This is the accessible text file for GAO report number GAO-07-883 
entitled 'Environmental Protection: EPA-State Enforcement Partnership 
Has Improved, but EPA's Oversight Needs Further Enhancement' which was 
released on July 31, 2007. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

July 2007: 

Environmental Protection: 

EPA-State Enforcement Partnership Has Improved, but EPA's Oversight 
Needs Further Enhancement: 

EPA-State Enforcement: 

GAO-07-883: 

GAO Highlights: 

Highlights of GAO-07-883, a report to congressional requesters 

Why GAO Did This Study: 

The Environmental Protection Agency (EPA) enforces the nation’s 
environmental laws through its Office of Enforcement and Compliance 
Assurance (OECA). OECA sets overall enforcement policies and through 
its 10 regions oversees state agencies authorized to implement 
environmental programs consistent with federal requirements. GAO was 
asked to (1) identify trends in federal resources to regions and states 
for enforcement between 1997 and 2006, and determine regions’ and 
states’ views on the adequacy of these resources; (2) determine EPA’s 
progress in improving priority setting and enforcement planning with 
states; and (3) examine EPA’s efforts to improve oversight of states’ 
enforcement programs and identify additional actions EPA could take to 
ensure more consistent state performance and oversight. GAO examined 
information from all 10 regions and 10 authorized states, among other 
things. 

What GAO Found: 

Overall funding to regions and authorized states increased from 1997 
through 2006, but these increases did not keep pace with inflation and 
the growth in enforcement responsibilities. Over the 10-year period, 
EPA’s enforcement funding to the regions decreased 8 percent in 
inflation-adjusted terms. Regional officials said they reduced the 
number of enforcement staff by about 5 percent. EPA’s grants to states 
to implement federal environmental programs also declined by 9 percent 
in inflation-adjusted terms while enforcement and other environmental 
program responsibilities increased. According to state officials, 
reductions in grant funds have limited their ability to meet EPA’s 
requests to implement new requirements. For example, according to New 
York State officials responsible for the hazardous waste program, a 
reduction in EPA grants between 1997 and 2006 has meant a 38 percent 
reduction in the full-time state staff supported by federal funding for 
this program. However, EPA information on the workload and staffing 
needs of its regions and the states is incomplete, and, thus, it is not 
possible with existing data to determine their overall capacity to meet 
their enforcement responsibilities. 

EPA has made substantial progress in improving priority setting and 
enforcement planning with states through its system for setting 
national enforcement priorities and the EPA/state National 
Environmental Partnership System (NEPPS), which have fostered a more 
cooperative relationship. For example, on states’ recommendation, OECA 
accepted as a priority ensuring that facilities handling hazardous 
substances, such as lead or mercury, have the financial resources to 
close their facilities, clean up contamination, and compensate 
communities and individuals affected by the contamination. EPA and 
states have also made some progress in using NEPPS for joint planning 
and resource allocation. State participation in the partnership grew 
from 6 pilot states in fiscal year 1996 to 41 states in fiscal year 
2006. 

EPA has improved its oversight of state enforcement programs by 
implementing the State Review Framework (SRF) as a means to perform a 
consistent approach for overseeing the programs. Moreover, EPA can make 
additional progress by addressing weaknesses that the SRF reviews 
identified and by implementing other improvements to ensure oversight 
that is more consistent. For example, the SRF reviews show that EPA has 
limited ability to determine whether the states are performing timely, 
appropriate enforcement and whether penalties are applied to 
environmental violators in a fair and consistent manner within and 
among the states. In addition, GAO noted that EPA could make further 
use of the SRF to (1) determine the root causes of poorly performing 
programs; (2) inform the public about how well the states are 
implementing their enforcement responsibilities; and (3) extend the use 
of the SRF methodology to assess the performance of EPA’s regions, 
which have been inconsistent in their enforcement and oversight 
efforts. 

What GAO Recommends: 

GAO recommends that EPA (1) develop an action plan to address problems 
identified in state programs, (2) evaluate the capacity of state 
programs to enforce authorized programs, (3) publish findings of state 
enforcement program reviews, and (4) assess the performance of its 10 
regions. EPA generally agreed with GAO’s recommendations, but stated it 
will decide whether to publish future state reviews when it evaluates 
the review process in fiscal year 2008. 

[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-883]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact John B. Stephenson at 
(202) 512-6225 or stephensonj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Increases in EPA Funding Have Not Kept Pace with Inflation and 
Enforcement Responsibilities: 

EPA and States Have Taken Steps to Improve Planning and Priority 
Setting for Enforcement, but Results Are Uneven: 

State Review Framework Has the Potential to Provide More Consistent 
Oversight: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Development and Implementation of the State Review 
Framework: 

Appendix III: Comments from the Environmental Agency: 

Appendix IVGAO Contact and Staff Acknowledgments: 

Table: 

Table 1: EPA's Candidate and Final National Enforcement Priorities for 
Fiscal Years 2005-2007, in Rank Order: 

Figures: 

Figure 1: EPA's Enforcement Funding in Real Terms, in Total, and by 
Headquarters and Regional Offices, Fiscal Years 1997-2006: 

Figure 2: OECA Headquarters and Regional Total FTEs, Fiscal Years 1997- 
2006: 

Figure 3: OECA Regional Offices FTEs, Fiscal Years 1997-2006: 

Figure 4: EPA's Real Total Funding and Real Total Grant Funding to 
States and Tribes, Fiscal Years 1997 through 2006: 

Abbreviations: 

EPA: Environmental Protection Agency: 

ECOS: Environmental Council of the States: 

FTE: Full-Time equivalent: 

NEPPS: National Environmental Partnership System: 

NYSDEC: New York State Department of Environmental Conservation: 

OECA: Office of Enforcement and Compliance Assurance: 

PPA: Performance Partnership Agreement: 

PPG: Performance Partnership Grant: 

RCRA: Resource Conservation and Recovery Act: 

SRF: State Review Framework: 

UST: Underground Storage Tank: 

United States Government Accountability Office: 

Washington, DC 20548: 

July 31, 2007: 

The Honorable Norman D. Dicks: 
Chairman: 
The Honorable Todd Tiahrt: 
Ranking Member: 
Subcommittee on Interior, Environment 
 and Related Agencies:
Committee on Appropriations House of Representatives: 

The Honorable James M. Inhofe:
Ranking Member: 
Committee on Environment and Public Works: 
United States Senate: 

The Environmental Protection Agency (EPA), in partnership with state 
agencies, oversees compliance with 44 separate environmental programs. 
These programs regulate facilities--such as sewage treatment plants, 
petroleum refineries, and power plants--whose operations could pollute 
the air, water, and land, and thereby endanger public health and the 
environment. EPA and its regulatory partners are responsible for 
ensuring that these regulated facilities comply with program 
requirements and taking enforcement action in instances of 
noncompliance. These enforcement efforts are important for ensuring a 
level playing field because, among other things, facilities that do not 
comply with program requirements might have a competitive economic 
advantage over facilities that take environmental requirements 
seriously and thereby incur additional operational costs. 

Many federal environmental statutes, such as the Clean Air Act, the 
Clean Water Act, and the Solid Waste Disposal Act, direct EPA to 
approve or authorize qualified states to implement and enforce 
environmental programs consistent with federal requirements. EPA 
expects its 10 regional offices to take a systematic, consistent 
approach in overseeing the state enforcement programs and, in doing so, 
to follow EPA's regulations, policies, and guidance. EPA outlines, by 
policy and guidance, its oversight expectations for regional offices 
with regard to ensuring the state approaches include the elements of an 
acceptable state enforcement program, such as the type and timing of 
the actions that should be taken for various violations, and track how 
well the states comply. 

This model of state enforcement of environmental laws, accompanied by 
EPA's regional oversight, allows the level of government closest to 
environmental conditions to assume primary responsibility for 
implementing programs. But it requires that states acquire and maintain 
adequate capacity to enforce state environmental programs that are 
consistent with federal requirements and act in a timely and 
appropriate manner to ensure violators come into compliance. EPA 
establishes by regulation the requirements for state enforcement 
authority, such as the authority to seek civil and criminal penalties 
and injunctive relief.[Footnote 1] EPA grants authorization to the 
states on a program-by-program basis. EPA policy and guidance outline, 
with greater specificity, the elements of an acceptable state 
enforcement program--such as the necessary legislative authorities and 
the type and timing of the enforcement actions for various violations-
-and track how well states comply. 

Most states have responsibility for multiple EPA programs. EPA- 
authorized states monitor the compliance of regulated facilities by 
conducting inspections, performing evaluations, and reviewing records 
to verify facilities' compliance with programs regulating the discharge 
of pollutants into surface water or the air and the storage and 
disposal of hazardous waste. States are expected to pursue enforcement 
actions against those facilities found in noncompliance and to report 
their actions to EPA. 

EPA administers its environmental enforcement responsibilities through 
its headquarters Office of Enforcement and Compliance Assurance (OECA). 
OECA monitors the compliance of regulated facilities, identifies 
national enforcement concerns and sets priorities, and provides overall 
direction on enforcement policies. While OECA headquarters occasionally 
takes direct enforcement action, much of EPA's enforcement 
responsibilities are carried out by its 10 regional offices. These 
offices are responsible for carrying out core program activities under 
each of the major federal environmental statutes, as well as 
significant involvement in implementing EPA's national enforcement 
priorities and taking direct enforcement action. The regions are also 
responsible for overseeing authorized states' enforcement programs, 
implementing programs in Indian country[Footnote 2] and states that are 
not authorized for particular programs. OECA also expects regions and 
authorized states to establish enforcement priorities and expectations 
and reach agreement on their respective roles and responsibilities. 
Authorized states may also receive EPA grants to assist in implementing 
and enforcing authorized programs. In fiscal year 2006, grants to 
states and tribes totaled $3.2 billion, or about 42 percent of EPA's 
total budget. 

Over the years, states have increased their inspection and enforcement 
activities. As a result, EPA regional offices are now more actively 
involved in conducting oversight and providing states with guidance, 
training, and technical assistance to assure consistent performance of 
state enforcement programs. If EPA finds a state is not adequately 
administering or enforcing authorized programs, individual 
environmental statutes may authorize EPA to take certain actions, 
including providing additional technical assistance, conditioning the 
receipt of grant funds on compliance with EPA guidance, or withdrawing 
state authorization. In addition, when EPA finds a specific state 
enforcement action to be inadequate, the agency may take federal 
enforcement action against the violator. 

Despite the interdependence between EPA and the states in carrying out 
enforcement responsibilities, effective working relationships have 
historically been difficult to establish and maintain, as we, EPA's 
Office of Inspector General, the National Academy of Public 
Administration, and others have reported.[Footnote 3] The following 
three key issues have affected EPA-state relationships: 

* EPA's funding allocations to the states have not fully reflected the 
differences among the states' enforcement workload and their relative 
ability to enforce state environmental programs consistent with federal 
requirements. In this regard, EPA lacks information on the capacity of 
both the states and EPA's regions to effectively carry out their 
enforcement programs, because the agency has done little to assess the 
overall enforcement workload of the states and regions and the number 
and skills of people needed to implement enforcement tasks, duties, and 
responsibilities. Furthermore, the states' capacity continues to evolve 
as they assume a greater role in the day-to-day management of 
enforcement activities, workload changes occur as a result of new 
environmental legislation, new technologies are introduced, and state 
populations shift. 

* Problems in EPA's enforcement planning and priority setting processes 
have resulted in misunderstandings between OECA, regional offices, and 
the states regarding their respective enforcement roles, 
responsibilities, and priorities. States have raised concerns that EPA 
sometimes "micromanages" state programs without explaining its reasons 
for doing so and often does not adequately consult the states before 
making decisions affecting them. 

