|- 4% \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
* tsi"*U | WASHINGTON, D.C. 20460
MAR I 9 I99T
MEMORANDUM
SUBJECT: Audit Report E1KAF6-05-0080-7100130
Risk Reduction Through Voluntary Programs
OFFICE OF
THE INSPECTOR GENERAL
FROM: Michael Simmons ^/Vxdv\ซxซ\ S
Deputy Assistant Inspector General
for Internal Audits
TO: Mary D. Nichols
Assistant Administrator
for Air and Radiation
Attached is the report on our review of voluntary programs. The voluntary programs included in
our review were Radon and ENERGY STARฎ Office Equipment, Buildings, and Homes programs.
The purpose of our audit was to provide the Agency with an analysis of current voluntary
programs and recommendations for improving current and future voluntary programs. We
concluded that the voluntary programs used good management practices and developed ways to
estimate their environmental results. However, improvements are possible in several areas, as
listed in the Executive Summary and Chapter 5.
ACTION REQUIRED
In responding to the draft report, the Office of Air and Radiation provided corrective actions,
including milestones, for each recommendation. Therefore, no further response from you is
required, and we are closing this report in our tracking system. Please track all planned
corrective actions in the Management Audit Tracking System.
We have no objections to the further release of this report to the public.
This audit report contains findings that describe problems the Office of Inspector General (OIG)
has identified and corrective actions it recommends. This audit report represents the opinion of
the OIG. Final determinations on matters in this audit report will be made by EPA managers in
accordance with established EPA audit resolution procedures. Accordingly, the findings
described in the audit report do not necessarily represent the final EPA position.
Recyctod/Recydable
Printed with Soy/Canola Ink on paper that
contain* at least 50% recycled fiber
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We appreciate the cooperation provided by you and your staff during this review. Should your
staff have any questions, please have them contact Charles Allberry, Audit Manager, Northern
Audit Division, at (312) 353-4222.
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EXECUTIVE SUMMARY
Voluntary, or nonregulatory, programs can be an effective tool for
reducing risk and achieving environmental results. The Radon
and ENERGY STARฎ voluntary programs we reviewed used good
management practices and developed ways to estimate their
environmental results. The programs provided the impetus to
overcome the barriers to energy efficiency and change consumer
behavior. As a result, they were effective at achieving
environmental benefits and reducing health risks, according to the
Environmental Protection Agency's (EPA) statistics.
In developing and implementing the programs, EPA helped
provide the information and motivation needed to get its program
participants to act. The Radon and ENERGY STAR programs
demonstrated several good management practices.
Planning
Educating people about incentives
Providing quality support
Working with outside organizations
Obtaining commitments
Evaluating progress and making adjustments
Good management does not guarantee program success, but it
does increase the likelihood that a program will achieve its goals
and desired results. As other EPA offices begin to plan and
implement voluntary programs, they should consider the lessons
learned by the Radon and ENERGY STAR programs.
An important measure of success for any EPA program is how
well it protects and improves human health and the environment.
This measurement is particularly true for a voluntary program,
since it would be difficult to continue funding a program not
required by Congress that is not achieving measurable risk
reductions. The voluntary programs effectively estimated the
impact their activities had on reducing risks to health and the
environment. These estimates were based on information from
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both EPA and outside sources. As a result, the programs were
able to (1) evaluate their progress, (2) measure their performance
against goals, and (3) make adjustments to better achieve their
goals. Future voluntary programs could benefit from using similar
measurement techniques.
Although we noted several good management practices in the
Radon and ENERGY STAR programs, some improvements are
needed in:
documentation of the. planning process,
definition of market transformation, and
maintenance of EPA logo integrity.
The Radon program should improve the accuracy of reporting its
results.
Agency Actions
OIG Evaluation
The Assistant Administrator for Air and Radiation agreed with all
the findings in our report and proposed correction actions to
address each of the recommendations. Corrective actions include
expanding the annual business plans for ENERGY STAR programs
to include information such as market and technical analysis,
marketing plans, and plans for addressing market transformation
and exit strategies. Also,
Atmospheric Pollution Prevention Division will evaluate
whether spot testing of products with the Energy Star label
is needed to maintain label integrity, and
Indoor Environments Division will clarify what the
statistic for high radon areas represents in all future reports
and information on radon results.
The Agency's actions, when implemented, will address the
findings and recommendations in the report.
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Table of Contents
EXECUTIVE SUMMARY i
CHAPTERS
1 INTRODUCTION 1
Purpose 1
Background 1
Scope and Methodology 5
Prior Audit Coverage .....:...:.... 6
2 VOLUNTARY PROGRAMS CAN BE AN EFFECTIVE TOOL
FOR ACHIEVING ENVIRONMENTAL BENEFITS 8
Role of Voluntary Programs in EPA 8
Environmental Benefits of Voluntary Programs 9
3 GOOD MANAGEMENT PRACTICES 11
Planning Process 11
Educating People About Incentives 14
Providing Quality Support 16
Working With Outside Organizations 17
Obtaining Commitments 19
Evaluating Progress and Making Adjustments 20
Conclusion 22
4 ESTIMATING ENVIRONMENTAL RESULTS 23
ENERGY STAR Programs 23
Radon Program 25
Conclusion 27
5 IMPROVEMENTS NEEDED 28
Improving Documentation of the Planning Process 28
Defining Market Transformation 30
Maintaining ENERGY STAR Logo Integrity 34
Reporting Radon Results 36
in
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Table of Contents
EXHIBITS
1 CCAP ACTIONS AND SUPPORTING EPA PROGRAMS 38
2 ENERGY STAR HOMES BUSINESS PLAN 39
3 ESTIMATION OF ENVIRONMENTAL RESULTS 40
APPENDIX
1 OFFICE OF AIR AND RADIATION'S RESPONSE TO DRAFT REPORT 43
2 ABBREVIATIONS 48
3 DISTRIBUTION 49
IV
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CHAPTER 1
Introduction
PURPOSE
BACKGROUND
We performed an audit of selected voluntary air programs. The
purpose of the audit was to provide the Agency with an analysis of
current voluntary programs and recommendations for improving
current and future programs. Our specific objectives were to
determine:
the management practices that worked well and areas
where improvements are needed in selected voluntary air
programs, and
whether voluntary programs achieve environmental
benefits.
Historically, EPA has relied upon command and control
regulations to achieve environmental results and risk reduction.
However, in its Five Year Strategic Plan (1994), EPA identified
the need to develop and implement more innovative, effective, and
efficient approaches to environmental protection. Two of the
seven guiding principles EPA identified were pollution prevention
and partnerships. To complement its traditional regulatory
programs, EPA initiated voluntary programs to prevent pollution
in partnership with its stakeholders: Federal, tribal, state, and
local agencies; Congress; private industry; public interest groups;
and citizens.
Both global warming and radon were ranked as high risk in EPA's
report Unfinished Business and Reducing Risk. The Office of Air
and Radiation (OAR) relies upon voluntary programs to get risk
reduction in several areas, including global warming and radon.
To address global wanning and the greenhouse effect, the
Atmospheric Pollution Prevention Division (APPD) developed a
number of ENERGY STAR programs which seek to encourage the
use of more energy efficient technologies through partnerships
with business, government, and nonprofit groups. Reductions in
1
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energy usage reduce the carbon dioxide emissions from power
plants and on-site combustion equipment, which are major
contributors to the greenhouse effect. The Indoor Environments
Division's (IED) Radon program uses a combination of research,
information dissemination, and partnerships with industry groups
to decrease exposure to radon.
ENERGY STAR In 1993, the President signed the Climate Change Action Plan
(CCAP), initiating many programs designed to reduce greenhouse
gas emissions through voluntary partnerships with businesses and
public institutions. The goal.of the CCAP is to return U.S.
greenhouse gas emissions to 1990 levels by the year 2000. EPA
has the primary responsibility for 21 of the 44 actions identified
by the CCAP to reduce emissions of carbon dioxide, methane,
hydrofluorocarbons (HFC), and other greenhouse gases. Some of
these actions are implemented jointly to capitalize on the
experience and expertise of other Federal agencies, including the
Departments of Energy (DOE), Agriculture, and Transportation.
Exhibit 1 presents EPA's CCAP actions and the related voluntary
programs. The ENERGY STAR programs support the CCAP
emissions reductions goals.
The ENERGY STAR programs have a common purpose to get
consumers and businesses to use more energy efficient products.
The programs' goals are to:
increase market penetration of existing energy efficient
products,
ensure that manufacturers' and homeowners' investments
in energy efficiency are cost effective and product quality
is sustained or improved, and
change consumer purchasing behavior.
APPD has several ENERGY STAR programs to encourage energy
efficient technologies in specific areas, such as lighting, office
equipment, commercial buildings, and residential homes. The
programs set targets for energy efficiency and offer the ENERGY
STAR label to recognize products that achieve the targets. We
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reviewed three individual programs related to office equipment,
existing commercial buildings, and new homes.
