Environmental Protection: EPA's and States' Efforts to Focus State
Enforcement Programs on Results (Chapter Report, 05/27/98,
GAO/RCED-98-113).

Pursuant to a congressional request, GAO reviewed: (1) what alternative
compliance strategies states are practicing; (2) whether and how states
are measuring the effectiveness of these strategies; and (3) how the
Environmental Protection Agency (EPA) has responded to these states'
efforts, focusing in particular on the agency's objective of holding the
states accountable for achieving environmental results, rather than
focusing solely on enforcement processes.

GAO noted that: (1) approaches used by 10 states contacted by GAO that
are experimenting with alternative compliance strategies generally fall
into two categories: (a) compliance assistance programs that seek to
help dischargers comply with environmental requirements; and (b)
programs that promote more flexible enforcement than is practiced under
the current system; (2) most of the 10 states had developed some kind of
compliance assistance program, which generally targets smaller
facilities or businesses that may not understand the requirements or the
most effective ways of achieving them; (3) nine of 10 states had some
type of audit privilege/immunity program, four of which were authorized
by the states' statutes; (4) there was broad agreement among the state
and EPA officials contacted that the effectiveness of alternative
compliance strategies should be measured and assessed; (5) nonetheless,
states' efforts to measure the effectiveness of alternative compliance
strategies have proven to be much more difficult than counting and
reporting traditional enforcement outputs; (6) key challenges to
developing results-oriented performance measures include the: (a)
frequent absence of the baseline data needed to determine whether
compliance rates or environmental quality have improved under new
strategies; and (b) inherently greater difficulty and expense involved
in quantifying outcomes, as compared with counting and reporting output
measures; (7) since 1994, EPA has initiated a number of activities to
facilitate states' efforts; (8) the agency has maintained a continued
emphasis on strong enforcement, noting that the deterrent effect
achieved through enforcement actions motivates regulated entities to
seek compliance assistance and use incentive policies; (9) differences
between EPA and state regulatory authorities were exacerbated by
inconsistent approaches by different EPA offices on how the adequacy of
state enforcement programs should be assessed; and (10) EPA could more
effectively help states deal with some of the technical barriers
impeding their efforts to develop measures needed to implement
results-oriented enforcement strategies.

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

 REPORTNUM:  RCED-98-113
     TITLE:  Environmental Protection: EPA's and States' Efforts to 
             Focus State Enforcement Programs on Results
      DATE:  05/27/98
   SUBJECT:  State-administered programs
             Voluntary compliance
             Environmental policies
             Audits
             Regulatory agencies
             Federal/state relations
             Environmental law
             Technical assistance
             Accountability
IDENTIFIER:  EPA National Environmental Performance Partnership System
             EPA National Pollutant Discharge Elimination System
             Washington Snapshots Program
             Massachusetts Environmental Results Program
             EPA National Performance Measures Strategy
             Florida
             Illinois
             Massachusetts
             Texas
             Washington
             Colorado
             Delaware
             New Jersey
             Oregon
             Pennsylvania
             NPDES
             
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Cover
================================================================ COVER


Report to Committee on Commerce, U.S.  House of Representatives

May 1998

ENVIRONMENTAL PROTECTION - EPA'S
AND STATES' EFFORTS TO FOCUS STATE
ENFORCEMENT PROGRAMS ON RESULTS

GAO/RCED-98-113

EPA's Enforcement Program

(160401)


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

  CAA - Clean Air Act
  CSI - Common Sense Initiative
  CWA - Clean Water Act
  ECOS - Environmental Council of the States
  ELP - Environmental Leadership Program
  EPA - Environmental Protection Agency
  ERP - Environmental Results Program
  FDEP - Florida Department Of Environmental Protection
  GAO - General Accounting Office
  GPRA - Government Performance and Results Act
  NAPA - National Association for Public Administration
  NEPPS - National Environmental Performance Partnership System
  NPMS - National Performance Measures Strategy
  OECA - Office of Compliance And Enforcement
  PPA - Performance Partnership Agreement
  PPG - Performance Partnership Grant
  RCRA - Resources Conservation and Recovery Act
  TNRCC - Texas Natural Resources and Conservation Commission
  VOCs - Volatile Organic Chemicals
  XL - Project XL

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


B-279372

May 27, 1998

The Honorable Thomas J.  Bliley
Chairman
The Honorable John D.  Dingell
Ranking Minority Member
Committee on Commerce
House of Representatives

As requested, we are reporting on the states' use of alternative
strategies for improving compliance with environmental laws and
regulations and the Environmental Protection Agency's oversight of
these activities. 

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, Environmental Protection Agency; 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
V. 

Peter F.  Guerrero
Director, Environmental
 Protection Issues


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


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

Most major environmental statutes allow the Environmental Protection
Agency (EPA) to delegate the responsibility for key programs to
qualified states.  In order for the states to obtain such
responsibility, the statutes generally require them to have adequate
authority to inspect, monitor, and enforce the program.  Recently,
some states have supplemented these traditional enforcement
activities with other, more cooperative approaches to improve
compliance through technical assistance and various incentives. 

To understand more about the potential for these alternative
strategies to make compliance more efficient and effective, the
Chairman and Ranking Member of the House Committee on Commerce asked
GAO to determine (1) what alternative compliance strategies states
are practicing, (2) whether and how states are measuring the
effectiveness of these strategies, and (3) how EPA has responded to
these states' efforts, focusing in particular on the agency's
objective of holding the states accountable for achieving
environmental results, rather than focusing solely on enforcement
processes. 


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

As a condition of accepting responsibility for implementing the Clean
Water Act, Clean Air Act, and other environmental statutes, delegated
states must establish enforcement programs approved by EPA to ensure
that the regulated community complies with pollution discharge
limitations and other environmental requirements.  Such programs
typically include monitoring compliance of members of the regulated
community, reporting violations to state and/or EPA authorities, and
taking "timely and appropriate" enforcement action when necessary. 
Depending on the nature of the violation, an appropriate enforcement
action could be an informal measure (such as a verbal warning or
written notice of violation) or a more formal measure (such as a fine
or criminal prosecution).  These actions must be taken according to
time frames set by the agency.  EPA's regulations generally provide
that EPA may withdraw its approval of a state's program if the state
does not act on violations or does not seek adequate enforcement
penalties. 

EPA has historically measured the success of states' enforcement
programs by the number of inspections conducted and the number of
enforcement actions taken against violators.  The agency has
generally maintained that the emphasis on inspections and enforcement
action is necessary to deter noncompliance and prevent violators from
gaining economic advantage by violating environmental laws. 
Increasingly, however, states have cited such enforcement-related
"output measures" as inappropriate indicators of a program's success
and as unduly emphasizing punitive measures when technical
assistance, incentives, and other, more cooperative strategies are
needed to increase compliance by some members of the regulated
community.  The states point specifically to the growing number of
small businesses that must comply with highly complex environmental
requirements.  They believe that a wider array of "tools" is needed
to help achieve environmental compliance and that state regulators
should be held accountable for the results their programs achieve,
rather than only for the number of enforcement actions they take. 


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

Approaches used by 10 states contacted by GAO\1 that are
experimenting with alternative compliance strategies generally fall
into two categories:  (1) "compliance assistance" programs that seek
to help dischargers comply with environmental requirements and (2)
programs that promote more flexible enforcement than is practiced
under the current system (which generally prescribes when and what
type of "timely and appropriate" enforcement action is required for a
given violation).  Most of the 10 states had developed some kind of
compliance assistance program, which included such activities as
seminars, technical assistance visits, and "plain-English" guides
explaining regulatory requirements.  These programs generally target
smaller facilities or businesses that may not understand the
requirements and the most efficient and effective ways of meeting
them.  Among the key flexible enforcement approaches employed are
"audit privilege/immunity" programs, which encourage facilities to
use environmental auditing to assess their environmental performance
and correct problems identified.  In return, their audit findings and
other information generated by their audits are granted
confidentiality and/or penalties for violations found may be waived
or reduced.  Nine of the 10 states had some type of audit
privilege/immunity program, four of which were authorized by the
states' statutes. 

GAO found broad agreement among the state and EPA officials contacted
that the effectiveness of alternative compliance strategies should be
measured and assessed.  Officials from Florida, Pennsylvania, and
Texas, for example, related experiences in which a drop in the number
of enforcement-related actions taken was criticized heavily by the
media, environmental groups, and others because a clear, quantifiable
benefit attributable to an alternative strategy could not be
demonstrated.  Nonetheless, while GAO identified a number of
innovative efforts under way, states' efforts to measure the
effectiveness of alternative compliance strategies have proven to be
much more difficult than counting and reporting traditional
enforcement outputs, such as the number of inspections conducted or
penalties assessed.  Key challenges to developing results-oriented
performance measures include (1) the frequent absence of the baseline
data needed to determine whether compliance rates or environmental
quality have improved under new strategies and (2) the inherently
greater difficulty and expense involved in quantifying outcomes (such
as industrywide compliance rates), as compared with counting and
reporting output measures. 

Since 1994, EPA has initiated a number of activities to facilitate
states' efforts, such as establishing compliance assistance centers
and working jointly with states to develop results-oriented
performance measures.  In doing so, the agency has maintained a
continued emphasis on strong enforcement, noting that the deterrent
effect achieved through enforcement actions motivates regulated
entities to seek compliance assistance and use incentive policies. 
This emphasis has led the agency to raise concerns in cases in which
states' data have shown decreased numbers of enforcement actions and
to object on legal and policy grounds to a number of states' audit
privilege/immunity laws and other programs that it believes
compromise the efficacy of the states' enforcement programs.  GAO
observed that some of the differences between EPA and state
regulatory authorities over these state initiatives reflect different
legal and policy views on whether these state audit privilege laws
compromise the states' authority to enforce federal environmental law
and what the appropriate role of EPA and its state counterparts
should be, particularly on the appropriate level of EPA oversight of
state enforcement activities.  GAO found, however, that these
differences were exacerbated by inconsistent approaches by different
EPA offices on how the adequacy of state enforcement programs should
be assessed--particularly as it relates to the appropriate balance in
states' use of traditional and nontraditional tools for achieving
compliance.  GAO also concluded that EPA could more effectively help
states deal with some of the technical barriers impeding their
efforts to develop measures needed to implement results-oriented
enforcement strategies. 


--------------------
\1 GAO visited five states--Florida, Illinois, Massachusetts, Texas,
and Washington--their corresponding EPA regional offices, and other
interested parties to gather detailed information about states'
alternative compliance strategies.  Additional information and
insights were gathered from another five states, including Colorado,
Delaware, New Jersey, Oregon, and Pennsylvania. 


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


      STATES' EXPERIENCES IN
      DEVELOPING AND USING
      ALTERNATIVE COMPLIANCE
      STRATEGIES
-------------------------------------------------------- Chapter 0:4.1

States' efforts to provide compliance assistance frequently target
smaller facilities in specific industry sectors.  The Washington
State Ecology Department's "Snapshots" Program, for example, provides
on-site technical assistance for lithographic printers, screen
printers, and photo processors across the state.  Under the program,
Department staff have worked with local officials to visit over 1,300
shops, providing customized recommendations to reduce waste
generation, improve waste management, and help the shops achieve
compliance with hazardous waste regulations.  Similarly, the
Massachusetts Department of Environmental Protection created its
Environmental Results Program to replace the existing permitting
process with broad performance standards with which small and
medium-sized facilities must certify their compliance. 

Provisions for audit privilege and/or immunity, used by states to
encourage facilities to undertake environmental auditing, have become
among the more prevalent means of enforcement flexibility exercised
by the states visited.  During a typical environmental audit, a
facility voluntarily conducts an examination to determine whether it
is complying with environmental laws and regulations.  Statutes in
two of the states we contacted, Colorado and Texas, offer immunity
for certain violations found during audits.  Under Texas' law, with
certain exceptions, a facility reporting a violation pursuant to an
environmental audit may not be assessed an administrative or civil
penalty for violations identified and corrected as a result of
conducting the audit.  In addition, in Texas, facilities are not
obligated to disclose the environmental audit reports in
administrative or civil proceedings, nor may the reports be used as
evidence in these proceedings.  As an alternative to authorizing such
programs through legislation, a number of states encourage
environmental auditing through nonbinding audit policies.  Many of
these are similar to EPA's own environmental auditing policy, which
eliminates or reduces certain penalties but does not provide either
privilege or immunity. 


      EFFORTS TO MEASURE NEW
      STRATEGIES' EFFECTIVENESS
-------------------------------------------------------- Chapter 0:4.2

EPA and state officials contacted by GAO emphasized the importance of
measuring the effects of their compliance and assistance programs. 
For example, officials from Florida, Pennsylvania, and Texas cited
innovative programs they initiated that relied less on enforcement
but which, they maintained, actually improved compliance and
environmental quality.  However, they noted that without tangible,
measurable proof that the strategy maintained or improved either
compliance or environmental quality, they found themselves vulnerable
to criticism that they were "going soft on polluters." Florida has
since begun an extensive effort to measure the results achieved by
each of its major programs, using statistical inspection samples to
obtain compliance rates for different industry sectors.  Other states
contacted by GAO have also augmented their efforts to go beyond
measuring the outputs associated with their programs. 

Nonetheless, most of the alternative strategies GAO examined either
were not being systematically evaluated or were still being assessed
on the basis of outputs (such as the number of facilities
participating in a program or the number of workshops conducted)
rather than on results.  Among the key barriers impeding greater use
of results-oriented performance measures were the following: 

  -- Absence of baseline data.  Because states have only recently
     begun to measure enforcement outcomes, they have generally not
     measured or kept records on such outcome-related data as
     industrywide compliance rates.  Without such baseline data, the
     relative success of new strategies cannot be easily documented. 

  -- Difficulty of quantifying outcomes.  Officials in each of the
     states GAO visited cited the difficulty in quantifying program
     results.  Florida was one of the few states to have attempted to
     quantify outcomes, noting that calculating accurate industrywide
     compliance rates was an important part of the state's effort to
     focus programs on results.  Doing so, however, required a
     substantial investment to change the data systems used by the
     Florida Department of Environmental Protection and its method of
     selecting facilities for inspection. 

  -- Difficulty in establishing causal links.  It is inherently
     difficult to establish a specific causal link that can isolate
     the effect of a particular strategy on compliance rates or
     environmental quality.  Florida officials noted that even when
     environmental quality can be quantified, measuring the impacts
     of enforcement strategies is complicated by the influence of
     other factors affecting the environment, such as the weather and
     economic activity. 


      EPA'S RESPONSE TO STATES'
      ALTERNATIVE COMPLIANCE
      STRATEGIES
-------------------------------------------------------- Chapter 0:4.3

EPA has initiated a number of activities during the past few years to
encourage voluntary compliance by facilities--thereby alleviating the
need to respond to violations exclusively by means of traditional
enforcement action.  Some of these activities are carried out at the
federal level and are viewed as part of EPA's own enforcement
program.  Others bear more directly on states' enforcement programs. 
Key activities include (1) establishing compliance assistance centers
for automotive repair, metal finishing, and several other industry
sectors; (2) working with states and other interested parties to
develop results-oriented measures; and (3) encouraging regulated
entities to voluntarily discover, disclose, and correct violations
through environmental auditing.  EPA's senior leadership has
underscored on numerous occasions, however, that these initiatives
are intended to supplement--not replace--a strong enforcement
program.  The agency's legal and policy concerns about a possible
weakening of enforcement has led it to respond negatively toward a
number of alternative compliance strategies, such as several states'
audit privilege/immunity laws and "amnesty" programs that, under
certain conditions, allow facilities additional time to correct
violations and return to compliance before enforcement actions are
taken.  For example, EPA is concerned that some of these laws may
prevent states from meeting basic requirements for the state
enforcement authority established in federal laws and regulations as
prerequisites for delegation, and thus has issued only interim
approvals of states' environmental programs until the concerns could
be resolved.  Senior EPA enforcement officials also asked EPA
regional offices recently to focus their attention on what was
perceived to be an unacceptable drop in the number of enforcement
actions by many of the states in the regions' jurisdiction. 

While EPA's policy is that compliance assistance should be
accompanied by a strong and credible enforcement deterrent, state
officials have noted that the inconsistent manner in which this
policy has been interpreted and implemented by different EPA offices
has led to confusion about the appropriate balance between
traditional enforcement and other compliance tools.  Specifically,
officials from each of the 10 states contacted maintained that a
fragmented and inconsistent approach among different EPA offices on
the appropriate use of alternative compliance strategies has made it
difficult to devise a coherent, results-oriented approach acceptable
to all key EPA stakeholders.  The inconsistencies most frequently
identified were between EPA headquarters and regional offices; among
the EPA headquarters offices with key enforcement responsibilities;
and between EPA management and lower-level staff.  These findings
echoed those of an internal December 1996 EPA study that reported
complaints by EPA staff in several regions that "they had received
mixed messages about the relative priority of enforcement and
compliance assurance." Among the consequences cited by the study were
"considerable confusion" among regions and states, and distrust among
the regulated community. 

Senior EPA enforcement officials have attempted to clarify the issue
through quarterly meetings between management staff in EPA's Office
of Enforcement and Compliance Assurance and the management teams of
each of EPA's 10 regional offices, issuing "operating principles"
that clarify how to integrate enforcement and compliance assurance
activities, and other actions.  They also implemented an ambitious
National Performance Measures Strategy, with wide participation from
various stakeholder groups, to develop results-oriented measures for
the agency's own enforcement effort.  GAO acknowledges these
important efforts, noting that they have, in fact, shed some light on
the agency's policy on the appropriate use of alternative enforcement
and compliance tools.  Nonetheless, GAO's interviews with enforcement
officials from the 10 states confirmed the difficulty of implementing
a multifaceted compliance strategy in an organization in which
enforcement responsibility is highly decentralized.  The officials
expressed the unanimous view that states are still receiving
inconsistent messages from different EPA offices on this issue.  In
this connection, GAO also observed that the enforcement measures EPA
says it will use in response to the Government Performance and
Results Act are overwhelmingly weighted toward numerical targets for
inspections, enforcement actions, and other outputs.  For example,
the "Performance Plan" prepared pursuant to the act notes that in
1999, the agency "will conduct 15,000 inspections and undertake 2,600
enforcement actions" and make 60,300 state pesticides inspections. 
The plan also includes numerous other output-oriented targets. 

Officials from Delaware, Massachusetts, New Jersey, and Pennsylvania
each raised concerns that EPA's heavy focus on outputs in responding
to the Results Act is inconsistent with the agency's other ongoing
initiatives designed to help states orient their environmental
programs toward results.  For example, the New Jersey respondent said
that such a focus on outputs was contrary to the results-oriented
manner in which New Jersey was attempting to negotiate its
performance partnership agreement with EPA under the agency's
National Environmental Performance Partnership System.  This system,
which is explicitly intended to focus on achieving environmental
results, provides a framework under which EPA regional offices and
states agree on such matters as which problems will receive priority
attention, what their respective roles will be, and how their
progress in achieving clearly defined program objectives will be
measured. 


