TD746
.U542
vvEPA
United States
Environmental Protection
Agency
Office of Water and Waste
Management
Washington, D.C. 20460
January 1981
1990
PRELIMINARY DRAFT
STRATEGY FOR MUNICIPAL
WASTEWATER TREATMENT
IT
OOOD81100B
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PRELIMINARY DRAFT 1990 STRATEGY FOR
MUNICIPAL WASTEWATER TREATMENT
TASK II - MANAGEMENT STRATEGY
OFFICE OF WATER AND WASTE MANAGEMENT
U.S. ENVIRONMENTAL PROTECTION AGENCY
"This paper presents a preliminary draft
strategy, proposed by EPA staff, for
improving the national municipal waste-
water treatment program. EPA is now
considering the positions offered here.
The document is intended for public
review and discussion to assist EPA
in developing its final 1990 Strategy."
January 16, 1981
U.S. E-ivironn^nu:! Piot.jci.iGn Agency
Region V, Library
230 South Dearborn Street
Chicago, Illinois 60G04
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PREFACE
The proposals presented in the Strategy are the result of both a major
effort within the U.S. Environmental Protection Agency and extensive
participation on the part of the interested public through meetings and
the distribution of relevant issue and background papers prepared by EPA.
The 1990 Strategy was prepared under the guidance of Eckardt C. Beck,
Assistant Administrator, Office of Water and Waste Management; James N. Smith,
Associate Assistant Administrator, Office of Water and Waste Management;
and Henry L. Longest II, Deputy Assistant Administrator, Office of Water
Program Operations.
The Chairman of the 1990 Strategy effort within the Agency was
Merna Hurd, Associate Assistant Administrator, Office of Water and Waste
Management. The Deputy Chairman was Carl Reeverts, Office of Water
Program Operations.
The Chairmen of Task II - Management Strategy were Carl Reeverts,
Office of Water Program Operations, and Ron Brand, Office of Planninn
and Management.
Further assistance in Task II was provided by The Synectics Group (TSG),
David Haun, Office of Water Program Operations, and Tom Kelly and John Thillmann,
Office of Planning and Management.
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CONTENTS
I. INTRODUCTION 1
Objective 1
Structure of the Strategy 2
II. EXECUTIVE SUMMARY 5
Overview 5
Current Program Description 5
Strategy Concept 7
Roles Under the Environmental Manager 7
Major Strategy Recommendations 8
Conclusion 9
III. CURRENT PROGRAM DESCRIPTION AND PROGRAM ASSESSMENT ... 11
Institutional SettingBackground 11
Program ResourcesStatus and Problem Areas 14
National Program Management--Current Systems and
Problem Areas 16
DelegationCurrent Status and Problem Areas 18
IV. MAJOR STRATEGY ISSUES 23
Introduction 23
The Federal Role Under Delegation1990 Objectives
(Issues 1 and 2) 24
Federal Policy to Reach Full and Effective
Delegation (Issues 3 and 4) 27
On-Going Oversight of State Programs (Issues 5,
6, 7, and 8) 30
On-Going Assistance to States to Improve and
Sustain Program Performance (Issues 9, 10, and 11) . . 33
V. PROPOSED MANAGEMENT STRATEGY 43
Management Concept 43
National Objectives 44
Roles Under the Environmental Manager 44
Discussion of Substrategy Areas 45
Major Recommendations 48
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VI. ACTION PLAN 51
Federal Role Under Delegation--1990 Objective ... 51
Federal Policy and Management to Reach
Environmental Manager Role 52
On-Going Oversight of State Programs 52
On-Going Program Assistance to the States 53
APPENDIX A: Delegable and Non-delegable Activities 59
APPENDIX B: Current Management Option with Existing EPA
Resources-Summary 61
APPENDIX C: Listing of Staff Papers Written
For Management Strategy 65
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CHAPTER I
INTRODUCTION
The 1990 construction grants management strategy has been
prepared with the cooperation of State, Regional and Headquarters
staff. Numerous background issue papers were drafted and circulated
to encourage participation from these and other related groups.
In addition, an EPA/State workshop was held in October to evaluate
the various issue papers and a conference was held in November to
provide detailed input into the drafting of the 1990 Strategy.
OBJECTIVE
The objective of the 1990 management strategy is to develop a
management and funding approach to the construction grants program
in the 1980s that would achieve two co-equal outcomes by 1990:
t State Self-Sufficiency, both in funding capability
and overall management of the program. (Return the
program to its proper place in our federal system.)
Protection of National Interests and Objectives, in terms
of national water quality goals and stewardship of federal
funds. (Maintain the national perspective of the program
across the States.)
These two outcomes are compatible, but they do not individually
lead the program in the same direction (e.g., a push toward total
state self-sufficiency and independent action could lead toward a
recommendation of an unrestricted block grant and a lessening of EPA
oversight, as States can better be self-sufficient if the objectives
are few.) The strategy fashions a program recognizing the "creative
tension" between these two co-equal outcomes.
The objective of the management strategy is to present a management
framework that will facilitate the transition of the program: a
transition that will ultimately result in EPA being the Environmental
Manager of the overall program, the States assuming project and program
management, and a more self-sufficient status for the States and
municipalities.
The management strategy proposes several significant changes to
the current institutional structure, including the roles and responsi-
bilities of the various levels of government, and outlines a series
of specific management proposals to accomplish these changes. The
recommendations will result in more effective management and administration
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of program operations at all levels, recognizing both the national
objectives of the Clean Water Act (CWA), the construction grants
program, and the unique Federal-State-local relationship necessary
to achieve these objectives.
A number of assumptions underlie the development of this management
strategy:
Legislative changes proposed in the strategy will be enacted,
particularly related to amendments giving EPA authority (a) to
withdraw and use the 2% funds under Section 205(g) under certain
conditions and (b) to terminate or suspend grant assistance to
projects in a State with poor and deteriorating program performance.
Federal and State funding will be sufficient to cover all
delegation requirements.
States will assume full responsibility for day-to-day operation
of the program, based on delegation agreements negotiated with
EPA, and be held accountable to EPA for meeting national program
objectives.
0 National EPA objectives will continue to include a mix of
environmental, fiscal, and technical considerations derived
These assumptions (and in some cases, recommendations) are basic
to the success of the management strategy. If one or more of the
assumptions is not realized, adjustments to the strategy will be
necessary.
STRUCTURE OF THE STRATEGY
The basic State and EPA roles in the strategy are significantly
different from those that have evolved to date. The new role of EPA,
characterized as the "Environmental Manager," will move EPA out of
project-by-project decision making and into national program
management concerns. This change will carry with it major new
State responsibilities for program performance, with the State
accountable for project fiscal, technical, and environmental integrity.
The strategy addresses both how and when this shift will occur.
Chapter II: Executive Summary -- presents the concept of the
management strategy and how this concept differs from the
current management approach, discusses the Federal role in
ensuring that national objectives are satisfied, and
provides an overview of the proposed strategy elements.
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Chapter III: Current Program Desctlptlon and Problem Assessment-
provides a discussion of the program, participants' roles,
program management systems and the status of delegation.
Chapter IV; Major Strategy Issues-- provides an assessment
of the major strategy issues under four specific strategy
areas.
1. Federal Role Under Delegation;
2. Federal Policy Needed to Reach the Environmental Manager
Goal;
3. On-Going Oversight of State Programs; and
4. On-Going Assistance to States to Improve and Sustain
Program Performance.
Chapter V: Management Strategy -- presents the 1990 management
concept, shows how the concept responds to national objectives,
identifies the changed roles of the participants, and
delineates the major management actions that will occur to
achieve the overall 1990 objectives.
Chapter VI: Action Plan -- presents a time and milestone
reference for the specific management actions proposed in
the strategy.
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CHAPTER II
EXECUTIVE SUMMARY
OVERVIEW
The goal of the Overall 1990 Strategy is to provide State and
municipal self-sufficiency, and to achieve national water quality and
related objectives. The management strategy provides a framework by
which management of the program could be established toward these
goals. The result -- a strategy that significantly changes the
management approach of the program. The strategy calls upon the States
to manage their programs, municipalities to become more self-sufficient,
and the Agency, as the program's Environmental Manager, to focus on
national program objectives.
CURRENT PROGRAM DESCRIPTION
For almost 25 years the federal government has participated with
State and local governments in controlling and abating water pollution.
As a result, water pollution control programs are among the oldest
and most established of the government's current environmental
programs. The Clean Water Act (CWA) established a set of rights,
responsibilities, and obligations comprising an intricate web of
intergovernmental relationships; a categorical assistance grant
program; a delegable regulatory scheme applicable to all levels of
government, to industry, and to agriculture; and a public participation
mandate in both governmental decision-making and regulatory activities.
This network is perhaps more complex than any other institutional
and management arrangement used to pursue and accomplish a national
goal.
Management Structure
The construction grants program is administered and managed
within a multi-level organizational structure, with responsibility
decentralized within EPA to the ten Regions and delegated States.
The federal, State and local governments share principal responsibility
for meeting the program objectives.
EPA is currently the direct manager of the entire grants program;
however, it delegates specific tasks to States and oversees their
performance. Through a series of regulations, Program Requirements
Memoranda (PRMs), and Program Operations Memoranda (PONs), EPA
interprets the CWA and establishes policies and manages delegation.
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Delegation
EPA is now delegating substantial elements of the construction
grants program to State agencies, in accordance with the congressional
mandate in Section 205(g) of the Clean Water Act. EPA has differentiated
the types of responsibilities which it can delegate to States from
those which it must manage directly by means of the following
categories:
t Category l--Nonde1egdb1e ActivitiesThese activities
cannot be delegated to the States nor to the Corps of
Engineers ^who now provide Step 3 resources), either
because delegation is restricted by regulation or
because the activity is EPA-specific (such as "Management
of Delegation").
0 Category 2Technically Nondelegable Activities
These activities are technically nondelegable and the
final review responsibility will remain with EPA.
However, the State or the Army Corps of Engineers
may, under delegation, assume a strong staff role in
support of EPA. Consequently, although these
activities are considered technically nondelegable, in
fact a large portion of the staff work may be
delegated.
t Category 3Delegable ActivitiesThese activities are
considered fully delegable, assuming an adequate
oversight role by the Regions.
The specific activities within each of these categories which
can or cannot be delegated to the States are listed in Appendix A.
Of the 52 States and territories that are candidates for delegation
(excluding the Virgin Islands and four Pacific Territories), 46 have
signed or are planning to sign 205(g) agreements by the end of FY 82.
In addition to State delegation, EPA has an Interagency Agreement
with the Corps of Engineers to provide technical and management
assistance in Step 3 related activities.
With the advent of increased delegation, EPA has been planning to
gradually move away from procedural oversight to program management
oversight. Currently, EPA has been monitoring States on a State-by-State
basis, as the Agency lacks a consistent, uniform delegation oversight
program.
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STRATEGY CONCEPT
The management strategy reflects the already changing nature
of the program's management and moves to decisively establish
management policy direction for the program and its participants.
The three major modes of operation were considered for EPA during
the background discussions and analysis leading to formulation of
the present strategy:
EPA the Supervisor - or Project Manager
EPA the Franchiser - or Program Manager
EPA the Environmental Manager - or Regulator
Each has different implications, responsibilities and authorities
for management of the program (Chapter IV provides a complete
discussion).
Through the analytical process of developing the 1990 Strategy
the concept of EPA as the Environmental Manager gathered increased
support. Though it is a major departure from current operations and
management approach, it is defended as the most effective and
appropriate role for the Agency in its effort to achieve the dual
goals of protecting national interests and facilitating State and
municipal self-sufficiency.
ROLES UNDER THE ENVIRONMENTAL MANAGER
EPA
STATE
nilNICII'Al I1Y
SERVE AS THE NATIONAL PROGRAM
MANAGER (RESPONSIBLE FOR ENSURING
THAT NATIONAL OBJECTIVES ARE MET)
t FORMULATE NATIONAL POLICY AND
EVALUATE NATIONAL PROGRAM
PERFORMANCE AGAINST THE POLICY.
PROVIDE TECHNICAL AND MANAGEMENT
ASSISTANCE TO STATES TO IMPROVE
AND SUSTAIN PROGRAM PERFORMANCE.