In June 1992, EPA announced the ENERGY STAR Computers
program, and several companies agreed to work with EPA in the
program. EPA officially launched the program on June 17, 1993,
at a White House press conference. After working with
computers, monitors, printers, and facsimile machines, the
program added copiers in April 1995 and changed its name to
ENERGY STAR Office Equipment. EPA's ENERGY STAR Office
Equipment program: (1).encourages manufacturers to develop
office products that use less energy, (2) educates consumers on the
benefits of energy efficient office equipment, and (3) encourages
organizations to purchase only energy efficient office equipment
and to reduce paper use. The energy consumption of office
equipment represents five to seven percent of commercial sector
electricity use.
The ENERGY STAR Buildings program reduces energy costs,
prevents pollution, and improves comfort and air quality in
commercial buildings through energy efficient building upgrades.
Commercial buildings account for about 15 percent of all U.S.
energy consumption. EPA secures commitments from
commercial building owners to upgrade existing building systems
with more energy efficient equipment, where profitable. The
program leads a building owner through a five stage strategy that
addresses lighting, building tune-up, heating systems, cooling
systems, and air handling. In turn, EPA provides technical
assistance, training, and public recognition to participants.
ENERGY STAR Showcase Buildings, begun in June 1994 as the
first stage of the program, implemented accelerated building
energy-efficiency upgrades and demonstrated potential energy
savings. EPA launched the Buildings program in April 1995, with
58 charter participants.
The ENERGY STAR Homes program, launched in April 1995,
reduces energy use and prevents pollution by encouraging builders
and developers to produce energy-efficient new homes. Energy
improvement recommendations often include improved insulation,
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tighter ducts, sealing packages, high efficiency heating and air
conditioning, and high performance windows. The program
motivates builders to build homes with the Home Energy Rating
System five-star rating that are 30 percent more efficient than
homes built using the existing Model Energy Code. The program
provides consumer education and information, training, and
recognition for its builder participants.
Radon Radon is a cancer-causing, radioactive gas. It is estimated to
cause thousands of deaths each year from lung cancer. In fact, the
Surgeon General has warned that radon is second only to smoking
as the leading cause of lung cancer in the United States.
Radon gets into the air from the breakdown of natural uranium in
soil, rock, and water. Radon can be found all over the U.S. in any
type of building, but its greatest exposure occurs in the home.
Radon typically moves up through the ground to the air above and
into the home through cracks and other holes in the foundation.
Nearly 1 out of 15 homes in the U.S. is estimated to have elevated
radon levels. EPA recommends that all homeowners test for
radon and fix the problem if the radon level is above designated
safety levels.
In response to a growing concern about elevated indoor radon
concentrations, EPA established the Radon Action Program in
September 1985. Since EPA lacks statutory authority to prescribe
what homeowners should do about radon, EPA is working through
a voluntary program to ensure that the required technical
knowledge exists and is accessible to homeowners, contractors,
and state and local officials.
A 1992 review by the Office of Policy, Planning and Evaluation
(OPPE) became the basis for the current program strategy,
developed in 1993. OPPE concluded that the Radon program had
made some progress in increasing radon awareness and testing,
but public information alone would not be sufficient to achieve
significant long-term risk reduction. Stronger actions, such as
requiring radon testing in real estate transactions and building
radon resistant new homes, were encouraged and seen as cost
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effective. OPPE recommended that the Radon program focus on
high risk areas. A 1992 General Accounting Office report
supported the findings and recommendations of the 1992 OPPE
report.
The 1993 radon strategy explained how EPA would reduce radon
risks, and provided a framework consisting of four key elements:
underlying policies and scientific principles,
a decentralized system of States and other partners for
targeting the public,
multiple strategies for achieving radon risk reduction, and
a strong focus on key program priorities.
METHODOLOGY Our audit was limited to the Radon program and three ENERGY
STAR programs: Office Equipment, Buildings, and Homes. The
purpose and objectives did not include determining the cost-
effectiveness of the programs.
Our first objective was to determine the management practices
that worked well and areas where improvements are needed in
selected voluntary air programs. To accomplish this objective, we
reviewed management controls over the processes for planning,
organizing, directing, and controlling program operations. We did
not review contract management controls because they were
covered in prior audit work (OIG Report No. 6100161, dated
March 30, 1996). We evaluated the control risk exposure and
identified the program internal control objectives and techniques.
We reviewed EPA's process for selecting the environmental
problems to be addressed with voluntary programs. Through
reviews of documentation and discussions with EPA employees,
we evaluated the processes used to plan and implement the
programs. We judgmentally selected 10 participants in each
ENERGY STAR program and surveyed them to obtain their
perspectives of the program.
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Our second objective was to determine whether voluntary
programs achieve environmental benefits. To accomplish this
objective, we identified how the programs set goals and measured
their activities and accomplishments. We reviewed how the
environmental benefits were computed and considered the source
and reliability of information used to measure benefits. We
compared the measured benefits to the program goals to determine
if the accomplishments were on target.
We conducted our fieldwork from April 1, 1996, to November 8,
1996. We discussed position papers with APPD and IED officials
on October 29, 1996. Their comments were used in finalizing the
draft report. We issued the draft report to the Assistant
Administrator for Air and Radiation on December 6, 1996. We
received the Assistant Administrator's response on March 6, 1997.
We incorporated the response into the report as appropriate. The
Assistant Administrator's response is included as appendix 1.
We performed our audit in accordance with the Government
Auditing Standards. 1994 Revision, issued by the Comptroller
General of the United States.
PRIOR AUDIT
COVERAGE In 1995, the Office of Inspector General (OIG) completed a survey
of APPD's voluntary Green Lights program (Report No. 5700002,
dated January 17, 1995). The auditors found that the program had
shown measurable progress in its voluntary approach to achieve
reductions in greenhouse gases. The survey results indicated that
current and planned activities, along with continued improvement
to program operations, should help the Green Lights program
meet established goals and milestones, as well as the initiatives
stated under the CCAP.
In March 1996, the OIG completed an audit of the Agency's
management and oversight of selected contracts awarded to a
major EPA contractor (Report No. 6100161, dated March 30,
1996). The overall objective was to assess the adequacy,
timeliness, and value of products and services procured by EPA
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from the contractor. The audit had two principal findings related
to the present audit:
Different measures should be used to determine the
success of the Green Lights program. Effectiveness was
measured, in part, by the number of entities enrolled in the
program. However, many of the enrolled entities had not
actively participated in the program. OAR responded that
it had a uniform policy that measured program
participation by several steps, which include joining the
program, completing ajl profitable upgrades, and allowing
for the time between these to conduct the surveys and carry
out the upgrades within five years of joining the program.
EPA uses progress in all these stages as measures of
program success.
EPA needs to become more discerning in assigning Green
Lights projects, as there were instances where the Agency
authorized the contractor to perform work that was
questionable from the standpoint of either cost or content.
OAR responded that, since the start of the contract, APPD
has required detailed work plans from its contractors.
Each work assignment manager must approve all trips
taken by the contractor. The purpose of this approval
process is to insure that all trips taken are necessary and
promote the program to key interested and appropriate
program participants.
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CHAPTER 2
Voluntary Programs Can Be An Effective Tool
For Achieving Environmental Benefits
In recent years, EPA has used voluntary programs more frequently
to reduce risks. Our review indicated that voluntary programs can
be an effective tool for reducing risk and achieving environmental
o un aryprograms results. The Radon and selected ENERGY STAR programs used
can be an effective . . , , , , . . .
good management practices and developed ways to estimate their
environmental results. As a result, the programs were effective
and achieved environmental benefits, as shown by EPA statistics.
tool.
ROLE OF VOLUNTARY
PROGRAMS IN EPA The importance of voluntary programs has been discussed in
several EPA and non-EPA documents.
EPA stated in its five-year plan that it must develop and
implement innovative, effective and efficient approaches
to environmental protection. Two guiding principles in the
plan are pollution prevention and creating partnerships.
EPA works to prevent pollution by developing voluntary
programs with the private sector. EPA creates partnerships
with Federal, tribal, state, and local agencies; Congress;
private industry; public interest groups; and citizens; to
develop the technology and capacity for carrying out
environmental programs and policies.
EPA's Customer Service Plan states that the ultimate
success in serving the public depends on how effectively
its programs work with and influence the actions of the
many other parties that are responsible for protecting the
environment. EPA recognized the growing importance of
voluntary programs and identified them as a core process
for serving its customers.
A report by EPA's Science Advisory Board, Reducing
Risk: Setting Priorities and Strategies for Environmental
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ENVIRONMENTAL
BENEFITS OF
VOLUNTARY
PROGRAMS
Programs provided
evidence of
environmental
results.
Protection, September 1990, recommended that EPA make
greater use of all the tools available to reduce risk,
including the sharing of information. The exchange of
information can facilitate the wider use of cost-effective
pollution prevention strategies.
The Climate Change Action Plan called upon EPA and
other Federal agencies to foster cooperative approaches to
environmental protection with the private sector through
partnerships, rather than relying exclusively on command-
and-control mandates, that tend to lock technologies into
place and stifle innovation.