* OECA has not established a consistent national strategy for 
overseeing states' enforcement of EPA programs. Consequently, the 
regional offices have not been consistent in how they oversee the 
states. Some regional offices conducted more in-depth state reviews 
than others, and states in these regions have raised concerns that 
their regulated facilities are held to differing standards of 
compliance than facilities in states located in other regions. 

EPA and leaders of state environmental programs have tried over the 
years to establish new mechanisms to address each of these long- 
standing problems in order to strengthen the EPA-state partnership. For 
example, EPA has linked its budgeting and allocation process to its 
strategic goals and objectives, and makes strategic decisions in 
developing its budget for its enforcement workforce to reflect shifting 
priorities. Nonetheless, according to OECA officials, shifts in funding 
and staff years made as a result of changing priorities are generally 
marginal. In this regard, in July 2005 we reported that an effective 
workforce strategy is needed, particularly during times of fiscal 
constraint, so that OECA can tailor workforce changes to reflect actual 
conditions in the regions and states and minimize potential adverse 
impacts on EPA's programs.[Footnote 4] 

To better clarify roles, responsibilities, and priorities between EPA 
and the states, the agency established the National Environmental 
Performance Partnership System (NEPPS) in 1995 to give states 
demonstrating strong environmental performance greater flexibility and 
autonomy in planning and operating their environmental programs. Under 
this system, a state and EPA may enter into a Performance Partnership 
Agreement (PPA) that identifies the state's environmental goals and 
priorities, and spells out how EPA and state officials are to address 
them. States may also ask to combine EPA grants into a Performance 
Partnership Grant (PPG), which is intended to allow the state greater 
flexibility in targeting limited resources to meet its priorities. In 
2003, OECA revised its process for setting national enforcement 
priorities to better consider the views of states and regions and to 
more effectively target enforcement resources. Under the new process, 
OECA headquarters evaluates the overall environmental performance of 
individual industrial sectors, and solicits views about those sectors 
from states and regions, the representatives of the industrial sectors, 
and the public. OECA uses this information to identify priorities that 
are best addressed through focused federal attention. OECA issues 
guidance to the regions and states for implementing the national 
enforcement priorities, as well as guidance for deterring noncompliance 
among all regulated sectors. 

Likewise, OECA implemented a new oversight program in 2004, known as 
the State Review Framework (SRF), to more uniformly and objectively 
measure the performance of states' enforcement programs. Under SRF, 
regions evaluate the extent to which state performance in managing 
three major programs complies with specific legal requirements, policy, 
and guidance, while OECA headquarters manages the overall review 
process.[Footnote 5] In conducting this evaluation, the regions use 12 
review elements, such as the degree to which states complete planned 
inspections, accurately identify significant violations, and take 
timely and appropriate enforcement action. As of January 2007, EPA had 
conducted SRF reviews in 33 states and expected to complete its 
assessment of the remaining states by the end of fiscal year 2007. EPA 
plans to evaluate the implementation of SRF in fiscal year 2008. 
Appendix II contains a detailed description of the development of the 
SRF. 

In this context, you asked that we (1) identify trends in the federal 
resources provided to regions and states for enforcement between 1997 
and 2006, and determine regional and states' views on the adequacy of 
these resources to implement their activities; (2) determine EPA's 
progress in improving priority setting and enforcement planning with 
its regions and authorized states; and (3) examine EPA's efforts to 
improve its oversight of state's enforcement and compliance programs 
and identify additional actions that could be taken to ensure more 
consistent state performance and more consistent oversight of state 
programs. 

To address these issues, we reviewed EPA's strategic plans and national 
strategy, and its policy and guidance for planning and implementing its 
enforcement programs and for establishing performance partnerships with 
authorized state agencies.[Footnote 6] We also examined the budgets for 
EPA and OECA for fiscal years 1997 through 2006. We discussed the 
development and implementation of national strategy, policy, guidance, 
and resource allocation with officials of OECA, EPA's Office of 
Congressional and Intergovernmental Relations, EPA's Office of Chief 
Financial Officer, and officials responsible for state program 
oversight in each of EPA's 10 regional offices. In each region, we 
examined regional strategic plans, partnership agreements with 
authorized states, and state oversight reviews. We used semi-structured 
interviews to elicit, organize, and evaluate narrative responses from 
officials at the 10 regional offices and 10 authorized state agencies. 
We selected one state from each region: five states that had 
performance partnership agreements with EPA (Iowa, Massachusetts, 
Minnesota, Oregon, and Utah) and five that did not (Arizona, Arkansas, 
Florida, New York, and West Virginia). At these state agencies, we 
reviewed strategic plans and strategy, and policy and guidance for 
planning and implementing enforcement programs. We were not able to 
assess the workload and capacity of states to meet their programs 
because, as mentioned previously, EPA does not have a system to collect 
information needed for such an assessment, including consistent and 
complete information from the states or regions on their workload and 
the number, type, and skills of staff needed to carry out these 
responsibilities. Appendix I contains a detailed description of our 
scope and methodology. We performed our work from October 2005 through 
July 2007 in accordance with generally accepted government auditing 
standards, which included an assessment of data reliability and 
internal controls. 

Results in Brief: 

Overall funding to regions and authorized states increased from fiscal 
years 1997 through 2006. However, these increases did not keep pace 
with inflation and the growth in enforcement responsibilities. Both EPA 
and state officials told us they are finding it difficult to respond to 
new requirements while carrying out their previous responsibilities. 
Over the 10-year period, EPA's enforcement funding to the regions 
increased from $288 million in fiscal year 1997 to $322 million in 
fiscal year 2006, but declined in real terms by 8 percent. In response, 
regional officials said, they reduced the number of enforcement staff 
by about 5 percent. EPA's grants to states to implement environmental 
programs consistent with federal requirements also increased over the 
10-year period, from $2.9 billion in fiscal year 1997 to $3.2 billion 
in fiscal year 2006, but declined in real terms by 9 percent. In 
addition, grant funding dropped substantially between fiscal years 2004 
and 2006, from $3.9 billion to $3.2 billion. These reductions in 
funding occurred during a period when statutory and regulatory changes 
increased enforcement and other environmental program responsibilities. 
As we reported in July 2005, EPA's implementation of amendments to the 
Clean Water Act (1) increased the number of regulated industrial and 
municipal facilities by an estimated 186,000 facilities and (2) added 
hundreds of thousands of construction projects to states' and regions' 
workloads for the storm water program. For example, Arkansas officials 
said that, for the storm water program in their state, the number of 
inspections and storm water permits issued increased by 512 percent 
from 2003 to 2005. In addition, other state officials told us that 
reductions in grant funds have limited their ability to meet EPA's 
requests for their states to carry out new requirements. As a result, 
as these officials focus on priority enforcement work, they have 
accumulated a backlog of work in other areas, such as renewing permits 
for regulated facilities. However, EPA does not collect sufficient 
information on enforcement workload and staffing to permit an 
independent assessment of the capability of either regions or states to 
meet their enforcement responsibilities. 

EPA has made substantial progress in improving priority setting and 
enforcement planning with states through its system for setting 
national enforcement priorities and NEPPS, which have fostered a more 
cooperative relationship. With respect to setting national priorities, 
for example, stakeholders recommended, and OECA accepted, a focus on 
ensuring that facilities handling hazardous substances, such as lead 
and mercury, have the financial resources necessary to close their 
facilities, clean up any contamination, and compensate communities and 
individuals affected by the contamination. Because financial assurance 
is now a national priority, EPA will provide training to state 
inspectors, who often do not have a financial background, on how to 
assess the adequacy of documented financial resources. EPA and states 
have also made progress in using NEPPS for establishing enforcement 
responsibilities and allocating resources. State participation in the 
partnership grew from 6 pilot states in fiscal year 1996 to 41 states 
in fiscal year 2006, although the extent of participation in the 
partnership varies. Of the 41 states, 31 had both Performance 
Partnership Agreements and Performance Partnership Grants; 2 had 
agreements only; and 8 had grants only. Participation has been uneven, 
according to state officials, because the benefits expected from this 
partnership--flexibility in managing their programs and directing grant 
funds--have only been partially realized. For example, Minnesota and 
Massachusetts officials said they have been able to achieve some 
flexibility from EPA to target state priorities and allocate grant 
resources to those priorities. Other states, such as Florida and New 
York, reported that they did not see significant benefits from 
participation in NEPPS. For example, Florida officials told us that 
state appropriation procedures restrict their ability to shift 
resources among programs. 

EPA has improved its oversight of state enforcement programs by 
implementing the SRF to provide a consistent approach for overseeing 
the programs. Moreover, EPA can make additional progress by addressing 
weaknesses that the SRF reviews identified and by implementing other 
improvements to ensure oversight that is more consistent. With its 
implementation of the SRF, EPA has, for the first time, a consistent 
approach for overseeing states' compliance and enforcement programs. 
The SRF reviews have also identified several significant weaknesses in 
how states enforce program requirements. For example, the reviews 
frequently found that states are not properly documenting inspection 
findings or penalties, as directed by EPA's enforcement policy and 
guidance. While recognizing that these findings are useful, EPA has not 
developed a plan for how it will uniformly address them in a timely 
manner. Nor has the agency identified the root causes of the 
weaknesses, although some EPA and state officials attribute the 
weaknesses to causes such as increased workloads concomitant with 
budgetary reductions. Until EPA addresses enforcement weaknesses and 
their causes, it faces limitations in determining whether states 
perform timely and appropriate enforcement and apply penalties to 
environmental violators in a fair and consistent manner within and 
among the states. The SRF is still in its early stages of 
implementation and offers additional uses that EPA has not yet 
considered, such as using the SRF's structured approach to (1) provide 
consistent information to the public on how well the states are 
implementing their enforcement responsibilities and (2) serve as a 
basis for assessing the performance of EPA's regions, which have been 
inconsistent in their enforcement and oversight efforts in the past. 

In order to enhance EPA's oversight of regional and state enforcement 
activities consistent with federal requirements, we are recommending 
that the Administrator of EPA use the results of the SRF to (1) 
identify lessons learned and develop an action plan to address 
significant problems; (2) address capacity issues, such as state 
staffing levels and workload requirements, of state programs that 
perform poorly; (3) publish the results of the SRF so that the general 
public and others will know how well state regulators are enforcing 
authorized programs; and (4) for regional enforcement programs, conduct 
a performance assessment similar to the SRF. In commenting on the draft 
report, EPA generally agreed with GAO's recommendations and stated that 
the agency is taking action to address the issues we raised. With 
respect to our recommendation to publish the results of the SRF 
findings, EPA said that it had agreed with the Environmental Council of 
the States that the first round of state enforcement reviews would not 
be published. However, EPA said it would consider whether to publish 
future reviews when it evaluates the implementation of the SRF in 
fiscal year 2008. 

Background: 

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

Because states historically had primary responsibility for addressing 
environmental pollution, including taking the lead role in enforcement 
under federal environmental legislation of the 1950s and 1960s, many 
states were dissatisfied with the new enforcement powers Congress 
granted to EPA. Referring to his first term as EPA Administrator during 
the 1970s, William Ruckelshaus described relations between EPA and 
state governments as "terrible," largely because EPA itself represented 
a repudiation of what the state regulators had been doing. The states 
felt, he believed, that in the face of very little public or political 
support, they had made considerable progress and were getting no credit 
for it. The very existence of EPA symbolized to state environmental 
agencies the lack of appreciation the public had for their efforts and 
accomplishments. 

Furthermore, because EPA was now responsible for ensuring the 
implementation and enforcement of environmental laws, states needed to 
demonstrate to EPA that they had acquired and were maintaining adequate 
authority to enforce program requirements consistent with federal law 
before EPA would "authorize" and continue to allow states to assume the 
day-to-day administration of new environmental programs. This federal 
oversight contributed to a very difficult period between EPA and the 
states. The states thought EPA dictated too much and was too intrusive. 