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

GAO recommends that the Administrator, EPA, promote greater
consistency in what has been a fragmented and inconsistent message by
different EPA offices about the appropriate balance in EPA's
enforcement program between enforcement and compliance assurance
activities.  In doing so, the Administrator should build on EPA's
recent efforts to address this issue by ensuring that (1) the
expectations set for the Office of Enforcement and Compliance
Assurance, program offices, and other EPA headquarters and regional
offices are consistent with the agency's policy calling for an
appropriate mix of tools to achieve compliance; (2) different EPA
offices with enforcement responsibility more systematically
coordinate their negotiations with, and oversight of, state agencies
on enforcement-related matters; and (3) the enforcement-related
provisions of EPA's Performance Plan, prepared pursuant to the
Government Performance and Results Act, focus on outcomes in a manner
consistent with that of the core performance measures developed under
EPA's National Performance Measures Strategy, the National
Environmental Performance Partnership System, and EPA's other
results-oriented initiatives. 

GAO makes additional recommendations in chapter 3 on the steps that
EPA could take to more effectively assist states in dealing with some
of the technical barriers impeding their efforts to develop
results-oriented performance measures. 


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

GAO provided copies of a draft of this report to EPA for its review
and comment.  Among the major concerns raised in the agency's
comments responding to the report were that the report (1) did not
give the agency adequate credit for the efforts made to promote
compliance assistance and develop innovative performance measurement
efforts; (2) relied too heavily on impressions, opinions, and
perceptions to support its conclusions about inconsistent
implementation by different EPA offices; (3) did not acknowledge the
value of deterrence to promoting environmental compliance; and (4)
made recommendations that would do little to effectively address the
problems and challenges it identified. 

In connection with the first point, GAO noted that the draft report
did in fact devote several pages of discussion to EPA's initiatives
on these matters, citing, among others, the agency's efforts to
establish compliance assistance centers, develop policies that
provide incentives to the regulated community to comply with
environmental laws, develop and implement its environmental auditing
policy, and develop performance measures.  Where appropriate, GAO
provided further recognition of these efforts in response to EPA's
comments. 

EPA's second point, that the draft report relied too heavily on
impressions, opinions, and perceptions to support its conclusions
about inconsistent implementation by different EPA offices, does not
convey the breadth and consistency of the report's findings on this
issue.  GAO noted that the problem of inconsistent implementation was
cited by EPA's own Office of Administration and Resource Management
in a December 1996 report.  The view that EPA has not solved the
problem was substantiated not by sporadic impressions, opinions, and
perceptions, but by (1) the overwhelming consensus of enforcement and
other officials from among a diverse group of 10 relatively
experienced states and (2) the strength and consistency with which
these views were conveyed.  This viewpoint was further reinforced by
the enforcement section of EPA's 1999 Government Performance and
Results Act Performance Plan, which focused solely on outputs,
despite the agency's stated desire to move toward a greater focus on
results. 

EPA's third point, that the report did not acknowledge the value of
enforcement as a deterrent and, therefore, as one of the principal
tools for achieving compliance, reflects a misunderstanding about the
report's purpose, which was to provide empirical information about 10
states' experiences with alternative compliance strategies and EPA's
response to these efforts.  Therefore, GAO did not reiterate its past
acknowledgement of the value of enforcement in achieving compliance
through deterrence.  Nothing in this report, however, contradicts
GAO's past statements about the importance of enforcement in
deterring violation of environmental laws.  Moreover, the draft
report did explicitly convey EPA's position that strong enforcement
is needed to make compliance assistance work, deter future
violations, and ensure a level playing field for members of the
regulated community.  GAO added language offered by EPA to further
expand on the importance the agency attaches to the deterrence value
of an effective enforcement program. 

In connection with the fourth point, GAO's recommendations are
intended to address two major issues identified in its report:  (1)
the difficulties experienced by states in developing results-oriented
measures and (2) the inconsistent manner in which different EPA
entities are implementing the agency's policies on the use of
enforcement and other compliance tools.  The first recommendation
essentially calls on EPA to follow through on its stated commitment
to develop measures pursuant to its National Performance Measures
Strategy and to do so in a collaborative manner with states
attempting to develop their own measurements.  The second
recommendation reflects GAO's conclusion that in the light of EPA's
decentralized structure, resolving the inconsistencies identified
will require the attention of the agency's top management, which has
overall responsibility for directing and coordinating the activities
of the diverse EPA organizational units with enforcement
responsibility.  GAO believes the other actions included in this
recommendation will also help to alleviate the problem cited by many
state officials--that they are often given conflicting information or
direction by different EPA offices. 

EPA's comments and GAO's responses are discussed in greater detail at
the end of chapters 2 and 3.  The full text of EPA's comments and
GAO's point-by-point response are included in appendix IV of this
report.  GAO also provided relevant sections of the draft report to
representatives of the 10 states included in its review to verify
statements attributed to them and other information provided.  GAO
made revisions as appropriate to incorporate their comments. 


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

Since the Environmental Protection Agency's (EPA) creation in 1970,
the agency has been charged with enforcing the nation's environmental
laws.  This responsibility has traditionally involved monitoring
compliance by those in the regulated community (such as factories or
small businesses that release pollutants into the environment or use
hazardous chemicals), ensuring that violations are properly
identified and reported, and ensuring that "timely and appropriate"
enforcement actions are taken against violators when necessary. 

Most major environmental statutes allow EPA to authorize qualified
states to implement key programs and to enforce their requirements. 
EPA establishes by regulation the requirements for state enforcement
authority, such as the authority to seek injunctive relief\1 and
civil and criminal penalties.  EPA also defines by policy the minimal
requirements of an acceptable state enforcement program, such as the
type and timing of the action required for various violations, and
tracks how well states comply.  Environmental statutes generally
provide authority for both EPA and states to take appropriate
enforcement action against violators in states that have been
delegated authority for these programs.  They also provide that EPA
may withdraw approval of a state's program if the state is not
adequately administering or enforcing it. 

In recent years, a number of states have begun to develop alternative
approaches that supplement--and sometimes replace--these traditional
enforcement activities with more cooperative approaches designed to
achieve compliance by regulated facilities.  These states have
generally maintained that a wider array of "tools" is needed to help
achieve environmental compliance and that they should be held
accountable for this desired outcome--environmental
compliance--rather than for the number of times they take traditional
enforcement actions.  This report examines (1) what alternative
compliance strategies these states are practicing, (2) whether and
how the states are measuring the effectiveness of these strategies,
and (3) how EPA has responded to these states' efforts, focusing in
particular on the agency's objective of holding states accountable
for achieving environmental results, rather than focusing solely on
enforcement processes. 


--------------------
\1 The authority to order a party that is violating a provision of
the law to refrain from further violation is referred to as
injunctive relief. 


   EPA AND STATES' ROLES IN
   ENFORCING ENVIRONMENTAL
   PROGRAMS
---------------------------------------------------------- Chapter 1:1

Most major federal environmental statutes allow EPA to delegate
responsibility to states to administer environmental programs.  One
of the key conditions for delegating this responsibility to a state
is that the state acquire and maintain adequate authority to enforce
the federal law.  For example, to obtain EPA's approval to administer
the Clean Air Act's (CAA) Title V permitting program for major air
pollution sources,\2 states must have (among other things) ï¿½adequate
authorityï¿½ to "assure compliance" with title V permitting
requirements and to "enforce permits," including authority to recover
civil penalties and provide appropriate criminal penalties.\3
Similarly, the Clean Water Act (CWA) allows EPA to approve a state's
water pollution programs under the National Pollutant Discharge
Elimination System if the state programs contain, among other things,
"adequate authority" to issue permits that "insure compliance" with
applicable requirements of the act and "to abate violations,"
including "civil and criminal penalties and other ways and means of
enforcement."\4 The Resource Conservation and Recovery Act (RCRA)
provides for EPA's approval of states' hazardous waste programs
unless, among other things, the program "does not provide adequate
enforcement of compliance" with the applicable requirements of the
act.\5

EPA develops enforcement policies for these programs.  For permitting
programs, such as those authorized by the CAA, CWA, and RCRA,
facilities are either required to report periodically on whether they
are in compliance with their permit or are subject to inspections
that check for compliance.  The enforcement policies outline EPA's
traditional regulatory approach to enforcement, including what
constitutes a violation--especially the "significant" violations that
are likely to require an enforcement action.  When a violation is
discovered, the policies generally require an escalating series of
enforcement actions, depending on how serious the violation is and on
the facility's level of cooperation in correcting it.  Actions might
start with a verbal warning, or a warning letter, and escalate to
administrative orders to change the facility's practices.  These
enforcement policies also define "timely and appropriate" enforcement
actions for various types of violations.  In the most serious cases,
EPA or states can assess penalties or refer the case to the U.S. 
Department of Justice for prosecution.  The monetary penalties EPA
assesses include two amounts:  a gravity-based portion based on the
seriousness of the violation, and an economic benefit portion
designed to remove any financial advantage the violator obtained over
its competitors through noncompliance.  EPA may also pursue criminal
enforcement if the situation warrants. 

Whether EPA or state personnel take the lead in taking enforcement
actions depends heavily on whether the state has been delegated the
authority to administer the program.  In cases in which EPA has
retained the program, the staff from the cognizant EPA regional
office generally take the lead in taking enforcement actions, often
with support and/or guidance from headquarters program offices, the
Office of Enforcement and Compliance Assurance (OECA), and the Office
of General Counsel. 

In situations in which the state has been delegated authority to
administer the program, EPA's enforcement polices provide guidance to
the states.  Moreover, EPA's regions and the states work together
each year to establish enforcement expectations and lay out their
respective roles.  EPA also provides grant funds to states to assist
in their implementation of the federal programs.  EPA oversees the
states' enforcement in a variety of ways, including reviewing
inspection reports and enforcement actions, and accompanying state
inspectors.  EPA also requires states to report information on their
enforcement efforts, for example, on the number and type of
inspections the state has taken, the results of those inspections,
and any enforcement actions resulting from discovered violations. 
EPA's enforcement policy under the CAA, CWA, and RCRA is concentrated
primarily on large facilities and large sources of pollution.  States
have more autonomy to determine how they will enforce the law at
smaller sources and smaller facilities. 

As states' responsibility for administering environmental programs
has grown, so has their role in enforcing program requirements. 
States are now responsible for most environmental enforcement in the
United States.  For example, as figure 1.1 illustrates, in 1996
states took 9,306 administrative enforcement actions (85 percent of
all such actions taken that year). 

   Figure 1.1:  Number of
   Administrative Civil
   Enforcement Actions Taken by
   States and EPA

   (See figure in printed
   edition.)


--------------------
\2 Title V of the Clean Air Act requires large sources of air
pollutants to obtain permits that specify the maximum amount of
pollutants that can be released, and monitoring requirements. 

\3 CAA ï¿½ 502(b)(5)(A),(E), 42 U.S.C.  ï¿½ 7661a(b)(5)(A),(E). 

\4 CWA ï¿½402(b)(2)(A), (7), 33 U.S.C.  ï¿½ 1342(b)(2)(A), (7).  The
National Pollutant Discharge Elimination System (NPDES) of the Clean
Water Act requires major sources of discharges to surface water to
obtain permits that control the amount of pollutants that may be
discharged to surface water and sets monitoring requirements. 

\5 RCRA ï¿½ 3006(b)(3).  42 U.S.C ï¿½ 6926(b)(3).  The Resource
Conservation and Recovery Act requires facilities that treat, store,
or dispose of hazardous materials to obtain a permit covering the
procedures for these actions. 


   EPA AND STATES ARE TRYING NEW
   WAYS TO ACHIEVE ENVIRONMENTAL
   COMPLIANCE
---------------------------------------------------------- Chapter 1:2

EPA has historically measured the performance of enforcement programs
by the number of inspections conducted and the number of enforcement
actions taken against violators.  The agency has generally maintained
that the emphasis on inspections and enforcement action is necessary
and has been effective in deterring noncompliance and preventing
violators from gaining economic advantage by violating environmental
laws. 

While acknowledging that enforcement has led to increased compliance
throughout industries, EPA and state environmental officials have
noted that a wider array of "tools" is needed to help achieve
environmental compliance and that states should be held accountable
for the results their programs achieve, rather than the numbers of
regulatory actions they take.  As a result, these officials have
cited total reliance on such "output measures" as inappropriate
indicators of program success and as unduly emphasizing punitive
measures when technical assistance, incentives, and other, more
cooperative strategies are also needed to increase compliance by the
regulated community.  They have pointed specifically to the number of
small businesses that must comply with complex environmental
requirements, noting that their ability to identify the requirements
and determine how to comply is more often a factor than their
willingness to do so. 

Such a results-oriented focus is also consistent with the Congress's
intent in passing the Government Performance and Results Act of 1993. 
The Results Act requires agencies to clearly define their missions,
establish long-term strategic goals (and annual goals linked to
them), measure their performance against the goals they have set, and
report this information to the Congress.  Importantly, 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. 

EPA, in cooperation with the states, has in place several efforts to
increase the results focus of enforcement programs.  The agency
established the National Environmental Performance Partnership System
(NEPPS) in 1995 as an important incentive to implement new programs
and measure their results.  NEPPS is intended to strengthen the
effectiveness of the nation's environmental programs by redefining
the federal and state roles to ensure that public resources are used
efficiently to address the most important environmental problems. 
One of NEPPS' primary objectives is to measure and report the
progress that states and EPA are making toward their environmental
and programmatic goals.  A key element is EPA's commitment to give
states with strong environmental performance greater flexibility and
autonomy in running their environmental programs.  Under the program,
states and EPA set environmental priorities on the basis of each
state's environmental conditions and priorities.  The results of
these negotiations are documented in Performance Partnership
Agreements (PPA) that explain the states' objectives, including
objectives for enforcement, and also establish performance
measurements to gauge progress toward those objectives.  For its own
enforcement programs, EPA is implementing a National Performance
Measures Strategy (NPMS), intended to measure different types of
enforcement and compliance assurance activities and their effect on
compliance and environmental quality. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:3

As agreed with the Chairman and Ranking Member of the House Committee
on Commerce, this report examines (1) what alternative compliance
strategies states are practicing, (2) whether and how states are
measuring the effectiveness of these strategies, and (3) how EPA has
responded to these states' efforts, focusing in particular on the
agency's objective of holding states accountable for achieving
environmental results, rather than focusing solely on enforcement
processes. 

To better understand the context for the issues discussed in this
report, we reviewed studies by a variety of organizations (including
GAO) on state and federal environmental enforcement.  We also
reviewed the growing literature on the efforts of EPA, as well as
many other public and private organizations, to focus programs on the
results they are intended to achieve. 

To address each of our objectives, we first contacted EPA officials
and officials with other organizations, such as the Environmental
Council of the States (ECOS)\6 and the Environmental Law Institute,
to identify appropriate state environmental programs for detailed
study.  In selecting states, we were primarily concerned with their
level of experience in implementing alternative compliance approaches
in any or all of three major environmental programs:  the Resource
Conservation and Recovery Act, the Clean Water Act, and the Clean Air
Act.\7 Other key criteria included (1) whether a state may have
undertaken innovative efforts to quantify the effectiveness of its
alternative compliance strategies and (2) a need to select states in
different EPA regions, both to reflect variety in the types of
environmental issues they face and to understand how different EPA
regional offices deal with their state counterparts. 

On the basis of these criteria, we visited five states for detailed
study--Florida, Illinois, Massachusetts, Texas, and Washington.  In
each case, we interviewed program officials in the states' lead
environmental agency, as well as enforcement and/or program officials
in the EPA regional office with jurisdiction for that state.  We also
interviewed officials from other organizations with a major stake in
environmental enforcement, including states' Offices of the Attorney
General, environmental groups active in enforcement issues, and key
associations representing the regulated community (e.g., associations
representing small businesses). 

After these visits, we conducted telephone interviews with, and
obtained other information from, environmental officials from an
additional five states (again using the criteria discussed
above)--Colorado, Delaware, New Jersey, Oregon, and Pennsylvania. 
These contacts were generally intended to gather additional
information and perspectives on the key issues arising from the
earlier five state visits. 

In connection with the third objective (EPA's response to these
alternative programs), in addition to our discussions with state
environmental officials and cognizant EPA regional officials, we
contacted OECA officials at EPA headquarters to understand the
agency's own use of alternative compliance approaches, its oversight
of the states implementing alternative compliance approaches, and its
initiatives to improve measurement of enforcement performance.  We
also interviewed (1) EPA headquarters officials with the Offices of
Air and Radiation, Water, and Solid Waste and Emergency Response and
(2) U.S.  Department of Justice officials to better understand how
that agency has responded to states' alternative state compliance
strategies and how it has coordinated that response with EPA. 

We conducted our work from July 1997 through March 1998 in accordance
with generally accepted government auditing standards.  We provided
copies of a draft of this report to EPA for its review and comment. 
EPA's April 28, 1998, letter and our detailed responses are included
in appendix IV of this report.  EPA's comments and our responses are
also discussed at the end of chapters 2 and 3.  We also provided
relevant sections of the draft report to representatives of the 10
states included in our review to verify statements attributed to them
and other information they provided.  We made revisions as
appropriate to incorporate their comments. 


--------------------
\6 ECOS is a national nonpartisan, nonprofit association of state and
territorial environmental commissioners. 

\7 These three programs account for 66 percent of all enforcement
actions taken in the United States. 


STATES' EFFORTS TO USE AND
EVALUATE ALTERATIVE COMPLIANCE
STRATEGIES
============================================================ Chapter 2

To improve environmental compliance among the regulated community,
states have begun to experiment with a variety of alternative
approaches to supplement traditional enforcement practices.  The
approaches used by the 10 states we contacted generally fall into two
categories:  (1) "compliance assistance" programs that seek to help
dischargers comply with environmental requirements and (2) programs
that promote more flexible enforcement for regulators than under the
current system, which generally specifies when and what type of
"timely and appropriate" enforcement action is required for a given
violation.  Compliance assistance programs often included such
activities as seminars, technical assistance visits, and distribution
of plain-English guides that explain regulatory requirements.  These
programs generally target smaller facilities or businesses that may
not understand the requirements and the most efficient and effective
ways of meeting them.  Among the key flexible enforcement approaches
employed were (1) programs encouraging regulated facilities to
conduct environmental audits to assess their environmental
performance and (2) amnesty programs that, under certain conditions,
allow facilities additional time to correct violations and return to
compliance before enforcement actions are taken.\1

GAO found broad agreement among the state and EPA officials contacted
that the effectiveness of alternative compliance strategies should be
measured and assessed in some manner--particularly if they are to be
relied upon as a primary means of achieving compliance.  In
particular, officials from a number of states related experiences in
which a drop in the number of enforcement-related actions taken was
criticized heavily by the media, environmental groups, and others
because a clear, quantifiable benefit attributable to the alternative
strategy could not be demonstrated.  Nonetheless, while we identified
a number of innovative efforts under way, states' efforts to measure
the effectiveness of alternative compliance strategies have proven to
be much more difficult than the current practice of tracking
enforcement actions, such as the number of inspections conducted or
penalties assessed. 


--------------------
\1 Beginning in 1994, EPA also implemented a number of compliance
assistance and flexible enforcement policies at the federal level. 
Chapter 3 describes these programs. 