The Radon and ENERGY STAR programs were effective in
achieving environmental benefits by using several good
management practices discussed in Chapter 3. The programs
developed ways to estimate environmental results, as discussed in
Chapter 4, and used the measurements to report their progress and
make adjustments in program implementation. The voluntary
programs provided evidence of their environmental results.
The Office Equipment program had transformed a
significant percentage of the markets to ENERGY STAR by
the end of 1995. This resulted in estimated savings of 2.3
billion kilowatt hours of electricity and 1,300 pounds of
carbon emissions ( .6 Million Metric Tons of Carbon
Equivalents (MMTCE)) for 1994 and 1995.
Studies in 1994 by the Conference of Radiation Control
Program Directors (CRCPD) showed that in high radon
areas, radon awareness was at 78 percent and testing was at
13 percent.
Since energy-efficient measures provide tangible benefits, such as
cost savings, it is reasonable to question why they are not widely
implemented in the marketplace without Federal Government
intervention. In a 1991 report on global change, the Office of
Technology Assessment (OTA), noted that uncertainty and the
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EPA serves as a
catalyst to help
consumers overcome
barriers.
Changing consumer
behavior provides
lasting environmental
results.
lack of information were key barriers to greater investment in
energy conservation in buildings. The large number of highly
cost-effective investments in energy efficiency that are not chosen
by consumers indicated that price alone did not stimulate optimal
investment decisions. Barriers such as lack of information
prevent full implementation of cost-effective energy efficiency
measures.1 Therefore, OTA recommended that information
dissemination be a key element of any U.S. global change policy
option. The ENERGY STAR programs disseminate needed
information and serve as a catalyst to help consumers overcome
the barriers to energy-efficiency.
Changing consumer behavior is a goal of EPA's voluntary
programs. When changing consumer behavior results in lasting
environmental results, market transformation has occurred.
Market transformation, as discussed in Chapter 5, is the process
whereby innovations are introduced into the marketplace and are
increasingly accepted by the market.
The role of voluntary programs is to encourage the manufacture
and consumers' acceptance of risk reduction innovations in the
marketplace. By changing consumer behavior and effecting a
market transformation, voluntary programs achieve lasting
environmental results and reduced health risks. As the market is
transformed by new environmental innovations, EPA will be able
to reduce its program support and allocate its resources to other
products or programs.
By developing ways to estimate environmental results and using
good management practices, the voluntary programs achieved
environmental benefits and reduced health risks. The programs
demonstrated that they can be an effective tool for reducing risk
and achieving environmental benefits.
1 Howard Geller and Steven Nadel, "Market Transformation Strategies to Promote End-Use Efficiency"
American Council for an Energy-Efficient Economy, 1994.
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CHAPTER 3
Good Management Practices
Management of voluntary programs is largely influenced by their
mission: educate people about a problem, and get them to act on
it. The Radon and ENERGY STAR programs demonstrated several
good management practices that, based on EPA statistics, helped
reduce health and environmental risks.
Planning .,,.,.
Educating people about incentives
Providing quality support
Working with outside organizations
Obtaining commitments
Evaluating progress and making adjustments
These management practices enabled the programs to achieve
environmental benefits of energy savings, pollution reduction, and
reduction in radon exposure, as discussed in Chapter 4. In
developing and implementing these programs, EPA addressed the
barriers to action and helped provide the information and
motivation needed to get its program participants to act. We
believe other EPA offices should, where applicable, use these
management practices when developing voluntary programs.
PLANNING PROCESS
Planning focused on
results.
Whether a program is voluntary or mandatory in nature, good
planning increases the likelihood that it will achieve the intended
results. For mandatory programs, the planning, goals, and
objectives are influenced by what is in the laws and regulations.
When there are few or no laws and regulations to guide a program,
the planning process becomes critical. For the Radon and ENERGY
STAR programs, important components of the planning process
were (1) evaluation of scientific, technical, and economic issues;
(2) establishment of goals and objectives; and (3) development of
strategies for meeting the goals and objectives. Program
personnel used the strategies to identify the activities that were
needed to implement the program.
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According to the American Management Association, planning is
the process of formulating objectives and developing strategies to
achieve them. The following steps are generally included in
corporate planning models:
establish premises or assumptions;
formulate objectives or results to be achieved;
develop and evaluate different courses of action, weighing
positive and negative outcomes;
select a particular course of action;
determine how the plan.will be implemented;
review the plan for feasibility and internal consistency
prior to implementation; and
commit resources to implement the plan.
ENERGY STAR Homes Through planning, the ENERGY STAR Homes program increased
the likelihood of achieving its goal of the construction of more
energy-efficient homes, thereby reducing electricity, natural gas,
and oil usage and the resulting greenhouse gas emissions. To
reach its goal, EPA analyzed the available technologies, developed
yearly plans for achieving the goal, and identified areas of the
country to target its marketing effort.
The Homes program looked at the options available for
implementing the program. To do this, the program
analyzed studies of the different technologies that were
u ie op lonsJฐr available for making homes more energy efficient. These
achieving significant , OJ
studies were from other EPA offices, and external
energy savings. . .
I organizations such as the American Society or Heating,
Refrigeration, and Air-conditioning Engineers; DOE;
Energy Information Administration (EIA); and the
American Council for an Energy-Efficient Economy. The
program found that there was a potential to achieve
significant energy savings with existing technologies.
The program developed yearly plans to meet its goal to
have 10 percent of new homes built in the year 2000 meet
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the ENERGY STAR guidelines for efficiency.2 These plans
included the activities, due dates, resources needed to
complete the activities, and measures for evaluating
progress. (See Exhibit 2 for an example.)
The Homes program identified 18 states with the highest
potential for building energy efficient homes. The
program considered factors such as the number of new
home starts in 1994, utility costs, types of heating fuel
(electricity, gas or oil), availability of an energy rating
system, and the frequency of heating and cooling use.
The program focused its initial outreach efforts in those 18
states.
Radon The goal of the Radon program is to reduce exposure to indoor
radon. In order to meet this goal, the program studied the causes
~~T"" I and effects of radon, technology to mitigate radon, other public
Developed a strategy i_ IM j i* <.- c *.- j i
f jj j health programs, and alternatives tor communicating radon risk.
for addressing radon -.
In 1993, the program retined their strategy for addressing radon
I issues. The 1993 strategy was used to develop yearly workplans
and to prioritize activities.
The Radon program researched the radon problem to
determine the extent of the problem and how best to
correct it. The program supported research covering the
health effects of radon, radon testing techniques, ways to
reduce radon levels in homes, and methods to inform and
enable the public to reduce its exposure to radon. This
research was used to analyze different approaches for the
Radon program and select the most cost-effective means of
reducing risk.
In developing options for implementing the program, the
Radon program studied other public health programs, such
as the seat belt and anti-smoking campaigns. From these
programs, EPA learned that changing human behavior
Studied other public
health programs.
2 ENERGY STAR homes use 30 percent less energy than a standard house, as defined in DOE's Voluntary
Residential Energy Efficiency Rating Guidelines.
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EDUCATING PEOPLE
ABOUT INCENTIVES
Incentives increase
the rate of adoption.
ENERGY STAR
only came from strong national and local networks
delivering consistent information. Therefore, in
developing its approach to addressing radon, the program
collaborated with state governments and many national
organizations, such as the American Lung Association and
National Safety Council, to communicate the risks of
radon and to promote actions that consumers can take to
identify and reduce the risks.
In developing the 1993 strategy, EPA obtained extensive
comments from state and local governments, the scientific
community, Federal agencies, health organizations,
consumer groups, and others. This resulted in the
identification of the most effective strategies for
implementing the program and extensive buy-in from
important stakeholders.
Educating people about incentives is an effective way to get
people to act, especially when just information about the problem
is not enough to get the desired action. Financial and market
incentives are strong motivators for consumers and corporations.
The more value corporations and consumers place on the
incentives, the higher the rate at which they will take the desired
action, thereby decreasing risk. In the Energy Star programs, EPA
educated the public about advantages of adopting energy
efficiency measures through use of a logo on qualifying products
and by providing information about the financial benefits that
arise through adopting energy efficiency measures. Radon
program partners provided free or reduced price test kits and other
incentives, such as rebates on new home construction fees.
The ENERGY STAR labeling programs seek to change consumer
behavior with the ENERGY STAR logo. The logo indicates that a
product meets EPA's specifications for energy-efficiency. The
logo provides an incentive to program participants by offering an
environmental label that identifies products that save energy and
money and help preserve the environment. Program participants
that offer cost-effective and energy-efficient products have an
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opportunity to gain a marketing advantage over competitors that
do not offer similar energy-efficient products. However,
consumers need to understand what the logo represents before
they will change their behavior. EPA's role is to instruct the
public about the logo and increase consumer awareness of the
energy-saving products and benefits.
