Title: Envornmental Protection Agency Author: Vice President Al Gore's National Performance Review Date: September, 1993 ******************************* Environmental Protection Agency ******************************* Accompanying Report of the National Performance Review Office of the Vice President Washington, DC September 1993 ******** Contents ******** Executive Summary 1 Recommendations and Actions ^^^^^^^^^^^^^^^^^^^^^^^^^^^ EPA01: Improve Environmental Protection Through Increased Flexibility for Local Government 5 EPA02:Streamline EPA's Permit Program 9 EPA03: Shift EPA's Emphasis Toward Pollution Prevention and Away from Pollution Control 13 EPA04:Promote the Use of Economic and Market- Based Approaches to Reduce Water Pollution 21 EPA05: Increase Private Sector Partnerships to Accelerate Development of Innovative Technologies 23 EPA06: Stop the Export of Banned Pesticides 29 EPA07:Establish Measurable Goals, Performance Standards, and Strategic Planning Within EPA 33 EPA08:Reform EPA's Contract Management Process 35 EPA09: Establish a Blueprint for Environmental Justice Throughout EPA's Operations 39 EPA10:Promote Quality Science for Quality Decisions 43 EPA11:Reorganize EPA's Office of Enforcement 47 Agency Reinvention Activities 51 Summary of Fiscal Impact 53 Appendix ^^^^^^^^ Accompanying Reports of the National Performance Review 57 Abbreviations ^^^^^^^^^^^^^ ACUS Administrative Conference of the United States ANSI American National Standards Institute AT&T American Telephone and Telegraph CAA Clean Air Act CAAA Clean Air Amendment Act CAD/CAM Computer Assisted Design/Computer Assisted Manufacturing CERCLA Comprehensive Environmental Response, Compensation and Liability Act CWA Clean Water Act DOD Department of Defense EHIA Environmentally High Impact Areas EPA Environmental Protection Agency ETI Environmental Technology Initiative FDA Food and Drug Administration FIFRA Federal Insecticide, Fungicide, and Rodenticide Act FMFIA Federal Manager's Financial Integrity Act FTE Full Time Equivalent GAO General Accounting Office IDEA Integrated Data for Enforcement Analysis IOAA Independent Office Appropriations Act NACEPT National Advisory Committee for Environmental Policy and Technology NEPA National Environmental Policy Act NPDES National Pollutant Discharge Elimination System NPL National Priorities List NPR National Performance Review OBRA Omnibus Budget Reconciliation Act OE Office of Enforcement OFPP Office of Federal Procurement Policy OMB Office of Management and Budget POTW Publicly Owned Treatment Works PPA Pollution Prevention Act RCRA Resource Conservation and Recovery Act SRF State Revolving Fund SRO Senior Resource Official SWAT Special Weapons and Tactics TRI Toxic Release Inventory UIC Underground Injection Control USDA United States Department of Agriculture ***************** Executive Summary ***************** In 1970, Congress created the Environmental Protection Agency (EPA) by pulling together a complex patchwork of federal programs into a single regulatory body. The new agency was charged with a deceptively straightforward mission: to control and abate the spread of pollution. Over the last two decades, this goal has remained unchanged, but the means needed to achieve it have proven to be far from simple. EPA integrates research, monitoring, standard-setting, and enforcement, coordinating these diverse activities with state and local governments, private and public organizations, and educational institutions. It works with the Departments of Interior, Agriculture, and Energy, serving as a focal point for all federal agencies whose operations affect the environment. EPA undertakes these functions with a work force of 17,468 and a 1994 budget of approximately $6.4 billion. The years since 1970 have brought an expanding system of environmental statutes under EPA's jurisdiction. These include the Clean Air Act (CAA), the Clean Water Act (CWA), the Pollution Prevention Act (PPA), the Resource Conservation and Recovery Act (RCRA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or Superfund), to name only a few. The growing outside scrutiny, increasing responsibilities, and limited resources have brought EPA to a critical juncture. To ensure the viability of the nation's environmental future, the agency must embark on a new course. Rather than responding to high-profile incidents of pollution with isolated, media-specific approaches based on a command-and-control bureaucracy, it must pursue an integrated, flexible strategy. Rather than tolerating status-quo inefficiencies as necessary evils, it must reinvent its approach to management. To help guide EPA's new course, first, the agency must eliminate obstacles to increased accountability and performance. EPA should give local communities greater flexibility in achieving the environmental focus of federal statutes wherever possible and should solicit their input before completing major regulatory reforms. In addition, EPA should delegate responsibility over permit programs to states that are legally and organizationally prepared for the job. To coordinate this decentralization, EPA should assemble a clearinghouse providing potential permit holders with relevant information. No matter how effectively EPA removes the barriers to federal, state, and local performance, it must also bolster the role of the private sector by creating competitive government. Shrinking resources, the immense costs of toxic cleanup, and the difficulty of eliminating pollutant transfer demand that EPA redirect its focus: The new priority must be to prevent environmental degradation altogether. Although the Pollution Prevention Act of 1990 provides a worthy point of departure, the agency can do more. Regulatory reform, private partnerships, technological innovation, greater public information, and state and local cooperation must each be harnessed to effect the shift in paradigm. One specific example of this principle lies in the arena of water quality, where the agency should recognize that parties subject to Clean Water Act regulations can often identify and implement the most efficient mechanisms to ameliorate toxic buildup. To make it possible, however, EPA must work with Congress to allow trading of waste discharges when such exchanges meet overall quality requirements while saving money. The agency should augment its effort to promote independent industry initiatives and public-private partnerships. These could be instrumental in the accelerated development of innovative environmental technology, especially in the area of pollution prevention. Eliminating the export of banned pesticides overseas will not only ensure that Americans are not exposed to harmful chemicals on imported foods but will also demonstrate American responsibility and leadership worldwide. EPA must also make better use of the resources already at its disposal by empowering employees to manage for results. It should begin with an agency-wide drive to exert new leadership through measurable goals, performance standards, and strategic planning. These steps should address the nation's full range of environmental problems and EPA's own internal operations. Overdependence on contractors and inadequate oversight of their work have yielded ethical abuses due to a lack of accountability. The agency's future lies in promoting not only environmental safety, but environmental justice as well. Administrator Browner is acting to resolve both issues with major initiatives, and EPA's senior management must follow through on her proposals. Measures to advance local action must be accompanied by efforts to improve EPA's own results, and an important step in this direction would come from ensuring that all agency decisions are based on quality science. To that end, EPA should develop a personnel system and professional tracks for scientific and technical employees and should intensify its use of peer review and quality assurance to promote excellence in science. Finally, another pressing internal issue lies in the agency's Office of Enforcement, where disparate, media-specific approaches have thwarted the overall effort to ensure environmental compliance. Reorganization of the Office of Enforcement will result in greater enforcement and compliance. The discussions that follow do not attempt to encompass the full set of concerns within EPA. The continuation of this process will bring additional issues and further reports on its own internal reinvention findings. The present recommendations of the National Performance Review, however, save approximately $33 million over the next six years and set EPA on a new course for the next century. Recommendations and Actions *************************** ********************************************************** EPA01: Improve Environmental Protection Through Increased Flexibility for Local Government ********************************************************** Background ********** Environmental laws and regulations implemented over the past decade have led to significant improvements in environmental quality. Airborne lead has decreased 98 percent since 1970, largely due to the ban on lead in gasoline.(1) Since 1983, carbon monoxide levels in the air have dropped 34 percent.(2) The Clean Water Act has dramatically improved the quality of rivers and waterways throughout the country, resulting in increased tourism, the resurgence of recreational boating and commercial fisheries, and other economic gains. Today, twice as many rivers meet quality conditions for their designated uses as did in 1974.(3) Many of these laws, however, place a very real cost burden on local governments. Localities now struggle to comply with new requirements of the Safe Drinking Water Act, the Clean Water Act, the Resource Conservation and Recovery Act (RCRA), the Clean Air Act, and Superfund, with little or no prospect of significant increases in federal grants and only limited availability of loans in the future. By the year 2000, the Environmental Protection Agency (EPA) estimates that local governments will need to spend nearly $44 billion annually to meet existing requirements.(4) As the front-line managers of many environmental programs, local governments have had too little to say in the development of past environmental regulations. With the opportunity to "reinvent" the way EPA works with state and local governments, EPA has a chance to significantly increase the effectiveness of our nation's environmental programs. One key challenge for the agency is to allow states and localities increased flexibility in environmental regulations, without compromising environmental performance, accountability, or fairness across communities. Greater flexibility may be warranted in a variety of circumstances to accommodate the diversity of environmental conditions across the country; to allow and encourage the use of more cost-effective methods to achieve the same or improved environmental outcomes; and to enable communities to more easily pursue environmental solutions across the multiple media of air, water, and land. Local governments cite examples where failure to devise better ways to protect the environment affordably may result in just the opposite of the intended effect. In the Southwest, one city reports an increase in desert dumping of solid waste by citizens because of a refusal by the citizenry to pay to expand the local landfill in accordance with federal regulations, which require installation of double liners and a leachate collection system to comply with RCRA groundwater laws. The city questions whether the requirements are necessary in this case because of its geology and arid climatic conditions. The problems associated with inflexible laws, regulations, and practices are exacerbated by the sheer volume of new regulations the EPA is required to implement. For example, the Safe Drinking Water Amendments of 1986 call for the testing, monitoring, and control of an additional 25 new contaminants every three years. If EPA fails to issue these new standards, it violates the federal law. At the same time, the issuance of such standards adds significant new cost burdens to local governments. Flexibility does exist in some statutes. EPA allows the states that have been delegated the authority to manage the Safe Drinking Water Act the right to waive some of the Act's monitoring requirements. Eleven states currently operate a waiver program, and 12 others have begun to establish new waiver programs. In some cases, however, the states and the local public water systems are finding they lack the resources necessary to develop an adequate program to modify the monitoring requirements. EPA has also begun to work with some states and local governments to conduct comparative risk assessments to help communities set priorities among competing needs. However, progress in this area varies considerably among the EPA regions, where primary responsibility exists for dealing with state and local governments, and considerable work needs to be done to translate the findings of comparative risk analysis into the day-to-day decisionmaking of EPA and its state and local partners in environmental protection. In the financial arena, EPA has begun, through university-based environmental finance centers, to help individual communities identify innovative financial approaches to meet environmental goals. In the technical and management areas, EPA has developed model laboratory/local government cooperative ventures. EPA needs to continue to explore, promote, and expand these and other ways to achieve environmental objectives and address barriers to innovation and change, along with maximum flexibility wherever warranted. EPA must recognize that increased regulatory flexibility offers tremendous opportunities for positive institutional change at federal, state, and local levels. Then EPA must work to take advantage of these opportunities by finding ways to allow flexibility without compromising fairness, accountability and, above all, performance. This move toward institutionalizing flexibility in regulatory processes can occur only in an atmosphere of true partnership that serves to promote and perpetuate the economic viability of local governments while protecting the health of the nation's citizenry and environment. Actions ******* 1. EPA should amend the regulations pursuant to the Regulatory Flexibility Act of 1980 determined to be most troublesome for local government to provide alternative and flexible approaches to meeting environmental mandates. EPA should establish an implementation group to determine which regulations should be selected for revision. The group should obtain input from state and local governments, environmental organizations, and other stakeholders. With guidance from the group, relevant EPA program offices should begin to develop appropriate language to amend the regulations selected. The public notice of EPA's intent to amend the selected regulations should be issued by January 1, 1996. If successful, this process could set a precedent for additional flexibility in the future. 2. The EPA should convene a series of town meetings across the United States with environmental and other citizen groups and local officials to ensure that outside input is considered before regulatory reform recommendations are finalized. The town meetings should start by January 30, 1994. One objective of these meetings should be to solicit interested stakeholders for their views on how EPA should increase its support of state, tribal, and local governments in assessing and prioritizing their ecological and community health risks. 3. The EPA should establish a pilot project that will assist one community to assess its environmental and community health risks in directing resources to priority problems. The pilot should be established by March 1, 1994. If successful, this pilot should then serve as a model for other communities and could become the impetus for additional regulatory and, perhaps, statutory change. Implications ************ In addition to promoting within EPA an understanding of the need for flexibility during rule-writing, town meetings and the process of identifying and selecting specific rules for revision are certain to increase awareness and understanding of health and environment- protecting regulations, as well as their importance. Perhaps the greatest danger in promoting flexibility lies in the potential for some communities to use that flexibility to reduce their commitment to environmental protection for their citizens, rather than to allow the innovation that will result in improved environmental outcomes. It becomes essential, therefore, for greater flexibility to be accompanied by performance measures and clear accountability. Fiscal Impact ************* Granting regulatory flexibility will not require an additional investment of resources. The implementation of the pilot program and the town meetings will impose additional costs on the agency. Endnotes ******** 1. U.S. Environmental Protection Agency, National Air Quality and Emissions Trends Report, 1991 (Washington, D.C., October 1992), sec. 1, p. 6. 