Fiscal Year 2004
          Annual  Report
          U.S. ENVIRONMENTAL PROTECTION AGENCY


ENVIRONMENTAL AND  FINANCIAL PROGRESS

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     —-ssssr—"
November 15, 2004
The President
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Washington, DC iU3
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                  MicKaelO.Leavitt

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                                                                 INTRODUCTION—TABLE OF CONTENTS
Table  of Contents
INTRODUCTION
Mission Statement and Organization Chart	ii
Message from the Administrator 	iii
Message from the Chief Financial Officer	iv

SECTION I —OVERVIEW AND  ANALYSIS
Overview of Performance Results 	3
Financial Analysis	II
Improving Results	14
Addressing Management Issues and  Challenges	18
    —FY 2004 Integrity Act Report	18
    —FY 2004 Management's Report on Audits	20
    —Key Management Challenges  	22

SECTION II—PERFORMANCE  RESULTS
GOAL  —Clean Air and Global Climate Change 	28
GOAL 2—Clean and Safe Water	49
GOAL 3—Land Preservation and Restoration	64
GOAL 4—Healthy Communities and Ecosystems	79
GOAL 5—Compliance and Environmental Stewardship	106
CHAPTER 6—Supporting Achievement of Environmental Results 	122

SECTION III—FINANCIAL STATEMENTS
CFO's Analysis 	136
Principal Financial Statements	142
Summary of OIG's Audit Report 	203

APPENDIX
Appendix A—Program Evaluations  Completed in FY 2004	2
Appendix B—Data Quality for Assessments of FY 2004 Performance Measures	20
Appendix C—Program Assessment Rating Tool (FY 2004-2005) 	53
Appendix D—Acronyms 	62

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                     Mission Statement and Organizational  Chart
                              U.S. Environmental Protection Agency
       The mission of the Environmental Protection Agency is to protect human health and the environment.
      Assistant Administrator
       for Administration and
       Resource Management
         General Counsel
       Assistant Administrator
      for Prevention, Pesticides,
        and Toxic Substances
             Region I
            Boston, MA
             Region 5
            Chicago, IL
                                                Administrator
                                              Deputy Administrator
Assistant Administrator
 for Air and Radiation
  Inspector General
Assistant Administrator
   for Research and
    Development
      Region 2
    New York, NY
      Region 6
     Dallas, TX
Assistant Administrator
 for Enforcement and
Compliance Assurance
Assistant Administrator
for International Affairs
Assistant Administrator
 for Solid Waste and
 Emergency Response
      Region 3
   Philadelphia, PA
      Region 7
   Kansas City, KS
 Chief Financial Officer
Assistant Administrator
  for Environmental
    Information
Assistant Administrator
     for Water
      Region 4
     Atlanta, GA
      Region 8
    Denver, CO
                                      Region 9
                                  San Francisco, CA
                                   Region 10
                                  Seattle, WA

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Message from the Administrator
In the three decades since the
Environmental Protection Agency was
created, our nation has made unprecedented
progress in protecting human health and the
environment. We have cut air pollution in
half, cleaned up lakes and streams, installed
drinking water and sewer systems, and begun
to heal the land from years of abuse. Each
generation of Americans builds upon the
environmental accomplishments of its
predecessors. In our generational relay for
environmental improvement, we aspire not just
pick up the pace.
to run our leg but to
As this FY 2004 Annual Report demonstrates, our efforts to accelerate
progress have achieved many impressive and important environmental
results. I commend the EPA's dedicated staff for its hard work to improve
and protect the environment. By fostering collaboration, harnessing new
technology, creating market incentives, and measuring the results of our
efforts, we are implementing new approaches to accomplish our environ-
mental goals while remaining economically competitive.

Our nation has developed considerable environmental maturity in the last
30 years. However, many challenges remain. We will meet these challenges
with a commitment to new thinking and better approaches—an EPA that
is collaborative, innovative, information'rich, and performance-based.
Together, we will use these approaches to build upon the successes of the
past year and increase the rate of environmental progress.
                                Michael O. Leavitt
                                Administrator
             .  I

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Message from the  Chief Financial  Officer

As Chief Financial Officer of the Environmental Protection Agency,
I recognize that our Agency must be accountable to our ultimate stake-
holders—the American Public. We are obligated to use our resources not
only to protect the environment for our citizens today, but also to assure
that generations to come will have a better life. We do this by promoting
the President's Management Agenda and making EPA part of a govern-
ment that is citizen-centered, results-oriented, and market-based.

Our Agency's work revolves around five environmental goals. In the
pages that follow, we report to you what we planned to accomplish
during this past fiscal year, what we have achieved, and what we have
ahead of us.

The final section of the report contains our audited financial state-
ments. EPA received the 2003 President's Quality Award for significant
improvement in financial performance, and our record remains strong
for 2004, with timely financial statements and a clean audit opinion.
Every year, EPA is better able to link its performance results and
financial information.

I thank our partners—state and local governments, tribes, businesses
and other federal agencies—as well as EPA's nearly 18,000 employees
for making fiscal year 2004 a successful year.
                                        ^S-   	\ M	
                          Charles E. JohnsWi       J
                          Chief Financial Offfeef—

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Overview of Performance Results ...
Financial Analysis 	
Improving Results	
Addressing Management Issues and Challenges
—FY 2004 Integrity Act Report	
—FY 2004 Management's Report on Audits ..
—Key Management Challenges	,.,

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    Today's environmental challenges are very complex,
and future challenges will likely be even more daunting.
To continue to meet these challenges, the U.S.
Environmental Protection Agency (EPA) has worked
during FY 2004 to increase the pace of improvement and
identify new and better ways to protect  human health
and the environment. By focusing on the results to be
achieved and expanding collaboration, improving tech-
nology, and increasing market incentives, EPA is working
to do more, and to do it faster
and more cost efficiently.
                                  EPA's LONG-TERM STRATEGIC GOALS
                                         n Air & Global Clima
                                         in & Safe Water
                                         J Preservation &  Rest
                                  4. Healthy Communities & Ecosystems
                                  5. Compliance & Environmental Stewardship
    In this report, the Agency
reviews its FY 2004 progress
toward achieving environ-
mental results—improving the
quality of air and water and
preserving and protecting the
land—while keeping the
nation economically competi-
tive. This document meets the
requirements of the Government Performance and
Results Act and other management legislation.1

    In FY 2004, with resource obligations of $10.16 billion
and 17,511 full-time-equivalent employees, EPA achieved
significant results under each of the five long-term envi-
ronmental goals established in its 2003 Strategic Plan. To
help measure EPA's annual progress and assess its success,
Agency leaders established 79 critical performance goals at
the beginning of FY 2004. EPA's progress toward these
goals is reported in the chapters that follow. Because man-
aging taxpayer dollars efficiently and effectively is key to
delivering the greatest results to the American people, this
report also presents a picture of the Agency's financial
activities and achievements during the year.

    The FY 2004 Annual Report contains three sections.
Section I, Overview and Analysis, provides a broad picture
of EPA's environmental and fiscal performance during
                       FY 2004.* It highlights EPA's envi-
                       ronmental accomplishments and
                       performance challenges, outlines
                       the Agency's financial position at
                       the end of FY 2004, discusses
                       efforts to strengthen performance
                       and manage for improved results,
                       and describes how EPA is address-
                       ing management issues and audit
                       recommendations. Section II,
                       Performance Results, describes in
                       greater detail the results that
EPA—working with its federal, state, tribal, and local
government partners—achieved under each of the Agency's
five goals. It also discusses EPA's successes and challenges  in
meeting the Annual Performance Goals established in
EPA's FY 2004 Annual Plan. Section III, FY 2004 Audited
Financial Statements, summarizes EPA's financial activities
and achievements and presents the Agency's annual finan-
cial statements as well as a summary of the  independent
audit conducted by EPA's Inspector General.
   The Overview and Analysis also addresses requirements for a "Management's Discussion and Analysis" of the annual financial statements
   included in EPA's FY 2004 Annual Report. Because the FY 2004 Annual Report consolidates a number of specific reports, some required
   components of the "Management's Discussion and Analysis" are presented in greater detail elsewhere in this report. In particular, EPA's
   mission statement and organization chart appear at the front of the report. Section II discusses the Agency's performance goals and results.
   Section III presents EPA's financial statements, along with a discussion of systems, controls, and legal compliance.

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                                   SECTION  I . OVERVIEW AND ANALYSIS—OVERVIEW OF PERFORMANCE RESULTS
Overview  of
Performance  Results
   Throughout FY 2004, EPA collaborated
closely with its partners to achieve better
environmental results by improving
approaches and using resources wisely. The
section below describes key environmental
and program results in protecting the nation's
air, water, and land; summarizes how well
the Agency did in meeting its FY 2004
performance goals; and discusses current
performance challenges.


ENVIRONMENTAL ACCOMPLISHMENTS

Clean Air and Global Climate Change,
Every year, state and federal criteria air pollu-
tant programs established under the 1990
Clean Air Act Amendments prevent tens of
thousands of prema-
ture mortalities,
millions of incidences
of chronic and
acute illness, tens
of thousands of
hospitalizations and
emergency room vis-
its, and millions of
lost work  days.2
   In FY 2004, EPA	
announced a new suite
of rules, critical to achieving cleaner, healthier
air. The Clean Air Rules of 2004 include the
Clean Air Ozone Rules, Clean Air Fine
Particle Rules, Clean Air Interstate Rule, and
Clean Air Mercury Rule. EPA identified which
areas of the country were and were not cur-
rently meeting the health-based ozone
standard. EPA also issued a new rule classifying
geographic areas by the severity of their ozone
conditions and establishing a deadline for state
and local governments to reduce ozone levels.
In early 2005, the Agency  will make similar
geographic boundary determinations for the
new particulate matter (PM) standard.
   In addition, EPA issued the Clean Air
Non-Road Diesel Rule, which requires strong
pollution controls on diesel engines used in
construction, agriculture, mining, and other
industries. By combining tough exhaust stan-
dards with cleaner fuel requirements,  the rule


The air is getting cleaner  every year.

will reduce the sulfur content of diesel fuel by
99 percent and cut emission levels from non-
road diesel equipment by over 90 percent.
This program is expected to provide dramatic
health benefits each year, preventing  12,000
premature deaths and hundreds of thousands
of respiratory problems. EPA estimates that
                    the overall public
                    health benefits of this
                    rule outweigh  the
                    economic costs by
                    40:1.3 Combined with
                    existing EPA pro-
                    grams, the new Clean
                    Air Rules and Clean
                    Air Non-Road Diesel
                    Rule are estimated to
                    bring well over half of
                    the nation's non-
                    attainment areas into
attainment with the National Ambient Air
Quality Standards for ozone and PM.4

    In FY 2004, the Agency completed the
first phase of a two-phase program for
addressing large stationary sources of toxic air
pollutants. The 96 Maximum Achievable
Control Technology Standards completed
and issued under this program have resulted
in annual reductions of approximately 1.5
million tons of toxic air emissions and will
achieve even greater reductions when all
sources come into full compliance by  2007.
In the second, risk-based phase of the air

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               toxics program, EPA will emphasize a com-
               munity-based approach to address local
               problems and reduce exposures to such pollu-
               tants as toxic chemicals, particulates, and
               asthma triggers.

                   Based on data obtained in FY 2004, EPA's
               climate protection programs again exceeded
               their goals for reducing greenhouse gas emis-
               sions.5 These programs remain on track to
               provide 40 percent of the greenhouse gas
               reductions required to meet the President's 18
               percent greenhouse gas intensity improvement
               goal by 2012. Encouraged by the Agency's
               ENERGY STAR program, American con-
               sumers and businesses avoided greenhouse gas
               emissions equivalent to those from 15 million
               automobiles, while saving approximately $8
               billion on their energy bills.6

                   EPA also continued important research
               on PM during FY 2004 that supports the
               association between exposure to PM and ill-
               ness and death, specifically for asthmatic
               children and other susceptible groups.7
               Scientists also found that PM25, the compo-
               nent of PM smaller than 2.5 microns in
               diameter, penetrates most indoor environ-
               ments easily. In FY 2004, EPA provided an
               estimate of the relationships between indoor
               concentrations of PM25 and people's exposure
               to particles from both indoor and outdoor
               sources.8 These research results will  enable
               regulators to more accurately estimate the
               risks posed by personal exposure to PM25.

               Clean and Safe Water. The percentage of
               the population served by U.S. community
               water systems that met all health-based
               drinking water standards in effect in 1994

 Drinking  water is  safer and recreational

 surface waters are cleaner.

               increased from 79 percent in 1993 to 90  per-
               cent in 2003. Although final FY 2004
               drinking water data will not be available
               until January 2005,  EPA expects that these
               critical gains have been maintained.
    During FY 2004, EPA reviewed and
approved new or revised water quality stan-
dards for 27 states and promulgated federal
standards for Puerto Rico. By the end of
FY 2004, 25 tribes had EPA-approved water
quality standards in place. In addition, EPA
supported states and tribes in developing bio-
logical and nutrient criteria that will enable
them to adopt water quality standards that
more fully protect aquatic life and water.

    Despite ongoing challenges in issuing
permits to protect surface water under the
National Pollutant Discharge Elimination
System (NPDES), in FY 2004, permits imple-
menting effluent guidelines prevented the
discharge of approximately 136 million
pounds of pollutants into the nation's waters.
This represents a cumulative total of 2.3 bil-
lion pounds since 1999.9 Part of this success
is due to the states and EPA's issuance of per-
mits at concentrated animal feeding
operations to  protect surface water from ani-
mal waste.

    EPA and  its state partners also continued
to improve their understanding of water qual-
ity. In FY 2004, EPA released for public

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                                      SECTION I .  OVERVIEW AND ANALYSIS—OVERVIEW OF PERFORMANCE RESULTS
comment the second report on the condition
of the nation's coastal resources, including
estuaries, coastal wetlands, and coral reefs. In
addition, in FY 2004 EPA and the states ini-
tiated the first national study of the
ecological condition of small streams
throughout the United States and will use
the results to make program and resource
decisions at the national and state levels. In
April 2004, EPA published a "List of
Beaches"10 that, for the first time, provided
the names, locations, and monitoring status
of beaches along the country's coastal and
Great Lakes waters.

Land Preservation and Restoration. In
FY 2004, EPA completed cleanup ("construc-
tion completes") and reduced risks posed to
human health at 40 sites on the Superfund
National Priorities List  (NPL), including the
900th site on the list in Port Salerno, Florida.
At the close of FY 2004, more than 83 percent
of Superfund NPL sites and 84 percent of high-
priority RCRA corrective action facilities had
met Agency goals for human health indicators,
meaning that controls are in place to prevent
any unacceptable human exposures from


Cleanup construction

completed at 926 Superfund

sites since the early  1990s.

occurring under current land and groundwater
use. In addition, groundwater protection goals
had been met at nearly 67 percent of
Superfund sites and 70 percent of high-priority
RCRA corrective action facilities.

    Under the Agency's waste prevention
programs, underground storage tank releases
were reduced to fewer than 5,000 by the mid-
dle of FY 2004 compared with more than
12,000 releases in FY 2003. EPA exceeded its
FY 2004 goal of permitting or establishing
approved controls to prevent dangerous
releases to air, soil, and groundwater at 81
percent of the country's hazardous waste
management facilities.
LOVE CANAL REMOVED FROM SUPERFUND LIST
On September 30, 2004, EPA removed the Love
Canal site in Niagara County, New York, from the
Superfund NPL. All cleanup work at the site has been
completed, and follow-up monitoring conducted for
the past 15 years confirms that cleanup goals have
been reached. EPA and the New York State
Department of Environmental Conservation have con-
tained and secured wastes already in the canal so that
they no longer leak into surrounding soils and ground-
water and have revitalized properties in the
neighborhood surrounding the canal.
The 70-acre Love Canal site encompasses a hazardous
waste landfill where chemical waste products were
disposed of from  1942 through 1952. In 1953, the origi-
nal  16-acre hazardous waste landfill was covered, and
a school and more than 200 homes were built nearby.
Residents reported  odors and residues as early as the
1960s; studies in the 1970s showed that numerous
toxic chemicals were migrating from the landfill and
contaminating nearby waterways. In 1978, New York
Governor Hugh Carey ordered the purchase of resi-
dents' homes surrounding the canal. In  1978 and 1980,
President Jimmy Carter declared two separate envi-
ronmental emergencies and, as a result, approximately
950 families were evacuated from a 10-block area sur-
rounding the canal.  I he emergency declaration area
included neighborhoods adjacent to the site covering
350 acres. In 1980, the Comprehensive  Environmental
Response, Compensation  and Liability Act (CERCLA),
also known  as Superfund, which addresses abandoned
hazardous waste sites, was passed largely due to the
problems at Love Canal.
Today, the area known as Love Canal is once again a
flourishing community. Forty acres are covered by a
synthetic liner and clay cap and surrounded by a bar-
rier drainage system. Contamination from the site is
also controlled by a leachate collection and treat-
ment facility. Neighborhoods to the west and north
of the canal have been revitalized, with more than
200 formerly boarded-up homes renovated and sold
to new owners, and 10 apartment  buildings con-
structed. The area east of the canal has also been
sold for light industrial and commercial redevelop-
ment. The Love Canal site will continue to be
monitored and remain eligible for cleanup work in
the unlikely event that a  change in site conditions
should warrant such an action.

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                  EPA's waste management and cleanup
               programs faced several challenges in FY
               2004. The Superfund program faced a
               growing backlog of projects ready to begin
               construction, coupled with the challenge of
               funding several large and complex ongoing
               projects. During FY 2004, Superfund
               underwent a series of internal and external
               evaluations  to explore this problem. As a
               result, the program has engaged in a public
               dialogue to identify and  implement  a series
               of reforms that will address these issues over
               the coming years.11

                  Generation of municipal solid waste
               (MSW) remained stable, at slightly less than
               4.5 pounds per capita daily, while increases
               in the rate of recycling did not occur as pro-
               jected. As a result, EPA  is unlikely to reach
               its goal of 35 percent recycling by 2005, and
               is extending this goal to  2008. To help
               increase  recycling rates,  EPA is targeting the
               paper, plastics, packaging, and organics seg-
               ments of the MSW stream. For example,
               EPA launched its "Greenscapes" program in
               FY 2004 to  foster composting of food and
               yard wastes—organic materials representing
               over 25 percent of MSW—and using the
               compost to landscape roads, highways, golf
               courses, ski resorts, and industrial and insti-
               tutional facilities.
   Childhood lead poisoning has been
   reduced by half since the early  1990s.
 Healthy Communities and Ecosystems,
 Through FY 2004, EPA continued to reduce
 risks to communities, homes, workplaces, and
 ecosystems. The Agency reviewed new chem-
 icals and pesticides before they were put on
 the market and older chemicals and pesti-
 cides already in use for unacceptable risks.
 EPA-screened chemicals now comprise more
 than 22 percent of the U.S. inventory of
 more than 76,000 commercial and/or indus-
 trial chemicals.12 In 2004, EPA provided
 industry with tools to pre-screen new chemi-
 cals for adverse effects early in their
 development, saving resources and  enhanc-
 ing environmental protection and
 stewardship. In addition, more than 400
 chemical companies and 100 industry consor-
 tia in FY 2004 committed to develop data for
 more than 2,200 chemicals produced or
 imported in quantities greater than 1 million
 pounds per year (high-production-volume, or
 HPV, chemicals). These hazard  screening
 data will be  available to the public  and will
 cover 92 percent of the nation's chemicals
 that EPA has identified as having incomplete
 hazard-screening data.13


EPA registered another 26 new

safer pesticides  in FY 2004.

    In  2004, EPA met new standards for
 efficiency and new deadlines under the
 Pesticide Registration Improvement Act of
 2003 (PRIA), allowing innovative  and safer
 pesticide products to reach the marketplace
 faster, and exceeding  its goal for registering
 alternatives  to pesticides that may endanger
 human health and the environment. In 2004,
 for example, EPA registered one new active
 ingredient as an alternative for methyl bro-
 mide, a pesticide known to deplete the ozone
 layer and scheduled for phase-out. EPA also
 registered 10 new agricultural uses for
 already-registered active  ingredients, as
 alternatives for methyl bromide.

    EPA is also making progress toward
 protecting the  health of vulnerable

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                                      SECTION I . OVERVIEW AND ANALYSIS—OVERVIEW OF PERFORMANCE RESULTS
children—the incidence of childhood lead
poisoning has been reduced by half since the
early 1990s.14 In 2004, EPA began to focus
outreach and education efforts on "hot spots"
where the incidence of childhood lead poi-
soning remains high, often in disadvantaged
urban centers. The Agency also completed a
study providing significant new data on the
aggregate exposures of preschool children to
pollutants commonly found in their homes
and daycare centers.