Difficulties in the EPA-state relationship manifested themselves from 
the 1970s through the 1990s and, to some degree, have continued to the 
present day. In 1980, we described the failings of the EPA-state 
partnership.[Footnote 7] In a 1988 comprehensive management review of 
EPA, we reported that while some progress had been made in improving 
the EPA/state relationship, the goal of a truly effective EPA-state 
partnership remained elusive.[Footnote 8] Many state officials 
expressed concerns about having limited flexibility, too much EPA 
control, and excessively detailed EPA oversight. 

In 2003, OECA officials said that environmental commissioners in 
several states and members of the Environmental Council of the States 
(ECOS)[Footnote 9] called for OECA to develop and implement a 
consistent and objective mechanism for measuring state performance. 
Specifically, ECOS wanted EPA's oversight of state programs to be 
consistent between EPA regions and states in the same region. ECOS also 
wanted EPA oversight to be predictable, repeatable, and unbiased. In 
December 2003, OECA began jointly developing the SRF with input from 
EPA regions, associations representing state pollution control 
agencies,[Footnote 10] ECOS and state officials to evaluate the extent 
to which state performance in three major programs complies with 
specific legal requirements, policy and guidance.[Footnote 11] The SRF 
measures state performance using 12 required elements and an optional 
13th element. The elements include five categories: (1) review of state 
inspection implementation; (2) review of state enforcement activity; 
(3) review of state enforcement commitments; (4) review of state data 
integrity; and (5) for the optional 13th element, a review of 
additional programs of the state's choice to insure consideration of 
state activities that support the overall evaluation. Regions prepare a 
draft report of the findings and conclusions of each review, jointly 
discuss with the state how major recommendations will be addressed, and 
provide the draft reports to OECA headquarters. OECA reviews the draft 
reports and provides comments on the regions' analyses and 
recommendations. A more detailed description of the SRF is included in 
appendix II. 

The relationship between EPA and state environmental agencies varies 
substantially from state to state and program to program. Staff in 
EPA's regional offices operate programs in those states that have 
elected not to seek authorization and in those states that EPA has 
concluded are not prepared to manage the programs effectively. In some 
cases, where EPA has denied a state with program authorization, state 
personnel may do most of the work as if they had the authority to grant 
permits, with EPA employees handling only the final step of formally 
issuing the documents. In other states or programs, EPA may approve a 
"partial delegation" of authority, under which a state operates part of 
a program that can be delegated and EPA operates the remainder. 

Just as EPA can authorize a state to conduct day-to-day program 
management, environmental statutes may allow EPA to withdraw 
authorization if a state fails to meet certain conditions, including 
maintaining the capacity to effectively manage the program and adopting 
and properly exercising the legal authorities to enforce program 
compliance consistent with federal laws and regulations. In practical 
terms, however, EPA's ability to directly manage state programs is 
limited because of its staffing levels and other resources. 

Increases in EPA Funding Have Not Kept Pace with Inflation and 
Enforcement Responsibilities: 

Overall funding to regions and authorized states increased from fiscal 
years 1997 through 2006. However, these increases did not keep pace 
with inflation and the growth in enforcement responsibilities. Both EPA 
and state officials told us they are finding it difficult to respond to 
new requirements while carrying out their previous responsibilities. 
However, EPA does not collect sufficient data on enforcement workload 
and staffing, which it needs to assess the capacity of the regions and 
states to effectively implement their responsibilities for enforcing 
environmental laws consistent with federal requirements. 

Resources for EPA Regions and the States Have Declined in Real Terms: 

According to our analysis of EPA's budget and workforce for fiscal 
years 1997 through 2006, EPA's total budget increased from $7.3 billion 
to $7.7 billion--a decline of 13 percent in real terms.[Footnote 12] At 
the same time, total funding for EPA enforcement increased from $455 
million to $522 million--a decline of 5 percent in real terms. For the 
regions, which command the bulk of enforcement resources, funding 
increased from $288 million to $322 million--a decline of 8 percent in 
real terms, while headquarters enforcement funding increased from $167 
million to $200 million--a decline of 1 percent in real terms. Figure 1 
shows the changes in EPA enforcement funding in real terms, in total, 
and by headquarters and regional offices. 

Figure 1: EPA's Enforcement Funding in Real Terms, in Total, and by 
Headquarters and Regional Offices, Fiscal Years 1997-2006: 

[See PDF for image] 

Source: GAO analysis of EPA data.

Note: In nominal terms, funding enforcement in EPA regions increased 
from $288 million in fiscal year 1997 to $322 million in fiscal year 
2006. 

[End of figure]

According to officials in OECA and EPA's Office of the Chief Financial 
Officer, OECA headquarters absorbed decreases in OECA's total 
enforcement funding in recent years to prevent further reductions to 
the regions. According to our analysis, enforcement funding for OECA 
headquarters increased from $197 million in fiscal year 2002 to $200 
million in fiscal year 2006--a 9 percent decline in real terms. During 
the same time, regional enforcement funding increased from $279 million 
to $322 million--a 4 percent increase in real terms. 

EPA reduced the size of the regional enforcement workforce by about 5 
percent over the 10 years, from 2,568 full-time equivalent (FTE) staff 
in fiscal year 1997 to 2,434 FTEs in fiscal year 2006. In comparison, 
the OECA headquarters workforce declined 1 percent, and the EPA total 
workforce increased 1 percent during the same period. Figure 2 shows 
the changes in headquarters and regional FTEs from fiscal years 1997 
through 2006. 

Figure 2: OECA Headquarters and Regional Total FTEs, Fiscal Years 1997- 
2006: 

[See PDF for image] 

Source: EPA Office of Budget.

[End of figure] 

As figure 3 shows, the change in FTEs was not uniform across the 10 
regions over the period. For example: 

* Two regions--Region 9 (San Francisco) and Region 10 (Seattle)-- 
experienced increases in their workforce: Region 9 increased 5 percent, 
from 229 to 242 FTEs, and Region 10 increased 6 percent, from 161 to 
170 FTEs. 

* Two regions--Region 1 (Boston) and Region 2 (New York) experienced 
the largest declines: Region 1 experienced a 15 percent decline, from 
195 to 166 FTEs, and Region 2 had a 13 percent decline, from 291 to 254 
FTEs. 

Figure 3: OECA Regional Offices FTEs, Fiscal Years 1997-2006: 

[See PDF for image] 

Source: EPA Office of Budget.

[End of figure] 

As EPA's real total funding declined, EPA's real total grant funding to 
states and tribes declined, as shown in figure 4. States and tribes use 
these grant funds, combined with their own resources, to implement and 
enforce environmental programs consistent with federal requirements. 
EPA's grants to authorized states and tribes increased from $2.9 
billion to $3.2 billion from fiscal years 1997 through 2006--a decline 
of 9 percent in real terms. However, grant funding to states and tribes 
dropped substantially between fiscal years 2004 and 2006, from $3.9 
billion to $3.2 billion--a 22 percent decline in real terms. 

Figure 4: EPA's Real Total Funding and Real Total Grant Funding to 
States and Tribes, Fiscal Years 1997 through 2006: 

[See PDF for image] 

Source: GAO analysis of EPA data.

Note: In nominal terms, funding for grants to states and tribes 
increased from $2.9 billion in fiscal year 1997 to $3.2 billion in 
fiscal year 2006. 

[End of figure] 

For the programs we examined, EPA provides states with federal 
resources through grant programs. In addition, under the Clean Air Act, 
states must collect fees from permitted facilities to help fund the 
program. The following are some of the funding sources for the programs 
we examined: 

* Clean Water Act Section 106 Grants. The Office of Water provides 
annual Water Pollution Control grant funds to the states under the 
Clean Water Act for, among other things, enforcement of point source 
pollution requirements. 

* Clean Air Act Section 105 Grants. States finance enforcement of air 
quality laws with fees paid by permitted facilities (e.g., electric 
utilities and chemical manufacturers), in accordance with title V of 
the Clean Air Act. States assess fees based on tons of pollution 
emitted. The fee must be at least $25 per ton (as adjusted for 
inflation) of regulated pollutants (excluding carbon monoxide). EPA 
provides grants to states to help fund programs that prevent and 
control air pollution or to implement national ambient air quality 
standards, including programs that may address smaller sources that do 
not have to obtain permits (e.g., dry cleaners and gasoline stations). 

* Resource Conservation and Recovery Act (RCRA) Section 3011 Grants. 
The Office of Solid Waste and Emergency Response provides annual grants 
to states under section 3011 of the Solid Waste Disposal Act to 
support, among other things, state enforcement of the RCRA Subtitle C 
Hazardous Waste Management programs.[Footnote 13] EPA's financial 
assistance covers up to 75 percent of a state's total costs for 
managing hazardous waste. 

* Underground Storage Tank (UST) Grants. The Office of Underground 
Storage Tanks provides grants to states under subtitle I of RCRA to 
support state UST programs, including inspections and enforcement 
activities. 

EPA Regions and States Find It Difficult to Respond to New Requirements 
under Current Resource Constraints: 

Given the real reductions in funding and personnel, regional and state 
enforcement officials noted states are finding it difficult to respond 
to new enforcement requirements in the Clean Water Act, Clean Air Act, 
and RCRA, which have greatly increased the number of regulated 
pollutants and sources.[Footnote 14] However, as we reported in June 
2006, EPA's data collection system for state and regional enforcement 
activities does not provide consistent and complete data on the 
workload of the states or the regions, and on their capacity to meet 
their workload, including the enforcement of environmental programs 
consistent with federal requirements.[Footnote 15] Thus, we were not 
able to independently assess their capabilities to meet their 
responsibilities under environmental programs with their existing 
resources. 

Clean Water Act: 

In 1987 amendments to the Clean Water Act,[Footnote 16] Congress 
expanded the scope of the act by regulating storm water runoff from 
rain or snow as a discharge from point sources, such as industrial 
facilities and municipal separate storm sewer systems. We reported in 
2005 that that the new storm water regulations increased the number of 
industrial and municipal facilities subject to regulation by an 
estimated 186,000 facilities. In that same year, the EPA Office of 
Inspector General reported that the new requirements added hundreds of 
thousands of construction projects to states' and regions' workloads 
related to storm water pollution sources. In 2005, EPA established 
storm water as a national enforcement priority. 

According to state water quality enforcement officials, it is difficult 
to meet these new requirements while still meeting older requirements 
to periodically inspect large municipal and industrial point sources. 
For example, Minnesota officials told us that there are a huge number 
of facilities and locations that require inspection and permits in that 
state. The Minnesota storm water officials provided us a performance 
report that indicated noncompliance with storm water requirements was 
so pervasive that the state's water enforcement program was not meeting 
its timeliness targets for closing enforcement cases where it has the 
authority to issue a penalty. The report said that the situation 
threatened to undermine earlier success in implementing the state's 
storm water permit program. According to the Arkansas director of the 
state's water quality program, storm water enforcement work in the fast-
growing northwestern corner of the state has overwhelmed the program. 
According to state data, the number of storm water permits issued grew 
by 512 percent--from 427 to 2,616--between 2003 and 2005. At the same 
time, the number of permits Arkansas officials issued to traditional 
point sources increased by 19 percent, from 190 to 227 facilities. 
However, the state is beginning to fall behind in issuing the 
traditional permits because it has had to redeploy inspectors to work 
on storm water enforcement. 

Regional officials told us they have provided assistance to some states 
to meet enforcement requirements for storm water, such as helping 
states complete a specified number or percentage of state inspections. 
For example, Region 8 (Denver) enforcement officials said they share 
the inspection workload with Montana officials because that state's 
permit program is chronically underfunded, and this partnership enables 
state officials in Montana to focus on reducing their backlog of 
regulated facilities that require permit renewals. 