2. Ibid., sec. 3, p. 2. 3. Wayland, Robert H., "What Progress in Improving Water Quality?" Journal of Soil and Water Conservation (reprint), vol. 48, number 4 (July-August 1993), pp. 262-266. 4. U.S. Environmental Protection Agency, Environmental Investment: The Case for a Clean Environment (Washington, D.C., November 1990), sec. 8, p. 51. The $44 billion estimate is a U.S. Department of Commerce-derived extrapolation for 1993 dollars based on a 1986 figure of $32.5 billion. *************************************** EPA02: Streamline EPA's Permit Program *************************************** Background ********** Historically, the Environmental Protection Agency (EPA) and its state partners have relied heavily on permits as the primary vehicle to achieve environmental protection. A permit is an authority granted by EPA to the permit holder to discharge a pollutant into the environment or to store, treat, or dispose of hazardous waste materials. The permit reflects the limitations established by the statutes for pollution discharges and handling of hazardous wastes. Permits may be general or specific. General permits state exactly what is required of a class of facilities, such as in the dry cleaning or the paper pulp industry. General permits are used when it is impractical or unnecessary to issue individual permits for each of many small facilities with similar operations. Specific permits dictate what a given facility is required to do, often taking into account particular conditions at the specific facility. While this strategy has succeeded in controlling sources of pollution from large, centralized facilities, the current permitting process has been less effective in managing small, diverse, and decentralized sources of pollution, like stormwater discharges. Currently, EPA and the states are responsible for processing more than 730,000 permits in the media (air, water, solid waste, and toxics). EPA budgets more than 1,000 positions annually (most of which are located in regional and field offices) and provides about $800 million in the form of grants to states and contract dollars to conduct permit activities.(1) Despite this resource investment, it is not always possible to issue or reissue permits in a timely manner due to insufficient data available to the EPA or state permit writer. Depending on the type of permit, the time it takes from application to issuance may range from 10 months to two years. EPA operates under 12 major environmental statutes and the regulations implementing those statutes. In order to ensure due process, some permit programs tend to prescribe the specific means by which environmental protection is achieved. This eliminates the opportunity to use innovative or alternative approaches. These requirements constrain EPA's ability to address cross-media concerns and innovative pollution abatement methods, even when the statute does not prohibit such approaches. For example, point sources (such as discharges from facilities), nonpoint sources (such as fertilizer runoff), wastewater effluent, and stormwater discharges would benefit from alternative solutions in permitting. A true cross-media approach can be stymied if no flexibility is available in a different statute. Given the large volume and different kinds of permits, neither the states nor EPA can effectively address all of their permittees. This raises the question of whether permits are always the best mechanism for achieving environmental protection. Consequently, it is essential to prioritize, group, and target permitting activities according to types of facilities to be regulated, their geographic location, and the nature of the types of permits that will be required. Because the responsibility for issuing permits is divided between EPA and the states without clear-cut lines delineating respective expectations and responsibilities, miscommunication often adds to the delay in the permitting process. States must rely on EPA to provide them with technical guidance and permit rules. When EPA does not provide the guidance, implementation becomes problematic. For example, the 1990 Clean Air Act Amendments (CAAA) required EPA to issue a permit rule by November 15, 1991; however, disagreement among EPA, the Office of Management and Budget, and the Council on Competitiveness over certain requirements in the final rule delayed its issuance for eight months. This in turn caused a delay in issuing the final permit rule for federal and state implementation of Title V's requirements. Moreover, some state legislatures deferred action on bills authorizing agencies to implement permit programs and collect permit fees. For example, while EPA has provided some guidance on implementing Title V, additional program and fee guidance that it planned to provide to states in 1992 has not been issued. Consequently, some states will find it difficult to meet the November 1993 deadline set by the CAAA for submitting their permit program plans to EPA.(2) Delays in meeting the milestones for implementing the permit program slow efforts to improve air quality, determine emission levels, monitor emissions, and fulfill other requirements. Both the regulators and the regulated community (the permittees) view the permitting process as an administrative burden. They have complained that too many forms are required to apply for a permit. This excess paperwork adds to the administrative burden at both the state and federal level and significantly slows the permit review process. Many states believe that EPA practices excessive oversight. States with well-established pollution control permit programs have indicated that a more appropriate role for EPA is in technology transfer, not in excessive oversight of the states. These states would prefer more authority to carry out their program responsibilities. For example, in the water quality permitting program, some states raised concerns that EPA micromanages each water quality permit issued by the state. Some states suggest that greater environmental protection could be achieved by refocusing EPA's activities from individual permit reviews to technical assistance services and development of a state/federal resource allocation plan to address water quality problems with the highest environmental risk. Furthermore, the lack of an integrated database system and mechanism to track permits in the states or regional EPA offices makes it very difficult for applicants to know permit requirements, and for regulators to know the types of permits, number of permits, and geographic location of the various permitted facilities. Partnerships with the states need to be developed to build the integrated databases that would enhance monitoring and compliance for enforcement and provide information for emergency responses to environmental accidents. Finally, as stated earlier, the current permitting procedures and programs do not effectively encourage flexibility. Even when regulations and statutes allow for various approaches, the agency budgeting and planning process does not allow upfront investments to pay for them. Although some statutes do not specifically prohibit pilot projects, many dictate the specific technology that must be used. Without incentives to encourage new approaches, little progress will be made in streamlining the permit process. For instance, the National Advisory Council For Environmental Policy and Technology has stated that the current permitting and compliance systems discourage all stakeholder groups from taking the risks necessary to develop innovative technologies whether for pollution prevention or for pollution control and to bring them into routine use to solve environmental problems.(3) Actions ******* 1. EPA should establish a permits clearinghouse by July 1995 to serve as a single point of contact for regulated industries and local governments to obtain information about national and regional regulations and permitting requirements. This should include general, simple to understand information, as well as names and numbers of state and/or EPA regional or headquarters contacts for technical assistance on permitting issues. The clearing-house should offer a national EPA permit hotline and computer bulletin board. 2. EPA should authorize states that now have full statutory authority and permit fee systems in place to take full responsibility for permit programs. This would allow states needed flexibility in dealing with local program requirements instead of relying on the one-size-fits-all approach. 3. EPA should identify, by June 1994, statutes that prevent flexibility in permitting and report to the Administrator for follow- up action. Flexibility in permitting is needed to stimulate new approaches for pollution abatement. EPA should direct regional offices to use more flexibility in dealings with states, especially where traditional approaches have proven ineffective. 4. EPA should develop a cross-program permit tracking system pilot with one state and one region by June 1994. This would allow for multi-media permit assessment, cross-media compliance, and enforcement actions, as well as greater access for the public and researchers to permit information. In addition, such a database could include environmental results and outcomes based on monitoring systems with feedback and targeting for permit programs. If the pilot project is successful, the technology could be transferred to other states. Implications ************ Streamlining and simplifying the permitting process will increase stakeholder participation and credibility as well as EPA and state level administrative costs savings. Increased state partnerships will improve performance and increase stakeholder participation in the permitting process. Establishment of a permit clearinghouse will improve customer satisfaction by reducing paperwork and other administrative burdens. Development of a permit tracking database will expedite the permit process, target risk assessment, and provide information for emergency responses to environmental mishaps. Fiscal Impact ************* Streamlining by reducing delays and staff time in the permitting process could result in savings for EPA, the states, and the regulated communities. Additional personnel needed for 1994-96 should be reassigned from existing staff within the agency. Budget Authority (BA) and Outlays (Dollars in Millions) Fiscal Year 1994 1995 1996 1997 1998 1999 Total ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BA 0.0 0.0 0.0 -7.5 -7.5 -7.5 -22.5 Outlays 0.0 0.0 0.0 -4.0 -7.5 -7.5 -19.0 Change 0 0 0 -100 -150 -150 -150 in FTEs Endnotes ******** 1. Data provided by the Environmental Protection Agency's Budget Office. 2. See U.S. General Accounting Office: Air Pollution, Difficulties in Implementing a National Air Permit Program, GAO/RCED-93-59 ( Washington, D.C.: U.S. General Accounting Office, 1993). 3. See U.S. Environmental Protection Agency, Permitting and Compliance Policy: Barriers to U.S. Environmental Technology Innovation, Report and Recommendations of Technology Innovation and Economics Committee (Washington, D.C., January 1991). ********************************************* EPA03: Shift EPA's Emphasis Toward Pollution Prevention and Away From Pollution Control ********************************************* Background ********** The Pollution Prevention Act of 1990 establishes a bold national objective for environmental protection: "[T]hat pollution should be prevented or reduced at the source whenever feasible."(1) The Environmental Protection Agency's (EPA) Science Advisory Board has strongly recommended that pollution prevention be emphasized as the preferred means of reducing risk, explaining, "Preventing pollution at the source through the redesign of production processes, the substitution of less toxic production materials, the screening of new chemicals and technologies before they are introduced into commerce, energy and water conservation, the development of less polluting transportation systems and farming practices, etc. is usually a far cheaper, more effective way to reduce environmental risk, especially over the long term."(2) EPA has defined pollution prevention as source reduction (reducing pollution at its source by shifting to the use of materials, processes, or practices that reduce or eliminate the creation of pollutants or wastes), as well as to mean protecting natural resources through conservation or increased efficiency in the use of energy, water, or other raw materials. Pollution prevention is not the only strategy for reducing risk; rather, it is the preferred one. Environmentally sound recycling shares many of the advantages of prevention it can reduce the need for treatment or disposal and conserve energy and natural resources. Where prevention or recycling are not feasible, treatment followed by safe disposal as a last resort will play an important role in achieving environmental goals. When EPA was created in 1970, it focused first on controlling and cleaning up the most immediate environmental problems. Those efforts have yielded major reductions in pollution. Over time, however, analysis has shown that traditional end-of-pipe approaches not only can be expensive and less than fully effective, but sometimes transfer pollution from one medium to another (for example, from water to air). Preventing pollution also offers important economic benefits, as pollution that is never created avoids the need for expensive investments in waste management or cleanup. For example, an environmental research group, INFORM, Inc., found in its study of 29 chemical plants that 15 percent of the 181 source-reduction activities identified resulted in annual dollar savings of $1 million or more.(3) Nearly half saved between $45,000 and $1 million annually, and more than one quarter saved between $6,000 and $45,000 each year. Only one out of all 181 source- reduction activities documented reported a net cost increase. Thus, this study suggests that pollution prevention has the potential for both protecting the environment and strengthening economic growth through more efficient manufacturing and raw material use. An effective pollution prevention strategy must reflect the complex and multiple array of factors that motivate the private sector to invest in cleaner, less polluting technologies and practices. These factors include regulations and compliance, state and local partnerships, private partnerships, federal partnerships, public information and the right to know, and technological innovation. Regulations and compliance play an integral part in preventing pollution. A report by INFORM, Inc., documented the critical role that both existing and anticipated future regulations play in providing an incentive to eliminate waste at the source. Federal and state experience with multi-media inspections and enforcement settlements demonstrate that effective compliance strategies can accelerate the introduction of new technologies. The recent decision to reorganize the Office of Enforcement creates major opportunities to focus on multi-media compliance goals.