Accompanying Report of the
National Performance Review
Office of the Vice President
Executive Summary 1
Recommendations and Actions
EPA01: Improve Environmental Protection Through Increased Flexibility for Local Government 5
EPA02:Streamline EPA's Permit Program 9
EPA03: Shift EPA's Emphasis Toward Pollution Prevention and Away from Pollution Control 13
EPA04:Promote the Use of Economic and MarketBased Approaches to Reduce Water Pollution 21
EPA05: Increase Private Sector Partnerships to Accelerate Development of Innovative Technologies 23
EPA06: Stop the Export of Banned Pesticides 29
EPA07:Establish Measurable Goals, Performance Standards, and Strategic Planning Within EPA 33
EPA08:Reform EPA's Contract Management Process 35
EPA09: Establish a Blueprint for Environmental Justice Throughout EPA's Operations 39
EPA10:Promote Quality Science for Quality Decisions 43
EPA11:Reorganize EPA's Office of Enforcement 47
Agency Reinvention Activities 51
Summary of Fiscal Impact 53
Accompanying Reports of the National Performance Review 57
ACUS Administrative Conference of the United States
ANSI American National Standards Institute
AT&T American Telephone and Telegraph
CAA Clean Air Act
CAAA Clean Air Amendment Act
CAD/CAM Computer Assisted Design/Computer Assisted Manufacturing
CERCLA Comprehensive Environmental Response, Compensation and Liability Act CWA Clean Water Act DOD Department of Defense EHIA Environmentally High Impact Areas EPA Environmental Protection Agency ETI Environmental Technology Initiative FDA Food and Drug Administration FIFRA Federal Insecticide, Fungicide, and Rodenticide Act FMFIA Federal Manager's Financial Integrity Act FTE Full Time Equivalent GAO General Accounting Office IDEA Integrated Data for Enforcement Analysis IOAA Independent Office Appropriations Act NACEPT National Advisory Committee for Environmental Policy and Technology NEPA National Environmental Policy Act NPDES National Pollutant Discharge Elimination System NPL National Priorities List NPR National Performance Review OBRA Omnibus Budget Reconciliation Act OE Office of Enforcement OFPP Office of Federal Procurement Policy OMB Office of Management and Budget POTW Publicly Owned Treatment Works PPA Pollution Prevention Act RCRA Resource Conservation and Recovery Act SRF State Revolving Fund SRO Senior Resource Official SWAT Special Weapons and Tactics TRI Toxic Release Inventory UIC Underground Injection Control USDA United States Department of Agriculture
In 1970, Congress created the Environmental Protection Agency (EPA) by pulling together a complex patchwork of federal programs into a single regulatory body. The new agency was charged with a deceptively straightforward mission: to control and abate the spread of pollution.
Over the last two decades, this goal has remained unchanged, but the means needed to achieve it have proven to be far from simple. EPA integrates research, monitoring, standard-setting, and enforcement, coordinating these diverse activities with state and local governments, private and public organizations, and educational institutions. It works with the Departments of Interior, Agriculture, and Energy, serving as a focal point for all federal agencies whose operations affect the environment. EPA undertakes these functions with a work force of 17,468 and a 1994 budget of approximately $6.4 billion.
The years since 1970 have brought an expanding system of environmental statutes under EPA's jurisdiction. These include the Clean Air Act (CAA), the Clean Water Act (CWA), the Pollution Prevention Act (PPA), the Resource Conservation and Recovery Act (RCRA), the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or Superfund), to name only a few.
The growing outside scrutiny, increasing responsibilities, and limited resources have brought EPA to a critical juncture. To ensure the viability of the nation's environmental future, the agency must embark on a new course. Rather than responding to high-profile incidents of pollution with isolated, media-specific approaches based on a command-and-control bureaucracy, it must pursue an integrated, flexible strategy. Rather than tolerating status-quo inefficiencies as necessary evils, it must reinvent its approach to management.
To help guide EPA's new course, first, the agency must eliminate obstacles to increased accountability and performance. EPA should give local communities greater flexibility in achieving the environmental focus of federal statutes wherever possible and should solicit their input before completing major regulatory reforms. In addition, EPA should delegate responsibility over permit programs to states that are legally and organizationally prepared for the job. To coordinate this decentralization, EPA should assemble a clearinghouse providing potential permit holders with relevant information.
No matter how effectively EPA removes the barriers to federal, state, and local performance, it must also bolster the role of the private sector by creating competitive government. Shrinking resources, the immense costs of toxic cleanup, and the difficulty of eliminating pollutant transfer demand that EPA redirect its focus: The new priority must be to prevent environmental degradation altogether.
Although the Pollution Prevention Act of 1990 provides a worthy point of departure, the agency can do more. Regulatory reform, private partnerships, technological innovation, greater public information, and state and local cooperation must each be harnessed to effect the shift in paradigm. One specific example of this principle lies in the arena of water quality, where the agency should recognize that parties subject to Clean Water Act regulations can often identify and implement the most efficient mechanisms to ameliorate toxic buildup. To make it possible, however, EPA must work with Congress to allow trading of waste discharges when such exchanges meet overall quality requirements while saving money. The agency should augment its effort to promote independent industry initiatives and public-private partnerships. These could be instrumental in the accelerated development of innovative environmental technology, especially in the area of pollution prevention. Eliminating the export of banned pesticides overseas will not only ensure that Americans are not exposed to harmful chemicals on imported foods but will also demonstrate American responsibility and leadership worldwide.
EPA must also make better use of the resources already at its disposal by empowering employees to manage for results. It should begin with an agency-wide drive to exert new leadership through measurable goals, performance standards, and strategic planning. These steps should address the nation's full range of environmental problems and EPA's own internal operations. Overdependence on contractors and inadequate oversight of their work have yielded ethical abuses due to a lack of accountability.
The agency's future lies in promoting not only environmental safety, but environmental justice as well. Administrator Browner is acting to resolve both issues with major initiatives, and EPA's senior management must follow through on her proposals.