INTERVENE IN
THOSE SELECT PROJECTS THAT HAVE
AN OVERRIDING FEDERAL INTEREST
MANAbE PROJECT OPERATIONS FROM
PRE-APPLICATION ASSISTANCE TO
PROJECT CLOSEOUT AND AUDIT
RESOLUTION.
t MANAGE THE STATE PROGRAM TO COMPLY
WITH NATIONAL OBJECTIVES.
ASSIST IN NATIONAL POLICY DEVELOP-
MENT, INCLUDING IMPLEMENTATION OF
THESE POLICIES WITHIN THE STATE.
« REVISE AND PROMULGATE NEW STATE
REGULATIONS REFLECTING NATIONAL
OBJECTIVES,
ESTABLISH EFFECTIVE FINANCIAL
MANAGEMENT SYSTEMS.
OPERATE AND MAINTAIN WASTEWATER
FACILITIES TO COMPLY WITH NATIONAL
WATER QUALITY ORJhCTIVES,
* CONTINUE TO PLAN AND CONSTRUCT
FACILITIES TO FURTHER ABATE WATER
POI HIT I ON.
t PARTICIPATE IN STATE TECHNICAL AND
MANAGEMENT ASSISTANCE PROGRAMS.
MAINTAIN THE NATIONAL MANAGEMENT
INFORMATION SYSTEM
SUPPORT THE NATIONAL MANAGEMENT
INFORMATION SYSTEM, INCLUDING PRO-
VIDING PROJECTIONS OF FUTURE
PROGRAM OUTPUTS FOR NATIONAL
PROGRAM USE.
PROVIDE GRANTEES WITH INFORMATION,
TRAINING, AND ASSISTANCE FOR
MANAGING THE PLANNING, DESIGN,
CONSTRUCTION, AND OPERATIONS OF
P01WS.
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MAJOR STRATEGY RECOMMENDATIONS
The Federal Role Under Delegation
The federal role under delegation should be that of an Environ-
mental Manager. This includes not only changed responsibilities
presented on the preceding figure but also a reorientation of the
grant mechanism to allow State administration of the federal grant,
including the making of grant offers, payment processing, and other
federal fiscal activities. To support the changed direction and
new responsibilities for EPA and States, the States will share in
developing policy for the program.
Federal Policy to Reach Full and Effective Delegation
To reach full delegation (the most critical aspect of EPA's ability
to assume the role of Environmental Manager), specific changes are re-
quired in how the program is currently operated and legislativel directed.
In particular, this includes reclassifying all activities as delegable.
The strategy recognizes the States to be managers of the program.
It recommends that the Corps Interagency Agreement be amended to allow
fully delegated States to participate in Corps/EPA negotiations on, for
example, workload and division of responsibility.
On-Going Oversight of State Programs
To ensure that national objectives are met, the Agency will
establish a uniform oversight program. The thrust of this program
will be to monitor State programs for quality and timeliness of
projects funded and integrity and management of the program to
ensure that the national objectives are met.
The evaluation mechanism to implement this will combine EPA
evaluation and a State management-by-objectives (MBO) system. The
MBO system will allow State-specific considerations to be made. States
will develop, and negotiate with EPA, a schedule for meeting the program's
(1990) objectives. Annually,, the State will submit a report detailing
the State's progress towards meeting the objectives which will be reviewed
by the appropriate Regional office. In addition, EPA will conduct an
annual evaluation of State programs focusing on national objectives:
the program's fiscal integrity, that high quality, environmentally sound,
and cost effective projects are being funded. Specific performance
measures to be used in these evaluations will be developed.
A system of incentives and sanctions to sustain State performance
will be implemented. This may include incentives and sanctions such
as annual reports, assistance, rewards, loan guarantees and (in extreme
cases) termination or suspension of grant assistance. EPA will request
authority from Congress to both (a) allow EPA to withdraw and use the
2% funds under Section 205(g) for non-delegated and poor performing
States and (b) allow EPA to terminate construction grants assistance
to projects in a State with severe and deteriorating performance problems.
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On-Going Assistance to States to Improve Performance
The Agency will provide both technical and management assistance
to improve and sustain the delegated programs. A national program
of technical assistance, located at Headquarters, Regions or in
environmental research centers, will be available to each State.
Technical assistance could include, for example, assistance on water
quality, energy conservation or implementing NEPA responsibilities.
Special assistance would be provided to each State as necessary in
areas of overriding federal interest. Management assistance, including
managerial assistance, training packages and manpower planning, will
be provided.
Both technical and management assistance will be provided to
any State upon request or by any State receiving a poor evaluation of
their program management and operation.
To support the management of the program, EPA will develop a
computerized Management Information System that is compatible with
State needs and the evaluation system.
CONCLUSION
The 1990 management strategy represents a significant departure
from the current management plan. It presents a new perspective for
the Agency and the delegated States, as each assumes new responsibilities.
The strategy responds to the already changing nature of program management
(i.e., delegation), and the movement toward State self-sufficiency
(focusing on State management of the program). At the same time, it
responds to the need to protect national interests and ensure that
national objectives are met through systematic monitoring of State
program performance. The strategy represents a realistic image of
this changing nature in the program and of EPA's role in managing
the transition while ensuring that national goals are satisfied.
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CHAPTER III
CURRENT PROGRAM DESCRIPTION AND PROGRAM ASSESSMENT
The institutional system in place for management of the construc-
tion grants program must address extremely complex and varied conditions
to properly meet the objectives of the Clean Water Act. The legislation
itself complicates the administration and management of the construction
grants program through its requirements for separate planning, permitting,
and enforcement mechanisms. In addition, the different levels of organi-
zational authority and responsibility complicate the management of the program,
The management strategy uses as its starting point the institu-
tions, intergovernmental relationships, and systems that have developed
over the last 25 years in this program. A summary of the current
situation and related problems is presented below as an aid to under-
standing and assessing how the 1990 management strategy affects and
improves current program management.
INSTITUTIONAL SETTING -- BACKGROUND
The construction grants program operates in a multi-level organiza-
tional structure, with responsibility decentralized within EPA to the ten
Regions. Five organizational layers, both within and outside of EPA,
must communicate with each other and function together to administer the
program properly, with governments on the federal, State and local level
sharing principal responsibility for meeting the program objectives.
Figure III.l depicts the five layers of organization, and notes the
primary functions of each prior to delegation. They are briefly described
below.
EPA Headquarters has an indirect (but major) impact upon the
construction grants program as a result of the decentralized operation
and management of EPA Regions. It plays a critical role in defining the
objectives of the construction grants program; providing regulations,
policy, and guidance on the methods of operating the program; and
measuring the progress of the program versus the program objectives.
The EPA Regions are the principal operating arm of EPA for the
construction grants program. EPA Regional Administrators currently have
the regulations and policy to meet the specific needs of the Region.
The Regions directly impact program operations through management of the
grants process and approval of all outputs from the municipalities.
Delegation to the States will cover most of the direct operations of the
EPA Regions.
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FIGURE III.l LAYERS OF RESPONSIBILITY
AND PRIMARY FUNCTIONS OF EACH
EPA HEADQUARTERS
Administrator
Planning and
Management
Water and
Waste Management
Enforcement,
MEPA, Air Programs
EPA REGIONS
Regional
Administrator
STATE ORGANIZATION-
(Highly Variable)
I
I
LOCALITY
(Highly
Variable)
Enforcement,
NEPA, Air Programs
1 ;
1
Water Pollution
Control Agency
Planning
Other
Municipality
Township
A
County
*
I
Sanitary
*
_J
District
PRIVATE FIRMS
Consulting Engineering Firms
Construction Contractors
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The State agency responsible for preparing and certifying project
priority lists and water quality management plans, as well as reviewing
and certifying construction grant applications, appears in a variety of
forms from State to State. Such an agency will typically fall into
one of the following organizational categories:
State Health Department Model: Water pollution control is
included as a function in such a department.
"Little EPA" Model: An agency in which the main functions
are pollution control and environmental protection.
"Super Agency" Model: The agency has other responsibilities
than the environmental; for example, conservation, forestry,
coastal zone management.
Unclassified Organizations: Such as Regional-State board
systems.
Local public bodies responsible for the treatment of wastewater
exist in a number of different governmental forms, including the
following:
Incorporated municipality
Township
County
Sanitary or utility districts.
The responsible locality participates in nearly every step of the
construction grants process, from initial planning through the operation
and management of wastewater treatment systems.
Private firms, experienced in the design of sanitary engineering
facilities, may provide services ranging from the preparation of plant
design and specifications to grant applications preparation, municipal
budgeting assistance, and coordination of financing sources. Engineering
firms often function as a "de facto" department of public works for
many small communities. Construction contractors perform the direct
construction work, under contract to the locality.
In addition to the intergovernmental relationships outlined above,
program operations are also affected by the internal EPA management
structure and the division of program responsibilties among the various
offices. Two points regarding this internal management approach are
relevant:
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EPA has a matrix approach to management, with the individual
Regional Administrators (RA) responsible for operational
control over the program in their Regions (including
allocation of resources) and the Assistant Administrator
(AA) in Headquarters responsible for national program
performance. The AA is held accountable by the Administrator,
OMB, Congress, and the public for meeting program objectives,
despite the fact that the RA awards the grants and reviews
all project documents. This matrix approach goes beyond the
Headquarters/Regional relationship experienced in most other
federal programs.
Within EPA, responsibilities for program performance are
divided across offices, with at least four separate offices
influencing program direction. The main operational office
is the Office of Water and Waste Management (OWWM), but separate
policy is set by the Office of Environmental Review (NEPA),
the Office of Civil Rights (MBE, Civil Rights), the Office
of Enforcement (NPDES permits), and the Office of Air, Noise,
and Radiation (Section 316 policy).
This internal matrix organization and division of responsibility,
in conjunction with the external layers of responsibility inherent in
our federal system and the legislation, defines the institutional
setting under which the program must operate.
PROGRAM RESOURCES STATUS AND PROBLEM AREAS
The personnel resources currently assigned to the program across
the three principal institutional levels are summarized in Table III.2.
TABLE III.2 RESOURCES ASSIGNED AT VARIOUS LEVELS (FY 1980)
Workyears % of Total
EPA, Including Corps Support 1,554 0.4
(Headquarters) (130)
(Regions) (874)
(Corps) (550)
States 1,462 0.4
Localities 365,000 99.2
(Construction Contracts*) (200,000)
(Operations of POTWs) (165,000)
TOTAL 368,016 100.0%
*Includes equipment manufacturers and other second level contractors,
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Over 99% of all the personnel resources in the program are at the
local level, either as temporary construction workers or as local
staff assigned to the treatment works. The State and federal resources
are limited to overseeing the grant program and reviewing various
program outputs for conformance with federal and State requirements.
Funding for the State and federal operations comes from annual
operating budgets (including up to 2% of the construction grant funds
authorized for delegated State operations). The local resources,
spread across 12,000-15,000 communities, provide the full effort
in planning, design, construction, and operation of the treatment
works. Funding for local resources comes from the annual construction
grants appropriation, which pays for 75% of the costs of construction-
related activities; State and local capital investment funds; and a
dedicated user charge, which pays the total costs of operations and
maintenance.
The lack of sufficient personnel resources (at both the federal
and State levels) to implement the vast number of activities in the
program has been a barrier to achieving program objectives. Since the
enactment of the Clean Water Act Amendments of 1977, however, EPA has
undertaken a major delegation of these activities to the States under
the authority of Section 205(g). The change in the mix of federal and
State resources in recent years (Table III.3) shows the impact of this
effort. The additional State resources supplied under Section 205(g)
1977
1978
1979
1980
1981*
1982*
* Estimated
TABLE III.
APPLIED TO
Headquarters
71
71
92
130
127
139
*
3 FEDERAL AND STATE WORKYEARS
THE CONSTRUCTION
EPA
Regions
997
981
904
874
891
841
GRANTS
Corps
-0-
112
425
550
600
600
PROGRAM
States
225
396
1,008
1,462
1,898 -
2,081
Total
1,293
1,560
2,429
3,016
3,516
3,661
and those provided to EPA through the agreement with the Corps of Engineers,
augmented what was acknowledged to be a severe resource deficit in federal/
State management of the program.