   STATES' EXPERIENCES IN
   DEVELOPING AND USING
   ALTERNATIVE STRATEGIES
---------------------------------------------------------- Chapter 2:1

Most of the 10 states contacted were implementing compliance
assistance programs intended specifically to alleviate the
environmental compliance problems experienced by smaller facilities. 
All 10 states were also implementing flexible enforcement approaches,
including programs to encourage the use of environmental auditing
and/or programs that allow amnesty to violators under certain
conditions.  A key feature associated with some of these alternative
strategies was the effort to systematically follow up with regulated
facilities after the alternative strategy was applied--both to
encourage them to follow through with the agreed-upon corrective
measures and to gauge the effectiveness of the program.  While state
officials generally agree on the value of such follow-up measures,
the significant resources needed to carry them out may be a problem. 


      COMPLIANCE ASSISTANCE
      APPROACHES FOCUS ON SMALLER
      FACILITIES
-------------------------------------------------------- Chapter 2:1.1

During the last several years, some state environmental agencies
supplemented their traditional regulatory approach to enforcement
with alternative programs that emphasize providing assistance and
gaining voluntary compliance, particularly for smaller facilities in
these states.  As OECA officials explained to us, enforcement of
major environmental laws has concentrated on larger facilities in
that they are typically required to have operating permits and report
emissions and discharge information to EPA and states.  Since these
laws have been in place for several years, the larger facilities have
adapted to these requirements, and mechanisms have been in place to
monitor their compliance. 

Accordingly, state officials have told us that they must now shift
more attention to smaller facilities to achieve additional
environmental improvements.  They note that while an individual small
facility may not emit enough waste to even require an operating
permit, the large numbers of these facilities, taken together, result
in a significant share of remaining pollution problems. 

Nonetheless, state and EPA officials consistently told us that
conventional enforcement approaches were often ineffective with these
smaller facilities.  One reason frequently cited was the view that
these facilities were often willing but unable to comply with
numerous, often complex regulations.  Echoing a sentiment expressed
by many of these officials, the Deputy Director of the Office of
Compliance and Enforcement at the Texas Natural Resource Conservation
Commission said that compliance assistance programs were created
because the agency recognized that small businesses do not generally
have the technical expertise or resources to understand what
requirements apply to them and what they need to do to comply.  Some
states also found that these cooperative programs often offered a
more efficient way to deal with the emissions and discharges of
thousands of individual pollution sources, noting that the
conventional permitting, compliance monitoring, and enforcement
approach was better suited to the much more finite number of major
facilities in their jurisdictions. 

Most of the compliance assistance efforts identified by state
officials were targeted to a specific industry sector and typically
included outreach efforts, such as educational workshops, proactive
site visits to identify potential compliance problems, and
distribution of plain-English guides that explain regulatory
requirements.  In some cases, states worked with business or industry
associations to develop programs and identify facilities.  The
following illustrates some of these compliance assistance efforts.\2


--------------------
\2 Other states' compliance assistance efforts are described in
appendix I. 


         WASHINGTON'S "SNAPSHOTS"
         PROGRAM
------------------------------------------------------ Chapter 2:1.1.1

Noting that the complexity of environmental regulations was posing an
increasingly difficult compliance challenge for small businesses,
senior officials from the Washington Department of Ecology said their
agency had begun conducting assistance campaigns for specific
industry sectors several years ago.  Of particular note, the agency
in 1994 created the "Snapshots" Program, which focused on technical
assistance for lithographic printers, screen printers, and photo
processors across the state.  The goal of the campaign was to provide
technical assistance to enable these industries to reduce their waste
generation, improve their waste management, and achieve compliance
with hazardous waste, air, and water quality regulations through
voluntary actions. 

Department of Ecology and local county staff have since worked
together to visit more than 1,300 shops identified with the help of a
business association.  The visits provided short, focused,
site-specific recommendations to reduce waste generation, improve
waste management, and help the shops achieve compliance with
environmental regulations.  Waste management and other environmental
practices were discussed with the facility's representative during
the visit.  State or county staff then left a written list of
recommendations and an informational booklet with each facility.  The
facilities were expected to address the recommendations identified
during the site assessments. 


         MASSACHUSETTS'
         ENVIRONMENTAL RESULTS
         PROGRAM
------------------------------------------------------ Chapter 2:1.1.2

The Massachusetts Department of Environmental Protection created its
Environmental Results Program to develop a new and superior
regulatory compliance system for the state's small and medium-sized
facilities.  While 25 years of using permits has achieved significant
environmental improvements in Massachusetts, the approach has in some
ways been inefficient and ineffective. 

For example, the Massachusetts Department of Environmental Protection
(MDEP) has spent significant resources issuing air permits to about
4,400 facilities, of which two-thirds are small and medium-sized
firms that together generate less than 5 percent of the state's total
air pollution.  Of the thousands of facilities in the state required
by law to obtain sewer discharge permits, only about 500 have done so
to date.  Overall, the agency estimates that nearly two-thirds of the
state's small and medium-sized facilities are out of compliance with
at least some existing environmental requirements. 

Consequently, in 1996 the agency established the Environmental
Results Program to replace the existing permitting process with broad
performance standards with which facilities must certify their
compliance.  The intent of the program, according to MDEP officials,
was to better protect the environment and safeguard human health
while making it easier, less time-consuming, and less costly for
facilities to comply.  Regulated facilities agree to be held
accountable for meeting certain environmental performance standards
and for submitting annual reports or "certifications" on their
compliance with these standards. 

For its part, MDEP strives to (1) set strict but achievable
environmental standards tailored to each industrial and commercial
sector; (2) perform more inspections and audits; (3) pursue
enforcement against violators; (4) improve the quality of, and access
to, compliance data so that the information will be more useful to
the agency, the facilities, and the public; and (5) provide
easy-to-understand, sector-specific compliance materials and
educational programs, simplified reporting and recordkeeping
requirements, and incentives for pollution prevention. 


      STATES' GROWING USE OF
      FLEXIBLE ENFORCEMENT
-------------------------------------------------------- Chapter 2:1.2

Along with their efforts to create compliance assistance programs,
states are attempting to introduce more flexibility into their
enforcement programs, most notably through

  -- programs that encourage environmental auditing through promises
     of confidentiality of the information generated during audits
     and/or penalty reductions for violations found and

  -- amnesty programs, under which penalties for violators may be
     waived under certain conditions. 


         STATES' EFFORTS TO
         ENCOURAGE ENVIRONMENTAL
         AUDITING
------------------------------------------------------ Chapter 2:1.2.1

During a typical environmental audit, a facility conducts an
examination to determine whether it is complying with environmental
laws and regulations.  Programs generally provide, under specified
conditions, for some type of leniency or other consideration if an
environmental audit reveals compliance problems.  Environmental
auditing is viewed by most of the state environmental agency
officials we interviewed as a useful adjunct to traditional
enforcement practices, given states' limited resources, because it
may allow facilities to identify and correct environmental problems
sooner than inspectors could identify them. 

Our 1995 report on environmental auditing cited some reasons why a
facility would be interested in performing environmental audits.\3
Businesses are increasingly recognizing that compliance is too
important to be left to chance.  For example, business managers view
environmental auditing (1) as a powerful tool for monitoring and
proactively managing compliance as well as overall environmental
performance and (2) as a means of controlling the risks inherent in
failing to meet legal requirements. 

Nine of the 10 states contacted have either passed laws or developed
nonbinding policies to encourage facilities to use environmental
auditing.  As table 2.1 shows, Colorado, Illinois, Oregon, and Texas
have authorized audit privilege protection by statute.  Under these
laws, with certain exceptions, environmental audit reports and other
information generated by the audit is not admissible in evidence or
subject to disclosure in certain legal proceedings.\4 In order to
invoke the privilege, regulated entities generally need not report
violations to agency officials. 



                               Table 2.1
                
                 States' Environmental Audit Provisions

                            Audit privilege/immunity
                                      laws
------------------------  ----------------------------  --------------
                                                        Other
                                                        environmental
                          Privilege\a   Privilege and   audit
States                    only          immunity\b      policies\c
------------------------  ------------  --------------  --------------
Massachusetts                                           X\d

New Jersey

Delaware                                                X

Pennsylvania                                            X

Florida                                                 X

Illinois                  X

Texas                                   X

Colorado                                X

Oregon                    X

Washington                                              X

======================================================================
Total                     2             2               5
----------------------------------------------------------------------
\a A privilege provision generally prevents information in the audit
report from being admitted as evidence or disclosed in certain legal
proceedings, including enforcement actions. 

\b An immunity provision generally prohibits the assessment of
certain penalties against facilities that identify and correct a
violation as a result of conducting an audit. 

\c These policies generally provide that the state environmental
agency will not routinely request audit reports.  They also generally
authorize, but do not require, the agency to reduce penalties for
violations discovered and corrected as a result of an audit. 

\d Massachusetts currently has an interim audit policy.  It has not
yet been finalized. 

Statutes in Colorado and Texas offer immunity for certain violations
found during audits.  Under Texas' law, with certain exceptions, a
facility reporting a violation pursuant to an environmental audit may
not be assessed an administrative or civil penalty for violations
identified and corrected as a result of conducting the audit.  In
general, three conditions must be met under most states'
environmental audit laws or policies in order to qualify for reduced
penalties or immunity:  (1) the regulated entity must conduct an
audit that uncovers environmental violations; (2) the entity must
promptly and voluntarily report the violations to authorities; and
(3) the entity must expeditiously correct the violation. 

As an alternative to authorizing such programs through legislation, a
number of states encourage environmental auditing through audit
policies that are similar to EPA's own environmental auditing policy. 
While their specific provisions vary from one state to another, these
policies generally provide that the state will not routinely request
audit reports to trigger enforcement actions--but it is not legally
precluded from doing so.  Similarly, the environmental agency is
authorized to provide penalty relief, but not immunity, for
violations found during the course of audits but is not required by
law to do so.  Delaware, Florida, Pennsylvania, and Massachusetts
have this type of environmental audit policy. 


--------------------
\3 Environmental Auditing:  A Useful Tool That Can Improve
Environmental Performance and Reduce Costs (GAO/RCED-95-37, Apr.  3,
1995). 

\4 Appendix III shows which states have passed legislation
encouraging environmental auditing through audit privilege and/or
immunity provisions as of March, 1998.  As discussed in chapter 3,
EPA has supported states' policies encouraging environmental auditing
but has expressed legal and policy reservations about many of these
state laws because of its view that they may jeopardize these states'
authority to enforce federal law and regulations.  Specifically, the
agency has noted that some of the laws may place restrictions on
states' abilities to engage in enforcement activities required by
federal law and regulations, including (1) obtaining penalties and
injunctive relief for violations of federal program requirements or
(2) obtaining information that may be needed to determine compliance
status. 


         STATE AMNESTY PROGRAMS
------------------------------------------------------ Chapter 2:1.2.2

Seven of the 10 case-study states discussed programs they have
created that grant amnesty from any penalties to certain facilities
when violations are found during the state's initial assessment. 
State officials told us that these programs are particularly useful
in situations in which small violators demonstrate a willingness to
come into compliance with environmental regulations and simply cannot
afford to pay a stiff penalty.  Typically, such violators are given
specified amounts of time to correct their problems and enter into
compliance before enforcement actions are taken.  State officials
sometimes work directly with the facilities to correct the problem
and develop strategies to avoid potentially more serious problems in
the future.  State environmental officials told us that these
programs, when used under appropriate circumstances, have allowed
them to bring violators into compliance more quickly and have avoided
long, expensive, and sometime ineffectual enforcement actions. 
Examples of state amnesty programs include the following: 

  -- The Illinois Environmental Protection Agency's Clean Break
     Program, initially developed in cooperation with a local Chamber
     of Commerce, began in April 1995 and specifically targets small
     businesses.  By participating in the program, the facility
     allows the state to conduct an inspection of the facility and
     agrees to resolve the noncompliance discovered during the
     inspection to the state's satisfaction.  By complying with the
     program requirements, the facility is immune from enforcement
     actions relating to the noncompliance. 

  -- The Oregon Department of Environmental Quality identified small
     businesses that were potential emitters of volatile organic
     compounds (VOC).  Facilities without appropriate permits were
     offered limited amnesty from civil penalties if they voluntarily
     agreed to conduct a pollution prevention assessment to determine
     if VOC emissions could be reduced and to obtain a state air
     contaminant discharge permit if necessary. 

The introduction of state amnesty programs has not always been
without problems or controversy.  Some state officials told us that a
number of practical implementation issues and other concerns were
raised in their states.  New Jersey's recently enacted Quick
Compliance Law, for example, states that a facility cited for a
"minor" violation will not receive a penalty if the violation is
corrected within 30 to 90 days.  However, an Administrator with New
Jersey's Department of Environmental Protection said that controversy
has arisen about the definition of a "minor" violation, and the
agency is still attempting to draft regulations defining this term. 
Concerns have been raised too that amnesty programs allow the state
agency to be "too soft on polluters." For example, the Florida
Department of Environmental Protection (FDEP) had its inspectors
apply a "root cause analysis" to determine why incidents of
noncompliance occurred.  For example, the facility may have
deliberately violated the regulations.  On the other hand, the
violation may have been accidental or the facility may have been
legitimately ignorant of the environmental requirements.  Rather than
taking enforcement actions against a facility, in some cases, the
staff from FDEP worked with the facility to determine the cause of
the violation in hopes of avoiding similar violations in the future. 
The local media began writing articles that suggested the agency was
not taking strong enough action against the violators.\5


--------------------
\5 Chapter 3 discusses EPA's reaction to the growing number of state
amnesty programs. 


      FOLLOW-UP STRATEGIES HELP
      ENSURE FACILITIES'
      PARTICIPATION
-------------------------------------------------------- Chapter 2:1.3

Many state officials pointed out to us that if the participants in
their alternative compliance programs know that the state may follow
up to ascertain their future compliance status, they have a greater
incentive to participate in the program and implement any necessary
actions.  Accordingly, these officials often spoke of the
desirability of incorporating follow-up strategies into their
compliance assistance and flexible enforcement programs. 

Most of the compliance assistance and amnesty programs we examined
did in fact include some type of follow-up strategy.  For example, in
Washington's Snapshots Program, Department of Ecology inspectors
identify areas that the facility needs to address and subsequently
apply a follow-up strategy consisting of three alternative courses of
action, depending upon the violations found during the inspection. 
The facilities that did not have any major concerns received a letter
expressing appreciation for their participation in the program.  The
facilities with fairly minor violations received a letter that
similarly thanked them for participating, but which also (1) reminded
them of outstanding issues at their facilities that needed to be
corrected and (2) listed contacts for further technical assistance if
needed.  More intense follow-up was performed at those facilities
with serious violations.  The facilities first received a Certificate
of Completion asking them if the violations had been corrected. 
Follow-up visits were conducted at those sites that did not respond
to the certificate and those that indicated a major violation had not
been corrected.  Those facilities with continuing violations were
asked to prepare a plan to address them.  Noncompliers were referred
to Department of Ecology field offices for potential inspections in
the future. 

Under Delaware's "Gray Hat" Inspection Program, inspectors
systematically follow up to ensure that violators that were provided
amnesty correct identified problems in a timely fashion.  If
inspectors discover a violation during an inspection, they have the
discretion to not fine the facility, but instead to note the
violation and give the facility a specified amount of time to correct
it.\14 If the violation has not been corrected before the state
inspector's follow-up visit, the inspector is supposed to take an
enforcement action against the facility. 

Massachusetts officials cited significant benefits in following up
with participants in their Environmental Results Program, but they
also identified an inherent problem with the practice--the
considerable resources often needed to conduct follow-up.  MDEP's
comparison of "before" and "after" inspections of participating
facilities showed a post-certification compliance rate of 78
percent--a significant improvement over the pre-certification rate of
33 percent and the average statewide industrial compliance rate of 42
percent.  Improvements were noted across the board, both in meeting
new standards created by the Environmental Results Program and in
complying with long-standing regulatory requirements, such as
hazardous waste management standards. 


--------------------
\14 This policy applies only to inspections under the Resources
Conservation and Recovery Act.  It does not apply in the case of
criminal violation or violations that immediately threaten human
health and the environment. 


   STATES ARE BEGINNING TO FOCUS
   ON PERFORMANCE MEASUREMENT FOR
   ENFORCEMENT PROGRAMS
---------------------------------------------------------- Chapter 2:2

A few of the states we contacted have undertaken efforts to measure
the effects of their alternative compliance strategies, hoping to
gauge whether these programs were achieving their objectives.  Few
states, however, were able to determine whether their programs
actually resulted in improved compliance or a cleaner environment. 
State officials cited a variety of problems impeding their
measurement efforts, such as the absence of the historical data
necessary for such a comparison, the difficulty in establishing
causal links between a program activity and a desired outcome, and
the significant resources needed to gather and analyze key data. 
They noted, however, that an increased focus on performance
measurement for states participating in NEPPS may help to overcome
some of these barriers. 


      REASONS FOR INCREASED
      INTEREST IN RESULTS-ORIENTED
      PERFORMANCE MEASUREMENT
-------------------------------------------------------- Chapter 2:2.1

State officials we contacted agreed on the importance of measuring
the results of their compliance efforts and offered a number of
reasons for their increased efforts to measure the effects of their
alternative compliance strategies.  Enforcement officials in some
states said that accountability to the public and the media was an
especially important driving force behind their measurement
initiatives.  In Florida, for example, both the number of penalties
assessed and dollar value of penalties collected under its federally
delegated programs decreased from 1994 to 1996.  According to Florida
officials, this decrease resulted, in part, from a greater emphasis
on the use of assistance to achieve compliance.  Newspapers in the
state subsequently published articles questioning whether the
Department was letting violators continue to pollute unpunished. 
Florida officials told us they expect that performance measures
focused on the results of its enforcement and compliance assistance
efforts will demonstrate whether these concerns are accurate, while
also informing the state where its resources are needed most.  The
Texas Natural Resources Conservation Commission faced similar
criticisms of its enforcement record and hopes that its use of the
core performance measures and the reports required by
performance-based budgeting will respond to these criticisms.  A
Pennsylvania Department of Environmental Protection official said
that EPA and the media had criticized the department over a strong
downward trend in the amount of penalties collected from violators. 
He anticipated that improved performance measures would help the
state to quantify the positive effects achieved by its new emphasis
on compliance assistance activities. 

In some cases, state officials pointed to a broader state government
focus on results as a contributing factor that encouraged
results-oriented measurement in the environmental enforcement
program.  Texas officials, for example, said that the state
legislature's requirement that state agencies use performance-based
budgeting in developing their annual budget requests led the Texas
Natural Resources and Conservation Commission to develop performance
measures for its programs.  FDEP officials explained that their
Secretary asked the department to begin to measure the results of its
programs, including enforcement, after the department was formed from
the merger of two other state agencies, hoping to target the new
agency's resources to the programs that needed them most. 

State officials also cited their increased use of performance
measurement as a response to encouragement from EPA.  Specifically,
the agency has periodically questioned whether states are able to
achieve the same or better results with alternative strategies in
comparison with traditional enforcement techniques.  One notable
example involves the Washington State Department of Agriculture. 
Officials in EPA's Seattle regional office recently cited a sharp
reduction in the number of enforcement actions as evidence that the
state's pesticide enforcement program had weakened.\7 Washington
responded that its technical assistance efforts have increased
compliance and therefore have reduced the need for the state to use
enforcement.  However, EPA remained unconvinced in the absence of
hard data supporting the claim, noting in its February 1998 report on
the matter that

     "until EPA is assured through comprehensive compliance data that
     technical assistance results in compliance comparable to
     traditional enforcement, EPA will require that enforcement
     efforts be maintained."