The ENERGY STAR Buildings program shows building owners and
operators how to take advantage of the significant dollar savings
available from energy efficient building upgrades. The program's
goal is to attain a 30 peicent energy savings through building
upgrades. A case study of one of the ENERGY STAR Buildings
Showcase buildings reported annual energy cost savings of
$90,000, or 39 percent of total energy costs, and a 59 percent
internal rate of return on its investment in upgrades. For program
participants, cost savings was the main incentive for joining the
program. In spite of the significant dollar savings and high rate of
return on investment, the program found that the largest barrier to
energy-efficient upgrades is building owners' and managers'
resistance to budgeting the required funds. To help overcome this
barrier, EPA provides building owners and managers with
information about the cost benefits of upgrades. EPA also
developed a scheduling tool to help owners plan and budget the
building upgrades.
Radon The Radon program works with its partnership network to use
incentives as a means of encouraging public action and risk
reduction on radon. Many Radon program community based
partners provide free or reduced price test kits and other
incentives, such as rebates on new home construction fees.
In East Moline, Illinois, a city health department employee
received radon training and support as part of the
cooperative agreement with the National Environmental
Health Association. After completing the training, the
employee decided to pursue an incentive-based program
for encouraging radon resistant new construction in East
Moline. The City Council passed a resolution granting a
rebate of $150 on the fee that the city assesses for new
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PROVIDING QUALITY
SUPPORT
Information, products
and services meet the
needs of customers.
ENERGY STAR Buildings
Quality support helps
overcome barriers.
homes, if they are built radon resistant. Since the rebate
program was begun in June 1994, all but one or two of the
new homes had been built radon resistant.
One of EPA's key roles in voluntary programs is to provide
support and be a facilitator to those who are acting to reduce risks
to their health or the environment. In EPA's 1995 Customer
Service Plan, two of the eight customer service standards for
voluntary programs directly address EPA's commitment to
provide quality support: -
We will proactively provide our customers accurate, up-to-
date, and reliable information, products, and services,
including high quality documents and publications.
We will actively listen to our customers' concerns and
needs regarding services and will develop technical
assistance services designed to address those needs and
concerns.
The Radon and ENERGY STAR programs facilitate action by
providing (1) information, (2) tools to aid the decision making
process, and (3) training sessions. To ensure that the support met
the needs of participants and consumers, EPA used focus groups
to identify their needs. After identifying customer needs, the
programs produced several types of support to program
participants:
public education efforts to increase consumer awareness,
assistance in determining what action was needed to
reduce risk, and
training on the program so that they could assist EPA in
disseminating information about the program.
The ENERGY STAR Buildings program met in focus groups with
representatives of companies that had commercial buildings and
identified barriers to upgrading building systems. To help
program participants overcome their barriers, EPA offered several
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WORK WITH OUTSIDE
ORGANIZATIONS
Radon
Resources from
outside organizations
help EPA reach more
people at less cost.
support tools, such as the ENERGY STAR Buildings Manual with
recommended building upgrade strategies. Since the program is
based on energy-saving technology, it was important to provide
customers with the technical information needed to complete
building upgrades.
Due to the Agency's limited resources, voluntary programs need
to use outside organizations to get consumers and corporations to
take a desired action, whether it is testing for radon or buying
energy efficient computers. In many voluntary programs, EPA is
trying to reach a large number of people but cannot accomplish
the task on its own. There are organizations, both government and
non-government, that are interested in achieving the same
environmental goals. EPA needs to work with these other
organizations to meet their common goals.
Outside organizations are a key component in the Radon
program's strategy for communicating the message about radon to
the public. EPA found that it needs to provide a clear definition of
its mission and a clear message for the outside organizations to
communicate to others. The strategy recognized that different
people respond to information messages from different sources.
The Radon program recognized that it should not be the sole
source for communicating radon risks for several reasons.
EPA messages on radon had a limited effect on many
audiences.
Informational materials produced by bureaucracies were
often untimely and generic, reducing the number of
audiences they reached.
EPA had only a few effective channels for sending out
radon information to the public.
Other sources were more closely associated with target
audiences, which put them in a better position to evaluate
the success of communication efforts.
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ENERGY STAR
Work with other
federal agencies and
outside organizations.
By leveraging resources, a small amount can be used to achieve
substantial results. For example, the Radon program works with
Consumer Federation of America (CFA) to produce public service
announcements (PSAs). The advertising company that prepares
the PSA and the television stations that play the PSA donate their
services. Therefore, the only cost to EPA is the cooperative
agreement. Over the last six years, the cooperative agreements for
PSAs have cost EPA about $2.28 million. EPA estimated the cost
of the donated time to be $118.7 million. The PSAs resulted in
increased consumer awareness.and phone calls to the radon
hotline.
Similarly, the Radon program sustains a comprehensive network
of over 550 state and local community based risk reduction
programs. These state and local affiliates of national Radon
program partners conduct local radon media campaigns, provide
targeted education to homebuilders, urge state and local adoption
of radon resistant building code changes, and secure commitments
from real estate agents and associations to disclose radon
information in home transfers. National, state, and local Radon
program partners draw extensively on their own resources and
infrastructure in doing this work. EPA's investment through
cooperative agreements with national organizations in recruiting,
training, supporting, evaluating, and refining the more than 550
community-based risk reduction programs is only about $2.5
million annually.
The ENERGY STAR programs used outside organizations to help
program participants achieve their goals and to help promote
energy efficiency to a larger audience. While historically EPA
and DOE administered separate programs in the areas of
environment and energy, today they are coordinating their
programs. For example, the ENERGY STAR Office Equipment
program is coordinating its efforts with DOE in marketing energy-
efficient retail products, to leverage their resources and meet their
common goals.
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OBTAINING
COMMITMENTS
Commitments increase
the likelihood of risk
reduction.
The ENERGY STAR programs also work with people or
organizations, referred to as allies, who provide the program
participants with products or services that help them achieve their
energy-reduction goals. These organizations voluntarily work
with EPA to promote and endorse the ENERGY STAR programs and
recruit new participants. For example, ENERGY STAR Buildings
allies provide lighting systems, energy management systems,
windows and films, energy-saving services, financial services, and
consulting to participants. Homes allies provide home energy
inspections, promote the program to builders and developers, and
recruit home builders as.participants in the program. These
organizations assist EPA in meeting ENERGY STAR goals by
disseminating program information to a larger number of people.
Voluntary programs such as ENERGY STAR and Radon rely upon
citizens and corporations to voluntarily take action to reduce risk
to their health and the environment. Gaining commitments
increases the likelihood that action will be taken. The ENERGY
STAR programs use memorandums of understanding (MOUs) to
obtain commitments to reduce energy usage. The Radon program
obtains commitments from its partner associations to
communicate radon risks and urge public action.
The report Market Transformation Strategies to Promote End-Use
Efficiency commented on the benefits of voluntary commitments:
Some companies and agencies are willing to make
voluntary commitments to implement energy-
efficiency measures in order to obtain recognition
and other benefits. Programs that promote such
voluntary commitments can accelerate the market
introduction of new technologies and/or can
stimulate consumers to increase implementation of
cost-effective efficiency measures.3
Howard Geller and Steven Nadel, American Council for an Energy-Efficient Economy, 1994.
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ENERGY STAR
Radon
In addition to getting voluntary agreements from participants, the
ENERGY STAR programs use commitments to provide direction to
the participants for the types of actions to be taken. Commitments
increase the likelihood that the programs will be completed.
The ENERGY STAR Buildings MOU describes the specific agreed-
upon actions and time frames. By providing clear directions with
the terms of the commitment, EPA increased the likelihood that
participants would take action. Program participants commit to
upgrading one pilot building within two years. They also commit
to completing within seven years:
all profitable lighting upgrades in a minimum of 90 percent
of eligible facility space, and
all profitable heating, ventilation, and air conditioning
(HV AC) upgrades in a minimum of 50 percent of eligible
facility space.
The commitment process addresses the largest barrier to program
success: committing funds for investment in energy efficiency.
The radon training program prepared participants to make their
own radon presentations in different types of outreach activities.
EPA asked the participants to commit to specific approaches to
promoting action on radon, such as running a radon hotline,
supplying discount-priced radon test kits, speaking at community
meetings, providing education and outreach to the real estate
community, and urging adoption of state and local radon resistant
building codes.
EVALUATING
PROGRESS AND
MAKING
ADJUSTMENTS
Evaluating progress and making adjustments is as important to
the planning process as establishing goals and objectives. In
order to evaluate progress, programs need to establish quantifiable
and measurable goals; obtain information to measure progress;
regularly evaluate progress; and be flexible to make adjustments
in program implementation. The Radon and ENERGY STAR
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Programs achieve
results by evaluating
progress and making
adjustments.
Radon
programs evaluated progress and made adjustments to program
activities as needed.
Modern management techniques require three elements: (1) a
plan that states the goal, (2) a method of achieving the goal with
ways of monitoring progress, and (3) a series of comparisons to be
performed periodically. Since plans are based on assumptions
about the future, it is important to have a process that helps
anticipate, detect, identify, and measure deviations from
anticipated results.