(4) EPA regulations, permits, inspections, and enforcement actions need better coordination to minimize the cross-media transfer of waste and to more effectively reduce waste at the source. The Source Reduction Review Project, through which EPA is attempting to coordinate different rules affecting 17 key industrial categories, is a good start. Regulations and compliance strategies must focus on the whole facility, rather than individual environmental problems. State and local partnerships will be an important factor in determining the success of pollution prevention. Increasingly, state and local governments are the face of government to the general public. States have also proved to be excellent sources of innovation, promoting pollution prevention through both compliance and technical assistance programs. For example, the State of Massachusetts won a national award from the Ford Foundation for the Blackstone project, which combines multi-media inspections with effective delivery of technical information to industries trying to find cost-effective methods of compliance. EPA disburses approximately $600 million per year in grants to states that have been charged with implementing federal law under authority delegated by EPA. It is critical that EPA follow up on its existing commitment to provide states with flexibility to use such funding to find innovative ways to carry out these responsibilities. In particular, EPA must offer more flexible approaches to funding state implementation efforts to reward innovation and emphasize results. Private partnerships are yet another key to achieving pollution prevention. In many cases, collaborative efforts with industry or public agencies can help achieve results through pollution prevention more quickly than could be obtained through regulation alone. For example, EPA's Green Programs to promote voluntary energy efficiency will play a critical role in achieving obligations under the U.S. Action Plan to stabilize greenhouse gas emissions by the year 2000. Furthermore, regulations do not often reach the more complicated corporate decisions needed to evaluate design, manufacturing, packaging, distribution, and marketing practices to reduce pollution and energy consumption. EPA has undertaken a series of innovative efforts through its Design for the Environment Program to work with industry groups such as the printing and dry cleaning industries, the accounting profession, and the insurance industry to incorporate environmental life-cycle thinking into business decisions. The Federal Trade Commission has developed standards for the use of specific environmental terms in advertising but has not reached the more complex questions of environmental claims based on more comprehensive, life-cycle analysis. The American National Standards Institute (ANSI) is currently developing positions on these issues and could benefit from EPA involvement. EPA needs to expand the scope of programs to encourage industry to go beyond compliance and to make measurable commitments to pollution prevention. That will require a better understanding of the relationship between compliance programs and the achievement of broader environmental goals. Federal partnerships must also be undertaken to achieve the goals of pollution prevention. President Clinton's Earth Day speech challenged the federal government to "lead by example not by bureaucratic fiat."(5) The federal government has a tremendous impact on the environment as the nation's largest landlord and its biggest consumer of goods and services. Accordingly, the President signed an Executive Order on August 3, 1993, that requires federal agencies to report toxic emissions under the Emergency Planning and Community Right to Know Act, establish a goal of cutting toxic emissions 50 percent, and set priorities for reducing the unnecessary use of extremely hazardous materials in government standards and specifications.(6) Other federal agencies can create major opportunities for pollution prevention through policies that shape decisions in agriculture, energy, transportation, and the management of natural resources. If pollution prevention is to expand in these sectors, EPA must form partnerships that take advantage of the authority and expertise of other federal agencies. Earlier this year, EPA joined the Food and Drug Administration and the Department of Agriculture in announcing a joint effort to develop a strategy to reduce the use of pesticides that present unreasonable risks. Other countries, including Canada and the Netherlands, have already adopted ambitious programs to cut back on the inefficient use of hazardous pesticides and fertilizers, which can cost farmers many dollars as well as pose risk to human health and the environment. A driving force in pollution prevention has been public information and the concept of the right to know. Since pollution prevention is motivated in part by public information, one of EPA's most important tasks is to collect and disseminate user-friendly data that measures progress in reducing waste at its source. The Toxics Release Inventory (TRI) has proved vital in helping industry to identify opportunities to reduce waste and improve economic efficiency. For example, many state pollution prevention planning laws are based directly on TRI data collected and maintained by EPA. New reporting requirements of the Pollution Prevention Act of 1990, which took effect last year, expands data requirements to include the reporting of chemicals that were reduced at the source, recycled, treated, or disposed, as well as the volume released directly to the environment. EPA has already committed to expanding the scope of the TRI to include different chemicals and major sources of emissions not already required to report. To make room for this expansion, EPA should reduce other paperwork requirements that are redundant or of less value. Technological innovation can serve as the engine that drives pollution prevention. The federal government plays a critical role in funding research in new technologies and in disseminating information about technological options to the private sector. The President's new initiative includes $36 million in funding for research in new technologies and anticipates a major expansion of technical assistance through the National Institute of Standards and Technology. Actions ******* 1. The preamble to each major rule proposed by EPA should include a summary of the total multi-media releases and resultant risks to the environment from the activities that are the subject of the rule. The analysis should include the estimated impact of the rule on these multi-media (e.g., air and water) releases and risks, and the preamble should identify other pending regulatory decisions likely to affect the same industry or industrial category that is the subject of the proposed rule. Having to provide these data will require identification of significant cross-media issues during development of the rule, and it will ensure that senior managers do not make significant regulatory decisions in a single-media vacuum. Such data will also provide industry with a more comprehensive picture of the web of regulatory transactions to which it must adjust over the coming years. EPA's performance can be measured according to whether it has incorporated this multi-media analysis into significant proposed rules within one year. 2. EPA should use its flexibility as it already has for the pulp and paper industry to adjust regulatory timetables so that major rules are proposed on the same date. Integrated rulemaking offers major opportunities to overhaul industrial processes to improve efficiency while reducing transaction costs by satisfying multiple regulatory requirements. Integrated rules can also help lay the groundwork for more efficient multi-media permitting and inspection strategies. EPA's performance can be measured according to the number of single-media rules it has combined for proposal on the same date. 3. EPA should change existing reporting requirements that create disincentives to multi-media inspections and enforcement actions at both the federal and state level. For example, EPA's single-media inspection programs require states to report results in conflicting formats and different time frames. Changing reporting require-ments should be addressed as part of the pending reorganization of EPA's enforcement program. EPA's performance can be measured according to whether it has integrated the reporting requirements for state inspections into one multi-media database by the end of next year. EPA should also be required to keep data on multi-media inspections carried out by the agency and by states pursuant to federal regulations. 4. EPA should move toward a consolidated grant approach providing states with maximum flexibility in the use of federal funds in carrying out responsibilities that have been delegated to the states by EPA. This may require developing performance-based measures that allow states the leeway to focus funding on the most significant problems. This flexibility should be exercised within a framework of clear federal objectives established by existing law (that is, the goal should not be a revenue-sharing approach). EPA's performance can be measured initially according to the number of dollars that states have been allowed to invest in multi-media projects under existing grant authority. 5. EPA should provide states with incentives to invest funds in water conservation and pollution prevention programs that reduce pollutant loadings of concern. EPA's performance can be reflected in whether new policies are promulgated (by statute or rule) that accomplish the above objectives. Over time, the agency should be able to point to a reduction in the quantity of wastewater to be treated as a result of water conservation and pollution prevention. 6. EPA should invite a specific industry sector to jointly undertake several projects to evaluate the feasibility of developing multi- media pollution prevention strategies for that particular industry. The projects should have clear objectives, including relating the pollution prevention objectives to compliance requirements, developing effective measures of performance, and assessing the efficacy of industry codes of conduct, for example, the Chemical Manufacturing Association's Responsible Care Program. Data from these projects could be extremely useful in developing strategies that offer industry more flexibility in return for achieving performance- based objectives. EPA's performance can be measured initially according to whether these projects have been undertaken. In the long run, EPA should be accountable for incorporating project recommendations into its legislative, regulatory, and compliance strategies. 7. EPA should help focus existing private sector labeling and standards programs by identifying the product categories of greatest concern. In addition, the agency should work with the American National Standards Institute in developing a coherent U.S. position on eco-labeling and life-cycle analysis. EPA's performance can be measured according to whether existing private sector groups focus research and labeling efforts on the product categories of concern, and whether ANSI is able to develop an effective position on environmental standards and labeling. 8. EPA should work cooperatively with the Department of Agriculture (USDA), the Food and Drug Administration, and other agencies to develop a national strategy to promote more efficient use of pesticides and fertilizers. The strategy should emphasize priorities, specific goals, and public measures of progress. The strategy should be completed and announced by mid-1994. Over time, EPA and the USDA should be able to measure progress in reducing pesticides and nutrients of concern and to document the savings to farmers from more efficient farming practices. These goals should be accomplished within existing budgets but may require significant reprogramming of funds at USDA, because the amount of funding devoted to sustainable agriculture at USDA is still quite small in relation to other priorities. 9. EPA should develop a plan for implementing the two pending Executive Orders on Pollution Prevention and Recycling, so that it can carry out its role and work jointly with other federal agencies, as outlined in the Executive Orders. These plans should include deadlines and identify individuals responsible for coordinating the development of the strategy in each agency. Both Executive Orders already include significant measurable goals. The Executive Orders can be accomplished within existing budgets but may require significant reprogramming of funds. 10. EPA should create an integrated database that provides information useful for measuring performance by industry, sector, and facility, and for devising long-term multi-media pollution prevention strategies. To the extent practical, the data should be public and should be sound enough to be useful in providing alternative, performance-based yardsticks for compliance. In the long run, credible measures of performance are critical to providing industry with the kind of flexibility needed to optimize investments in pollution prevention. The integrated database should include TRI data expanded to cover additional chemicals and facilities with greater efforts at quality control. It should also include an inventory for measuring, on an industrywide basis, changes in the use of toxic chemicals and pesticides. EPA should identify and eliminate redundant reporting requirements or information collection efforts that serve no practical purpose. This integrated database, if credible, will provide Congress and the public with a better basis for measuring EPA's actual performance in reducing pollution. The costs of establishing this integrated database are likely to be significant, although some costs (for example, for TRI expansion) are already reflected in the President's budget. EPA should coordinate with the Department of Commerce to ensure that this does not conflict or overlap with its activities in this area. 11. EPA should earmark funds for environmental technology for prevention. The President's 1994 budget includes $36 million in increased funding for research in the development of environmental technologies. A significant portion of this budget should be reserved for investments in pollution prevention with EPA involved in establishing priority areas for investment. Success will be measured in the short term according to how much of the Environmental Technology Initiative (ETI) expenditures are actually invested in technologies that don't pollute. 12. A significant portion of funds for the Environmental Technology Initiative should be targeted for technical assistance, including information access. The EPA should ensure that a significant portion of new federal funds are used to help provide small businesses with technical assistance for pollution prevention. To the maximum extent practical, the federal government should rely on existing delivery systems (such as state pollution prevention programs) for the distribution of such assistance. EPA should play a wholesale role in developing and packaging materials useful to state and other federal programs, for example, by providing clear and consistent information about forthcoming regulatory requirements. Performance in the short term can be measured according to the amount of funding made available to help small businesses with investments in pollution prevention. In the long run, EPA and other agencies must evaluate how many businesses made use of the information and collect data on cost savings. Implications ************ For each of the recommendations regarding regulations and compliance, short-term costs will include funding for cross-media training of regulatory and enforcement staff and for the development of an integrated database that can be shared by different programs. However, the long-term payoffs from a coordinated and efficient approach to rulemaking should far outweigh these temporary costs. Perhaps the greatest savings will be for industry, since integrated rulemaking can help reduce transactions costs by eliminating conflicting or overlapping requirements. Regarding state and local partnerships, providing states with more flexibility to direct existing grant funds toward pollution prevention should not result in any increased costs. In the long run, emphasizing demand-side management for municipal water systems to encourage conservation and reduce principal sources of pollution may decrease the need for expensive investments in wastewater treatment. States are likely to welcome the increased ability to invest scarce dollars in activities with a higher environmental payoff. With private partnerships, the demonstration projects outlined in the recommendations may require some funding to support data collection and analysis as well as peer review. Industry may be willing to bear most of these costs if it can reach agreement with EPA on a set of shared objectives. In the long run, these projects should help lead to more efficient approaches to regulations and compliance that offer both government and industry significant cost savings. Implementing a comprehensive agriculture strategy, as part of federal partnerships, may require significant reprogramming of funds at USDA. Similarly, the Pollution Prevention and Recycling Executive Orders may also require reprogramming of funds at other federal agencies. Each of these initiatives is designed to establish goals and measures to focus existing resources on high-priority environmental problems. The costs of establishing an integrated database to measure performance and evaluate compliance on a cross-media basis are likely to be in the range of $10 million. These resources will be most effectively spent if they are used to improve and establish linkages between existing databases, such as the TRI and the Office of Enforcement's Integrated Data for Enforcement Analysis network. Government costs may be offset in the long run by the elimination of redundant reporting requirements that currently impose data collection and management costs. Furthermore, an integrated database provides the foundation for establishing performance-based measures that allow both industry and government to find the most cost- effective alternatives for compliance. Finally, with technology innovation, the recommendations do not request any new funds but, rather, suggest earmarking a significant fraction of the ETI budget for pollution prevention research and technical assistance to small business. Investing in new pollution prevention technologies can reduce the cost of environmental protection and position the United States to compete in the global marketplace. Technical assistance is critical for helping small businesses which are responsible for most new job creation meet the costs of complying with the new Clean Air Act and other statutes. Fiscal Impact ************* This proposal is cost-neutral. For the majority of the issues, no new costs are anticipated; in the cases where some costs may be incurred, they are already included in the existing budget. Endnotes ******** 1. The Pollution Prevention Act of 1990 (42 U.S.C.A. 13101 to 13109). 