Clean Air Act: 

In 1990 amendments to the Clean Air Act,[Footnote 17] Congress created 
significant new enforcement requirements for both EPA regions and 
states.[Footnote 18] Title III of the 1990 amendments required EPA to 
control emissions of 189 air toxics by, among other things, developing 
technology-based emissions limits for major stationary 
sources.[Footnote 19] By 2006, there were an estimated 84,000 major 
stationary sources within 158 major source categories such as 
incinerators and chemical plants to which these standards applied. 
Title III of the amendments also directed EPA to develop a list of 
categories of small stationary sources, such as dry cleaners and gas 
stations--so-called "area sources"--sufficient to represent 90 percent 
of emissions from small stationary sources of listed hazardous air 
pollutants. EPA and authorized states were then to implement strategies 
to control toxic emissions from these sources. EPA developed a list of 
70 categories, but, as we reported in 2006, it had issued standards for 
only 16.[Footnote 20] 

Under title V of the 1990 amendments, Congress directed EPA and 
authorized states to implement a comprehensive permit program for 
sources emitting regulated air pollutants.[Footnote 21] The new 
requirement significantly expanded an earlier permit program that 
applied only to major new construction or modifications of existing 
major sources of pollution. As of April 2001, EPA had authorized all 50 
states and 63 local governmental units to act as clean air regulatory 
agencies and issue Title V operating permits. The 1990 amendments also 
required states to collect fees from regulated facilities sufficient to 
cover program costs. We reported in 2001 that 19,880 major sources had 
already received, or could be expected to obtain or comply with the 
conditions of, Title V permits;[Footnote 22] furthermore, federal and 
state regulators performed about 17,800 routine inspections each year 
in fiscal years 1998 and 1999. 

State air enforcement officials said that reductions in federal air 
quality grants and EPA restrictions on how states can use the permit 
fees limit their ability to meet new Clean Air Act requirements. For 
example, enforcement officials in Arizona and West Virginia told us 
that reductions in section 105 grants have made it difficult to meet 
EPA's push for states to identify and regulate air toxic emissions from 
small stationary sources, such as dry cleaners. According to the 
director of West Virginia's air quality program, while his office has 
identified these sources and provided this information to Region 3 
(Philadelphia), it does not have the resources to regulate these 
sources. Title V rules restrict states from using permit fees for 
enforcement of air toxic emission standards for small stationary 
sources. 

Several state officials said they also face difficulties keeping up 
with Title V requirements to issue operating permits and inspect 
facilities. For example, according to West Virginia's Director of Air 
Quality, the state program is spending more than it generates in 
revenues from Title V permit fees. Furthermore, the state is drawing 
down a reserve fund that it established in 1993, when it was operating 
a preliminary Title V program before it was authorized to administer 
this program. West Virginia's Title V fee is around $21 per ton, which 
is below the national average fee of $28 per ton paid by major sources 
in 2001.[Footnote 23] The Director of Arizona's Air Quality Division 
said that as a result of new standards and new types of performance 
testing, the Title V permitting workload has increased faster than 
staff levels. 

Resource Conservation and Recovery Act: 

The 1984 amendments to RCRA[Footnote 24] required EPA and authorized 
states to regulate small-quantity hazardous waste generators--those 
producing between 100 and 1,000 kilograms of waste per month. Before 
the 1984 amendments, EPA only required generators who produce more than 
1,000 kilograms of hazardous waste to comply with regulations 
concerning, among other things, record keeping and reporting. In 
addition, the 1984 amendments required EPA and authorized states to 
ensure that owners and operators of treatment, storage and disposal 
facilities comply with new prohibitions for disposing of untreated 
hazardous wastes on land. 

This expansion of responsibility, combined with a reduction in 
resources, has made it difficult to carry out responsibilities, 
according to state hazardous waste enforcement officials we spoke with. 
For example, data provided to us by New York State officials showed 
that the state's grant for hazardous waste management dropped in real 
terms by 19 percent between fiscal years 1997 and 2006. As a result of 
this decline in funding, New York State officials said that the grant 
supports fewer full-time staff. The officials provided us data that 
showed New York State's grant for hazardous waste management supported 
38 percent fewer full-time staff in the state's RCRA program in fiscal 
year 2006 than in fiscal year 1997. Furthermore, while it continues to 
focus on EPA's national priorities for enforcement, the state has 
accumulated a backlog of permits that must be renewed. Renewing these 
hazardous waste permits is critical to protecting the environment and 
public health because EPA and authorized states can enforce new 
hazardous waste standards only when they are specified in a permit. 
According to these officials, EPA has issued new standards during the 
life of the old permit and these new standards are not enforceable 
until the permit is renewed. 

Several states identified an emerging challenge: verifying that owners 
and operators of hazardous waste facilities have the financial 
resources to clean up their sites, as RCRA requires, rather than 
leaving site cleanup to the taxpayer. As we reported in 2005, EPA's 
Office of Inspector General concluded that required cleanups at some 
sites could exceed $50 million. EPA made enforcement of the financial 
assurance requirement a national enforcement priority in 2005. However, 
state officials told us, and EPA's regional officials agreed, that they 
do not have the personnel with the necessary skills to evaluate the 
financial assurances provided. For example, New York State officials 
told us that they have only one person trained to review the adequacy 
of a facility's financial assurance. 

The Energy Policy Act of 2005[Footnote 25] also expanded states' 
enforcement workload by requiring, among other things, (1) EPA and any 
state receiving federal funding to inspect by August 8, 2007, all 
regulated tanks that were not inspected since December 22, 1998, and 
(2) EPA or the state must generally inspect regulated tanks once every 
3 years and complete the first 3-year inspection cycle within 3 years 
of completing inspections of underground storage tanks that had not 
been inspected by December 22, 1998.[Footnote 26] We reported in 
February 2007 that according to EPA data there were 645,990 active 
federally regulated underground storage tanks registered with state 
underground storage tank programs.[Footnote 27] 

To carry out these additional inspections, the act, as amended, allows 
states to use Leaking Underground Storage Tank Trust Fund 
appropriations, and authorizes substantial appropriations from the 
trust fund during fiscal years 2006 through 2011. These new 
appropriations were to be in addition to State and Tribal Grant funds 
EPA provides to states for underground storage tank programs, which 
historically have been about $187,000 annually. These additional funds 
were not appropriated in fiscal years 2006 and 2007. As a result, some 
state officials told us, they do not have sufficient resources to meet 
the new inspection requirements. For example, Minnesota officials said 
they have sufficient resources for inspecting underground storage tanks 
only once every 9 years. Regional officials acknowledged that many 
states need additional inspectors for meeting these new underground 
storage tank inspection requirements and said they provide support to 
states facing fiscal constraints. For example, the Region 3 Chief of 
RCRA enforcement and compliance said the region helped state officials 
in West Virginia by inspecting small and midrange gas stations in the 
state. Region 9 (San Francisco) has also been working with UST 
officials in Arizona to meet the new inspection requirements. 

EPA and States Have Taken Steps to Improve Planning and Priority 
Setting for Enforcement, but Results Are Uneven: 

EPA has made substantial progress in improving priority setting and 
enforcement planning with states through its system for setting 
national enforcement priorities and NEPPS, which have fostered a more 
cooperative relationship. For example, on states' recommendation, OECA 
accepted as a priority ensuring that facilities handling hazardous 
substances, such as lead or mercury, have the financial resources to 
close their facilities, clean up contamination, and compensate 
communities and individuals affected by the contamination. EPA and 
states have also made some progress in using NEPPS for joint planning 
and resource allocation. State participation in the partnership grew 
from 6 pilot states in fiscal year 1996 to 41 states in fiscal year 
2006. 

EPA Implemented a More Collaborative Process for Setting National 
Priorities for Enforcement: 

Since the late 1980s, EPA's top agency executives have set priorities 
for improving agency management. To develop more collaborative 
relationships among EPA's headquarters and regions, and the states, 
OECA created the Planning Council in 2003 to direct OECA's strategic 
and planning processes, including selecting national enforcement 
priorities. The council includes both EPA headquarters and regional 
officials. In the summer of 2003, OECA asked officials representing 
state environmental agencies, tribal governments, and air, water, and 
solid waste pollution control associations to recommend priorities for 
consideration as national priorities for fiscal years 2005 through 
2007. Considering these recommendations, as well as those from EPA's 
media program managers, OECA developed a list of potential national 
priorities that it published in the Federal Register in December 2003. 
OECA asked for public comments on candidate priorities and suggestions 
for new national enforcement priorities. In January 2004, OECA hosted a 
meeting with headquarters and regional officials, and representatives 
from 10 state environmental agencies, four tribal governments, and 
three pollution control associations to discuss and rank their choices 
of potential priorities. OECA then selected the final national 
enforcement priorities for fiscal years 2005 through 2007 based on the 
following criteria: 

* Significant environmental benefit. In what specific areas can the 
federal enforcement and compliance assurance programs make a 
significant positive impact on human health and/or the environment? 
What are the known or estimated public health or environmental risks? 

* Noncompliance. Are there particular economic or industrial sectors, 
geographic areas, or facility operations where regulated entities have 
demonstrated serious patterns of noncompliance? 

* EPA responsibility. What identified national problem areas or 
programs are better addressed through EPA's federal capability in 
enforcement or compliance assistance? 

Table 1 shows the potential national priorities, and those that were 
selected. 

Table 1: EPA's Candidate and Final National Enforcement Priorities for 
Fiscal Years 2005-2007, in Rank Order: 

Potential priorities: Clean Air Act; 
Priorities selected: [Empty]. 

Potential priorities: Clean Air Act: Air toxics; 
Priorities selected: [Check]. 

Potential priorities: Clean Air Act: New source review/prevention of 
significant deterioration; 
Priorities selected: [Check]. 

Potential priorities: Clean Water Act; Priorities selected: [Empty]. 

Potential priorities: Clean Water Act: Effects of wet weather on 
concentrated animal feeding operations, combined sewer overflows, 
sanitary sewer overflows, and storm water runoff; 
Priorities selected: [Check]. 

Potential priorities: Petroleum refining; 
Priorities selected: [Check] [A]. 

Potential priorities: Resource Conservation and Recovery Act; 
Priorities selected: [Empty]. 

Potential priorities: Resources Conservation and Recovery Act: 
Financial assurance/financial responsibility; 
Priorities selected: [Check]. 

Potential priorities: Resources Conservation and Recovery Act: Mineral 
processing; 
Priorities selected: [Check]. 

Potential priorities: Tribal environmental issues; 
Priorities selected: [Check]. 

Potential priorities: Federal facilities; 
Priorities selected: [Empty]. 

Potential priorities: Resource Conservation and Recovery Act; 
Priorities selected: [Empty]. 

Potential priorities: Resource Conservation and Recovery Act: Leaking 
underground storage tanks; 
Priorities selected: [Empty]. 

Potential priorities: Ports of entry; 
Priorities selected: [Empty]. 

Potential priorities: Asbestos in schools; 
Priorities selected: [Empty]. 

Potential priorities: Auto salvage yards; 
Priorities selected: [Empty]. 

Potential priorities: Environmental justice; 
Priorities selected: [Empty]. 

Potential priorities: Miscellaneous plastics; 
Priorities selected: [Empty]. 

Potential priorities: Safe Drinking Water Act; 
Priorities selected: [Empty]. 

Potential priorities: Microbials; 
Priorities selected: [Empty]. 

Potential priorities: Fuels management; 
Priorities selected: [Empty]. 

Potential priorities: Significant noncompliance oversight; 
Priorities selected: [Empty]. 

Source: EPA. 

[A] EPA's national petroleum refining priority addresses air emissions 
from the nation's petroleum refineries. EPA reached its goal of 
addressing 80 percent of the domestic refining capacity through 
settlements or filed civil actions. As a result, OECA removed it from 
the national priority list at the end of fiscal year 2006. 