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State resources for the program are expected to continue to increase
(although at a decreasing rate) as delegation of operations spreads
to all States. In FY 82, approximately 80% of direct operational
workload is expected to be assumed by either the Corps (approximately
20%) or the States (60%).Under the current management of the program,
EPA workload in FY 82 will consist of:
1. direct program operations in non-delegated States,
2. the remaining direct activities not delegated,
3. management of the non-delegable activities (i.e., NEPA,
Bid Protest Resolutions),
4. national initiatives where overriding federal interest
demands involvement,
5. national policy development and program management, and
6. oversight and quality assurance of State operations.
NATIONAL PROGRAM MANAGEMENT CURRENT SYSTEMS AND PROBLEM AREAS
Program management systems used by EPA and the States must support
the management decisions made both on a day-to-day basis and as part
of the planning and control processes required to operate any large
construction program. The situation in the construction grants program
is unique only in its complexity; the systems must meet a variety of
demands, including the following:
Ability to measurably reflect the objectives of the program;
Ability to measure how much progress has been made toward the
baseline goal, and what backlog, or remaining effort, is
required to reach the goal;
Ability to plan the operations of the program towards reaching
the baseline goal; and
Ability to observe when the program operations are "off-course"
and to know what corrective actions must be carried out.
EPA has chosen to address these requirements by working through three
major system components: (1) interpretation and implementation of
policy, (2) planning and evaluation of the program, and (3) management
information systems to meet program requirements. These components
are discussed briefly in the following sections.
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Interpretation and Implementation of Policy
Headquarters develops policy and provides guidance through
Regulations, Program Requirements Memoranda (PRMs), Program Operation
Memoranda (POMs), and Guidelines in special technical areas. The
regulations issued set the framework within which the individual
grantees must act. PRMs are used to convey program policy for the
construction grants program where specific provisions are not available
in existing regulations or other Agency documents. POMs are used
as directives, setting forth periodic reporting requirements, ceilings,
or quotas. POMs lose their applicability within a limited time frame
and are primarily "housekeeping" in nature. Grantees are the recipients
of regulations; the EPA Regions are the recipients of PRMs and POMs.
The process for release of PRMs includes participation by the States
and others in the review of draft documents before final distribution.
Planning and Program Evaluation
EPA has developed an integrated planning, budgeting, and performance
monitoring system for use by the Regions and Headquarters program
offices. The basic components are outlined in the Agency Planning and
»g« .
based program evaluation system for programs under the responsibility
Management Processes: An Overview. Also under development is an OWWM-
f!
of the Assistant Administrator. Within this Agency and OWWM framework,
the construction grants program has developed a program management strategy
to plan and monitor program activities across the Regions. A program
management strategy to monitor States has not as yet been instituted.
The performance monitoring tool (called a Report Card) allows
evaluation of one Region relative to another based on predefined priority
program areas. The strategy changes annually as Agency priorities and
program management change. The Report Card, in conjunction with periodic
program reviews, is the principal mechanism used by Headquarters managers
to evaluate regional program performance.
Management Information Systems
The principal management information system for the construction
grants program and other smaller Agency grant programs is the Grants
Information and Control System (GICS), which provides grant project
level information for Regional and Headquarters use. It is the primary
source of technical, fiscal and performance data for the program.
The GICS system provides a data base and computer programs to
collect, edit, and maintain data on prospective projects, grant
applications, and funded projects through to project closeout. It was
first implemented in 1972 and has been periodically updated to reflect
new requirements and new management needs. The data base has approxi-
mately 215 elements available for each project, 95 of the elements
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include fiscal, technical, and project tracking information divided by
step in the grants process. The system is currently being re-evaluated
in terms of its effectiveness and workability under a delegated program.
Problems Concerning Program Management Systems
The current program management systems have problems that affect
operations of the program.
There is currently no systematic provision for multiyear
strategic planning for the construction grants program to
provide a common framework to set policy, plan the budget,
or develop annual program plans.
Though States are assuming more responsibility in program
management they have not participated in policy development
for the program.
Policy development and implementation (through the PRM process)
is built to a large extent on ad hoc initiatives and changing
administration guidance; thus, it is at times fragmented and
inconsistent.
Performance monitoring and program evaluation, now based on a
Report Card system, is focused almost entirely on grant-related
outputs. No provisions have been made nationally for State
performance monitoring. The present system does very little
evaluation based on environmental results.
0 The current information systems in place (e.g., GICS, CMS) to
support program management are clearly an inadequate base for
future program operations, given the increase in the number
of users and the need to allow more flexibility in system
design to accomodate State programs.
DELEGATION CURRENT STATUS AND PROBLEM AREAS
Progress of Delegation to States
It is estimated that 46 of the 52 States and Territories that are
candidates for delegation (excluding the Virgin Islands and four Pacific
Territories) have signed or are planning to sign 205(g) agreements by the
end of FY 82. By that time, some States should be fully delegated.
Nationally, there is a sharp rate of increase (12% to 59%) in activities
assumed by the States from FY 79 to 82. By FY 82, 59% of the potentially
delegable workyears will have been delegated to the States, with the Corps
of Engineers providing manpower for another 20%. Figure III.4 illustrates
the magnitude and timing of delegation.
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FIGURE in.4 STATUS OF 205(g) DELEGATION AGREEMENTS
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Corps of Engineers Resources
In January 1978, EPA and the Corps of Engineers, with OMB approval,
signed a 3-year Interagency Agreement. The terms stipulated that
the Corps would contribute 600 workyears annually toward assisting with
the administration and management of some Step 3 activities in the
construction grants program. The agreement was meant to be a short-term
solution to aid delegation to the States. The Corps and EPA signed
a new agreement on July 8, 1980 that expanded the role of the Corps
to include all delegable Step 3 activities that have not been delegated
to States. Substantial and long-term involvement of the Corps will be
required through the mid-1980s, and the percentage of total potential
delegable workyears assigned to the Corps in FY 82 to FY 83 will remain
at approximately 20%. By FY 82, only South Dakota, Texas, Montana,
and Wyoming will have phased out the Corps completely. California has
given the Step 3 activities it was delegated back to EPA, and the Corps
has assumed them.
Monitoring Delegation
During this transitional phase of States embarking on delegation,
the Agency has been monitoring States on a State-by-State basis. The
Agency lacks a consistent, uniform delegation oversight program. Though
no two Regions use a uniform method for overseeing States, each Region
employs different combinations of a number of basic management approaches.
These methods can be grouped into two categories:
1. periodic formal reviews focused on specific activities
or individual projects, for which the State and Regional
offices have agreed upon standard operating procedures,
and
2. informal assessments, which consist of day-to-day communications
or scheduled meetings to target problem areas.
At present, most Regions in the early stages of delegation use
both formal and informal means of oversight to review a number (e.g.,
10%) of specific activities that the States perform. As delegation
progresses, Regions containing States that signed early 205(g) agreements
are moving beyond review of specific activities to review the procedures
that the States use to conduct their activities. Other Regions review
10% of all ongoing projects and compare expenditures and costs of the
project budget.
Problems Concerning Delegation
Under the current delegation strategy, the Agency will be unable to
achieve the 1990 national program goals and objectives. In particular:
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The Agency is unable to manage a national program because not
all States have accepted delegation.
Six potentially delegable States have not signed agreements
and do not plan to do so. They are Florida, Hawaii,
Indiana, Oregon, Tennessee, and Virginia.
t The Agency is unable to delegate the f ul 1 program, as certain
activities are classified as non-delegable.
e.g. NEPA, Audit Resolution, MBE.
The Agency is experiencing difficulty reaching full delegation
in many States due to lack of dollar and staff resources.
Current uncertainties as to whether funding will be
adequate are making some States hesitant to accept
additional responsibilities or to "staff up" for
resource-intensive activities that are currently
performed by the Corps.
Other States are having difficulties in locating and
paying for the necessary expertise, and for that reason
are reluctant to accept Step 3 activities. This means,
therefore, continued direct participation by EPA or its
agents, with States not reaching self-sufficiency.
Specific roles and responsibilities of program participants
are unclear.
For example, the Corps of Engineers contributes approximately
20% of the currently delegable workyears and is a major
participant in the program. Currently the Corps agreement
is negotiated between the Corps and EPA, thus leaving the
State out of the major management decision point.
t The Agency has not established a uniform delegation oversight
program.
The lack of a uniform oversight program burdens each State
unequally with different program requirements.
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CHAPTER IV
MAJOR STRATEGY ISSUES
INTRODUCTION
The issues section of the strategy presents the results of much
research and analysis of the issues and alternatives. For EPA to
reach the goal of Environmental Manager, the major strategy issues
must be resolved and acted upon. This section is organized into
four strategy areas, each with several major issues.
Federal Role Under Delegation
Through public workshops, meetings and developing research papers
EPA has received numerous recommendations that it move toward the role
of an Environmental Manager. The Agency must provide detailed objectives
that will help direct the program and a workable schedule for accomplishing
the objectives. In addition, the States should be given the opportunity
to formally participate in program policy development.
Federal Role to Reach Full and Effective Delegation
Once EPA has clearly stated where the program is moving it must
identify and remove the barriers that will hinder the progress. New
policy and other incentives must be developed and a mechanism provided
for achieving full, effective, and sustained delegation to all States.
On-Going Oversight of State Programs
As the States assume responsibility for the program, EPA must
have an oversight mechanism for ensuring that the States are performing
within the program requirements, are working towards meeting the
national objectives, and have some methods of enforcing these.
On-Going Assistance to States to Improve Performance
EPA must determine what expertise is necessry to provide the
States with assistance (technical and management) in meeting the
national objectives. As a national manager, EPA should aid in technology
transfer and collect national information required for program decision-
making.
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THE FEDERAL ROLE UNDER DELEGATION 1990 OBJECTIVES
Issue No, 1
The current management approach does not reflect the changing
nature of the program under delegation and does not build a consistent,
clear framework for management in the 1980s.
Discussion
The present management structure for the program divides management
responsibilities among EPA, the States, and the Corps. This situation
presents difficulties in terms of accountability and program effectiveness.
Continuing under the current management approach will lead to a program
with little national direction.
The EPA role in the construction grants program is presented as
a continuum of management responsibility, with delegation as the major
driving force. At one end of the continuum, EPA has the responsibility
to manage every activity in the program. At the other end, EPA limits
its involvement to overseeing State management and protecting only national
program interests. There are three milestone points on the continuum that
represent the EPA roles discussed throughout the 1990 strategy development:
EPA the Supervisor, EPA the Franchiser, and EPA the Environmental Manager.
Each represent different degrees of EPA management responsibility
and delegation strategy, as illustrated in Figure IV.1.
FIGURE IV.I EPA MANAGEMENT RESPONSIBILITY CONTINUUM
Supervisor Franchiser Environmental
Manaaer
EPA Responsible EPA Responsible
for All Projects for National
and All Activities Program Management
and"Performance
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As a Supervisor or Project Manager. EPA would delegate certain
activities and procedures to the States but would continue to exert
direct management control over State projects. EPA would emphasize
State adherence not only to program objectives, but also to consistent
procedures laid out by EPA to ensure uniformity from State to State.
As a Franchiser or Program Manager, EPA would gradually recede
from direct supervision, but would provide States and grantees with
extensive technical and management support. EPA would continue to
conduct "quality control" monitoring of State operations to ensure
that procedures are adequate to achieve program success, and would
intervene in program administration when significant deficiencies
were discovered. Variation among State delegated systems would be
allowed.
As an Environmental Manager, EPA delegates project related activities
and program management responsibilities to the States; States share in
developing program policy. EPA retains the authority, on an extremely limited
basis, to participate in those projects with overriding federal interest
and intervene in program administration if national objectives are not being
met. EPA would monitor the overall program through monitoring and evaluation
of the State's performance. The Agency would continue to provide management
and technical support as necessary.
Resolution
To satisfy the environmental and program requirements of the
legislation and the intent of Congress to delegate the program, EPA
must move toward the role of Environmental Manager by 1990.