Measures to advance local action must be accompanied by efforts to improve EPA's own results, and an important step in this direction would come from ensuring that all agency decisions are based on quality science. To that end, EPA should develop a personnel system and professional tracks for scientific and technical employees and should intensify its use of peer review and quality assurance to promote excellence in science. Finally, another pressing internal issue lies in the agency's Office of Enforcement, where disparate, media-specific approaches have thwarted the overall effort to ensure environmental compliance. Reorganization of the Office of Enforcement will result in greater enforcement and compliance.
The discussions that follow do not attempt to encompass the full set of concerns within EPA. The continuation of this process will bring additional issues and further reports on its own internal reinvention findings. The present recommendations of the National Performance Review, however, save approximately $33 million over the next six years and set EPA on a new course for the next century.
Environmental laws and regulations implemented over the past decade have led to significant improvements in environmental quality. Airborne lead has decreased 98 percent since 1970, largely due to the ban on lead in gasoline.(1) Since 1983, carbon monoxide levels in the air have dropped 34 percent.(2) The Clean Water Act has dramatically improved the quality of rivers and waterways throughout the country, resulting in increased tourism, the resurgence of recreational boating and commercial fisheries, and other economic gains. Today, twice as many rivers meet quality conditions for their designated uses as did in 1974.(3)
Many of these laws, however, place a very real cost burden on local governments. Localities now struggle to comply with new requirements of the Safe Drinking Water Act, the Clean Water Act, the Resource Conservation and Recovery Act (RCRA), the Clean Air Act, and Superfund, with little or no prospect of significant increases in federal grants and only limited availability of loans in the future. By the year 2000, the Environmental Protection Agency (EPA) estimates that local governments will need to spend nearly $44 billion annually to meet existing requirements.(4)
As the front-line managers of many environmental programs, local governments have had too little to say in the development of past environmental regulations. With the opportunity to "reinvent" the way EPA works with state and local governments, EPA has a chance to significantly increase the effectiveness of our nation's environmental programs.
One key challenge for the agency is to allow states and localities increased flexibility in environmental regulations, without compromising environmental performance, accountability, or fairness across communities. Greater flexibility may be warranted in a variety of circumstances to accommodate the diversity of environmental conditions across the country; to allow and encourage the use of more cost-effective methods to achieve the same or improved environmental outcomes; and to enable communities to more easily pursue environmental solutions across the multiple media of air, water, and land.
Local governments cite examples where failure to devise better ways to protect the environment affordably may result in just the opposite of the intended effect. In the Southwest, one city reports an increase in desert dumping of solid waste by citizens because of a refusal by the citizenry to pay to expand the local landfill in accordance with federal regulations, which require installation of double liners and a leachate collection system to comply with RCRA groundwater laws. The city questions whether the requirements are necessary in this case because of its geology and arid climatic conditions.
The problems associated with inflexible laws, regulations, and practices are exacerbated by the sheer volume of new regulations the EPA is required to implement. For example, the Safe Drinking Water Amendments of 1986 call for the testing, monitoring, and control of an additional 25 new contaminants every three years. If EPA fails to issue these new standards, it violates the federal law. At the same time, the issuance of such standards adds significant new cost burdens to local governments.
Flexibility does exist in some statutes. EPA allows the states that have been delegated the authority to manage the Safe Drinking Water Act the right to waive some of the Act's monitoring requirements. Eleven states currently operate a waiver program, and 12 others have begun to establish new waiver programs. In some cases, however, the states and the local public water systems are finding they lack the resources necessary to develop an adequate program to modify the monitoring requirements.
EPA has also begun to work with some states and local governments to conduct comparative risk assessments to help communities set priorities among competing needs. However, progress in this area varies considerably among the EPA regions, where primary responsibility exists for dealing with state and local governments, and considerable work needs to be done to translate the findings of comparative risk analysis into the day-to-day decisionmaking of EPA and its state and local partners in environmental protection.
In the financial arena, EPA has begun, through university-based environmental finance centers, to help individual communities identify innovative financial approaches to meet environmental goals. In the technical and management areas, EPA has developed model laboratory/local government cooperative ventures. EPA needs to continue to explore, promote, and expand these and other ways to achieve environmental objectives and address barriers to innovation and change, along with maximum flexibility wherever warranted.
EPA must recognize that increased regulatory flexibility offers tremendous opportunities for positive institutional change at federal, state, and local levels. Then EPA must work to take advantage of these opportunities by finding ways to allow flexibility without compromising fairness, accountability and, above all, performance. This move toward institutionalizing flexibility in regulatory processes can occur only in an atmosphere of true partnership that serves to promote and perpetuate the economic viability of local governments while protecting the health of the nation's citizenry and environment.
EPA should establish an implementation group to determine which regulations should be selected for revision. The group should obtain input from state and local governments, environmental organizations, and other stakeholders. With guidance from the group, relevant EPA program offices should begin to develop appropriate language to amend the regulations selected. The public notice of EPA's intent to amend the selected regulations should be issued by January 1, 1996. If successful, this process could set a precedent for additional flexibility in the future.
2. The EPA should convene a series of town meetings across the United States with environmental and other citizen groups and local officials to ensure that outside input is considered before regulatory reform recommendations are finalized.
The town meetings should start by January 30, 1994. One objective of these meetings should be to solicit interested stakeholders for their views on how EPA should increase its support of state, tribal, and local governments in assessing and prioritizing their ecological and community health risks.
3. The EPA should establish a pilot project that will assist one community to assess its environmental and community health risks in directing resources to priority problems.
The pilot should be established by March 1, 1994. If successful, this pilot should then serve as a model for other communities and could become the impetus for additional regulatory and, perhaps, statutory change.
In addition to promoting within EPA an understanding of the need for flexibility during rule-writing, town meetings and the process of identifying and selecting specific rules for revision are certain to increase awareness and understanding of health and environmentprotecting regulations, as well as their importance.
Perhaps the greatest danger in promoting flexibility lies in the potential for some communities to use that flexibility to reduce their commitment to environmental protection for their citizens, rather than to allow the innovation that will result in improved environmental outcomes. It becomes essential, therefore, for greater flexibility to be accompanied by performance measures and clear accountability.