The Radon program used the results of OPPE's 1992 review to
determine if changes were needed in its program strategy. Prior to
the review, the program's strategy was to rely on providing public
information to increase radon awareness and testing. OPPE's
review concluded that while the program had made some progress
in increasing radon awareness and testing, providing public
information would not, by itself, be sufficient to cause significant
long-term risk reduction. OPPE encouraged stronger actions, such
as requiring radon testing in real estate transactions and building
new homes radon resistant. OPPE recommended that the Radon
program focus its efforts on high risk areas. The Radon program
agreed that changes were necessary and, therefore, made
adjustments using the review as the basis for its new 1993 radon
strategy.
The Radon program also used the results of the CRCPD study to
adjust its program activities. For example, the program learned
from the 1993 CRCPD study that Hispanics were the ethnic group
least likely to have heard of radon. To address this need, the
Radon program began working with the National Coalition of
Hispanic Health and Human Services Organizations to raise
awareness and increase testing for radon in Hispanic communities.
The coalition established a Spanish-language radon hotline and
prepared a Spanish adaptation of A Citizen's Guide to Radon.
These actions caused a marked increase in awareness among
Hispanics from 27 percent in 1993 to 47 percent in 1994. By
evaluating its progress and targeting high risk areas, the Radon
program effectively increased radon awareness.
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CONCLUSION
Good management does not guarantee program success, but it
does increase the likelihood that a program will achieve its goals
and desired results. Although the Radon and ENERGY STAR
programs are trying to achieve very different results, each program
has a number of common management practices. As other EPA
offices begin to plan and implement voluntary programs, they
should consider the lessons learned by the Radon and ENERGY
STAR programs.
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CHAPTER 4
Estimating Environmental Results
Measuring
environmental results
is important to good
management.
While environmental
results are the goal of
EPA programs,
estimating those
results is often
difficult.
ENERGY STAR
PROGRAMS
The ENERGY STAR and Radon programs effectively estimated the
impact their activities had on reducing risks to health and the
environment. These estimates were based on information from
both EPA and outside sources. As a result, the programs were
able to (1) evaluate their progress, (2) measure their performance
against their goals, and (3) make adjustments to better achieve
their goals.4 Future voluntary programs could benefit from using
similar measurement techniques.
An important measure of success for any EPA program is how
well it protects and improves human health and the environment.
This measurement is particularly true for a voluntary program,
since it would be difficult to continue funding a program not
required by Congress that is not achieving measurable risk
reductions. Nevertheless, it is difficult to directly attribute
changes in the environment to a particular statute, regulation, or
program. The Radon and ENERGY STAR programs focus on
measuring activities that have a direct effect upon the environment
and public health. The ENERGY STAR programs promote energy
savings in the public and private sector, and estimate
environmental results as reductions in greenhouse gas emissions.
The Radon program estimates benefits to human health by the
extent of radon awareness, testing, and mitigation in homes.
The Climate Change Action Plan includes many programs to
reduce greenhouse gas emissions to 1990 levels by the year 2000,
including the ENERGY STAR programs. EPA established annual
performance targets for the ENERGY STAR programs to meet
CCAP goals. Accordingly, the programs estimate environmental
results in terms of greenhouse gas emissions reductions.
See Chapter 3 for an example of how the Radon program evaluated its progress and made adjustments.
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Environmental results
are estimated in terms
of reduction in
greenhouse emissions.
The calculation of environmental results involves two steps: (1)
estimating energy savings, and (2) converting energy savings to
emission reductions.
The Office Equipment program developed formulas to calculate
energy savings from energy-efficient computers and office
equipment. The program uses industry statistics to determine the
percent of office equipment sales that are energy-efficient. DOE
provides information on energy use of office equipment. In
calculating total energy savings, the program considers: (1)
number of energy-efficient computers sold, (2) percent of
computers with the ENERGY STAR feature activated, (3) amount of
time that computers are in use and in a power down mode that
uses less energy, and (4) the price of electricity. (See Exhibit 3 for
additional details on how the program estimates environmental
benefits.)
EPA used standard conversion factors from sources such as the
EIA to convert the energy savings to emissions reductions. Using
the conversion factors, EPA calculated the yearly pollution
prevented in terms of MMTCE.5
The ENERGY STAR programs report annually their results against
the CCAP targets. Table 1 presents the Office Equipment
program's energy savings and emission reduction achievements
for 1994 and 1995, and the target for 2000.
5 MMTCE refers to million metric tons of carbon equivalent, a standardized measure of greenhouse gas
reductions that accounts for the relative contributions of each gas to global warming over a 100-year period.
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Table 1: ENERGY STAR Office Equipment Environmental Benefits
1994
1995
2000
Annual Energy Savings
(Billion kilowatts per hour)
Target
0.2
2.4
24.0
Actual
0.3
2.0
Greenhouse Gas Emission
Reductions (MMTCE)
Target
0.1
0.6
6.0
Actual
0.1
0.5
The annual targets for energy savings and emissions reductions
are low in the early years of the program when consumers are
beginning to accept the energy-efficient products. After the early
years, the targets were set higher due to the expected rapid
acceleration of a market transformation to energy-efficiency. (See
Chapter 5 for further discussion of market transformation.)
The ENERGY STAR Buildings and Homes programs did not have
achievement targets during their development stage in fiscal 1994
and 1995. Starting in fiscal 1996, they began reporting energy
savings and risk reductions achieved through program activities.
The ENERGY STAR Buildings program will estimate the energy
saved and emission reductions from energy-efficient building
improvements by analyzing the actual energy reports from
program participants. The ENERGY STAR Homes program will
estimate the energy saved and emissions reductions based on the
number of actual homes built as reported by builders.
RADON PROGRAM
Levels of radon
testing and mitigation
used to estimate
environmental impact.
The Radon program estimates environmental results through
increases in radon awareness, testing, and mitigation. The program
uses information from the Conference of Radiation Control
Program Directors' (CRCPD) Radon Risk Communication and
Results Study to measure the levels of public awareness, radon
testing, and radon mitigation. The results for 1993 and 1994 are
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presented in Table 2.6 (See Exhibit 3 for additional details on the
study scope and methodology.)
Table 2: CRCPD Radon Risk Communication and Results Study
Level of
Public
Awareness
Testing
Mitigation
National
1993
67%
8.6%
1994
73%
10.3%
2%
Targets
2000
75% - -
31%
13.5%
High Radon Potential Areas
1993
77%-
12.7%
1994
78%
12.5%
2%
Targets
2000
90%
57%
20%
Educating people and convincing them to change their behavior
for any health promotion campaign is difficult. The experience of
other national health promotion efforts like anti-smoking or seat
belt campaigns shows that societal behavior change is gradual.
The Radon program has made consistent, steady progress in
increasing public awareness and testing on radon from essentially
zero in 1986 to the levels shown in Table 2.
Program officials believe that their current strategy of targeting
high radon areas for communicating radon risk will result in
increased levels of testing. Radon program officials stated that
sustained awareness is needed to affect consumer action. Testing
rates in east coast states, which are as high as 25 percent, are
generally higher than in west coast states. The radon problem was
found in the East, and consumers in those states have been aware
of the problem for a longer period of time. The experiences of
these Eastern states suggest that at least comparable radon results
could be achieved in the rest of the nation.
6 In 1995, the program went to a survey over two years, and the 1996 results are not yet available.
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CONCLUSION
The ENERGY STAR and Radon programs developed ways to
estimate environmental results and reduced health risks. This
enabled the programs to calculate their achievements, monitor and
report their progress, and evaluate their effectiveness. Other EPA
programs could benefit from using similar measurement
techniques.
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CHAPTER 5
Improvements Needed
Although we noted several good management practices in the
Radon and ENERGY STAR programs, some improvements are
needed. The ENERGY STAR programs should improve their:
documentation of the planning process,
definition of market transformation, and
maintenance of EPA logo integrity.
The Radon program should improve the accuracy of reporting its
results.
IMPROVING
DOCUMENTATION
OF THE PLANNING
PROCESS
While the ENERGY STAR programs had a good planning process,
they can improve how they document the process.
Documentation of the planning process serves to (1) clearly
communicate to all parties what is expected of them, (2) provide a
framework for evaluating progress, and (3) provide support for
decisions made during the planning process. The documentation
should also be filed in a way that prevents loss.
The ENERGY STAR programs documented their overall goals and
supplemented them with detailed annual goals and activities. The
programs used the documents primarily as planning and tracking
tools. The programs need additional types of documentation to
fully support their planning processes. The information would
also be useful when planning other voluntary programs.
The ENERGY STAR programs need to improve
documentation of the steps they followed during the
planning process, including (1) assumptions that the
programs made, (2) the different alternatives for
implementing the program that were considered, and (3)
the courses of action selected and the reasons for their
selection. The documentation should be prepared before
program implementation and should be revised when the
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approach to the program significantly changes. This type
of documentation would (1) support the decisions made
during the planning process, (2) aid the understanding of
those who were not involved in the planning process, and
(3) explain the program's approach for the benefit of other
voluntary programs.