This major change in program management strategy can not immediately
happen across all States. Figure IV.2 graphically depicts the transition
of the EPA management role over time.
FIGURE IV.2 EPA's CHANGING ROLE OVER TIME
Environmental
Manager
Franchiser
Supervisor
1970 1975
Construction
Grants
Program
Begins
1980 1985
Delegation
to the
States
1990
Full Effective
Delegation to
All States
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In certain States, E.g., California, Illinois, Texas, EPA will be able
to progress more rapidly toward the role of the Environmental Manager.
The Agency, assuming the role of Environmental Manager, clearly defines
the policy direction and role responsibility of the program participants.
Issue No, 2
The current grant mechanism (Federal-Municipal categorical grants)
does not reflect the major State management responsibilities anticipated
in the 1990 Management Strategy. It retains the administrative and fiscal
relationship between EPA and the Municipality, despite the fact that full
operational responsibility and project level decisions will have shifted
to the States.
Discussion
The 1990 strategy is built on the expectation of full and effective
delegation to the States, with EPA moving out of project-related decision
making and program administration. This new role eliminates EPAs rela-
tionship (both administrative and technical) with the Municipalities,
except in extraordinary circumstances when overriding federal interest
demand intervention, and replaces it with an oversight and technical
assistance role between EPA and the States. The existing administrative
grant mechanism (Federal-Municipal categorical grants) is inconsistent
and potentially in conflict with this overall thrust. Without significant
positive action to alter the legal grant administrative relationship between
EPA and the Municipality, EPA may find itself held accountable for specific
fiscal actions of every municipality, despite the fact that the State
will be making all project-level decisions. Likewise, the State may
effectively be unable to fully exercise independent authority because of this
continued project-level accountability by EPA. Several options to correct
this situation are available:
t Federal-Local Grant Via State -- The Agency reorients the
existing grant mechanism so that the States adminster all
fiscal and administrative aspects of the grant program,
including making of the grant offer, payment processing,
audit resolution, etc. In this way, the State will serve
as the "responsible federal official" under delegation, and
be held accountable to EPA for all federal fiscal requirements.
Federal-State Categorical Grant -- EPA, under new legislation, makes
grants to the States based on the existing allotment formula rather
than to the Municipality. Utilizing a categorical grant results in
all requirements of the construction grants program being applied
as conditions (e.g., NEPA) of the grant of the State.
Federal-State Block Grant -- As in the Categorical Grant, EPA makes
a grant to the State based on the existing allotment formula. The
difference is that the State is bound only by broad parameters.
This would allow the State to determine how the money is spent as
long as it is within the goal of improved water quality.
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The three options range from keeping the existing grant mechanism (but
adjusting policy to make the States accountable), to changes in the statute
to make the State the legal grantee. It is clear that the Clean Water Act
and other applicable federal laws will continue to demand specific uses
of the appropriation, which would tend to eliminate the less restricted
block grant approach (the third option). The change in the legislation
to a formula-based State categorical grant (the second option) is most
consistent with the 1990 strategy, but has not been investigated sufficiently
to assess the impact that such a drastic change would have on the existing
administration process. This option may have adverse impacts on implementation
of the federal laws and on protection of federal funds that would need to be
mitigated before recommending a legislative change. Further, the change could
require new enabling legislation in the States and be subject to State budget
restrictions that would limit its workability.
Resolution
Because unwanted program impacts may spinoff from the legislative change
to Federal-State Categorical grant, it is recommended that EPA retain the
existing federal-local grant mechanism. EPA will, however, take significant
steps to ensure that the administrative and fiscal responsibilities are
fully and effectively delegated to the States. This change will allow the
States to become the "responsible federal official" accountable to EPA for
fiscal integrity. Concurrently, EPA will develop a separate issue paper
on the feasibility of a change in the grant mechanism at some future date..
(See Action Plan)
FEDERAL POLICY TO REACH FULL AND EFFECTIVE DELEGATION
Issue No. 3
Current policy restricts full and effective delegation, both
through the regulatory and statutory limitations.
Discussion
Statutory requirements and EPA regulations discourage full
delegation of the program.
Not all activities are classified as "delegable"; therefore,
full delegation cannot be achieved.
Several key activities, essential to full and
integrated management of program operations, cannot
currently be delegated, preventing full operational
delegation, e.g., bid protest, NEPA determinations.
In a number of cases, EPA has been reluctant to
delegate project decisionmaking to the States,
principally because the "responsibility" for the
grant remains with EPA as the signator of the grant
offer.
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The funding available to delegated States through Section
205(g) of the Act appears to be inadequate to allow States
to assume full delegation and assume increased responsibilities
in WQM.
The involvement of the Corps of Engineers in the delegation
program impairs achievement of the objective of encouraging
State management of the program.
The State continues to share operational responsi-
bilities, e.g., on-site inspections with the Corps
of Engineers, who report to EPA rather than the State,
under the existing agreement.
Resolution
The following recommendations are proposed to facilitate full
delegation and State management of the program.
Amend the State Management Assistance Grant Regulations (35.1030-3)
to allow delegation of the following functions: civil rights
determinations, Minority Business Enterprises (MBE), final
dispute determination,, bid protests, wage rate determination,
and resolution of audit exceptions.
Initiate actions to legalize delegation of the signing of grant
awards to the States. Make regulatory changes to delegate payments
and other fiscal responsibilities typically the perogative of the
federal government.
Initiate actions to allow delegation of NEPA determinations to
the States, under a procedure that would certify the State director
as the "responsible federal official." Checks and balances would
be similar to the NEPA arrangement currently underway with the
Federal Highway Program. EPA would involve itself in project
level decisions only where overriding federal interest (as defined
in EPA/State delegation agreements) would dictate.
t EPA should investigate the availability of 205(g), 201, 208, and
106 funds for increased State management responsibilities.
Amend the National Corps of Engineers agreements to allow
State participation in Corps/EPA negotiations on workload and
division of responsibilities, once a State has received full
delegation of all delegable activities.
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Issue No. 4
Certain states have experienced institutional problems (e.g.
staffing ceilings, skill mix) that limit the States ability to
accept and sustain delegation.
Discussion
State institutional barriers are contributing to the inability
of some States to accept and sustain delegation. The following
problems are currently being encountered.
Salary rates too low to attract qualified
personnel at the level of expertise required.
State legislative or executive action has put a
limit on personnel hiring, despite fund
availability under 205(g).
The uncertain or inadequate funding provided
through 205(g) prevents development of a full
State staff.
State executive priorities prevent a full effort
in the construction grants program.
In some cases, States are reluctant to accept
full responsibility for all federal laws and
requirements.
In order to achieve full delegation of all activities EPA must
develop incentives, provide assistance, and propose new policies that
would help overcome these and other institutional barriers to full
delegation in all States.
Resolution
EPA will develop and offer to States a managment assistance package
that will address many of these institutional problems hindering full
delegation. Areas of assistance will include:
t The development of an information transfer program among the
States to use successful State experience as a vehicle to
address similar problems in States experiencing delays or
barriers to full delegation.
Expand 205(g) eligibilities to cover additional program
management expenses where limited resouces are creating
problems in accepting full delegation or sustaining
delegation once accepted.
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The use of the EPA Program Evaluation Review Sessions to
develop better and more efficient management techniques at
the State level, greatly facilitating certain types of
delegation (e.g., grant offer processing, operational
reviews).
Assistance in the use of special consultants or personnel
services contractors in the State office, to build expertise
beyond that available under the State civil service.
The use of IPAs in the State office, to increase the level
of expertise in the State necessary to accept delegation
and to train new staff as they are hired.
ON-GOING OVERSIGHT OF STATE PROGRAMS
Issue No. 5
The current oversight program, emphasizing procedural review, is
inadequate under the new role of Environmental Manager Jbecause it doesn't
monitor national program results.
Discussion
In most States and Regions EPA exercises its program oversight
responsibility under delegation through sampling projects, to assure
that the States are complying with legislative and other program
requirements. As States get closer to full delegation this oversight
procedure is clearly inadequate.
As an Environmental Manager, EPA's role in oversight will shift
from project-by-project monitoring to overall program performance
monitoring. An effective oversight program must evaluate management
and administrative practices that are most likely to lead to
successful performance in the program and achievement of national
objectives (water quality and State self-sufficiency). Because it
may take a number of years for a facility to become operable, EPA
must have a monitoring program designed to assess State performance
before the facilities are in place and operating.
The following four major overall performance characteristics
serve as the framework by which EPA will monitor the States:
1. Quality of projects funded, e.g.; are projects rated high on
the priority system, are projects cost effective, environmentally
sound?
2. Timeliness of planning, design and construction of facilities,
e.g.; are projects moving through grant process as rapidly
as possible, do States perform their review in a timely manner
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3. Preservation of the integrity of the program, e.g.; do States
employ sound management, administrative and fiscal controls,
have States been able to prevent fraud and misuse of funds.
4. Effective program management, e.g.; does the State employ
sound management practices for planning future activities,
developing and maintaining the mangement information system,
is State management oriented towards achievement of the goals
of the act?
While this list is not inclusive, States that perform well in
these areas are likely to have success in meeting the national
objectives.
The EPA emphasis on the four performance areas is dependent on
progress in each specific State. Early in delegation, EPA will focus
on the systems and program aspects of the State performance (Items 2,
3, and 4). As the States reach full and effective delegation, the
oversight emphasis will concentrate on results related to quality of
projects, fiscal integrity, etc. (Item 1). The degree of emphasis in
each of the four areas will shift as State performance indicates need
for lesser involvement to protect federal interests.
Resolution
The four overall performance characteristics (quality and
timeliness of projects funded, integrity and management of the State
program) are good measures for achievement of the national goals.
EPA should monitor a combination of these performance characteristics
to ensure that the national program accomplishments comply with
the national goals. As EPA's role changes to meet the goal of
Environmental Manager, the relative importance of monitoring the
performance characteristics will change.
Issue No. 6
Once EPA moves away from procedural review of individual projects, it
lacks a. consistent mechanism for monitoring State program performance (results),
Discussion
For EPA to be successful in its role as an Environmental Manager, the
oversight program must include a mechanism for overseeing State programs
that both supports and assists State management while protecting national
interests and national management concerns. The Agency must develop a new
versight mechanism that focuses on a State's overall performance.
The shift to program-level monitoring can be accomplished through
odic program evaluation reviews, the purpose of which will be to
evaluate program performance against known measures and advise the
on improvements in program operations. Evaluations can be approached
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in a number of ways. The most stringent would be to have on-site monitoring
of a sample of projects. The least stringent would be to monitor national
program results only, with no on--site evaluations.
Four evaluation mechanisms
stringent to least stringent.
are discussed below in the order of most
1. On-Site Evaluation: EPA's present oversight policy is to perform an
on-site procedural review of a percentage of projects funded. EPA
could continue to monitor a random sample of projects with a results-
oriented approach, rather than check all procedures. From these
results, EPA would make assumptions about the status of the State
program overall. While this evaluation method yields specific
information, it may lead to inaccurate assessments of State performance.
2. Evaluation Team: Each State should have an annual review performed by
an evaluation team. This team would be under the direction of the
EPA Regional offices, and would include selected State and EPA Regional
office representatives as well as key Headquarters managers. The
advantages to a team are that a unit independent of day-to-day program
responsibilities would provide a more objective evaluation and, having
the same unit perform evaluations for all States, would lend consistency
to the approach and provide comparable results.
A schedule for monitoring and evaluation should be developed each
fiscal year in conjunction with the development of the annual State/
EPA agreement. The evaluation should consider two parts of the
State's performance: The State's technical performance (quality
and timeliness of projects) and the State's management performance
(program integrity and program management). The skill mix required
for each part of the evaluation follows:
Technical Eva!uation
t Sanitary engineers familiar with the
technical aspects of planning and
design
t Someone familiar with the grants
process
An environmental specialist
t A treatment plant operations
specialist
Management Evaluation
An engineer, planner or other
technical staffer familiar with
the grants process
An engineer familiar with
construction
A constracts/payments
specialist
An accountant/auditor
The evaluation will focus on the State's progress towards
achievement of national water quality goals and the fiscal
integrity of the State's program. Evaluations will stress
program outcomes, rather than procedures, though evaluation
of procedures will occur in the initial phases of delegation.