[End of table]

According to state and regional officials, OECA's approach for 
selecting national priorities has fostered a more collaborative working 
relationship, and they pointed to the financial assurance national 
priority under RCRA as a case in point. This priority focuses on 
ensuring that owners and operators of facilities handling hazardous 
substances, such as lead or mercury, provide assurance that they have 
the financial resources necessary to close their facilities, clean up 
any contamination, and compensate communities and individuals affected 
by any contamination they cause. Stakeholders--EPA regions, states, 
pollution control associations,[Footnote 28] and the public--told OECA 
that financial assurance should be a national priority. EPA and state 
supporting investigations confirmed that (1) there are significant 
noncompliance issues relating to the financial assurance requirements; 
(2) the issues are of national importance and deal with several 
environmental laws and regulatory programs; and (3) areas of 
noncompliance were not isolated to a specific sector, industry, or 
geographic location. In selecting financial assurance as a national 
priority, OECA stated that an effective national enforcement and 
compliance strategy would help address many of the problems created by 
the regulated facilities' failure to fulfill their financial 
responsibility obligations. In this regard, EPA is providing training 
to state inspectors--who often do not have expertise in financial 
management--on how to assess the adequacy of financial documentation 
provided by regulated facilities. 

While state and regional officials told us the priority setting process 
is more collaborative, some state officials raised a number of issues 
about how EPA considered their comments about national priorities. For 
example, Massachusetts and Oregon officials told us that they did not 
understand why OECA ranked some of their priorities lower than the 
national priorities that were selected and would like to have feedback 
on how their views were considered when selecting national enforcement 
priorities. In addition, while Minnesota, Utah, and Arizona officials 
agree that the planning and priority setting has improved, they would 
prefer earlier involvement in the decision-making process, that is, in 
developing the candidate list. On the other hand, New York and Arkansas 
said that they preferred to provide input on the national enforcement 
priorities through the pollution control associations and/or ECOS. They 
said, by doing so, OECA will receive states' collective views on the 
candidate priorities in a more representative and compelling way. 

After OECA selects the national enforcement priorities, it uses the 
National Program Managers guidance to inform its stakeholders of the 
national priorities and required elements of all environmental laws. 
The managers establish overall national goals for their respective 
programs based on a variety of factors, including underlying statutory 
mandates, congressional directives, administration/administrator 
priorities, and their own view of programs and policies that the 
programs should focus on. EPA regions and states use this guidance to 
negotiate agreements based on (1) which environmental problems will 
receive priority attention within state programs, (2) what EPA's and 
the states' respective enforcement roles and responsibilities will be, 
and (3) how the states' progress in achieving program objectives will 
be assessed. The results of these negotiations are documented primarily 
in PPAs and/or PPGs. According to EPA, NEPPS allows regions and states 
to negotiate agreements that vary in content and emphasis to reflect 
regional and state conditions and priorities. 

Extent of States' Participation in the Planning and Priority Setting 
Process Varies: 

State participation in NEPPS grew from 6 pilot states in fiscal year 
1996 to 41 states in fiscal year 2006. Of these 41 states participating 
in NEPPS in fiscal year 2006, 31 had both PPAs and PPGs; 2 had 
agreements only; and 8 had grants only. Twelve states did not 
participate at all in NEPPS. 

Regional officials and states participating in NEPPS said it 
contributed to improvements in their planning and priority setting 
process by helping identify enforcement priorities, roles, and 
responsibilities. The states we spoke with that had a PPA--Iowa, 
Massachusetts, Minnesota, Oregon, and Utah--also had a PPG and 
generally agreed that EPA's planning and budget process fostered 
collaboration in setting joint priorities, roles, and accountability 
for each party. In addition, Minnesota and Massachusetts officials told 
us that they have been able to use grant resources to address other 
state priorities. However, these officials noted that EPA guidance 
continues to call for a specific number of enforcement activities, 
which does not allow for as much flexibility as envisioned. 

States without a PPA can still participate in NEPPS through a PPG, 
which allows them to combine individual categorical grant funds into a 
consolidated grant. Once the funds are consolidated, they lose their 
category-specific identity and can be used with greater flexibility. We 
found that states that had a PPG, but not a PPA, had mixed views on 
NEPPS. For example, according to the New York State Department of 
Environmental Conservation (NYSDEC), which currently has a performance 
grant only for water programs, it experimented with a performance 
agreement in the mid-1990s but dropped the endeavor because of 
difficulties in drafting an agreement that combined multiple agency 
divisions. NYSDEC officials said the amount of work involved outweighed 
the benefits to individual programs. Furthermore, even with a 
performance grant for water programs, NYSDEC officials told us, EPA 
still maintains requirements for how the money is used and attempts to 
steer the state toward EPA's priorities, which are not necessarily 
NYSDEC's priorities. In contrast, the Arizona Department of 
Environmental Quality, which has a performance grant but not a 
performance agreement, said it has a "fantastic relationship" with 
Region 9 that is characterized by extensive coordination and 
communication. Because of its grant, Arizona officials told us, the 
state has realized administrative efficiencies and has more flexibility 
to move money among programs. 

States that do not participate in NEPPS were generally satisfied with 
the amount of joint planning and coordination in their work plan 
agreements (i.e., memorandum of agreement and annual work plans). For 
example, West Virginia and Florida told us that their work plan 
agreements with their EPA regions provided them with much of the same 
opportunities for joint planning, flexibilities, and priority setting 
as NEPPS participants. Officials from the West Virginia Department of 
Environmental Protection said they did not participate in NEPPS because 
they did not wish to transfer grant funding among media programs. They 
said state programs rely heavily on revenue generated through fees and 
penalties; therefore, program managers are reluctant to share 
resources. According to officials from the Florida Department of 
Environmental Protection, they have not participated in NEPPS since 
1999 because their work plan agreements provide the benefits of NEPPS-
-good dialogue with the region in planning and priority setting. 
Moreover, Florida officials said they cannot use the flexibility 
allowed under NEPPS to redirect resources between programs because 
state appropriation procedures place restrictions on their ability to 
shift resources among programs. 

State Review Framework Has the Potential to Provide More Consistent 
Oversight: 

With its implementation of the SRF, EPA has--for the first time--a 
consistent approach for overseeing authorized states' compliance and 
enforcement programs and has identified several significant weaknesses 
in how states enforce their environmental laws in accordance with 
federal requirements.[Footnote 29] For example, the SRF reviews found 
that states are not properly documenting inspection findings or 
penalties, as directed by EPA's enforcement policy and guidance. While 
recognizing that these findings are useful, EPA has not developed a 
plan for how it will uniformly address them in a timely manner. Nor has 
the agency identified the root causes of the weaknesses, although some 
EPA and state officials attribute the weaknesses to causes such as 
increased workloads concomitant with budgetary reductions. Until EPA 
addresses enforcement weaknesses and their causes, it faces limitations 
in determining whether states perform timely and appropriate 
enforcement, and whether they apply penalties to environmental 
violators in a fair and consistent manner within and among the states. 
Moreover, the SRF is still in its early stages of implementation and 
offers additional uses that EPA has not yet considered. In this regard, 
its structured approach provides consistent information that would be 
useful to (1) inform the public about how well the states are 
implementing their enforcement responsibilities and (2) serve as a 
basis for assessing the performance of EPA's regions, which have been 
inconsistent in their enforcement and oversight efforts in the past. 

SRF Findings Demonstrate the Value of a Uniform Approach to Evaluating 
State Enforcement Programs: 

As of January 25, 2007, OECA had conducted SRF reviews in 33 states and 
expected to complete its assessment of remaining states by the end of 
fiscal year 2007. OECA reported good performance in most aspects of 
state compliance and enforcement programs. However, it also reported 
that the reviews found several weaknesses in state programs that will 
require focused attention to correct. EPA officials said the following 
four weaknesses were the most frequently identified: 

* States are not adequately documenting the results of facility 
inspections in order to determine the significance of violations. EPA 
policy states that complete and accurate documentary evidence is needed 
to determine the nature and extent of violations, particularly the 
presence of significant violations, and to support timely and 
appropriate enforcement actions. EPA policy also states that a quality 
program should maintain accurate and up-to-date files and records, and 
report this information to EPA to support effective program evaluation 
and priority setting. EPA and state officials suggested that some of 
the causes of inadequate state documentation and reporting of facility 
inspections can be traced to a lack of staff expertise, inadequate 
training, increasing workload, and reductions in staff and budgetary 
resources in recent years. 

* States are not adequately entering significant violations noted in 
their inspection reports into EPA databases. GAO, EPA's Office of 
Inspector General, and OECA have reported that the lack of complete and 
accurate national enforcement data has been a long-term problem. OECA 
needs accurate and complete enforcement data to help it determine 
whether core enforcement requirements are being consistently 
implemented by regions and states and whether there are significant 
variations from these requirements that should be corrected. In 
addition, accurate and complete enforcement data helps OECA more 
efficiently and effectively oversee states and regions. According to 
EPA regional and state officials, the SRF is helping them recognize the 
reasons for discrepancies between state and EPA databases and improve 
the quality of data in these databases. 

* States lack adequate or appropriate penalty authority or policies. 
Penalties play a key role in environmental enforcement by deterring 
potential violators and ensuring that members of the regulated 
community cannot gain a competitive advantage by violating enforcement 
regulations. To qualify as an authorized state for administering 
environmental programs, states must, among other things, acquire and 
maintain adequate authority to enforce program requirements consistent 
with federal requirements. For example, to obtain EPA's approval to 
administer the Clean Air Act's Title V permitting requirements for 
major air pollution sources, states must have, among other things, 
authority to recover civil penalties and provide appropriate criminal 
penalties. EPA's policy provides that all penalties should include two 
components. First, penalties should include an "economic benefit" 
component that reflects the benefit achieved by avoiding compliance. 
This component is considered important to "leveling the playing field" 
among companies within an industry and eliminating any economic 
advantage violators gain through delayed or avoided compliance costs. 
The second component--the "gravity-based component"--reflects the 
seriousness of the violation, the actual or possible harm it causes, 
and the size of the violator. 

* States are not documenting how they implement EPA's policies for 
calculating and assessing penalties. According to EPA policy, states 
need to maintain sufficient documentation so that the regions can 
evaluate (1) the state's rationale for obtaining a penalty and (2) 
where appropriate, the calculation of the economic benefit and gravity- 
based components. If a state has not assessed a penalty or other 
appropriate sanction against a violator, EPA may take direct 
enforcement action to recover a penalty. However, regional and state 
offices we interviewed said applying this policy places strains on the 
EPA/state working relationship because states generally prefer that EPA 
not take direct enforcement action against regulated entities in their 
states. For this reason, EPA generally does not take direct enforcement 
action solely to recover additional penalties unless a state penalty is 
determined to be grossly deficient. 

Regional and state officials said states vary as to whether their 
environmental program administrators have the authority to assess 
penalties. If program administrators lack this authority, they must 
pursue judicial remedies through their state attorney general. Judicial 
actions generally result in penalties and court orders requiring 
correction of the violation. However, this route is more time-consuming 
and resource-intensive than having the environmental program office 
assess the penalty and can significantly delay obtaining penalties and 
achieving a return to compliance. 

Modifications to the SRF Could Improve EPA's Enforcement Oversight 
Process: 

The initial SRF findings provide the basis for discussions between EPA 
and the states on how to address deficiencies in state compliance and 
enforcement programs, many of which have been well known and long- 
standing. According to OECA officials, EPA will have completed an SRF 
review in all states by the end of 2007 and will perform an evaluation 
of the SRF in fiscal year 2008. The proposed evaluation methodology 
states that EPA will address the effectiveness of implementing the SRF 
by surveying the state environmental agencies that participated in the 
reviews and the pollution control associations. However, this proposed 
evaluation may not yield the results EPA will need to better ensure 
more consistent state performance and more consistent state program 
oversight. In this regard, the proposed evaluation methodology does not 
specify how EPA plans to use the results of the SRF to begin 
determining the causes for cited deficiencies and to identify 
strategies for uniformly and expeditiously implementing potential 
corrective actions. 