Although the ENERGY STAR programs evaluated their
progress toward meeting goals throughout the year, a
written year-end evaluation of progress would strengthen
program controls. -The evaluation should include a
comparison of goals and objectives with actual
accomplishments and any changes to program
implementation that are needed. A year-end evaluation (1)
makes management accountable for meeting goals and
objectives, (2) provides the basis for annual reports on
program accomplishments, and (3) supports decisions
made regarding changes to program implementation.
The information on program goals, objectives, and
strategies was maintained in employees' offices.
However, filing in employees' offices may result in loss of
information when an employee leaves the program and
makes the information less accessible. The program
should consider filing information such as (1)
documentation of the planning process, (2) long and short
term goals and objectives, and (3) year-end evaluations, so
that it is not lost and is more accessible.
Recommendations We recommend that the Director, APPD, require the ENERGY
STAR programs to:
5-1. document the planning process when developing future
programs,
5-2. prepare written year-end evaluations, and
5-3. file program information in a way that makes it readily
available and prevents loss.
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Agency Actions
OIG Evaluation
DEFINING MARKET
TRANSFORMATION
The Assistant Administrator, in responding to the draft report,
agreed with our recommendations and stated APPD had taken, or
will take the following actions.
1. Future annual business plans, depending on program
maturity, will include such things as a market analysis,
technical analysis, marketing plan and evaluation plan.
2. Issue, by June 1997, an annual report for fiscal 1996 that
will include a year-end of evaluation of each program's
accomplishments and budget evaluations.
3. In a memorandum dated January 7, 1997, the director of
APPD instructed program managers to take actions to
ensure that key program documents are accessible and do
not become lost.
The Agency's actions, when implemented, will address our
finding and recommendations.
The ENERGY STAR programs use market transformation as a tool
to reach their emission reduction goals. Market transformation is
the process whereby innovations are introduced into the
marketplace and are increasingly accepted by a large portion of
the market. The ENERGY STAR programs attempt to transform
their markets from non-energy-efficient products to energy-
efficient products. Market transformation can be visualized in
terms of the S-shaped curve shown in Table 3.
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Table 3: Market Transformation Curve
Penetration Rate
Market Penetration
Market Acceleration
Early Adopters
Time
EPA's Role in
Market Transformation
When a new product or innovation is introduced, its acceptance by
consumers, or market penetration, begins to rise through early
adopters. During the early years, consumer acceptance rises
slowly. Over the next several years, more consumers begin to
purchase energy-efficient products as the public becomes more
aware of the technology and its advantages. The market
penetration rate increases rapidly until most of the consumers have
adopted the innovation. Achieving the last increments of market
penetration occurs more slowly. The incremental cost of
achieving market penetration is higher in the final stages than in
earlier stages because the diminishing rate of penetration causes a
smaller return on the incremental investment.7
EPA's role in market transformation is to encourage the
manufacture of energy-efficient products and increase consumer
awareness of energy-efficient products and their benefits. EPA
serves as a catalyst to help start the market transformation process
and build its momentum. Promoting a product or idea requires a
higher amount of resources in the early years to build the
Information on market transformation was obtained from Market Transformation Strategies to Promote End-
Use Efficiency, by Howard Geller and Steven Nadel, American Council for an Energy-Efficient Economy, 1994.
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momentum of public acceptance than in the later years when it
reaches acceptance. When market transformation of a product
occurs, the product will remain in demand in the marketplace
without the same level of support from EPA. EPA should
determine the point during market transformation to reduce its
program support and allocate its ENERGY STAR resources to other
products or programs.
Although the ENERGY STAR programs had considered the
consequences of market transformation, they did not have written
plans for adapting to it. EPA should consider the following in
developing these plans.
At what point, in terms of market penetration, can EPA
reduce its program support?
What level, if any, of continuing support for the program
will be needed as market penetration increases?
Who will provide the continuing program support, EPA or
another organization?
If another organization will provide continuing support,
what transition activities and time frame will be required
for EPA to transfer program control?
While a market may be sufficiently transformed for EPA to reduce
its involvement, there are other reasons for EPA to devote
resources to achieving further risk reductions. The ENERGY STAR
programs also consider:
new technology making further pollution reduction
possible,
new scientific data on greenhouse gases requires more
aggressive efforts to meet CCAP goals, and
changes in the economy may increase the amount of
energy usage and the generation of greenhouse gases.
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Recommendations
Agency Actions
While there are many factors that affect when EPA can reduce its
program support, preparing written plans can be valuable. There
is a tendency for any established program to continue operating
after it has reached its goal and completed its mission. Written
plans would serve as an internal control to prevent the
continuation of an ENERGY STAR program when it is no longer
achieving significant environmental benefits. Without this control
mechanism, the ENERGY STAR programs might continue to
operate after market transformation, when resources could be
better used in other programs.,
We recommend that the Director, APPD, require the ENERGY
STAR programs to:
5-4. develop written plans to define a target level for market
transformation, and
5-5. establish plans to phase out EPA's program support after
the target is reached.
The Assistant Administrator, in responding to the draft report,
agreed with our recommendations. Starting with the next update
of the annual business plans for each program, which will be
before December 1997, the plans will address market
transformation objectives and appropriate exit strategies. In
developing the exit strategies, the program will consider (1)
whether the market is stable or fast changing, and (2) if there is
cost effective potential to push for further energy saving
advancements.
The Assistant Administrator provided an example of how APPD
has considered market transformation and exit strategies for the
ENERGY STAR Homes program. The program plans to continually
reduce EPA's program support, including a significant phase out
of program resources, after a 10 percent market penetration level
has been reached. This level was identified as a critical point for
reducing program support because over 100 mid-size and large
builders are expected to be profitably producing ENERGY STAR
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homes at that time. Based on historic market shifts led by
preeminent, successful builders to new technologies and features,
the program believes that the success of these builders will
facilitate a shift to the steep slope of the diffusion curve. EPA's
support will evolve from direct and frequent contact with many
builders to interactions through fewer program allies. EPA will
organize most of the continuing support for the program through
its network of program allies. EPA expects that this transition will
significantly reduce the need for government resources to support
the program. EPA will yearly reevaluate the specific market
penetration targets and timing in light of actual program and
market performance, and adjust the program plan accordingly.
OIG Evaluation
MAINTAINING
ENERGY STAR
LOGO INTEGRITY
The Agency's actions, when implemented, will address our
finding and recommendations.
The ENERGY STAR Office Equipment program's practice of
allowing manufacturers to self-certify their products for ENERGY
STAR compliance might not preserve the integrity of the logo. As
consumer demand for ENERGY STAR products increases, there will
be increasing pressure on manufacturers to provide these products.
There will also be increased potential for misuse of the ENERGY
STAR logo.
EPA created the ENERGY STAR logo to recognize achievement of
its energy-efficiency specifications. EPA provides guidance for
product testing and requires computer and office equipment
manufacturers to test their products for ENERGY STAR compliance.
The MOU manufacturers sign sets out the requirements for power
usage. EPA also provided additional guidance which discusses
how to measure power usage, specifications for testing equipment,
and other testing issues.
EPA does not certify the products for meeting ENERGY STAR
requirements because it considers that effort to be too costly and
time-consuming. Instead, EPA allows the manufacturers to self-
certify their products, following the MOU and additional
guidance. EPA believes this is sufficient because in the computer
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industry, manufacturers may test their competition for ENERGY
STAR compliance. EPA does monitor how companies use the logo
in advertising.
Use of the logo on products that do not meet ENERGY STAR
requirements may degrade the value of the logo and negatively
impact the ENERGY STAR program. According to an EPA report
on labeling, successful acceptance of a product certification
program depends on an accurate and clearly understood
presentation of the product attributes.8 Misuse of the logo also
may cause ENERGY STAR .compliant products to lose any
competitive edge the logo provides.
EPA is expanding the number of products that will use the
ENERGY STAR logo to identify energy efficiency. In 1996, DOE
and EPA agreed to work jointly on the ENERGY STAR Retail
Program to educate retailers and consumers. DOE will use the
ENERGY STAR logo on appliances, and EPA will use it on office
equipment, and HVAC equipment. The joint retail program will
expand the range of products carrying the ENERGY STAR logo to
increase consumer exposure and recognition. As use of the logo
expands and consumer recognition increases, the potential for
misuse increases. EPA needs to consider whether controls on the
use of the logo may be needed in the future.
Recommendation
Agency Actions
5-6. We recommend that the Director, APPD, require the
ENERGY STAR programs to consider the need for additional
efforts to maintain ENERGY STAR logo integrity, as the
program applies the logo to new products.
The Assistant Administrator, in responding to the draft report,
agreed with our recommendations and described actions APPD
has taken, or will take, to protect the integrity of the ENERGY STAR
logo.
EPA Office of Pollution Prevention and Toxics, Determinants of Effectiveness for Environmental
Certification and Labeling Programs, April 1994.