    In May 2004, the President signed an
Executive Order directing Administrator
Leavitt to establish the Great Lakes Federal
Task Force, comprising nine Cabinet  agen-
cies, the U.S. Army Corps of Engineers, and
the Council on Environmental Quality, to
coordinate the federal effort to improve water

Administrator Leavitt

leads  Great  Lakes Federal

Task Force.


quality in the Great Lakes.15 The Order calls
for regional collaboration  to develop action
plans to address priorities, identify resource
needs, develop an  implementation schedule,
and facilitate a cohesive management
process. During FY 2004, EPA worked with
Canada to monitor conditions in the Great
Lakes by  tracking a number of indicators,
such as polychlorinated biphenyl (PCB) con-
centrations in predator fish, atmospheric
deposition of toxic chemicals, and phospho-
rus levels in the water.16 Water quality
monitoring conducted in 2003 of the Lake
Erie Central Basin "dead zone" showed that
phosphorus concentrations are approximately
twice the target levels. EPA is conducting a
study of this problem, believed to be linked
to invasive species such as zebra mussels, and
expects to issue the final report in FY 2005.

    In FY 2004, EPA also  protected and
restored over 100,000 acres of estuarine habi-
tat within the 28 estuaries of the National
Estuary Program. In addition, the President
announced an aggressive new national goal
to achieve an overall increase of America's
wetlands over the next 5 years. To reach this
goal, EPA will be working to restore 6,000
acres and enhance an additional 6,000 acres
of wetlands over the next 5 years (an average
of 1,200 acres per year in each category).17

Compliance and Environmental
Stewardship. EPA continued to promote
compliance with environmental require-
ments, enforce environmental laws, and
encourage environmental stewardship. The
Agency  estimates that enforcement actions
concluded in FY 2004 will reduce, treat, or
eliminate over 1 billion pounds of pollutants,
with a total estimated reduction of 2.5 billion
pounds since FY 2001. Eighty three percent
of enforcement  actions concluded in FY 2004
will result in increased environmental protec-
tion or improved long-term facility
environmental management practices.
   EPA also provided specialized compli-
ance assistance  to over 731,000 facilities,
states, and other regulated entities to

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
      FY  2004 PROGRESS IN HOMELAND SECURITY
      •  Protecting Water Facilities From Terrorist
        Attacks: EPA continued to assist the nation's drink-
        ing water and wastewater facilities in protecting
        infrastructure from terrorist and other intentional
        attacks. By the end of FY 2004, 100  percent of
        water systems serving at least 100,000 people had
        completed vulnerability assessments. EPA expects
        100 percent of the nation's small systems to have
        assessments in place in 2005.
      •  Improving Emergency Preparedness for Large-
        Scale Incidents: EPA collaborated with  its federal
        partners to enhance the incident  command system
        across government and the  private sector, assist
        states, and develop national policy and  guidance on
        response coordination and emergency  support. EPA
        field responders were trained to detect, analyze,
        and respond to chemical, biological,  and radiological
        agents. In  addition, the Agency's criminal enforce-
        ment personnel supported the U.S.  Secret Service
        and FBI at designated  National Special Security
        Events such as the G-8 Nations Summit, and sup-
        ported the U.S. Capital Police and FBI during the
        ricin incident at the  U.S. Capitol.
      •  Developing the Nation's Ability to Respond to
        Chemical  Terrorism: EPA led a collaborative effort
        with nine federal agencies, numerous state agencies,
        private industry, emergency medical associations, and
        other organizations to increase understanding of the
        potential health effects from various levels of expo-
        sure to hazardous chemicals during a terrorist
        incident.  In FY 2004, 'Acute Exposure Guideline
        Levels" were proposed for 22 highly hazardous chem-
        icals, bringing the cumulative total to  128 chemicals.
        Eliminating Anthrax Spores:  EPA continued to
        spearhead scientific collaboration to measure the
        effectiveness of various liquid, gaseous, and vapor-
        ized chemical sporicides for eliminating anthrax
        spores resulting from a terrorist incident.
improve their understanding of require-
ments and environmental management
practices. In FY 2004, 90 percent of the
regulated community responding to com-
pliance assistance center surveys
indicated an improved understanding of
environmental regulation, and 72 percent
of the respondents improved environ-
mental management practices as a result
of the assistance.18
    Under EPA's Green Chemistry
Challenge Award program, which provides
Presidential recognition to industries


EPA's pollution prevention

programs eliminated over

600 million pounds  of

hazardous  chemicals in

FY2004.

achieving outstanding pollution preven-
tion, 134 million pounds of hazardous
chemicals were eliminated from the envi-
ronment.19 EPA also worked with industry
in its Design for the Environment program
to develop cleaner, more environmentally
friendly products. In FY 2004, Design for
the Environment eliminated 63 million
pounds of hazardous chemical use, saved 23
million gallons of water, and provided
industry $488,000 in cost savings.20 Taken
together, all of EPA's pollution prevention
programs resulted in the elimination of
over 600 million pounds of hazardous
chemicals, saved 495 million gallons of
water, and saved companies $936,000.21 An
additional benefit of the Agency's pollution
prevention work was the elimination of 7 7
metric tons of carbon dioxide.
                                                               HOMELAND  SECURITY

                                                                  In FY 2004 EPA revised its Homeland
                                                               Security Strategic Plan, which identifies
                                                               the range of homeland security activities

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                                      SECTION I . OVERVIEW AND ANALYSIS—OVERVIEW OF PERFORMANCE RESULTS
the Agency conducts, taking into account
the evolving role of the U.S. Department of
Homeland Security.21 The Agency also spent

Vulnerability assessments

completed on all major

water systems,

considerable time and effort mapping out
responsibilities and strategies to address
recently issued Presidential Directives. More
information on EPA's Homeland Security
Program is available at http://www.epa.gov/
home landse curity.

THE PRESIDENT'S MANAGEMENT AGENDA

    EPA's leaders recognize that organizing
the Agency and managing its work and
resources as efficiently as possible will deliver
the best results to the American people.
The President's Management Agenda (PMA)

EPA improved its scores

under the President's

Management Agenda.

provides a framework for assessing resource
management efforts and ensuring that EPA is
streamlined, responsive, and results-oriented.
Building on its FY 2003 accomplishments,
EPA made significant progress in implement-
ing the PMA reforms for Strategic
Management  of Human Capital, Competitive
Sourcing, Expanding E-Government,
Improved Financial Performance, and Budget
and Performance Integration. More informa-
tion about the Agency's work under the PMA
is available at http://www.epa.gov/pmaresults.

SUMMARY  OF  PERFORMANCE DATA

    In FY 2004, EPA met 78 percent of the
annual performance goals (APGs) for which
data are provided in this report. FY 2004 results
to date reflect an improvement over the 73
percent of goals the Agency met in FY 2003.
    In its FY 2004 Annual Plan, EPA com-
mitted to 79 APGs. However, because final
data for 25 of these APGs will not be avail-
able until later in 2004 or beyond, these
APGs are not included in the tallies provided
in this report. They will be discussed in
future annual reports. Figure 1 provides an
update of results for prior years;  charts pre-
senting EPA's FY 2004 performance results
and highlights of 4-year performance trends
are provided with each chapter  in Section II.

    Despite EPA's and its partners' best
efforts, the Agency was not able to meet all
planned targets for FY 2004. EPA did not
meet  12 of the 54 FY 2004 APGs for which
performance data are currently available.
However, the Agency does not expect this
shortfall to compromise its ability to meet its
longer-range goals and strategic objectives.
EPA will consider  these shortfalls as it adjusts
its APGs and program strategies for FY 2005
and beyond. The performance data charts in
Section II provide more complete informa-
tion on missed targets, discuss efforts to meet
future targets, and describe the Agency's
progress toward its longer-range strategic
goals and objectives.

       Figure I: EPA's Updated Performance Results
    (Annual Performance Goals for Which Final Data Are Available)
 10
      1999
              2000
                     2001     2002

                    Fiscal Year
                                    2003
    During FY 2004, final performance results data became available for a number
    of APGs from prior years: 19 for FY 2003, two for FY 2002, one for FY 2001,
    and one for FY 1999. The above graph includes these additional results.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
                 EPA's  FY2004  PROGRESS  UNDER THE  PRESIDENT'S  MANAGEMENT AGENDA
     INITIATIV
     Human Capital
                            Yellow
                 Green
                -Improved status score to "yellow" and received "green" progress score from the
                 Office of Management and Budget (OMB) for 4 quarters in FY 2004. Achieved
                 EPA's July I, 2004, "Proud-To-Be" goals.
                -Issued a revised "EPA Strategy for Human Capital" and made significant progress
                 in implementing it.
                -Developed and implemented a human capital accountability plan.
                -Aligned all employee performance  standards with the Agency's mission and
                 Strategic Plan.
                -Began implementing a plan to move from a two-level to a multi-level perform-
                 ance management system for Agency employees.
     Competitive
     Sourcing
                            Yellow
                 Green
                -Improved status score to "yellow" and received "green" progress scores from
                 OMB for 3 quarters in FY 2004. Achieved the Agency's July I, 2004, "Proud-To-
                 Be" goals.
                -Began conducting EPA's first standard competition of Agency-wide Employee
                 Benefit services in May 2004. However, EPA's participation in another govern-
                 ment-wide initiative led to cancellation of this competition.
                -Initiated a second standard competition, covering Agency-wide Vendor Payment
                 services with completion  expected in August 2005.
                -Submitted a long-term competitive sourcing plan to OMB for review.
                -Expanded EPA's Competitive Sourcing Council to include  all major program
                 offices, as well as other headquarters and regional offices.
     Expanded E-
     Government
                            Green
                 Green
                -For the first time, achieved "green" status score from OMB for E-Government.
                 Achieved EPA's July  I, 2004, "Proud-To-Be" goals.
                -Participated in 17 of the 25 E-Government initiatives under the PMA. Led the
                 architecture workgroup for the financial management piece of OMB's "Line of
                 Business" efforts.
                -Continued to serve as the federal agency lead for the E-Rulemaking initiative.
                 Reached agreement on the core functions and architecture for the Federal
                 Docket Management System (FDMS).
                -Completed all 13 E-Government Memoranda of Understanding (MOUs) that EPA
                 was required to complete in FY 2004.
                -Implemented an Earned Value Management System (EVMS).
                -Submitted the Critical Infrastructure Protection plan to OMB.
     Improved
     Financial
     Performance
Green
Green
—Maintained EPA's "green" status score. Received "green" progress scores from
 OMB for 4 quarters in FY 2004 and achieved the Agency's July I, 2004, "Proud-
 To-Be" goals.
—Delivered EPA's FY 2004 Annual Report with audited financial statements by the
 required November 15, 2004, deadline, and met all required deadlines for the
 Agency's quarterly financial statements.
—Developed a framework and action plan to guide the Agency's future efforts in inte-
 grating financial and performance information for decision making.
—Worked with Treasury and OMB and reconciled variances in  year-end Superfund
 Trust Fund resources, which have accumulated over the last 3-4 fiscal years. The
 Superfund Trust Fund account balance statements are now in agreement across
 all three agencies.
—Identified EPA's high-risk areas for erroneous payments, and expanded the scope
 of the Agency's erroneous payments review to determine that funds are used for
 their intended purpose.
     Budget and
     Performance
     Integration
Yellow
Green
-Received "green" progress scores for three out of four quarters in FY 2004. Did
 not achieve EPA's July  I, 2004, "Proud-To-Be" goals.
-Worked cooperatively with OMB on the FY 2006 Program Assessment Rating
 Tool (PART) process, completing 32 PART assessments to date.
-Developed OMB-approved efficiency measures for an additional 20 programs
 that have undergone a PART review.
-Developed a new streamlined, transparent process for reaching agreement on
 regional performance commitments, enabling EPA regions to consider targets
 across five  national programs and engage more effectively with states and tribes.

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                                                   SECTION I . OVERVIEW AND ANALYSIS—FINANCIAL ANALYSIS
 Financial
Analysis
   Administrator Leavitt's 500-Day Plan
to "increase the velocity of environmental
progress by implementing a better way"
recognizes the importance of managing
resources: Managing Resources Wisely is one
of the plan's nine priorities. Key to the
Administrator's principles for "a better way"
is considering the benefits and costs of EPA
actions. Agency managers rely on financial
analyses as well as performance information
to make planning and priority-setting
decisions that influence results.

   EPA's financial statements, presented
in Section III, are an important aspect of
accountability. They provide a snapshot of
EPA's financial position at the end of FY 2004
and have been audited by the Office of
Inspector General.

RESOURCES AND  OUTLAYS

   In FY 2004 EPA received $8.41 billion in
Congressional appropriations.24 EPA Financial
Trends25 (Figure 2) shows a 5-year snapshot of
the Agency's available and used resources.
The Statement of Budgetary Resources, includ-
ed in Section III, presents additional
information on the Agency's resources.

   EPA's net outlays, as published in the
U.S.  Department of the Treasury's Annual
Statement of Receipts and Outlays, are relative-
ly small compared to those of other federal
agencies and the entire federal government.
Figure 3 compares EPA's net outlays with
those of selected Cabinet-level departments.
Figure 4 shows EPA's FY 2004 obligations by
Congressional appropriation.

   EPA works with its partners in the public
and private sectors to accomplish its mission
and uses a variety of funding mechanisms—
including grants, contracts, innovative
FINANCIAL HIGHLIGHTS
• Received the 2003 President's Quality Award for
  Improved Financial Performance.
• Achieved greater financial accountability by maintaining
  a less than  percent erroneous payment rate.
• Earned an unqualified audit opinion on the FY 2004
  financial statements.
           Figure 2: EPA Financial Trends
    2000     2001     2002     2003     2004
                 Fiscal Year
           Figure 3: Government Net
          Outlays by Selected Agencies
 o
 ca
    25
    20
    15
    10
                             19.9
                         15.2
         10.9
EH

    Figure 4: FY 200-4 Obligations by Appropriation
            (Dollars in Thousands)
State & Tribal Assistant Grants
All Other
Superfund
Total
$3,908,755 (38.8%)
$4,769,489 (47.0%)
$1,477,137 (14.5%)
$10,155,381 (100%)

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
      Figure 5: FY 2004 Cost Categories
   Figure 6: FY 2004 Major Grant Categories
      Figure 7: EFCN Funding Sources
        Figure 8: Cumulative Super-fund
         Cost Recoveries 1999-2004
financing, and collaborative networks—to protect human health and
the environment. Figure 5 depicts EPA's costs (expenses for services
rendered or activities performed) by spending category.26

    Grant programs comprise 58 percent of EPA's costs (Figure 5). Two
State Revolving Funds (SRFs) that support the Agency's Clean and
Safe Water goal (Figure 6) account for 43  percent of the Agency's grant
awards. Other major EPA environmental grant programs include assis-
tance to states and tribes, consistent with EPA's authorizing statutes,
and research grants to universities and nonprofit institutions.

INNOVATIVE  FINANCING: PARTNERSHIPS  AND  THE
ENVIRONMENTAL FINANCE PROGRAM

    Over 25 percent of the Agency's funds go toward  improving water
quality. EPA leverages federal funds through several innovative envi-
ronmental financing efforts, mutually beneficial public—private
partnerships,  such as SRFs and the Environmental Finance Program.

    Collaboration and partnerships with the states help EPA manage
its resources wisely to keep the nation's water clean and safe. As of
early FY 2004, the Clean Water SRF had leveraged nearly $21 billion
in federal capitalization grants into more than $43.5 billion in assis-
tance to municipalities and other entities for waste water projects. The
Drinking Water SRF has leveraged $6.4 billion in federal capitaliza-
tion grants into more than $8.1 billion available for drinking water
assistance.

    The Environmental Finance Program  helps regulated entities find
creative ways to fund environmental programs, projects, and activities.
The program  seeks to lower costs, increase investments, and build
capacity via partnerships with state and local governments and the pri-
vate sector. It provides leveraged financial outreach services to these
partners through three distinct, but related, components: the federally
chartered Environmental Financial Advisory Board; a  network of nine
university-based Environmental Finance Centers (EFCs); and an
online database, the Environmental Financing Information Network.
Additional information is available at http://www.epa.gov/efinpage.

     To date,  the EEC Network has provided education, technical
assistance, and  analytic support to public and  private  entities in 48
states. The EFCs accomplish this through leveraging base grants from
EPA with up  to 3.5 times as much  in additional grants and contracts
from other public and private clients (Figure 7).

SUPERFUND COST  RECOVERY

    EPA applies consistent and certain enforcement to motivate com-
pliance. One  of the Agency's enforcement success stories is its
Superfund program, which leverages funding to  increase cleanup of
contaminated sites.
     1999  2000  2001  2002  2003  2004
                Year

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                                                       SECTION I .  OVERVIEW AND ANALYSIS—FINANCIAL ANALYSIS
    Under Superfund, EPA may recover the
cost of cleanups. Figure 8 shows that since
1980, EPA has collected $3.28 billion in cost
recoveries.27 EPA also retains and uses the pro-
ceeds received under settlement agreements to
conduct cleanup activities, placing these funds
in interest-bearing, site-specific special
accounts. With careful management, EPA uses
and leverages these resources to the fullest
extent possible. As of September 30, 2004,
EPA had established 444 special accounts with
$1.3 billion in receipts. These accounts earned
an additional $5.2 million in interest.28
                       LEVERAGING TECHNOLOGY
                       • Data mining—searching data for hidden correlations.
                       • Business Intelligence—linking disparate databases
                         and  making data connections.
                       • Web technologies—providing easy access to
                         useful data.
                       • Defining business lines—identifying and capturing data
                         meaningfully for program management decision making.
MEASURING FINANCIAL  MANAGEMENT
RESULTS
    EPA tracks its performance in key
financial management areas: processing
payments; reconciling cash, along with
managing accounts receivable; budgets;
contracts; Superfund billings; and property. In
FY 2004, the Agency generally met or exceed-
ed its performance goals. Figure 9 presents
results for three Agency performance measures
that support the Administrator's e-government
and improved financial management priorities.
   Figure 9: Financial Management Performance Measures
            98.8      99.1      992
                                      99.0
   2000
                                    2004
                        As required by the Improper Payments
                     Information Act (IPIA) of 2002 and the
                     Office of Management and Budget (OMB)
                     Memorandum M-03-07, EPA conducted
                     a risk assessment on various programs in
                     FY 2004 and identified a less than 1 percent
                     error rate in payments (Figure 10). EPA will
                     statistically sample and annually report on
                     improper payments in the two SRFs previous-
                     ly covered under OMB Circular Number
                     A-ll,  Sections?.

                     NEW FINANCIAL MANAGEMENT INITIATIVES

                        Timely, accurate information is critical
                     for managing resources wisely. The Agency
                     leverages technology and updates its systems
                     to produce the information program man-
                     agers need to make sound decisions. EPA is
                     committed to managing its finances thor-
                     oughly and responsibly, and to using
                     resources efficiently and effectively to further
                     its progress in protecting human health and
                     the environment.
                       "igure 10: Improper Payment Reduction Outlook for FY 2004-
                                            fdollars in millions)
  Clean Water and Drinking
  Water Revolving Funds
$2,105
                                       4 Improper FY 2004 Improper  FY 2005 Improper  FY 2006 Improper FY 2007 Improper
                                       nents %      Payments       Payments %      Payments %     Payments %
$10.3
                                         .452
                                                                     .352

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                 mproving   Results
                  To address increasingly complex environ-
               mental challenges, it is essential that EPA
               and its partners work together to establish
               goals and priorities, plan and budget to
               achieve results, measure their progress, and
               adjust strategies to improve their perform-
               ance. In FY 2004, EPA continued to
               collaborate closely with states and tribes,
               strengthening vital partnerships with the
               Environmental Council of the States
               (EGOS) and the Tribal Caucus. The Agency
               also focused on improving how it conducts
               program evaluations and applies findings,
               tracks and measures its performance, address-
               es environmental data issues, and anticipates
               and plans for future trends and issues.

               STRENGTHENING COLLABORATION
               WITH  PARTNERS

                  Without the support and participation of
               states, tribes, and other federal agencies, EPA
               could not have achieved its FY 2004 accom-
               plishments and will not achieve its long-term
               goals for protecting human health and the
               environment. EPA is committed to strengthen-
               ing its partnerships and working collaboratively
               with states and tribes to focus on the most
               important work to be done and complement
               and leverage—not duplicate—efforts.
    During FY 2004, EPA worked closely
with EGOS to improve joint planning and
priority-setting. EPA and states focused on
aligning planning processes to enable states,
tribes, and EPA regions to engage more
meaningfully at the earliest stages of the
Agency's annual planning; making EPA's
planning process  as open and inclusive as
possible; streamlining processes and minimiz-
ing transaction costs;  and improving
communication, particularly in terms of
defining roles,  priorities, and accountability
for results. This collaboration resulted in sev-
eral significant reforms to the Agency's
annual planning process.29 In FY  2004, EPA:

•   Developed Regional Plans that consider
    regional  conditions, reflect regional,
    state, and tribal priorities,  and link
    regional  strategies and initiatives to the
    Agency's Strategic Plan.