Historically, the Environmental Protection Agency (EPA) and its state partners have relied heavily on permits as the primary vehicle to achieve environmental protection. A permit is an authority granted by EPA to the permit holder to discharge a pollutant into the environment or to store, treat, or dispose of hazardous waste materials. The permit reflects the limitations established by the statutes for pollution discharges and handling of hazardous wastes. Permits may be general or specific. General permits state exactly what is required of a class of facilities, such as in the dry cleaning or the paper pulp industry. General permits are used when it is impractical or unnecessary to issue individual permits for each of many small facilities with similar operations. Specific permits dictate what a given facility is required to do, often taking into account particular conditions at the specific facility. While this strategy has succeeded in controlling sources of pollution from large, centralized facilities, the current permitting process has been less effective in managing small, diverse, and decentralized sources of pollution, like stormwater discharges.
Currently, EPA and the states are responsible for processing more than 730,000 permits in the media (air, water, solid waste, and toxics). EPA budgets more than 1,000 positions annually (most of which are located in regional and field offices) and provides about $800 million in the form of grants to states and contract dollars to conduct permit activities.(1) Despite this resource investment, it is not always possible to issue or reissue permits in a timely manner due to insufficient data available to the EPA or state permit writer. Depending on the type of permit, the time it takes from application to issuance may range from 10 months to two years.
EPA operates under 12 major environmental statutes and the regulations implementing those statutes. In order to ensure due process, some permit programs tend to prescribe the specific means by which environmental protection is achieved. This eliminates the opportunity to use innovative or alternative approaches. These requirements constrain EPA's ability to address cross-media concerns and innovative pollution abatement methods, even when the statute does not prohibit such approaches. For example, point sources (such as discharges from facilities), nonpoint sources (such as fertilizer runoff), wastewater effluent, and stormwater discharges would benefit from alternative solutions in permitting. A true cross-media approach can be stymied if no flexibility is available in a different statute.
Given the large volume and different kinds of permits, neither the states nor EPA can effectively address all of their permittees. This raises the question of whether permits are always the best mechanism for achieving environmental protection. Consequently, it is essential to prioritize, group, and target permitting activities according to types of facilities to be regulated, their geographic location, and the nature of the types of permits that will be required.
Because the responsibility for issuing permits is divided between EPA and the states without clear-cut lines delineating respective expectations and responsibilities, miscommunication often adds to the delay in the permitting process. States must rely on EPA to provide them with technical guidance and permit rules. When EPA does not provide the guidance, implementation becomes problematic. For example, the 1990 Clean Air Act Amendments (CAAA) required EPA to issue a permit rule by November 15, 1991; however, disagreement among EPA, the Office of Management and Budget, and the Council on Competitiveness over certain requirements in the final rule delayed its issuance for eight months. This in turn caused a delay in issuing the final permit rule for federal and state implementation of Title V's requirements.
Moreover, some state legislatures deferred action on bills authorizing agencies to implement permit programs and collect permit fees. For example, while EPA has provided some guidance on implementing Title V, additional program and fee guidance that it planned to provide to states in 1992 has not been issued. Consequently, some states will find it difficult to meet the November 1993 deadline set by the CAAA for submitting their permit program plans to EPA.(2) Delays in meeting the milestones for implementing the permit program slow efforts to improve air quality, determine emission levels, monitor emissions, and fulfill other requirements.
Both the regulators and the regulated community (the permittees) view the permitting process as an administrative burden. They have complained that too many forms are required to apply for a permit. This excess paperwork adds to the administrative burden at both the state and federal level and significantly slows the permit review process.
Many states believe that EPA practices excessive oversight. States with well-established pollution control permit programs have indicated that a more appropriate role for EPA is in technology transfer, not in excessive oversight of the states. These states would prefer more authority to carry out their program responsibilities. For example, in the water quality permitting program, some states raised concerns that EPA micromanages each water quality permit issued by the state. Some states suggest that greater environmental protection could be achieved by refocusing EPA's activities from individual permit reviews to technical assistance services and development of a state/federal resource allocation plan to address water quality problems with the highest environmental risk.
Furthermore, the lack of an integrated database system and mechanism to track permits in the states or regional EPA offices makes it very difficult for applicants to know permit requirements, and for regulators to know the types of permits, number of permits, and geographic location of the various permitted facilities. Partnerships with the states need to be developed to build the integrated databases that would enhance monitoring and compliance for enforcement and provide information for emergency responses to environmental accidents.
Finally, as stated earlier, the current permitting procedures and programs do not effectively encourage flexibility. Even when regulations and statutes allow for various approaches, the agency budgeting and planning process does not allow upfront investments to pay for them. Although some statutes do not specifically prohibit pilot projects, many dictate the specific technology that must be used. Without incentives to encourage new approaches, little progress will be made in streamlining the permit process. For instance, the National Advisory Council For Environmental Policy and Technology has stated that the current permitting and compliance systems discourage all stakeholder groups from taking the risks necessary to develop innovative technologies whether for pollution prevention or for pollution control and to bring them into routine use to solve environmental problems.(3)
This should include general, simple to understand information, as well as names and numbers of state and/or EPA regional or headquarters contacts for technical assistance on permitting issues. The clearing-house should offer a national EPA permit hotline and computer bulletin board.
2. EPA should authorize states that now have full statutory authority and permit fee systems in place to take full responsibility for permit programs.
This would allow states needed flexibility in dealing with local program requirements instead of relying on the one-size-fits-all approach.
3. EPA should identify, by June 1994, statutes that prevent flexibility in permitting and report to the Administrator for followup action.
Flexibility in permitting is needed to stimulate new approaches for pollution abatement. EPA should direct regional offices to use more flexibility in dealings with states, especially where traditional approaches have proven ineffective.
4. EPA should develop a cross-program permit tracking system pilot with one state and one region by June 1994.
This would allow for multi-media permit assessment, cross-media compliance, and enforcement actions, as well as greater access for the public and researchers to permit information. In addition, such a database could include environmental results and outcomes based on monitoring systems with feedback and targeting for permit programs. If the pilot project is successful, the technology could be transferred to other states.