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3. Management by Objective (MBO): Evaluation of State performance
could be based on a concept of Management by Objective
(MBO) where, in addition to an evaluation schedule,
State-specific program objectives are agreed upon by the
State and EPA. Each State is then evaluated based upon
its pre-determined objectives. MBO recognizes that
States vary in their capabilities and in severity of
water quality problems.
4. Monitoring of Water Quality: EPA could monitor only the national
program accomplishments, i.e., improvements in water quality.
While this mechanism gives full discretion to the States,
EPA abdicates its role of assistance in the program and
has no way of measuring whether or not the national objectives
are being accomplished in the most efficient manner, and
cannot impact the process until facilities are operational.
Resolution
EPA should combine the annual evaluation with an MBO system in its
oversight mechanism. The evaluation should be used to ensure all national
objectives are being met (with the four general performance characteristics),
Where State-specific considerations should be made, these can be negotiated
periodically through MBO.
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Jssue No. 7
EPA does not have clearly defined performance criteria nor measures
for evaluating State management, that can be used to ensure that State
program results are consistent with the national objectives.
Discussion
To meet the delegation oversight objective, EPA must establish a
clear mission and clear objectives for the construction grants program to
guide the States in its management. State performance in carrying out the
program would then be measured against each of these objectives. Where it
is impossible to measure performance directly, EPA could examine State
procedures to see whether they are consistent with the objective and are
likely to result in their achievement.
Resolution
The following set of performance measures and objectives is proposed as
appropriate to EPA and State management as EPA moves toward the role of
Environmental Manager. Program objectives are developed at the outset that
will apply to all States. These objectives will provide policy guidance to
the States, making it clear what requirements they are to meet. In each
case, the performance measure is results-oriented and would indicate whether
the State program is successful rather than how the State performs each
Table IV.I proposes a set of performance measures for each of the
four general performance characteristics outlined in Issue 6. The
list is not inclusive, but should provide an indication of the breadth
and depth of the performance criteria being proposed in the EPA over-
sight system.
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TABLE IV.I PROGRAM PERFORMANCE MEASURES
GENERAL PERFORMANCE CHARACTERISTIC
QUALITY OF PROJECTS FUNDED,
DIRECT MEASURE OF PERFORMANCE
CHECK OF PROCEDURES
TO CONSTRUCT FACILITIES THAT OPERATE
IN SUCH A MANNER AS TO MEET NPDES
PERMIT REQUIREMENTS,
TO SELECT PROJECTS THAT BEST
FACILITATE THE MEETING OF THE ENFORCE-
ABLE REQUIREMENTS OF THE CLEAN WATER
ACT AMENDMENTS.
TO CONSTRUCT MUNICIPAL TREATMENT
FACILITIES THAT ARE COST-EFFECTIVE
AND ENVIRONMENTALLY SOUND.
DETERMINE THE COMPLIANCE STATUS OF
ALL PROJECTS USING AN AGREED-UPON
DEFINITION OF "SUBSTANTIAL"
COMPLIANCE,
DETERMINE WHAT PERCENTAGE OF PROJECTS
FUNDED DURING THE YEAR IS IN THE
UPPER QUADRANT OF THE LIST OF PROJ-
ECTS RESULTING FROM RATING THE PROJ-
ECTS AGAINST PRIORITY SYSTEM CRITERIA.
DETERMINE THE PER CAPITA COST OF
TREATMENT FACILITIES AND ENSURE THAT
THESE COSTS ARE NOT EXCESSIVE AND
ENSURE THAT SPECIAL ENVIRONMENTAL
AREAS ARE PROTECTED .
MAKE SURE THE STATE is AWARE OF THE
EXTENT OF NONCOMPLIANCE.
DETERMINE THAT THE STATE is TAKING
EFFECTIVE ACTION TO CORRECT THE
PROBLEM,
ENSURE THAT THE STATE is TAKING THE
NECESSARY CORRECT!VE/PREVENTIVE
ACTION EARLY IN THE GRANTS PROCESS.
DETERMINE WHETHER THE STATE'S
PRIORITY RANKING SYSTEM IS ADEQUATE
TO ENSURE ACHIEVEMENT OF THE ENFORCE-
ABLE REQUIREMENTS OF THE ACT.
INVESTIGATE WHETHER THE STATE is
PROPERLY IMPLEMENTING ITS PRIORITY
RANKING SYSTEM.
SAMPLE ONGOING PROJECTS TO DETERMINE
WHETHER THE ANALYSIS OF ALTERNATIVES
WAS ADEQUATE. SPECIFICALLY, CHECK TO
SEE IF LOW-COST ALTERNATIVES WERE CON-
SIDERED. ENSURE THAT REJECTED PROJECTS
WERE SO TREATED FOR VALID REASONS, MONITOR
PROJECTS TO ENSURE COMPLIANCE WITH COST
EFFECTIVENESS. ANALYSIS, REGULATIONS,
11MELINESS OF PROJECTS.
TO PLAN, DESIGN, AND CONSTRUCT
TREATMENT FACILITIES IN A TIMELY
MANNER.
DETERMINE THE ANTICIPATED DATE FOR
COMPLETION OF ALL PROJECTS NEEDED
TO MEET THE ENFORCEABLE REQUIRE-
MENTS OF THE CLEAN WATER ACT AMEND-
MENTS USING STANDARD ASSUMPTIONS
FOR APPROPRIATIONS, ETC. DETERMINE
IF THE STATE HAS PREPARED A PLAN TO
MEET THIS FINAL TARGET DATE AND IF
THE PLAN IS ON SCHEDULE.
DETERMINE THE ELAPSED TIME FROM
START TO COMPLETION OF A PROJECT.
COMPARE THIS FIGURE WITH THE
ELAPSED TIME REASONABLY EXPECTED.
REVIEW THE STATE PROCESSING TIME
PER PROJECT FOR THE FOLLOWING MAJOR
REVIEWS AND COMPARE TO A REASONABLE
TIME-BASED GOAL,
-- APPROVAL AND CERTIFICATION OF
STEP 1 GRANT APPLICATION;
-- APPROVAL AND CERTIFICATION OF
STEP 2 GRANT APPLICATION;
-- APPROVAL AND CERTIFICATION OF
STEP 3 GRANT APPLICATION;
-- REVIEW AND APPROVAL OF FACILITY
PLAN; AND
-- REVIEW AND APPROVAL OF PLANS
AND SPECIFICATIONS.
REVIEW OF ELAPSED TIME BETWEEN STEP 3
GRANT AWARD AND INITIATION OF CON-
STRUCTION. CHECK FOR SLIPPAGE,
DETERMINE WHETHER STATE AGGRESSIVELY
TRACKS AND MANAGES THE PROGRESS OF
INDIVIDUAL PROJECTS SO THAT THEY MOVE
THROUGH THE SYSTEM AT A REASONABLE RATE.
SEE IF STATE WORKS CLOSELY WITH GRANTEES
AND CONSULTANTS TO PROVIDE ASSISTANCE
AND HELP AVOID MAJOR PITFALLS AND TIME
DELAYS.
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GENERAL PERFORMANCE CHARACTERISTIC
INTEGRITY OF PROGRAM.
DIRECT MEASURE OF PERFORMANCE
CHECK OF PROCEDURES
TO PRESERVE THE INTEGRITY OF THE
PROGRAM BY PREVENTING FRAUD, MISUSE
OF FUNDS, ETC.
STATE MANAGEMENT OF PROGRAM.
TO ENSURE THAT THE DELEGATED
CONSTRUCTION GRANTS PROGRAM is
MANAGED IN AN EFFICIENT MANNER.
TO ENSURE THAT THE STATE COMPLIES
WITH LEGAL REQUIREMENTS (E.G.,
NEPA, MBE, EEO, ETC.).
DETERMINE HOW WELL THE BID COST
COMPARES WITH THE FINAL CONSTRUCTION
COST. EXAMINE IN DETAIL PROJECTS
WITH LARGE OVERRUNS. ALTERNATIVELY
DETERMINE IF THE STATE HAS BEEN ABLE
TO AVOID REPEATED MAJOR "BLACK EYES"
THAT REFLECT BADLY ON THE MANAGEMENT
OF THE PROGRAM. ON A SELECT BASIS,
DETERMINE COST-EFFECTIVENESS OF
FACILITIES.
DETERMINE IF THE STATE HAS MET ITS
SEA AND 205(G) COMMITMENTS WITHIN THE
RESOURCES ALLOTTED THROUGH 205(G) .
WHERE POSSIBLE, EPA/STATE-NEGOTIATED
PERFORMANCE TARGETS SHOULD BE CHECKED
TO SEE IF THEY HAVE BEEN MET.
DETERMINE WHETHER THE STATE EMPLOYS
MANAGEMENT, ADMINISTRATIVE, AND
FISCAL CONTROLS SOUND ENOUGH FOR A
PROGRAM OF THIS MAGNITUDE.
CHECK TO SEE IF THE STATE TOGETHER
WITH THE CORPS HAS A STRONG PROGRAM
OF CONSTRUCTION INSPECTION AND
MANAGEMENT.
SEE IF THE STATE HAS A STRATEGY TO
ELIMINATE OR KEEP DOWN PROJECT
OVERRUNS.
SEE IF THE STATE HAS INSTITUTED A PROGRAM
TO DETERMINE COST-EFFECTIVENESS OF FACILITIES
ESTABLISH WHETHER THE STATE HAS STREAM-
LINED ITS PROCEDURES TO ELIMINATE ANY
DUPLICATION.
WHERE IT is NOT FEASIBLE TO NEGOTIATE
EXPLICIT PERFORMANCE TARGETS, CHECK TO
SEE IF THE STATE HAS ADHERED TO PRO-
CEDURES AS SPECIFIED IN THE DETAILED
DELEGATION AGREEMENTS.
36
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Jgsue No. 8
The Agency does not currently have an effective system of incentives
and sanctions that may be applied to States to encourage consistent
performance and to allow for outside management of the program in States
whose performance in the program is inadequate.
Discussion
EPA must maintain a system of incentives and sanctions to ensure
that once each State has been assessed for performance of its
program responsibilities, the level of State performance is sustained
and national interest is protected.
An effective incentive system rewards good performance. The
simplest method is to circulate annually a comparison of performance
for all States, similar to the current Report Card system. There
is a small incentive to sustain program performance when a State's
program status is periodically compared with others. However, the
present system compares all States as though they were equal when,
in fact, they are at different stages of delegation. EPA should
categorize States according to their delegation status for the purpose
of comparison.
Once an MBO system is instituted, achievement of the objectives
negotiated by the State should be rewarded. An alternative to
simply advertising the States with good performance is for EPA to
offer loans or loan guarantees to fund 100% of construction of
POTWs. (EPA would have to seek a statutory amendment to allow such a
loan.) This incentive would not only provide a reward to States
with a good program but, by leveraging additional dollars in these
States, may result in further improvements in water quality.
EPA must also maintain a system of sanctions for those instances
where State programs encounter difficulties. Where EPA, through
evaluating a State's performance, discovers the State is not performing
up to standards, it should reserve the right to intervene. If the
State performance could be improved simply by providing assistance
in a specific area of expertise, EPA should use a system of temporary
personnel transfer. This mechanism should be developed, perhaps
using the Interagency Personnel Agreement (IPA) as a base.
As a last resort, if a State's performance drops below minimum acceptable
norms and improvement is unlikely, EPA should have the authority to withdraw
delegation and be allowed to use the 2% 205(g) monies to run the program
directly, either through a contract, third party administrator, or use of
EPA in-house staff. Further, authority should be requested from Congress to
terminate or suspend grant assistance to States with severe and deteriorating
performance problems.
Resolution
EPA must develop a concrete system of incentives and sanctions.
The present annual status report format and personnel transfer
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mechanism should be revised. In addition, EPA should seek the legislative
changes required to provide loans and loan guarantees above grant funds
for construction of POTWs, to allow EPA to retain the 2% 205(g) to
fund in-house operations for non-delegated and poor performing States,
and to give EPA authority to terminate or suspend grants assistance to
projects in States with severe performance problems. Further incentive
and sanction mechanisms should continue to be explored, for example:
cash rewards, EPA review of State priority lists and court action against
continued non-compliance.