EPA's Seattle office committed to working with Washington to "develop
performance measures beyond traditional enforcement accounting which
better show the rate of compliance."

EPA has also expressed similar concerns about declining enforcement
numbers on the basis of nationwide trends.  Specifically, the agency
has noted that states as a whole reported taking 17 percent fewer
formal enforcement actions in 1996 than in 1994.\8

Finally, other key EPA initiatives, most notably the National
Environmental Performance Partnership System, call for the
participating states to focus on meaningful performance measurement. 
In negotiating Performance Partnership Agreements, states and EPA
include performance measures for the states' objectives, including
performance measures for the states' enforcement efforts. 


--------------------
\7 Specifically, EPA's Seattle office noted that the number of the
Washington State Department of Agriculture's pesticides-related
enforcement actions dropped from 168 actions in fiscal year 1996 to
59 actions in fiscal year 1997. 

\8 EPA's concerns about recent trends in states' enforcement actions
are discussed in detail in chapter 3. 


      TIERED APPROACH TO
      RESULTS-ORIENTED PERFORMANCE
      MEASUREMENT
-------------------------------------------------------- Chapter 2:2.2

States and EPA recognized that measuring the results of these new
programs meant moving beyond counting the number of actions taken to
evaluating their actual effect on the regulated community and the
environment.  In response, they are starting to use new forms of
performance measurement.  EPA and the Environmental Council of the
States developed a tiered approach, illustrated in table 2.2, to
better account for program results.  EPA will use this approach in
judging the performance of its own enforcement programs, and states
negotiating a Performance Partnership Agreement with EPA are expected
to select appropriate performance measures from the three tiers. 



                               Table 2.2
                
                Categories of Environmental Performance
                              Measurement

                              Characterist
Measure\a                     ic            Examples      Purpose
----------------------------  ------------  ------------  ------------
Output                        Numbers of    Number of     Demonstrates
                              actions       penalty       level of
                                            dollars       activity;
                                            collected;    demonstrates
                                            number of     how
                                            violations    resources
                                            discovered    are used

Outcome                       Results       Percent of    Demonstrates
                              associated    facilities    results of
                              with a        in            specific
                              particular    environmenta  initiatives
                              policy        l compliance  or policies

Environmental indicator       Indicators    Trend in      Demonstrates
                              associated    number of     whether
                              with overall  bodies of     overall,
                              program       water         long-term
                              objectives    meeting       agency
                                            clean water   objectives
                                            standards     are being
                                                          achieved
----------------------------------------------------------------------
\a In its efforts to develop overall performance measures for the
Government Performance and Results Act (GPRA), EPA uses slightly
different terms:  "outputs," "intermediate outcomes," and "long-term
outcomes." The Office of Management and Budget in its guide to
implementing GPRA distinguishes between "output goals," and "outcome
goals" and calls on federal agencies to measure progress toward both. 
Other experts in the field of government performance measurement
labeled the three tiers "outputs," "policy or behavioral outcomes,"
and "program outcomes." See for example, Malcolm Sparrow,,
"Regulatory Agencies, Searching for Performance Measures That Count,"
and John M.  Greiner, "Positioning Performance Measurement for the
Twenty-first Century," Organization Performance and Measurement in
the Public Sector, Quorum Books, 1996. 

Using a combination of these measures, environmental agencies can
report information about the effectiveness of their programs.  They
have traditionally focused on measuring outputs, such as the number
of inspections conducted and enforcement actions taken.  These
actions are easiest to count and they provide a useful measure of the
level of agency activity and resources devoted to enforcement and
compliance programs.  GAO's 1997 report on performance measurement
also found that outputs are sometimes appropriate performance
measures, stating that "output measures such as the number of
inspections conducted can be used when studies exist to demonstrate
their relationship to the results that agencies are attempting to
accomplish."\9 Measuring outcomes, such as the degree of regulatory
compliance, is more difficult but provides information on whether the
goals of the regulatory program are being achieved.  Environmental
indicators reflect the ultimate goals of the program--the extent to
which the overall mission of a cleaner environment is being achieved. 


--------------------
\9 Managing for Results:  Regulatory Agencies Identified Significant
Barriers to Focusing on Results (GAO/GGD-97-83, June 24, 1997). 


      MEASURING RESULTS HAS PROVEN
      TO BE SUBSTANTIALLY MORE
      DIFFICULT THAN MEASURING
      OUTPUTS
-------------------------------------------------------- Chapter 2:2.3

Despite the acknowledged benefits of measuring program results and
the availability of new approaches, several states we contacted still
relied primarily on outputs when evaluating their traditional and
alternative enforcement programs.  Outputs, by their nature, are
inherently easier to measure, report, and understand than outcomes
and environmental results.  In fact, one expert in the field of
performance measurement notes that EPA and others may be

     "tempted to lurch back to the enforcement numbers game; partly
     because it seems to be the only game their audience understands,
     and partly because counting enforcement actions is so much
     simpler than trying to deal with the complexities of measuring
     outcomes or impacts."\10

EPA does, in fact, already require delegated states to periodically
report such output measures as the number of inspections conducted,
the number of significant violations detected, and how violations are
handled.  States generally have the data systems in place to record
and report these kinds of output measures. 

Officials in each of the states visited readily acknowledged the
relative ease of collecting this type of information.  However, they
also emphasized the limited usefulness of these data for both
traditional and alternative enforcement programs.  For example, one
OECA official pointed out that a decrease in the number of reported
violations detected could be interpreted in two very different ways: 
It could indicate that fewer facilities are violating environmental
laws, or simply that the state is performing fewer inspections. 
Similarly, some state officials pointed out that counting the number
of businesses contacted through a compliance assistance program does
not demonstrate whether compliance is improving or deteriorating, nor
does it allow states to report information about their alternative
compliance programs. 

A few states we contacted had begun to address these issues and were
able to cite compliance rates in certain facilities, or trends in
environmental indicators.  For example, Florida officials reported in
October 1997 that 84 percent of petroleum and hazardous substance
storage tank facilities selected through random inspections were in
compliance with regulations.  Through subsequent quarterly reports,
FDEP will be able to measure trends in compliance rates.  Similarly,
after following up with violators participating in Washington's
Snapshots Program, state officials were able to determine that 80
percent of participants had corrected the waste management problems
identified in the initial visit. 

Nevertheless, measuring outcomes and environmental impacts associated
with new compliance strategies has proven to be difficult.  Even
these relatively advanced efforts were unable to measure the precise
impacts a given regulatory strategy may have had on a desired result. 
As the following section describes, part of the problem is explained
by a number of barriers impeding states' measurement efforts.  Part
of the problem, however, reflects the inherent limitations in
performing this type of analysis.  These limitations suggest that
while better performance measurement is necessary, expectations for
performance measurement should recognize that some challenges will be
difficult to overcome. 


--------------------
\10 Malcolm Sparrow, "Regulatory Agencies, Searching for Performance
Measures That Count," June 9, 1997. 


      BARRIERS TO MEASURING THE
      RESULTS OF ENFORCEMENT
      PROGRAMS
-------------------------------------------------------- Chapter 2:2.4

While some progress has been made in results-oriented performance
measurement and some creative and fruitful experiments have been
pursued, state officials we contacted consistently cited several key
barriers that will need to be overcome before states can successfully
focus measurement on desired results.  These include (1) an absence
of baseline performance data for both traditional and alternative
strategies, (2) the inaccessibility of key data to evaluate programs'
success, (3) the inherent difficulty in quantifying certain results,
(4) the difficulty in linking enforcement strategies to environmental
results, and (5) the considerable resources needed for high-quality
performance measurement. 


         LACK OF BASELINE
         INFORMATION
------------------------------------------------------ Chapter 2:2.4.1

Officials from each of the five states visited agreed with the
statement that "baseline compliance data are not available or not
comparable with new data" and that this lack poses a key barrier to
measuring the performance of their alternative compliance strategies. 
Because states and EPA have compliance information typically only for
the larger, more significant facilities, they have not measured the
extent to which all regulated facilities have complied with
environmental laws.  Both the identified universe of regulated
facilities and the potential universe (facilities that should obtain
permits or authorization, but have not) are much larger than states
have resources to routinely inspect and gather compliance information
from.  Data are especially scarce for small businesses that
historically received few inspections.  Without such data, state
programs that are just now attempting to measure results will have no
past data with which to compare them.  For example, Florida officials
said that their environmental reports will generally have a baseline
of 1997 or 1998, since past information is unavailable or unreliable. 

The absence of adequate baseline data for comparison is, in fact, a
common problem among many organizations engaged in performance
measurement, including federal agencies.  Indeed, our own work on
performance measurement at the federal level indicates that federal
agencies frequently need to build entirely new data systems and ways
of collecting data because the old systems are of no use in analyzing
programs' performances.\11 Similarly, one expert noted that
regulatory agencies such as EPA have typically "not yet devised the
measurement, recording, or reporting systems necessary to dethrone
the enforcement statistics in the minds of their audience. 
Consequently, these agencies find themselves held hostage by their
own reporting traditions."\12


--------------------
\11 Executive Guide:  Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1, 1996). 

\12 Malcolm Sparrow, "Regulatory Agencies, Searching for Performance
Measures That Count," June 9, 1997. 


         NECESSARY DATA ARE
         INACCESSIBLE
------------------------------------------------------ Chapter 2:2.4.2

As some of the ongoing state experiments discussed above illustrate,
generating relevant and accurate data is a challenge under the best
of circumstances.  We found that certain characteristics of some of
the states' alternative programs may further complicate performance
measurement by inhibiting state officials from obtaining the data
needed to evaluate the programs' success.  For example, audit
privilege laws, such as those in Texas and Colorado, prevent the
state from reviewing the information in environmental audits.  As a
consequence, these states can only confirm that a facility conducted
an audit, or that it discovered or corrected a violation, if the
facility chooses to reveal that information.  These states have
summary information about the numbers of facilities that revealed
violations in order to obtain immunity from enforcement, the nature
of these violations, and how they were corrected.  However, they
cannot, for example, obtain any broader information about violations
that facilities chose not to disclose, or the effectiveness of the
privilege law in improving compliance.\13 The Illinois audit
privilege law does not provide immunity to facilities that disclose
and correct violations.  Thus, a facility may have little incentive
to report that it has completed an audit.  The facility, however, is
required to report any noncompliance to the state in accordance with
the applicable statutory and regulatory requirements. 

In addition, results-oriented performance measurement often requires
an up-front commitment to follow up with participants to determine
the effect on compliance.  States that did not include such a
follow-up component have generally had a difficult time measuring
outcomes.  For example, officials associated with New Jersey's
Environmental Management Assistance Program were able to determine
the number of participants receiving assistance from the state but
not whether this program has improved compliance with environmental
regulations.  Similarly, officials associated with Illinois' Clean
Break Program said that they often answered technical questions about
correcting violations at the seminars they conducted for small
businesses but had no way of documenting any resulting improvement in
environmental management practices. 


--------------------
\13 A planned study may shed some light on the overall consequences
of states' audit laws and policies.  EPA awarded the National
Conference of State Legislatures a grant to evaluate the effects of
the voluntary environmental audit privilege and immunity legislation
enacted in 19 states and of environmental audit policies adopted in 3
states.  While the evaluation will not specifically address the
outcomes associated with these audits, it will attempt to shed light
on whether more and better audits are resulting from these laws and
policies and any differences in the number and quality of audits in
states with laws as compared with states with policies.  The
Conference will also identify six states that have never had audit
laws to use as a control group for comparison purposes. 


         DIFFICULTY OF QUANTIFYING
         OUTCOMES
------------------------------------------------------ Chapter 2:2.4.3

Officials in each of the five states we visited agreed that "program
results are difficult to quantify"; some added that quantifying
compliance rates and other outcomes of enforcement programs often
sounds easier to do than it is.  Officials from the five states said
they wrestled with the issue of how to define a compliance rate and
then with how to calculate it.  A Texas Natural Resources
Conservation Commission official expressed concern that each state
will end up quantifying results differently. 

One expert also cites the complexity of measuring compliance rates,
noting that to be statistically valid, they must result from a
random, representative, or comprehensive sample of the relevant
industry or population.  He further adds that

     "Few agencies can produce such compliance measures, because most
     available compliance figures result from inspection programs
     which are focused or targeted on known or suspected risks, and
     which therefore produce biased estimates of underlying
     compliance rates.  Dealing with this problem necessitates the
     diversion of resources from focused inspection programs into
     random sampling, for the sake of measurement--which has always
     been (and remains) notoriously difficult."\14

Nonetheless, FDEP undertook such an effort in 1996, noting that
calculating accurate compliance rates was an important part of their
effort to focus programs on achieving desired outcomes.  FDEP
officials said they had to change their data systems and distinguish
between the different types of regulatory inspections the agency
conducts to produce the representative sample of inspections
necessary to calculate a compliance rate for different industry
sectors.  They noted that the agency had typically conducted some
inspections because officials suspect a violation exists--and that
including these inspections of known "bad actors" in calculating a
compliance rate could artificially inflate the percentage of
noncompliers detected.\15 Consequently, FDEP now includes only
results from facilities that were randomly selected and excludes from
its compliance rate calculations those "targeted" at suspected
violators.  According to FDEP officials, this practice required
training inspectors to place different types of information in the
department's data system, distinguish between types of inspections,
and use a common definition of significant compliance. 

FDEP released its first report on compliance rates and other outcomes
in October 1997 and plans to build on this information in future
quarterly reports and use the information as a basis for negotiating
its Performance Partnership Agreement with EPA's Atlanta office.  A
senior OECA official said that EPA too has experienced difficulty in
attempting to measure compliance rates, citing in particular the
significant resources and planning necessary to develop them
successfully. 


--------------------
\14 Malcolm Sparrow, "Regulatory Agencies, Searching for Performance
Measures That Count," June 9, 1997. 

\15 In certain programs, like the National Pollutant Discharge
Elimination System, for example, states receive compliance
information regularly on all permitted facilities.  In these
programs, a compliance rate is easier to calculate because the state
can include the entire universe of facilities, rather than taking a
sample. 


         LINKING ENFORCEMENT
         STRATEGIES TO
         ENVIRONMENTAL RESULTS
------------------------------------------------------ Chapter 2:2.4.4

Ideally, agency officials would be able to link their alternative
compliance programs' direction to changes in compliance rates and
environmental conditions.  But as we noted in a 1997 report on the
complexities associated with performance measurement, "Separating the
impact of [a] program from the impact of other factors external to
the program was cited by government agency officials as the most
difficult challenge in analyzing and reporting government
performance."\16 These sentiments were also expressed at an
EPA-sponsored meeting in July 1997 on compliance assistance, in which
state and EPA officials agreed that distinguishing between the
effects that their programs and other enforcement programs had on
environmental indicators was difficult and counterproductive. 

While the states we visited had efforts under way to improve the
measurement of environmental indicators (i.e., quality of air and
water), only Massachusetts attempted to determine whether changes in
these environmental indicators could be linked to specific
alternative compliance strategies.  For approximately 2 years,
Massachusetts has been measuring and evaluating the environmental
results of the state's Environmental Results Program by using
"environmental business practice indicators," compliance inspection
findings, and data reported on self-certification forms. 
Environmental business practice indicators are essentially
industry-specific performance practices that provide a snapshot of a
facility's environmental performance.  These practices, if followed,
reflect a facility's level of environmental performance, including
both traditional regulatory standards and "beyond compliance"
measures.  Examples of such indicators are the proper storage of
hazardous waste and the education of consumers about "environmentally
friendly" products. 

Each of the five states we visited agreed with the statement that "it
is difficult to link program activities to results." Even in the case
of Florida's significant commitment to measuring compliance rates and
environmental indicators, noted above, regulators made a conscious
decision not to link their enforcement programs with trends in
environmental indicators or outcomes like compliance rates.  They
explained that the causes of these trends are subject to other
influences outside the Department's control, such as the state of the
economy, the weather, and other departmental actions besides
enforcement.  FDEP's consultant agreed, noting that

"If and when the scallop population in Tampa Bay is restored to
healthy levels, Florida's Department of Environmental Protection .  . 
.  would be hard pressed to prove beyond doubt that their
interventions actually produced this result, no matter how compelling
their scientific analyses and explanations."\17

He added that regulatory agencies should not feel obligated to prove
causality.  Rather, "They should be content to demonstrate publicly
their ability to focus on specific risks, to design and implement
creative solutions, and to determine when the risk has abated
sufficiently to permit them to move on to other priorities."


--------------------
\16 Managing for Results:  Analytic Challenges in Measuring
Performance (GAO/HEHS/GGD-97-138, May 30, 1997). 

\17 Malcolm Sparrow, "Regulatory Agencies, Searching for Performance
Measures That Count," June 9, 1997. 


         RESOURCE CONSTRAINTS
------------------------------------------------------ Chapter 2:2.4.5

A final barrier, which essentially flows from the others identified
above, relates to the significant resources and expertise required to
gather and analyze the data needed to do quality performance
measurement.  FDEP, for example, hired a consultant to assist in the
effort and dedicated several staff to its efforts to develop and
implement its new measurement system.  Officials from other states,
agreed that it is difficult to make such a resource commitment while
still meeting other program requirements. 

Even monitoring the results of an individual program, such as
Massachusetts' Environmental Results Program, can also require
considerable resources.  While only 18 companies participated in the
pilot, the Deputy Commissioner said that the agency had to invest a
great deal of time and energy to work with the facilities and measure
the ultimate results.  He added that these efforts would be difficult
to duplicate as additional facilities participate in the program. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 2:3

States' recent efforts to focus their enforcement programs on
environmental compliance represent a significant departure from past
enforcement strategies.  Past efforts focused on the largest sources
of pollution and relied on the government to detect violations. 
States we reviewed now say that, while it is still important to pay
attention to large facilities, achieving additional environmental
improvement requires bringing the much greater number of smaller
facilities into compliance.  To do so effectively, they say, requires
solutions that supplement the deterrent effect of enforcement with
opportunities for voluntary compliance.  Toward that end, states we
reviewed had implemented a number of promising programs to reach
facilities seldom reached through traditional enforcement.  They
pointed to several factors that they expect to contribute to their
success, including working with local business associations in
developing the programs and using follow-up strategies to encourage
compliance and measure the results of the programs. 

These alternative strategies have sometimes raised concerns among
affected communities, the media, some regulators, and other
interested parties, particularly to the extent that they offer
amnesty or other forms of flexible enforcement to violators.  States
have responded with efforts to measure their new strategies'
effectiveness but are facing significant challenges in producing the
kind of performance measurement that can convincingly demonstrate the
efficacy of their approaches. 