Streamlining and simplifying the permitting process will increase stakeholder participation and credibility as well as EPA and state level administrative costs savings. Increased state partnerships will improve performance and increase stakeholder participation in the permitting process. Establishment of a permit clearinghouse will improve customer satisfaction by reducing paperwork and other administrative burdens. Development of a permit tracking database will expedite the permit process, target risk assessment, and provide information for emergency responses to environmental mishaps.
Streamlining by reducing delays and staff time in the permitting process could result in savings for EPA, the states, and the regulated communities. Additional personnel needed for 1994-96 should be reassigned from existing staff within the agency.
Budget Authority (BA) and Outlays (Dollars in Millions)
Year 1994 1995 1996 1997 1998 1999 Total ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BA 0.0 0.0 0.0 -7.5 -7.5 -7.5 -22.5
Outlays 0.0 0.0 0.0 -4.0 -7.5 -7.5 -19.0
Change 0 0 0 -100 -150 -150 -150 in FTEs
The Pollution Prevention Act of 1990 establishes a bold national objective for environmental protection: "[T]hat pollution should be prevented or reduced at the source whenever feasible."(1) The Environmental Protection Agency's (EPA) Science Advisory Board has strongly recommended that pollution prevention be emphasized as the preferred means of reducing risk, explaining, "Preventing pollution at the source through the redesign of production processes, the substitution of less toxic production materials, the screening of new chemicals and technologies before they are introduced into commerce, energy and water conservation, the development of less polluting transportation systems and farming practices, etc. is usually a far cheaper, more effective way to reduce environmental risk, especially over the long term."(2)
EPA has defined pollution prevention as source reduction (reducing pollution at its source by shifting to the use of materials, processes, or practices that reduce or eliminate the creation of pollutants or wastes), as well as to mean protecting natural resources through conservation or increased efficiency in the use of energy, water, or other raw materials. Pollution prevention is not the only strategy for reducing risk; rather, it is the preferred one. Environmentally sound recycling shares many of the advantages of prevention it can reduce the need for treatment or disposal and conserve energy and natural resources. Where prevention or recycling are not feasible, treatment followed by safe disposal as a last resort will play an important role in achieving environmental goals.
When EPA was created in 1970, it focused first on controlling and cleaning up the most immediate environmental problems. Those efforts have yielded major reductions in pollution. Over time, however, analysis has shown that traditional end-of-pipe approaches not only can be expensive and less than fully effective, but sometimes transfer pollution from one medium to another (for example, from water to air).
Preventing pollution also offers important economic benefits, as pollution that is never created avoids the need for expensive investments in waste management or cleanup. For example, an environmental research group, INFORM, Inc., found in its study of 29 chemical plants that 15 percent of the 181 source-reduction activities identified resulted in annual dollar savings of $1 million or more.(3) Nearly half saved between $45,000 and $1 million annually, and more than one quarter saved between $6,000 and $45,000 each year. Only one out of all 181 source- reduction activities documented reported a net cost increase. Thus, this study suggests that pollution prevention has the potential for both protecting the environment and strengthening economic growth through more efficient manufacturing and raw material use.
An effective pollution prevention strategy must reflect the complex and multiple array of factors that motivate the private sector to invest in cleaner, less polluting technologies and practices. These factors include regulations and compliance, state and local partnerships, private partnerships, federal partnerships, public information and the right to know, and technological innovation.
Regulations and compliance play an integral part in preventing pollution. A report by INFORM, Inc., documented the critical role that both existing and anticipated future regulations play in providing an incentive to eliminate waste at the source. Federal and state experience with multi-media inspections and enforcement settlements demonstrate that effective compliance strategies can accelerate the introduction of new technologies. The recent decision to reorganize the Office of Enforcement creates major opportunities to focus on multi-media compliance goals.(4)
EPA regulations, permits, inspections, and enforcement actions need better coordination to minimize the cross-media transfer of waste and to more effectively reduce waste at the source. The Source Reduction Review Project, through which EPA is attempting to coordinate different rules affecting 17 key industrial categories, is a good start. Regulations and compliance strategies must focus on the whole facility, rather than individual environmental problems.
State and local partnerships will be an important factor in determining the success of pollution prevention. Increasingly, state and local governments are the face of government to the general public. States have also proved to be excellent sources of innovation, promoting pollution prevention through both compliance and technical assistance programs. For example, the State of Massachusetts won a national award from the Ford Foundation for the Blackstone project, which combines multi-media inspections with effective delivery of technical information to industries trying to find cost-effective methods of compliance.
EPA disburses approximately $600 million per year in grants to states that have been charged with implementing federal law under authority delegated by EPA. It is critical that EPA follow up on its existing commitment to provide states with flexibility to use such funding to find innovative ways to carry out these responsibilities. In particular, EPA must offer more flexible approaches to funding state implementation efforts to reward innovation and emphasize results.
Private partnerships are yet another key to achieving pollution prevention. In many cases, collaborative efforts with industry or public agencies can help achieve results through pollution prevention more quickly than could be obtained through regulation alone. For example, EPA's Green Programs to promote voluntary energy efficiency will play a critical role in achieving obligations under the U.S. Action Plan to stabilize greenhouse gas emissions by the year 2000.
Furthermore, regulations do not often reach the more complicated corporate decisions needed to evaluate design, manufacturing, packaging, distribution, and marketing practices to reduce pollution and energy consumption. EPA has undertaken a series of innovative efforts through its Design for the Environment Program to work with industry groups such as the printing and dry cleaning industries, the accounting profession, and the insurance industry to incorporate environmental life-cycle thinking into business decisions. The Federal Trade Commission has developed standards for the use of specific environmental terms in advertising but has not reached the more complex questions of environmental claims based on more comprehensive, life-cycle analysis. The American National Standards Institute (ANSI) is currently developing positions on these issues and could benefit from EPA involvement.
EPA needs to expand the scope of programs to encourage industry to go beyond compliance and to make measurable commitments to pollution prevention. That will require a better understanding of the relationship between compliance programs and the achievement of broader environmental goals.
Federal partnerships must also be undertaken to achieve the goals of pollution prevention. President Clinton's Earth Day speech challenged the federal government to "lead by example not by bureaucratic fiat."(5) The federal government has a tremendous impact on the environment as the nation's largest landlord and its biggest consumer of goods and services. Accordingly, the President signed an Executive Order on August 3, 1993, that requires federal agencies to report toxic emissions under the Emergency Planning and Community Right to Know Act, establish a goal of cutting toxic emissions 50 percent, and set priorities for reducing the unnecessary use of extremely hazardous materials in government standards and specifications.(6)
Other federal agencies can create major opportunities for pollution prevention through policies that shape decisions in agriculture, energy, transportation, and the management of natural resources. If pollution prevention is to expand in these sectors, EPA must form partnerships that take advantage of the authority and expertise of other federal agencies. Earlier this year, EPA joined the Food and Drug Administration and the Department of Agriculture in announcing a joint effort to develop a strategy to reduce the use of pesticides that present unreasonable risks. Other countries, including Canada and the Netherlands, have already adopted ambitious programs to cut back on the inefficient use of hazardous pesticides and fertilizers, which can cost farmers many dollars as well as pose risk to human health and the environment.
A driving force in pollution prevention has been public information and the concept of the right to know. Since pollution prevention is motivated in part by public information, one of EPA's most important tasks is to collect and disseminate user-friendly data that measures progress in reducing waste at its source. The Toxics Release Inventory (TRI) has proved vital in helping industry to identify opportunities to reduce waste and improve economic efficiency. For example, many state pollution prevention planning laws are based directly on TRI data collected and maintained by EPA. New reporting requirements of the Pollution Prevention Act of 1990, which took effect last year, expands data requirements to include the reporting of chemicals that were reduced at the source, recycled, treated, or disposed, as well as the volume released directly to the environment.
EPA has already committed to expanding the scope of the TRI to include different chemicals and major sources of emissions not already required to report. To make room for this expansion, EPA should reduce other paperwork requirements that are redundant or of less value.
Technological innovation can serve as the engine that drives pollution prevention. The federal government plays a critical role in funding research in new technologies and in disseminating information about technological options to the private sector. The President's new initiative includes $36 million in funding for research in new technologies and anticipates a major expansion of technical assistance through the National Institute of Standards and Technology.
The analysis should include the estimated impact of the rule on these multi-media (e.g., air and water) releases and risks, and the preamble should identify other pending regulatory decisions likely to affect the same industry or industrial category that is the subject of the proposed rule. Having to provide these data will require identification of significant cross-media issues during development of the rule, and it will ensure that senior managers do not make significant regulatory decisions in a single-media vacuum. Such data will also provide industry with a more comprehensive picture of the web of regulatory transactions to which it must adjust over the coming years. EPA's performance can be measured according to whether it has incorporated this multi-media analysis into significant proposed rules within one year.
2. EPA should use its flexibility as it already has for the pulp and paper industry to adjust regulatory timetables so that major rules are proposed on the same date.
Integrated rulemaking offers major opportunities to overhaul industrial processes to improve efficiency while reducing transaction costs by satisfying multiple regulatory requirements. Integrated rules can also help lay the groundwork for more efficient multi-media permitting and inspection strategies. EPA's performance can be measured according to the number of single-media rules it has combined for proposal on the same date.
3. EPA should change existing reporting requirements that create disincentives to multi-media inspections and enforcement actions at both the federal and state level.
For example, EPA's single-media inspection programs require states to report results in conflicting formats and different time frames. Changing reporting require-ments should be addressed as part of the pending reorganization of EPA's enforcement program. EPA's performance can be measured according to whether it has integrated the reporting requirements for state inspections into one multi-media database by the end of next year. EPA should also be required to keep data on multi-media inspections carried out by the agency and by states pursuant to federal regulations.
4. EPA should move toward a consolidated grant approach providing states with maximum flexibility in the use of federal funds in carrying out responsibilities that have been delegated to the states by EPA.
This may require developing performance-based measures that allow states the leeway to focus funding on the most significant problems. This flexibility should be exercised within a framework of clear federal objectives established by existing law (that is, the goal should not be a revenue-sharing approach). EPA's performance can be measured initially according to the number of dollars that states have been allowed to invest in multi-media projects under existing grant authority.
5. EPA should provide states with incentives to invest funds in water conservation and pollution prevention programs that reduce pollutant loadings of concern.
EPA's performance can be reflected in whether new policies are promulgated (by statute or rule) that accomplish the above objectives. Over time, the agency should be able to point to a reduction in the quantity of wastewater to be treated as a result of water conservation and pollution prevention.
6. EPA should invite a specific industry sector to jointly undertake several projects to evaluate the feasibility of developing multimedia pollution prevention strategies for that particular industry.
The projects should have clear objectives, including relating the pollution prevention objectives to compliance requirements, developing effective measures of performance, and assessing the efficacy of industry codes of conduct, for example, the Chemical Manufacturing Association's Responsible Care Program. Data from these projects could be extremely useful in developing strategies that offer industry more flexibility in return for achieving performancebased objectives. EPA's performance can be measured initially according to whether these projects have been undertaken. In the long run, EPA should be accountable for incorporating project recommendations into its legislative, regulatory, and compliance strategies.
7. EPA should help focus existing private sector labeling and standards programs by identifying the product categories of greatest concern. In addition, the agency should work with the American National Standards Institute in developing a coherent U.S. position on eco-labeling and life-cycle analysis.
EPA's performance can be measured according to whether existing private sector groups focus research and labeling efforts on the product categories of concern, and whether ANSI is able to develop an effective position on environmental standards and labeling.
8. EPA should work cooperatively with the Department of Agriculture (USDA), the Food and Drug Administration, and other agencies to develop a national strategy to promote more efficient use of pesticides and fertilizers.
The strategy should emphasize priorities, specific goals, and public measures of progress. The strategy should be completed and announced by mid-1994. Over time, EPA and the USDA should be able to measure progress in reducing pesticides and nutrients of concern and to document the savings to farmers from more efficient farming practices. These goals should be accomplished within existing budgets but may require significant reprogramming of funds at USDA, because the amount of funding devoted to sustainable agriculture at USDA is still quite small in relation to other priorities.
9. EPA should develop a plan for implementing the two pending Executive Orders on Pollution Prevention and Recycling, so that it can carry out its role and work jointly with other federal agencies, as outlined in the Executive Orders.
These plans should include deadlines and identify individuals responsible for coordinating the development of the strategy in each agency. Both Executive Orders already include significant measurable goals. The Executive Orders can be accomplished within existing budgets but may require significant reprogramming of funds.
10. EPA should create an integrated database that provides information useful for measuring performance by industry, sector, and facility, and for devising long-term multi-media pollution prevention strategies.
To the extent practical, the data should be public and should be sound enough to be useful in providing alternative, performance-based yardsticks for compliance. In the long run, credible measures of performance are critical to providing industry with the kind of flexibility needed to optimize investments in pollution prevention. The integrated database should include TRI data expanded to cover additional chemicals and facilities with greater efforts at quality control. It should also include an inventory for measuring, on an industrywide basis, changes in the use of toxic chemicals and pesticides. EPA should identify and eliminate redundant reporting requirements or information collection efforts that serve no practical purpose. This integrated database, if credible, will provide Congress and the public with a better basis for measuring EPA's actual performance in reducing pollution. The costs of establishing this integrated database are likely to be significant, although some costs (for example, for TRI expansion) are already reflected in the President's budget. EPA should coordinate with the Department of Commerce to ensure that this does not conflict or overlap with its activities in this area.
11. EPA should earmark funds for environmental technology for prevention.
The President's 1994 budget includes $36 million in increased funding for research in the development of environmental technologies. A significant portion of this budget should be reserved for investments in pollution prevention with EPA involved in establishing priority areas for investment. Success will be measured in the short term according to how much of the Environmental Technology Initiative (ETI) expenditures are actually invested in technologies that don't pollute.
12. A significant portion of funds for the Environmental Technology Initiative should be targeted for technical assistance, including information access.
The EPA should ensure that a significant portion of new federal funds are used to help provide small businesses with technical assistance for pollution prevention. To the maximum extent practical, the federal government should rely on existing delivery systems (such as state pollution prevention programs) for the distribution of such assistance. EPA should play a wholesale role in developing and packaging materials useful to state and other federal programs, for example, by providing clear and consistent information about forthcoming regulatory requirements. Performance in the short term can be measured according to the amount of funding made available to help small businesses with investments in pollution prevention. In the long run, EPA and other agencies must evaluate how many businesses made use of the information and collect data on cost savings.
For each of the recommendations regarding regulations and compliance, short-term costs will include funding for cross-media training of regulatory and enforcement staff and for the development of an integrated database that can be shared by different programs. However, the long-term payoffs from a coordinated and efficient approach to rulemaking should far outweigh these temporary costs. Perhaps the greatest savings will be for industry, since integrated rulemaking can help reduce transactions costs by eliminating conflicting or overlapping requirements.
Regarding state and local partnerships, providing states with more flexibility to direct existing grant funds toward pollution prevention should not result in any increased costs. In the long run, emphasizing demand-side management for municipal water systems to encourage conservation and reduce principal sources of pollution may decrease the need for expensive investments in wastewater treatment. States are likely to welcome the increased ability to invest scarce dollars in activities with a higher environmental payoff.
With private partnerships, the demonstration projects outlined in the recommendations may require some funding to support data collection and analysis as well as peer review. Industry may be willing to bear most of these costs if it can reach agreement with EPA on a set of shared objectives. In the long run, these projects should help lead to more efficient approaches to regulations and compliance that offer both government and industry significant cost savings.
Implementing a comprehensive agriculture strategy, as part of federal partnerships, may require significant reprogramming of funds at USDA. Similarly, the Pollution Prevention and Recycling Executive Orders may also require reprogramming of funds at other federal agencies. Each of these initiatives is designed to establish goals and measures to focus existing resources on high-priority environmental problems.
The costs of establishing an integrated database to measure performance and evaluate compliance on a cross-media basis are likely to be in the range of $10 million. These resources will be most effectively spent if they are used to improve and establish linkages between existing databases, such as the TRI and the Office of Enforcement's Integrated Data for Enforcement Analysis network. Government costs may be offset in the long run by the elimination of redundant reporting requirements that currently impose data collection and management costs. Furthermore, an integrated database provides the foundation for establishing performance-based measures that allow both industry and government to find the most costeffective alternatives for compliance.
Finally, with technology innovation, the recommendations do not request any new funds but, rather, suggest earmarking a significant fraction of the ETI budget for pollution prevention research and technical assistance to small business. Investing in new pollution prevention technologies can reduce the cost of environmental protection and position the United States to compete in the global marketplace. Technical assistance is critical for helping small businesses which are responsible for most new job creation meet the costs of complying with the new Clean Air Act and other statutes.
This proposal is cost-neutral. For the majority of the issues, no new costs are anticipated; in the cases where some costs may be incurred, they are already included in the existing budget.
The general principle underlying market-based approaches to dealing with water pollution is that the parties subject to pollution control requirements can identify and implement the most efficient methods of reducing or eliminating pollution.
Market-based approaches rely on a common principle that the polluter pays. That is, polluters face an economic disincentive, while nonpolluters may be rewarded through the same mechanism. Examples of market-based approaches include pollution discharge fees, pollution trading systems, and deposit-rebate programs. Each of these approaches provides a financial incentive to the polluter for eliminating or reducing discharges and emissions.
To date, market-based approaches to water pollution have not been widely implemented in the United States. However, innovative marketbased approaches are being examined by environmental groups and lawmakers, as well as by the Environmental Protection Agency (EPA). The Clean Water Act (CWA) reauthorization provides for the expansion of market-based options, which will stimulate new, more costeffective ways to control wastewater discharges.
The current CWA does, under certain circumstances, allow for water pollution trading between point source pollutants (such as wastewater from treatment plants) between point and nonpoint source pollutants (such as fertilizer runoff), and between nonpoint sources. For example, two waste-water treatment plants that comply with treatment technology requirements can trade discharge loadings to meet water quality standards. In principle, trading allocates reductions in pollutant discharges across sources using cost-effectiveness as a criterion. In practice, regulated sources can avoid treatment upgrades to meet water quality standards if they arrange for equivalent or greater reductions in loadings from other sources that discharge to the water.(1)
When a point source trades with a nonpoint source, the point source (usually a water pollution treatment plant) may face regulatory pressure to reduce loadings. For example, meeting water quality standards may require additional wastewater treatment for a point source, such as advanced treatment for a publicly owned treatment works (POTW). If trading is available, the POTW may find a more efficient means to achieve the water quality goals by obtaining reductions from NPS contributors or other dischargers to the same water body. In this case, the POTW pays or otherwise arranges for the nonpoint sources to control their discharges rather than paying for the installation of more advanced treatment. The process proceeds in much the same fashion in a nonpoint/nonpoint trading scenario.
EPA estimates that point/nonpoint trading currently has the potential for application in at least 950 water bodies (lakes, rivers, and streams) that are affected by nutrients and municipal and/or industrial discharges. Nutrient discharges are believed to be the type of pollution problem most readily dealt with in a trading system because: (1) they are frequently discharged by a variety of sources, and (2) nutrient trades generally raise less complex issues than trades involving toxic discharges.
A second market-based approach to controlling water pollution is an incentive system wherein fees are paid by polluters based on the amount and/or nature of their wastewater discharges. Fees can be established to reflect the quantity, toxicity, or other adverse characteristics of the pollutants present in the discharge. These fees are used in some European countries to finance wastewater control programs. Such charges are based on formula involving biological oxygen demand, chemical oxygen demand, suspended matter, nitrogen and phosphorus content, and other effluent characteristics. Although designed mainly to bring in revenues, charges in Germany have also reduced industrial emissions.(2) The United States is also looking at ways to develop pollution fee programs.
EPA has a lead role in identifying those fees that could result in the greatest reduction in water pollution. The fees should be structured to be effective (i.e., give cause to reduce water pollution without being burdensome to dischargers).
Market incentive approaches are not likely to be zero-cost panaceas. To adopt these approaches, difficult problems need solving, such as the revision of state or local permitting regulations and implementation issues involving trading agreements. For those who are willing to use trading approaches, there is an opportunity for cost savings.
These recommendations have the potential for raising significant new revenues and savings. At this time, however, the fiscal implications cannot be estimated.
The Environmental Protection Agency's (EPA) National Advisory Committee for Environmental Policy and Technology (NACEPT) has stated that the nation's potential to improve the environment is directly related to its ability to produce and apply technological solutions.(1) However, NACEPT has also noted that the current rate of technological innovation is less than required. This is creating a gap between the ability to define risk and target environmental problems, and the ability to solve them.
EPA can accelerate the pace of technological development by building stronger partnerships with technology providers and users. NACEPT concluded that enhanced technology programs are essential to the achievement of EPA's mission and that EPA should establish the climate, culture, and incentives necessary to encourage widespread use of improved technology. NACEPT further noted that EPA should streamline coordination with its potential partners and, thus, should establish stronger technology partnerships.(2)
The application of more effective environmental technologies, however, is not just a matter of environmental improvement. Improved technologies reduce the costs of environmental protection, and they enhance the competitiveness of the United States in both the domestic and international environmental technology markets. The EPA estimates that the domestic market for environmental technology now exceeds $150 billion per year, and that the world-wide market may exceed $300 billion per year.
Innovative technologies can play a significant role in cleaning up the environment in many different situations, such as: monitoring/site assessment situations to determine the degree of contamination at a site; remedial situations used to clean up a site; pollution control, otherwise known as end-of- pipe cleanup; recycling; and pollution prevention where a process or product is designed/redesigned to reduce or eliminate production of pollutants. In the long run, innovative pollution prevention technologies will have a tremendous impact on environmental protection, cost effectiveness, and global competitiveness.
Designing and redesigning manufacturing processes to produce a better product and one that is designed for the environment, often called a green product, will yield a more competitive product.
For example, in the Energy Star program, major computer companies joined with EPA to design computers that use less energy and, thereby, contribute to the release of fewer pollutants at power generation facilities. The Energy Star program is expected by some estimates to save up to 2 percent of the nation's energy costs by the year 2000.(3) According to EPA, the early demand for energy-saving computers appears to be very high. The Energy Star program should give domestic computer designers and manufacturers a lead over foreign competition in the sale of these machines.
Improved technology to clean up existing environmental waste and prevent the future manufacture of such waste has great economic importance. According to recent EPA estimates, the average cost to clean up one superfund National Priorities List (NPL) site is $27 million, and EPA estimates it will cost a total of $16.5 billion to clean up just those NPL sites already identified. Thus, partnerships between EPA and industry are necessary to develop more cost-effective solutions through innovative technologies that is, those that look promising but may lack the cost and performance data necessary to support routine use.
The President's budget proposes an Environmental Technology Initiative (ETI) for the next five years, which would provide $620 million in increased funding for technology development. Much of this money would be in the base budgets of other federal agencies. In addition to participating in partnerships with these agencies to fully advance the innovation of environmental technologies, EPA also needs to leverage its limited resources to spur industry to participate with EPA as full partners in environmental technology innovation.
Recently, EPA started a new public-private partnership program in cleaning up polluted sites. A Cooperative Research and Development Agreement at McClellan Air Force Base in California was developed under the provisions of the Federal Technology Transfer Act.(4)
The project's goal is to evaluate the use of innovative technologies for contaminated soil and ground water (such as soil vapor extraction with innovative off-gas treatment, two-phase vacuum extraction, and bioremediation) as alternatives to established technologies (such as incineration). The project was initiated under a grant from the EPA Technology Innovation Office. A nonprofit organization, Clean Sites, Inc., of Alexandria, Virginia, is facilitating this partnership between the Air Force, EPA's Region 9 (headquartered in San Francisco, California), the California EPA, several private companies (AT&T, Beazer-East, Dow, Dupont, Monsanto, Southern California Edison, and Xerox), the EPA Risk Reduction Engineering Laboratory, and the EPA Office of Federal Facility Enforcement.
Expanding the McClellan model to other federal and state projects would enable EPA to leverage limited resources to promote innovative technologies, clean up or stablilize hazardous environmental sites, prevent pollution, and provide economic improvement to the United States and other countries. The implications of this approach are many. It provides a marketing incentive for firms whose technology is demonstrated; it creates new jobs, since most technology development is occurring at firms that employ 50 people or less (firms that can benefit from the opportunities to demonstrate performance provided by these kinds of projects); and competitive technologies in remediation and pollution prevention can be exported.
While the implications cannot be calculated with certainty, examples of past successes in technology innovation show the economic benefits that could be gained. In February 1993, EPA issued a summary report on its Superfund Innovative Technology Program, noting that innovative technologies used in cleaning up polluted sites can save the government as much as 68 percent of the money that would otherwise be used with existing technologies. In EPA's Region 5 (headquarted in Chicago, Illinois) between 1987 and 1990, seven NPL sites underwent remediation with innovative technologies. The projected cost to the federal government, under then-existing technology, was about $225 million; however, the use of innovative technologies accomplished the cleanup for a cost to the government of $8.5 million-a savings of $140 million. As noted, EPA may need about $16.5 billion for its share to clean up existing NPL sites. If, in fact, innovative technologies could be applied to many, or most, of these sites, there is a potential cost savings of as much as $11.2 billion, or 68 percent of the total needed, based on Region 5's experience.
Because of the success of innovative technologies whether in site remediation, pollution control, or pollution prevention there is also an economic benefit to private industry. For instance, a pollution control partnership between EPA, the Tennessee Valley Authority, and private industry is field testing an innovative sulfur removal device that can replace flue gas scrubbers. If successful, savings for industries could exceed $1 billion per year, according to EPA, and this estimate does not include the economic gain from selling the technology both here and abroad.
Innovative technology can benefit small business as well. The EPA assisted a small manufacturer of orthopedic devices to switch from a solvent that damages the ozone layer to a more diluted cleaner. The firm's products are now cleaned in an ultrasonic bath with the cleaner to remove grease from the parts. The new cleaning system is saving the business about $4,800 per year, according to EPA. It cost the business about $1,800 to implement the innovation.
Environmental technologies are often extremely difficult to develop and test in a laboratory setting. Possible solutions conceived in a laboratory must, therefore, be evaluated outside of the laboratory in a real-world environment. However, attempting to develop and test innovative technologies outside a laboratory creates a risk for those testing the technology. The technology may not work the way it was planned, exposing technology implementers to financial liability. The McClellan partnership is based on risk-sharing by government and industry, an essential element to encourage first uses of innovative technology.
The Governors of several Western states have already recognized the economic and environmental benefits of such a model program. They have developed an action plan, working with the Departments of Defense, Energy, and the Interior, and the EPA, to implement similar programs in partnership with industry. The Governors have cited the McClellan project as a model for their proposal.
EPA is looking for other possible federal installations to use the McClellan model and is examining possible ways to expand this to nonfederal sites. It has provided $700,000 to Clean Sites, Inc., to facilitate a series of these public-private partnerships.
In sum, EPA needs to take the lead in the development, evaluation, dissemination, and use of superior environmental technologies. EPA must not only make certain that its policies and regulations allow such innovation, but it must also encourage statutory changes to spur such innovation. Therefore, EPA needs to take a proactive approach by: (1) leveraging its limited resources in partnerships with private industry; (2) providing small and large businesses with technical support regarding the benefits and costs; and (3) establishing a program to validate the performance of innovative environmental technologies.
The plan should identify existing barriers to innovative technology development, recommend new approaches for writing regulations, seek opportunities for working with other federal agencies, and identify policies and procedures to facilitate permitting for innovative technologies. Such a plan would encourage the introduction of innovative environmental technology. After the action plan is completed, its permitting component should be tested as a pilot program involving innovative approaches to permit development of new environmental technology. A special team, to be established by mid- 1994, consisting of permit writers from EPA and the states, should test the action plan by initiating 20 permit reviews. These reviews should begin by January 1995. The reviews would determine whether the permits could be changed or modified to allow the use of more innovative technology to accomplish the environmental mandate dictated by the permits. Results from the pilot program may require changes in the plan or may result in recommendations for statutory change.
2. EPA, in partnership with other federal agencies, should establish a small business center as a pilot program to expand the technology options available in the marketplace by helping businesses obtain financing for new technologies.
The center would identify environmental business opportunities, develop a business plan, provide marketing information, and identify funding sources. Assistance should be provided to 10 small businesses from this center by October 1994, and to another 10 by October 1995.
3. EPA should develop and promote a series of monographs to assist industry in identifying pollution prevention opportunities and making informed, responsible design choices.
These monographs should include information on specific industry processes, products, and systems in the areas of comparative risks, performance, and costs, including environmental costs. The monographs, describing the use of analytical tools including full cost accounting systems and substitute assessment analytical tools, should be completed by October 1994.
4. EPA should establish five partnerships similar to the McClellan Air Force Base model to expand available sites where developers and vendors can test and evaluate their technologies.
Two of the partnerships, including McClellan, should be established by April 1994, and three more by January 1995. These partnerships would help EPA leverage its limited resources to promote innovative technology development by industry.
5. EPA should establish an environmental technology performance verification program by October 1995, to evaluate and validate the claims of environmental technology vendors.
Under this program, EPA could designate an independent group, with the assistance of the National Institute of Standards and Technology, to perform the assessments. These assessments would be similar to those conducted by Underwriters Laboratories for electrical equipment. The program would provide users, financiers, EPA, and others with consistent, credible protocols and testing data and independent review and verification of performance claims. Protocols for the first technology applications should be developed by October 1996.
6. EPA should establish five partnerships with different industries to reengineer common products and processes in order to promote environmentally cleaner manufacturing processes.
The purpose of this effort would be to reduce the use of hazardous materials and eliminate or reduce toxic releases during production release and disposal. The first two of these partnerships should be established by October 1994. Another partnership involving the computer industry should be established by January 1995. Two additional partnerships for reengineering common products and processes should commence by September 1995.
Implementation of these recommendations would result in a cleaner environment, and industry and the taxpayers would save money. The potential also exists for the creation of new industries, or expansion of existing small industries, as new technologies are developed. Also, exportable technology would be produced, putting the United States in a better position to compete internationally in the growing environmental technology market.
This proposal should be funded from existing sources. Over the long term, the use of such partnerships should produce significant reductions in cost, but these gains cannot be estimated at this time.