•   Expanded opportunities for states and
    tribes to  engage in EPA's annual plan-
    ning, inviting them to participate in
    planning and performance meetings and
    soliciting their input to FY 2005 guid-
    ance that will shape program priorities
    and commitments for the next 3 years.

•   Implemented a streamlined process for
    developing annual regional performance
    commitments that actively engages
    states and tribes prior to and during
    regional—national program negotiations.

•   Funded with EGOS a Cooperative
    Agreement for conducting pilot projects to
    strengthen states' capabilities to manage
    for results and to improve joint regional-
    state planning. FY 2004 projects involved
    22 states and 6 regions; pilot results are
    providing models for other states.

•   Worked  with EGOS to improve
    Performance  Partnership Agreements,
    grounding  them in integrated planning
    and structuring them around essential

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                                                      SECTION  I . OVERVIEW AND ANALYSIS—IMPROVING RESULTS
    elements to more clearly define
    state—EPA working relationships.

    While the Agency worked with EGOS to
improve collaboration overall, EPA program
and regional offices, states, and tribes contin-
ued to achieve specific environmental results.
EPA worked with the State of Michigan to
reduce chemical hazards in Flint, Michigan,
schools by auditing and collecting hazardous
chemicals, including mercury and lead, and
increasing the community's awareness of risks
posed by chemicals in the area. Approximately
7,000 pounds of various chemicals were col-
lected and disposed of in an environmentally
safe manner. Colorado's State Department of
Public Health and Environment prevented
mercury releases to the air and land by work-
ing with automobile salvage yards to remove
mercury switches from junk automobiles
before they were dismantled, shredded, and
melted at electric arc furnace steel mills.

    EPA and Native American Tribes worked
together to address key environmental prob-
lems in Indian Country. For example,

•   EPA and more than 50 tribes have
    formed the Yukon River Inter-Tribal
    Watershed Council, which is building
    holistic programs to reduce contaminants
    in subsistence food sources, homes, and
    schools within tribal communities. In
    2004, the Council completed a large-
    scale environmental plan to  address
    contaminant issues on the Yukon River.

•   EPA, the State of Idaho, and the Nez
    Perce Tribe signed a Memorandum of
    Agreement in FY 2004 to develop a Total
    Maximum Daily Load standard for sedi-
    ments, temperature, nutrients, dissolved
    oxygen, and bacteria that will protect
    water quality on tribal lands. This effort
    provides a model for working in partner-
    ships and leveraging resources to improve
    water quality.
•   EPA conducted seven pollution preven-
    tion assessments at tribal clinics across
    California, Arizona, and Nevada to help
    reduce or eliminate mercury-containing
    devices and red bag medical waste; recy-
    cle metals and hazardous and solid waste;
    and substitute environmentally preferable
    products, procedures, and best manage-
    ment practices for toxic cleaning,
    disinfection, and pest management sub-
    stances. This ongoing partnership aims to
    virtually eliminate mercury-containing
    waste from these waste streams by 2005,
    reduce the overall volume of all wastes by
    30 percent by 2005 and 50 percent by
    2010, and identify further opportunities
    for preventing pollution and reducing
    hazardous waste.

    EPA continues to cooperate closely with
its federal partners. In FY 2004, EPA and the
U.S. Food and Drug Administration (FDA)
jointly developed a methylmercury fish advi-
sory—for the first time merging their fish
advisories to provide the public with compre-
hensive information in one document.30
Based on the success of this endeavor, FDA
and EPA intend to work together to address
PCBs and other fish contamination concerns.

USING  PROGRAM EVALUATION AND
THE  PART

    EPA relies on program evaluations and
analyses to inform decisions, design effective
strategies, and adjust approaches to improve
results. During the FY 2006 budget formulation
process,  for example, EPA senior managers
used the results of the Administration's
Program Assessment Rating Tool (PART)
reviews to identify needs for program improve-
ment, justify resource requests, and guide
decisions.

    The PART process, which rates pro-
grams' effectiveness, was first used in FY 2002
for the development of EPA's FY 2004 budg-
et. During that first year, only one of the
programs "PARTed" received a rating of "ade-
quate." In contrast, the following year (i.e.,
FY 2003 for the FY 2005 budget) 7 programs
received ratings of "adequate" or "moderately

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   FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
                 effective." This improvement in PART rat-
                 ings illustrates the commitment across EPA's
                 workforce to designing and implementing
                 programs that fully deliver environmental
                 results. Ratings for programs assessed during
                 FY 2004 for the FY 2006 budget will not be
                 available until February 2005.

More EPA programs demonstrated results.
                     EPA continued developing efficiency
                 measures that assess how program results relate
                 to the resources and time spent to achieve
                 those results. By the end of FY 2004, EPA had
                 developed efficiency measures for 28 programs
                 that have undergone PART assessments. For
                 example, the Agency developed an efficiency
                 measure for its drinking water program that
                 tracks dollars spent per person receiving drink-
                 ing water compliant with EPA's health-based
                 drinking water standards. Under its water
                 program, EPA will track the number of water
                 bodies restored, improved, or protected per
                 million dollars provided to states under the
                 Clean Water State Revolving Fund. The
                 Agency will also track cumulative tons of
                 ozone depleting potential-weighted emissions
                 reduced per cumulative EPA and industry
                 dollars spent. A complete list of measures
                 developed during the FY 2004 and FY 2005
                 PART process can be found in Appendix C.
                 Additional information on the PART process
                 is available at http://www.whitehouse.gov/
                 omb/part/index.html.

                     EPA conducted other types of program
                 evaluations in FY 2004 as well. For example,
                 the Agency assessed the influence and cost of
                 Oregon's Toxics Use and Waste Reduction
                 Assistance Program (TUWRAP), particularly
                 TUWRAP's impact on compliance with haz-
                 ardous waste requirements. The evaluation
                 found that Oregon's site visits to provide
                 technical assistance strongly influenced haz-
                 ardous waste generator compliance, leading
                 Oregon's Department of Environmental
                 Quality (DEQ) and EPA's Region 10 office to
discuss how to incorporate TUWRAP into
DEQ's overall compliance program.
Appendix A contains a complete list of pro-
gram evaluations completed in FY 2004.

IMPROVING ENVIRONMENTAL
INDICATORS,  PERFORMANCE
MEASUREMENT,  AND DATA QUALITY
    EPA issued its first Draft Report on the
Environment in FY 2003 to present the best
available  indicators of the current state of the
environment and provide a baseline of envi-
ronmental information for measuring future
performance. In FY 2004, the Agency initiat-
ed a national dialogue on the draft report to
refine environmental indicator information
and make it more useful to decision makers.
Through  a series of public meetings across
the country with stakeholder groups and
other interested parties, EPA gained ideas for
improving indicators, filling key environmen-
tal data gaps, and meeting research needs.
This information will help EPA shape the
next Report on the Environment, to be issued
in FY 2006.
    As the Agency moves forward, EPA also
intends to develop and use environmental
indicators that can  enhance our ability to
manage for results in order to report more

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                                                     SECTION  I . OVERVIEW AND ANALYSIS—IMPROVING RESULTS
clearly on progress in achieving long-term
environmental and human health goals.
The Agency's strategic planning, work on
environmental indicators, and development
of the next Report on the Environment, are
now being coordinated with this end in
mind. The Draft Report on the Environment
and information on the Agency's "Indicators
Initiative" are available at http://www.epa.gov/
indicators.


EPA made strides in measuring

environmental outcomes.

    EPA furthered its effort to focus annual
performance goals and measures on environ-
mental outcomes, rather than activity-based
outputs. The percentage of annual perform-
ance goals that track environmental or
intermediate outcomes increased from 44
percent in EPA's FY 2004 Annual
Performance Plan to approximately 60 per-
cent in its FY 2005 Annual Performance Plan.
Likewise, the percentage of annual perform-
ance measures tracking outcomes increased to
approximately 64 percent, up from 51 percent
the previous year. In addition, in FY 2004 the
Agency developed more than 20 new multi-
year Measure Development and
Implementation Plans to improve its measures
over time. A variety of programs, representing
all five of the Agency's strategic goals and
including some programs assessed under the
PART process, have adopted these plans.

    Finally, EPA continued to ensure that its
performance and financial data are reliable
and complete. In FY 2004, EPA detected  and
corrected errors in environmental data; stan-
dardized reporting; and collaborated with
federal, state, and local data-sharing partners
to exchange and integrate electronic data
and information. For complete information
on the quality of the data contained in
Section II—Performance Results, see
Appendix B.
   NEW EPA PERFORMANCE MEASURE
   DEVELOPED IN FY 2004
   •  Air Toxics:  EPA will measure cumulative reduc-
     tions in air toxic emissions, differentiating betwee
     cancer and noncancer risks reduced.
   •  Stratospheric Ozone: EPA will report every 5
     years on chlorine and bromine (two key ozone-
     depleting chemicals) loadings in the atmosphere.
     Further, in 2050, EPA will report on the number of
     reductions in melanoma and nonmelanoma skin can
     cers and the number of premature deaths avoided.
   •  Pesticide Worker Protection:  EPA will measure
     the number of occupational pesticide poisoning inci
      i  i  i         i i    rr  i •        r i i  A      i
     ^^1 I LO LW OOO^OO LI 1^ ^1 I ^^ LI V^l I^OO WI  LI 1^ / X&^' '^/ °
     Worker Protection Standard for Agricultural
     Workers, established in 1995.
   •  Coastal and Ocean Waters: EPA will measure spe-
     cific indicators of aquatic system health for coastal
     wetlands, and water clarity and dissolved oxygen in
     coastal waters at the national level.
CONSIDERING FUTURE TRENDS AND
LOOKING  AHEAD

    EPA recognizes the value of foresight in
strategic planning. In FY 2004, the Agency
revised its approach to conducting environ-
mental futures analyses and incorporating
findings into the Agency's strategic planning.
EPA senior managers and staff identified sig-
nificant environmental trends, demographic
issues, transformative technologies, and indus-
trial trends  that might have consequences for
environmental quality and EPA's work.
Information gleaned from these discussions
will provide the basis for a more in-depth
analysis of emerging environmental trends,
the results of which will better inform the
Agency's planning and 2006 Strategic Plan.

    In FY 2004, EPA also began projects to
build staff capabilities for using futures analysis
to increase environmental foresight and inform
planning. One project developed a range of
plausible forecasts of the growth of hydrogen
micro-fuel cell technologies in the marketplace
and their potential environmental impacts.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
             Addressing   Management
              Issues  and  Challenges
                The Reports Consolidation Act of 200031
             authorizes agencies to consolidate various
             management reports and submit them as part
             of their annual reports. This section discusses
             EPA's progress in strengthening management
             practices to achieve program results. It
             includes the FY 2004 Integrity Act Report,
             which highlights the strategies implemented
             and progress made in addressing management
             concerns identified under the Federal
             Managers Financial Integrity Act (FMFIA);32
Management's Report on Audits, which sum-
marizes the Agency's efforts to carry out
corrective actions on audits issued by EPA's
Office of the Inspector General (OIG); and a
summary of the OIG's list of EPA's top man-
agement  challenges facing the Agency along
with a brief update on the Agency's progress
to address each issue. A more detailed discus-
sion of these issues can be found at
http://www.epa.gov/ocfo/finstatement/2004ar/
2004ar.htm.
             FY  2004  Integrity Act  Report
                In FY 2004, for the third year, EPA had
             no material weaknesses to report under
             FMFIA. During the year, the Agency resolved
             three of its less severe, internal Agency weak-
             nesses, reportable conditions that merit the
             attention of the Administrator (see chart
             "4 Year Trend of Material and Agency Level
             Weaknesses" on page 19). To identify manage-
             ment issues and monitor progress in addressing
             them, Agency senior leaders use a system of
             internal and independent reviews and program
             evaluations, audits by the Government
             Accountability Office (GAO) and EPA's
             OIG, and performance measurement. These
             efforts help ensure that program activities are
             effectively carried out in accordance with
             applicable laws and sound management policy,
             and provide reasonable assurance that Agency
             resources are protected against fraud, waste,
             abuse, and mismanagement.

                OMB continues to recognize EPA's efforts
             to maintain effective and efficient manage-
             ment controls. Since June 2003, the Agency
             has maintained its "green" status score for
             Improved Financial Performance under the
             PMA. EPA's senior managers meet periodically
             during the course of the year to provide
updates on the progress the Agency is making
to resolve its current management challenges
and to identify and discuss emerging manage-
ment issues so that new issues can be addressed
before they become serious problems.
   In FY 2004, EPA made progress in
addressing a wide range of major manage-
ment challenges, thereby strengthening its
ability to achieve environmental and human
health results. The Agency's advancements


          FISCAL YEAR 2004
   ANNUAL ASSURANCE STATEMENT
    am pleased to give an unqualified
   statement of assurance that the
   Agency's programs and resources are
   protected from fraud, waste, and mis-
   management, based on EPA's annual
   self-assessment of its internal manage-
   ment and financial control systems.
                     Michael O. Leavitt
                        Administrator
                     November 2, 2004

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                            SECTION  I . OVERVIEW AND ANALYSIS—ADDRESSING MANAGEMENT ISSUES AND CHALLENGES
in establishing and implementing effective
management controls in environmental pro-
grams include:

•   Using a comprehensive, integrated strate-
    gy to address risk from all sources of air
    toxics—major, area, and mobile. In
    FY 2004, EPA completed all of its
    10-year Maximum Achievable Control
    Technology standards. This effort has
    already resulted in annual reductions of
    1.5 million tons of toxic air emissions
    and is expected to achieve even grater
    reductions when all sources come into
    full compliance by 2007. Other aspects of
    the strategy include a focus on air toxics
    reductions in communities and working
    on mobile source regulations through
    reformulated gasoline, engine standards,
    and other efforts, as well as a voluntary
    diesel retrofit program.

•   Addressing Laboratory Quality System
    Practices through EPA's Forum on
    Environmental Measurement of the
    Science Policy Council, which developed
    a policy directive ensuring and docu-
    menting the competency of Agency
    laboratories. Under the policy, EPA labo-
    ratories demonstrate on-going
    performance through independent  exter-
    nal assessments, accreditation or
    certification, and inter-laboratory com-
    parison studies of their operations.

•   Improving water quality by reducing the
    backlog of NPDES Permits33 and setting
    priorities for water permits to achieve envi-
    ronmental results. In collaboration with
    states and regions, EPA continues to imple-
    ment the Permitting for Environmental
    Results strategy to assess and identify
    opportunities for enhancing the integrity
    and efficiency of the NPDES program.

•   Redesigning and modernizing EPA's
    Permit Compliance System to address
    expanded requirements of the NPDES
    permitting program and provide better
    information for the Agency's compliance
    and enforcement programs (e.g.,  tracking
        4-Year Trend of Material and Agency-Level Weaknesses
  20 -i
  15-
  10-
   5-
        2001
                 2002      2003
                    Fiscal Year
                                   2004
    pollutant loadings, capturing information
    on storm water sources, and assessing the
    health of individual watersheds).

    The Agency also addressed a number of
challenges in administrative and manage-
ment areas, which provide the infrastructure
supporting EPA's ability to achieve results.
Following are examples of FY 2004 accom-
plishments toward continued improvement
in effective management of resources:
•   Implementing a comprehensive approach
    to managing grant awards, which make
    up more than half of the Agency's
    budget.34 Having issued policies to
    address competition and post-award
    monitoring, EPA implemented its Grants
    Management Training Plan  to enhance
    the skills of personnel involved in grants
    management. EPA is also focusing efforts
    on improving grant recipients' under-
    standing of federal grant requirements. In
    addition, EPA is the first agency to suc-
    cessfully enhance and deploy the
    Integrated Grants Management System,
    which fully automates grant processes in
    regional offices.

•   Strengthening management controls to
    ensure that the Information Security
    Program collects data of sufficient quality
    for decision makers. Advancements
    include improved technology and hard-
    ware, along with new testing and
    evaluation processes and greater invest-
    ments in information security training.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
                  Making significant progress in the area
                  of human capital. In FY 2004, EPA
                  achieved "green" progress and "yellow"
                  status scores for successfully implement-
                  ing the human capital portion of the
                  PMA.35 In addition, the Agency began
                  documenting the relationship between
                  every employee's work and the Agency's
                  strategic goals to fulfill Agency commit-
                  ments to the Office of Personnel
                  Management and OMB. EPA has taken
                  crucial steps in the areas of workforce
                  planning and staff development, with
   particular emphasis on management
   development.

   The "Key Management Challenges"
section in the Overview (which follows the
"FY 2004 Management's Report on Audits"
section below) lists EPA's Top 10 manage-
ment challenges as identified by EPA's OIG
and others and summarizes actions EPA is
taking to address these issues. More detailed
information on the work being done to
address the Agency's management issues is
available at http://www.epa.gov/ocfo/
finstatement/2004ar/2004ar.htm.
               FY  2004  Management's  Report on  Audits
                  The Inspector General Act of 1978, as
              amended,36 requires federal agencies to report
              to Congress on the status of their progress in
              carrying out audit recommendations. Audit
              management serves as a tool in assessing the
              Agency's ability to meet its strategic objec-
              tives. EPA continues to strengthen its audit
              management practices and has improved its
              ability to address and complete corrective
              actions in a timely manner.

                  In FY 2004, EPA was responsible for
              addressing OIG's recommendations and
              tracking follow-up activities on 249 audits.
              The Agency achieved final action (i.e., com-
              pletion of all corrective actions associated
              with an audit) on 136 audits, which include
              Program Evaluation/Program Performance
              Audits, Assistance Agreements Audits,
              Contracts Audits, and Single Audits. Results
              achieved during FY 2004 for the Agency's
              audit management activities are summarized
              below. A listing of audits for which corrective
              actions have not been completed within a
              year can be found at http://www.epa.gov/ocfo/
              finstatement/2004ar/2004ar.htm.

              Final Corrective Action Taken. EPA
              completed final corrective actions on 15
performance and 121 financial audits. Of the
121 financial audits, OIG questioned costs of
more than $ 97 million (i.e., costs incurred
by the Agency from contractors or grantees
which may be ineligible by law or regulation;
not supported by sufficient documentation; or
unnecessary expenditures). After careful
review, OIG and the Agency agreed to disal-
low approximately $35 million of these
questioned costs (i.e.,  either deny payment or
seek reimbursement for payments already
made). In the performance audit arena, EPA
managers and the OIG did not identify funds
that could be put to better use.

Final Corrective Action Not Taken. As of
the end of FY 2004, 112 audits were without
final action and have not been fully resolved
(excluding those audits with management
decisions under administrative appeal by the
grantee).

Final Corrective Action Not Taken Beyond
I  Year. Of the 112 audits, EPA officials had
not completed final action on 29 audits with-
in 1 year after the management decision (i.e.,
the point at which the OIG and the Action
Official reach agreement on the corrective
action plan). Because  of the complexity of

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                           SECTION  I . OVERVIEW AND ANALYSIS—ADDRESSING MANAGEMENT ISSUES AND CHALLENGES
the issues, it often takes Agency management
more than 1 year after management decisions
are reached with OIG to complete the
agreed-upon corrective actions.