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The ENERGY STAR name is already a registered service mark, and
APPD is working with the Office of General Council to register
the ENERGY STAR logo. These registrations provide a strong legal
basis to pursue entities who may misuse the logo. APPD is
considering whether random spot testing of labeled products
would be warranted to ensure logo integrity. This analysis will be
completed in 1997, and if testing is deemed necessary, it would
likely begin in late 1997 or 1998.
The ENERGY STAR Buildings program allows allies and program
participants to use the logo. APPD will issue logo use guidelines
for allies by May 1997. Program participants must receive
approval from EPA before the logo can be used on a building.
Program participants can also use the logo on reports and
letterhead, but EPA has not experienced problems with misusing
the logo in this way.
EPA ensures the integrity of the ENERGY STAR logo on homes
through allies which provide quality assurance and warranty
programs.
OIG Evaluation
REPORTING RADON
RESULTS
The Agency's actions, when implemented, will address our
finding and recommendations.
The Radon program was not reporting its progress clearly because
they did not explain the statistic for high radon areas. A program
must report its progress accurately in order to effectively estimate
its accomplishments against its goals.
The Radon program adopted a policy in its 1993 program strategy
of targeting the greatest risks first to reduce exposure to radon in
high radon potential areas. EPA surveyed the entire country and
identified those areas where radon levels were most likely to be
elevated. The result of the survey was the radon potential map,
which placed all U.S. counties into one of three zones, as shown in
Table 4.
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Voluntary Programs
Recommendation
Agency Action
OIG Evaluation
Table 4 Radon Zones
Zone
1
2
3
Average Predicted Screening Level
Picocuries per Liter (pCi/L)
Greater than 4
Between 2 and 4
Less than 2
When reporting program progress, the Radon program reports
statistics on a national basis and for high radon areas (Zone 1).
The Radon program reports the statistic for high radon areas to
demonstrate that the program is targeting high risk areas first.
However, the reported statistic for high radon areas includes more
areas than zone one. The statistic includes other areas designated
as high risk by twelve states that have no zone one areas. EPA did
not describe this reporting methodology in the Radon program
reports.
The report statistic might mislead readers who are unfamiliar with
the reporting methodology. Those readers might not understand
that the statistic includes some areas that are not zone one areas.
Without a clarification of the statistic, the Radon program is not
accurately reporting its results.
We recommend that the Director, IED, require the Radon program
to either:
5-7. clarify in its reports what the statistic for high radon areas
represents, or report only zone one areas in the high radon
areas statistic.
The Assistant Administrator, in responding to the draft report,
agreed with our recommendation. IED agreed to clarify what the
statistic for high radon areas represents in all future reports and
information on radon results.
The Agency's actions, when implemented, will address our
finding and recommendation.
37
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Exhibit 1
Page 1 of 1
CCAP Actions and Supporting EPA Programs
Action
Number
1
2
6
16
19
20
24
30
32
33
34
35
38
39
40
41
42
Action Name
ENERGY STAR Buildings
Green Lights
Golden Carrot Partnerships: (Offer financial incentives for
the development of more efficient appliances)
Accelerate Source Reduction,
Pollution Prevention, and Recycling
Employee Parking Cashout
Increase Transportation System Efficiency
Encourage Seasonal Gas Use for
Controlling Nitrous Oxide
ENERGY STAR Transformers
Natural Gas Star
Increase Stringency of Landfill Rules
Expand Landfill Outreach Program
Coalbed Methane Outreach Program
Partnerships with Livestock Producers
Improve Ruminant Productivity and Product Marketing
Reduce Emissions of High Global Warming Potential
Chemicals
Partnerships with HCFC-22 and HFC-23 Producers
Partnerships with Aluminum Producers
Umbrella Program for CCAP Initiatives
State and Local Outreach
Joint Implementation - Cooperative Projects among
Countries
EPA Program
ENERGY STAR Buildings
Green Lights
ENERGY STAR Office Equipment
ENERGY STAR Homes
ENERGY STAR HVAC
Waste Wise
Commuter Choice/Parking Cashout
Transportation Partners
Seasonal Gas Use for the Control
of Nitrous Oxide
ENERGY STAR Transformer
Natural Gas Star
Landfill Methane Outreach
Landfill Methane Outreach
Coalbed Methane Outreach
AgSTAR
Ruminant Livestock Methane
CFC (Chlorofluorocarbon) Substitutes
HFC-23 Reductions
Voluntary Aluminum Industrial Partnership
Climate Wise
State and Local Outreach
U.S. Initiative on Joint Implementation
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Exhibit 2
Page 1 of 1
ENERGY STAR Homes Business Plan
The ENERGY STAR Homes program developed yearly plans to
meet its program goals for number of ENERGY STAR Homes
constructed. As shown below, the yearly plans included subgoals,
activities, resources and measures.
Example from an ENERGY STAR Homes Business Plan
Overall Program Goals - Annual ENERGY STAR Homes Constructed:
1995: 500 Homes
1996: 5,000 Homes
2000: 100,000 Homes
2010: 1,000,000 Homes
Sub-Goals to Reach
Overall Program
Goals
Commit builders by 1/97
to build a minimum of
12,000 ENERGY STAR
homes in targeted high-
growth areas, including a
minimum of 12 large
builders and 20 small to
medium builders.
Activities
Regional builder
recruiting binder.
Sales calls to large home
builders in targeted states.
Coordinate with allies.
Spending:
Committed/
Incremental
Committed:
$3. 5K travel.
Measures
Completed recruiting binder.
Expanded recruiting binder for
new target cities.
# of builders:
contacted by EPA,
recruited by EPA,
contacted by allies,
recruited by allies.
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Voluntary Programs
Exhibit 3
Page 1 of2
Estimation of Environmental Results
ENERGY STAR Office
Equipment Program In office equipment, energy savings are obtained when the
products power down when they are turned on, but not in use
(suspend mode). For example, monitors use an average of 85
watts per hour, but only 20 watts per hour in the suspend mode.
The Office Equipment program estimates environmental results in
two steps: (1) estimating energy savings from energy efficient
office equipment, and (2) converting the energy savings to
emission reductions.
There are several steps to estimating energy savings from office
equipment.
Using information from Dataquest, EPA determines the
yearly sales for office equipment and ENERGY STAR office
equipment.9
EPA computes the energy savings, in terms of kilowatt
hours, that is achieved by the ENERGY STAR office
equipment, as compared to regular office equipment. In
making this calculation, EPA considers:
energy usage in regular and suspend modes,
average number of days computers are used a year,
average number of hours a day the computer is in
use and in the suspend mode,
percent of computers left on for 24 hours, and
percent of computers left on during the day.
9 Dataquest is a Dun & Bradstreet Corporation and offers market research for more than 25 specific
information technology markets.
40
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Exhibit 3
Page 2 of2
EPA obtains information on the energy usage of computers and
computer usage patterns from Lawrence Berkeley National
Laboratory.10
Kilowatt hours of energy savings are converted to million metric
tons of carbon equivalent (MMTCE) using a scientific formula:
1 billion kilowatt hours = .25 MMTCE
While the conversion of energy savings to reduction in carbon
emissions depends upon many factors, the above formula was
used in preparing the CCAP. The formula reflects the average
impact of emission reductions from all CCAP programs in the
year 2000.
Radon The Radon program estimates the impact its activities have on
human health by measuring the activities of others, primarily
homeowners, in reducing their exposure to radon. Biennially,
EPA sponsors the Radon Risk Communication and Results Study,
which is performed by the Conference of Radiation Control
Program Directors (CRCPD).11 The objectives of the study are to
determine:
overall awareness of radon,
incidence of testing and mitigation,
prevalence of testing during real estate transfer, and
estimates of the above statistics by demographic group.
The University of California manages the Ernest Orlando Lawrence Berkeley National Laboratory for DOE.
The laboratory focuses on national needs in technology and the environment.
1' Prior to 1994, the study was performed annually.
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The results are obtained through questionnaires and the results are
statistically valid with error rates for each state of between four
and six percent.
42
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Appendix 1
Page 1 of 5
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, O.C. 20460
^f
MAR -6 1997
OFFICE OF
MEMORANDUM AIR AND RADIATION
SUBJECT: Comments on Revised Draft Audit Report E1KAF6-05-0080
Risk Reduction Through Voluntary Programs
FROM: Mary D. Nichols
Assistant Administrator
for Air and Radiation
TO: Michael D. Simmons
Deputy Assistant Inspector General
for Internal Audits
The Office of Air and Radiation (OAR) has reviewed the revised draft audit report on
Risk Reduction Through Voluntary Programs, received February 4, 1997. Overall, we were
pleased by the findings and are particularly gratified that the Radon and Energy Star Office
Equipment, Buildings and Homes were recognized for their good management practices, success
in developing ways to estimate environmental results, and overall effectiveness in achieving
environmental results.
Attached are the Office of Atmospheric Programs and the Office of Radiation and Indoor
Air responses to the revised reports' recommendations. We would appreciate it if the responses
could be included in the final report, in order to indicate to the reader that we have taken the
suggestions seriously and have made important progress to continue to improve the programs. It
is not necessary to include in the final report copies of the documents that we provided to
substantiate our response.