ON -GOING ASSISTANCE TO STATES TO IMPROVE AND SUSTAIN PROGRAM PERFORMANCE
Issue No. 9
Because each of the fifty State programs has different levels of
technology development and because the state-of-the-art in innovative
treatment technologies changes, a national technology transfer program is
demanded.
Discussion
Because of the administrative and technical complexity of the
program, the need will continue for expert assistance and training
in implementing and managing certain activities and initiatives under
the program. Expert assistance and training to date have usually been
fragmented or in some cases not available. In general, Headquarters
organizations responsible for policy development have served as
surrogates in the absence of a unified approach to providing such
assistance. By necessity, Regional staff have been generalists who
are oriented toward managing and coordinating projects.
Technical assistance should include: the identification and
transfer of information on new and improved technology and innovative
information; the identification of knowledge gaps and negotiation for
specific research and development to support the program, as well as
integrated training programs for State agencies in technically complex
program areas and with new initiatives.
A two-tiered approach has been proposed to provide expert assistance
and training to the States and grantees in critical program areas.
The first tier would be a separate Headquarters organization composed
of national experts responsible for translating technology and innovation
into training packages, training Regional experts, interfacing with
research and development, providing analytical support for policy
makers, and advising and assisting on projects as requested by
Regions. Although some of these experts will be located in Headquarters,
some groups will be situated in Regional offices or environmental
research centers, depending on the nature of the special geographic
application of expertise, and research needs. The second tier would
be experts within the Regional offices who interact directly with State
agencies for project assistance, program development, staff training,
and evaluation of delegation performance.
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It is generally agreed that a technical assistance framework that
crosses State lines would improve and sustain State performance over time.
Certain technical areas (e.g., alternative and innovative technology,
operations and maintenence) can better be researched centrally to take
advantage of economies of scale and effective information transfer.
Under the changing EPA role, this national assistance would be provided
directly to the State only, for their use in administering the program.
Resolution
A National program for technical assistance is necessary to
ensure proper management of the delegated program. EPA would
provide technical assistance to the States as requested. The
national role would be to support the States in their program
administration, assisting in initial development and packaging
of new techniques. The States, in turn, would use these new
techniques as necessary to improve and sustain program performance.
Technical assistance could be provided, for example, in the following
areas:
Innovative and Alternative Technology
t Water Conservation and Energy Efficiency
t Operations and Management of Treatment Works
Pretreatment and Sludge Management
* Financial Management
Program Management Systems
To ensure timely and effective response to State needs and to
ensure that only the most complex problems are referred to national
experts, the delivery of expertise to the State will be the
responsibility of Regional offices. Regional experts will assist the
States with problem projects, consult national experts on the more
complex project issues, and provide direct training to States.
It is recognized that the estblishment of this concept will
have organizational and personnel ramifications within EPA, both in
the Regional and Headquarters operations. Resources currently
committed to certain tasks will be reprogrammed to cover the needs
in this area. The technical assistance should be kept to only the
most critical areas to avoid a resource-intensive situation that could
cause other program activities to be neglected in both Headquarters
and in the Regions.
39
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Jssue No. 10
The Agency needs to develop better (flexible, accessible, useful)
management information systems to support and improve the program.
Discussion
The existing management information system used in the construction
grants program is clearly inadequate to address the program needs,
structure, and overall complexity that will result from delegation.
Management information systems with fifty State managed programs, ten
Regions, and a national program office, require a new approach that
reflects the changing roles and functions. Systems developed to
respond to this need must service not only EPA Headquarters and the
Regions, but the States as well.
A series of new initiatives, related to the management information
system, is required to meet the information needs for decision making.
Resolution
EPA and the States should jointly address this issue as follow-up
to the 1990 study. Implementation of this joint initiative should be
completed before FY 82. These areas of study must include:
Delegation of Information System Management to the States.
All operational aspects of the federal grants information
system, including data input, report generation, and overall
information management at the project level, are the
responsibility of the States. Steps to accomplish this must
be taken now, as delegation occurs.
Data Quality. Much of the information needed for EPA management
will come directly from the State managed federal grants in-
formation system. The States, as operational managers,
will provide accurate and complete information.
System Documentation. EPA Headquarters, as the national
managers of the system, will ensure that the system is well
documented, uniformly applied, and clear and simple to apply
across all State situations.
Data Requirements. EPA Headquarters, as the national managers
of the system, must, clearly define (in conjunction with the
Regions and the States) the data needs at each program level.
Data requirements and usage will follow the roles and
responsibilities of each user under the Environmental Manager
mode.
40
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Management Usefulness. The proper use of information is
critical to effective management. Clearly articulated uses
of data are essential for both day-to-day operations and
national management. Headquarters will take steps to
facilitate more convenient use of the data systems and be
responsive to State and Regional needs for reports and other
management aids.
The management information system will be both flexible for
individual State needs and compatible with the State performance
evaluation (MBO) plan.
Issue No. 11
Although the 1990 Strategy recognizes the States as exclusive program
managers, there remains a need for EPA involvement in certain projects
that are of overriding national interest.
Discussion
The need for EPA involvement in selective project level decisions
is recognized as a necessary correlary to national program management
and oversight of the States. Although the thrust in the 1990 Strategy
is to turn over all program administration of the project to the States,
certain projects or conditions will continue to require federal involve-
ment. This is particularly true of projects that are interstate in
nature or are of special Congressional or Executive interest. Based on
the integral relation to EPA's environmental objectives, a limited
number of projects with significant environmental impact under NEPA
would also be candidates for such special attention. It is also true
that EPA may feel compelled to involve itself in project decisions that
directly threaten federal objectives and that may not be reversible if
caught after the fact.
EPA will delineate limiting guidelines to federal involvement in
State decisions both to prevent unwarranted EPA intervention on its own
initiative and to prevent EPA from being pulled into State/local or
public/private conflicts.
A listing of potential project characteristics or conditions where
an overriding federal interest may exist is outlined below. Actual EPA
application of these characteristics will be subject to EPA's guidelines
limiting involvement.
a. The project areas or specific project decisions impose
significant environmental impacts, both primary and secondary,
and there is cause to believe the national objectives may be
threatened.
b. The project is located in a special environmental area requiring
restoration or avoidance, such as wetlands, floodplains,
critical habitats, historic or archeologic sites, etc.
41
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c. The project decisions are contested by members of Congress
or the Executive and EPA is asked to intervene.
d. The projects are involved in court cases or subject to other
directives -- e.g., consent decrees, ocean dumping restrictions,
international agreements -- that EPA must administer despite
delegation.
e. The projects are involved in law enforcement investigations.
f. The projects have interstate or international impacts that
go beyond State jurisdiction, interest, or influence.
Resolution
EPA will develop as part of the followup action plan a set of
specific guidelines for project involvement. These will be developed
with State participation and be limiting in nature (i.e., defining the
ceiling on project level involvement). These threshold criteria will
be provided to each State and be used in development of State plans and
delegation agreements.
EPA will establish internal management controls to ensure that
projects of overriding federal interest requiring EPA involvement are
limited to 2% - 3% of the total project workload in any delegated State.
This level of involvement is viewed as an Agency goal, representing a
desired ceiling for federal involvement.
42
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CHAPTER V
PROPOSED MANAGEMENT STRATEGY
MANAGEMENT CONCEPT
The thrust of the 1990 management strategy is built on the already
changing nature of program management (i.e., delegation) and the need to
effectively use the resources and institutions inherent in our federal
system. Emphasis is placed on encouraging State self-sufficiency, both
in funding capability and overall management of the program, and in
protecting national interests and objectives, in terms of national water
quality goals and stewardship of federal funds. The requirement to
reach the national objectives, coupled with the transition in program
management responsibilities, results in EPA serving as an Environmental
Manager by the year 1990. Accordingly the States will become more self-
sufficient and assume responsibility for managing the construction grants
programs.
As an Environmental Manager, EPA will be responsible for national
program performance and for ensuring that the objectives of this national
program are met. EPA will continue to set overall program direction
and policy and seek to influence program direction (rather than project
direction) at the State level. EPA will, however, participate in those
special projects where an overriding federal interest has been determined.
EPA will expand its leadership role in developing and transfering new
program and project management techniques. EPA will evaluate performance
based on national objectives, provide new technology to improve the
effectiveness of the system, and take action if abuses should occur.
State responsibilities will dramatically increase not only for
meeting day-to-day program operations but for achieving national objectives
across a broad range of water pollution requirements. This new institutional
arrangement, although fitting into the traditional federal approach to water
pollution control, will reverse the trend in federal involvement of the
last several years. The change should make for a more effective and
efficient program; its workability depends on a close, working relationship
between EPA and the States, built on mutual trust and reliance.
Although EPA and the States have been advancing in this direction, there
are a number of barriers that mean the difference between EPA fully delegating
the program as it now is defined and EPA as an Environmental Manger. EPA
currently retains responsibility for project performance after full delegation
of the program. In order to become an Environmental Manager, EPA must
obtain regulatory and legislative changes to allow delegation of all
activities to the State. EPA will take steps (both in proposed legislation
and internal administration) to delegate project review and operations
requirements to the States for all activities in the grants process. This
will include NEPA and other federal law administration, audit exception
resolution, and project closeout. To achieve this objective, EPA will seek
43
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to alleviate the State and federal institutional barriers delaying or pre-
venting full delegation from taking place. As project managers, the States
would assume accountability for project fiscal, technical, and environmental
integrity with EPA overseeing State program performance.
While limiting its direct involvement in project and program
management, EPA will focus its attention on oversight of State
performance to ensure that the national objectives are being met.
To ensure sustained State performance, EPA will have authority to apply
a mix of incentives to reward good performance and sanctions to remedy
poor or deteriorating performance.
NATIONAL OBJECTIVES
EPA's role as Environmental Manager centers around its responsibility
to ensure that the national objectives are met. When program management
responsibilities are transferred to the State, it becomes increasingly
important to monitor State programs to confirm that the State procedures
are compatible with national water quality standards and State self-
sufficiency. In order to fulfill this role, EPA must perform three tasks.
First, EPA must periodically evaluate State policy against the national
objectives to check that State programs are meeting national water quality
goals. Second, where EPA determines a State program isn't adequate, it
should provide the State with technical or management assistance; a good
assistance program promotes State self-sufficiency. Third, EPA must have
an oversight program that ensures that the State level of performance is
sustained or improved.
The federal role as an Environmental Manager is to ensure that, while
responsibility for the program is decentralized, national standards are
maintained.
ROLES UNDER THE ENVIRONMENTAL MANAGER
LTA
STATE
MUNICIPALITY
SERVE /\s THE NATIONAL PROGRAM
MANAGER (RESPONSIBLE FOR ENSURING
THAT NATIONAL OBJECTIVES ARE MET)
["ORMULATE NAT1OMAI POLICY AND
EVALUATE NATIONAL PROGRAM
PERFORMANCE AGAINST THE POLICY.
« PROVIDE TECHNICAL AND MANAGEMENT
ASSISTANCE TO STATES TO IMPROVE
AMD SUSTAIN PROGRAM PERFORMANCE.
IMCRVENE IN
THOSE SELECT PROJECTS THAT HAVE
AH OVERRIDING FEDERAL INIEREST
MAUA(,r PROJECT OPERATIONS FROM
PRC-APPLICATION ASSISTANCE TO
PROJECT CLOSEOUT AND AUDIT
RCSOLUTION.
THE STATE PROGRAM TO COMPLY
Mini NATIONAL OBJECTIVES.
I ASSIST IN NATIONAL POLICY DEVELOP-
MFNT, INCLUDING IMPLEMENTATION OF
THtSE POLICIES WITHIN THE STATE.
REVISE AND PROMULGATE NEW STATE
REUILATIOIIS REFLECTING NATIONAL
OBJECTivrs.
ESTABLISH EFFECTIVE FINANCIAL
MANAGEMENT SYSTEMS.