2. U.S. Environmental Protection Agency, Science Advisory Board, Reducing Risk (Washington, D.C., 1990). 3. Environmental Dividends Cutting More Chemical Waste, Inform, Inc. (New York, 1992). The term "source reduction" means any practice that: a) reduces the amount of any hazard, pollutant, or contaminant entering any waste stream or otherwise released into the environment prior to recycling, treatment, or disposal; and b) reduces the hazards to the environment associated with the release of such substances, pollutants, or contaminants. 4. Multi-media is defined as air, water, solid waste, toxic waste, and pesticides. 5. President Clinton's Earth Day Speech, April 21, 1993, Washington, D.C. 6. Executive Order 12856, The Federal Emergency Planning and Community Right To Know Act, August 3, 1993. **************************************************** EPA04: Promote the Use of Economic and Market-Based Approaches to Reduce Water Pollution **************************************************** Background ********** The general principle underlying market-based approaches to dealing with water pollution is that the parties subject to pollution control requirements can identify and implement the most efficient methods of reducing or eliminating pollution. Market-based approaches rely on a common principle that the polluter pays. That is, polluters face an economic disincentive, while non- polluters may be rewarded through the same mechanism. Examples of market-based approaches include pollution discharge fees, pollution trading systems, and deposit-rebate programs. Each of these approaches provides a financial incentive to the polluter for eliminating or reducing discharges and emissions. To date, market-based approaches to water pollution have not been widely implemented in the United States. However, innovative market- based approaches are being examined by environmental groups and lawmakers, as well as by the Environmental Protection Agency (EPA). The Clean Water Act (CWA) reauthorization provides for the expansion of market-based options, which will stimulate new, more cost- effective ways to control wastewater discharges. The current CWA does, under certain circumstances, allow for water pollution trading between point source pollutants (such as wastewater from treatment plants) between point and nonpoint source pollutants (such as fertilizer runoff), and between nonpoint sources. For example, two waste-water treatment plants that comply with treatment technology requirements can trade discharge loadings to meet water quality standards. In principle, trading allocates reductions in pollutant discharges across sources using cost-effectiveness as a criterion. In practice, regulated sources can avoid treatment upgrades to meet water quality standards if they arrange for equivalent or greater reductions in loadings from other sources that discharge to the water.(1) When a point source trades with a nonpoint source, the point source (usually a water pollution treatment plant) may face regulatory pressure to reduce loadings. For example, meeting water quality standards may require additional wastewater treatment for a point source, such as advanced treatment for a publicly owned treatment works (POTW). If trading is available, the POTW may find a more efficient means to achieve the water quality goals by obtaining reductions from NPS contributors or other dischargers to the same water body. In this case, the POTW pays or otherwise arranges for the nonpoint sources to control their discharges rather than paying for the installation of more advanced treatment. The process proceeds in much the same fashion in a nonpoint/nonpoint trading scenario. EPA estimates that point/nonpoint trading currently has the potential for application in at least 950 water bodies (lakes, rivers, and streams) that are affected by nutrients and municipal and/or industrial discharges. Nutrient discharges are believed to be the type of pollution problem most readily dealt with in a trading system because: (1) they are frequently discharged by a variety of sources, and (2) nutrient trades generally raise less complex issues than trades involving toxic discharges. A second market-based approach to controlling water pollution is an incentive system wherein fees are paid by polluters based on the amount and/or nature of their wastewater discharges. Fees can be established to reflect the quantity, toxicity, or other adverse characteristics of the pollutants present in the discharge. These fees are used in some European countries to finance wastewater control programs. Such charges are based on formula involving biological oxygen demand, chemical oxygen demand, suspended matter, nitrogen and phosphorus content, and other effluent characteristics. Although designed mainly to bring in revenues, charges in Germany have also reduced industrial emissions.(2) The United States is also looking at ways to develop pollution fee programs. EPA has a lead role in identifying those fees that could result in the greatest reduction in water pollution. The fees should be structured to be effective (i.e., give cause to reduce water pollution without being burdensome to dischargers). Actions ******* 1. EPA should work with Congress to propose language amending the Clean Water Act to explicitly encourage market-based approaches to reduce water pollution. 2. The EPA Administrator should work with Congress to identify water pollution discharge fees that could be included in the Clean Water Act reauthorization. Implications ************ Market incentive approaches are not likely to be zero-cost panaceas. To adopt these approaches, difficult problems need solving, such as the revision of state or local permitting regulations and implementation issues involving trading agreements. For those who are willing to use trading approaches, there is an opportunity for cost savings. Fiscal Impact ************* These recommendations have the potential for raising significant new revenues and savings. At this time, however, the fiscal implications cannot be estimated. Endnotes ******** 1. The term "pollutant loadings" means the type and amount of pollution that enters a waterbody from one or many sources for example, sounds or suspended solids. Trading systems must reflect good data for both parameters. 2. Theter, "Green Fees," World Resources Institute, November 1992, p. 76. ********************************************************** EPA05: Increase Private Sector Partnerships to Accelerate Development of Innovative Technologies ********************************************************** Background ********** The Environmental Protection Agency's (EPA) National Advisory Committee for Environmental Policy and Technology (NACEPT) has stated that the nation's potential to improve the environment is directly related to its ability to produce and apply technological solutions.(1) However, NACEPT has also noted that the current rate of technological innovation is less than required. This is creating a gap between the ability to define risk and target environmental problems, and the ability to solve them. EPA can accelerate the pace of technological development by building stronger partnerships with technology providers and users. NACEPT concluded that enhanced technology programs are essential to the achievement of EPA's mission and that EPA should establish the climate, culture, and incentives necessary to encourage widespread use of improved technology. NACEPT further noted that EPA should streamline coordination with its potential partners and, thus, should establish stronger technology partnerships.(2) The application of more effective environmental technologies, however, is not just a matter of environmental improvement. Improved technologies reduce the costs of environmental protection, and they enhance the competitiveness of the United States in both the domestic and international environmental technology markets. The EPA estimates that the domestic market for environmental technology now exceeds $150 billion per year, and that the world-wide market may exceed $300 billion per year. Innovative technologies can play a significant role in cleaning up the environment in many different situations, such as: monitoring/site assessment situations to determine the degree of contamination at a site; remedial situations used to clean up a site; pollution control, otherwise known as end-of- pipe cleanup; recycling; and pollution prevention where a process or product is designed/redesigned to reduce or eliminate production of pollutants. In the long run, innovative pollution prevention technologies will have a tremendous impact on environmental protection, cost effectiveness, and global competitiveness. Designing and redesigning manufacturing processes to produce a better product and one that is designed for the environment, often called a green product, will yield a more competitive product. For example, in the Energy Star program, major computer companies joined with EPA to design computers that use less energy and, thereby, contribute to the release of fewer pollutants at power generation facilities. The Energy Star program is expected by some estimates to save up to 2 percent of the nation's energy costs by the year 2000.(3) According to EPA, the early demand for energy-saving computers appears to be very high. The Energy Star program should give domestic computer designers and manufacturers a lead over foreign competition in the sale of these machines. Improved technology to clean up existing environmental waste and prevent the future manufacture of such waste has great economic importance. According to recent EPA estimates, the average cost to clean up one superfund National Priorities List (NPL) site is $27 million, and EPA estimates it will cost a total of $16.5 billion to clean up just those NPL sites already identified. Thus, partnerships between EPA and industry are necessary to develop more cost-effective solutions through innovative technologies that is, those that look promising but may lack the cost and performance data necessary to support routine use. The President's budget proposes an Environmental Technology Initiative (ETI) for the next five years, which would provide $620 million in increased funding for technology development. Much of this money would be in the base budgets of other federal agencies. In addition to participating in partnerships with these agencies to fully advance the innovation of environmental technologies, EPA also needs to leverage its limited resources to spur industry to participate with EPA as full partners in environmental technology innovation. Recently, EPA started a new public-private partnership program in cleaning up polluted sites. A Cooperative Research and Development Agreement at McClellan Air Force Base in California was developed under the provisions of the Federal Technology Transfer Act.(4) The project's goal is to evaluate the use of innovative technologies for contaminated soil and ground water (such as soil vapor extraction with innovative off-gas treatment, two-phase vacuum extraction, and bioremediation) as alternatives to established technologies (such as incineration). The project was initiated under a grant from the EPA Technology Innovation Office. A nonprofit organization, Clean Sites, Inc., of Alexandria, Virginia, is facilitating this partnership between the Air Force, EPA's Region 9 (headquartered in San Francisco, California), the California EPA, several private companies (AT&T, Beazer-East, Dow, Dupont, Monsanto, Southern California Edison, and Xerox), the EPA Risk Reduction Engineering Laboratory, and the EPA Office of Federal Facility Enforcement. Expanding the McClellan model to other federal and state projects would enable EPA to leverage limited resources to promote innovative technologies, clean up or stablilize hazardous environmental sites, prevent pollution, and provide economic improvement to the United States and other countries. The implications of this approach are many. It provides a marketing incentive for firms whose technology is demonstrated; it creates new jobs, since most technology development is occurring at firms that employ 50 people or less (firms that can benefit from the opportunities to demonstrate performance provided by these kinds of projects); and competitive technologies in remediation and pollution prevention can be exported. While the implications cannot be calculated with certainty, examples of past successes in technology innovation show the economic benefits that could be gained. In February 1993, EPA issued a summary report on its Superfund Innovative Technology Program, noting that innovative technologies used in cleaning up polluted sites can save the government as much as 68 percent of the money that would otherwise be used with existing technologies. In EPA's Region 5 (headquarted in Chicago, Illinois) between 1987 and 1990, seven NPL sites underwent remediation with innovative technologies. The projected cost to the federal government, under then-existing technology, was about $225 million; however, the use of innovative technologies accomplished the cleanup for a cost to the government of $8.5 million-a savings of $140 million. As noted, EPA may need about $16.5 billion for its share to clean up existing NPL sites. If, in fact, innovative technologies could be applied to many, or most, of these sites, there is a potential cost savings of as much as $11.2 billion, or 68 percent of the total needed, based on Region 5's experience. Because of the success of innovative technologies whether in site remediation, pollution control, or pollution prevention there is also an economic benefit to private industry. For instance, a pollution control partnership between EPA, the Tennessee Valley Authority, and private industry is field testing an innovative sulfur removal device that can replace flue gas scrubbers. If successful, savings for industries could exceed $1 billion per year, according to EPA, and this estimate does not include the economic gain from selling the technology both here and abroad. Innovative technology can benefit small business as well. The EPA assisted a small manufacturer of orthopedic devices to switch from a solvent that damages the ozone layer to a more diluted cleaner. The firm's products are now cleaned in an ultrasonic bath with the cleaner to remove grease from the parts. The new cleaning system is saving the business about $4,800 per year, according to EPA. It cost the business about $1,800 to implement the innovation. Environmental technologies are often extremely difficult to develop and test in a laboratory setting. Possible solutions conceived in a laboratory must, therefore, be evaluated outside of the laboratory in a real-world environment. However, attempting to develop and test innovative technologies outside a laboratory creates a risk for those testing the technology. The technology may not work the way it was planned, exposing technology implementers to financial liability. The McClellan partnership is based on risk-sharing by government and industry, an essential element to encourage first uses of innovative technology. The Governors of several Western states have already recognized the economic and environmental benefits of such a model program. They have developed an action plan, working with the Departments of Defense, Energy, and the Interior, and the EPA, to implement similar programs in partnership with industry. The Governors have cited the McClellan project as a model for their proposal. EPA is looking for other possible federal installations to use the McClellan model and is examining possible ways to expand this to non- federal sites. It has provided $700,000 to Clean Sites, Inc., to facilitate a series of these public-private partnerships. In sum, EPA needs to take the lead in the development, evaluation, dissemination, and use of superior environmental technologies. EPA must not only make certain that its policies and regulations allow such innovation, but it must also encourage statutory changes to spur such innovation. Therefore, EPA needs to take a proactive approach by: (1) leveraging its limited resources in partnerships with private industry; (2) providing small and large businesses with technical support regarding the benefits and costs; and (3) establishing a program to validate the performance of innovative environmental technologies. Actions ******* 1. EPA should develop an action plan with specific milestones, by mid-1994, for improving the regulatory and statutory climate for innovative technologies. The plan should identify existing barriers to innovative technology development, recommend new approaches for writing regulations, seek opportunities for working with other federal agencies, and identify policies and procedures to facilitate permitting for innovative technologies. Such a plan would encourage the introduction of innovative environmental technology. After the action plan is completed, its permitting component should be tested as a pilot program involving innovative approaches to permit development of new environmental technology. A special team, to be established by mid- 1994, consisting of permit writers from EPA and the states, should test the action plan by initiating 20 permit reviews. These reviews should begin by January 1995. The reviews would determine whether the permits could be changed or modified to allow the use of more innovative technology to accomplish the environmental mandate dictated by the permits. Results from the pilot program may require changes in the plan or may result in recommendations for statutory change. 