Audits Awaiting Decision on Appeal. EPA
regulations allow grantees to appeal manage-
ment decisions on financial assistance audits
that seek monetary reimbursement from the
recipient. In the case of an appeal, EPA must
not take action to collect the account receiv-
able until the Agency issues a decision on
the appeal. At the end of FY  2004, 39 audits
were in administrative appeal.
                    DISALLOWED COSTS & FUNDS PUT TO BETTER USE
                            October I, 2003 - September 30, 2004



A. Audits with management decisions but without
final action at the beginning of FY 2004.
B. Audits for which management decisions were
made during FY 2004:
(i) Management decisions with disallowed
costs. (23)
(ii) Management decisions with no disallowed
costs. (90)
C. Total audits pending final action during
FY 2004. (A+B)
D. Final action taken during FY 2004:
(i) Recoveries
a) Offsets
b) Collections
c) Value of Property
d) Other
(ii) Write-offs.
(iii) Reinstated through grantee appeal
(iv) Value of recommendations completed.
(v) Value of recommendations management
decided should/could not be completed.
E. Audit reports needing final action at the end of FY 2004.
(C-D)
Number Value

83 $106,591,146
113 $ 3,007793
196 $109,598,939
121 $ 35,213,332
$ 7993,454
$ 772,680
$0
$ 11,196,584
$ 9,508,924
$ 5,741,690
75 $ 74,385,607
Number Value

27 $0
25 $0
52 $0
16 $0
$0
$0
37 $0

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
              Key Management  Challenges
              (Prepared by EPA's Office of the Inspector General)
                 EPA continues to make progress in
              addressing long-standing management chal-
              lenges identified by the Office of the Inspector
              General (OIG). The following table identifies
              the top management challenges faced by the
Agency and the relation of the issues to
EPA's Strategic Plan and the President's
Management Agenda. Results of a recent
OIG survey indicate that EPA senior leaders
are committed to strengthening strategic
               EPA's TOP MANAGEMENT CHALLENGES
                       REPORTED BY THE
                  OFFICE OF INSPECTOR GENERAL
            LINK TO EPA's
             STRATEGIC
               GOAL
  LINK TO
 PRESIDENT'S
MANAGEMENT
  AGENDA
Linking Mission to Management:
Development of outcome-based targets.
Agency Efforts in Support of Homeland
Security: Implementing a strategy to effec-
tively coordinate and address threats.
Superfund Evaluation and Policy
Identification: Improving the usefulness of
internal evaluations, and implementing pro-
gram policy decisions.
Information Resource Management and
Data Quality: Improving the
quality of data used.
EPA's Use of Assistance Agreements to
Accomplish Its Mission: Improving
Management of the billions in grant funding
awarded by EPA.
Challenges in Addressing Air Toxics
Program Phase 1 and Phase 2 Goals:
Reducing air toxic emissions by improving
approach and measures.
Human Capital Management: Implementing a
strategy to develop staff
Information Security: Protecting information
systems by preventing intrusion and abuse.
Management of Biosolids: Improving
sewage sludge management to sufficiently
protect the public.
Backlog of National Pollutant Discharge
Elimination System Permits: Addressing per-
mit renewal backlog for water dischargers.
EPA's Working Relationship with States:
Improving structure for working with states
•
•

•
•
•
•
•
•
•
•
•
•

•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
^
Cross-Goal
Cross-Goal
Goal 3
Cross-Goal
Cross-Goal
Goal 1
Cross-Goal
Cross-Goal
Goal 2
Goal 2
Cross-Goal
Budget and
Performance
Integration


Expanded
E-Government
Improved Financial
Performance

Human Capital
Expanded
E-Government



               In FY 2004, EPA's Working Relationship with States was consolidated in item I, Linking Mission to Management

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                               SECTION I .  OVERVIEW AND ANALYSIS—ADDRESSING MANAGEMENT ISSUES AND CHALLENGES
human capital management and linking
human capital to program success. EPA
continues to enhance its Information Security
Program through risk assessments of its major
systems, conducting internal and external pen-
etration testing, and monitoring the Agency's
firewall and intrusion detection system. EPA is
         also working closely with federal, state, and
         local counterparts to strengthen and effective-
         ly coordinate on Homeland Security issues.

             While EPA continues to address the
         management challenges, sustained attention
         and management action must continue to
         correct outstanding issues.
      HIGHLIGHTS OF EPA's ACTIONS TO ADDRESS OIG's KEY MANAGEMENT CHALLENGES
   OIG's Top Management Challen
  Linking Mission and Management: OIG
  believes that while EPA has begun link-
  ing costs to goals, it must continue to
  work with its partners to develop
  appropriate outcome measures and
  accounting systems that track environ-
  mental and human health results across
  the Agency's new goal structure. This
  information must then become an
  integral part of the Agency's decision-
  making process.
              Summary of EPA's Actions
Implemented a new financial architecture that provides greater
program and project details in the Agency's accounting system.
Developed Regional Plans that link to Agency's Strategic Plan.
Implemented annual commitment system for regions and
national programs.
 Agency Efforts in Support of
 Homeland Security: EPA needs to
 develop better processes for ensuring
 security at Nationally Significant Events,
 assess vulnerability of water utilities and
 determine how to measure water secu-
 rity improvements, and better define
 the Agency's role in  protecting air from
 terrorist threats.
Revised the Homeland Security Strategic plan.
Established the Homeland Security Collaborative Network to
coordinate and address high priority, cross-Agency technical and
policy issues related to homeland security programs.
Developed a homeland security  information management
system.
(see Overview for programmatic examples)
  Superfund Evaluation and Policy
  Identification: OIG believes EPA faces
  significant challenges in its ability to
  meet effectively current and future
  Superfund needs and must establish a
  strong working relationship between
  states and tribes in order to achieve its
  environmental goals.
Initiated an internal review of the Superfund program to identi-
fy opportunities for program efficiencies.
Worked to increase oversight of the Tribal Association on Solid
Waste and Emergency Response cooperative agreement, in
accordance with commitments to OIG.
Developing a program evaluation strategy to identify, develop,
and select evaluation projects aimed at improving the efficiency
and effectiveness of remedial programs.
  Information Resource Management
  and Data Quality: EPA faces a number
  of challenges with the data it uses to
  make decisions and monitor progress
  against environmental goals.
Improved data management and usage by providing tools and
planning processes for effective data sharing, integration, and
identification of key data gaps.
Developed and issued a policy directive to ensure and docu-
ment the competency of Agency laboratories.
  EPA's Use of Assistance Agreements
  to Accomplish Its Mission: EPA needs
  to improve oversight for awarding and
  administering assistance agreements to
  ensure effective and efficient use of
  resources. Recent OIG and GAO audits
  continue to identify problems in the
  use of assistance agreements.
Developed a long-term Grants Management Plan which out-
lines the Agency's approach to effective grants management.
Implemented the Grants Management Training Plan to enhance
the skills of EPA personnel involved in grants management.
Issued a comprehensive post-award monitoring policy (EPA
Order 5700.6).
                                                                               (Continued next page)

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                    HIGHLIGHTS OF EPA's ACTIONS TO ADDRESS OIG's KEY MANAGEMENT CHALLENGES (CONTINUED
                   Challenges in Addressing Air Toxics
                   Program Phase I and Phase 2 Goals:
                   While EPA has achieved its Phase I goal
                   of issuing technology-based standards,
                   there are concerns about  EPA's efforts
                   to assess and  implement Phase 2, resid-
                   ual risk standards, as well as the
                   accuracy of air toxics data used  in
                   measuring progress.
                                          Completed all MACT standards. This effort has already resulted
                                          in annual reductions of 1.5 million tons of toxic air emissions
                                          and will  achieve even greater reductions when all sources come
                                          into full  compliance by 2007
                                          Developed an efficiency measure, "toxidty-weight emissions,"
                                          to better understand risk reduction.
                   Human Capital Management: While
                   EPA is making progress on human capi-
                   tal efforts, it must continue developing
                   and implementing its Human Capital
                   Strategy and focus on accountability
                   and better communication of planned
                   strategies.
                                          Established a comprehensive system of management controls:
                                            -  Completed EPA's Human Capital Strategy
                                            -  Created a new office to oversee implementation of
                                              strategy.
                                          Continued investment in workforce through developmental
                                          programs at the staff and managerial levels.
                   Information Security: Due to the
                   dynamic nature of information security,
                   EPA needs to continue its emphasis and
                   vigilance on strong information security
                                          Strengthened management controls to improve implementation
                                          of the Agency's security program and implemented testing and
                                          evaluation processes to verify their effectiveness.
                                          Continued enhancing program through risk assessments, pene-
                                          tration testing, and monitoring of firewall and intrusion
                                          detection systems.
                   Management of Biosolids: Although
                   EPA is directing renewed attention to
                   biosolids, EPA needs to implement a
                   national biosolids program and establish
                   strong enforcement to meet CWA to
                   reduce risks and maximize the benefi-
                   cial use of sewage sledge.
                                          Continues to meet statutory obligations under the Clean
                                          Water Act pertaining to sewage sludge (biosolids).
                                          Maintains an active presence in biosolids compliance and
                                          enforcement activities.
                                          Published action plan in the Federal Register (68 FR 75531) to
                                          strengthen sewage sludge use and disposal program (e.g., field
                                          studies on land application, development of improved analytical
                                          methods).
Backlog of National Pollutant
Discharge Elimination System
Permits: While EPA is making
progress in reducing the backlog, OIG
is assessing the environmental impact
of the backlog, how well the backlog
measures reflect impacts, and how
successful  EPA and states have  been at
managing the backlog.
                                                             Developed and implemented the Permitting for Environmental
                                                             Results strategy to focus scarce permit-writing resources on
                                                             environmentally significant permits.
                                                             Streamlined the NPDES permitting process by developing tools
                                                             to ensure efficiency (automated permit writing process).
                                                             (see Overview for programmatic results)

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                                  SECTION I  . OVERVIEW AND ANALYSIS—ADDRESSING MANAGEMENT ISSUES AND CHALLENGES
NOTES

1    The Federal Managers Financial Integrity Act, the Inspector General Act Amendments, the Government
    Management Reform Act, the Chief Financial Officers Act, and the Reports Consolidation Act.
2    EPA (U.S. Environmental Protection Agency). 1997. Benefits and Costs of the Clean Air Act, 1970 to 1990.
    Final Report to Congress. EPA 410/R-97-002. Office of Air and Radiation, Office of Policy, Planning and
    Evaluation. U.S. Environmental Protection Agency, Washington,  DC. Available at: http://www.epa.gov/
    oar/sect812/contsetc.pdf.
3    U.S. Environmental Protection Agency, Office of Air and Radiation. May 2004. Clean Air Nonroad Diesel
    Rule Summary. EPA 420'F'04'029. Available online at: http://www.epa.gov/otaq/regs/nonroad/equip'hd/2004fr/
    420f04029.pdf.
4    "Clean Air Rules of 2004 Oral  Testimony": EPA testimony as prepared for delivery before the U.S. Senate
    Committee on Environment and Public Works, Subcommittee on Clean Air, Climate and Nuclear Safety.
    April  10, 2004.
5    Each of EPA's climate protection partnerships is designed to achieve  long-term greenhouse gas emission
    reduction goals, which were set  through an interagency process in 2001 and communicated to the Secretariat
    of the Framework Convention on Climate Change in the U.S. Climate Action Report—2002.
6    U.S. Environmental Protection Agency. September 2004. Protecting the Environment—Together. ENERGY
    STAR and Other Voluntary Programs  2003 Annual Report. Available at: http://www.energystar.gov/ia/news/
    downloads/annual_report_2003.pdf.
7    Slaughter, J.C., et al. "Effects of Ambient Air Pollution on Symptom Severity and Medication Use in Children
    with Asthma." Annals of Allergy, Asthma, and Immunology 2003: 91346-53.
8    U.S. Environmental Protection Agency. 2004. Use of Indoor-Outdoor Sulfur Concentrations to Estimate the
    Infiltration Factor, Personal Exposure Factor, Penetration Coefficient,  and Deposition rate for Individual Homes.
9    Loading reductions are calculated and tracked using a spreadsheet maintained by the Office  of Science and
    Technology. U.S. EPA, Office of Science and Technology, Loadings Reduction Spread Sheet for Direct
    Discharges from Point Sources Subject to Effluent  Guidelines (Washington, DC: U.S. EPA, updated 2004).
10   U.S. Environmental Protection Agency, Office of Water. March 2004. National List of Beaches. EPA-823-R-
    04-004. Washington, DC. Available at: http://www.epa.gov/waterscience/beaches.
11   More information on the Agency's Superfund cleanup  program's is available at: http://www.epa.gov/superfund,
    http://www.epa.gov/superfund/news/120daystudy.pdf, and http://www.epa.gov/oswer/docs/naceptdocs/
    NACEPTsuperfund-Final-Report.pdf.
12   U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. "TSCA New Chemicals
    Program." Internal monthly report by Chemical Abstract Services.
13   U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. "High Production Volume
    Challenge Program, HPV Commitment Tracking System." Available at: http://www.epa.gov/chemrtk/viewsrch.htm.
14   Centers for Disease Control, National Center for Health Statistics. National Health and Nutrition
    Examination Survey: 1999-2002. Available at: http://www.cdc.gov/nchs/nhanes.htm.
15   Additional  information regarding the  Great Lakes, the Interagency Task Force and the Executive Order is
    available at http://www.epa.gov/glnpo/collaboration/taskforce/eo.html.
16   Data for 2004 will not be available until 2005 due to quality assurance  issues and lags in aggregating U.S. and
    Canadian data. Canadian data will be  reported  in 2005.
17   More information is available at: http://www.whitehouse.gov/news/.
18   This information was collected through exit surveys completed by users of the National Compliance Assistance
    Centers. U.S. Environmental Protection Agency, Office of Enforcement and Compliance Assurance.
    "Compliance Assistance Results." Available at:  http://www.assistancecenters.net/results.
19   U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. "Green Chemistry
    Challenge." Internal database. Continually updated.
20   Electronic communication from Noramtech Corporation to EPA Design for Environment staff, November 20,
    2002.
21   U.S Environmental Protection Agency, Office  of Pollution Prevention and Toxics, Pollution Prevention and
    Toxics, Internal Pollution Prevention Tracking System, continually updated.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                  22  Refer to Sustained Progress in Addressing Management Issues available at http://www.epa.gov/ocfo/
                      finstatement/2004ar/2004ar.htm.
                  23  The Office of Management and Budget (OMB) regularly releases an executive scorecard which rates each
                      federal agency's overall status and progress in implementing the PMA initiatives. The scorecard ratings use a
                      color-coded system that is based on criteria determined by OMB.
                  24  Public Law 108499 H.R. 2673.
                  25  Section III, FY 2004 Statement of Budgetary Resources.
                  26  Section III, FY 2004 Statement of Net Costs.
                  27  US Department of the Treasury, FY 2004 Superfund Trust Fund Financial Statements.
                  28  EPA's Integrated Financial Management System.
                  29  Refer to Sustained Progress in Addressing Management Issues available at http://www.epa.gov/ocfo/
                      finstatement/2004ar/2004ar.htm.
                  30  U.S. Department of Health & Human Services and U.S. Environmental Protection Agency. "What You Need
                      To Know About Mercury In Fish & Shellfish." EPA-823-R-04-005. March 2004. Available on the internet at:
                      http://www.epa.gov/waterscience/fishadvice/advice.html.
                  31  Reports Consolidation Act of 2000. Public Law 106-531 (January 24, 2004).
                  32  Federal  Managers Financial Integrity Act of 1982. Public Law 97-255 (September 8, 1982).
                  33  U.S. Environmental Protection Agency, Office of Water. "National Pollutant Discharge Elimination System
                      (NPDES), Backlog Reduction." Available at: http://cfpub.epa.gov/npdes/permitissuance/backlog.cfm.
                  34  U.S. Environmental Protection Agency. Grants Information and Control System (GIGS) database.
                  35  Executive Office of the President, Office of Management and Budget. The  President's Management Agenda.
                      Available at: http://www.whitehouse.gov/omb/budintegration/pma_index.html.
                  36  Inspector General Act of 1978, as amended. Public Law 95-542 (October 12, 1978).
                  37  OIG Memorandum of September 6, 2002 to EPA Administrator, "EPA's Key Management Challenges."
                  38  OIG Memorandum of May 22, 2003 to EPA Administrator, "EPA's Key Management Challenges."
                  39  OIG Memorandum of April 21, 2004 to EPA Administrator, "EPA's Key Management Challenges."

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CONTENTS
GOAL I—Clean Air and Global Climate Change  	
GOAL 2—Clean and Safe Water	
GOAL 3—Land Preservation and Restoration	
GOAL 4—Healthy Communities and Ecosystems  	
GOAL 5—Compliance and Environmental Stewardship  	
CHAPTER 6—Supporting Achievement of Environmental Results

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     Protect and improve the air so it is healthy to breathe and risks to human health and the environment u.
      reduced. Reduce greenhouse gas intensity by enhancing partnerships with businesses and other sectors.
        Since 1970, EPA has been working with its partners
     and stakeholders to implement the Clean Air Act and
     other environmental laws to achieve cleaner, healthier air
     for all Americans. The Agency's strategy for protecting
     public health relies on national regulatory, voluntary, and
     market-based programs carried out in combination with
     state, tribal, and local efforts. By phasing out lead in gaso-
     line, setting tougher standards for vehicle emissions, and


     Air pollutant emissions have

     decreased  while  economic growth has

     increased by over  160 percent.

     using allowance trading  to reduce acid rain precursors,
     national programs have decreased overall emission of air
     pollutants by 48 percent since 1970; at the same  time,
     economic growth has  increased by over  160 percent.
     Every year, state and federal criteria air pollutant pro-
     grams established pursuant to the 1990 Clean Air Act
     Amendments prevent tens of thousands of premature
     mortalities, millions of incidences of chronic and acute
     illness, tens of thousands of hospitalizations and emer-
     gency room visits, and millions of lost work days. In
     addition, these Clean Air Act programs provide signifi-
     cant economic benefits. In 2002, for example, the
     economic value of the reductions noted above was esti-
     mated to exceed $117 billion, compared to costs  of less
     than $30 billion.1
    The Clean Air Act addresses three general categories
of outdoor air pollution: "criteria" pollutants (e.g., ozone
and particulate matter), air toxics, and acid rain.

CRITERIA POLLUTANTS

    In addressing criteria pollutants, EPA currently places a
high priority on meeting new national ambient air quality
 standards (NAAQS) for particulate matter (PM) and
 ozone. Despite significant increases in vehicle travel and
 energy consumption, EPA, state, tribal, and local govern-
 ment clean air programs have reduced emissions of the
 volatile organic and nitrogen compounds that form
 ground-level ozone by 54 and 25 percent, respectively,
 since 1970. These emissions declined during the 1980s and
1990s, and significant reductions have continued through
2003.2 Ozone concentration levels for 2003, the last year for

Ozone Concentrations Levels at Lowest Level since I960
      0.12
      0.10
    A 0.08
    I
      0.06
    3 °-04
      0.02
      0.00
.089 .086
                                                                                       Year
28
      Based on 3-year rolling averages of annual average fourth
      maxmum 8-hour ozone concentration at I55 monitoring sites.

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                             SECTION 2. PERFORMANCE RESULTS—GOAL I .  CLEAN AIR AND GLOBAL CLIMATE CHANGE
which quality-assured data are currently avail-
able, were the lowest since 1980.

    In April 2004, EPA issued boundary des-
ignations indicating which areas of the
United States have attained the  new 8-hour
standard for ozone and which have not.  (A
few areas were designated as unclassifiable.)
Under final designations, roughly 2,700
counties met the 8-hour ozone standard.
Approximately 125 areas, including approxi-
mately 475 counties, were designated
nonattainment for the 8-hour standard.3 EPA
and state, local, and tribal governments are
now working on similar geographic boundary
determinations for the fine PM standard;
states submitted proposals in February 2004,
and EPA will issue final designations by
December 2004.

    These designations initiate a planning
process during which state and local govern-
ments in nonattainment areas will prepare
plans for achieving clean air. Planning will
incorporate federal as well as local measures.
At the federal level in FY 2004,  EPA pro-
posed the Clean Air Interstate Rule4 and
promulgated the Clean Air Nonroad Diesel
Rule for construction, agricultural, and indus-
trial diesel equipment.5 As proposed or final,
these two programs—combined with such
existing programs as the Tier 2/gasoline sulfur
standards for cars and light trucks, the
Nitrogen Oxides State Implementation Plan
(NOX SIP) Call Rule to reduce interstate
ozone transport, and the Clean Diesel pro-
gram for new trucks and buses—will bring
well over half of counties now monitoring
nonattainment into attainment with the fine
particle and ozone standards by 2015.

    EPA must regularly review standards for
criteria pollutants and revise them based on
the latest scientific information.  The PM
standard is next on the Agency's review
schedule. Past research has shown that short-
term exposure to PM can adversely affect
human health and is generally associated
with illness and premature death independ-
ent of the effects of other, gaseous pollutants
             Ozone Pollution
   The Interstate Air Quality Rule Together
  with  Other Clean Air Programs Will Bring
       Cleaner Air to Cities in the East

   274 Counties Exceed the 8-Hour Ozone Standard in 2002
  Remaining 26 Counties Likely to Exceed the 8-Hour Ozone
      Standard with Interstate Air Quality Rule in 2015
 8-hour Ozone Standard = 85 ppb


in the atmosphere. Other findings suggest
that people with lung disease may be more
affected by increasing levels of PM. Research
has also led to hypotheses on how the chemi-
cal and physical properties of PM could
produce disease and models for estimating
how much PM will travel from a source of
potentially toxic particles to affected popula-
tions. Many questions remain, however,

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               particularly regarding the role long-term
               exposure to PM plays in development of
               chronic disease.

                  EPA's 2004 research findings support the
               association between exposure to PM and ill-
               ness and death, especially for asthmatic
               children and other susceptible groups.6
               Scientists have also found that PM25, the
               component of PM smaller than 2.5 microns
               in diameter, easily penetrates most indoor
               environments, where people spend much of
               their time. In FY 2004, EPA estimated rela-
               tionships between indoor concentrations
               and personal exposures to particles from
               both indoor and outdoor sources.7 EPA's
               Office of Research and Development
               (ORD) will be investigating new hypotheses
               on how PM causes disease and death, which
               can help the Agency and its partners devel-
               op targeted control strategies to reduce
               human exposure. In addition, EPA will
               accelerate research to help implement
               NAAQS by using modeling and monitoring
               data to determine which states and regions
               are out of compliance and developing new
               analytical tools that will help them comply
               with  the NAAQS.

