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  Setting—Background	11
        Program Resources—Status and  Problem Areas	14
        National  Program Management--Current  Systems  and
        Problem Areas   	  16
        Delegation—Current  Status and Problem Areas	18

IV.     MAJOR STRATEGY ISSUES 	   23

        Introduction 	  23
        The Federal  Role Under Delegation—1990 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 Activities—These  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 2—Technically 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 3—Delegable Activities—These 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.
                                         11

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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
                                       12

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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:
                              13

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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,
                                   14

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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.
                                      15

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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
                                   17

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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:
                                  20

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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.
                                      27

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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.
                                                         35

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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.
                                       38

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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.
                                      45

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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.
                                  47

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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.
                                49

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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.)
                                  51

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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:
                                       52

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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 RESOURCES—SUMMARY
     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
                                    61

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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).
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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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