While EPA's proposed evaluation may prove to be useful in obtaining 
views on the success of the SRF and on areas needing improvement in 
performing the reviews, the proposal is still in its early stages of 
development, and specific details have not been laid out on whether and 
how certain potential issues will be addressed. EPA could better ensure 
more consistent state performance and more consistent oversight of 
state enforcement programs by (1) developing and implementing 
corrective actions for the major deficiencies identified through the 
SRF and (2) assessing the capacity of poorly performing state programs 
to determine whether they possess the staff, financial, and other 
resources to effectively implement enforcement programs consistent with 
federal requirements. 

Region 8's experience in using the findings of its Uniform Enforcement 
Oversight System may prove to be useful for OECA in addressing the 
findings of the SRF on a nationwide basis. This oversight system was 
designated a "best practice" in the area of state agency oversight by 
EPA's Office of Inspector General.[Footnote 30] The region evaluated 
states' enforcement programs using uniform review criteria that had 
been previously agreed to by each state agency. The region then used 
the evaluation findings to develop an improvement strategy tailored to 
the particular weakness identified in each state's enforcement program. 
In order to hold the states accountable for correcting the weaknesses 
identified, Region 8 also used the improvement strategy in arriving at 
annual agreements with the states. For example, because of the findings 
from its oversight review of Colorado's hazardous waste program, Region 
8 officials became concerned about the adequacy of the authorized 
program's ability to protect human health and the environment or to 
take on new program responsibilities. On the basis of these concerns, 
the region conducted an in-depth "capability assessment" of Colorado's 
hazardous waste program beginning in 1998, covering items such as the 
state's levels of resources and staff skills; professional development 
and training programs; and the efforts to resolve legal and 
institutional limitations in its program. Over the next 4 years, 
regional and state officials worked with state government leaders to 
increase program funding, staff, and training, and to implement new 
penalty policies. Region 8 also directly implemented compliance 
monitoring and enforcement activities at selected Colorado hazardous 
waste facilities while the state program developed and implemented its 
enhanced capabilities. Region 8 conducted another capability assessment 
in 2001 and concluded that the state had made the improvements 
necessary to implement a fully authorized program. 

EPA could also use the SRF to inform the general public and others 
about the extent to which states effectively implement environmental 
enforcement programs consistent with federal requirements. EPA has not 
yet determined whether or how the results of the SRF reports will be 
made available to the general public, congressional committees, 
environmental interest groups, state environmental organizations, local 
community groups, and other interested groups and organizations. Many 
of these groups have expressed deep interest in and concern over the 
years about the consistency, fairness, and effectiveness of 
environmental enforcement. A common criticism has been that variation 
in environmental compliance and enforcement among the states has 
resulted in the lack of equitable public health and environmental 
protection and the lack of a "level playing field" for business from 
one state to another. EPA's Office of Inspector General also 
recommended that regional evaluations of state programs should be made 
easily accessible to the public as an important means for holding 
states accountable for their environmental performance. ECOS and 
several states officials we interviewed expressed concern that public 
dissemination of the SRF reports would be used inappropriately to 
compare or rank state performance. However, the SRF reports have the 
potential to convey useful information to both EPA managers and to the 
public on the extent to which the enforcement program is being 
implemented consistently and fairly nationwide. 

In addition to the usefulness of the SRF in evaluating state 
enforcement programs, the SRF provides a model that OECA could use to 
evaluate progress being made by EPA's regions in addressing 
inconsistencies in enforcement actions and oversight. Although we 
focused our review on EPA's oversight of state enforcement programs, 
rather than on the enforcement programs of EPA's 10 regional offices, 
we testified in June 2006 based on reviews on EPA's enforcement program 
that the regions vary substantially in the actions they take to enforce 
environmental requirements, such as the number of inspections performed 
at regulated facilities and the amount of penalties assessed for 
noncompliance with environmental regulations.[Footnote 31] In addition, 
past EPA Inspector General and OECA evaluations found variations among 
regions regarding issues such as sufficiently encouraging states to 
consider economic benefit in calculating penalties, taking more direct 
federal actions where states were slow to act, and requiring states to 
report all significant violators. 

In our June 2006 testimony, we stated that broad agreement exists among 
EPA and state enforcement officials on the key factors contributing to 
variations among regions including (1) differences in philosophy among 
regional enforcement staff about how best to secure compliance with 
environmental requirements, (2) differences in state laws and 
enforcement authorities and the manner in which regions respond to 
these differences, (3) variations in resources available to both state 
and regional enforcement offices, (4) the flexibility afforded by EPA 
policies and guidance that allow states a degree of latitude in their 
enforcement programs, and (5) incomplete and inadequate enforcement 
data that hamper EPA's ability to accurately characterize the extent to 
which variations occur.[Footnote 32] 

Although EPA has noted that some variation in environmental enforcement 
is necessary to take into account local environmental conditions and 
concerns, it has acknowledged that similar violations should be met 
with similar enforcement responses to ensure fair and consistent 
enforcement and equitable treatment for regulated businesses, 
regardless of geographic location. Our testimony noted that the SRF was 
among the initiatives that could make a positive contribution to EPA's 
efforts to ensure consistent approaches in regional enforcement 
activities, although it is too early to tell whether the initiative 
will create a level playing field for the regulated community across 
the country. 

Conclusions: 

The SRF initiative provides EPA with a potential means to ensure 
consistent and effective enforcement among the states, thereby 
addressing a difficult and long-standing challenge to the agency. EPA's 
plan to evaluate the SRF in 2008 will provide the agency with an 
opportunity to obtain information from the regions and the states 
regarding what does and does not work well in these SRF reviews and to 
make appropriate corrections to its review methodology. However, the 
proposed evaluation methodology does not describe how EPA will examine 
the causes of the significant deficiencies noted during the SRF reviews 
and develop a strategy for addressing them. If these deficiencies are 
not addressed in a uniform and timely manner, EPA and the states will 
not gain the full benefit of the SRF. 

Regardless of the extent and effectiveness of oversight reviews to 
determine the consistency and effectiveness of enforcement programs, 
corrective actions will not be feasible if states lack sufficient 
funding, staff levels, expertise, and other resources that are vital to 
carrying out their enforcement responsibilities. On the basis of the 
audits it has conducted, the EPA's Office of Inspector General has 
endorsed the practice of having regions follow up on the deficiencies 
noted in their reviews of state programs and making their findings 
public. Likewise, Region 8 demonstrated the value of performing a 
capacity assessment to understand why deficiencies exist in a state 
program to demonstrate to decision makers and the public what needs to 
be improved. Such assessments would provide an improved basis for a 
truly collaborative approach between the regions and the states during 
their annual deliberations on partnership agreements and grants in 
order to address the root causes of problems identified in state 
enforcement programs. 

EPA has not determined whether or how it will share the results of the 
SRF reviews with the general public and others, including Members of 
Congress who over the years have raised questions and expressed 
concerns about the way the enforcement program has been implemented. If 
Members of Congress and the public fully understand the deficiencies 
and their significance, then they would be better informed about how to 
assist EPA and the states in ensuring that public health and the 
environment are protected and a level playing field is established for 
regulated facilities. 

Although the SRF thus far has been focused on reviewing state 
enforcement programs, the process could be extended to include the 
enforcement programs of EPA's regions. As we have previously reported, 
the regions have long been inconsistent in their oversight of states 
within their jurisdiction and the enforcement actions they take in 
order to provide a level playing field for regulated facilities across 
the nation. 

Recommendations for Executive Action: 

To enhance EPA's oversight of regional and state enforcement activities 
to implement environmental programs consistent with the requirements of 
federal statutes and regulations, we recommend that the Administrator 
of EPA take the following actions: 

* include, in EPA's fiscal year 2008 evaluation of the SRF, an 
assessment of lessons learned and an action plan for determining how 
significant problems identified in state programs will be uniformly and 
expeditiously addressed; 

* evaluate the capacity of individual authorized state programs, where 
the SRF finds the state appears to lack sufficient resources (e.g., 
funding, staff, and expertise), to implement and enforce authorized 
programs and then develop an action plan to improve that state's 
capacity; 

* publish the SRF findings so that the public will know how well state 
regulators are enforcing authorized programs and protecting public 
health and the environmental conditions in their communities; and: 

* conduct a performance assessment similar to SRF for regional 
enforcement programs. 

Agency Comments and Our Evaluation: 

In commenting on the draft report, EPA generally agreed with GAO's 
recommendations and stated that the agency is taking action to address 
the issues we raised. With respect to our recommendation to publish the 
results of the SRF findings, EPA said that it had agreed with the 
Environmental Council of the States that the first round of state 
enforcement reviews would not be published. However, EPA said it would 
consider whether to publish future reviews when it evaluates the 
implementation of the SRF in fiscal year 2008. EPA also provided 
detailed technical and clarifying comments, which we incorporated as 
appropriate. EPA's letter is included in appendix III. 

We are sending copies of this report to interested congressional 
committees; the Administrator of EPA; and other interested parties. We 
will also make copies available to others upon request. In addition, 
the report will be available at no charge on GAO's Web site at 
[hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-3841 or stephensonj@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Key contributors to this report are 
listed in appendix IV. 

Signed by:

John B. Stephenson: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Scope and Methodology: 

To assess how the Environmental Protection Agency (EPA) and authorized 
state agencies work together to deploy resources, plan, set priorities, 
and define roles and responsibilities for enforcement of and compliance 
with environmental programs consistent with federal requirements, we 
(1) identified the federal resources provided to EPA regions and states 
for enforcement between 1997 and 2006, and obtained EPA regional and 
states' views on the adequacy of these resources to implement their 
activities; (2) determined EPA's progress in improving priority setting 
and enforcement planning with its regions and authorized states; and 
(3) examined EPA efforts to improve its oversight of states' 
enforcement and compliance programs. 

For the purpose of this review, we conducted semistructured interviews 
with officials at the 10 EPA regions and at 10 authorized state 
agencies. To construct questions for the interviews, we analyzed 
policies, procedures, and guidance materials EPA has developed and 
implemented. We synthesized the findings, conclusions, and 
recommendations contained in reports by us, EPA's Office of Inspector 
General (OIG), the National Academy of Public Administration (NAPA), 
and the Environmental Council of the States (ECOS). We also met with 
officials from EPA Region 4, the Georgia Department of Natural 
Resources, South Carolina Department of Health, and the New Jersey 
Department of Environmental Protection to obtain a more thorough 
understanding of how state agencies work together to plan, set 
priorities, define roles and responsibilities, and deploy resources for 
enforcement and compliance of environmental laws. 

We used a nonrandom sample of 10 states, which consisted of 1 state 
from each region: 

* Five had a Performance Partnership Agreement (PPA) and Performance 
Partnership Grant (PPG) with EPA (Iowa, Massachusetts, Minnesota, 
Oregon, and Utah). These states incorporated an enforcement program 
into their PPA, along with other essential elements that EPA and state 
leaders considered important (e.g., jointly agreed priorities, defined 
roles/responsibilities, and processes for resource deployment). 