Some of these challenges, such as the difficulty in developing causal
links between program activities and environmental indicators, will
be difficult to address.  States have found other barriers
challenging but solvable, if sufficient effort and resources are
brought to bear on them.  Especially promising are commitments to
include performance measures in Performance Partnership Agreements
between states and EPA.  As we discuss in the following chapter,
there may be a role for EPA in helping states deal with these
problems--a role made all the more appropriate by EPA's belief that
states should demonstrate the efficacy of their alternative
strategies (particularly strategies employing flexible enforcement)
if they are to rely upon them to achieve compliance. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 2:4

EPA's letter responding to a draft of this report included several
comments on material in this chapter.  (App.  IV contains the text of
EPA's letter and our response.) The letter states that "several
critical assumptions about the state of enforcement and compliance
assurance seem to be accepted without challenge," in particular
whether large facilities have improved compliance as a result of past
enforcement actions and whether alternative approaches are more
appropriate for small facilities.  The letter cites several passages
in the chapter of particular concern.  We attributed these statements
to state officials who offered them to explain why they had adopted
alternative approaches as a supplement to enforcement.  We obtained
similar opinions and information in our interviews with EPA staff. 
In addition, some of the passages cited in the EPA letter were
paraphrased in a manner that made them appear more sweeping than they
were as presented in our draft report.  For example, the letter
quoted the report as stating "conventional enforcement approaches are
ineffective with small facilities." The actual passage stated that
"State officials told us that conventional enforcement approaches
were often ineffective with these smaller facilities."

The letter asserts that the draft report did not reflect the
deterrence value of enforcement in promoting compliance.  It states,
"the report provides no discussion of the fundamental concept that
enforcement actions protect the environment and public health by
deterring violations of pollution standards, and by requiring those
who do violate the law to return to compliance." The report, however,
was intended to describe alternative approaches to enforcement in 10
states, and therefore we did not reiterate our past acknowledgement
of the value of enforcement in achieving compliance through
deterrence.  Nevertheless, the report did explicitly convey EPA's
position on this issue.  It cited, for example, the position of EPA's
Assistant Administrator for Enforcement and Compliance Assurance that
"enforcement is the mechanism that makes compliance assistance work,
deters future violations and ensures a level playing field for those
who comply." The draft executive summary noted that "the emphasis on
inspections and enforcement action is necessary to deter
noncompliance and prevent violators from gaining economic advantage
by violating environmental laws." We added language offered by EPA to
further expand on the importance the agency attaches to the
deterrence value of an effective enforcement program. 

The letter states that the report contained inaccurate information
about some state audit privilege and immunity laws.  The report
provides an overview of this issue by setting forth the general
characteristics of these laws.  Therefore, in some cases we did not
describe the details of how each state's law varied from this
overview.  Nevertheless, as EPA suggested, we did add information on
the scope of privilege accorded information in an audit and the
requirements for audits and distinguished between those laws that
required that a violation be revealed in order for immunity or
privilege to apply and those laws without such a requirement. 

Finally, in connection with states' amnesty programs, the letter
suggests that the report should distinguish between policies that
provide state officials with enforcement discretion versus laws that
remove the ability of these officials to take enforcement action
under certain circumstances.  We provide examples of both types of
programs in chapter 2.  New Jersey's Quick Compliance Law is an
example of the latter, while Illinois' Clean Break Program is the
former.  In addition, chapter 3 describes EPA's legal concerns about
amnesty laws, citing EPA's particular concerns about Washington's
amnesty law. 


EPA NEEDS A CLEARER AND MORE
CONSISTENT RESPONSE TO ALTERNATIVE
STATE COMPLIANCE STRATEGIES
============================================================ Chapter 3

Since 1994, EPA has led a number of efforts to encourage the use of
alternative compliance strategies, including establishing compliance
assistance centers for several industries, working with states and
other interested parties to develop results-oriented measures, and
encouraging regulated entities to voluntarily discover, disclose, and
correct violations through environmental auditing.  EPA's senior
leadership has underscored on numerous occasions, however, that these
compliance assistance initiatives are intended to supplement--not
replace--a strong enforcement program.  The agency's legal and policy
concerns about a possible weakening of enforcement has led it to
react critically to a number of state initiatives, such as several
states' audit privilege/ immunity laws.  EPA is also concerned about
"amnesty" programs, which, as discussed in the previous chapter,
generally allow facilities additional time to correct violations and
return to compliance before enforcement actions are taken.  The
agency also asked its regions to reverse what it believed to be an
unacceptable drop in the numbers of enforcement actions by states in
their jurisdiction. 

To some extent, the differences that have arisen between EPA and
state regulatory authorities over these state initiatives,
particularly those providing for flexible enforcement, reflect
different legal and policy judgments about what constitutes adequate
enforcement under federal environmental law and about the appropriate
role of federal and state government in deciding how environmental
compliance can best be ensured.  Yet while these issues will continue
to be the subject of debate in coming years, broad agreement already
exists among concerned parties on the desirability of moving toward a
system that (1) focuses more on achieving desired outcomes through a
combination of compliance assistance activities and conventional
enforcement and (2) systematically measures progress on how well
these outcomes are being achieved.  Toward this end, our work
suggests that EPA should be doing more to (1) facilitate states'
efforts to develop effective program measures and (2) provide greater
consistency in what has become a fragmented and inconsistent message,
as conveyed by different EPA offices in a decentralized organization,
on states' efforts to employ a wider array of tools in achieving
environmental compliance. 


   EPA VIEWS ALTERNATIVE
   STRATEGIES AS SUPPLEMENTS TO
   CONVENTIONAL ENFORCEMENT
---------------------------------------------------------- Chapter 3:1

EPA's creation in 1994 of its Office of Enforcement and Compliance
Assurance clearly reflected the agency's efforts to use new
strategies to encourage and facilitate compliance as supplements
to--not a replacement of--its long-standing focus on traditional
enforcement activities.  On the one hand, the Office is charged with
developing ways to assist the regulated community and encourage
voluntary compliance with regulations.  On the other hand, OECA
officials emphasize that EPA is still charged with applying powerful
sanctions, as necessary, to compel compliance by the regulated
community. 


      EPA'S EFFORTS TO ENCOURAGE
      THE USE OF ALTERNATIVE
      COMPLIANCE STRATEGIES
-------------------------------------------------------- Chapter 3:1.1

EPA has initiated a number of activities in recent years that are
intended to help bring facilities into voluntary compliance--thereby
alleviating the need to respond to violations exclusively by means of
traditional enforcement action.  Some of these activities are carried
out at the federal level and are viewed as a part of EPA's own
enforcement program.  Others bear more directly on state enforcement
programs.  Key activities include (1) establishing compliance
assistance centers; (2) encouraging regulated entities to voluntarily
discover, disclose, and correct violations through environmental
auditing; and (3) developing results-oriented measures. 


         COMPLIANCE ASSISTANCE
         CENTERS AND RELATED
         INITIATIVES
------------------------------------------------------ Chapter 3:1.1.1

At the federal level, EPA has to date established compliance
assistance centers for four industry sectors--printing, automotive
service and repair, metal finishing, and agriculture.  These function
as communication centers and serve sectors with a large number of
companies, particularly a large number of small companies.  The
ultimate goal of the centers is to provide small businesses with an
understanding of their specific environmental requirements and
encourage them to take appropriate steps to improve their compliance
status.  Each center provides services through the Internet or via
telephone, fax, and mail.  Because of the high rate of interest in
these centers, EPA is developing new ones to assist chemical
manufacturers, municipal/local governments, transportation, and
printed wiring board manufacturers. 

EPA has also developed a number of policies that give incentives to
the regulated community to comply with environmental laws--especially
in the case of small businesses and small communities.  For example,
EPA officials said the agency worked collaboratively with various
stakeholder groups, including states, to develop its Policy on
Compliance Incentives for Small Businesses.  The final version of
this policy was effective in June 1996, and along with this policy,
EPA has also issued guidance to help states and local governments
offer these incentives.  Under certain circumstances, this policy
provides penalty relief for those small businesses that are not
repeat violators under the policy and that make a good faith effort
to comply with environmental regulations by using on-site compliance
assistance or by conducting an environmental audit and promptly
disclosing and correcting any violations that may be identified. 
This policy does not apply if the violation is caused by criminal
conduct or has caused actual serious harm or imminent and substantial
endangerment to public health or the environment. 

EPA provided compliance incentives to small communities through its
November 1995 Policy on Flexible State Enforcement Responses to Small
Community Violations.  This policy encourages states to establish
small community environmental compliance assistance programs that
provide flexible enforcement responses to small communities making
good faith efforts to comply with environmental mandates.  It
describes the circumstances in which EPA will defer to a state's
decision to place a small community on an enforceable compliance
agreement that provides for timely compliance with all applicable
environmental mandates.  Under the policy, states can allow small
communities to set priorities among competing environmental mandates
on the basis of comparative risk, and EPA will defer to the state's
decision to waive part or all of the noncompliance penalty. 

In addition, EPA has launched a number of initiatives that, while not
focused specifically on providing compliance assistance, are intended
to offer participants the opportunity to experiment with innovative
ways to improve compliance more efficiently and effectively.  For
example: 

  -- The Common Sense Initiative (CSI) focuses on improving
     environmental regulations for six industrial sectors:  iron and
     steel, electronics and computers, metal plating and finishing,
     auto assembly, petroleum refining, and printing.  For each
     sector, EPA convenes high-level teams composed of industry
     executives, environmental leaders, government officials, and
     labor and environmental justice representatives.  OECA is
     represented on every sector's team. 

  -- Project XL allows individual 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. 

  -- The Environmental Leadership Program provides public recognition
     and certain other benefits to facilities demonstrating strong
     commitments to continued compliance and efforts to go "beyond
     compliance." Among the requirements for participation are that a
     company have an auditing program, establish community outreach
     and employee involvement programs, and undertake innovative
     environmental enhancement activities. 


         POLICY TO ENCOURAGE
         ENVIRONMENTAL AUDITING
------------------------------------------------------ Chapter 3:1.1.2

Chapter 2 discussed a number of states' efforts to encourage
environmental auditing by regulated facilities as a way of
discovering, disclosing, correcting, and preventing violations.  EPA
has similarly encouraged environmental auditing--but has done so as a
matter of policy and has not pursued statutory change, as have many
states.  Specifically, in collaboration with various stakeholder
groups, EPA developed a policy entitled "Incentives for
Self-Policing:  Discovery, Disclosure, Correction and Prevention of
Violations." This policy, which was effective in January 1997, states
that where violations are found through voluntary environmental
audits or efforts that reflect a regulated entity's due diligence\1
and are promptly disclosed and expeditiously corrected, EPA will not
seek gravity-based penalties\2 and will generally not recommend
criminal prosecution against a regulated entity.  EPA will reduce
gravity-based penalties by 75 percent for violations that are
voluntarily discovered and are promptly disclosed and corrected, even
if they were not found through a formal audit or due diligence. 
Under this policy, EPA retains its discretion to recover economic
benefit gained as a result of noncompliance so that companies will
not obtain an economic advantage over their competitors by delaying
their investment in compliance.  Finally, the policy restates EPA's
policy and practice to refrain from making routine requests for
environmental audit reports.  As of October 30, 1997, under this
policy, more than 225 companies have disclosed and corrected
environmental violations at more than 700 facilities. 


--------------------
\1 According to EPA's policy, "due diligence" encompasses the
regulated entity's systematic efforts, appropriate to the size and
nature of its business, to prevent, detect, and correct violations
through various means, including (1) compliance policies, standards,
and procedures that identify how employees and agents are to meet the
requirements of laws, regulations, permits, and other sources of
authority for environmental requirements; (2) assignment of overall
responsibility for overseeing compliance with policies, standards,
and procedures, and assignment of specific responsibility for
ensuring compliance with each facility or operation; and (3)
procedures for the prompt and appropriate correction of any
violations, and any necessary modifications to the regulated entity's
program to prevent future violations. 

\2 Gravity-based penalties generally reflect the seriousness of the
violator's behavior and are that portion of a penalty over and above
the economic benefit, i.e., the punitive portion of the penalty,
rather than that portion representing a defendant's economic gain
from noncompliance. 


         EPA EFFORTS TO DEVELOP
         MEASURES THAT FOCUS ON
         RESULTS
------------------------------------------------------ Chapter 3:1.1.3

Environmental statutes require EPA to ensure that minimum standards
are maintained for states' enforcement programs, and EPA's policy
requires the agency to ensure that such standards are maintained for
the nation's overall environmental quality.  As part of this
commitment, the agency maintains that states should be able to
measure and report on the success of alternative compliance
strategies to ensure that these minimum standards of protection are
not compromised.  As discussed in chapter 2, most of the measures in
use today are "output" measures of traditional enforcement
activities, such as number of inspections performed or amount of
penalties assessed.  EPA officials note that the agency is involved
in a number of efforts to develop results-oriented performance
measures that, among other things, are intended to better capture the
impact of compliance assistance and incentive strategies. 

Through the National Environmental Performance Partnership System
(NEPPS), signed by the EPA Administrator and state environmental
leaders on May 17, 1995, EPA has been encouraging the use of
performance measures.  NEPPS is designed to give states with strong
environmental programs more leeway in setting environmental
priorities, designing new strategies, and managing their own
programs, while concentrating EPA's oversight and technical
assistance on weaker programs.  The major components of the program
include increased use of environmental goals and indicators, state
assessments of environmental and program performance, and the
negotiation between EPA and states of Performance Partnership
Agreements.  As mentioned in chapter 1, through the negotiation of
Performance Partnership Agreements, states and EPA negotiate
performance measures for environmental objectives, including
performance measures for a state's enforcement efforts.  These
performance measures will likely include many of the recommended core
performance measures that EPA has negotiated separately with the
Environmental Council of the States (ECOS). 

EPA has also spent considerable time and energy in developing its
National Performance Measures Strategy (NPMS), released in December
1997.\3 While this strategy applies only to measures of EPA
enforcement, its influence may extend to state enforcement.  In fact,
EPA sought broad involvement by states and other stakeholders in
developing the strategy.  NPMS was initiated in response to the need
to develop an enhanced set of performance measures for EPA's
enforcement and compliance assurance program.  The strategy was
developed, in part, to recognize that traditional output-based
measures do not capture the impact of compliance assistance and
incentive-based approaches. 

The measures developed through the NPMS are to be incorporated in
EPA's strategic plan and annual performance plans, which are required
under GPRA.  A key element of the strategy is the development of a
measurement framework called the Performance Profile for Compliance
and Assurance, which lays out a plan to develop the combination of
output measures, outcome measures, and environmental indicators that
will be used as part of the agency's effort to implement a more
results-oriented compliance approach toward EPA enforcement.  The
agency plans to implement these measures in fiscal year 1998,
although it cautions that some measures will be implemented more
quickly than others.  According to OECA officials, as of April 1998,
EPA has identified and begun implementation on seven outcome
measures, including statistically valid compliance rates. 


--------------------
\3 According to EPA officials, as of April 1998, all EPA regional
offices had been briefed on the measures and their implementation,
workgroups had been formed to develop definitions and collect
information for individual measures, more than $300,000 had been
awarded for contractor and consultant support for certain measures,
pilot projects were being developed to test measures in three to five
regions, and several states (Florida, Colorado, New York, Oregon,
South Carolina, Texas, and Washington) had begun working with EPA to
collaborate on developing measures or conducting pilot projects. 


      CONTINUED EMPHASIS ON STRONG
      ENFORCEMENT
-------------------------------------------------------- Chapter 3:1.2

While EPA has strived in recent years to provide assistance to the
regulated community, encourage voluntary compliance with regulations,
and develop results-oriented measures, agency officials stress that
these efforts cannot come at the expense of traditional enforcement. 
In this connection, EPA has expressed concern that some states'
efforts to encourage voluntary compliance--particularly states' audit
privilege/immunity laws and amnesty laws--may compromise states'
ability to enforce federal environmental laws. 


         CONTINUED FOCUS ON THE
         NUMBER OF ENFORCEMENT
         ACTIONS TAKEN
------------------------------------------------------ Chapter 3:1.2.1

Although EPA has several efforts under way to encourage states' use
of alternative compliance strategies, agency officials emphasize that
the success of these efforts depends on a continued emphasis on
traditional enforcement action.  EPA officials said that the agency
has been told repeatedly by complying companies that enforcement is
an important and appropriate tool for ensuring compliance.  These
officials strongly believe enforcement actions provide a specific and
general deterrent effect that motivates regulated entities to seek
compliance assistance, utilize incentive policies, and participate in
alternative compliance strategies. 

Top EPA officials have publicly stressed that EPA's new compliance
assistance and incentive programs are not intended as a substitute
for a strong enforcement program.  For example, during her keynote
address at the OECA National Conference held in April 1996, the EPA
Administrator said that the agency's recent compliance initiatives,
while important, supplement--but do not replace--a strong enforcement
program.  At the same conference, EPA's Assistant Administrator for
Enforcement and Compliance Assurance noted that enforcement is the
mechanism that makes compliance assistance work, deters future
violations, and ensures a level playing field for those who comply. 
He further explained that the initial emphasis on compliance tools
"was necessary and essential to affect change--to initiate something
new.  However, .  .  .  strong enforcement cannot be replaced, and a
strong compliance program cannot succeed without strong enforcement."

This view of the importance of traditional enforcement activities was
shared by other senior EPA headquarters officials we interviewed.  In
particular, OECA's Director of Enforcement acknowledged to us that in
the wake of an unusually low number of enforcement actions in fiscal
year 1996\4 --and the lack of evidence that the drop in these numbers
resulted from increased compliance--she met with each region's
management to encourage them to restore their numbers to
"appropriate" levels.  Commenting on this message, EPA regional
officials explained that their own performance is judged primarily on
the basis of output-oriented measures that reinforce the use of
traditional enforcement approaches.  Accordingly, they expect the
state enforcement programs to reflect these priorities as well. 


--------------------
\4 OECA's Director of Enforcement attributed much of this drop to an
increased focus on compliance assistance and the effects of the
government shutdown that occurred in fiscal year 1996. 


         CONCERNS ABOUT STATES'
         AUDIT PRIVILEGE AND
         AMNESTY LAWS
------------------------------------------------------ Chapter 3:1.2.2

While EPA has long supported the use of environmental auditing, in
reviewing the adequacy of state enforcement authority for purposes of
the federal delegation and approval of state environmental programs,
EPA has frequently taken issue with the type of state laws discussed
in chapter 2.  These audit laws protect regulated entities from
having to disclose the results of an audit and/or provide immunity
from enforcement, in exchange for a regulated facility's use of an
environmental audit.  The agency explained, for example, that some of
these laws may prevent states from meeting basic requirements for
state enforcement authority established in federal laws and
regulations as prerequisites for delegation because they (1) restrict
the ability of states to obtain penalties and injunctive relief for
violations of federal program requirements and (2) restrict the
states' ability to obtain information that may be needed to determine
whether a facility is in compliance with environmental laws and
regulations.  Furthermore, the agency is concerned that these laws
interfere with the public's access to information.  For example, EPA
was concerned that Texas' audit privilege law initially allowed the
privilege to be asserted in criminal enforcement cases.  The agency
considered these provisions and others in the Texas law to be in
conflict with laws and regulations controlling the delegation of
environmental programs and initially issued only an interim approval
of the Clean Air Act Title V program in Texas until EPA's concerns
could be resolved. 

EPA has been able to negotiate agreements to resolve some of these
disputes.  For example, after negotiations with EPA, Texas
environmental officials proposed revisions to the state's audit
privilege to address many of EPA's concerns (such as removing the
privilege from criminal proceedings), and the Texas legislature
amended the law.  EPA has resolved similar disputes with Michigan,
Utah, Virginia, and Wyoming.  In an effort to forestall similar
disputes in the future, EPA has issued a "statement of principles"
reflecting the agency's position on whether and how approval of new
state programs (or program modifications) could be affected by state
audit laws that restrict state enforcement and information gathering
authority.  Among other things, this statement requires that, at a
minimum, a state must maintain certain authorities, including those
that provide for recovering penalties for significant economic
benefit, repeat violations, and activities that may present imminent
and substantial endangerment as well as authority to obtain fines and
sanctions in criminal proceedings.  Also the state must maintain the
ability to obtain the information needed to identify noncompliance
and criminal conduct.  EPA is currently in discussion with five other
states about bringing their audit laws in line with these principles. 