               AIR  Toxics

                  The Clean Air Act includes provisions
               that address air toxics from mobile sources,
               major stationary sources, and area stationary
               sources. In FY 2004, EPA completed the
               first of a two-phase program for addressing
               large stationary sources of air toxics. The
               Agency issued 96  Maximum Achievable


   Implementation  of MACT standards

   has reduced  air toxic  emissions by  1.5

   million tons per year.

               Control Technology Standards covering
               160 categories of industrial sources. The stan-
               dards completed and issued have resulted in
               reductions of approximately 1.5 million tons
  http://www.epa.gov/air/eac
 of toxic air emissions and will achieve even
 greater reductions when all sources come
 into compliance by 2007. The second phase
 of the air toxics program is risk-based: EPA
 will promote a community-based approach
 to addressing local problems, which the
 Agency expects will result in measurable
reduced exposures to toxic chemicals, partic-
ulates, and asthma triggers.8

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                             SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
  ACID RAIN

     Long-term studies and measurements
  of acid rain deposition and surface water
  acidity demonstrate positive environmen-
  tal outcomes from the Acid Rain Program.
  A comparison of average annual wet sul-
  fate deposition for 1989-91 and


  Annual wet sulfate deposition

  shows  reductions  of up to 30

  percent for a large area of the

  eastern United States. Many

  lakes and streams are no

  longer acidic.

  1999-2001 shows reductions of up to 30
  percent over a large area of the eastern
  United States. Response of Surface Water
  Chemistry to the Clean Air Act
  Amendments of 1990, an ORD report
  released in 2003, indicates that in three
  of five geographic areas studied, one-
  quarter to one-third of lakes and streams
  previously affected by acid rain are no
  longer acidic, although they remain highly
  sensitive  to future changes in deposition.
  Signs of recovery were not yet  evident in
  the other two areas, suggesting that further
            reductions, such as those presented in the
            proposed Clean Air Interstate Rule or the
            Clear Skies Act, will be needed for ecosys-
            tem recovery. For more information, see
            http://www.epa.gov/ord/htm/
            CAAA-2002-report-2col-rev-4.pdf.

                Historically, environmental progress
            has been achieved largely by advances in
            environmental technologies—catalytic
            converters on cars and trucks, sulfur diox-
            ide scrubbers, selective catalytic reduction
            for NOx removal, and reformulated gaso-
            line. Over the next 15 years, innovative
            technologies like fuel cells, hybrid vehi-
            cles, renewable fuels, and zero-emission
            power plants will enable  EPA to reach
            aggressive goals that match or exceed the
            progress made in the past. By designing
            and promoting market-based strategies,
            such as cap-and-trade programs, EPA can
            foster innovation and provide incentives

            Innovative approaches  and

            technologies will enable further

            environmental progress.


            for developing and adopting efficient,
            high-performing technologies.
  20
  18
_, 16
| 14

I 12
1 10
a
         SO2 Emission Reductions
       under the Acid Rain Program
    9.4 9.3
10.6  10.2  la6
             5.3  5.4  5.5  5.3  4.9 I  I  I
    1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003
                    Year
                 Energy Goals and Achievements for
                    Climate Protection Programs
             160
             120
            I 100
                                             40
                                                 145
                                         12   120
100
                                 74 7580
                            .Illll
                1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
                                 Year

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                                Annual Performance Goals Met:         4
                                                                Annual Performance Goals Not Met:     I
                                                                Data Available After 11/5/04:             13
   Note: In the FY 2005 Annual Performance Plan and Congressional Justification, EPA's Office of Air and Radiation (OAR)
   corrected the baseline for the criteria pollutants (I -hour ozone, PM |0, CO, SO2 and Pb) correcting the display of prior
   year targets and actuals for the NAAQS performance goals. Previously, OAR had included as its baseline only the  1990
   population for areas designated as non-attainment; all improvements were against that baseline. OAR has now corrected
   this baseline to include the population for areas that were designated as attainment or unclassified. This correction gives a
   truer picture of the baseline population and the progress towards EPA's strategic goal. This correction does not change the
   status of whether EPA met or did not meet the goal or measure for the criteria pollutants for years prior to 2004.
     STRATEGIC OBJECTIVE: THROUGH 2010, WORKING WITH PARTNERS, PROTECT HUMAN HEALTH AND THE
     ENVIRONMENT BY ATTAINING AND MAINTAINING HEALTH-BASED AIR-QUALITY STANDARDS AND REDUCING THE
     RISK FROM TOXIC AIR POLLUTANTS. FY 2004 Cost (in thousands): $596,826 (63.3% of FY 2004 Goal   Total Costs)
   Progress Toward Strategic Objective: EPA, working with its state, local, and tribal partners as well as industry small businesses,
   and other federal agencies, continues to make steady progress in attaining and maintaining health-based air quality standards and
   reducing the risk from toxic air pollutants. EPA's Clean Air Nonroad Diesel Rule, promulgated as a final rule in May 2004, requires
   stringent pollution controls on diesel engines used in industries such as construction, agriculture  and mining, and  reduces the sul-
   fur content of diesel fuel by 99%. The suite of Clean Air Rules of 2004 (Clean Air Ozone Rules, Clean Air Fine Particle Rules,
   Clean Air Interstate Rule, Clean Air Mercury Rule as well as the non-road diesel program), combined with other existing pro-
   grams, including the Tier 2 clean vehicles and gasoline sulfur standards for cars and light trucks, the NOX SIP Call rule to reduce
   interstate ozone and the Clean Diesel program for new trucks and buses,  will bring more than half of counties now monitoring
   nonattainment into attainment with the fine particle and ozone standards. EPA signed the Utility Mercury Reductions proposal
   which would permanently cap emissions from coal-fired power plants and provide companies with flexibility to achieve early
   reductions from mercury. EPA promulgated the last of the maximum achievable technology (MACT) standards  for major station-
   ary sources, which once fully implemented will decrease air toxics emissions by 1.7 million tons per year EPA continues to shift
   the emphasis of its air toxics program to a risk-based approach and is continuing to analyze the  various source categories promul-
   gated under MACT for remaining residual risk. EPA has begun to focus increasingly on community-specific air toxics problems,
   working with partners and stakeholders to identify and address the nsk reductions that matter most to local citizens.
     APG  I.I   Reduce Ozone and Ozone Precursors
    FY 2004        The number of people living in areas with monitored ambient ozone
                    concentrations below the NAAQS for the I -hour ozone standard
                    will increase by 4% (relative to 2003) for a cumulative total of 47%
                    (relative to 1992).

                    Performance Measures:
                    —Cumulative  percent increase in the number of people who live in
                      areas with ambient I -hour ozone concentrations below the level
                      of the NAAQS as compared to 1992.
                    —Cumulative  percent increase in the number of areas with ambient
                       I -hour ozone concentrations below the level of the NAAQS as
                      compared to 1992.
Planned
  Actual
 47%
 55%
  Data
avail 2005

  Data
avail 2005

-------
                              SECTION  2.  PERFORMANCE RESULTS—GOAL I .  CLEAN AIR AND GLOBAL CLIMATE CHANGE
APG I.I   Reduce Ozone and Ozone Precursors    (continued)                      Planned         Actual
FY 2004        —Total number of people who live in areas designated to attain-        167.3 M         I65.4M
                 ment of the Clean Air Standards for ozone.
               —Areas newly designated to attainment for the ozone standards.        5 areas         3 areas
               —Additional people living in newly designated areas with demon-        5.8 M          3.9 M
                 strated attainment of ozone standards.
               —Tons of VOCs Reduced from Mobile Sources.                       2.0 M          2.0 M
               —Tons of NC> Reduced  from Mobile Sources.                         1.65 M          1.65 M
FY 2003        Maintain healthy air quality for approximately 161.5 million people liv-
               ing in monitored areas attaining the ozone standard; certify 7 areas
               of the remaining 54 nonattainment areas. Attained the I-hour
               NAAQS for ozone, thus increasing the number of people living in
               areas with healthy air by 5.8 million. Goal Met,

               Performance Measures:
               —Cumulative percent increase  in the number of people who live in         19%
                 areas with ambient I -hour ozone concentrations below the level
                 of the NAAQS as compared to 1992.
               —Cumulative percent increase  in the number of areas with ambient        31%
                  I-hour ozone concentrations below the level of the NAAQS as
                 compared to 1992.
                —Tons of VOCs Reduced from Mobile Sources.                          1.9 M
                —Tons of NO  Reduced from Mobile Sources.                          1.4 M
                 42%


                 93%


                 1.9 M
                 1.4 M
FY 2002        Maintain healthy air quality for approximately 155.7 million people liv-
               ing in monitored areas attaining the ozone standard; certify 3 areas
               of the remaining 55 nonattainment areas have attained the I-hour
               NAAQS for ozone, thus increasing the number of people living in
               areas with healthy air by 3.6 million.

               Performance Measures:
               —Cumulative percent increase  in the number of people who live  in
                 areas with ambient I-hour ozone concentrations below the level
                 the NAAQS as compared to 1992.
               —Cumulative percent increase  in the number of areas with  ambient
                  I-hour ozone concentrations below the level of the NAAQS as
                 compared to 1992.
                —Total number of people who live in areas designated to attainment
                 of the Clean Air Standards for ozone.
               —Areas newly designated to attainment for ozone standard.
               —Additional people living in newly designated areas with demon-
                 strated attainment of the ozone standard.
                —Tons of VOCs Reduced from Mobile Sources.
               —Tons of NO  Reduced from Mobile Sources.
3 areas
 1.8 M
 1.3 M
                 37%
                 83%
155.7 M

2 areas
 3.6M

 1.8 M
 1.3 M
FY 2001         EPA maintained healthy air quality for 152 million people living in
               areas attaining the ozone standard,  increased by 170 thousand the
               number of people living in areas with healthy air quality that have
               newly attained the standard  by certifying two areas have attained the
               I -hour standard.

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG I.I   Reduce Ozone and Ozone Precursors   (continued)
    FY 2001          Performance Measures:
                     —Cumulative percent increase in the number of people who live in
                       areas with ambient I -hour ozone concentrations below the level
                       of the NAAQS as compared to 1992.
                     —Cumulative percent increase in the number of areas with ambient
                       I -hour ozone concentrations below the level the NAAQS as com-
                       pared to  1992.
                     —Total number of people who live in areas designated to attainment
                       of the Clean  Air Standards for ozone.
                     —Areas newly  designated to attainment for ozone standard.
                     —Additional people living in newly designated areas with demon-
                       strated attainment of the  ozone standard.
                     —Tons of VOCs Reduced from Mobile Sources.
                     —Tons of NO,, Reduced from Mobile Sources.
Planned
2 areas
 1.7 M
 1.2 M
Actual
 33%


 80%


152 M

I  area
 170 K

 I.7M
 1.2 M
     FY 2004 Result: EPA is not on track to meet this goal based on available data. EPA maintained healthy air quality for 165.4 million
     people living in 53 areas designated as attaining the I-hour ozone standard (falling short of its goal by 1.9 million people) and certified
     that 3 (out of a target of 5) of the remaining 48 non-attainment areas have attained the I -hour NAAQS for ozone, thereby increasing
     the number of people living in areas with healthy air by 3.9 million in lieu of the 5.8 million target However, EPA will revoke the  I -hour
     standard in June 2005 to reflect that in April 2004, EPA made attainment designations for areas under the 8-hour standard. Areas are
     currently developing their clean air plans to meet the 8-hour standards.
     A description of the quality of data used to measure  EPA's performance can be found in Appendix B, pages 20-21.
     FY 2003 Result Available in 2004: As reported in its  FY 2003 report, EPA declared this goal not met With this report, EPA is reporting
     on the data that was not yet available for the FY 2003 report EPA measured a cumulative increase of 42% of the number of people
     who  live in areas with ambient I-hour ozone concentrations below the level of the NAAQS and measured a cumulative increase of
     93%  in the number of areas with ambient I-hour ozone concentrations below the level of the NAAQS as compared to 1992.
APG 1.2 Reduce CO, SO2, NO2, Lead (Pb) Planned
FY 2004 The number of people living in areas with monitored ambient CO,
SO2, NO2, or Pb concentrations below the NAAQS for the stan-
dard will increase by 4% (relative to 2003) for a cumulative total of
53% (relative to 1992).
Performance Measures:
— Cumulative percent increase in the number of people who live in 53%
areas with ambient CO, SO2, NO2, or Pb concentrations below
the level the NAAQS as compared to 1992.
— Cumulative percent increase in the number of areas with ambient 87%
CO, SO2, NO2, or Pb concentrations below the level of the
NAAQS as compared to 1992.
— Total number of people who live in areas designated to attain- 174 M
ment of the Clean Air Standards for CO, SO2, NO2, or Pb.
— Areas newly designated to attainment for CO, SO2, NO2, or Pb 19 areas
standards.
— Additional people living in newly designated areas with demon- 6.2 M
strated attainment of the CO, SO2, NO2, or Pb standards.
— Tons of CO reduced from mobile sources. 12.6 M
Actual


Data
avail 2005
Data
avail 2005
173.3 M
14 areas
5.4 M
12.6 M

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SECTION 2. PERFORMANCE RESULTS—GOAL  I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
APG 1.2 Reduce CO, SO2, NO2, Lead (Pb) (continued) Planned
FY 2003 Maintain healthy air quality for 1678 million people living in monitored
areas attaining the CO, SO2, NO2, or Pb; increase by 435 thousand
the number of people living in areas with healthy air quality that have
newly attained the standard.
Performance Measures:
— Cumulative percent increase in the number of people who live in
areas with ambient CO, SO2, NO2, or Pb concentrations below
the level the NAAQS as compared to 1992.
— Cumulative percent increase in the number of areas with ambient
CO, SO2, NO2, or Pb concentrations below the level of the
NAAQS as compared to 1992.
—Total number of people who live in areas designated to attainment
of the Clean Air Standards for CO, SO2, NO2, or Pb.
— Areas newly designated to attainment for CO, SO2, NO2, or Pb 16 areas
standards.
— Additional people living in newly designated areas with demon-
strated attainment of the CO, SO2, NO2, or Pb standards.
—Tons of CO reduced from mobile sources. 11.3 M
FY 2002 Maintain healthy air quality for 167 million people living in monitored
areas attaining the CO, SO2, NO2, or Pb; increase by 16 million the
number of people living in areas with healthy air quality that have
newly attained the standard.
Performance Measures:
— Cumulative percent increase in the number of people who live in
areas with ambientCO, SO2, NO2, or Pb concentrations below
the level the NAAQS as compared to 1992.
— Cumulative percent increase in the number of areas with ambient
CO, SO2, NO2, or Pb concentrations below the level of the
NAAQS as compared to 1992.
—Total number of people who live in areas designated to attainment
of the Clean Air Standards for CO, SO2, NO2, or Pb.
— Areas newly designated to attainment for CO, SO2, NO2, or Pb |Q areas
standards.
— Additional people living in newly designated areas with demon-
strated attainment of the CO, SO2, NO2, or Pb standards.
—Tons of CO reduced from mobile sources. 11.0 M
FY 2001 Maintain healthy air quality for 151 million people living in monitored
areas attaining the CO, SO2, NO2, or Pb; increase by 419 thousand
the number of people living in areas with healthy air quality that have
newly attained the standard.
Performance Measures:
— Cumulative percent increase in the number of people who live in
areas with ambient CO, SO2, NO2, or Pb concentrations below
the level the NAAQS as compared to 1992.
— Cumulative percent increase in the number of areas with ambient
CO, SO2, NO2, or Pbconcentrations below the level of the
NAAQS as compared to 1992.
Actual


47%
91%
1678 M
5 areas
435 K
11.3 M


47%
87%
1674 M
12 areas
16.5 M
1.0 M


32%
76%

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 1.2 Reduce CO, SO2, NO2, Lead (Pb)   (continued;                            Planned         Actual
    FY 2001         —Total number of people who live in areas designated to attainment                      151.0 M
    (continued)         of the Clean Air Standards for CO, SO2, NO2, or Pb.
                    —Areas designated to attainment for CO, SO2, NO2, or Pb standards.      14 areas         9 areas
                    —Additional people  living in newly designated areas with demon-                         419 K
                      strated attainment of the CO,  SO2, NO2, or Pb standards.
                    —Tons of CO  reduced from mobile sources.                             11.0 M           11.0 M
     FY 2004 Result: Based on available data, EPA is not on track to meet its goal. EPA maintained healthy air quality for 173 million people
     living in 122 monitored areas attaining the CO, SO2, NO2, or Pb standards falling slightly short of its goal of 174 million. Out of the
     remaining 24 non-attainment areas, EPA certified 14 of its FY 2004 goal of 19. This increased the number of people living in areas with
     healthy air by 5.4M but missed the target of 6.2M.
     A description of the quality of data used to measure EPA's performance can be found in Appendix B, page 20.
     APG 1.3 Reduce Particulate Matter
                                                                   Planned
                Actual
    FY 2004
The number of people living in areas with monitored ambient PM
concentrations below the NAAQS for the PM 0 standard will
increase by less than  I % (relative to 2003) for a cumulative total of
6% (relative to 1992).

Performance Measures:
—Cumulative percent increase in the number of people who live in
   areas with ambient PM |0 concentrations below the level of the
   NAAQS as compared to 1992.
—Cumulative percent increase in the number of areas with ambient
   PM 10 concentrations below the level of the NAAQS as compared
   to  1992.
—Total number of people who live in areas designated attainment
                      of the Clean Air Standards for PM
                                                     10-
                   —Additional people living in newly designated areas with demon-
                      strated attainment of the PM 0 standard.
                   —Areas newly designated to attainment.
                   —Percent of areas with improving ambient PM |0 concentrations.
                   —Tons of PM 0 Reduced from Mobile Sources.
                   —Tons of PM25 Reduced from Mobile Sources.
  6%


 40%


 120 M

 380 K

9 areas
 76%
 18,100
 13,500
     Data
  avail 2005

     Data
  avail 2005

    120.5 M

     126 K

    6 areas
Data avail 2005
     18,100
     13,500
    FY 2003         Maintain healthy air quality for 120 million people living in monitored
                    areas attaining the PM|0 standards; increase by 252 thousand the
                    number of people living in areas with healthy air quality that have
                    newly attained the standard.

                    Performance Measures:
                    —Cumulative percent increase in the number of people who live in
                      areas with ambient PM|0 concentrations below the level  of the
                      NAAQS as compared to 1992.
                    —Cumulative percent increase in the number of areas with ambient
                      PM|0 concentrations below the  level of the NAAQS as compared
                      to 1992.
                    —Total number of people who  live in areas designated to attainment
                      of the Clean Air Standards for PM,n.
                                                                                    6%
                                                                                    50%
                                                                                   120.4 M

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                               SECTION 2. PERFORMANCE RESULTS—GOAL  I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
APG 1.3 Reduce Particulate Matter   (continued)
Planned
Actual
FY 2003         —Additional people living in newly designated areas with demon-                          252 K
(continued)         strated attainment of the PM,0 standard.
                —Areas newly designated to attainment.                                8 areas         5 areas
                -Tons of PM |0 Reduced from Mobile Sources.                           25,000         25,000
                —Tons of PM25 Reduced from Mobile Sources.                           18,000          18,000
FY 2002         Maintain healthy air quality for 120 million people living in monitored
                areas attaining the PM|0 standards; increase by 2.7million the number
                of people living in areas with healthy air quality that have newly
                attained the standard.

                Performance  Measures:
                —Cumulative percent increase in the  number of people who  live in                        5%
                  areas with  ambient PM|0 concentrations below the level of the
                  NAAQS as compared to 1992.
                —Cumulative percent increase in the  number of areas with ambient                        40%
                  PM|0 concentrations below the level of the NAAQS as compared
                  to 1992.
                —Total number of people who live in areas designated to attainment                      120 M
                  of the Clean Air Standard for PM,0.
                —Additional  people living in newly designated areas with demon-                          2.7 M
                  strated attainment of the PM,n standard.
— Areas newly designated to attainment for PM|0.
—Tons of PM|0 Reduced from Mobile Sources.
—Tons of PM25 Reduced from Mobile Sources.
6 areas
23,000
17250
4 areas
23,000
17250
FY 2001          Maintain healthy air quality for 120 million people living in monitored
                areas attaining the PM|0 standards; increase by 2.7million the number
                of people living in areas with healthy air quality that have newly
                attained the standard.