OPERATE AND MAINTAIN HASTEWATER
FACILITIES TO COMPLY KITH NATIONAL
WATER QUALITY OBJECTIVES.
CONTINUE TO PLAN AND CONSTRUCT
FACILITIES TO FURTHER ABATE HATER
POLLUTION.
PARTICIPATE IN STATE TECHNICAL AND
MANAGEMENT ASSISTANCE PROGRAMS.
MAINTAIN THE NATIONAL MANAGEMENT
INFORMATION SYSTEM
SUPPORT THE NATIONAL MANAGEMENT
INFORMATION SYSTEM, INCLUDING PRO-
VIDING PROJECTIONS OF FUTURE
PROGRAM OUTPUTS FOR NATIONAL
PROGRAM USE.
PROVIDE GRANTEES wnn INFORMATION,
TRAINING, AND ASSISTANCE FOR
MANAGING THE PLANNING, DESIGN,
CONSTRUCTION, AND OPERATIONS OF
44
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DISCUSSION OF SUBSTRATEGY AREAS
The Federal Role Under Delegation
To satisfy the environmental and program requirements of the
legislation and the intent of Congress to delegate the program, EPA
will change its role to one of an Environmental Manager by 1990.
A clear description of the objectives revised to reflect the new
position must be issued. The transition to State management of the
program will not occur at once because States are at varying stages
of delegation. It is therefore important for EPA to provide a
direction in which it expects the States to progress, and a reasonable
schedule for reaching the objectives of Environmental Manager.
In accordance with the theme of shifting program management to
the State, the grant mechanism will be reoriented to allow State
administration of the federal grant, including the making of the
grant offer, payment processing, and other federal activities. States
will gain flexibility and control needed to manage the program and
continued EPA involvement would ensure national objectives are being
met.
Federal Policy to Reach Full and Effective Delegation
As an Environmental Manager, EPA must fully delegate the
construction grants program. Delegation is being slowed, and in
some cases stopped, by institutional barriers. In order to remove
these barriers, EPA must introduce legislative and regulatory changes
allowing all operational responsibilities to be delegated. This
would include such responsibilities as bid protest resolution,
MBE/WBE, wage rate determinations, NEPA activities, final resolution
of audit exceptions, and other currently non-delegable activities.
A legislative amendment is proposed that would allow EPA to
use up to 2% of the construction grants allotment to fund in-house
operations in those States not under a 205(g) grant agreement or for
those where State performance is unacceptable. This will help EPA
delegate the program and should encourage States to take and sustain
delegation as opposed to letting a third party run the program.
Management assistance is another method of aiding delegation.
Many States need assistance in setting up State management systems
as well as in sustaining them. This assistance can be provided in
three forms: IPAs, special consultants, and the EPA Program Evaluation
Review Sessions, which can help explain and facilitate the more
technical aspects of delegation. The sessions are useful not only
to the State taking delegation but provide feedback to EPA on the
construction grants program.
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On-Going Oversight of State Programs
To ensure that water quality objectives are continuing to be met
and that the program is running effectively and efficiently, the Agency
will have to participate in monitoring and oversight of State programs.
State performance will be evaluated against the following four
general performance characteristics: quality of projects funded;
timeliness of planning, design, and construction of facilities; preser-
vation of program integrity; and management of the program.Specific State
performance measures have been developed for each category. These should
be used as tools for evaluating each State's program.
EPA will develop a national oversight program that combines an annual
evalution (performed by an evaluation team) with periodic regional reviews
of State-specific objectives. The annual evaluation stresses program
outcomes rather than procedures; and will focus on national objectives such
as the State program's fiscal integrity, and that high quality, environ-
mentally sound, and cost effective projects are being funded. Specific
performance measures to be used in these evaluations will be developed.
Some specific State objectives will be negotiated by the State and
Regional offices in a system of management by objective (MBO). The State
will submit an annual report detailing its progress towards meeting the
objectives. These reports will be reviewed by the Regional office. This will
allow EPA to consider State variations for particular objectives while
not losing sight of the national objectives.
If, during the course of an evaluation, EPA finds a State's
performance is lacking in an area, it will work directly with the State
to provide technical or management assistance. In severe cases, or where
State performance deteriorates, EPA will request legislative adjustments
for the following two authorities:
o To withhold the 2% 205(g) monies for use by EPA to administer
the program itself, either through contract or other third
parties or with in-house staff; and
o To terminate or suspend construction grants program assistance
to projects in the States, until such time as the State
performance meets national standards.
These sanctions will apply only in cases of severe performance
problems, and will be based on uniform criteria known to the States in
advance. This specific criteria will be developed in conjunction with
the State and other relevant officials as part of the action plan.
Assistance to States to Improve and Sustain Program Performance
As the program changes, arid full delegation is achieved, the Agency
will have to provide assistance to States to improve and sustain program
performance. Both technical and management assistance will be provided
to the States.
46
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Technical Assistance:
Technical assistance will be provided, but not limited to, the
following areas:
Innovative and alternative technology
Water conservation and energy efficiency
Operations and management of treatment works
Pretreatment and sludge management
Financial management
Program management systems.
A national program for technology assistance will be provided to
the States. The assistance, therefore, will be better adapted to an
individual State problem or need. In addition, EPA will provide
technical assistance to any State that, via State evaluation, is
improperly implementing the technical aspects of the program.
Although some of the experts providing assistance will be
located at Headquarters, many groups will be in Regional offices or
environmental research centers, depending on the nature of the
specialty, geographic application of expertise, and research needs.
Management Assistance:
Management assistance will be provided in much the same way as
technical assistance. Assistance will focus on:
t Managerial Assistance -- Including individual training courses
in supervisory and management skills.
Management Training Packages -- Presenting information to State
employees in the areas of grant management, implication of new
program initiatives, regulations, and changes in policy.
t Manpower Planning -- I including program budgeting, program
planning and resource allocation planning to be available for
any State. Mandatory management assistance will be provided
for those States that receive poor results in the evaluation
of their management practices.
Management Information System:
As one key element of EPA's technical and management assistance
program, the Agency will develop a computerized Management Information
System (MIS). The system will be completed by FY 82.The Agency will
develop a uniform data entry form that allows flexibility for
specific State information needs. EPA will provide training for
all States to operate and utilize the system for their individual
State management programs.
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In addition, the Management Information System will be designed
to be compatible with the MBO system, established for State evaluation.
MAJOR RECOMMENDATIONS
I. The Federal Role Under Delegation
Encourage progress towards EPA acting as an Environmental
Manager. States assume project management responsibilities
and participate in policy development.
Reorient the grant mechanism to allow full State administration
of the grants process, including the making of the grant offer,
payment processing, and other federal fiscal activities.
II. Federal Policy to Reach Full and Effective Delegation
Reclassify all activities as delegable.
Amend Section 205(g) to provide adequate funding
to States to administer the program.
t Amend the Interagency Corps of Engineers (COE) agreement
to allow for State participation in negotiations.
Ill- On-Going Oversight of State Programs
Monitor State programs for quality and timeliness of
projects funded, and integrity and management of the
program, to ensure that national program objectives
are met.
Develop an evaluation mechanism that combines an annual
evaluation (to ensure national objectives are being met)
with MBO, where State specific considerations should be
made.
Develop a set of performance measures to evaluate
State programs. (A list of performance measures is
presented in Table IV.I.)
Institute a system of incentives and sanctions to sustain
State performance including: annual reports, assistance
rewards, loan guarantees and retention of 205(g) funds.
Request authority from Congress to terminate or suspend
construction grants assistance to projects in a State with
poor and deteriorating program performance.
48
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Provide management assistance in the form of IPAs, special
consultants* and National Program Evaluation Reviews.
Expand the 205(g) eligibilities to cover additional program
management activities.
IV. On-Going Assistance to States to Improve Performance
t Provide a national program of technical assistance
located at Headquarters, Regional offices or in
environmental research centers.
t Provide management assistance in a variety of forms
including: managerial assistance (such as training
courses in management skills), management training
packages (e.g., training for State employees in areas
of grants management and new implementation of federal
program requirements), and manpower planning.
t Develop a computerized Management Information System
(MIS) that is compatible with State needs and the MBO
system.
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CHAPTER VI
ACTION PLAN
The action items for implementation of the management strategy
recommendations are outlined below and summarized in Figure VI.1. The
action items are grouped by major strategy area and are consistent
with the recommendations contained in Chapter V. A separate list
of proposed legislative changes related to the management strategy is
included in Figure VI.2 and will be part of the overall legislative
package to be submitted by EPA to Congress in FY 81.
FEDERAL ROLE UNDER DELEGATION -- 1990 OBJECTIVE
1. Draft major policy statement, to be issued by the Administrator,
which outlines the shift of EPA responsibility from national construc-
tion grants manager (the "Supervisor Role"), to national environmental
manager (the "Environmental Manager"). Included in this statement will
be detailed delineation of federal, State, and local roles, a rough
timeline for moving to the new role by 1990, and program objectives and
outputs that will continue to be national in nature. (Deadline --
March 31, 1981.)
2. Consider legislative change to convert grants program mechanism
to a direct, formula based grant to the States, from the current
categorical grant from EPA to the municipality:
a. Draft a major issue paper, proposed legislative language
and supporting memorandum and distribute to States and other parties
for comment. (Deadline March 31, 1981.)
b. Prepare program impact analysis of legislative proposal,
in terms of meeting national objectives, changing existing administra-
tive mechanisms, and stewardship of federal funds. (Deadline June 30,
1981.)
c. Prepare resource analysis of change in grant mechanism
(and related management strategy recommendations), including federal
and State functions, resource needs, management options, and organiza-
tion. (Deadline -- June 30, 1981.)
d. Submit proposal to Agency for decision. (Deadline --
September 15, 1981.)
e. If change proposed, submit legislative and resource
proposal to Congress concurrent with the FY 83 President's budget and
related legislative package, to be used by the authorizing committees
in considering changes to the Clean Water Act. (Deadline January 1982.)
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FEDERAL POLICY AND MANAGEMENT TO REACH ENVIRONMENTAL MANAGER ROLE
3. Draft policy, regulatory, and legislative changes both to al low
effective delegation of all activities to all States, and to encourage
(through use of financial and legal incentives) all States to accept
full program responsibility under delegation as soon as possible:
a. Propose legislative proposal and supporting memorandum to
allow delegation of grant offer, payments, and final audit determination
to qualified States. (Deadline -- January 1982.)
b. Propose regulatory proposal and supporting memorandum to
allow delegation to qualified States to bid protest resolution, NEPA,
civil rights determination, final dispute determination, determination
of protest, resolution of audit exceptions, and determination of
overriding federal interest. Final determination under other federal
laws. (Deadline June 30, 1981.)
c. Issue new delegation policy that defines limits of delegation
under the statute and encourages regulatory deviation for those activities
not now delegable under the current regulation. (Deadline -- February, 1981.)
d. Prepare analysis of delegation plans and resource require-
ments on a State-by-State basis, including establishment of periodic
State reporting on resource-related issues. (Deadline -- June, 1981.)
e. Propose legislative change to provide for the funds available
to a State under Section 205(g) and related management authorities to be
transferred to EPA authority if a States does not sign a delegation agree-
ment under current policy by December 31, 1981. (Deadline March 31, 1981.)
f. Renegotiate Corps of Engineers agreement to allow active
State direction in planning and management of Corps activities. (Dead-
line June 30, 1981.)
g. Establish a Pilot Study to delegate NEPA responsibilities.
Develop analyses of overriding federal interest criteria under a fully
delegated program, including an assessment of where it would likely apply.
(Deadline June, 1981.)
4. Develop an EPA assistance package for facilitating delegation of
program responsibilities, to be used at a State's option, to effectively
meet negotiated delegation schedules and sustain delegation.
ON-GOING OVERSIGHT OF STATE PROGRAMS
5. Develop EPA monitoring and oversight policy and guidelines (a
State management evaluation system) that defines the areas of federal
interest requiring EPA oversight, program review and evaluation
procedures, and the incentives and sanctions available to EPA to ensure
effective State management:
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a. Draft a basic program monitoring framework, and distribute
to Regions and selected States. (Deadline -- January 31, 1981.)
b. Assemble workgroup of State, Regional and Headquarters
officials to develop full State Management Evaluation System.