2. EPA, in partnership with other federal agencies, should establish a small business center as a pilot program to expand the technology options available in the marketplace by helping businesses obtain financing for new technologies. The center would identify environmental business opportunities, develop a business plan, provide marketing information, and identify funding sources. Assistance should be provided to 10 small businesses from this center by October 1994, and to another 10 by October 1995. 3. EPA should develop and promote a series of monographs to assist industry in identifying pollution prevention opportunities and making informed, responsible design choices. These monographs should include information on specific industry processes, products, and systems in the areas of comparative risks, performance, and costs, including environmental costs. The monographs, describing the use of analytical tools including full cost accounting systems and substitute assessment analytical tools, should be completed by October 1994. 4. EPA should establish five partnerships similar to the McClellan Air Force Base model to expand available sites where developers and vendors can test and evaluate their technologies. Two of the partnerships, including McClellan, should be established by April 1994, and three more by January 1995. These partnerships would help EPA leverage its limited resources to promote innovative technology development by industry. 5. EPA should establish an environmental technology performance verification program by October 1995, to evaluate and validate the claims of environmental technology vendors. Under this program, EPA could designate an independent group, with the assistance of the National Institute of Standards and Technology, to perform the assessments. These assessments would be similar to those conducted by Underwriters Laboratories for electrical equipment. The program would provide users, financiers, EPA, and others with consistent, credible protocols and testing data and independent review and verification of performance claims. Protocols for the first technology applications should be developed by October 1996. 6. EPA should establish five partnerships with different industries to reengineer common products and processes in order to promote environmentally cleaner manufacturing processes. The purpose of this effort would be to reduce the use of hazardous materials and eliminate or reduce toxic releases during production release and disposal. The first two of these partnerships should be established by October 1994. Another partnership involving the computer industry should be established by January 1995. Two additional partnerships for reengineering common products and processes should commence by September 1995. Implications ************ Implementation of these recommendations would result in a cleaner environment, and industry and the taxpayers would save money. The potential also exists for the creation of new industries, or expansion of existing small industries, as new technologies are developed. Also, exportable technology would be produced, putting the United States in a better position to compete internationally in the growing environmental technology market. Fiscal Impact ************* This proposal should be funded from existing sources. Over the long term, the use of such partnerships should produce significant reductions in cost, but these gains cannot be estimated at this time. Endnotes ******** 1. U.S. Environmental Protection Agency, National Advisory Council for Environmental Policy and Technology, Improving Technology Diffusion for Environmental Protection: Report and Recommendations of the Technology Innovation and Economics Committee (Washington, D.C., October, 1992), p. i. 2. Ibid, pp. 59-61. 3. U.S. Environmental Protection Agency, Performance Review Committee on Environmental Technology, Washington, D.C., July 1993. 4. Cooperative Research and Development Agreement between Clean Sites, Inc. (on behalf of interested private companies) and EPA, December 1, 1992, 0049-92. Also see the Federal Technology Transfer Act of 1986, Public Law 99-502; and U.S. Environmental Protection Agency, Superfund Innovative Technology Evaluation Program: Technology with an Impact (Washington, D.C., February 1993), p. 4. ******************************************** EPA06: Stop the Export of Banned Pesticides ******************************************** ********** Background ********** The United States is a major exporter of pesticides. The Environmental Protection Agency (EPA) estimated that in 1991, approximately 400 million pounds of pesticides were exported from the United States.(1) This represents 10 percent of the approximately 4 billion pounds of pesticides that are used annually throughout the world.(2) The United States exports pesticides to both industrialized and developing countries. Before a pesticide may be sold or distributed in the United States, it must be registered by EPA. The EPA reaches registration decisions from an evaluation of the risks posed by the use of the pesticide as compared to the benefits the use confers. If EPA determines that a product cannot be safely used, a registration application may be denied, or, in the case of an already registered product, an existing registration may be canceled. Although decisions by EPA determine whether a pesticide can be sold in the United States, there are no registration requirements for pesticides that are to be exported. The Federal Insecticide, Fungicide, and Rodenticide Act does, however, impose certain labeling and notification requirements for exported pesticides. If these requirements are met, pesticides can be exported even if they are not registered, or were registered and then had that registration cancelled. EPA has found that most developing countries are illequipped to handle hazardous pesticides. Only a few countries have effective laws governing the import, use, and disposal of pesticides. In 1990, the World Health Organization estimated that as many as 25 million workers in developing countries could suffer an incident of pesticide poisoning each year. International pressure is growing to place stricter controls on the export and import of pesticides. An issue has arisen in the United States over the export of pesticides that have been banned here but are used in other countries whose crops are then sold in the United States. This "circle of poison" has raised concerns about the safety of some imported foods. About 25 percent of all the foods available to U.S. consumers are imported. The Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) are responsible for ensuring that all foods, including imports, comply with our food safety laws. The FDA and USDA monitor fruit, grain, meat, and dairy products for contaminants, including pesticide residues. Under U.S. food safety laws, foods found to contain residues of a pesticide for which no allowable pesticide limit (tolerance) exists, or that exceed an allowable tolerance, are considered to be adulterated. Such foods are prohibited from sale in the United States. Of the 18,113 monitoring tests taken by FDA in 1989, 10,719 surveillance samples were performed on imported foods. Of these, 97 percent contained no violative residues. Most of the violations found consisted of residues for which no tolerance levels had been set. The government only samples a relatively small number of food shipments. A majority of food shipments enter the country without having undergone any analysis. Further, unless a pesticide has been registered, the government is not likely to have an analytical method capable of detecting residues of a pesticide. Thus, some residues that may be harmful to the public health could be missed. To address some of the concerns for pesticide exposure incidents in developing countries, as well as to improve the safety of imported foods, the EPA helped develop an international information-sharing program led by the United Nations (U.N.) known as the Prior Informed Consent (PIC) procedures. The PIC can provide importing countries information on pesticides that have been banned or severely restricted in order to protect human health or the environment. An importing country can then notify the U.N. whether a particular banned pesticide is acceptable to that country for future import. The PIC has broad international support, but it is a voluntary program. Thus, even though the United States, other major exporting countries, and major pesticide trade organizations in many countries have indicated a willingness to comply with PIC, the program is difficult to enforce. There are few steps that can be taken under PIC against pesticide exporters who choose to export a banned pesticide, against the wishes of an importing country. In addition to relying on PIC, many countries, especially in the developing world, rely on the United States for information about pesticide use. Our regulatory system serves as a valuable guide for developing countries that lack the resources and/or expertise to evaluate health and safety data or establish worker training programs. Further, many countries that export food products to the United States need information about our standards and regulations so that they can meet the requirements for foods to be shipped here. Technical assistance and training from the United States are in great demand in the developing world. The United States receives more requests than it can fulfill to assist these countries in their efforts to use pesticides more safely. Given the necessity to break the circle of poison, and the technical expertise the United States can provide other countries, EPA should embark on a three-pronged approach to make the world safer from the harmful effects of many pesticides. ******* Actions ******* 1. EPA should work with Congress in developing legislation that would stop the United States from exporting banned pesticides by June 1994. This legislation should require appropriate analytical methods that can detect the presence of residues of non-registered pesticides and require exporters to keep records and report on types of pesticides exported, country of destination, and general information on pesticide use. 2. EPA should work with appropriate national and international organizations and private industry to develop policies that make PIC more enforceable throughout the world. EPA should seek legislation that gives it the authority to enforce PIC in the United States. This could serve to spur other countries, especially developing countries, to implement similar laws and policies to enforce PIC. These countries look to the United States for the lead in such matters, because of its technical expertise. 3. EPA, in cooperation with USDA and FDA, should consider developing a public-private sector partnership to provide technical assistance to developing countries by January 1995. This program should address technical assistance and training requests from developing countries on how to safely use pesticides. Implications ************ This would be a step toward breaking the circle of poison, that is, ensuring that U.S. citizens are not exposed to harmful chemicals on imported foods. Additionally, it would assist developing nations to better control the import of potentially harmful pesticides. The program would enhance the status of the United States in the eyes of developing nations as a leader for a safer environment. Fiscal Impact ************* EPA should be able to begin implementing this program with current resources. Endnotes ******** 1. See U.S. Environmental Protection Agency, Official Pesticides Program, "Pesticide Industry Sales and Usage 1990 and 1991 Market Estimates," Washington, D.C., undated. 2. 55 Federal Register 4956. 3. Foundation for Advancements in Science and Education, "Exporting Banned and Hazardous Pesticides, 1991 Statistics," undated. 4. National Agricultural Chemicals Association, "Market Survey," undated. *********************************************** EPA07: Establish Measurable Goals, Performance Standards, and Strategic Planning Within EPA *********************************************** Background ********** Historically, the Environmental Protection Agency (EPA) has targeted its activities toward the implementation of a broad range of statutes and related regulations. These were developed incrementally as major national environmental problems were identified. In response to ever- increasing statutory mandates, the agency has focused more on implementing statutes and less on achieving measurable environmental results. The agency has also pursued a media- specific approach to pollution control that ignores connections between air, water, and waste. The basic approach has been one of command-and-control, one that often addresses environmental issues in a way that transfers pollution among various media rather than eliminating it. Though this approach has resulted in significant environmental improvements over the past 20 years, other mechanisms must be developed to address the complex, multi-media environmental problems our country faces today. Over the past few years, the agency's strategic planning process has begun to take hold, but it is still ineffective in directing EPA's resources and implementation in an optimal manner. There is a growing need to link strategic planning with budget formulation and implementation efforts. This would allow the agency to aim for measurable environmental goals. The need for strategic planning and performance measurement has been recognized governmentwide. The Government Performance and Results Act of 1993, signed by President Clinton on August 3, 1993, requires the Office of Management and Budget (OMB) to designate 10 agencies as pilot projects in planning, measuring, and reporting performance by fiscal year 1994. By September 1997, each agency will submit to OMB and Congress a strategic plan that will set measurable goals, direct agency activities and resources, and identify progress towards objectives. As its responsibilities continue to grow in a tight fiscal climate, EPA must maximize its opportunity to direct environmental change. A strategic planning process that emerges from broad-based participation and continuous assessment of progress will be the vehicle for transforming agency direction in coming years. This plan should be a living document that guides strategy and implementation on an annual basis and provides the criteria for measuring progress. It should provide the context to link resources to activities and activities to environmental results. As these strategic plans are developed, current management practices and delivery systems need to be reassessed and revised to efficiently deliver the agency's services. Building appropriate incentives for headquarters, regions, states, and industry to participate in the process will be an important component of reinventing EPA. Clarification of EPA's roles and responsibilities in the larger environmental community will guide stakeholders in determining their own function in the country's overall environmental agenda. Many federal agencies contribute to environmental problems that others are charged with correcting. Opportunities for working together to avoid such inefficiencies must be reexamined to ensure maximum effectiveness in targeting the nation's natural resources. EPA needs to take a lead role in establishing a national environmental strategic planning process and an implementation program to go with it. Intra-agency partnerships can provide innovative approaches in establishing multi-media strategic for environmentally sensitive areas around the nation. Focusing on specific geographic regions will provide a practical means for the current structure of media-specific programs to integrate their resources and implementation. Such cooperative activity should yield long-term working relationships and reveal potential changes in organizational structure. Actions ******* 1. By April 1994, EPA should prepare measurable, internal goals to provide direction for assessing and redirecting existing EPA strategies where needed. This action will result in the development of a draft strategic plan and will begin to provide the needed direction for fiscal year 1995 operating plans and the fiscal year 1996 budget formulation process. The broader participation of other federal agencies in setting goals will set the stage to develop integrated strategies and budgets for selected geographic areas of the country. 