                Performance  Measures:
                —Cumulative percent increase in the  number of people who  live in
                  areas with  ambient PM|0 concentrations below the level of the
                  NAAQS as compared to 1992.
                —Cumulative percent increase in the  number of areas with ambient
                  PM|0 concentrations below the level of the NAAQS as compared
                  to 1992.
                —Total number of people who live in areas designated to attainment
                  of the Clean Air Standard for PM,0.
                —Additional  people living in newly designated areas with demon-
                  strated attainment of the PM|0 standard.
                —Areas newly designated to attainment for PM|0.
5 areas
                  3%


                 32%


                117.4 M

                2.3 M
 FY 2004 Result: Based on available data, EPA is not on track to meet its goal. EPA met its goal of maintaining healthy air quality for
 120.5 million people living in 31 areas designated as attaining the PM |0 standard. However, EPA certified 6 areas (from the 9 areas) of
 the 54 remaining non-attainment areas have attained the NAAQS and increased the number of people living in areas with healthy air
 by 126,000 (not 380,000). While EPA missed the targets for both the number of areas designated and additional people living in healthy
 air, this is due in part to areas not meeting the procedural requirements for formal designations to attainment Completion of the air
 quality monitoring data review, in 2005, will provide more information on  percentage of people who live in areas and the number of
 areas that meet the PM |0 standard and thus allow EPA to have a more complete picture of air quality.

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 1.3  Reduce Particulate  Matter   (continued)
     (FY 2004 Result continued) A description of the quality of data used to measure EPA's performance can be found in Appendix B,
     page 20.
     FY 2003 Result Available in FY 2004: As reported in its FY 2003 report, EPA declared this goal met. With this report, EPA is reporting
     on the data that was not yet available for the FY 2003 report. EPA missed the designation of attainment target but met the target that
     was the actual emission reduction. There was a cumulative increase of 6% in the number of people who live in areas with ambient
     PM |Q concentrations below the level the NAAQS as compared to 1992 and a 50% increase in the number of areas with ambient PM |0
     concentrations below the level of the NAAQS as compared to 1992.
     APG 1.4  Reduce SO0 Emissions
     FY 2004         Maintain or increase annual SO2 emission reduction of approxi-
                     mately 5 million tons from the 1980 baseline. Keep annual emissions
                     below level authorized by allowance holdings and make progress
                     toward achievement of Year 2010 SO2 emissions cap for utilities.
                    Planned
                     5M
  Actual
   Data
avail 2005
     FY 2004 Result: Although data is not available for FY 2004, EPA
     has continued to meet and exceed this goal for the previous 3
     years. FY 2004 data will be available in the last quarter of 2005
     to verify that annual emissions reduction of approximately 5
     million tons from utility sources were maintained or increased
     during 2004.
     A description  of the quality of data used to measure EPA's
     performance can be found in Appendix B, page 21.
     FY 2003 Result Available in FY 2004: This goal was met. SO2
     emissions were reduced  by approximately 39% from the  I960
     level of 174 million tons,  approaching the 50% reduction goal
     from  I960 level by 2010.  Unit-level SO2 emissions data for all
     sources covered by the Acid Rain Program are available on
     EPA's website at http://www.epa.gov/airmarkets.
2001
            2002        2003
               Fiscal Year
                                   2004
APG 1. 5
FY 2004
FY 2003
Increase Tribal Air Capacity
Increase the number of tribes monitoring air quality for ozone
and/or PM from 42 to 45 and increase the percentage of tribes
monitoring clean air for ozone from 64% to 67% and PM from 71 %
to 72%. Goal Met.
Performance Measures:
— Percent of Tribes with Tribal Lands Monitoring for ozone and/or
Particulate Matter.
— Percent of Monitoring Tribes Monitoring Clean Air for ozone.
— Percent of Monitoring Tribes Monitoring Clean Air for PM.
— Number of Tribes implementing air programs.
Increase the number of tribes monitoring air quality for ozone and/or PM
from 37 to 42 and increase the percentage of tribes monitoring clean air
for ozone from 62% to 64% and PM from 68% to 71 %. Goal Not Met.
Planned
13%
67%
72%
45 tribes
42 tribes
64%
71%
Actual
18%
81%
93%
74 tribes
39 tribes
66%
68%

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                                SECTION 2.  PERFORMANCE RESULTS—GOAL I  . CLEAN AIR AND  GLOBAL CLIMATE CHANGE
APG 1.5  Increase Tribal Air Capacity   (continued)
 FY 2004 Results: EPA significantly exceeded this goal by almost doubling the number of tribes working to implement air programs, in
 cooperation with state and local air managers. In FY 2004, 17 out of 21 tribes monitored below the NAAQS for ozone. Fifty-six out
 of 60 tribes monitored below the NAAQS for PM. The Agency will continue to work with tribes to increase the number of tribes
 that monitor for air quality.
 A description of the quality of data used to measure EPA's performance can be found in Appendix B, page 21.
APG 1.6 Reduce Air Toxic Emissions Planned
FY 2004 Air toxics emissions nationwide from stationary and mobile
sources combined will be reduced by an additional 2% of the updat-
ed 1993 baseline of 6 million tons for a cumulative reduction of 37%.
Performance Measures:
— Combined Stationary and Mobile Source Reductions in Air 2%
Toxics Emissions.
— Mobile Source Air Toxics Emissions Reduced. .71 tons
— Stationary Source Air Toxics Emissions Reduced. 1.59 tons
— Area and All other Air Toxics Emissions Reduced. +. 13 tons
FY 2003 Air toxics emissions nationwide from stationary and mobile sources
combined will be reduced by an additional \% of the updated 1993
baseline of 6 million tons for a cumulative reduction of 35%.
Performance Measures:
— Combined Stationary and Mobile Source Reductions in Air Toxics \%
Emissions.
— Mobile Source Air Toxics Emissions Reduced. .68 tons
— Stationary Source Air Toxics Emissions Reduced. 1.57 tons
— Area and All other Air Toxics Emissions Reduced. +. 12 tons
FY 2002 Air toxics emissions nationwide from stationary and mobile sources
combined will be reduced by 5% from 2001 (for a cumulative reduc-
tion of 40% from the 1993 level of 4.3 million tons per year.)
Performance Measures:
— Combined Stationary and Mobile Source Reductions in Air Toxics 5%
Emissions.
— Mobile Source Air Toxics Emissions Reduced.
— Stationary Source Air Toxics Emissions Reduced.
— Area and All other Air Toxics Emissions Reduced.
FY 2001 Air toxics emissions nationwide from stationary and mobile sources
combined will be reduced by 5% from 2000 (for a cumulative reduc-
tion of 35% from the 1993 level of 4.3 million tons per year.)
Performance Measures:
— Combined Stationary and Mobile Source Reductions in Air Toxics 5%
Emissions.
— Mobile Source Air Toxics Emissions Reduced.
— Stationary Source Air Toxics Emissions Reduced.
— Area and All other Air Toxics Emissions Reduced.
Actual
Data
avail 2012
Data
avail 2009
Data
avail 2005
Data
avail 2005

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG  1.6  Reduce Air Toxic Emissions   (continued)
    FY 2000        Air toxics emissions nationwide from stationary and mobile sources
                    combined will be reduced by 3% from 1999 (for a cumulative reduc-
                    tion of 30% from the 1993 level of 4.3 million tons per year.)

                    Performance Measures:
                    —Combined Stationary and Mobile Source Reductions in  Air Toxics
                      Emissions.
                    —Mobile Source Air Toxics Emissions Reduced.
                    —Stationary Source Air Toxics Emissions Reduced.
                    —Area and All other Air Toxics Emissions Reduced.
Planned
  Actual
               avail 2005
    FY 1999         Reduce air toxic emissions by 12% in FY 1999, resulting in cumulative
                    reduction of 25% from 1993 levels.

                    Performance Measures:
                    —Combined Stationary and Mobile Source Reductions in Air Toxics
                      Emissions.
                    —Mobile Source Air Toxics Emissions Reduced.
                    —Stationary  Source Air Toxics Emissions Reduced.
                    —Area and All other Air Toxics Emissions Reduced.
  12%
                1.1  tons
                1.4 tons
                Mtons
     FY 2004 Result: The NTI (National Toxics Inventory) and NEI (National Emissions Inventory) are scheduled to be completed every 3
     years. The Agency is currently working on updating the NEI and expects to have FY 2004 results in the last quarter of 2012; FY 2003
     results in the last quarter of 2009; and FY 2000, 2001, and 2002 results in the last quarter of FY 2005.
     A description of the quality of data used to measure EPA's performance can be found in Appendix B, pages 20-21.
     FY 1999 Result Available in FY 2004: EPA exceeded its goal for FY 1999 air toxics emissions reductions. FY 1999 is from the 1999 NEI
     completed in the fall of 2003.
     APG  1.7  Reduce Exposure to Unhealthy Ozone Levels—8 hour
    FY 2004        The number of people living in areas with monitored ambient ozone
                    concentrations below NAAQS for the 8-hour standard will increase
                    by 4% (relative to 2003) for a cumulative total 7% (relative to 2001).

                    Performance Measures:
                    —Cumulative Percent Increase in the number of people who live in
                       areas with ambient 8-hour concentrations below the level of the
                       NAAQS as compared to 2001.
                    —Cumulative Percent Increase in the number of areas with ambi-
                       ent 8-hour concentrations below the level of the NAAQS as
                       compared to 2001.
Planned
  Actual
  
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                                SECTION 2. PERFORMANCE RESULTS—GOAL  I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
 APG 1.8  Reduce Exposure to Unhealthy PM Levels—PM2S
 FY 2004        The number of people living in areas with monitored ambient PM2 q
                concentrations below NAAQS will increase by less than I % (relative
                to 2003) for a cumulative total of less than I % (relative to 2001).

                Performance Measures:
                —Cumulative Percent Increase in the number of people who live in
                   areas with ambient PM25 concentrations below the level of the
                   NAAQS as compared to 2001.
                —Cumulative Percent Increase in the number of areas  with ambi-
                   ent PM25 concentrations below the level of the NAAQS as
                   compared to 2001.
Planned
  Actual
  
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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 1.10   Healthier Indoor Air in Schools
    FY 2004         1,575,000 students, faculty and staff will experience improved
                     indoor air quality (IAQ) in their schools.
                                                                                       Planned
                                                                                        1.5 M
  Actual
  Data
avail 2005
                                                                             Improved Indoor Air Quality in Schools
FY 2004 Result: EPA gathers information on the number of
schools and school systems/districts that receive Tools for
Schools (TfS) kits and makes assumptions about adoption rates
at each school. Based on preliminary data, the Agency expects
to meet its goal by reaching 3,000 schools with an average of
approximately 525 students/staff per school in adopting an
indoor air quality management plans.
A description of the quality of data used to measure EPA's
performance can be found in Appendix B, page 22.
FY 2003  Result Available in FY 2004: Based on its review and
analysis of partner/grantees' reports and consulting with partners
of EPA's Indoor Environment  Network, EPA is confident that
more than  I million students  and staff are experiencing improved
IAQ in schools. In particular, EPA has seen an increase in IAQ
planning  progress and/or IAQ TfS implementation in 12 of the 15
largest U.S. school district representing more than 4,700 schools. This includes the school districts of Los Angeles, Miami, and Dallas.
                                                                         2001
                                                                                     2002         2003
                                                                                        Fiscal Year
                                                                                                            2004
     APG I. II   Healthier Residential Indoor Air
    FY 2004         834,400 additional people will be living in healthier residential
                     indoor environments.
                                                                                       Planned
                                                                                      834,000
  Actual
  Data
avail 2005
     FY 2004 Result: EPA is currently analyzing the information                           Healthier Residential Indoor Air
     gathered through the survey instruments mentioned below. EPA
     expects to have FY 2004 results in FY 2005, and based on
     historical trends is likely to meet the goal. EPA gathers
     information from an annual National Association of Home
     Builders Survey EPA also reviews  the number of sales of radon
     fans, estimates the annual number of kids not exposed to ETS,
     and estimates the number of people made aware of EPA's
     outreach efforts via direct outreach, grant awards, public
     service announcements, and partnerships efforts.

     A description of the quality of data used to measure EPA's
     performance can be found in Appendix B, page 22.

     FY 2003 Result Available in FY 2004: For FY 2003, EPA
     estimates that it met its goal of approximately 834,400 additional
     people living in healthier residential indoor environments. This result is based upon information gathered from the Indoor Environment
     Partner Network which includes traditional partners and grantees, as well as analysis of various results data efforts including public service
     announcements and  outreach, as well as information from the National Association of Home Builders and radon mitigation fan sales. This
     is a compound measure which  includes  results from the secondhand smoke, Asthma, and Radon Programs.
                                                           Q-
                                                           "o
                                                            0)
                                                           _o
                                                                      2001
                                                                                 2002        2003
                                                                                    Fiscal Year
                                                                                                       2004
      STRATEGIC OBJECTIVE: BY 20IO, THROUGH WORLDWIDE ACTION, OZONE CONCENTRATIONS IN  THE
      STRATOSPHERE WILL HAVE STOPPED  DECLINING AND SLOWLY BEGUN  THE PROCESS OF RECOVERY, AND THE
      RISK TO HUMAN HEALTH FROM OVEREXPOSURE TO ULTRAVIOLET RADIATION, PARTICULARLY AMONG
      SUSCEPTIBLE  SUBPOPULATIONS, SUCH AS CHILDREN, WILL BE REDUCED. FY  2004 Cost (in thousands):
      $14,874 (1.6% of FY 2004 Goal I  Total Costs)
   Progress Toward Strategic Objective: According to the United Nations Environment Programme's "Scientific Assessment of
   Ozone Depletion: 2002," a 4-year review of developments related to the ozone layer; "the total combined effective abundance

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                                SECTION 2. PERFORMANCE RESULTS—GOAL I .  CLEAN AIR AND GLOBAL CLIMATE CHANGE
of ozone-depleting compounds continues to decline slowly from the peak that occurred in 1992-1994 (p.  I)." As a result of the
continuing reduction in total atmospheric concentrations of ozone-depletors, models project varying rates of recovery in the
global amount of total column ozone between now and 2050. The report also states that "measurements continue to confirm
that decreases in ozone column amounts lead to increases in UV radiation." UV radiation  is a recognized risk factor for skin
cancer and has been associated with other health effects, such as cataracts. Therefore, increases in total column ozone by 2010
should reduce the amount of UV radiation reaching the surface and the associated risk of developing health effects.
 APG 1.12   Restrict Domestic Consumption of Class II HCFCs
 FY 2004         Restrict domestic consumption of class II hydrochlorofluorocarbons
                 (HCFCs) below 9,906 ozone depletion potential-weighted metric
                 tons (OOP NTs) and restrict domestic exempted production and
                 import of newly produced class I chlorofluorocarbons (CFCs) and
                 halons below 10,000 OOP NTs.

                 Performance Measures:
                 —Domestic Consumption of Class II HCFCs.
                 —Domestic Exempted Production and Import of newly produced
                   class I HCFCs and halons.
 Planned
  Actual
<9,906
< 10,000
  Data
avail 2005
 FY 2003         Restrict domestic consumption of class II HCFCs below 9,906 OOP
                 MTs and restrict domestic exempted production and import of
                 newly produced class I CFCs and halons below  10,000  OOP MTs.

                 Performance Measures:
                 —Domestic Consumption of Class  II HCFCs.
                 —Newly produced Domestic Exempted Production and Import of
                   class  I HCFCs.
 <9,906
< 10,000
   Data
avail 2005
 FY 2002         Restrict domestic consumption of class II HCFCs below 15,240 OOP
                 MTs and restrict domestic exempted production and import of newly
                 produced class I  CFCs and halons below 60,000 OOP MTs. Goal Met,

                 Performance Measures:
                 —Domestic Consumption of Class II HCFCs.
                 —Newly produced Domestic Exempted Production and Import of
                   class I CFCs and halons.
 < 15,240
 < 60,000
   13,950
   2,347
  FY 2004 Result: Data will be available in 2005. Progress on restricting domestic exempted consumption of Class I CFCs and halons is
  tracked by monitoring industry reports of compliance with EPA's CAA phase out regulations and U.S. obligations under the Montreal
  Protocol. Data are provided by U.S. companies producing, importing, and exporting Ozone Depleting Substances.
  A description of the quality of data used to measure EPA's performance can be found in Appendix B, page 23.
  FY 2002 Result Available in FY 2004: EPA met its FY 2002 goal, verifying that domestic consumption of Class II HCFCs was 13,950
  metric tons and newly produced domestic exempted production and import of class I CFCs and halons was 2,347 metric tons, in
  compliance with EPA's phaseout regulations.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     STRATEGIC OBJECTIVE: THROUGH 2008, WORKING WITH PARTNERS, MINIMIZE UNNECESSARY RELEASES OF
     RADIATION AND BE PREPARED TO MINIMIZE IMPACTS TO HUMAN HEALTH AND THE ENVIRONMENT SHOULD
     UNWANTED RELEASES OCCUR. FY 2004 Cost (in thousands): $39,053 (4.  % of FY 2004 Goal   Total Costs)
   Progress Toward Strategic Objective: EPA continues on a steady path toward its 2008 strategic objective of minimizing
   unnecessary releases of radiation and minimizing impacts to human  health and the environment. Highlights of that progress
   include improved management of "low-activity" radioactive waste; continued  radiological emergency response exercises
   including the summer 2004 Ruby Slippers exercise; recertification of the Waste Isolation  Plant and revised stakeholder
   approach to the WIPP; and the launching of RADINFO that provides basic information about facilities that the EPA regu-
   lates for radiation and  radioactivity. EPA continues to meet or exceed its WIPP goal. While EPA did not meet its annual
   goal for updating the national radiation monitoring system, EPA has  since revised  the schedule and expects to meet the
   long-term goal while falling short of FYs 2004 and 2005 goals.
     APG  1.13   Ensure WIPP Safety
    FY 2004         Certify that 36,000 55-gallon drums of radioactive waste (containing
                    approximately 108,000 curies) shipped by the Department of Energy
                    (DOE) to the Waste Isolation Pilot Plant are permanently disposed
                    of safely and according to EPA standards. Goal Met.
                                  Planned
                                 36,000
 Actual
36,500
     FY 2004 Result: Through FY 2004, EPA has
     certified as properly disposed approximately
     109,000 drums of transuranic waste equivalent
     to approximately 321,000 millicuries.
     A description of the quality of data used to
     measure EPA's performance can be found in
     Appendix  B, page 23.
           Ensure Waste Isolation Pilot Plant Safety
40,000
                                                = 2
                                                Z-5
     APG  1.14  Build National Radiation Monitoring System
    FY 2004         EPA will purchase 60 state of the art radiation monitoring units
                    thereby increasing EPA radiation monitoring capacity and popula-
                    tion coverage from 37% of the contiguous U.S. population in
                    FY 2002 to 50% in FY 2004. Goal Not Met.
                                  Planned
                                   60
 Actual
     FY 2004 Result: EPA did not meet its FY 2004 target of purchasing and deploying 60 state of the art radiation monitoring units. EPA
     awarded a contract for the fixed monitors in FY 2004 and expects shipment beginning in FY 2005.  EPA expects to reach the overall
     FY 2008 strategic goal of purchasing and deploying 180 state of the art radiation monitors.
     A description of the quality of data used to measure EPA's performance can be found in Appendix B, page 23.

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                               SECTION 2.  PERFORMANCE RESULTS—GOAL I .  CLEAN AIR AND GLOBAL CLIMATE CHANGE
  STRATEGIC OBJECTIVE: THROUGH EPA's VOLUNTARY CLIMATE PROTECTION PROGRAMS, CONTRIBUTE 45
  MILLION METRIC TONS OF CARBON EQUIVALENT (MMTCE) ANNUALLY TO THE PRESIDENT'S 18%
  GREENHOUSE GAS (GHG) INTENSITY IMPROVEMENT GOAL BY 2012. (AN ADDITIONAL 75  MMTCE TO RESULT
  FROM THE SUSTAINED GROWTH IN THE CLIMATE PROGRAMS ARE REFLECTED IN THE ADMINISTRATION'S
  BUSINESS-AS-USUAL PROJECTION FOR GHG INTENSITY IMPROVEMENT.10). FY 2004 Cost (in thousands):
  $112,061 (11.9% of FY 2004 Goal I  Total Costs)


Progress Toward Strategic Objective: Global climate change is a complex, long-term challenge that will require a sustained
effort over many generations. For more than a decade, businesses and organizations have partnered with EPA through vol-
untary climate protection  programs to pursue common sense approaches and addressing global climate change issues.
Each year the environmental and economic benefits grow and most recent results (from 2003) show that the programs
remain on track. As a result of the partnerships, 48 mmtce of ghg emissions were prevented in 2003, equivalent to the
annual emissions from more than 31  million automobiles; 228,000 tons of nitrogen oxides were prevented in 2003; more
than 40 mmtce per year in ghg emissions will be avoided during the next decade due to actions already taken by partners
in the voluntary programs. Consumers and business have locked in investments  in energy-efficient technologies exceeding
$16 billion.
 APG 1.15  Reduce Greenhouse Gas (GHG) Emissions
 FY 2004        GHG emissions will be reduced from projected levels by approxi-
                mately  81 mmtce per year through EPA partnerships with
                businesses, schools, state and local governments, and other organi-
                zations.