Despite the agency's statement of principles, however, controversy
remains among some states over the extent to which EPA should be
influencing state policies and laws in this area.  EPA has voiced
strong reservations about Colorado's audit privilege law, for
example, arguing that it could weaken the state's ability to
adequately enforce a number of delegated environmental programs
including the National Pollutant Discharge Elimination System program
under the Clean Water Act.  EPA has received a petition from a
citizens group asking that delegation be rescinded because of the
audit law.\5 Colorado officials, on the other hand, defend the
state's law, saying that stringent conditions must be met before a
facility qualifies for privilege, and the law has had the positive
effect of bringing facilities into compliance.  Colorado officials
sent a letter to EPA on November 18, 1998, defending the state's
audit law, noting that many of EPA's concerns are based on
hypothetical scenarios and that EPA's actions are interfering with
the state's flexibility in administering environmental programs.  EPA
subsequently responded in a January 28, 1998, letter to the Governor
that the law still undercuts the state's NPDES authority and
therefore the state will have to amend it if it wishes to "maintain
the minimum required authorities to administer and enforce" the NPDES
program.\6

According to a senior OECA official, EPA is also concerned that some
states' amnesty laws may undercut states' enforcement authority. 
According to this official, where these laws provide "grace periods"
and technical assistance to small businesses, they can be valuable
tools in helping these businesses comply with environmental
requirements.  However, this official noted that where these laws
provide amnesty for minor violators, the definition of what
constitutes a minor versus a major violator can be particularly
important. 

A significant controversy has arisen over Washington's amnesty law,
where EPA has expressed concern that portions of the state's law
conflict with EPA's delegation requirements.  In a November 20, 1997,
letter to the Washington State Department of Ecology, the Regional
Administrator of EPA's Seattle Regional Office notified the state
that its amnesty law conflicts with the necessary enforcement
authority required for delegation of federal environmental programs
to the state.  Among other things, EPA found the law unacceptably
restricts the state from assessing a penalty for each day that a
facility is in violation of environmental requirements and
impermissibly increases the state's burden of proof in establishing
violations.  Because of the agency's concerns, the letter states that
EPA "does not intend to approve requests from [Washington state] for
the approval of new federal environmental programs" and that the
identified problems "jeopardize existing approvals." In response to
EPA's concerns, Washington's Department of Ecology invoked a
provision of the state's law making inoperative any part of the law
determined by the department to be in conflict with federal law or
program requirements.  In response to the growing number of these
laws, EPA has launched a review of states' amnesty laws to determine
if these laws may undercut states' enforcement authority and serve as
an impediment to the delegation of federal environmental programs. 


--------------------
\5 An OECA official said that citizen or environmental groups in four
other states with audit privilege laws also petitioned EPA to remove
delegation of a federal program.  EPA is not likely to act on the
petitions in three of the states because the agency reached agreement
with two of them and the third state's audit law expired.  EPA has
not yet acted on the petitions in the final state, and has not
decided whether to rescind delegation in any other state because of
its audit law. 

\6 Controversies over state audit privilege/immunity laws have led to
the introduction of a number of bills in the Congress that would
grant privilege and immunity under federal law for those facilities
that meet certain requirements.  Specifically, S.  866 (The
Environmental Protection Partnership Act of 1997), introduced in the
Senate on June 10, 1997, and H.R.  1884 (Voluntary Environmental
Self-Evaluation Act), introduced in the House on June 12, 1997, would
both establish limited privileges and immunities for facilities that
conduct self-audits and voluntarily disclose and correct any
violations found.  S.  1332 (The State Environmental Audit Protection
Act), introduced in the Senate on October 29, 1997, would create a
"safe harbor" to protect from federal interference state audit laws
that provide a limited privilege for audit information and limited
protection from penalties. 


   BARRIERS IMPEDING A MORE
   RESULTS-ORIENTED COMPLIANCE
   APPROACH
---------------------------------------------------------- Chapter 3:2

To some extent, the controversies about states' audit privilege
statutes and amnesty laws reflect different legal and policy
judgments on whether these states' audit privilege/immunity laws
compromise the states' authority to enforce federal environmental law
and on the appropriate roles of federal and state governments in
deciding how environmental compliance can best be ensured.  Yet while
participants in the environmental regulatory process continue to
debate these issues, all parties generally agree on the desirability
of moving toward a system that focuses more heavily on achieving
desired outcomes through a combination of compliance assistance
activities and conventional enforcement and that systematically
measures progress on the extent to which these outcomes are being
achieved.  Our contacts with a broad range of EPA and state officials
and other interested parties suggest that regardless of how the
specific issues associated with states' audit privilege/immunity
statutes are resolved, EPA can in the meantime take important steps
to (1) facilitate states' efforts to develop effective
results-oriented performance measures and (2) promote greater
consistency in what has been fragmented and inconsistent
implementation by different EPA offices of the agency's policies on
the appropriate balance in EPA's enforcement program between
enforcement and compliance assurance activities. 


      EPA ASSISTANCE NEEDED TO
      FACILITATE STATES' EFFORTS
      TO MEASURE PROGRESS
-------------------------------------------------------- Chapter 3:2.1

EPA can facilitate states' efforts to measure progress in achieving
compliance by (1) developing baseline data and other information
needed to help states measure success in achieving program outcomes
and (2) helping states deal with a reporting burden caused by
overlaying new reporting requirements on top of existing
requirements. 


         ASSISTANCE IN DEVELOPING
         PROGRAM MEASURES
------------------------------------------------------ Chapter 3:2.1.1

As noted in chapter 2, performance measurement is a worthwhile but
inherently difficult enterprise.  States have been gathering and
reporting enforcement outputs (i.e., numbers of inspections,
enforcement actions) for many years but have had significantly less
experience in the more results-oriented measures--environmental
indicators and environmental outcomes.  In its National Performance
Measures Strategy, EPA acknowledges the added difficulty of obtaining
and analyzing the necessary information to do these more
results-oriented analyses.  In this strategy, the agency categorizes
the difficulty in assessing environmental indicators (e.g., assessing
a program's impact on environmental conditions) as "high," noting
that such evaluations "will require significant resources and
sophisticated analysis methods." It also categorizes the
implementation difficulty associated with outcome measures (i.e.,
compliance rates) for key industry sectors as "high," because of "the
design and execution of [an] inspection/sampling plan, which will
require significant resources."

Through the development of its Performance Profile (discussed
earlier), EPA plans to develop at least some of this
information--although the effort is largely intended to refocus EPA's
own enforcement program on results.  According to a senior OECA
official, the implementation schedule laid out in EPA's Measures
Strategy, which calls for fully implementing or conducting pilot
projects for each new measure during fiscal year 1998, is very
ambitious and will be difficult to meet.  This schedule includes
gathering and analyzing the information needed to support the
development of output, outcome, and indicator measures.  While the
effort is designed primarily to develop the data needed to measure
EPA's own enforcement program, one of OECA's two Deputy Assistant
Administrators acknowledged that the Office was giving some thought
to whether and how the effort could be simultaneously designed to
help interested states tap into EPA's effort so that it can help meet
their own data and analytical needs.  In the light of the states'
considerable needs in this area, identified in chapter 2 of this
report, such an effort may be particularly worthwhile and should be
systematically built into EPA's Performance Profile plan. 


         ASSISTANCE IN REDUCING
         THE REPORTING BURDEN
------------------------------------------------------ Chapter 3:2.1.2

In our Executive Guide on implementing GPRA, we noted that

     "The number of measures for each goal at a given organizational
     level should be limited to the vital few .  .  .  .Organizations
     that seek to manage an excessive number of performance measures
     may risk creating a confusing excess of data that will obscure
     rather than clarify performance issues.  Limiting the number of
     performance measures to the vital few .  .  .  will not only
     keep the focus where it belongs, it will help ensure that the
     costs involved in collecting and analyzing the data do not
     become prohibitive."\7

There has long been considerable discussion between state
environmental agencies and EPA about a perceived reporting burden in
the enforcement program, both in terms of the information that
regulated entities are required to report to the states (and
sometimes directly to EPA) and the information that states must
report to EPA.  While the recent EPA-ECOS effort to develop
agreed-upon core performance measures represents progress in shifting
measurement toward environmental outcomes, both EPA and the states
have acknowledged that adding these measures to the ones already in
place could have the unintended consequence of exacerbating such a
reporting burden. 

EPA and ECOS both acknowledged this concern in a joint statement last
year on this issue, noting that as EPA and the states "start using
more outcome measures, we want to ensure that we do not ultimately
increase the overall state reporting burden."\8 The statement goes on
to say that the parties to the agreement hope to reduce unnecessary
reporting and activity counting so that their time is spent sharing
information on the nation's environmental and pollution problems. 

Our interviews suggest that concerns about a reporting burden have
grown as states have increasingly sought to incorporate the core
performance measures into their performance agreements with EPA.  Of
the 10 states contacted during this review, officials from 5 cited a
reporting burden as a problem needing attention.  One other state
(Pennsylvania) noted that a potential reporting burden is a "looming
issue" in light of the state's imminent efforts to change the manner
in which it plans to report compliance trends in the future.  A
senior Massachusetts official, for example, told us that the focus of
future reporting should center around the core measures negotiated by
EPA and the states and that the cumulative burden of reporting
associated with these measures in addition to existing reporting
requirements is excessive.  He amplified the point by questioning the
value of many of the existing requirements, noting that (1) many
efforts to develop new measures are "serving different masters"
within EPA and (2) an effort is needed at the agency to determine
which data being collected are useful and which are not. 

Delaware's Environmental Administrator echoed these sentiments,
noting that EPA should do a "housecleaning" to determine which data
are no longer needed to manage environmental programs.  He added that
the agency should work toward a system whereby more of the data that
states submit in hard copy are instead placed in electronic databases
and that EPA would then have the responsibility for extracting the
required data rather than requiring state personnel to periodically
submit them in written reports. 

The burden-reduction issue was raised repeatedly at ECOS' September
1997 annual meeting, prompting senior EPA officials to cite numerous
individual efforts within the agency to reduce states' reporting
burden.  State officials at the meeting acknowledged these efforts
but questioned their effectiveness.  An ECOS workgroup addressing
this issue noted, for example, that "there has been a substantial
amount of discussion between the states and EPA regarding reduction
of burden .  .  .  ." and that

"It has become increasingly evident that what is lacking is any
coordinated vision of what burden reduction means and what all
[EPA's] efforts are designed to accomplish.  Further, there has been
no mechanism for coordination of these efforts to assure consistency
and lack of duplication of effort."\9

These concerns about the effectiveness of EPA's actions were echoed
in our contacts with officials from the 10 states, most of whom
indicated that EPA needed to make a more concerted and cohesive
effort to address the issue.  The senior Massachusetts DEP official
noted that "no one is really looking at whether the information
collected is valuable" and questioned how seriously EPA's burden
reduction efforts are taken by EPA staff.  A Colorado official
maintained that EPA staff "sometimes recognize that some of the
information collected is useless, but collect it anyway." The
official asserted that "culture change is not happening at the staff
level" and that as a consequence, some EPA officials do not take
seriously the agency's stated desire to focus increasingly on core
performance measures.  Florida's response to this question suggested
that EPA should (1) establish a hierarchy among reporting
requirements, emphasizing measures that allow states to demonstrate
the outcomes of their programs; (2) eliminate requirements for
extraneous data; and (3) consolidate databases for different media so
that multimedia analyses can be done more easily. 

EPA officials have acknowledged the need to take a more comprehensive
approach to addressing this problem.  At the September 1997 ECOS
meeting, for example, the EPA Administrator indicated that the agency
had tried to be responsive to states' concerns through numerous
individual efforts but that the time had come to coordinate and
consolidate these efforts in a more cohesive manner.  Along these
lines, EPA has an initiative under way called Reinventing
Environmental Information, which includes negotiating a comprehensive
information management agreement with the states.  Among other
things, the current draft of this agreement acknowledges the need to
collect data in such a way that it imposes the least burden on the
private and public sectors.  EPA is currently negotiating this
agreement with ECOS, and the success of this effort, particularly as
it relates to the reporting burden issues identified in this section
by the states, remains to be seen. 


--------------------
\7 Executive Guide:  Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118), p.  25. 

\8 "Joint Statement on Measuring Progress Under the National
Environmental Performance Partnership System," ECOS and EPA, p.  2. 

\9 "States' Vision for Improving Environmental Information
Management," ECOS Strategic Planning Committee (Draft), 9/18/97. 


      EPA'S FRAGMENTED AND
      INCONSISTENT RESPONSE TO
      STATES' ALTERNATIVE
      COMPLIANCE STRATEGIES
-------------------------------------------------------- Chapter 3:2.2

Perhaps the most serious problem affecting EPA and state efforts to
balance states' conventional enforcement activities with alternative
compliance strategies is a fragmented approach by the numerous EPA
offices whose responsibilities bear on this issue.  A consequence of
this fragmentation, according to information supplied by each of the
10 states we contacted, is that "mixed messages" from different
entities within EPA make it difficult to devise a coherent,
results-oriented approach acceptable to all of the key "stakeholders"
within EPA.  An internal EPA analysis had previously cited the
problem, noting that it has led to confusion within and outside EPA
and, in the opinion of some regional representatives, to inconsistent
approaches across EPA regional offices on how best to balance
enforcement and compliance assurance efforts.  As discussed below,
this fragmentation manifests itself in inconsistencies (1) between
EPA headquarters and regional offices, (2) among the EPA headquarters
offices with key enforcement responsibilities, (3) between EPA
management and lower-level staff, and (4) among the key agency
initiatives designed to promote a greater focus on achieving
cost-effective program results. 


         INCONSISTENCIES BETWEEN
         HEADQUARTERS AND REGIONS
------------------------------------------------------ Chapter 3:2.2.1

As noted in chapter 1, EPA headquarters offices with primary
enforcement responsibility include the program offices, OECA, and the
Office of General Counsel.  Regional offices are responsible for
negotiating directly with the states the states' program goals and
the means by which those targets will be achieved.  These agreements
have typically been documented in EPA-state enforcement agreements. 
A growing number of states have documented these understandings as
part of their Performance Partnership Agreements. 

In a study that focused on the varying structures of EPA's regional
offices, a December 1996 report by the agency's Office of
Administration and Resources Management noted that "representatives
of several regions complained that they had received mixed messages
about the relative priority of enforcement and compliance
assurance."\10 The report identified sources of these mixed messages
as the Administrator, OECA, and the senior leadership of the regional
offices.  Among the consequences cited were "considerable confusion"
among regions and states and distrust in the regulated community. 

Officials from all 10 states contacted indicated that they too
believed they were receiving divergent messages from EPA headquarters
and their EPA regional offices on key issues affecting their
enforcement programs.  Most were critical of the headquarters message
that the state needs to raise the number of enforcement actions being
taken, or at least had to achieve some baseline in the number of
actions.  Many asserted that this message was inconsistent with the
one arising from negotiations with their region concerning their
Performance Partnership Agreements, which tend to focus less on
achieving higher numbers of enforcement "outputs" and more on
ensuring an approach that achieves compliance through a mix of tools
(one of which is enforcement).  Pennsylvania's respondent said that
his agency's Operations Chiefs continually report that EPA's
Philadelphia regional office staff push them to achieve numbers of
enforcement actions and that pressure from headquarters is frequently
cited by the regional office staff as a factor.  As one example, he
cited a memorandum from the state agency's Waste Management
Operations Chief, which complained that EPA staff in Philadelphia had
unexpectedly required the state to begin tracking all violations for
a return to compliance (not just the more serious "Class I"
violations, which had been the case during the previous 16 years of
the state's RCRA program) and that the state would have to ensure
that all "violations [are] corrected regardless of seriousness." The
memorandum noted that despite vehement objections from the state's
RCRA enforcement personnel over "this middle of the year unannounced
switch," they insisted the change was based on "orders from
headquarters."

Beyond the central question about the appropriate emphasis on numbers
of actions, states also told us that differences over other
priorities between regions and headquarters offices complicates their
efforts to set their own priorities.  Oregon officials, for example,
said that they spend months working with EPA's Seattle office to
establish enforcement priorities for the year, but various
headquarters offices are continually developing initiatives that
sometimes conflict with these priorities.  Similar concerns were
voiced by respondents from Colorado, Massachusetts, and Texas. 


--------------------
\10 Management Review:  Innovative Regional Structures, Environmental
Protection Agency (Dec.  1996), p.  29. 


         INCONSISTENT PRIORITIES
         AMONG DIFFERENT EPA
         HEADQUARTERS OFFICES
------------------------------------------------------ Chapter 3:2.2.2

Several states also cited inconsistent messages from a number of the
headquarters offices with key enforcement responsibilities.  Oregon
officials, for example, cited "internal battles" between OECA and the
agency's program offices, noting that the two tend to have different
initiatives and priorities, leading to confusion for both the regions
and the states.  Colorado, Massachusetts, and Pennsylvania cited
similar problems.  The Pennsylvania respondent noted in particular
that some offices, such as the Office of Reinvention, appear to
advocate a more risk- and results-based approach to enforcement,
while others advocate the more traditional approach that emphasizes
counting numbers of enforcement actions. 

Respondents from Delaware, Massachusetts, and Texas also highlighted
divergent messages from within OECA itself.  Delaware's Environmental
Administrator said that the Office sometimes appears to be speaking
with two voices, noting that the OECA staff responsible for the
Office's compliance assistance efforts support the use of a wider
variety of tools to achieve compliance but that the staff responsible
for tracking enforcement appear substantially more concerned about
the number of enforcement actions taken. 


         INCONSISTENT MESSAGES
         FROM EPA MANAGEMENT AND
         STAFF
------------------------------------------------------ Chapter 3:2.2.3

Our recent report on EPA's efforts to "reinvent" environmental
protection cited the difficulty in achieving "buy-in" among EPA's
rank and file to new ways of achieving environmental objectives.\11
In particular, the report noted that while senior EPA managers have
articulated a clear commitment to finding improved ways of achieving
environmental goals, the agency has had difficulty in achieving
buy-in among its rank and file to new ways of doing business. 

Several of the state respondents conveyed experiences in their
enforcement relationship with EPA staff and management that were
consistent with this finding.  The Secretary of Florida's Department
of Environmental Protection expressed some frustration about the
agency's follow-through on its rhetorical support for innovation,
noting that while headquarters may announce a new initiative, and
regional administrators encourage states to participate, regional
program staff are generally less flexible.  Massachusetts' Associate
Commissioner for Enforcement, for example, said that the state DEP
had few problems with, and greater access to, top management at EPA's
Boston office.  Rather, conflicts generally occur with the region's
mid-level managers "who make the more specific decisions about what
data need to be reported and whether the state can or cannot exercise
flexibility." She also cited similar conflicts with mid-level
managers at EPA headquarters. 