Should you have any questions, your staff may contact Jeanne Briskin at 233-9135.
Attachment
Printed on Recycled Paper
43
Original response was signed by Mary D. Nichols. Report No. 7100130
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Appendix 1
Page 2 of 5
ATTACHMENT
Response to Recommendations in Draft Audit Report EIKAF6-05-0080
February 6, 1997
Office of Atmospheric Programs Comments:
p. 29 Please insert the following responses to recommendations 5-1, 5-2. and 5-3'
(5.1) APPD has been implementing this recommendation for some time. Since
FY 96, all ENERGY STAR programs have prepared an annual business plan for
all current and new programs. In the future, depending on program maturity, the
annual business plans will include such items as a market analysis (number and
type of companies in the market, assessment of technical potential for energy
savings and possible market penetration for the program), technical analysis (list
of cost effective product improvements, determination of reliability or quality
issues), marketing plan (options to stimulate demand, message, target audience),
and evaluation plan (what to track to measure success, how to get information,
compilation and interpretation of results). The content of program plans changes
as each program evolves, and is customized to suit the needs of each particular
program. In addition, current programs update their plans on an annual basis.
These documents are kept for future reference.
We have provided you with an example business plan for the new ENERGY STAR home
electronics program.
(5.2) APPD began work during FY 96 to prepare an annual end of
year report. We estimate that the report will be available in final form
by approximately June 1997. The report contains a year end
evaluation of each ENERGY STAR program, including highlights of
accomplishments and budget evaluations. In addition, the division
will document year end summaries of annual accomplishments for
each program.
(5.3) Through a memo dated January 7, 1997 that was delivered to
all staff, the director of APPD has instructed each program manager to
identify and manage with special care important program documents
(such as key early documents used to assist in program design,
business plans, evaluations, and budgets) to assure that the documents
are accessible and do not become lost. The agency's official
documents management protocols will be followed for the long term
disposition of the documents. We have provided you with a copy of
the memo.
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Page 3 of 5
p 32 Please insert the following response to recommendations 5-4 and 5-5:
Since FY 96, the APPD Director has instructed each Branch Chief to
prepare annual business plans for each program area. As they are
updated, each plan will also address market transformation objectives
and appropriate exit strategies. The next set of updates will apply to
the FY 98 plans and is expected to be completed approximately 12/97.
One factor considered when developing exit strategies is: Is themarket
stable or fast changing? A stable market may be transformed more
permanently and we could exit with some confidence that our results
would be sustained. In a fast changing market, however, our work
could unravel when next generation products are introduced if our
efforts are phased out prematurely. In such cases, we might reduce our
efforts to a lower level, rather than exit completely. A second factor
considered is: Is there still a cost effective potential to push for further
significant energy saving advancements? In other words, we would
compare the marginal benefits of more efforts with marginal costs (to
EPA and industry ) of going further, in the context of the government's
overall goal in reducing emissions of greenhouse gases and the suite of
activities underway for that effort.
For example, the ENERGY STAR Homes Program has a plan to
continually reduce EPA's program support including a significant
phase out of program resources after a 10% market penetration level
has been reached. This level was identified as a critical point for
reducing program support because over 100 mid-size and large
builders are expected to be profitably producing ENERGY STAR
homes at that time. Based on historic market shifts led by preeminent,
successful builders to new technologies and features, we believe that
the success of these leading builders in the ENERGY STAR program
will facilitate a dramatic shift to the steep slope of the diffusion curve.
Once the 10% ENERGY STAR Home market penetration level is
reached, we expect that the program will already have dropped from a
cost to the government of over $600 per home in 1996 to less than $10
per home. Shortly after, we forecast program costs to drop rapidly to
less than $1 per home in the program. The nature of the support
provided by EPA will evolve, from direct and frequent contact with
many builders to interactions through many fewer program allies. In
fact, most of the continuing support for the program will be organized
by EPA through its network of program allies who promote the
program to meet their own business objectives (utilities,
manufacturers, industry associations, state and local governments,
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Appendix 1
Page 4 of 5
home energy rating providers.) EPA plans and expects that this gradual transition to a
more hands-off approach will significantly reduce the need for government resources to
support the program. The program will periodically (probably at least once per year)
reevaluate the specific market penetration targets and timing in light of actual program
and market performance, and adjust the program plan accordingly.
p. 34 Please insert the following response to recommendation 5-6:
The ENERGY STAR name is already a registered service mark, and
APPD is working with the Office of General Counsel (OGC) to
receive registration for the ENERGY STAR logo. These registrations
provide a strong legal basis to pursue entities who may mis-use the
logo. APPD works closely with trademark attorney in OGC to discuss
proper methods for protecting our marks. The program already
performs general literature searches to check for inappropriate uses of
the logo. Violators are notified in writing. The program managers are
currently considering whether random spot testing of labeled products
would be warranted to ensure logo integrity. This analysis will be
completed in 1997, and if testing is deemed necessary, it would likely
being in late 1997 or 1998. We plan to document this process in an
appropriate manner.
The logo is protected when it is used in the Energy Star Buildings
program through several means:
1. The Energy Star Buildings Ally MOU stipulates the requirements
that Allies must follow to assure the logo is not altered and used in
accordance with logo use guidelines. All uses of the logo by Allies
must be approved by EPA. Such guidelines have been in place for the
Green lights program for several years, with the latest revision being in
1996. Because the Energy Star Buildings Ally program is new, these
logo use guidelines are currently being expanded to include the Energy
Star Buildings Ally program. We will have a final copy of these
guidelines by May 1997.
2. In the Energy Star Buildings Partner MOU, EPA informs partners
that they can use the Energy Star Buildings logo on a specific
buildings that they have upgraded, as long as it meets certain
performance measures. Partners must apply to use this logo and
EPA's approval is based on the reports that they submit to EPA.
Approval must be given by EPA before the Partner can use the logo on
a building.
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Appendix 1
Page 5 of 5
3 We encourage other organizations that are part of Energy Star
Buildings to publicize their participation and encourage them to use
the logo on materials such as annual reports and letterhead Partners
are free to use the logo in this manner with no prior approval from
EPA. This policy has been in place for over 6 years with the Green
Lights program and we have never had a problem with a logo being
misused by a Partner. In fact, it is our participants use of this logo that
helps educate other about these programs. We.will insure that this
policy is an included in the Account Managers handbook by Summer
of 1997.
Extra efforts will be made to protect the integrity of EPA's ENERGY
STAR label in the ENERGY STAR Homes program. First, allies
provide quality assurance and warranty programs. In addition, EPA
will monitor program performance through a detailed evaluation
process assessing energy savings, builder satisfaction and home buyer
satisfaction. Feedback from this process will allow EPA to assess
progress towards critical program goals and make necessary
adjustments.
We have provided you with a copy of the ENERGY STAR Ally Logo Use Guidelines, and Questions
and Answers About The Green Lights and ENERGY STAR Registered Marks.
Office of Radiation and Indoor Air Comment:
P. 35 Please insert the following response to recommendation 5-7:
The IED Division Director supports the report's recommendation and intends to make
changes in reporting the radon survey results to clarify what the statistic for high radon
areas represents. This change will be implemented immediately for any reports or other
information produced on radon results.
47
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Voluntary Programs
ABBREVIATIONS
APPD Atmospheric Pollution Prevention Division
CCAP Climate Change Action Plan
CF A Consumer Federation of America
CRCPD Conference of Radiation Control Program Directors
DOE Department of Energy
EIA Energy Information Agency
EPA Environmental Protection Agency
HFC Hydrofluorocarbons
HVAC Heating, Ventilation, and Air-Conditioning
IED Indoor Environments Division
MMTCE Million Metric Tons of Carbon Equivalents
MOU Memorandum of Understanding
OAR Office of Air and Radiation
OIG Office of Inspector General
OPPE Office of Policy, Planning and Evaluation
OTA Office of Technology Assessment
PSA Public Service Announcement
Appendix 2
Page 1 of 1
48
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Appendix 3
Page 1 of 1
DISTRIBUTION
Headquarters
Assistant Administrator for Air and Radiation (6101)
Director, Office of Radiation and Indoor Air (6601J)
Director, Office of Atmospheric Programs (6201 J)
Agency Follow up Official (3101)
Attn: Assistant Administrator, OARM
Agency Follow up Coordinator (3304)
Attn: Director, RMD
Audit Followup Coordinator, Office of Air and Radiation (6102)
Associate Administrator for Congressional and Legislative Affairs (1301)
Associate Administrator for Communications and Public Affairs (1701)
Assistant Administrators
EPA Partners for the Environment Programs
Headquarters Library (3401)
Office of Inspector General
Inspector General (2410)
GAO Issue Area Planner
Regions
Regional Administrators
Regional Program Directors
Regional Libraries
,49 ' ;; . ,t> .. 5
r
': ,ซ'ซ*ป c
Report No. 7100130
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U.S. Environmental Protection Agency
Region 5, Library (PL-12J)
77 West Jackson Boulevard, 12th Ftoor
Chic4go.lt 60604-3590
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