                Performance Measures:
                —Annual GHG Reductions- All EPA Programs data available.
                —GHG Reductions from EPA's Buildings Sector Programs
                  (ENERGY STAR).
                —GHG Reductions from EPA's Industrial Efficiency/Waste
                  Management Programs.
                —GHG Reductions from EPA's Industrial Methane Outreach Programs.
                —GHG Reductions from EPA's Industrial HFC/PFC Programs.
                —GHG Reductions from EPA's Transportation Programs.
                —GHG Reductions from EPA's State and Local Programs.
Planned
 81.0
 21.4

 7.3

 18.1
 29.6
 2.6
 2.0
Actual
                Data
             avail 2005
 FY 2003        GHG emissions will be reduced from projected levels by approxi-
                mately 72.2 mmtce per year through EPA partnerships with
                businesses, schools, state and local governments, and other organiza-
                tions.

                Performance Measures:
                —Annual GHG Reductions—All EPA Programs.                        72.2 M          82.4 M
                —GHG Reductions from EPA's Buildings Sector Programs                19.2 M          23.0 M
                  (ENERGY STAR).
                —GHG Reductions from EPA's Industrial Efficiency/Waste                6.7 M          74 M
                  Management Programs.
                —GHG Reductions from EPA's Industrial Methane Outreach Programs.       170 M          179 M
                —GHG Reductions from EPA's Industrial HFC/PFC Programs.            24.9 M          29.8 M
                —GHG Reductions from EPA's Transportation Programs.                2.4 M          2.3 M
                —GHG Reductions from EPA's State and Local Programs.                2.0 M          2.0 M

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION  AGENCY
     APGI.I5  Reduce Greenhouse Gas (GHG) Emissions    (continued)
    FY 2002        GHG emissions will be reduced from projected levels by approxi-
                    mately 65.8 mmtce per year through EPA partnerships with
                    businesses, schools, state and local governments, and other organiza-
                    tions thereby offsetting growth in GHG above 1990 levels by about
                    20%. Goal Met.
                                                                                     Planned
                                                                                     65.8 M
                Actual
                71  M
    FY 2001
               Same Goal, different target. Goal Met.
66 M
65 M
     FY 2004 Result: Final data will be available in mid-2005. Data collected by EPA's voluntary programs include partner reports on facility-
     specific improvements (e.g., space upgraded, kilowatt-hours reduced), national market data on shipment of efficient products, and
     engineering measurements of equipment power levels and usage patterns. The information collected is then converted to GHG
     emissions reduced.
     A description of the quality of data used to measure EPA's performance can be found in Appendix B, pages 23-24.
     FY 2003 Result Available in FY 2004: EPA met its goal for its Climate Change programs by reducing  GHG emissions by 82.4 mmtce.
     APG  1.16  Reduce Energy Consumption                                            Planned         Actual
    FY 2004        Reduce energy consumption from projected levels by more than  110       NOB           Data
                    billion (B) kilowatt-hours (kWh), contributing to more than $7.5  B                      avail 2005
                    in  energy savings to consumers and businesses.
                                                                                 Reduce Energy Consumption
FY 2004 Result: The information collected is then converted to
energy and related cost savings.  Final data will be available in the
summer of 2005. Data collected by EPA's voluntary programs
include partner reports on facility-specific improvements (e.g
space upgraded, kilowatt-hours reduced), national market data
on shipment of efficient products, and engineering measurements
of equipment power levels and usage patterns.
A description of the quality of data used to measure  EPA's
performance can be found in Appendix B, page 24.
FY 2003 Result Available in FY 2004: Through the end of 2003,
EPA's Climate Change Programs significantly exceed its goal by
reducing energy use by 122.8  billion kWh. EPA estimates that
from investments made due to EPA's technology deployment
programs, businesses and consumers across the country will
realize energy bill savings of more than $85 billion through 2012 (net of investment in energy-efficient technologies).
                                                                          2001
                                                                                     2002        2003
                                                                                        Fiscal Year
                                                                                                           2004
     STRATEGIC OBJECTIVE: THROUGH  20IO, PROVIDE AND APPLY SOUND SCIENCE TO SUPPORT EPA's GOAL OF
     CLEAN AIR BY CONDUCTING LEADING-EDGE RESEARCH AND DEVELOPING A BETTER UNDERSTANDING AND
     CHARACTERIZATION OF ENVIRONMENTAL OUTCOMES UNDER GOAL  I. FY 2004 Cost (in thousands):
     $126,576  (13.4% of FT 2004 Goal I  Total Costs)
   Progress Toward Strategic Objective: EPA is on track for meeting this objective. For FY 2004, EPA's Office of Research and
   Development (ORD) provided crucial information to support NAAQS on the effects of ambient particulate matter (PM)
   on potentially susceptible groups, such as children and the elderly. ORD also provided important information regarding how
   PM components may contribute to adverse  health outcomes, ultimately allowing EPA to regulate PM based on its compo-
   nents, as well as its mass (PM|0 or PM25), in the future. Specifically, an assessment of the toxicity of different sizes of coal fly
   ash shows that coarse particles do not cause pulmonary inflammation while fine and, to a larger extent, ultrafine particles

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                                  SECTION  2.  PERFORMANCE  RESULTS—GOAL I  . CLEAN AIR AND GLOBAL CLIMATE CHANGE
do."  EPA is also making progress in assessing the potential health effects of long-term exposure to PM, PM constituents, and
co-pollutants, including providing an estimate of the relationships between  indoor concentrations and personal exposures to
particles from indoor and outdoor sources. The National Research Council, in a recent review of the PM research program,
concluded that scientific uncertainty in this area has been greatly reduced in the past several years, and the evidence gained
is already being used in decisions that will continue to be made even with the remaining uncertainties.
 APG  1.17  Clean Automotive Technology
 FY 2004        Transfer hybrid powertrain components, originally developed for
                 passenger car applications, to meet size, performance, durability,
                 and towing requirements of Sport utility vehicle and urban delivery
                 vehicle applications with an average fuel economy improvement of
                 25% over the baseline. Goal Met.

                 Performance Measure:
                 Fuel Economy of typical SUV with EPA-developed hybrid technology
                 over EPA driving cycles tested.
 Planned
 Actual
  25.2
  25.2
  FY 2004 Result: The average fuel economy of the typical SUV with EPA-developed hybrid technology represents a 25% increase over
  the baseline of 20.2 mpg.
  A description of the quality of data used to measure EPA's performance can be found in Appendix B, pages 24-25.
 APG  1.18   PM Effects Research
 FY 2004        Provide reports to OAR and the scientific community that examine
                 the health effects of high levels of air pollutants, especially particulate
                 matter in potentially susceptible populations so that PM standards
                 protect human health to the maximum extent possible. Goal Met.

                 Performance Measures:
                 —Report on the chronic respiratory health effects in children of intra-
                    urban gradients of particulate matter and co-pollutants in El  Paso, TX.
                 —Report on epidemiologic studies examining acute cardiac and
                    respiratory effects in the elderly and children exposed to PM and
                    co-pollutants
 Planned
 Actual
I  report

I  report
I report

I report
  FY 2004 Result: EPA's ORD provided critical information to the OAR to enhance risk estimates needed for promulgating the PM NAAQS
  and that focus on those who are at greatest risk. Specifically, the two reports completed in 2004 examine the health effects of increased
  levels of PM on children and the elderly As noted by the National Research Council, the issue of susceptibility and chronic health outcomes
  is of utmost importance. There is currently considerable concern that increased levels of PM may disproportionately affect certain
  susceptible groups, especially when exposures are long-term. One such group is children, especially those with pre-existing asthma and
  related cardiopulmonary diseases.  For example, in a study of children with pre-existing asthma, increases in PM exposure were linked to
  increased likelihood of an asthma attack and having that attack last for more than 2 hours.  Children living in areas of high pollution such as
  on the U.S.-Mexico border are particularly at risk due to economic factors as well as exposure. The El Paso Children's Health Study
  examined ambient exposures to motor vehicle emissions and their effect on the prevalence of allergies and asthma among children.
  Preliminary findings from the study indicate that the duration of El Paso residence is associated with an increased prevalence of allergic
  sensitization in children, suggesting that environmental exposures in El Paso may be responsible, independent of other risk factors. The elderly
  with chronic lung disease comprise another susceptible group who may be more acutely affected. In two studies of elderly populations
  across the U.S., researchers found that a daily increase in PM concentration was associated  with decreased heart rate variability, a health
  endpoint linked to higher mortality risk. This association was documented among health subjects and those with coronary heart disease.
  A description of the  quality of data used to measure EPA's performance can be found in Appendix B, page 25.
     ASSESSMENT OF IMPACTS OF FY 2004 PERFORMANCE ON FY 2005 ANNUAL PLAN:
         THERE ARE  NO CHANGES TO FY 2005 APGs  BASED ON RESULTS OF FY 2004 PERFORMANCE.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
    NOTES

    1    U.S. Environmental Protection Agency, Office of Air and Radiation and Office of Policy, Planning and Evaluation. 1997.
        Benefits and Costs of the Clean Air Act, 1970 to 1990. Final Report to Congress. EPA 410/R-97-002. Washington, DC. Available
        at: http://www.epa.gov/oar/sect812/contsetc.pdf
    2    More information is available at: http://www.epa.gov/ozonedesignations/ozonetrends.htm
    3    More protective health-based 8-hour ozone standards were implemented on April 15, 2004. Every area in the United States was
        designated as meeting or failing to meet these tighter standards. More information is available at: http://www.epa.gov/
        ozonedesignations/
    4    The proposed Clean Air Interstate Rule, part of the Clean Air Rules of 2004, addresses pollution that crosses states boundaries.
        This rule will reduce emissions of SO2 and NOX in 29 eastern states and the District of Columbia in two phases. More
        information is available at: http://www.epa.gov/interstateairquality/
    5    U.S. Environmental Protection Agency, Office of Air and Radiation. May 2004.CIedn Air Nonroad Diesel Rule Summary,
        EPA 420-F-04-029. Washington, DC. Available at: http://www.epa.gov/otaq/regs/nonroad/equip-hd/2004fr/420f04029.pdf
    6    Slaughter, J.C., et al. "Effects of Ambient Air Pollution on Symptom Severity and Medication Use in Children with Asthma."
        Annals of Allergy, Asthma, and Immunology  2003: 91346-53.
    7    U.S. Environmental Protection Agency. 2004. Use of Indoor-Outdoor Sulfur Concentrations to Estimate  the Infiltration Factor,
        Personal Exposure Factor, Penetration Coefficient, and Deposition Rate  for Individual Homes. 2004.
    8    Refer toSustained Progress in Addressing Management Issues available at http://www.epa.gov/ocfo/finstatement/2004ar/2004ar.htm
    9    The 1994 baseline is assumed to be zero for purposes of tracking the results of EPA indoor air programs because the number of
        Americans experiencing healthier indoor air prior to 1994 is unknown.
    10  Overall, EPA's climate protection programs will prevent 185 mmtce annually by 2012, up from 65 mmtce in 2002. Of the
        additional 120 mmtce that will be prevented annually by 2012, 75 mmtce will result directly from the sustained growth in many
        of the climate programs and are reflected in the Administration's business-as-usual projection for ghg intensity improvement; 45
        mmtce will contribute to the attainment of the President's 18% ghg intensity improvement goal. The strategic targets outline
        the path for preventing the 120 mmtce by  2012.
    11  Gilmour MI, Oconnor S, Dick C], Miller CA, Linak WP. "Differential pulmonary inflammation and in vitro cytotoxicity of size
        fractionated fly ash particles from pulverized coal." J Air Waste Manage Assoc 2004; 54:1-10.

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 GOAL2:   Clean   and   Safe  Water
      Ensure drinking water is safe. Restore and maintain oceans,  watersheds, and their aquatic
          ecosystems to protect human health, support economic and recreational activities,
                       and provide healthy habitat for fish, plants,  and wildlife.
   Over the past 30 years, EPA and its federal, state, and
tribal partners have made significant progress in protect-
ing and restoring the nation's waters. Today, more
Americans have safe, reliable, and
affordable drinking water, and peo-
ple can fish, swim, and travel safely
in rivers that were once polluted.
Challenges remain, however, and
EPA is using a variety of strategies
to address them. During FY 2004,
EPA focused on developing and
applying innovative, flexible
approaches, such as trading and
watershed-based permitting, that
will promote efficiencies and yield
improved results. The Agency also
worked closely with states and
tribes to improve data, so managers
have the information they need to
target actions to protect human
health and aquatic ecosystems most
effectively. New tools—such as the first complete list of
beaches in coastal and Great Lakes States, an expanded

EPA  works with states and tribes to

improve data quality and develop new

tools to improve reporting and results.

listing of waters where fish are safe to eat, and a new
national study that uses comparable results to report
stream conditions across the United States—are laying
the foundation for improved reporting and results in the
coming years.


                  DRINKING WATER

                      EPA has established health-
                  based drinking water standards for
                  more than 90 contaminants.1 To
                  help drinking water systems imple-
                  ment the standards for
                  contaminants posing the greatest
                  risk to human health, EPA, states,
                  tribes, and key stakeholders work
                  together to provide water systems
                  with extensive technical assistance
                  and training. Over the past decade,
                  the Agency and its partners have
                  made significant progress in provid-
                  ing the public with drinking water
                  that meets health-based standards.
While final FY 2004 drinking water data will not be
available until January 2005,  EPA expects to maintain
 these gains.

    Given the many new standards and regulations
 which have been implemented since 1998 and continue
 to be implemented, however, EPA does not expect
 straight line increases in the number of community water
 systems that comply with all standards and regulations
throughout the year, or in the corresponding percentages
                                                                                                       49

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
               of the populations they serve. For example,
               EPA and states project that the 2005 goal, 93
               percent of the population is served by systems
               that meet all federal health-based standards
               all the time, will
               not be met. The
               Agency recognizes
               that many systems,
               especially small sys-
               tems, will be
               struggling to imple-
               ment the revised
               arsenic in drinking
               water  standard and
               may not be in com-
               pliance with this
               standard for the
               entire year.
               Consequently, in
               FY 2004, EPA
               worked with states
               to determine which
               public water systems
               will need help in
               implementing the arsenic rule and the suite
               of microbial and disinfection/disinfectant
               byproducts rules that become effective in


   EPA and  the Food and Drug
   Administration issued the first joint
   federal fish advisory.
               2005, 2006, and 2007. EPA estimates that, as
               a result of concerted technical assistance,
               training, and other capacity-building efforts,
               the gap between its annual goals and per-
               formance results will narrow in FY 2007, and
               the Agency will reach its FY 2008 goal.

                  Recently, verification of state data and
               other quality assurance analyses have  called
               into question the accuracy of EPA's estimates
               of accomplishments in protecting drinking
               water. Efforts are underway to improve the
               data and the accuracy of EPA reports.2
FISH AND SHELLFISH

    In FY 2004, states, territories, and tribes
accelerated monitoring of fish tissue for mer-
cury and other contaminants. As a result, as
                       of December  2003,
                       47 new guidelines
                       identifying specific
                       water bodies from
                       which the public
                       can safely consume
                       fish were added to
                       those reported for
                       2002. Overall, 35
                       percent of total
                       lake acres and 24
                       percent of river
                       miles in the
                       United States
                       are now under
                       consumption advi-
                       sories; the increase
                       in waters under
                       advisory reflects
statewide mercury advisories issued by
Montana and Washington and the
addition of rivers to Wisconsin's statewide
advisory. In addition, Hawaii issued a
statewide advisory for its entire coastline,
and the Cheyenne River Sioux Tribe issued
an advisory on all of its tribal waters.3 Most
recent advisories involved mercury, though
U.S. emissions of mercury have declined
significantly since 1990.4

    In FY 2004, in the first such cooperative
effort of its  kind, EPA and the Food and Drug
Administration issued a joint federal fish
advisory. The agencies shared their data and
expertise to develop three recommendations
for reducing exposure to the harmful effects
of mercury  in fish. By following the recom-
mendations, women of child-bearing age and
children can safely enjoy the nutritional ben-
efits of fish  and shellfish while avoiding risks
associated with methylmercury.5 During
FY 2005, EPA will continue working with
states, tribes, and health-care providers  to
disseminate this information to the public.

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                                          SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
BEACHES AND RECREATIONAL WATERS

    Each year, Americans take an estimated
910 million trips to beaches, where they
spend approximately $44 billion.6 During
FY 2004, EPA took important steps to


EPA proposed water quality

standards to protect public health

and the quality of our beaches.

protect public health and the quality of the
nation's beaches. To fulfill provisions of the
Beaches Environmental Assessment and
Coastal Health (BEACH) Act of 2000, EPA
proposed health-based federal water quality
standards for the 25 states and territories bor-
dering Great Lakes or ocean waters that had
not strengthened their standards.7 South
Carolina, Maryland, and Delaware have
already adopted these criteria. Ensuring that
the public has current  information on the
safety of recreational waters is also a high pri-
ority for EPA. In April 2004, the Agency
published the first "List of Beaches" on U.S.
coastal and Great Lakes waters.8 This com-
prehensive list will be critical for making
information accessible to the public and for
tracking results over time. In addition, during
FY 2004 for the fourth consecutive year, EPA
provided grant funding to support coastal and
Great Lakes states, tribes, and territories in
monitoring beaches and notifying the public
about beach conditions.9

WATER QUALITY

    To protect water quality and restore
impaired waters, EPA, states, and tribes
employ a watershed approach, enabling them
to improve collaboration and information
sharing and leverage resources. To be success-
ful, water programs must have the
comprehensive,  consistent data they need to
manage wisely, and they must apply the tools
provided them by the Clean Water Act effi-
ciently and effectively to address pollution
from point and nonpoint sources of pollution.
    Data on the number of watersheds with
80 percent or more of assessed waters meeting
water quality standards are reported every 2
years; EPA expects to complete the analysis of
states' 2004 data by the end of FY 2005.
However, the Agency does not expect to meet
its FY 2005 goal of 500 watersheds. Improved
state monitoring and reporting is providing a
better understanding of watershed condition,
and EPA and states recognize that improving
water quality on a watershed basis is challeng-
ing. The Agency and its partners are taking
steps to improve results by increasing monitor-
ing, encouraging watershed-based permitting
and development of total maximum daily
loads, increasing efficiency by identifying the
most environmentally significant permits and
setting permitting priorities from a watershed
perspective, and helping states and tribes


  LONG ISLAND SOUND  NITROGEN
  LOADING REDUCED
  A study administered by EPA Regions I
  and 2 identified nitrogen pollution that
  results in  hypoxia (low levels of dissolved
  oxygen) as the highest priority for
  restoring the Long Island Sound. In
  response, Connecticut and New York
  are using flexible, innovative strategies to
  upgrade wastewater treatment plants to
  remove nitrogen, n 2004, Connecticut
  continued its nitrogen pollutant trading
  program, and  New York finalized addi-
  tional bubble permits. Both approaches
  set firm, enforceable targets for reducing
  nitrogen,  but provide flexibility in  achiev-
  ing them. As a result of upgrades to
  date, wastewater treatment plant dis-
  charges have decreased nitrogen  loading
  by 25 percent from baseline levels.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                             *
                                             M/C RAY
COLLABORATION ON NPDE^
PERMITS PROTECTS CHESAPEAKE BAY
To control point-source pollution of the
Chesapeake Bay watershed, EPA has led
a collaborative effort to issue appropri-
ate NPDES permits—consistent with
Clean Water Act requirements and
Chesapeake 2000 goals—for discharges
of nutrients to the Bay.  After coordinat-
ing extensively with the seven states
comprising the watershed, EPA issued a
draft comprehensive strategy in July
2004. The Agency will finalize the strate-
gy in FY 2005, following public review.
The strategy has been the subject of
considerable attention by the regulated
community, environmental groups, and
the press, and many have recognized
ERA's leadership in moving this essential
effort forward.
               improve the information available on water
               conditions and sources of impairment.

                  A cost-effective, scientifically sound sys-
               tem for obtaining national water quality data
               is crucial for detecting pollution problems,
               managing effectively, and assessing progress
               in improving water quality. During FY 2004,
               EPA continued to provide states with fund-
               ing and technical support to enhance and
               expand monitoring. The Agency worked
               with states to conduct the Wadeable
               Streams Assessment, the first national study
               of the condition of wadeable streams
               throughout the United States. Survey
               results, available in 2005, will be compara-
               ble across all states in the contiguous United
               States, allowing state and regional biologists
to consider methods and select approaches
appropriate for their areas. The Agency's
investment in state monitoring programs not
only provides the new data, but also will sup-
port future decision making under a wide
range of federal and state programs.