--------------------
\11 Environmental Protection:  Challenges Facing EPA's Efforts to
Reinvent Environmental Regulation (GAO/RCED-97-155). 


         INCONSISTENCIES AMONG
         DIFFERENT EPA INITIATIVES
         TO MEASURE PROGRESS
------------------------------------------------------ Chapter 3:2.2.4

As discussed above, EPA has several enforcement-related initiatives
under way that are all intended to focus greater attention on
achieving results rather than on performing prescribed tasks and
processes.  Among the most important of these initiatives are

  -- the National Environmental Performance Partnership System, under
     which EPA and states negotiate agreements on such matters as (1)
     which problems will receive priority attention, (2) what their
     respective roles will be, and (3) how their progress in
     achieving clearly defined program objectives will be met;

  -- OECA's National Performance Measures Strategy, which is intended
     to build results-oriented measures into EPA's existing
     accountability system, which currently focuses heavily on output
     measures; and

  -- OECA's performance measures required by GPRA; EPA's Strategic
     Plan, required by GPRA, emphasized the need for a mix of output
     and outcome performance measures, noting that EPA is "striving
     to develop a range of measures that reflect the broad spectrum
     of enforcement and compliance activities, the degree to which
     they protect human health and the environment, and industry
     compliance with applicable laws."

EPA's goals under NEPPS, the National Performance Measures Strategy,
and its GPRA-related activities would appear to share the same goal
of focusing on environmental results.  However, the
enforcement-related performance measures that EPA prepared pursuant
to GPRA, as reflected in EPA's recently issued Performance Plan, are
heavily weighted toward numerical targets for inspections,
enforcement actions, and other outputs.  For example, the Performance
Plan notes that in fiscal year 1999, EPA "will conduct 15,000
inspections and undertake 2,600 enforcement actions." Similarly, it
calls for 53,000 state pesticides inspections in 1998 and 60,300 in
1999.  The plan also sets numerical targets for compliance assistance
(such as the number of compliance tools developed and the number of
compliance assistance centers in operation) and notes that EPA is
working to improve measures of compliance and to develop measures to
assess its compliance assistance efforts. 

Officials from Delaware, Massachusetts, New Jersey, and Pennsylvania
each raised concerns about OECA's implementation of GPRA to date,
noting that OECA's heavy focus on outputs was inconsistent with other
ongoing efforts designed to help states focus their environmental
programs on results.  The New Jersey respondent echoed the view that
OECA's response to GPRA has thus far focused on traditional output
measures, offering the partial explanation that outputs are easier to
quantify than results.  But he said that such a focus was contrary to
both the spirit of GPRA and to the results-oriented manner in which
the state was attempting to negotiate its Performance Partnership
Agreement (pursuant to NEPPS) with EPA's New York Regional Office.\12
Pennsylvania's respondent shared a similar impression, pointing to
the "unfortunate way GPRA is being used by EPA to say to the states,
'collect all these enforcement beans because we'll need to report
this stuff to the Congress pursuant to GPRA.'"


--------------------
\12 Among other things, the 1997-1998 New Jersey Performance
Partnership Agreement established (1) overall goals for seven major
topic areas (e.g., air quality/radiation, drinking water, site
remediation), (2) subgoals, (3) milestones/objectives for achieving
its subgoals (which, where feasible, are quantitative with dates for
completion), and (4) indicators for measuring progress toward the
milestones/objectives.  Thus, for example, under the goal that "every
person in New Jersey will have safe drinking water," the agreement
states that "[b]y 2005, 95 percent of the public water systems (and
95 percent of the population served) will provide water that meets
the microbiological drinking water standards. 


         EPA'S EFFORTS TO ACHIEVE
         GREATER CONSISTENCY ON
         THE USE OF ALTERNATIVE
         COMPLIANCE TOOLS
------------------------------------------------------ Chapter 3:2.2.5

The information gathered from the 10 states contacted confirmed the
widely held perception that different EPA offices continue to convey
an inconsistent message on the appropriate use of various compliance
tools.  In commenting on this issue, one of OECA's Deputy Assistant
Administrators pointed out that to some degree, the Congress's
long-standing practice of holding EPA accountable for certain outputs
(e.g., inspections conducted, enforcement actions taken) has
reinforced the belief among many at EPA that the numbers of
enforcement actions deserve greater priority.  He cited press
releases, for example, that strongly criticized the agency during
1996 for its drop in these outputs and noted that many in EPA have
been sensitive and responsive to these criticisms.  He nonetheless
cited the Congress's ongoing efforts to ensure effective
implementation of the GPRA as a factor in focusing greater attention
among enforcement staff on the importance of developing
results-oriented performance measures. 

He also emphasized that OECA has, in fact, taken steps to resolve
perceived inconsistencies in the appropriate mix of compliance tools
through quarterly meetings between OECA management and the management
teams of each of EPA's 10 regional offices.  He also cited a number
of other efforts, including the issuance in November 1996 by OECA of
"operating principles" that were intended to clarify how to integrate
enforcement and compliance assurance activities, an annual conference
of OECA staff and its regional counterparts, and twice-yearly
meetings between OECA staff, regional enforcement staff, and managers
of regional program offices. 

Our contacts with officials from the EPA regional offices that
oversee the five states we visited suggest that these efforts have
shed light on this matter.  Some progress may also be occurring at
the state level.  Florida officials said that EPA regional officials
had recently agreed to use the state's new measurement systems as a
basis for negotiating its 1999 Performance Partnership Agreement. 
Information from the measurement system will be used to set annual
priorities, and specific measurements will be substituted for some of
Florida's current reporting requirements. 

However, the broad consensus among representatives of the 10 states
we contacted supports the view that further actions will be needed
before the agency is perceived to be speaking with one voice on the
appropriate use of alternative compliance tools.  Also, EPA's
response to GPRA, as reflected in its Performance Plan, reinforces
the agency's preexisting focus on outputs and is at odds with states'
efforts to negotiate results-oriented Performance Partnership
Agreements with their corresponding regions.  Fiscal year 1999 is the
first year EPA and other agencies have been required to submit
Performance Plans under GPRA, and for the reasons outlined earlier in
this report (i.e., the relative ease of developing output versus
outcome measures), it is not surprising that the agency's early
efforts to develop performance measures under GPRA to emphasize
outputs.  Nonetheless, EPA can go a long way toward improving the
consistency of its message on this matter--and the likelihood that a
mix of tools can be successfully used to achieve environmental
results--by (1) expeditiously developing and implementing a broader
range of output, outcome, and indicator measures and (2) reflecting
these measures in its GPRA Performance Plan and the other key
vehicles used by the agency to set performance expectations for its
regions and the states. 


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

The differences that have arisen between EPA and state regulatory
authorities over some state initiatives, particularly those providing
for flexible enforcement, in part reflect different views on the
appropriate roles of federal and state government in deciding how
environmental compliance can best be ensured.  Yet while these issues
will continue to be the subject of debate in coming years, EPA can
take a number of important steps to move toward a system that focuses
more on achieving desired outcomes through a combination of
compliance assistance activities and conventional enforcement and
which systematically measures progress on how well these outcomes are
being achieved. 

First, states face a number of difficulties in developing and
analyzing the key data needed to measure the results of their
compliance strategies.  Without this information, it will be
difficult to move from the present focus on counting outputs to the
more results-oriented focus they are seeking.  Through the
development of its Performance Profile, EPA plans to develop at least
some of this vital information--although the effort is largely
intended to refocus EPA's own enforcement program on results.  EPA
has been giving some thought to whether and how the effort could be
simultaneously designed to help interested states tap into the EPA
effort so that the agency can help states meet their own data and
analytical needs.  In the light of the states' considerable needs in
this area--and EPA's insistence that states should demonstrate the
efficacy of their alternative strategies if they are to rely upon
them to achieve compliance--EPA needs to ensure that development of
its Performance Profile stays on the schedule identified in OECA's
National Performance Measures Strategy and that it be developed
collaboratively with interested states in a manner that helps these
states meet their own performance measurement needs.  The "best
practices" resulting from these efforts could be usefully shared with
other states interested in improving their own capacity for
performance measurement. 

As a related matter, adding results-oriented performance measures to
the ones already in place could have the unintended consequence of
exacerbating states' already-burdensome reporting requirements.  EPA
has a major initiative under way that it hopes will deal with the
problem.  Specifically, the agency's Reinventing Environmental
Information initiative calls for negotiating a comprehensive
information management agreement with the states and is intended,
among other things, to address the need to collect data in way that
imposes the least burden on the private and public sectors.  The
success of this effort, particularly in terms of its effectiveness in
responding to the reporting burden issues identified by the states in
this chapter, remains to be seen. 

Second, information from each of the 10 states contacted shows a
fragmented and inconsistent approach by different EPA offices to how
the success of state enforcement programs should be judged,
particularly as it relates to the appropriate balance between
traditional enforcement and other tools to ensure compliance.  OECA
has taken a number of important steps to address the issue, which
have helped to a degree.  However, the broad consensus among
representatives of the 10 states we contacted confirms EPA's view
that it is difficult to integrate "traditional compliance monitoring
and enforcement actions with compliance assistance and incentive
approaches, doing so in a multi-layered federal-state system, with a
set of organizations that are highly decentralized." It also supports
the view that further actions will be needed before the agency is
perceived to be speaking with one voice on the extent to which states
are to be held accountable for achieving output targets and the
extent to which they are to be held accountable for achieving
results.  EPA can go a long way toward improving the consistency of
its message on this matter--and the likelihood that a mix of tools
can be successfully used to achieve environmental results--by
ensuring that (1) the expectations set for the Office of Enforcement
and Compliance Assurance, program offices, and other EPA headquarters
and regional offices are consistent with the agency's operating
principles calling for an appropriate mix of tools to achieve
compliance, (2) different EPA offices with enforcement responsibility
more systematically coordinate their negotiations with, and oversight
of, state agencies on enforcement-related matters, and (3) the
enforcement-related provisions of EPA's Performance Plan, prepared
pursuant to the Government Performance and Results Act, focus on
outcomes in a manner consistent with that of the core performance
measures developed under EPA's National Performance Measures
Strategy, the National Environmental Performance Partnership System,
and the agency's other results-oriented initiatives. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 3:4

We recommend that the Administrator, EPA, take the following actions: 

  -- Ensure that the development of the Office of Enforcement and
     Compliance Assurance's (OECA) Performance Profile stays on the
     schedule outlined in its National Performance Measures Strategy;
     that the Profile be developed collaboratively with interested
     states in a manner that helps these states meet their own
     performance measurement needs; and that OECA periodically
     disseminate information (as it becomes available) among the
     states on effective practices in measuring enforcement programs'
     results. 

  -- Promote greater consistency in what has been a fragmented and
     inconsistent message by different EPA offices on the appropriate
     balance in EPA's enforcement program between enforcement and
     compliance assurance activities.  In doing so, the Administrator
     should build on EPA's recent efforts to address this issue by
     ensuring that (1) the expectations set for the Office of
     Enforcement and Compliance Assurance, program offices, and other
     EPA headquarters and regional offices are consistent with the
     agency's policy calling for an appropriate mix of tools to
     achieve compliance; (2) different EPA offices with enforcement
     responsibility more systematically coordinate their negotiations
     with, and oversight of, state agencies on enforcement-related
     matters; and (3) the enforcement-related provisions of EPA's
     Performance Plan, prepared pursuant to the Government
     Performance and Results Act, focus on outcomes in a manner
     consistent with that of the core performance measures developed
     under EPA's National Performance Measures Strategy, the National
     Environmental Performance Partnership System, and the agency's
     other results-oriented initiatives. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 3:5

EPA raised a number of concerns about the information presented in
this chapter.  The following summarizes its major concerns and our
responses.  The full text of EPA's comments, and our detailed
responses, are included in appendix IV of this report. 

EPA's letter maintains that the draft report did not give the agency
adequate credit for its efforts to either (1) promote compliance
assistance or (2) develop innovative performance measurement efforts. 
We disagree.  In recognizing EPA's compliance assistance efforts, the
draft contained several pages describing EPA's efforts to establish
compliance assistance centers, develop policies that give incentives
to the regulated community to comply with environmental laws, and
develop and implement its environmental auditing policy.  It also
recognized related agency initiatives that, while not focused
specifically on providing compliance assistance, are intended to
offer participants the opportunity to experiment with innovative ways
to improve compliance more efficiently and effectively (e.g., Common
Sense Initiative, Project XL, Environmental Leadership Program).  We
nonetheless added language suggested by EPA to further convey the
agency's role in developing alternative compliance strategies and in
assisting the states in their own efforts to develop such strategies. 

In connection with EPA's efforts to develop and implement enhanced
performance measures, the draft noted that the agency had "spent
considerable time and energy in developing its National Performance
Measures Strategy [and that] its influence may extend to state
enforcement." The draft also credited the agency with "broad
involvement by states and other stakeholders in developing the
strategy." In addition, the report cited other initiatives, such as
the National Environmental Performance Partnership System, as further
encouraging use of performance measures.  Nonetheless, we added
language suggested by the letter to further explain the agency's
commitment of resources to this effort. 

EPA also said the draft report (1) relied too heavily on impressions,
opinions, and perceptions as the basis for its conclusions about
inconsistent implementation by different EPA offices and (2) should
acknowledge the difficulty of dealing with this problem "in a
multi-layered federal-state system, with a set of organizations that
are highly decentralized." The first of these statements inaccurately
conveys the basis for the report's findings on inconsistent messages
and uneven implementation by different EPA offices.  As our report
points out, the problem of inconsistent implementation was cited by
EPA's own Office of Administration and Resource Management, which in
December 1996 identified complaints by EPA regional staff that "they
had received mixed messages about the relative priority of
enforcement and compliance assurance," and that the problem had
resulted in "inconsistent approaches across [EPA regional offices] on
how to best balance enforcement and compliance assurance efforts."
The fact that EPA did not solve the problem was substantiated not by
sporadic impressions, opinions, and perceptions, but by (1) the
overwhelming consensus of enforcement and other officials from among
a diverse group of 10 relatively experienced states and (2) the
strength and consistency with which these views were conveyed.  The
uniformly output-oriented enforcement component of EPA's GPRA
Performance Plan is also inconsistent with the agency's expressed
desire to use a combination of output and results-oriented measures. 

As a related matter, we do agree with EPA's suggestion that we
acknowledge the difficulty associated with integrating traditional
enforcement approaches with compliance assistance/incentive
approaches "in a multi-layered federal-state system, with a set of
organizations that are highly decentralized." We have added language
pointing to the inherent difficulty in ensuring consistency in the
light of EPA's decentralized structure and the diversity among the
state organizations with which the agency deals.  We would observe,
however, that EPA's request for such an acknowledgement appears to
demonstrate that the problem of inconsistency still exists. 

EPA said that the report took a simplistic view of the difficulty of
reducing the reporting burden caused by adding new measures to
existing ones, noting that the report seemed to imply that data about
environmental conditions should simply replace, rather than
supplement, output and source-specific data.  We disagree.  The
report in no way reflects a view that output measures and
source-specific data should be replaced with data on environmental
conditions, and in fact acknowledges the value of output measures
when linked in some way to the results an organization is trying to
achieve.  The report's discussion of this issue does, however,
reflect a view repeated by many state officials--and acknowledged by
senior EPA officials--that adding new measures to existing ones poses
legitimate concerns for state officials.  The report cites EPA's
efforts to deal with the problem, noting that their effectiveness
remains to be seen. 

EPA also asserts that the report makes recommendations that would do
little to effectively address the problems and challenges identified. 
The report's recommendations are intended to address two major issues
identified:  (1) the difficulties experienced by states in developing
results-oriented measures and (2) the inconsistent manner in which
different EPA entities are implementing the agency's policies on the
use of enforcement and other compliance tools.  The first
recommendation essentially asks EPA to follow through on its stated
commitment to develop measures pursuant to its National Performance
Measures Strategy, and to do so in a manner that will assist
interested states in developing their own measurements.  We modified
the recommendation to (1) reinforce the value of disseminating
information among the states on effective practices and successful
efforts to measure programs' results and (2) suggest that EPA should
work collaboratively with states in developing the measures. 

The second recommendation reflects our conclusion that EPA's
decentralized structure requires the attention of the agency's top
management because it has overall responsibility for directing and
coordinating the activities of the different EPA organizational units
with enforcement responsibility, including OECA, program offices, the
Office of General Counsel, and its regions.  Realistically, the task
of resolving the inconsistent implementation discussed in the report
would still be a difficult task.  Nonetheless, we believe this level
of management attention to the issue would substantially increase the
chances for progress on this key issue.  We also added language to
this recommendation to encourage different EPA offices with
enforcement responsibility to more systematically coordinate their
negotiations with, and oversight of, state agencies.  We believe that
this action would help to alleviate the problem cited by many state
officials that they are often given conflicting information or
direction by different EPA offices. 


EXAMPLES OF COMPLIANCE ASSISTANCE
PROGRAMS BEING IMPLEMENTED BY THE
CASE-STUDY STATES
=========================================================== Appendix I

State                     Program\a       Description
------------------------  --------------  ----------------------------
Massachusetts             Environmental   Small to medium-sized
                          Results         facilities are asked to
                          Program         commit to certain
                                          performance standards and
                                          self-certify their
                                          compliance with these
                                          standards.

Massachusetts             Printers        This program is an effort to
                          Partnership     reformat regulatory
                          Program         requirements for the
                                          printing industry and
                                          provide compliance
                                          assistance materials to
                                          printers to help them meet
                                          these requirements. Printers
                                          were asked to voluntarily
                                          participate and were given
                                          incentives for joining.

New Jersey                Environmental   New Jersey's Department of
                          Management      Environmental Protection
                          Assistance      will create a cross-media,
                          Program         cross-functional team to
                                          evaluate a facility's--
                                          primarily small businesses-
                                          -compliance with
                                          environmental regulations.
                                          The team prepares an
                                          environmental oversight
                                          document identifying a
                                          facility's environmental
                                          requirements.

Delaware                  Business and    The unit provides assistance
                          Permitting      to program offices within
                          Services Unit   the state seeking to improve
                                          their compliance assistance
                                          and provides information/
                                          assistance to businesses
                                          applying for permits.

Pennsylvania              Self-           Small businesses are given a
                          Evaluation      guide, which includes
                          Guide           several different
                                          checklists, to use in
                                          helping them determine if
                                          they are in compliance with
                                          various environmental
                                          regulations.

Illinois                  Dry Cleaners    Illinois' Environmental
                          Outreach        Protection Agency worked
                                          with dry cleaners
                                          associations and dry
                                          cleaners facilities to
                                          ensure the facilities were
                                          in compliance. Illinois'
                                          Department of Environmental
                                          Protection conducted
                                          numerous workshops and
                                          provided on-site assistance
                                          to some facilities.

Texas                     Small Business  This program offers small
                          Assistance      businesses confidential
                          Program         assistance by request. The
                                          program provides
                                          environmental technical
                                          assistance on air, water,
                                          waste, and pollution
                                          prevention issues.

Colorado                  Targeted        Small businesses, such as
                          technical       dry cleaners, are targeted
                          assistance      to ensure that they
                                          understand environmental
                                          regulations.