* Five states did not have a PPA (Arizona, Arkansas, Florida, New York, 
and West Virginia), but had either a PPG or an alternative working 
relationship with EPA.[Footnote 33] 

Our evaluation of 10 selected states cannot be generalized to the other 
states with authorized programs. However, we met with EPA officials 
representing all 10 regions, who provided their perspectives about all 
state programs within their geographic region. In addition, we examined 
other sources of state involvement, such as information available from 
ECOS and pollution control associations (e.g., Association of State and 
Territorial Solid Waste Management Officials, Association of State and 
Interstate Water Pollution Control Administrators, State and 
Territorial Air Pollution Program Administrators, and the Association 
of Local Air Pollution Control Officials, now known as the National 
Association of Clean Air Agencies). 

We also limited our review to the environmental agencies within each 
selected state that implement the major EPA programs (Clean Water Act, 
Clean Air Act, Safe Drinking Water Act, and Resource Conservation and 
Recovery Act) and did not include state departments or agencies that 
implemented other programs, such as the Federal Insecticide, Fungicide, 
and Rodenticide Act. 

To determine if there were any trends in the federal resources provided 
to EPA regions and states for enforcement from 1997 to 2006, and assess 
EPA regional and state views on the adequacy of these resources to 
implement their activities, we reviewed the budgets for EPA and the 
Office of Enforcement and Compliance Assurance (OECA) for fiscal years 
1997 through 2006. We also reviewed our prior reports and those from 
the Congressional Research Service (CRS), Congressional Budget Office 
(CBO), Office of Management and Budget (OMB), EPA, and the EPA OIG, for 
information on the distribution of federal resources. We met with 
officials from the EPA's Office of the Chief Financial Officer and 
OECA, ECOS, and the Natural Resources Defense Council, and administered 
structured interviews to officials in all 10 EPA regions and the 
selected state in each region. In each region and state, we obtained 
perspectives on the deployment of resources. However, we were not able 
to assess the workload of the states and regions and their overall 
capability to meet federal enforcement requirements because EPA's data 
collection system does not collect sufficient information needed to 
make such an assessment. In this regard, EPA lacks information on the 
capacity of both the states and EPA's regions to effectively carry out 
their enforcement programs, because the agency has done little to 
assess the overall enforcement workload of the states and regions and 
the number and skills of people needed to implement enforcement tasks, 
duties, and responsibilities. Furthermore, the states' capacity 
continues to evolve as they assume a greater role in the day-to-day 
management of enforcement activities, workload changes occur as a 
result of new environmental legislation, new technologies are 
introduced, and state populations shift. 

To determine EPA's progress in improving priority setting and 
enforcement planning with its regions and authorized states, we 
reviewed EPA's strategic plans and national strategy, its policy and 
guidance for planning and implementing its enforcement programs, the 
process for implementing National Environmental Performance Partnership 
agreements with authorized state agencies, and Federal Register 
notices. We also reviewed our prior reports and those from CRS, OMB, 
EPA, EPA OIG, and NAPA for information on the planning and priority 
setting process. We met with officials from EPA's Office of 
Congressional and Intergovernmental Relations, OECA, ECOS, and the 
Natural Resources Defense Council, and administered structured 
interviews to all 10 EPA regions and the selected state in each region. 
In each region and state, we examined regional and state strategic 
plans and state-EPA enforcement agreements, such as memorandums of 
agreement, PPAs, and PPGs. At state agencies, we also discussed the 
states' perspectives on how EPA administered state-EPA agreements, 
regional plans, and national priorities. 

To determine EPA efforts to improve its oversight of state enforcement 
and compliance programs, we reviewed EPA's policy and guidance for 
overseeing state agencies. We met with officials from EPA's Office of 
Congressional and Intergovernmental Relations, OECA, ECOS, and the 
Natural Resources Defense Council, and administered structured 
interviews to all 10 EPA regions, and the selected state in each 
region. In each region, we examined strategic plans, state-EPA 
agreements, and 33 state oversight reviews of the SRF. At state 
agencies, we reviewed policy and guidance and received perspectives on 
EPA's oversight process. 

We performed our work from October 2005 through July 2007, in 
accordance with generally accepted government auditing standards, which 
included an assessment of data reliability and internal controls. 

[End of section] 

Appendix II: Development and Implementation of the State Review 
Framework: 

EPA's criteria for assessing the performance of compliance assurance 
and enforcement responsibilities in authorized states can be traced 
back to the mid-1980s. In August 1986, the EPA Deputy Administrator 
issued a policy guidance memorandum entitled "Revised Policy Framework 
for State/EPA Enforcement Agreements." The policy memorandum was 
intended to provide a framework for gathering information and making 
judgments about the effectiveness of state compliance and enforcement 
performance and providing guidance on when and how EPA would become 
involved in enforcement actions in authorized states. Among other 
things, the 1986 policy guidance discussed (1) EPA oversight criteria 
and the measures that the agency would use to define good state 
performance, (2) oversight procedures and protocols, and (3) criteria 
for direct federal intervention--factors EPA would consider before 
taking direct enforcement action in a state and what states might 
reasonably expect of EPA in this regard. 

According to OECA officials, subsequent experience with the 1986 policy 
guidance revealed several implementation shortcomings that limited 
EPA's ability to adequately and consistently oversee state compliance 
and enforcement programs. For example, the 1986 policy guidance did not 
clearly describe how EPA would oversee state enforcement programs, 
including what constituted "good program performance". Moreover, EPA 
and authorized states did not agree on what uniform program information 
states needed to maintain and provide to EPA for performance 
measurement. This led to considerable inconsistency from region to 
region in overseeing state compliance and enforcement programs. 

By 2003, OECA officials said that environmental commissioners in 
several states and members of ECOS were in the forefront of the call 
for developing and implementing a more uniform and systematic process 
for EPA's oversight and evaluation of state compliance and enforcement 
programs. Other factors also pointed to the need to develop a more 
consistent method of gauging state performance. These included EPA's 
OIG audits of state programs, EPA's internal assessments, and public 
petitions for withdrawal of program authorizations for some state 
programs. A common criticism was that variation in environmental 
compliance and enforcement among the states was directly attributable 
to the lack of uniform EPA oversight and performance measurement and 
that the result was the lack of equitable public health and 
environmental protection and lack of a level playing field for business 
from one state to another. 

At an ECOS meeting in 2003, OECA officials said the Chairman of the 
ECOS Compliance Committee proposed to EPA's then Deputy Assistant 
Administrator for OECA a method for systematically and uniformly 
assessing state performance. The assessment method, called the SRF, was 
patterned after a review process originally developed by EPA's Region 8 
to assess the performance of state compliance and enforcement programs 
in that region (encompassing the states of Colorado, Utah, Wyoming, 
South Dakota, North Dakota, and Montana and 27 sovereign tribal 
nations). The SRF was formally agreed to by EPA, ECOS, state media 
organizations, and state environmental agency officials in December 
2003. 

The 12-point evaluation model used in Region 8, called the Uniform 
Enforcement Oversight System, became the basis for a review framework 
for evaluating state compliance and enforcement performance. These 12 
required elements for evaluation of state performance include the 
following: 

1. the degree to which a state program has completed the universe of 
planned inspections (addressing core requirements and federal, state 
and regional priorities); 

2. the degree to which inspection reports and compliance reviews 
document inspection findings, including accurate descriptions of what 
was observed to sufficiently identify violations; 

3. the degree to which inspection reports are completed in a timely 
manner, including timely identification of violations; 

4. the degree to which significant violations (e.g., significant 
noncompliance and high priority violations) and supporting information 
are accurately identified and reported to EPA national databases in a 
timely manner; 

5. the degree to which state enforcement actions include required 
corrective or complying actions (e.g., injunctive relief) that will 
return facilities to compliance in a specific time frame; 

6. the degree to which a state takes timely and appropriate enforcement 
actions, in accordance with policy relating to specific media; 

7. the degree to which a state includes both gravity and economic 
benefit calculations for all penalties, appropriately using the 
economic benefit calculation model (BEN) or similar state model (where 
in use and consistent with national policy); 

8. the degree to which final enforcement actions collect appropriate 
economic benefit and gravity penalties in accordance with applicable 
penalty policies; 

9. the degree to which enforcement commitments in the PPA, PPG, and/or 
other written agreements to deliver a product/project at a specified 
time, if they exist, are met and any products or projects are 
completed; 

10. the degree to which the minimum data requirements are timely; 

11. the degree to which the minimum data requirements are accurate; 
and: 

12. the degree to which the minimum data requirements are complete, 
unless otherwise negotiated by the region and state or prescribed by a 
national initiative. 

The SRF also includes a 13th "optional" element that is open for 
negotiation between regions and states. EPA and ECOS encourage the use 
of the 13th element to ensure the review takes a measure of the full 
range of program activities and results. These components can add 
meaningful input into a state's overall performance and program. Topics 
could include program areas such as compliance assistance, pollution 
prevention, innovation, incentive or self-disclosure programs, 
relationships with state attorneys general, and outcome measures or 
environmental indicators that go beyond the core program activities 
covered in elements 1 through 12. 

The SRF was also seen by the parties as being consistent with the 
principles of the National Environmental Performance Partnership 
System, which provides a mechanism for joint planning and program 
management that takes advantage of the unique capabilities of each 
party in addressing pressing environmental problems. Also, the SRF 
considers commitments negotiated between EPA regions and states 
contained in PPAs, PPGs, and/or other agreements that may differ from 
national policy and guidance and evaluates state performance in terms 
of those commitments. In cases where states and regions have negotiated 
different state commitments (e.g., number of inspections) or other 
activities, states are held accountable for those commitments, although 
the SRF reviewers may provide feedback that those commitments need to 
be increased in the future to fully demonstrate an adequate enforcement 
program. 

After a review is completed, the regions prepare a draft report of the 
findings and conclusions, jointly discuss with the state how major 
recommendations will be addressed, and provide the draft report to OECA 
headquarters. OECA reviews the draft reports and provides comments on 
the regions' analyses and recommendations. OECA expects regions to 
incorporate these recommendations into the next round of negotiated 
agreements, where OECA will track and manage the recommendations to 
conclusion. 

Additional anticipated benefits of applying the SRF's elements in a 
uniform manner included, among others, (1) more strategic resource 
allocation, (2) reduction of duplicative work, (3) consistent and 
predictable baseline oversight across states and regions with agreed- 
upon thresholds for corrective action, (4) differential oversight of 
state programs based on performance,[Footnote 34] (5) a level playing 
field for states in competition for business, and (6) improved public 
confidence in federal and state compliance and enforcement programs. In 
addition, the SRF is viewed as providing a basis to establish a 
dialogue on performance that will lead to improved program management 
and environmental results. 

OECA pilot-tested the SRF during fiscal year 2004 in at least one state 
in each of EPA's 10 regions. The states that participated in the pilot 
were all volunteers. The pilot states included Alaska, Arizona, 
Colorado, Rhode Island, New Jersey, Maryland, Michigan, Missouri, 
Nebraska, Oklahoma, and South Carolina. OECA also piloted the SRF in 
one EPA region, Region 10 (Seattle), to test the approach on EPA's 
direct implementation of the Resource Conservation and Recovery Act 
(RCRA) and the Clean Water Act National Pollution Discharge Elimination 
System (NPDES) program in Alaska. EPA used the SRF to evaluate the 
enforcement performance of three media programs (both the pilot reviews 
and subsequent reviews): the Clean Air Act Stationary Sources program, 
the Clean Water Act NPDES program, and (RCRA) Subtitle C hazardous 
waste program. For each program, the SRF defined the essential elements 
and then, in a companion Framework Implementation Guide more fully 
defined how each element is to be applied and measured. 

In February 2005, OECA contracted for an evaluation of the pilot review 
process to determine whether the SRF provides an accurate assessment of 
state compliance and enforcement activities. The evaluation sought to 
obtain answers to questions, such as the following: (1) Are the 12 
review elements the right ones? (2) Are the right data metrics being 
used? (3) What barriers were encountered? The evaluation also addressed 
such implementation issues as whether the reviews could be streamlined 
and made more efficient; what barriers were encountered in conducting 
the reviews and how they could be reduced or eliminated; and the 
consistency of application across the country, specifically any need 
for and ways to improve consistency; problems with objectivity; and 
apparent gaps in capability or expertise that need to be addressed. 