2. By April 1995, EPA should draft measurable environmental goals for the range of environmental problems the United States faces. Development of these goals must be done in the context of long-term environmental and economic sustainability, with direct involvement by appropriate federal agencies, as well as broad-based discussions with states and the public. 3. EPA should develop performance measures for selected goals and strategies consistent with the Government Performance and Results Act of 1993 (GPRA). EPA should submit a proposal to OMB to be included as a GPRA pilot agency. Implications ************ Although these proposals are broad in scope, they encompass a core issue that will determine the agency's overall success in establishing and addressing this country's environmental agenda in the future. Fiscal Impact ************* This proposal is cost-neutral. There are no additional costs above current operating costs. Imposed planning should reduce costs over the long term, but this impact cannot be estimated at this time. ************************************************ EPA08: Reform EPA's Contract Management Process ************************************************ Background ********** The Environmental Protection Agency (EPA) has become increasingly reliant on contractors. Contract obligations have increased from $600 million in 1986 to approximately $1.4 billion in 1992. Currently, the agency has about 700 active contracts serving nearly all program areas, including information systems development, pesticide testing, and Superfund site clean-up. Several reasons underlie this contractor dependence. The use of contractors has provided EPA with a wide array of specific technical expertise on a short-term basis, allowing the agency to forgo long- term hiring commitments. In addition, over the years, the agency has been more successful in getting dollars to hire contractors, than in getting dollars for employee salaries. Finally, the law sometimes encourages the use of contractors, as in the legislation governing Superfund site cleanup. EPA has been subject to criticism because of inadequate oversight of its contractors. During the last four years, agency contract management practices have come under the scrutiny of numerous General Accounting Office and Inspector General reports, as well as several congressional hearings. EPA has long focused on its central mission- environmental protection-and not on strong contract management, but the recent criticism is pushing the agency to carefully analyze its current methods and to target specific areas for major improvement. Contract management was declared a material weakness in the agency's December 1992 report on internal controls to the President, required by the Federal Managers' Financial Integrity Act (FMFIA).(1) Improving contract management practices at EPA requires an analysis of several issues such as resources, contractor-client relations, and accountability. With respect to resources, EPA does not have enough personnel with the technical knowledge needed to adequately manage contractor performance. Since 1981, EPA's annual contract obligations increased by 237 percent in nominal terms, yet the agency's overall work force grew by only 25 percent during the same period.(2) EPA is actively searching for opportunities to reallocate staff to contract management. In addition, EPA's Standing Committee on Contracts Management, formed to review the entire contracting process, made several recommendations in its June 1992 report. Of particular importance were the recommendations to highlight contract management in agency vacancy announcements and to place an emphasis on improving the quality of oversight resources currently in place. Doing more with less, however, can only go so far, and if EPA's responsibilities continue to multiply, it will have to match improvements in contract management with a commitment to shrink its dependence on outside help. The use of so many contractors has engendered problematic ties between EPA and the non-governmental firms to which it turns for assistance. The transformation of a formal contractor-client relationship into the more informal interaction between employer and employee carries potential risks. Other problems exist when contractors have performed inherently governmental functions, such as payroll review. Incumbent firms may receive an unfair advantage when their contract comes up for renewal. Perhaps most serious is that agency oversight has become lax, leading to vague work instructions, nebulous lines of authority, and compromised individual responsibility. Such abuses have been documented, as in the March 31, 1992, Inspector General audit of EPA's relationship with the Computer Sciences Corporation.(3) There is also the possibility of conflicts of interest. This issue has emerged frequently regarding the Superfund Program, where the delegation of cleanup duties to a firm implicated in the initial pollution raises concerns. In some instances contractors are being hired to clean up the pollution that they have created. The conflict of interest risk is particularly worrisome because current federal regulations require contractors to self-police, a process that does not adequately safeguard against abuse. To improve contract management, EPA should pursue a multitiered approach. As a start, the agency's own Standing Committee has acted on five specific, complementary steps. These include: (1) implementation of performance standards for contract management, complete with an awards program, to foster awareness and accountability throughout the agency; (2) encouragement of better contract planning through new requirements for annual acquisition strategies; (3) provision of written guidelines wherever possible to facilitate reliable contracting, such as in preparation of Independent Government Cost Estimates or in FMFIA assessments; (4) assembly of a quality contracting team pilot composed of a Procuring Contracting Officer, an Administrative Contracting Officer, a Project Officer, an Office of General Counsel Representative, and any needed specialists, to monitor a contract from its inception to closeout; (5) injection of more competition into the contracting process by awarding contracts to multiple vendors. This would guarantee a constant alternative to the incumbent and promote continuing competition to meet agency standards even after contract award. These measures reappear in EPA's response to a March 1993 review of agency contract policy requested by the Director of the Office of Management and Budget (OMB). In that same response, EPA requested authority over its intramural-extramural budget distribution as a way of empowering the agency to reform its dealings with contractors. Though the recommendations of both the Standing Committee and the OMB review should improve EPA contract management process, they leave some difficult issues unaddressed. Foremost among them may be the agency's fundamental high reliance on contractors, and the blurring it promotes between contractor and agency responsibilities. Without appropriate controls, training, and monitoring staff, it will be difficult to prevent abuses. Administrator Browner has begun to grapple with this quandary by ordering an independent analysis of the agency's use of intramural-extramural resources to determine, among other things, whether EPA's current distribution of dollars best serves its mission. Administrator Browner has also pledged to spearhead reform in agency culture by emphasizing that management and accountability will be cornerstones of her administration. With respect to accountability, EPA has failed to hold both contractors and its own personnel accountable for fiscal and legal discrepancies. On the fiscal front, there have been blatant indirect cost abuses by contractors. Indirect costs, those charges not immediately related to specific work orders, include utilities, office rent, administrative salaries, health insurance costs, and an array of similar items. These expenses are generally stated as a percentage of direct labor. Certain costs--alcoholic beverages, for example, or customized chocolates imprinted with the company logo-- are unallowable. Inspector General audit reports disclosed just these violations by EPA contractor CH2M Hill in 1992. The agency has also not held its personnel accountable to the legal requirements delineated by the Business Opportunity Development Reform Act of 1989. This legislation requires competition among 8(a) contractors for procurement with an estimated value above $3 million.(4) Recent Inspector General audits of EPA's Office of Research and Development laboratories have found instances where requirements were split and government cost estimates understated to stay under the $3 million threshold, thus avoiding competition.(5) EPA has confronted these problems through several tacks. Many of the aforementioned recommendations of its Standing Committee have been implemented. The Committee's proposal to tighten indirect cost recovery with the assistance of OMB represents a more focused response, as does EPA's participation in the interagency contract management review. This effort, launched by the Office of Federal Procurement Policy (OFPP) in the summer of 1992, challenged internal auditors in 12 civilian agencies to find unallowable expenses in contractor claims and to determine the frequency of negotiated settlements disallowing the costs. EPA's report to OFPP contained 41 agency-specific findings and 38 governmentwide--a total of 79 recommendations, which accounted for one-third of proposals received from all 12 organizations. Agency action on its internal findings is nearing completion. On a final front, Administrator Browner's initiatives, particularly her program to establish Senior Resource Officials (SROs) responsible for fiscal and ethical management, should substantially support her pledge to restore EPA accountability.(6) The agency's tripartite response to its accountability deficit, based on proposals from the Standing Committee, interagency review team, and the Administrator, should lessen much of the abuse prevalent thus far, if these proposals are integrated and implemented. A familiar caveat remains, however, concerning EPA's long-term prognosis: if the agency's growing responsibilities are met with an increasing reliance on contractors, enforcing accountability will only become more of a challenge. Actions ******* 1. EPA should fully implement performance standards for contract management advocated by the Standing Committee, OMB review, and the Administrator by January 1994. Contract management awareness and accountability should be strengthened through the agency performance standard and evaluation process. Individual performance standards for contract management should be one of several human resource management mechanisms that directly support the integration of resource management into the priorities and responsibilities of staff throughout the agency. Others include highlighting contract management in job announcements and position descriptions, providing better training opportunities, and promoting more definitive disciplinary and awards programs. Since so much of EPA's staff is involved in contract management, the human resource mechanisms are a primary means of ensuring accountability. Taken with other agency contract management improvements, these changes should be evaluated overall in terms of how the agency has improved its ability to manage contracts. 2. EPA should institutionalize the oversight recommendations of the Standing Committee, the OMB Review, and the Administrator by January 1995. EPA should evaluate the success of the agency's quality contract team pilot to determine how well the contract was managed, costs were controlled, and goods and services were rendered. If the quality contract team proves to be more effective, EPA should begin implementing it throughout the agency by the end of fiscal year 1994, with the condition that all team members be inhouse agency personnel. EPA should supplement this program by placing the SROs advocated by Administrator Browner throughout the agency by the end of fiscal year 1994. EPA should ensure that each of the agency's 10 regional offices has at least one SRO, and this official should be held accountable for extramural resource management in the region. 3. EPA should maximize competition in the contracting process. EPA should evaluate its pilot program to award multiple contracts with the same work statement to different vendors (a strategy that functions by farming out individual delivery orders and assignments to competing contractors). The contracts should be awarded by the end of the fiscal year 1994. At the midway point of the three-year contract, the agency should assess its effectiveness. If the pilot project is found to yield net savings when compared to the traditional practice of employing single contracts for a project's entirety, EPA should consider implementation by the end of fiscal year 1996. 4. OMB should provide EPA with more flexibility in determining the appropriate balance of extramural versus intramural resources. EPA is currently conducting an independent analysis to identify this balance. Once an appropriate balance is identified, EPA should begin converting contractor dollars to regular staff to better achieve that balance. Conversion of contractor dollars to fulltime equivalent (FTE) positions will have to be accomplished within the context of the President's Executive Order to reduce federal employment. Additional FTEs may be obtained through the agency's efforts to streamline operations. Implications ************ Better contract management and over-sight should result in significant contract dollar savings and improved contract services. Fiscal Impact ************* This proposal is cost-neutral. Additional FTEs needed to provide oversight and management of contract work that is currently done by contractors will be reassigned from units through agency streamlining efforts. Endnotes ******** 1. Federal Manager's Financial Integrity Act of 1982, Public Law 97- 255, September 8, 1982. 2. Standing Committee on Contracts Management, "Contract Management at EPA: Managing Our Mission," June 1992. 3. U.S. Environmental Protection Agency, Management of Computer Science Corporation Contract Activities Report (Washington, D.C., March 1992). 