(Deadline -- January 31, 1981.)
c. Complete prototype Management Evaluation Strategy in
two Regions (and four States), to test out strategy in varying situations
and to facilitate full delegation of program responsibility in
fastest moving States. (Deadline -- June 30, 1981.)
d. Issue draft Management Evaluation Strategy, including
policy and procedural guidance, prototype example, and schedule for
implementation. (Deadline June 30, 1981.)
e. Issue final Management Evaluation Strategy, for use
during FY 82. (Deadline -- September 30, 1981.)
ON-GOING PROGRAM ASSISTANCE TO THE STATES
6. Develop an EPA technical support package to improve and sustain
program performance in engineering, scientific, fiscal, and plant
operations areas. (Package will be available to the States at their
option, as necessary to meet performance requirements under delegation.
a. Draft technical support strategy that includes areas
of expertise, mechanisms of support, type of support, and personnel
requirements. (Deadline -- March 31, 1981.)
b. Complete prototype technical support centers, training
packages, and other aids to most critical technical areas.
(Deadline -- June 30, 1981.)
c. Issue technical support package, including full
implementation plan. (Deadline June 30, 1981.)
d. Complete implementation of organizational and functional
changes in EPA to accomodate technical support initiative.
(Deadline -- December 31, 1981.)
7. Develop a Program Management Support package for State use,
to improve and sustain program performance in manpower planning and
organization, program planning, control, evaluation and fiscal
management. (Deadline -- June 30, 1981.)
8. Develop a National Management Information System for use by
States, Corps, and EPA Headquarters and Regions. (Deadline -- Sept. 30,
1981.)
53
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FIGURE VI.2
PROPOSED LEGISLATIVE CHANGES TO
IMPLEMENT MANAGEMENT STRATEGY
Federal Role Under Delegation
No legislative changes proposed.
Federal Policy to Reach Full and Effective Delegation
Re-classify all activities as delegable including NEPA.
Change legislation to grant EPA authority to use the
State 2% of funds (205(g)) if a State does not sign a
new delegation agreement by 12/31/82.
On-Going Oversight of State Programs
Change legislation to give EPA authority to terminate or
suspend construction grants assistance to projects in a
State with poor and deteriorating program performance.
On-Going Assistance to States to Improve Performance
§ No legislative changes needed.
57
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APPENDIX A
DELEGABLE AND NONDELEGABLE ACTIVITIES
Category 1--Nonde1egab1e Activities
Priority List Review and Acceptance
Finding of No Significant Impact (FNSI) and EIS
Disputes, Appeals, Protests
States Agreement Management (Delegation)
Negotiation of State Agreements and Amendments
Construction Mgt. Assistance Grant Management
Corps Agreement Management
Category 2--Technica11y Nondelegable Activities
Processing Step 1 Grant Offers
MBE Review
Payments
Grant Amendments
Review of Environmental Information Document
and Preparation of Environmental Assessment
Public Hearings
Step 2/2+3
Processing of Step 2/2+3 Grant Offers
MBE Review
Payments
Grant Amendments
Category 3--De1egab1e Activities
Step 1
Preapplication Conference
Plan of Study
Review of Application & Clearinghouse Comments
Review of Prop. Eng. Contr.
Overall Management of Projects
Mid-Course Facility Planning Reviews
Public Participation Programs
Review of Facility Plan (excluding I/I EAS)
I/I Analysis
Sewer System Evaluation Survey
Review of Facility Plan from an Operability Stand
Administrative Review of Application
Review of Proposed Engineering Contract
(Including Overall Management of Project)
Predesign Conference
In-Process Design Reviews
Technical & Administrative Review of FSS
Constructabillty & Biddability
Draft Plan of Operation Review
Review of UC/ICR System
Assessment of the Operability/Maintainability
Review of VE
Processing of Step 3 Grant Offers
MBE Review
Payments
Grant Amendments
Interim Audit Resolution
Final Audit Resolution
Support Activities
Inquiry Response (FOI, Congressional, OMB, GAO)
Construction Grants Program Planning (including ZBB)
Source: Background Paper, Current Use of Resources. July 15,
1980.
Administrative Review of Application
Review of Proposed Engineering Contracts
Overall Management of Project Reconstruction
Preconstructlon Conference
Bid Package Review
Overall Management of Projects
Processing Change Orders
Interim Inspections
Plan of Operation Review & Tracking of Compliance
O&M Manual Review
Sewer Use Ordiance Review
UC System Review
1 Year Follow-up 04M Inspection
Review of Pretreatment Plan
Start-up Services
Final Project Inspection and Certification
Operability
Project Close-out
Support Activities
Information Control & Support of RCGM
59
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APPENDIX B
CURRENT MANAGEMENT OPTION WITH EXISTING EPA RESOURCESSUMMARY
For the last several years, the EPA construction grants program
has systematically developed a national priority scheme as part of
the budget and planning process, to ensure effective targeting of
limited EPA resources. EPA recognized early that major increases
in personnel resources were needed to implement the 1972 Clean Water
Act Amendments and the mid-course correction amendments in 1977.
Despite substantial increases in staff in FY 75 and FY 77, however,
the full resources needed to properly run the program were not forthcoming.
To meet the manpower deficit, therefore, EPA took steps to
supplement the EPA personnel base with other resources approaches.
The two most productive approaches were:
To negotiate an interagency agreement with the Corps
of Engineers to provide 600 workyears for Step 3
construction grants management (signed January 2, 1978);
and
To actively encourage delegation of program activities
to the States, both through administrative actions
(i.e., changes to the regulations to allow fee plans and
selective certifications to States), and legislative
recommendations (resulting in Section 205(g) enactment
in December 1977).
A further action to address the resource problem involved the
negotiation of a major EIS mission contract to draft most environmental
impact statements for the construction grants program. In addition,
a variety of actions were undertaken to streamline program operations
to make more effective use of the resources available.
Since FY 78, the national program has issued an annual priority
scheme that ranked activities according to their relative importance
to meet Agency priorities. Activities ranked highest were to have
full resource coverage; activities ranked lower were to have less than
full coverage, down to certain activities that were to be cut entirely.
This priority scheme was first established through a series of
Regional/Headquarters meetings during the budgeting process in FY 78,
and has been modified annually since then based on conditions unique
to each fiscal year. It is used as the principal analytical tool for
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the zero based budgeting (ZBB) process, the Regional resource
allocation exercise, and in evaluating performance of the
Regional offices.
The basic priority scheme chosen, called the "Quality with
Reality Emphasis" (Management Option D), considered the relative
importance of each of the 75 program activities to meet the most
critical immediate concerns of Agency management, Congress, OMB,
and the public. In general, it was intended to cover highly
visible Congressional actions, annual administration priorities
(MBE, Outlay Management), and Agency initiatives. It was very
responsive to activities that (a) appeared to have the greatest
short-term benefit to the various Agency clientele, (b) are
virtually nondiscretionary (e.g., Congressional inquiry response,
bid protests, ZBB), and (c) are critical to fiscal management.
It is less responsive to those activities that (a) are related to
non-delegated intermediate project management and meetings (e.g.,
mid-course facility planning meetings), (b) delegation monitoring
once the initial State grant is made, and (c) non-delegated
selected front end technical reviews (e.g., infiltration/inflow
analysis). This option reflects the crisis oriented reality of
current EPA program management, but acknowledges the Agency and
Congressional emphasis on program quality and effectiveness.
This option is the only option, that is able to balance
short-term nondiscretionary activities with an attempt to implement
the major quality objectives set out in Agency policy and the Clean
Water Act of 1977. The option explicitly continues the management
by crisis mode of prior years. Full implementation of delegation
was expected to considerably soften this tradeoff and allow more
complete program coverage.
The approach to defining this option was to group activities
into four categories, reflecting the relative level of EPA effort
necessary to meet objectives of option, against the total "prudent
manager" level defined in the workload analysis:*
(a) Maintain full effort:
AWT Review, Priority List Review, Public Participation,
Negative Declaration, Final Project Inspections, Project
Close Out, Inquiry Response, Dispute Resolution, Grant
Officer Processing Payment, Change Orders, MBE Review.
*This option prioritizes EPA effort only. State and Corps delegated
activities are assumed to be maintained at Prudent Manager levels.
The reduction recommended is from full effort, and did not necessarily
imply a cutback from current program effort.
62
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(b) Reduce Effort to 80%:
Project Management (All Steps), Facility Planning
Review, Audit Resolution, Corps Oversight, Review of
Environmental Assessment, EIS Preparation, Program
Planning (ZBB).
(c) Reduce Effort to 50%:
Mid-Course Meeting, Preapplication Conference, State
Delegation Management and Monitoring, Review of
Engineering Contracts, Needs Survey coordination,
RC GMIS Support.
(d) Reduce Effort to 20%:
Infiltration/Inflow Analysis, Design Conferences and
Reviews, Review of Grant Amendments (Steps 1 and 2).
The basic priority scheme was substantially modified for the
FY 82 budget planning process just completed, in anticipation of
recommendations from the 1990 study. The modifications reflect the 1990
basic thrust by reorienting the construction grants program from one of
direct operations to a program of overall management, oversight, and
technical assistance. The purpose is to leverage the program's
relatively scarce federal resources to make maximum use of not only
State and COE resources (through 205(g) and COE delegation agreements,
respectively), but also resources in the municipalities, the
consulting engineering field, and the construction industry as a
whole. There are six basic new initiatives, in the following areas:
Integrated Waste Management
Innovative/Alternative Technology
Municipal Self-Sufficiency
Operations and Management
Service Centers
Quality Assurance of Delegation.
The decision was to staff these new initiatives within current
resources, thus cutting into traditional operations more severely
than with the old Management Option D approach. The major steps in
the computation, based on use of the construction grants resource
model, were as follows:
63
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Workyears
Total EPA Resource Need (Level 5) 1,286
Less: Management Option D (incl. Corps -553
Standardization)
Less: Other Adjustments Downward per 1990 Thrust -141
Total Resources for Traditional Program 592
Plus: Adjustments Upward per 1990 Thrust
(other than six new initiatives) +104
Plus: Integrated Waste Management +30
Innovative Alternative Technology +15
Municipal Self Sufficiency +50
Operations and Management +20
Service Centers (Partial Implementation) +30
Quality Assurance of Delegation +50
Current Resources in Program (Level 3) 891
A detailed outline of this management option is contained in the
FY 82 workload analysis for construction grants.
64
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APPENDIX C
LISTING OF STAFF PAPERS WRITTEN FOR MANAGEMENT STRATEGY
National Program Objectives, Roles and Functions
1. Roles of EPA in Construction Grants (6-5-80); Digest of
Roles (7-9-80).
2. Impact of Other Federal Laws on Operations (9-30-80).
3. FY 1982 Workload Analysis for Construction Grants
(8-26-80).
Delegation of Program Operations Under Franchiser Role
1. Regional Oversight of State Programs (10-8-80); Summary
10-2-80.
2. State Resources 1990 Strategy Background Paper
(9-29-80); Summary (9-29-80)
3. Evaluation of Operational Issues in State Delegation
(Walker Study) (11-80).
4. Role of the Corps of Engineers (9-29-80).
5. Strong Audits; An Essential Ingredient in Delegation
Construction Grants (9-15-80).
Innovative Management Approaches and Initiatives
1. Technical Support Centers (8-20-80).
2. Grantee Marketing in the Construction Grants Program
(8-20-80).
3. Peer Review Concept (7-1-80).
4. Certification (7-21-80).
5. Options for Third Party Management of Construction Grants
for Small Communities (9-5-80); Summary (9-5-80).
6. State Priority List for Construction Grants (5-30-80).
7. State Project Priority Systems and Lists (9-4-80).
8. Early Environmental Assessment in the Construction
Grants Process (8-22-80).
65
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9. Fiscal Assessment and Financial Planning (7-21-80),
10. Use of IPAs or Other Personnel Transfer Mechanisms,
National Program Management Systems
1. National Program Management (9-29-80).
2. Defining a Management Process (10-22-80).
v.s. aovBBtuort imam omc* : i9ei-o-720-ott/jMz
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