Washington                Snapshots       Multimedia inspections were
                                          conducted at lithographers,
                                          screen printers, and photo
                                          processors. Educational
                                          materials were given to each
                                          facility inspected. The
                                          facility was responsible for
                                          implementing the
                                          recommendations. Follow-up
                                          was dependent upon the
                                          inspection findings.

Washington                Shop Sweep      Streamlined inspections were
                                          conducted at auto repair
                                          shops concentrating on the
                                          most common waste management
                                          problems. Educational
                                          materials were given to each
                                          facility inspected. The
                                          facility was responsible for
                                          implementing the
                                          recommendations. Follow-up
                                          inspections were conducted
                                          at a random sample of sites.
----------------------------------------------------------------------
\a The summary table does not capture all of the compliance
assistance efforts the case-study states are undertaking.  Rather,
these are the programs that were highlighted in our discussions with
state officials. 


EXAMPLES OF AMNESTY PROGRAMS BEING
IMPLEMENTED BY THE CASE-STUDY
STATES
========================================================== Appendix II

State                     Programa        Description
------------------------  --------------  ----------------------------
New Jersey                Green Start     This is a voluntary
                          Program         compliance assistance
                                          program for small businesses
                                          and local governments. A
                                          facility asks for assistance
                                          in meeting environmental
                                          regulations. An inspection
                                          is performed and a report is
                                          issued listing the
                                          requirements that must be
                                          met to reach compliance.
                                          Penalties are waived under
                                          certain circumstances if the
                                          facility comes into
                                          compliance within a
                                          specified period of time.

New Jersey                "Quick          If violations meeting
                          Compliance"     certain criteria are
                          Law             identified by the
                                          government, the facility
                                          will not receive a penalty
                                          for the violations if they
                                          are corrected within 30 to
                                          90 days.

Delaware                  "Gray Hat"      Once a violation is
                          Program         identified, inspectors may
                                          allow the facilities a
                                          chance to correct the
                                          violation before taking a
                                          formal enforcement action. A
                                          follow-up inspection is
                                          conducted to ensure the
                                          violation is corrected.

Florida                   General         Inspectors attempt to
                          technical       identify the root cause for
                          assistance      the violation. If the
                                          violation is minor and
                                          occurred because of genuine
                                          ignorance of the
                                          regulations, the inspectors
                                          may provide technical
                                          assistance to the facility.
                                          A follow-up inspection is
                                          conducted to ensure the
                                          violation is corrected.

Illinois                  Clean Break     Illinois' Environmental
                                          Protection Agency targets
                                          small businesses to
                                          participate in the program.
                                          By participating in the
                                          program, the facility allows
                                          the state to conduct an
                                          inspection of the facility
                                          and agrees to resolve the
                                          noncompliance discovered
                                          during the inspection to the
                                          state's satisfaction. By
                                          complying with the program
                                          requirements, the facility
                                          is immune from enforcement
                                          actions relating to the
                                          noncompliance.

Illinois                  Pre-            Once a violation is
                          enforcement     identified, the state may
                          Strategy        decide to resolve a
                                          facility's noncompliance
                                          issues, to avoid litigation,
                                          through a "compliance
                                          commitment agreement." This
                                          agreement details the steps
                                          the state requires the
                                          facility to take to return
                                          to compliance under a
                                          specific time frame. If the
                                          facility does not satisfy
                                          the agreement, the state may
                                          take formal enforcement
                                          actions.

Texas                     Small Business  This program targets
                          Amnesty         specific industries:
                          Programs        foundries, wood products,
                                          metal finishing, dry
                                          cleaners, body shops,
                                          printers, gas stations, and
                                          dairies/confined feeding
                                          lots. Technical assistance
                                          and additional time are
                                          granted to come into
                                          compliance.

Oregon                    Volatile        Oregon's Department of
                          Organic         Environmental Quality
                          Compound        identified small businesses
                          Limited         that were potential emitters
                          Amnesty         of volatile organic
                          Program         chemicals. Facilities
                                          without appropriate permits
                                          were offered limited amnesty
                                          from civil penalties if they
                                          voluntarily agreed to
                                          conduct a pollution
                                          prevention assessment to
                                          determine if volatile
                                          organic chemical emissions
                                          could be reduced and to
                                          obtain a state air
                                          contaminant discharge permit
                                          if necessary.

Oregon                    Waste           During technical assistance
                          Reduction       visits at facilities located
                          Assistance      in Oregon's Western Region,
                          Program (WRAP)  inspectors leave a form that
                                          lists improvements and
                                          recommendations instead of
                                          making an enforcement
                                          referral. The facility is
                                          responsible for implementing
                                          the recommendations,
                                          completing the form, and
                                          returning it to the Oregon
                                          Department of Environmental
                                          Quality by an agreed-upon
                                          date.

Washington                House Bill      With certain exceptions, the
                          1010            Department of Ecology must
                                          provide technical assistance
                                          rather than take an
                                          enforcement action when
                                          visiting a small facility
                                          for the first time.
----------------------------------------------------------------------
\a Note:  The summary table does not capture all of the amnesty
programs the case-study states are undertaking.  Rather, these are
the programs that were highlighted in our discussions with state
officials. 


STATES WITH AUDIT
IMMUNITY/PRIVILEGE LAWS
========================================================= Appendix III



   (See figure in printed
   edition.)




(See figure in printed edition.)Appendix IV
COMMENTS FROM THE ENVIRONMENTAL
PROTECTION AGENCY
========================================================= Appendix III



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Environmental Protection
Agency's (EPA) letter dated April 28, 1998.  The comments are
organized in the order of the major sections of EPA's letter. 


   GAO'S COMMENTS
------------------------------------------------------- Appendix III:1

Section I.  General Concerns

1.  EPA's statements about GAO's acceptance of "unchallenged
assumptions" do not reflect our purpose in including this
information.  The statements are presented not as statements of fact,
but as the rationale that state officials offered in explaining why
they were pursuing alternative approaches to supplement their
traditional enforcement programs.  The state officials noted, for
example, that compliance among large sources had improved as a result
of the considerable enforcement effort that had been directed toward
them and that additional environmental improvements could be obtained
through a variety of methods to bring smaller businesses and sources
into compliance.  We would note that similar opinions were in fact
offered by EPA enforcement staff.  Finally, some of the passages
cited in EPA's letter were paraphrased in a manner that made them
appear more sweeping than they were as presented in the draft report. 
For example, EPA's letter quoted the draft report as stating that
"conventional enforcement approaches are ineffective with small
facilities." The actual passage stated that "State officials
consistently told us that conventional enforcement approaches were
often ineffective with these smaller facilities."

2.  EPA's statements about our reliance on "impressions and opinions"
do not accurately convey the basis for the report's findings about
inconsistent messages and uneven implementation by different EPA
offices.  As our report points out, the problem of inconsistent
implementation was cited by EPA's own Office of Administration and
Resource Management, which in December 1996 identified complaints by
EPA regional staff that "they had received mixed messages about the
relative priority of enforcement and compliance assurance," and that
the problem had resulted in "inconsistent approaches across [EPA
regional offices] on how to best balance enforcement and compliance
assurance efforts." The fact that EPA did not solve the problem was,
in our view, convincingly substantiated by both the overwhelming
consensus of enforcement and other officials from among a diverse
group of 10 states, and by the strength and consistency with which
these views were conveyed.  The uniformly output-oriented enforcement
component of EPA's GPRA Performance Plan is also inconsistent with
the agency's expressed desire to use a combination of output and
results-oriented measures. 

3.  This report was intended to provide empirical information about
10 states' experiences with alternative compliance strategies and
EPA's response to these efforts.  As such, we did not reiterate our
acknowledgement of the value of enforcement in achieving compliance
through deterrence.  Furthermore, the report does not contradict past
GAO statements about the importance of enforcement in deterring
violations of environmental laws.  Nevertheless, the report did
explicitly convey EPA's position on this issue.  For example, it
cited the position of EPA's Assistant Administrator for Enforcement
and Compliance Assurance that enforcement is the mechanism that makes
compliance assistance work, deters future violations, and ensures a
level playing field for those who comply.  The draft executive
summary had noted EPA's position that "the emphasis on inspections
and enforcement action is necessary to deter noncompliance and
prevent violators from gaining economic advantage by violating
environmental laws." We nonetheless added language offered by EPA to
further expand on the importance the agency attaches to the
deterrence value of an effective enforcement program. 

4.  The draft report discussed the role of federal law in
establishing enforcement requirements and noted that states are
expected to follow these requirements in implementing their
enforcement programs.  It also described the basic requirements of
RCRA, the Clean Air Act, and the Clean Water Act and the statutory
criteria for delegating these programs to the states--including
requirements that states have in place enforcement and penalty
provisions consistent with these federal statutes.  We did add
language to clarify the legal basis for EPA's position on a number of
issues discussed in the report, such as the agency's concerns about
the states' various audit privilege and immunity laws.  We
acknowledged EPA's stated position, for example, that some of these
laws hamper the states' ability to comply with statutory enforcement
requirements by restricting their ability to obtain penalties and
injunctive relief and to obtain information about a facility's
compliance status. 

5.  The draft report devoted several pages crediting EPA's efforts to
establish sector-specific compliance assistance centers, develop
policies that give incentives to the regulated community to comply
with environmental laws, and develop and implement its environmental
auditing policy.  The draft also recognized the agency's related
initiatives that, while not focused specifically on providing
compliance assistance, are intended to offer participants the
opportunity to experiment with innovative ways to make compliance
more efficient and effective (e.g., Common Sense Initiative, Project
XL, Environmental Leadership Program).  We added language to further
convey EPA's role in developing alternative compliance strategies and
in assisting the states in their own efforts to develop such
strategies. 

6.  The draft report fairly described EPA's efforts in developing and
implementing enhanced performance measures.  In particular, the draft
noted that the agency had "spent considerable time and energy in
developing its National Performance Measures Strategy" and that "its
influence may extend to state enforcement." The draft also credited
the agency with seeking "broad involvement by states and other
stakeholders in developing the strategy." In addition, the report
cited other initiatives, such as the National Environmental
Performance Partnership System, as further encouraging use of
performance measures.  Nonetheless, we added language that EPA
suggested to further explain the agency's commitment of resources to
this effort. 

7.  The report's recommendations are intended to address two major
issues identified:  (1) the difficulties experienced by states in
developing results-oriented measures and (2) the inconsistency with
which different EPA entities are implementing the agency's policies
on the use of enforcement and other compliance tools.  The first
recommendation essentially asks EPA to follow through on its stated
commitment to develop measures pursuant to its National Performance
Measures Strategy and to do so in a manner that will assist
interested states in developing their own measurements.  We did
modify the recommendation, as EPA suggested, to (1) reinforce the
value of disseminating information among the states on effective
practices and successful efforts to measure programs' results and (2)
reflect that EPA should work collaboratively with states in
developing the measures. 

The second recommendation reflects our conclusion that the problems
of inconsistent implementation identified in the report require the
attention of the agency's top management because it has overall
responsibility for directing and coordinating the activities of the
different EPA organizational units with enforcement responsibility,
including OECA, program offices, the Office of General Counsel, and
the regions.  Admittedly, the task of resolving the inconsistent
implementation discussed in the report would still be a difficult
task.  Nonetheless, we believe that this level of management
attention to the issue will move things in the right direction.  We
also added language to this recommendation designed to encourage
EPA's various offices with enforcement responsibility to more
systematically coordinate their negotiations with, and oversight of,
state agencies.  We believe this effort would help to alleviate the
problem cited by many state officials that they are often given
conflicting information or direction by different EPA offices. 

We believe that EPA's suggested recommendations on "the types or mix
of measures needed for enforcement and compliance assurance programs"
were not appropriate for this report.  In this connection, the letter
itself points out that integrating these elements "cannot be reduced
to a simple rule .  .  .  or a resource formula (e.g., 60% to
enforcement, 40% to assistance)."

Section II.  EPA Implementation of Alternative Compliance Strategies

8.  As noted above under Section I ("General Concerns"), point #5,
the draft report presented considerable discussion acknowledging
EPA's efforts to develop and implement alternative compliance
strategies.  In connection with the third point raised by Section II
of EPA's letter--that we should have mentioned EPA's use of a
collaborative process involving other stakeholders--the draft report
cited EPA's use of a collaborative process in developing the National
Performance Measures Strategy, noting that the agency had "sought
broad involvement by states and other stakeholders in developing
[this] strategy." As requested by EPA, the published report includes
additional recognition of stakeholder involvement in the agency's
other initiatives. 

Section III.  Recognizing the Value of Deterrence

9.  As noted above under Section I ("General Concerns"), point #3,
while we do not believe it appropriate to use this report to
reiterate our acknowledgement of the value of enforcement in
achieving compliance through deterrence, we emphasize that nothing in
the report contradicts GAO's past statements about the importance of
enforcement in deterring violations of environmental laws or of
"leveling the playing field" among regulated companies and
facilities.  While the draft report had reflected EPA's position on
these issues, we added language suggested by EPA to describe why it
feels so strongly about the value of deterrence. 

In connection with EPA's specific comment in point #2 of this section
that the report does not acknowledge that the "specific and general
deterrent effect achieved through enforcement actions" motivates
participation in alternative enforcement strategies.  It was not our
intent to imply that enforcement and conventional regulatory
approaches are incapable of producing results, and we revised the
passage cited to avoid any such implication. 

Section IV.  Auditing Laws

10.  We revised our draft report to reflect EPA's legal concerns
about audit privilege and immunity laws, currently in chapter 3, in
other parts of the report as appropriate.  The draft report set forth
the general characteristics of states' audit privilege and immunity
laws without describing in detail their myriad provisions.  However,
in the light of EPA's comments, we have added language to make clear
that some audit privilege laws protect not only audit findings, but
also other information generated by an audit.  We also (1) reflected
the fact that some audit laws do not require that the audit be
comprehensive in order for the privilege or immunity to apply and (2)
clarified that audit immunity laws, but not audit privilege laws,
generally require disclosure and correction of the violation in order
to obtain the privilege or immunity.  The information EPA provided on
the National Conference of State Legislatures study has been included
in the report. 

Section V.  Amnesty Laws and Programs

11.  Chapter 3 of the draft report discussed EPA's concern that some
state amnesty laws may undercut state enforcement authority.  It
cited EPA's specific concern that Washington's amnesty law
unacceptably restricted the state from assessing a penalty for the
time in which a facility is in violation and impermissibly increased
the state's burden of proof in establishing violations.  This section
of the draft report also noted that EPA recently launched a review of
states' amnesty laws to determine if they might undercut states'
enforcement authority and serve as an impediment to the delegation of
federal environmental programs to the states. 

Section VI.  "Mixed Messages" from EPA

12.  See our response to Section I above (General Concerns), point
#2, which discusses the basis for our conclusions about inconsistent
messages and uneven implementation by different EPA offices with
enforcement and compliance assurance responsibilities.  In addition,
this section of the EPA letter raises several additional points,
including the following: 

  -- The letter states that the report should acknowledge the
     difficulty associated with integrating traditional enforcement
     approaches with compliance assistance/incentive approaches "in a
     multi-layered federal-state system, with a set of organizations
     that are highly decentralized." We agree with this suggestion
     and have added language pointing to the inherent difficulty in
     ensuring consistency in the light of EPA's decentralized
     structure and the diversity among the state organizations with
     which the agency deals.  We would observe, however, that the EPA
     request for this revision appears to us as an acknowledgement
     that the problem of inconsistency still exists. 

  -- The letter states that the concern about EPA's message is not so
     much that the message is inconsistent, but that EPA's approach
     to enforcement is one with which many states disagree.  We
     firmly believe that our findings do reveal inconsistency, but it
     is worth clarifying that the inconsistency is not one of the
     message articulated by enforcement management, but one of
     implementation by the various EPA offices charged with carrying
     that message out.  We revised language in the draft report to
     clarify this distinction. 

Section VII.  EPA Measurement Efforts

13.  The points raised in this section generally (1) request greater
acknowledgement of EPA's efforts to develop performance measures and
(2) defend the agency's continued use of output measures: 

  -- As noted above under Section I ("General Concerns"), point #6,
     the draft report had given EPA considerable credit for its
     progress under its measures strategy.  This section of EPA's
     letter further states that the agency had already developed
     seven outcome measures (including statistically valid compliance
     rates).  We have acknowledged the additional progress.  However,
     the agency should then indicate when this progress will be
     reflected in the measures contained in the enforcement section
     of its GPRA annual performance plan, which, as our draft report
     notes, is currently focused entirely on output measures. 

  -- We agree that EPA will continue to need output data for the
     reasons cited in this section.  We would add that the agency
     should complement this reliance on output measures with an
     increasing reliance on outcome measures and environmental
     indicators.  As we stated in our report, we believe progress in
     this direction can be made through aggressive pursuit by EPA of
     its National Performance Measures Strategy. 

Section VIII.  State Measurement Efforts

14.  Our review was not intended to resolve a debate between EPA and
"the states as a whole" on fundamental policy issues about the
appropriate role of enforcement in promoting greater compliance and
environmental protection.  Rather, as requested, we examined the
practices of 10 states (among the acknowledged leaders in testing
alternative compliance strategies) to provide information on (1) what
alternative compliance strategies the states were practicing, (2)
whether and how they were measuring the effectiveness of these
strategies, and (3) how EPA had responded to their efforts.  The
product of this effort is intended to suggest ways in which EPA and
the states can work together more effectively to achieve the
developing common goal of state compliance strategies that
increasingly focus on results.  We agree with EPA that it is
important to recognize the diversity among the states in capability
and orientation, and to recognize that the rate of progress in
developing results-oriented compliance strategies (and the
appropriate mix of compliance tools) may vary from state to state. 

Section IX.  Burden Reduction

15.  We believe the report more than adequately reflects the
reporting burden dilemma faced by EPA and the states.  Of particular
note, the report in no way reflects a view that output measures and
source-specific data should be replaced with ambient condition data. 
It does, however, reflect a view repeated by many state
officials--and acknowledged by senior EPA officials--that adding new
measures to existing ones poses legitimate concerns for state
officials about a reporting burden.  The report cites EPA's efforts
to deal with the problem, noting that their effectiveness remains to
be seen. 

Section X.  Recommendations

16.  See our response above under Section I ("General Concerns"),
point #7, which explains the rationale for the recommendations
contained in this report.  We believe that some of the additional
suggestions offered by EPA in this section were not appropriate to
include as formal recommendations.  However, we did include the
information in some of the suggestions elsewhere in the draft report. 
For example, EPA suggested that we commend the Florida Department of
Environmental Protection for its measurement efforts.  The draft
report acknowledged Florida's considerable efforts in developing
statistically valid compliance rates and EPA's open, stakeholder
approach in pursuing its National Performance Measures Strategy.  On
the other hand, we did not believe it appropriate to prescribe
specifically what output and outcome measures should be used by EPA
and the states (EPA's seventh suggested recommendation in this
section) or to "reiterate" opinions about (1) the need for strong
enforcement as a foundation for programs that use alternative
compliance strategies and (2) the need to use enforcement to provide
a level playing field and eliminate the economic advantages of
noncompliance (suggested recommendations one and two). 


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V

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

Steven L.  Elstein, Assistant Director
Katherine Siggerud, Senior Evaluator
Lisa T.  Pittelkau, Senior Evaluator
Mary F.  Nugent, Senior Evaluator
Mary Pniewski, Senior Evaluator
Robert J.  Letzler, Evaluator

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