4. Section 8(a) of the Small Business Act, 15 U.S.C. 637(a) et. seq. 1953. 5. U.S. Congress, Senate, Committee on Government Affairs, testimony by EPA's Inspector General, June 22, 1993. 6. U.S. Congress, Senate, Committee on Government Affairs, testimony by EPA Administrator Carol Browner, March 10, 1993. ******************************************************* EPA09: Establish a Blueprint for Environmental Justice Throughout EPA's Operations ******************************************************* Background ********** Pollution is not a problem faced equally by everyone in our society. Minorities and low-income communities often face higher exposure to environmental hazards by living near waste sites, by being subjected to harmful chemicals in poorly maintained housing, or through exposure to pesticides in farm fields. In light of the growing importance of this issue, a national policy of environmental justice (the distribution of environmental risks across population and income groups, and the policy responses to these distributions) needs to be articulated. Environmental justice is not a new problem. It was first reported more than two decades ago. The problem of environmental justice did not receive national attention until 1982, however, when officials decided to locate a toxic chemical landfill in predominantly African- American Warren County, North Carolina. Protests similar to those of the civil rights movements of the 1960s erupted. In response to these protests, the General Accounting Office (GAO) investigated, focusing on the socioeconomic and racial composition of communities surrounding the four major hazardous waste landfills in the South. GAO concluded that three of the four landfills were located in communities that were predominantly African-American. Since then environmental justice has received more attention. A nationwide study in 1987 found that the proportion of minorities in communities that have a commercial hazardous waste facility is about double that in communities without such facilities. In 1990, the Michigan Conference on Race and the Incidence of Environmental Hazards was convened. In response to the Michigan conference's findings that no public policies were in place to require monitoring equity in the distribution of environmental quality, the Environmental Protection Agency (EPA) established a working group on environmental equity. In a June 1992 report, the working group determined that there was a general lack of information concerning pollution and minority and low-income communities. There were indications of problems in siting and enforcement of pollution-generating activities in minority and low-income communities. The group concluded that EPA had no specific policy dealing with this issue. In response, EPA established the Office of Environmental Equity to focus on three major areas: education and outreach; community and economic development; and technical and financial assistance to community groups. The National Environmental Policy Act (NEPA), adopted in 1970, sets forth an environmental policy for the nation. Specifically, NEPA states that: . . . it is the continuing policy of the federal government, in cooperation with State and local governments, and other concerned public and private organizations, to use all practicable means and measures, including financial and technical assistance, in a manner calculated to foster and promote the general welfare, to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans.(1) In her statement before the House Government Operations Committee on May 6, 1993, Administrator Browner affirmed the need to address environmental justice: . . . as we undertake programs to reduce risks, we must explicitly recognize the ethnic, economic, and cultural makeup of the people we are trying to protect. We now believe that people of color and low income are disproportionately affected by some environmental risks: the risk of living near landfills, municipal waste combustors, or hazardous waste sites; the risks posed by lead or asbestos in old, poorly maintained housing; the risk of exposure to pesticides in farm fields; and the risk of eating contaminated fish when fish is a mainstay of their diet.(2) There are large environmentally related health costs and other concerns associated with minority workers and low-income communities. For example, studies have shown that migrant farm workers suffer from neurological disorders, cancer, and birth defects at a higher rate than the normal population. Another example is exposure to lead. EPA has stated that lead in paint and lead dust are major causes of poisoning in young children. Although there have been no definitive studies on the overall health costs to minority workers and low- income communities, there is general agreement that related health care costs could be quite high. While minority and low-income communities inordinately suffer the effects of environmental hazards, all U.S. taxpayers asorb the additional health costs incurred. Administrator Browner has made environmental equity a key policy theme in her administration. The President's fiscal year 1994 budget contains an additional $15 million to address lead paint hazards, a particular hazard for minority children. The administrator has moved to establish an interagency group to address environmental justice issues across all federal agencies. EPA is working with federal health agencies to strengthen the scientific and health effects data related to communities of color and those of low income, and EPA has initiated three environmental justice projects with the Department of Justice, one of which will be used to establish enforcement priorities. Congress has also shown a strong interest in environmental justice. In pending EPA cabinet legislation-- H.R. 3425, introduced by Representative Conyers (D-MI)-- there are numerous provisions regarding environmental justice. In May 1993, Representative Lewis (D-GA) introduced H.R. 2105, the Environmental Justice Act of 1993. This bill would require EPA to publish a list of geographic areas with the highest amounts of toxic chemicals. It would require EPA to inspect all toxic chemical facilities operating in Environmentally High Impact Areas (EHIAs) and impose a moratorium on the siting of new chemical facilities in EHIAs. On June 24, 1993, Senator Baucus introduced Senate Bill 1161, the Environmental Justice Act of 1993, which generally parallels the House bill. While the environmental justice movement gains momentum, a new awareness permeates the environmental community. There exist differing views on prioritizing efforts. EPA is taking action, and more needs to be done. Actions ******* 1. EPA should develop, by mid-1994, a blueprint of actions that will incorporate environmental justice considerations into all aspects of EPA operations. Environmental justice will be fully reflected in EPA actions only if it is regularly considered in operational and policy decisions. This would include rulemaking, permitting, data collection, siting of projects and facilities, enforcement, education, and outreach. EPA must also continue its efforts to develop a more culturally and racially diverse workforce. EPA should ensure that all programs receiving federal assistance give assurances that environmental justice issues are appropriately addressed and that all activities subject to EPA oversight abide by the same environmental justice considerations as EPA does. The agency should take a lead role in establishing interagency cooperation on environmental justice issues. 2. EPA should prepare an annual report providing analysis of the progress it has made regarding environmental justice and should develop appropriate remedies for communities that have suffered environmental injustice. Other actions could include liaison with states and other federal agencies and could emphasize that environmental justice is a shared responsibility of all federal agencies and, ultimately, state, local, and tribal governments. Emphasis could be placed on assessing the environmental impact statements' discussion of socioeconomic considerations apparently missing in some decisions. Implications ************ Pending legislation to elevate EPA to Cabinet status, proposed environmental justice legislation, and a proposed environmental justice Executive Order will significantly affect this program. The environmental justice movement is gaining momentum. Proposed environmental justice legislation and the expected Executive Order will require some actions, facilitate other actions, and encourage other behaviors. Fiscal Impact ************* This proposal is cost-neutral. EPA would need an additional five employees to carry out the proposed environmental justice activities. This additional staff will be allocated from existing personnel. It is reasonable to expect some long-term reduction in health costs in low-income and minority communities as the environmental quality of their communities improves; however, this impact cannot be estimated at this time. Endnotes ******** 1. Public Law 91-190, 42 USC 4321-4347 (January 1, 1970). 2. U.S. Congress, Senate, Committee on Governmental Affairs, testimony by EPA Administrator Carol Browner, May 6, 1993. ***************************************************** EPA10: Promote Quality Science for Quality Decisions ***************************************************** Background ********** Rulemaking and other policy decisions at the Environmental Protection Agency (EPA) almost invariably rely on science, with the nature and extent of that reliance varying considerably from one instance to another. But one factor is constant: quality must be a first-order concern in deciding what scientific information is relevant, how it is presented, and how it is used. Quality science includes the following characteristics: clear identification and prioritization of the most important scientific questions to be addressed; identification and use of the most appropriate and powerful experimental and analytical designs; employment of state-of-the-art experimental techniques; accurate measurements; validation and independent review processes; and recruitment, retention, and reward of high-quality scientific personnel. Regulatory and research science at EPA is performed in its 12 research and development laboratories, its 23 regional and program office laboratories, and its program and policy offices. Many contributions made by EPA scientists are widely respected by the research community. For example, its analytical methods, predictive models, and risk-assessment guidelines are used as standards by other agencies, nationally and abroad. Nonetheless, the role of science in EPA policies, decisions, and actions is much less prominent than it should be. A recent EPA- sponsored study noted that EPA is seen as distorting scientific analysis to make them fit its policies.(1) The study recommendations called for increased use of peer review, expanded inhouse research capabilities, and establishment of risk-based priorities for research and development (R&D). A subsequent study reinforced these ideas and called specifically for consolidation of laboratories to achieve a stronger programmatic focus in selected areas.(2) EPA must begin to focus its energies and resources in five key areas if it is to bring its domestic recognition to the same high level the agency enjoys internationally, as a science agency as well as a regulatory agency. The first is in the recruiting, nurturing, and development of its entry-level scientific staff. There is currently a highly skilled, well-recognized scientific workforce in the Office of Research and Development that is nearing retirement and will need replacing, due to FTE limitations. EPA has not previously demonstrated capabilities in this area. Scientific and technical factors often receive insufficient weight in developing job descriptions, setting performance standards, designing training programs and career-development opportunities, creating career ladders, and rewarding achievement. Second is peer review, quality assurance, and quality control. Regulatory decisions are most likely to be cost-effective if they are based on risk assessments or other technical work-products that embody state-of-the-art scientific principles, models, and data. One important procedure for obtaining such high-quality products is peer review- that is, independent reviews by unbiased subject-matter experts. Another key procedure is to require that the underlying data be gathered in accordance with strict quality-assurance guidelines. Although such procedures exist within EPA, they are not consistently used. Historically, policy decisions have often lacked credibility because they were based on work-products that either were obviously flawed or lacked the endorsement of outside experts. As a consequence, EPA regulatory decisions have been frequently perceived by Congress, the Office of Management and Budget and other federal agencies, industry, or the public as unsound. Third, good laboratory systems are necessary to maintain quality science. Scientists cannot be effective without a quality infrastructure for all EPA laboratories. This includes state-of-the- art facilities and instrumentation, well-equipped libraries, high- performance computing and telecommunications resources, and a responsive procurement and budgeting system. Moreover, if policymakers are to benefit from improvements to the science base, more strategically focused investment in R&D is imperative. Recent studies have noted that the R&D effort at EPA is neither large enough nor focused enough to meet the mission requirements. A fourth area necessary to sustain quality science is administrative oversight for R&D. Reductions in science and engineering career positions in recent years not only have fostered undue dependence on contractors but also have encumbered EPA scientists with new contract management duties-thereby shifting their focus and their talents toward administration and away from what they do best. Moreover, laboratory scientists are unnecessarily encumbered by inflexible budgets and the fact that job positions and contract dollars are not interchangeable. Finally, communication and coordination between EPA policymakers and scientific staff are too fragmented to be effective. For example, inadequate coordination among programs and the laboratories has led to science being practiced in isolation and with no apparent impact on the research agendas of other agencies. Actions ******* 1. EPA should work to establish guidelines for professional development and promotion of scientific and technical staff. EPA should review and evaluate best practices of other federal science agencies for example, the National Institutes of Health, which have made progress in developing successful personnel systems and tenure tracks for scientific and technical employees. 2. EPA should expand the use of peer review and quality-assurance procedures to promote excellence in science. Through specific policy guidance from the Office of the Administrator, existing procedures for peer review and quality assurance would be integrated further into EPA programs. 3. The EPA Administrator should assess the organizational effectiveness and appropriate structures of EPA's laboratories. The President's budget request for fiscal 1994 includes funds for a study to address research needs and to identify options for making EPA's research more efficient. As a part of the study, EPA should also identify management and administrative processes that can be streamlined. 4. EPA should develop a plan to integrate opportunities for increased scientific communications within and outside EPA. Through increased use of workshops, temporary reassignments, and other methods, EPA scientists would gain more opportunities to stay current with the advances in environmental science and its applications. In this way, EPA can better keep congressional staff, members of the news media, and the general public informed about the state of the environment and implications of the latest research findings. Implications ************ Improvements in the quality of science at EPA will result in renewed credibility and stature for EPA's scientists. In addition, regulatory decisionmaking will be based on optimal scientific analysis. Fiscal Impact ************* There are no additional costs associated with this issue. Endnotes ******** 1. See U.S. Environmental Protection Agency, Expert Panel on the Role of Science, Safeguarding the Future: Credible Science, Credible Decisions (Washington, D.C., March 1992). 