The pilots were also evaluated to determine what they indicated about 
the performance of the states, whether corrective actions or 
differential oversight agreements get codified in grant agreements, and 
the best way to summarize and communicate the results of the review. 
The evaluation used the results of the pilots as well as discussions 
with key stakeholders to support recommendations aimed at helping OECA 
improve the SRF before implementing it more broadly. For example, while 
OECA had allowed regions considerable discretion/flexibility on 
procedures for file selection, the evaluation identified a number of 
weaknesses in the file selection process and highlighted potential 
improvements to OECA's file selection protocol. The consultant 
developed an improved sampling model that would yield representative 
file reviews across states and provide a more representative picture of 
enforcement and compliance assurance across states with varying levels 
of enforcement activity. 

[End of section] 

Appendix III: Comments from the Environmental Agency: 

United States Environmental Protection Agency 
Washington, D.C. 20460 

Office Of Enforcement And Compliance Assurance:

July 15, 2007

John B. Stephenson:
Director, National Resources and Environment:
U.S. Government Accountability Office Room 2T23:
441 G Street, N.W.:
Washington, D.C. 20548:

Dear Mr. Stephenson:

Thank you for the opportunity to provide comments on the draft report, 
"EPA-State Enforcement Partnership Has Improved, but EPA's Oversight 
Needs Further Enhancement". The draft report provides a thoughtful 
discussion on a number of areas central to our implementation of the 
national enforcement program: 1) our partnership with states in 
priority setting and implementation of enforcement programs; 2) our 
efforts to maintain a level of consistency across state programs and 
our Regional offices; and 3) our work to identify impediments to 
performance and devise resource strategies targeted at those areas.

I am particularly appreciative of the report's acknowledgement of the 
substantial progress we have made in terms of priority setting and 
planning with the states, and our use of the State Review Framework 
(SRF) to enhance our ability to evaluate and oversee state enforcement 
programs. In both instances, we have used a collaborative approach, one 
we will continue to employ as we work to fill remaining data gaps, 
enhance our relationships with states, and develop innovative resource 
approaches. The Agency looks forward to a continued dialogue with you 
and your staff as we embark on these important efforts. 

Our detailed comments on the draft report are attached. If you have any 
questions, please contact me at 564-2440 or your staff may contact 
Gwendolyn Spriggs in our Immediate Office at 564-2439.

Sincerely,

Signed By: 

Catherine R. McCabe:
Principal Deputy Assistant Administrator:

Attachment:

[hyperlink, http://www.epa.gov]:
Recycled/Recyclable:
Printed with Vegetable Oil Basel Inks on 100% Postconsumer, Process 
Chlorine Free Recycled Paper:

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John B. Stephenson (202) 512-3841 or stephenson@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Ed Kratzer, Assistant 
Director; Charles W. Bausell, Jr; Kevin S. Bray; Brian M. Freidman; 
Carol M. Henn; Tom M. James; Ralph L. Lowry; Lynn M. Musser; Carol H. 
Shulman; John C. Smith; and Ignacio J. Yanes made key contributions to 
this report. 

[End of section]

FOOTNOTES 

[1] Such injunctive relief includes the authority to order a party that 
is violating a provision of the law to refrain from further violation 
and to take action to abate or correct the noncompliance. 

[2] "Indian country" includes all land within the limits of an Indian 
reservation under the jurisdiction of the United States government and 
all dependent Indian communities within the borders of the United 
States. 

[3] GAO, Environmental Protection Agency: Protecting Human Health and 
the Environment Through Improved Management, GAO/RCED-88-101 
(Washington, D. C.: Aug. 16, 1988); GAO, Environmental Protection: 
Collaborative EPA-State Effort Needed to Improve New Performance 
Partnership System, GAO/RCED-99-171 (Washington, D.C.: June 21, 1999); 
EPA Office of Inspector General, EPA Needs Better Integration of the 
National Environmental Performance Partnership System, No. 2000-M- 
000828-000011 (Washington, D.C.: Mar. 31, 2000); National Academy of 
Public Administration, Environment.Gov: Transforming Environmental 
Protection for the 21st Century (Washington, D.C.: November 2000); GAO, 
Environmental Compliance and Enforcement: EPA's Effort to Improve and 
Make More Consistent Its Compliance and Enforcement Activities, GAO-06-
840T (Washington, D.C.: June 2006). 

[4] GAO, Clean Water Act: Improved Resource Planning Would Help EPA 
Better Respond to Changing Needs and Fiscal Constraints, GAO-05-721 
(Washington, D.C.: July 22, 2005). 

[5] These three programs are the Clean Water Act--National Pollutant 
Discharge Elimination System; Clean Air Act--Stationary Sources 
Program; and Resource Conservation and Recovery Act--Subtitle C 
Hazardous Waste Program. 

[6] For purposes of this report, state agencies include those of the 
District of Columbia, Puerto Rico, the U.S. Virgin Islands, and the 
Pacific Islands. 

[7] GAO, Federal-State Environmental Programs--The State Perspective, 
CED-80-106 (Washington, D.C.: Aug. 22, 1980). 

[8] GAO/RCED-88-101. 

[9] ECOS is the national nonprofit, nonpartisan association that 
represents state and territorial environmental commissioners. 

[10] State pollution control associations are national, nonpartisan 
professional organizations representing state and local pollution 
control officials. They include, for example, the Association of State 
and Territorial Solid Waste Management Officials (ASTSWMO), Association 
of State and Interstate Water Pollution Control Administrators 
(ASIWPCA), and the National Association of Clean Air Agencies--formerly 
known as State and Territorial Air Pollution Program Administrators, 
and Association of Local Air Pollution Control Officials (STAPPA/ 
ALAPCO). 

[11] The review elements are based upon compliance and enforcement 
policies that have been in place for many years, such as EPA's national 
enforcement response policies, compliance monitoring policies, civil 
penalty policies, and similar state policies (where in use and 
consistent with national policies). 

[12] When we refer to "real terms," we mean after subtracting out the 
effect of inflation, i.e., growth in prices. Trends in spending of 
nominal amounts (also called current dollar or then-year values) may 
reflect changes in both price and quantity. To evaluate real spending 
trends, it is necessary to remove the effect of changes in prices. The 
effect of inflation is removed by deflating the series, a process that 
requires dividing the nominal value by an appropriate price index. The 
resulting series can be labeled real, inflation-adjusted, or constant 
dollars. This report used the Gross Domestic Product (GDP) price index 
to deflate the nominal dollar amounts of budget authority amounts and 
arrive at inflation adjusted (or real) dollars in 2007 dollars. 

[13] The Resource Conservation and Recovery Act of 1976, Pub. L. No. 94-
580, 90 Stat. 2795, amends the Solid Waste Disposal Act, Pub. L. No. 89-
272, tit. II, 79 Stat. 997 (1965), the first federal law regulating 
solid wastes--a broad category of materials including such materials as 
garbage from treatment plants and discarded materials resulting from 
industrial, commercial, or agricultural activities. 

[14] Precise information about the overall changes in region and state 
enforcement workload associated with the implementation of new 
requirements--such as information on changes in the numbers of 
regulated entities--is not available. However, we and others have 
reported over the years on the impact of changes in the federal 
environmental programs to the requirements for EPA's and authorized 
states' enforcement programs. GAO-05-721; Congressional Research 
Services, RL30798, Environmental Laws: Summaries of Statutes 
Administered by the Environmental Protection Agency (updated Mar. 31, 
2005). 

[15] GAO-06-840T. 

[16] Water Quality Act of 1987, Pub. L. No. 100-4, 101 Stat. 7. 

[17] Clean Air Act Amendments, Pub. L. No. 101-549, 104 Stat. 2399 
(1990). 

[18] GAO, Clean Air Act: EPA Should Improve the Management of Its Air 
Toxics Program, GAO-06-669 (Washington, D.C.: June 23, 2006). 

[19] Title III of the 1990 amendments directs EPA to impose technology- 
based standards, or Maximum Achievable Control Technology (MACT) 
standards, on industry to reduce emissions. These technology-based 
standards require the maximum degree of reduction in emissions that EPA 
determines achievable for new and existing sources, taking into 
consideration the cost of achieving such reduction, health and 
environmental impacts, and energy requirements. 

[20] The agency faces court-ordered deadlines to complete standards for 
all of the remaining 54 source categories of small stationary sources 
by June 15, 2009. 

[21] Under Title V of the Clean Air Act, sources emitting pollutants 
above certain thresholds are classified as "major sources" and must 
obtain Title V operating permits. In addition, most major sources must 
report their aggregate annual emissions to their state air quality 
agency and pay fees based partly or entirely on their level of 
emissions. Sources that emit pollutants below major source thresholds 
are called "minor sources" and do not have to obtain a Title V permit. 
Some minor sources, called "synthetic minors," have the potential to 
emit pollutants at major source levels but choose to limit their 
operations and emit below these thresholds. 

[22] GAO, Air Pollution: EPA Should Improve Oversight of Emissions 
Reporting by Large Facilities, GAO-01-46 (Washington, D.C.: April 
2001). 

[23] GAO-01-46. 

[24] The Hazardous and Solid Waste Amendments of 1984, Pub. L. No. 98- 
616, 98 Stat. 3221. 

[25] Pub. L. No. 109-58, 119 Stat. 594. 

[26] The act allows EPA to extend the first 3-year period for up to 1 
additional year if an authorized state demonstrates that it has 
insufficient resources to complete all inspections within the first 3- 
year period. 

[27] The Leaking Underground Storage Tank Trust Fund, as established in 
1986, provided funds to states specifically for cleaning up 
contamination from tanks (i.e., releases or leaks). Prior to the Energy 
Policy Act of 2005, states could not use the money for inspections or 
enforcement of leak detection and prevention requirements. 

[28] Association of State and Territorial Solid Waste Management 
Officials also received a collective recommendation from the Northeast 
Waste Management Officials' Association (NEWMOA), a nonprofit, 
nonpartisan interstate association that has a membership composed of 
the hazardous waste, solid waste, waste site cleanup and pollution 
prevention program directors for the environmental agencies in eight 
New England States (Connecticut, Maine, Massachusetts, New Hampshire, 
New Jersey, New York, Rhode Island, and Vermont) 

[29] As we reported in June 2006, EPA has long experienced difficulties 
in providing oversight of state enforcement programs with sufficient 
consistency. 

[30] EPA Office of Inspector General, Water Enforcement: State 
Enforcement of Clean Water Act Dischargers Can Be More Effective, Audit 
Report No. 2001-P-00013 (Washington, D.C.: Aug. 14, 2001). 

[31] GAO-06-840T. 

[32] GAO/RCED-00-108. 

[33] For the purposes of this report, state agencies include those of 
the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, and 
the Pacific Islands. 

[34] The term "differential oversight" refers to a mechanism through 
which the compliance and enforcement program can offer differing levels 
of oversight based on EPA's assessment of state performance. States 
demonstrating an adequate core compliance and enforcement program would 
qualify for benefits while state performance not meeting minimum 
standards would result in enhanced oversight. This process does not 
negate EPA's responsibility for oversight; it simply determines the 
level, intensity, and focus of the oversight. 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "Subscribe to Updates." 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office 441 G Street NW, Room LM 
Washington, D.C. 20548: 

To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202) 
512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 

E-mail: fraudnet@gao.gov: 

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400: 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 
Washington, D.C. 20548: 

Public Affairs: 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800: 

U.S. Government Accountability Office, 441 G Street NW, Room 7149 
Washington, D.C. 20548: