Report No.: GAO/OCG-93-16TR Date: December 1992
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Author: United States General Accounting Office
Office of the Comptroller General
Addressee: Transition Series
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CONTENTS
Environmental Protection Issues
Meeting Environmental Requirements With Limited Resources
- Risk-Based Priorities Could Better Allocate Resources
- Nonregulatory Alternatives Could Reduce Compliance Costs
- Alternative Approaches Needed to Ensure State and Local Capacity to
Respond
Developing Necessary Scientific and Monitoring Information
- Data Collection and Management Need Improvement
- Environmental Indicators Could Measure Program Success
Ensuring Accountability for Correcting Program Weaknesses
Strengthening Global Environmental Protection Efforts
Related GAO Products
Transition Series
- Economics
- Management
- Program Areas
Office of the Comptroller General
Washington, DC 20548
December 1992
The Speaker of the House of Representatives
The Majority Leader of the Senate
In response to your request, this transition series report discusses the major
environmental policy, management, and program issues facing the Congress and
the new administration. These issues include the challenges of (1) meeting
environmental requirements with limited resources, (2) developing information
to support regulatory programs and measure environmental results, (3)
establishing accountability for correcting program weaknesses, and (4)
strengthening global environmental protection efforts.
As part of our high-risk series on program areas vulnerable to waste, fraud,
abuse, and mismanagement, we are issuing a related report, _Superfund Program
Management_ (GAO/HR-93-10, Dec. 1992).
The GAO products upon which this transition series report is based are listed
at the end of the report.
We are also sending copies of this report to the President-elect, the
Republican leadership of the Congress, the appropriate congressional
committees, and the Administrator-designate of the Environmental Protection
Agency.
As a result of the legislation enacted over the last 20 years, American
industry and government are currently spending about $115 billion a year to
meet environmental goals. The amount is expected to increase to $160 billion a
year by the end of the decade. State and local governments, which will have to
bear a particularly large share of this increase, face over $80 billion in
investment costs for wastewater alone, and the federal government will have to
spend about $200 billion simply to clean up contaminated Department of Defense
and Department of Energy installations.
Under current economic conditions, meeting these financing challenges will be
an important concern of all levels of government. In the next few years, the
Congress and the new administration will have to deal with these difficult
issues as a number of major environmental statutes--including those that
govern pesticides, toxic chemicals, hazardous and solid waste disposal,
surface water pollution, drinking water safety, and the cleanup of abandoned
hazardous waste sites--are scheduled for reauthorization. In addition, the
Congress may again consider proposals to elevate the Environmental Protection
Agency (EPA) to a Cabinet department, a move we have endorsed but which, we
cautioned, would have to be accompanied by improvements in the agency's
management. In the international arena, the Congress and the administration
will have to consider how to implement the environmental agreements reached
during the United Nations Conference on Environment and Development and weigh
the environmental implications of the North American Free Trade Agreement.
In our 1988 transition report, we discussed problems in overall environmental
program management; improvements needed in the management of hazardous waste
programs; and the need for EPA to create a new policy for reducing urban smog,
focus greater attention on environmental assessments for pesticides, and
develop a comprehensive approach to controlling surface water pollution. While
EPA has made some progress in each of these areas, our work over the last 4
years suggests that dealing with the root causes of these problems will
require changes in policies and agencywide management practices.
MEETING ENVIRONMENTAL REQUIREMENTS WITH LIMITED RESOURCES
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Given high public expectations for environmental protection, one of the most
important issues the Congress and the administration will have to contend with
is the limited resources available to meet environmental requirements.
Currently, the United States--both government and industry--spends about $115
billion a year to meet environmental goals. This investment is expected to
rise to about $160 billion over the next decade. Altogether, the nation has
invested about $1 trillion in environmental protection over the last 20 years.
Despite the current economic downturn, opinion polls show that Americans
support continued and even additional spending on environmental protection.
Nevertheless, the federal budget deficit limits the federal government's
ability to respond. State and local governments are also confronting fiscal
crises, and industry's capacity to invest further is similarly constrained.
Resource limitations have particularly strained EPA. The Congress has
substantially increased the agency's responsibilities for regulating hazardous
waste, drinking water, and water and air pollution, among other things.
However, the agency's fiscal year 1992 operating budget, in constant dollars,
was roughly the same as it was in fiscal year 1979.
With the widening gulf between EPA's responsibilities and the resources
available to carry them out, EPA has often been unable to meet statutory
mandates and to implement plans for addressing pollution, as the following
example illustrates. The agency believes that most of the nation's remaining
water quality problems stem from nonpoint, or diffuse, sources of water
pollution resulting from agricultural and urban runoff. EPA has developed an
ambitious plan to deal with nonpoint pollution. However, for lack of
resources, the agency has hardly acted on key elements of the plan, including
the development of monitoring techniques to help states determine the extent
of their nonpoint source pollution problems and the effectiveness of
corrective actions.
Recognizing that the federal budget deficit and the Omnibus Budget
Reconciliation Act make increased funding for EPA unlikely, we have
recommended a number of broad management improvements to make the agency's
programs more cost-effective. EPA has begun to act on a number of these
recommendations. But ensuring that these improvements--inherently long-term in
nature--are made will require the sustained attention of both the Congress and
the new administration.
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RISK-BASED PRIORITIES COULD BETTER ALLOCATE RESOURCES
Establishing priorities among programs on the basis of the risk to public
health and the environment is one of the keys to improved environmental
management. Setting priorities in this way will be difficult, however, as long
as public policy and, in particular, the budget allocation process are
dominated by public perceptions of risk rather than by scientific and expert
judgment. Currently, many environmental problems that EPA experts and others
judge to be of relatively low risk, such as contamination from hazardous waste
sites, receive extensive public attention and federal resources, while
problems judged to be of greater risk, such as global warming and radon and
other types of indoor air pollution, receive less attention and fewer
resources. To correct this imbalance, we have recommended that the Congress
and EPA work together to find opportunities to shift resources according to
the level of risk involved.
Recognizing that risk assessments alone are not sufficient for setting
environmental policy and that public opinion contributes heavily to the
Congress's agenda, we have pointed out that the public must also be kept
better informed about environmental risks. We have therefore recommended that
EPA direct some of the agency's educational activities specifically toward
informing the public about the relative seriousness of the nation's
environmental problems.
The federal government will also have to set priorities for the cleanup of
federal facilities. Years of neglect at Department of Defense and Department
of Energy installations have left a legacy of contamination that these
agencies now estimate may cost close to $200 billion to correct. These
estimates do not take into account the full federal cleanup liability. The
total will also include other agencies' cleanup costs, such as the Department
of the Interior's, which have not yet been estimated. Although these cleanups
will increasingly be competing for limited federal funds, EPA has not yet
developed a system for assessing the health and environmental risks posed by
federal sites relative to one another and to other environmental problems and
for setting priorities accordingly.
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NONREGULATORY ALTERNATIVES COULD REDUCE COMPLIANCE COSTS
To help industry achieve greater cost efficiencies in complying with
environmental standards, we have advocated making greater use of nonregulatory
alternatives. The current regulatory structure of command-and-control, which
requires polluters to meet defined health or technology-based standards, has
succeeded in dealing with large stationary sources of pollution. However, this
structure has proved to be less effective and very costly for controlling
smaller and more diffuse sources.
Market-based incentives--which include taxes on pollution, trading in
pollutant emission "rights," and public disclosure of polluters'
emissions--all give polluters a financial reason to reduce pollution without
specifying how they should do so. Pollution prevention, which eliminates or
reduces pollution at its source rather than try to contain or treat it after
it has been generated, has already been successfully adopted by some
companies, which have also realized cost savings as a result.
With the Clean Water Act, the Resource Conservation and Recovery Act, and the
Safe Drinking Water Act, among others, scheduled for reauthorization, the
administration and the Congress will have numerous opportunities to supplement
traditional regulation with these nonregulatory alternatives. We have
therefore called for EPA to work with the Congress to identify opportunities
for revising legislation.
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ALTERNATIVE APPROACHES NEEDED TO ENSURE STATE AND LOCAL CAPACITY TO RESPOND
Finally, we are concerned about the ability of state and local governments to
bear the growing financial burden associated with meeting environmental
objectives. In environmental programs, as in other areas, the federal
government has been shifting to state and local governments the responsibility
for implementing and financing major programs. Long-term federal construction
grants for wastewater treatment plants, for example, have been replaced with
short-term grants to capitalize state revolving loan funds. These funds are
expected to meet only about one-third of local communities' financing needs
for wastewater treatment, which are estimated to exceed $80 billion
nationwide. We therefore believe there is a need for alternative financing,
technology, and managerial approaches to meeting the environmental
requirements of states and localities.
DEVELOPING NECESSARY SCIENTIFIC AND MONITORING INFORMATION
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Although EPA's regulatory programs depend heavily on scientific information on
the health and environmental effects of chemicals and pollutants, these data
often do not exist or, when they are available, are of poor quality or
difficult to access and use. Moreover, despite the fact that environmental
programs are designed to clean up or prevent unacceptable levels of pollution,
EPA has not collected the information necessary to judge the success of its
programs.
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DATA COLLECTION AND MANAGEMENT NEED IMPROVEMENT
In order to assess environmental risks and address those that are most likely
to cause the greatest harm, EPA needs to have better data on acute and chronic
health effects. We have therefore recommended that the agency develop a
research agenda clearly focused on improving its risk assessment capabilities.
EPA also needs better data on whether a particular substance is harmful to
human health and the environment in order to take appropriate regulatory
actions and to identify new and emerging problems. The Toxic Substances
Control Act gives EPA specific legislative authority to obtain this
information from chemical manufacturers. But in the 16 years since the law's
passage, EPA has been reluctant to require these data. As a result, EPA has
identified for testing less than 1 percent of more than 70,000 chemicals and
has complete test data for only 22 chemicals.
Even data that EPA has available are often inadequate and poorly managed. For
example, EPA has three data bases for regulating disinfectants, yet EPA
officials believe that as much as 60 percent of the data on disinfectant
product claims are inaccurate or incomplete. Likewise, EPA maintains nine
separate data base management systems to track information about pesticides
awaiting reregistration, including the results of health and environmental
studies. Yet, in the summer of 1991, when a trainload of metam sodium spilled
into the Sacramento River, EPA was unaware of information in its files
indicating that metam sodium can cause birth defects. As a result, the agency
could not warn pregnant women and workers in the area of the spill of the
pesticide's hazards.
Moreover, EPA has traditionally enforced environmental laws by identifying
violations and taking enforcement actions separately for each environmental
medium--air, water, land--and regulated substance. EPA's information systems
have been designed largely to accommodate these compartmentalized approaches.
Nevertheless, some of the agency's highest priorities--pollution prevention,
management for minimizing risk across multiple environmental threats, and
coordinated enforcement--depend on using data in a much more integrated way.
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ENVIRONMENTAL INDICATORS COULD MEASURE PROGRAM SUCCESS
Although environmental programs are designed to clean up or prevent
unacceptable levels of pollution, EPA has not collected the information
necessary to judge the success of its programs. While EPA has developed some
measures of environmental outcomes--meeting national air quality standards,
for example--the agency has generally relied on activity-based indicators,
such as numbers of permits issued or enforcement actions taken, to track its
progress. EPA has historically relied on activity-based measures because of
the inherent technical difficulties of establishing linkages between program
activities and environmental improvements and conditions. Although EPA has had
a national environmental monitoring program, which is designed to measure the
success of the agency's activities, the program has been cut back over the
years as a result of leadership changes and decreased funding. Because EPA has
traditionally considered itself to be primarily a regulatory agency, it has
focused its attention and resources almost exclusively on setting standards
and issuing permits rather than on developing the information necessary to
measure environmental results.
EPA has made some effort to refocus its management information system on
results and has begun to develop environmental indicators to use in this
system. However, considerable work remains to be done. One improvement that
EPA could make is to establish a central unit for collecting, analyzing, and
disseminating environmental data. We have therefore suggested that the
Congress consider establishing, as part of a Cabinet department for the
environment, a bureau or center for environmental statistics.
ENSURING ACCOUNTABILITY FOR CORRECTING PROGRAM WEAKNESSES
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After reporting for many years on weaknesses that affected the efficiency and
effectiveness of virtually all of EPA's programs, we have continued to see the
same basic problems, despite recommending numerous corrective actions. The
result is persistent inefficiency, as programs continue to incur costs without
necessarily achieving the anticipated results.
For example, in a 1990 report on the drinking water program, we found that
1) drinking water problems were going undetected, (2) many of those that were
detected were not being reported to EPA, and (3) enforcement was often neither
timely nor effective in bringing water systems back into compliance. To
correct these problems, we recommended that the agency ensure that regions and
states improve compliance with drinking water regulations. EPA responded to
our findings and recommendations with written guidance to regions and states.
However, without substantially improved oversight by headquarters to ensure
that this guidance is followed, it is not clear that the problem will be
adequately addressed.
Likewise, although problems with Superfund contractor cost control persisted
for years, EPA managers did not pay sufficient attention to contract
management or follow through on promised reforms. EPA is heavily dependent on
contractors, spending more than $1 billion in fiscal year 1991, most of it in
the Superfund program. Because of its vulnerability to fraud, waste, and
abuse, we identified Superfund as one of our high-risk areas in the federal
government. As we highlight in a report on the high-risk Superfund program,
Superfund's largest contractors work under cost-reimbursable contracts that
promise to pay all of a contractor's allowable costs. This requires the agency
to have in place effective controls to ensure that such costs are proper. We
found, however, that EPA does not adequately review contractors' spending
plans before approving them, check bills for reasonableness before paying
them, or verify charges later by timely audits of contractors' records. While
EPA has not addressed all of our concerns, it has begun several initiatives to
improve contract oversight, including the development of independent cost
estimates against which it can compare contractors' spending proposals.
In other areas, as well, EPA has frequently taken the first step toward
corrective action but seldom followed through to ensure that its directives
are carried out. For example, in our 1988 transition report, we reported that
EPA was developing an integrated financial management system and recommended
that the agency provide sustained leadership and a high priority for its
effort. However, 3 years later, the EPA Inspector General's office found that
the system had still not been implemented because EPA had not devoted adequate
resources or management attention. A lack of follow-through has also
characterized attempts made by EPA to improve its enforcement programs.
Following numerous GAO and EPA Inspector General reviews pointing out that
EPA's regional offices and the states were not assessing penalties against
violators at least as great as the amount by which the companies benefit by
not being in compliance, EPA responded by reminding its regions, in a
memorandum, to adhere to agency policies and to document the reasons for any
penalty reductions. In a subsequent review, however, we found that little had
changed; two-thirds of the closed cases we examined did not document penalty
calculations, making it difficult to determine whether agency policies were
followed.
To their credit, EPA's Administrator and Deputy Administrator have attempted
to improve management accountability using the annual process for assessing
and reporting on material weaknesses, which is required by the Federal
Managers' Financial Integrity Act (FMFIA). To oversee FMFIA, EPA created a
Senior Council on Management Controls to focus high-level management attention
on problems and solutions. The Council has been extremely valuable and should
become a permanent mechanism for highlighting important management problems.
Still needed, however, is a long-term commitment by senior managers to review
the results of their corrective actions to make sure that they have been
successful.
STRENGTHENING GLOBAL ENVIRONMENTAL PROTECTION EFFORTS
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Resolving today's environmental problems--including global climate change,
depletion of the stratospheric ozone layer, and deforestation, among
others--will require an unprecedented level of international cooperation. At
the United Nations Conference on Environment and Development in Rio de Janeiro
in June 1992, participating nations drew up an action program for
environmentally sustainable development as well as conventions to address
climate change and threats to biological diversity. But while reaching these
agreements is, in itself, a noteworthy accomplishment, their effectiveness in
correcting problems ultimately depends on how well the agreements are
implemented. Moreover, because the costs of compliance are high, uneven
implementation may place the countries that carry out the agreements at a
competitive disadvantage with those that do not.
Since 1972, the number of international environmental agreements in which the
United States participates, or in which it has a significant interest, has
grown from fewer than 50 to about 170. Yet little is known about how well
environmental agreements are being implemented. In a review of eight major
international agreements, we found that the reports that parties are supposed
to provide on their compliance with agreements are often late, incomplete, or
not submitted at all, and the secretariats responsible for overseeing the
agreements lack the authority or resources to monitor implementation
independently. In addition, many parties, particularly developing countries,
lack the technical and financial capability to comply.
To strengthen international environmental agreements, we have suggested that
the U.S. government could support efforts to improve information on
implementation. Such information could be used to bring pressure on parties to
live up to their commitments and could increase public support for meeting
obligations. In addition, information on implementation could be used to
target assistance to countries in need. The prospect of assistance could
provide an additional incentive for such countries to report the status of
their implementation efforts. In the development and ratification of treaties
and in its foreign assistance and support of international institutions, the
U.S. government could establish goals for improving the availability of
information on implementation, increasing public access to the information,
and improving the ability of developing countries to both participate in and
carry out environmental agreements.
The environment has also become a critical element in trade agreements and
will have to be addressed directly in future negotiations. As the United
States and its trading partners seek to phase out tariffs and traditional
barriers to free trade, incompatible environmental standards can themselves be
perceived as trade barriers and can stand in the way of trade liberalization.
This, in turn, generates concern about the potential for trade agreements to
encourage the adoption of "lowest common denominator" environmental standards
that would be weaker than existing U.S. standards.
Moreover, existing trade agreements do not fully address environmental issues.
The General Agreement on Tariffs and Trade (GATT)--the major international
trade agreement--was developed long before countries had many environmental
laws and international environmental agreements. And when the North American
Free Trade Agreement (NAFTA) was created, the administration promised to deal
with environmental issues in a separate process, outside of the agreement
itself. However, in a review of U.S. and Mexican pesticide standards, we found
that plans by the two countries to reconcile differences in standards would
not address all differences. In addition, there is an absence of enforcement
and monitoring capabilities on the part of the Mexican government. The U.S.
government will therefore have to recognize the potential for conflicts and
search for new ways to reconcile them.