2. Carnegie Commission on Science, Technology, and Government, Environmental Research and Development: Strengthening the Federal Infrastructure (Washington, D.C., December 1992), pp. 62-68. ********************************************** EPA11: Reorganize EPA's Office of Enforcement ********************************************** Background ********** The Environmental Protection Agency (EPA) enforcement program is responsible for bringing parties who are violating the nation's environmental laws into compliance, preparing and litigating cases against these parties, and helping to forge effective responses to harmful environmental conditions. Reorganization of EPA's enforcement operation represents an excellent opportunity to achieve efficiencies in government. In the early 1980's, EPA reassigned and separated its enforcement responsibilities. EPA placed the environmental compliance engineering and inspections staff, which provides the technical expertise necessary to ascertain whether a source is in violation, into the individual media-specific program offices (Air, Water, Solid Waste, and Toxics). In addition, EPA placed the legal enforcement staff into a separate Office of Enforcement (OE). The regional enforcement divisions were abolished. This decentralized and limited the coordination and management of environmental enforcement within the agency. The organizational structure created in 1981 continues to define the shape of EPA enforcement today. Presently, there is no centralized authority vested in any one Assistant Administrator for targeting, priority setting, and development and management of enforcement resources. In fact, enforcement priority setting is currently shared by five assistant administrators and 10 regional administrators. As a result, enforcement has not been a sufficiently high priority for any of the program offices at EPA headquarters, which have conflicting priorities such as permitting and regulation development. In addition, persons at all levels of the agency must be tied into protracted and frequently repetitious consultations over enforcement priorities and implementation plans. For example, the development of a single enforcement initiative typically involves extensive discussion with six different EPA program offices. This situation is not only frustrating to personnel within EPA, but recently caused the Department of Justice's Assistant Attorney General for Environment and Natural Resources to ask for a single point of contact at EPA for enforcement issues. In addition, the present system adversely affects EPA's ability to address multi-media environmental problems (those affecting more than just one medium, such as air, water, or land). Specifically, it is difficult to develop comprehensive enforcement responses to facilities that are in violation of more than one federal statute. The current enforcement structure has thwarted EPA's ability to implement multi-media enforcement, a top priority of the Clinton Administration. The current structure also results in parallel and often duplicative processes. For example, each case and policy matter typically undergoes parallel review and analysis up through the office director level in both OE and in related program offices. In the event of disagreement, ultimately only the Administrator and the Deputy Administrator are empowered to resolve these enforcement disputes. Recently, it took more than nine months and the personal involvement of the Administrator to resolve a disagreement among the Assistant Administrator for Water, a Regional Administrator, and the Assistant Administrator for Enforcement concerning the proper enforcement response to a violation of the wetlands regulations. In addition to being inherently inefficient, this system promotes "forum-shopping"-- choosing a media-specific program office that will give the desired result. By going directly to a program office to discuss an enforcement issue, outside parties (including regulated sources) can effectively try to play one EPA office against another. Simply stated, there is no single enforcement voice in the agency. This results in a de-emphasis on enforcement, high transaction costs, duplication of effort, and an inability to effectively pursue multi- media enforcement. This problem needs to be rectified. On July 22, 1993, in connection with the National Performance Review effort, Administrator Browner announced that she intends to consolidate and reorganize EPA's enforcement resources at headquarters. To implement this, she has created a task force, which is developing a plan for implementation by October 1993. A consolidated structure will eliminate duplicative review chains, force issues to final resolution much lower in the management chain, and eliminate forum-shopping. Reorganizing headquarters enforcement will improve EPA's effectiveness. Action ****** EPA should implement the Administrator's headquarters enforcement reorganization proposal. This would bring the various EPA enforcement operations together under the Office of the Assistant Administrator for Enforcement. Within one year, it is anticipated that a reorganized OE should: eliminate duplication of effort, thereby maximizing the government's environmental enforcement efforts; restore accountability to a presently fractured system; provide a single voice on national environmental enforcement priorities, thereby eliminating mixed and conflicting signals between headquarters, the regional offices, and the states; position the agency to respond to cutting-edge issues and vulnerabilities, such as environmental justice, multi-media enforcement capacity, penalty practice, measuring program success, and enforcement data integration; and enhance agency efficiency and promote cost effectiveness. Implications ************ In a time of flat or declining resources and a nearly unmanageable case docket, EPA can no longer afford the inefficiencies of the current organizational framework for enforcement. Reorganization would enable EPA's OE to more effectively identify and respond to national environmental problems, including targeting companies that consistently violate the law, addressing sources that are responsible for ecosystem destruction, and addressing pollution problems that affect minority and low-income populations. A reorganization will demonstrate the administration's commitment to eliminate duplication and waste in the federal government and will leave EPA's enforcement apparatus stronger and more responsive to the priorities of this administration. Fiscal Impact ************* This issue will require no new expenditures. Reorganization will produce a net savings by streamlining enforcement operations, and result in a total savings of 138 workyears over the period of FY 1997 through FY 1999. It is assumed that dollar savings will be reprogrammed to increase compliance monitoring, inspection, legal enforcement, and other activities in EPA. Budget Authority (BA) and Outlays (Dollars in Millions) Fiscal Year 1994 1995 1996 1997 1998 1999 Total ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BA 0.0 0.0 0.0 -3.5 -3.5 -3.5 -10. Outlays 0.0 0.0 0.0 -3.3 -3.5 -3.5 -10.3 Change 0 0 0 -46 -46 -46 -138 in FTEs ***************************** Agency Reinvention Activities ***************************** Getting Started *************** After President Clinton's March 3, 1993, directive on reinventing the government, the Environmental Protection Agency (EPA) moved quickly to capture the spirit of reform in an internal reinvention effort. Administrator Browner committed more than 450 full-time employees from across the agency to EPA's National Performance Review Team (NPRT). In planning a new EPA, the Administrator charged NPRT to focus on the principles of the governmentwide reinvention drive. The EPA's review thus emphasized four themes: cutting red tape, putting customers first, empowering employees to get results, and cutting back to basics. These themes yielded specific proposals that should fundamentally change the way EPA pursues its mission. To facilitate such fundamental change, NPRT directed a variety of initiatives to generate involvement and activism throughout the agency. The Administrator herself encouraged all employees to submit ideas for improvement, and in addition, NPRT reviewed countless responses to questionnaires designed to solicit comments from EPA personnel, business interests, and local communities. The team likewise combed through records of past seminars, conferences, and reports for worthy recommendations lost or ignored. To promote more hands-on participation, NPRT sponsored forums at several levels. The Administrator held a town meeting with Vice President Gore that covered agencywide concerns ranging from procurement to hiring to enforcement. Focus groups provided opportunities for more extensive discussions, as program specialists and managers from throughout EPA met with relevant NPRT personnel to flesh out their suggestions. EPA's internal review team remains committed to discussing the recommendations that emerge from its cumulative analysis with all parties that have contributed input. Reinvention Teams ***************** To create a new EPA, its review effort established an array of teams. While each assumed a specific, defined role, together they formed an interdisciplinary force. The Senior Leadership Council consisted of EPA's top political and career executives. This group, which will remain active through the entire course of the reinvention program, advised the Administrator on NPR planning and implementation. The Process and Policy Teams, consisting of 19 groups in total, drew members from all employee grade levels and all agency branches-- headquarters, regional offices, program centers, and laboratories. With sizes ranging from 18 to 25 people, the groups were charged with developing in-depth reports on specific topic areas. The topics included: Awards/Recognition Workforce Capacity Ecosystem Protection Environmental Justice Environmental Technology Extramural Resource Management Financial Management Intergovernmental Partnerships Internal Communications Workforce Diversity Management Development Performance Management Permit Streamlining Planning and Budgeting Pollution Prevention Position Classification Quality Management Quality Science Regulatory Development The Leadership Team, consisting of about 20 employees from all agency levels, provided direction and guidance to the process and policy teams. In addition, it assumed responsibility for those cross-cutting issues that lay outside the domain of individual parties. Finally, the Quality Advisory Group offered consultation, facilitation, and logistical support to all other NPRT components, in particular the Senior Leadership Council. Lessons Learned *************** EPA's internal review identified several principles it should instill, wherever possible, to better fulfill its mission. First, the organization must commit to performance measurement. EPA has already made progress here--Administrator Browner recently accepted the recommendation of an earlier EPA improvement team to establish environmental goals that will provide the American people with very real means to gauge EPA performance. NPRT's findings indicate a need to continue in this positive direction. The agency must likewise devote itself to reinvigorated customer service. In the coming months, EPA will implement a comprehensive outreach at the Administrator's behest to strengthen ties with its constituents state and local governments, private sector organizations, and the general public. Their input will yield the best concrete plans to boost customer satisfaction. Improving relations with outside sources must include a drive to empower partners. By decentralizing its programs and regulations, injecting competition wherever applicable, and exerting leverage on market forces, EPA can create openings for collaboration with the larger community focused on environmental protection. Working together, each accomplishes more. Looking Forward *************** EPA is already implementing several recommendations reshaping its environmental goals and regulatory process. Administrator Browner recognizes that genuine change depends not just on policy actions but on the culture underlying them. To realize the agency's new vision, the Administrator and her management team will not only lead implementation of the present proposals, but will also ensure that the EPA continues its employee outreach efforts. Public forums, surveys, and focus groups will become agency mainstays. EPA has established an NPR implementation steering committee made up of senior management and members from EPA's internal NPR team. This group will provide a focal point for future suggestions and a means to guarantee monitoring and accountability as well. EPA will continue to reinvent itself even as it comes closer still to fulfilling its mission. ************************ Summary of Fiscal Impact ************************ Change in Budget Authority by Fiscal Year ***************************************** (Dollars in Millions) Change in Recommendations 1994 1995 1996 1997 1998 1999 Total FTEs ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ EPA01: na na na na na na na na EPA02: 0.0 0.0 0.0 -7.5 -7.5 -7.5 -22.5 -150 EPA03: cbe cbe cbe cbe cbe cbe cbe cbe EPA04: cbe cbe cbe cbe cbe cbe cbe cbe EPA05: na na na na na na na na EPA06: na na na na na na na na EPA07: na na na na na na na na EPA08: cbe cbe cbe cbe cbe cbe cbe cbe EPA09: na na na na na na na na EPA10: na na na na na na na na EPA11: 0.0 0.0 0.0 -3.3 -3.5 -3.5 -10.5 -138 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Total EPA 0.0 0.0 0.0 -11.0 -11.0 -11.0 -33.0 -288 cbe = Cannot be estimated (due to data limitations or uncertainties about implementation timelines). na= Not applicable (recommendation improves efficiency or redirects resources but does not directly reduce budget authority). Change in Outlays by Fiscal Year ******************************** (Dollars in Millions) Recommendations 1994 1995 1996 1997 1998 1999 Total ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ EPA01: na na na na na na na EPA02: 0.0 0.0 0.0 -4.0 -7.5 -7.5 -19.0 EPA03: cbe cbe cbe cbe cbe cbe cbe EPA04: cbe cbe cbe cbe cbe cbe cbe EPA05: na na na na na na na EPA06: na na na na na na na EPA07: na na na na na na na EPA08: cbe cbe cbe cbe cbe cbe cbe EPA09: na na na na na na na EPA10: na na na na na na na EPA11: 0.0 0.0 0.0 -3.3 -3.5 -3.5 -10.3 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Total EPA 0.0 0.0 0.0 -7.3 -11.0 -11.0 -29.3 cbe = Cannot be estimated (due to data limitations or uncertainties about implementation timelines). na = Not applicable (recommendation improves efficiency or redirects resources but does not directly reduce outlays). ******** Appendix ******** Accompanying Reports of the National Performance Review Governmental Systems Abbr. ******************** **** Changing Internal Culture ^^^^^^^^^^^^^^^^^^^^^^^^^ Creating Quality Leadership and Management QUAL Streamlining Management Control SMC Transforming Organizational Structures ORG Improving Customer Service ICS Reinventing Processes and Systems ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Mission-Driven, Results-Oriented Budgeting BGT Improving Financial Management FM Reinventing Human Resource Management HRM Reinventing Federal Procurement PROC Reinventing Support Services SUP Reengineering Through Information Technology IT Rethinking Program Design DES Restructuring the Federal Role ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Strengthening the Partnership in Intergovernmental Service Delivery FSL Reinventing Environmental Management ENV Improving Regulatory Systems REG Agencies and Departments Abbr. ^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^ Agency for International Development AID Department of Agriculture USDA Department of Commerce DOC Department of Defense DOD Department of Education ED Department of Energy DOE Environmental Protection Agency EPA Executive Office of the President EOP Federal Emergency Management Agency FEMA General Services Administration GSA Department of Health and Human Services HHS Department of Housing and Urban Development HUD Intelligence Community INTEL Department of the Interior DOI Department of Justice DOJ Department of Labor DOL National Aeronautics and Space Administration NASA National Science Foundation/Office of Science and Technology Policy NSF Office of Personnel Management OPM Small Business Administration SBA Department of State/ U.S. Information Agency DOS Department of Transportation DOT Department of the Treasury/ Resolution Trust Corporation TRE Department of Veterans Affairs DVA