    FY 2004 marks the first year since 1992
that EPA is not under a consent decree for
issuing effluent guidelines. During FY 2004
EPA published final effluent guidelines for
meat and poultry, construction and develop-
ment, and aquaculture.10 The meat and
poultry processing effluent guideline will
reduce pollutants produced by these opera-
tions by an estimated 30 million pounds per
year.11 In addition, new regulations that EPA
issued in 2004 for large power producers will
protect more than 200 million pounds of
aquatic organisms annually from death or
injury from cooling tower intake structures.12
The Agency also published the 2004 Effluent
Guidelines Program Plan, which will direct the
effluent guidelines program over the next 2
years.13 During FY 2004, National Pollution
Discharge Elimination System (NPDES) per-
mits implementing effluent guidelines
prevented the discharge of approximately 136
million pounds of pollutants into the nation's
waters, for a cumulative total of 2.3 billion
pounds reduced since 1999.14 EPA expects
the reduction in pollutant loadings to
increase as the Agency continues to imple-
ment the revised Concentrated Animal
Feeding Operation regulation and to focus on
the most environmentally significant permits.
EPA's collaboration with the U.S.
Department of Agriculture and the
Association of State and Interstate Water
Pollution Control Administrators is key to
achieving NPDES program goals.

New effluent guidelines  will

reduce pollutants discharged from

meat and poultry processing

operations by an estimated 30

million pounds per year.

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                                           SECTION 2.  PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
    Throughout FY 2004, EPA promoted
innovative approaches to streamline permitting
and other administrative processes and
improve results. Under the Permitting for
Environmental Results (PER) initiative, for
example, EPA and its partners identify the most
environmentally significant permits in and
among watersheds and set permit priorities
accordingly. Now in its second year, PER is
improving the integrity of the process for issu-
ing permits and, more importantly, is providing
an approach to focus on priority permits that
will achieve the greatest environmental benefit
and make the most of valuable resources. To
further watershed-based permitting, in FY 2004
EPA issued the Watershed-Based NPDES
Permitting Implementation Guide15 and began
drafting complementary technical guidance
that will facilitate watershed-based permitting.16
    EPA is implementing a strategy for sus-
tainable infrastructure that will enhance the
operating efficiency of water and wastewater
systems. The strategy is based on four related
components: better asset management,
full-cost pricing, efficient water use, and
watershed-based management.  Employing
these sustainable management  techniques
can prolong the
lives of existing
utility systems and
provide clean water
at reduced costs.
                     reduce harmful effects by increasing energy
                     efficiency and conserving resources. In
                     FY 2004, collaborating with others, EPA
                     produced two guides: Achieving Environmental
                     Excellence: An Environmental Management
                     Systems Handbook for Wastewater Utilities11
                     and Continual Improvement in Utility
                     Management: A Framework for Integration.18
                     These guides provide practical step-by-step
                     information on developing a high-quality
                     EMS, advice on integrating systems to con-
                     tinuously improve operations, and case
                     studies of successful systems.

                         Finally, EPA's research programs in
                     FY 2004 continued to supply the information
                     needed to set and implement drinking water
                     and water quality standards. Researchers
                     explored the performance and cost of commer-
                     cially ready arsenic  treatment technologies for
                     small water systems and provided information
                     on managing residuals from arsenic treatment,
                     determining the effects of the distribution
                     system on treated water, and optimizing treat-
                     ment processes. To  support the Wadeable
                     Streams Assessment, EPA also evaluated
                     bioassessment methods and tools used to assess
                     streams and rivers in New England.
SCHUYLKILL ACTION NETWORK PROTECTS WATER QUALITY
The Schuylkill Action Network, one of EPA's Targeted Watershed Initiative gr;
recipients for FY 2004, is accelerating source water and watershed protection
    EPA is also
promoting an
Environmental
Management
System (EMS)
approach to help
drinking water and
wastewater utilities
operate more effi-
ciently to reduce
adverse impacts on
the environment.
EMS practices
enable an operation
to evaluate its
impact on the
environment and
the 130-mile Schuylkill River, a drinking water source for over 1.5 million peopl
the Philadelphia area. Organized by EPA, the City of Philadelphia Water
Department, and the Pennsylvania Department of Environmental Protection,
Network is working with more than 50 public and private organizations to ad
acid mine drainage, agricultural runoff,  storm water runoff, untreated sewage
charges, and combined  sewer overflows that threaten water quality. The Net
has secured funding for community sewer systems, implemented a storm wat
demonstration project in the Wissahickon watershed, and diverted stream fl
from an abandoned mine tunnel that was discharging metals to the river

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                                  Annual Performance Goals Met:          7
                                                                  Annual Performance Goals Not Met:     3
                                                                  Data Available After 11/5/04:             3
     STRATEGIC OBJECTIVE: PROTECT HUMAN HEALTH BY REDUCING EXPOSURE TO CONTAMINANTS IN
     DRINKING WATER (INCLUDING PROTECTING SOURCE WATERS), IN FISH AND SHELLFISH, AND IN
     RECREATIONAL WATERS. FY 2004 Cost (in thousands): $ ,313,748 (32.8% of FY 2004 Goal 2 Total  Costs)
   Progress Toward Strategic Objective: In collaboration with states, tribes, and local governments, EPA is making steady
   progress in protecting human health by reducing contaminants in drinking water, in fish and shellfish, and in recreational
   waters. Although final FY 2004 drinking water data will not be available until January 2005, EPA expects that the gains
   made over the past decade will be maintained. Through concerted technical assistance and training, as well as other capac-
   ity development activities, we anticipate that the gap between the planned targets and actual achievements will narrow in
   FY 2005 and EPA will achieve the 2008 drinking water protection goal.

   States, terntories, and tribes are increasing monitonng activities offish tissue for mercury and are communicating this critical infor-
   mation to the consuming public, and making progress toward meeting the 2008 goal. EPA also continues to provide the public with
   information about the quality of recreational waters and anticipates resolving the technical difficulties with eBeaches in FY 2005.
     APG 2.1   Source Water Protection
    FY 2004        Advance states' efforts with community water systems to protect
                    their surface and ground water resources that are sources of drink-
                    ing water supplies. Goal Met.

                    Performance Measure:
                    Number of community water systems and percent of population
                    served by those CWSs that are implementing source water protec-
                    tion programs.
Planned
Actual
 7,500
 25%
13,891
 42%
    FY 2003         39,000 community water systems (representing 75% of the nation's
                    service population) will have completed source water assessments and
                    2,600 of these (representing 10% of the nation's service population)
                    will be implementing source water protection programs. Goal Met,
 2,600
  10%
 6,570
 25%
     FY 2004 Result: The states and EPA exceeded the goal, resulting in more community water systems (CWSs) implementing best
     management practices to address potential sources of contamination and further protect drinking water supplies. These source water
     assessments, authorized in the 1996 Amendments to the Safe Drinking Water Act to be conducted by the states, consists of six steps:
     (I) delineating the water supply, (2) inventorying actual and potential sources of contamination, (3)  determining the susceptibility of
     potential sources, (4) informing the public, (5) developing a management plan for high risk sources of contamination, and (6) developing a
     contingency plan for alternative drinking water supplies in the event of wide- spread contamination. States continue to assess and identify
     potential sources of contamination that could endanger or contaminate sources of drinking water supplied by the nation's 53,000+ CWSs.
     Additional information on the Source Water Program is available at http://www.epa.gov/safewater/protect/assessment.html.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 25.
     FY 2003 Result Available in FY 2004: Data for 2003 was incomplete; not all states reported by January 2004. EPA ensured that the data
     collection process for 2004 reporting was corrected.

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                                                 SECTION  2.  PERFORMANCE RESULTS—GOAL  2.  CLEAN AND SAFE WATER
APG 2.2  Safe Drinking Water                                                        Planned          Actual
FY 2004         Population served by community water systems will receive drinking       85%            Data
                 water meeting health-based standards promulgated in 1998.                              avail 2005
FY 2003
                Same goal. Goal Met,
85%
96%
 FY 2004 Result: To protect the nation's public health through safe drinking water, health-based standards for both chemical and
 microbial contaminants must be implemented by all 53,000+ community water systems. Pertinent rules for this measure include the
 Filter/Backwash Rule, Stage I Disinfections Byproducts Rule, and the Surface Water Treatment Rule (LTI  SWTR), which were
 promulgated in or after 1998. At this time, data collection is still in progress. Additional information on the health standards and
 regulations for drinking water is available at http://www.epa.gov/safewater/standards.html.
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 26.
 FY 2003 Result Available in FY 2004: Data reported by states to EPA to date show that the percentage  of the population served by
 community water systems which meet all health-based drinking water standards increased from 79% in 1993 to 96% in 2003 which
 met drinking water standards promulgated in 1998 was 96% in 2003.
APG 2.3  Safe Drinking Water                                                        Planned          Actual
FY 2004         Population served by community water systems will receive drink-          92%            Data
                 ing water meeting all health-based standards, up from 83% in 1994.                        avail 2005
                                                               Population Served by Community Water Systems Will Receive Drinking
                                                                 Water Meeting All Health-Based Standards, Up from 83% in 1994
FY 2004 Result:  All health-based standards and regulations that
were promulgated prior to 1998 were in effect in 1994. The
population supplied drinking water by community water systems
that have had no health-based violations in that year is the
indicator for ensuring safe drinking water Data for this measure
will be available in 2005. Additional information on standards and
regulations for public drinking water systems can be found at:
http://www.epa.gov/safewater/standards.html.
A description of the quality of the data used to measure EPA's
performance can be found in Appendix B, page 26.
FY 2003 Result Available in FY 2004: Although the vast majority
of the nation's community water systems supplied drinking water
that met all health-based standards, some very large systems
serving a large number of people (e.g., New York City and Puerto
Rico) reported violations during the year For example, even though the New York City system was out of compliance for just a few hours,
it is reported as a violation for the entire year As a result the goal was not achieved. The Agency is pursuing ways to account for these
temporary noncompliance events to more comprehensively and accurately reflect the public health benefits over the entire year.
                                                                     1999
                                                                            2000
                                                                                   2001    2002
                                                                                    Fiscal Year
                                                                                                 2003   2004
APG 2.4  River/Lake Assessments for Fish Consumption
FY 2004         Reduce consumption of contaminated fish by increasing the infor-
                 mation available to states, tribes, local governments, citizens, and
                 decision-makers. Goal Met.

                 Performance Measures:
                   —Lake acres assessed for the need for fish advisories and compi-
                      lation of state-issued fish consumption advisory methodologies
                      (cumulative).
                   —River miles assessed for the need for fish consumption advi-
                      sories and compilation  state-issued fish consumption advisory
                      methodologies (cumulative).
                                                                                         Planned
               Actual
                                                                                          35%
                                                                                           16%
                 35%
                24%

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION  AGENCY
     APG 2A River/Lake Assessments for Fish Consumption    (continued)
      FY 2004 Result: EPA met its goal, with the increase in river miles largely due to new statewide advisories in 3 states (Washington,
      Montana, and Wisconsin) due to mercury. These data are a compilation offish advisory information provided to EPA by 50 states, 3
      tribes, Puerto Rico, Guam, and American Samoa, and local governments. The information is voluntarily submitted to EPA in an effort
      to provide  a central repository offish consumption advisories information for the United States.  Monitoring entities determine the
      scope and extent of monitoring and which waters should be placed under an advisory Fish advisories are issued in order to inform
      the public about the recommended level of consumption offish caught in local waters. The overall increase in waters needing
      advisories is primarily due to increased sampling of previously untested waters by states and tribes.
      States are also increasingly using risk-based methodologies in determining the need for fish consumption  advisories. In calendar year
      2002, 45 states reported using risk-based methodologies, an increase from the 15 states that reported  using these methodologies in
      1999. EPA provides scientific and technical information to enhance state capacity, and develops and disseminates outreach materials for
      health care professionals in several languages. As a result of following these consumption advisories, the public should be protected
      from eating contaminated fish  in quantities that would be harmful to their health.
      A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 26.
                Lake Acres Assessed for the Need for Fish Advisories
                 and Compilation of State-Issued Fish Consumption
                      Advisory Methodologies (cumulative)
                                                                     River Miles Assessed for the Need for Fish Consumption
                                                                   Advisories and Compilation of State-Issued Fish Consumption
                                                                             Advisory Methodologies (cumulative)
          1993  1994 1995  1996 1997
                                     1999 2000  2001  2002  2003 2004
                                  Fiscal Year
                                                                  1993 1994 1995 19961997  1998 1999 2000 2001 2002  2003 2004
                                                                                         Fiscal Year
     APG 2.5  Increase Information on Beaches
     FY 2004         Reduce human exposure to contaminated recreation waters by
                      increasing the information available to the public and decision-mak-
                      ers. Goal Not Met.

                      Performance Measure:
                      Beaches for which monitoring and closure data are available to the
                      public at http://www.epa.gov/OST/beaches/ (cumulative).
                                                                                            Planned
Actual
                                                                                             2,823
 1,857
FY 2004 Result: Calendar year 2003 beach closure data
were provided by 227 state agencies for 1,857 beaches.
The target of beach closure data for 2,823 beaches was
not met due to software compatibility issues with the old
and new database systems. The new database system,
eBeaches, will allow EPA to collect beach  closure and
pathogen data from states on a daily basis, a vast
improvement over the previous system which reported
beach closure information on a yearly basis. The 10 states
that currently use STORET as a repository for monitoring
data were able to report 2003 data  for 1,857 beaches
(closure data are available at http://www.epa.gov/
waterscience/beaches/). EPA expects the system to be
fully operational, allowing all states to report beach
closure information, in January 2005.
A description of the quality of the data  used to measure
EPA's performance can  be found in Appendix B, page 27
                                                                               Increase Information on Beaches
                                                                       1997  1998  1999  2000  2001  2002  2003  2004
                                                                                        Fiscal Year

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                                                 SECTION 2. PERFORMANCE RESULTS—GOAL  2.  CLEAN AND SAFE WATER
 APG 2.6   Drinking Water Infrastructure (Homeland Security)
 FY 2004         Enhance homeland security by securing the nation's critical drinking
                 water infrastructure. Goal Not Met.

                 Performance Measures:
                 —Percent of population and number of CWSs serving more than
                    50,000 but less than  100,000 people have certified the completion
                    of their vulnerability assessment and submitted a copy to EPA.
                 —Percent of population and number of CWSs serving more than
                    50,000 but less than  100,000 people have certified the completion
                    of the preparation or revision of their emergency response plan.
                 —Percent of population and number of CWSs serving more than
                    3,300 but less than 50,000 people have certified the completion
                    of their vulnerability assessment and submitted a copy to EPA.
 Planned
  Actual
 IOO%/435
 IOO%/435
IOO%/7,64I
 IOO%/435
 93%/405
88%/6,788
 FY2003          Enhance public health protection by securing the nation's critical
                 water infrastructures through support for counter-terrorism  pre-
                 paredness. Goal Met,

                 Performance Measure:
                 Percent of the population and the number of community water
                 systems—serving 100,000 or more people—that have certified the
                 completion of the preparation or revision of their emergency
                 response  plan.
 IOO%/463
 IOO%/463
  FY 2004 Result: EPA met its goal of having virtually all medium community water systems assure that their public water utilities have
  evaluated their susceptibility to potential threats and identified corrective actions to reduce or mitigate the risk of serious consequences
  from an intentional act However, EPA missed its goal of having 100% of medium community water systems certify the completion of
  emergency response plans (ERP) within 6 months after submitting their vulnerability assessments, consistent with this Public Health
  Security and  Bioterrorism Preparedness and Response Act (Bioterrorism Act) of 2002. Instead of taking an enforcement action against
  those systems that have not yet submitted their ERPs, the Agency is providing training and  technical assistance to those systems making a
  concerted effort to complete their plans. Currently, EPA is providing on-the-ground technical assistance to those systems that have not
  yet submitted their ERPs.  EPA missed  its goal of having small systems certify their vulnerability assessments by June 30, 2004. EPA
  continues to  provide assistance to help small water utilities identify the basic elements of vulnerability assessments and comply with
  completion, submission, and certification requirements. The tools help systems evaluate their susceptibility to potential threats and
  identify corrective actions to prepare  for and respond to contamination of the nation's water supply. This continued support should
  expedite small systems' abilities to submit their vulnerability assessments. EPA expects that this number will continue to rise over the
  next few months since the due date recently passed.
  A description of the quality of the data used to measure  EPA's performance can be found  in Appendix B, page 27
  FY 2003 Result Available in FY 2004:  As stated in the Bioterrorism Act, large community water systems were mandated to certify the
  completion of their emergency response plan  (ERP) within 6 months after submitting their vulnerability assessment to EPA. Large
  community water systems serving more than 100,000 people have now demonstrated that they have response plans in  place designed
  to deal with emergency situations or vulnerabilities discovered through  conducting their vulnerability assessments. The public's large
  water utilities are, therefore, better prepared for a potential threat
  STRATEGIC OBJECTIVE: PROTECT THE QUALITY OF RIVERS,  LAKES, AND STREAMS ON A WATERSHED  BASIS
  AND PROTECT COASTAL AND OCEAN WATERS. FY 2004 Cost (in thousands):  $2,549,300  (63.5% of FT 2004
  Goal 2 Total  Costs)
Progress Toward Strategic Objective: EPA, states and tribes, continue to use a watershed approach to protect and
improve water quality nationwide, including coastal waters. In 2004, EPA, working with state  and tribal partners, established

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
   regional and state watershed-improvement targets that consider existing data and planned implementation activities. This
   approach, combined with a continued emphasis on enhancing state and tribal monitoring and assessment programs, and
   improving data collection and management efforts to provide meaningful status and trends information, will help to pro-
   vide a better picture of the condition of the nation's waters.

   EPA also continues to promote the use  of innovative and flexible approaches, such as trading and watershed-based permit-
   ting, to achieve water quality goals. These  tools can lead to administrative efficiencies, benefit all watershed stakeholders,
   and lead to increased environmental results.
     APG 2.7 Clean Water State Revolving Fund: Annual Assistance
    FY 2004         900 projects funded by the Clean Water State Revolving Fund
                     (CWSRF) will initiate operations, including 629 projects providing
                     secondary treatment, advanced treatment, Combined Sewer
                     Overflow (CSO) correction (treatment), and/or storm water (SW)
                     treatment. Cumulatively, 10,440 CWSRF funded projects will have
                     initiated operations since program inception. Goal Met.
                                     Planned
                                     10,440
Actual
11,419
     FY 2004 Result: EPA and the states exceeded
     the target for FY 2004 by more than 900
     projects. The additional projects will reduce
     pollutant loadings and will result in
     accelerated environmental protection. The
     cumulative number of CWSRF projects
     initiating operations through 2004 is displayed
     above. These projects facilitate human health
     protection and pollution control by providing
     secondary treatment,  advanced treatment,
     combined sewer overflow correction
     (treatment), and/or stormwater control.
     A description of the quality of the data used
     to measure EPA's performance can be found
     in Appendix B, page 27
         Clean Water State Revolving Fund: Annual Assistance
u  2000
        1995 1996 1997 1998 1999  2000 2001  2002  2003 2004
                           Fiscal Year
     APG 2.8 State/Tribal Water Quality Standards (WQSs)
    FY 2004        Assure that states and tribes have effective, up-to-date water quali-
                    ty standards programs adopted in accordance with the regulation
                    and the WQSs program priorities. Goal Met.

                    Performance Measures:
                    —States with new or revised WQSs that EPA has reviewed and
                       approved or disapproved and promulgated federal replacement
                       standards.
                    —Tribes with WQSs adopted and approved (cumulative).
                                     Planned
Actual
                                       20
                                       33

 25
     FY 2004 Result: Achievement of this goal ensures that up-to-date scientifically defensible and robust standards are in place to protect
     the nation's waters. EPA exceeded its goal by reviewing and approving new or revised water quality standards for 27 states. EPA met
     the performance goal overall based on the states' standards, which apply to a far larger share of the nation's rivers, lakes, and streams
     than do the tribal standards. The tribal target was not met primarily due to a Supreme Court decision resulting in EPA revising its tribal

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                                                   SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
APG 2.8 State/Tribal Water Quality Standards (WQSs)    (continued)
                                                                          Planned
                Actual
 authorization process, which delayed approval of new tribal standards. By the end of FY 2004, a total of 25 tribes had EPA-approved
 water quality standards. EPA has made significant progress in increasing the number of tribes with water quality standards, and will
 accelerate progress by increasing the management accountability for EPA actions on treatment as a state (TAS) applications;
 continuing to provide guidance and assistance, including specialized training, and technical and legal advice, to tribes who have applied
 or are applying for authority to administer the WQS program, or are developing standards; and  continuing to explore the possibility
 of promulgating federal WQS  for tribes that do not have standards in place under the Act.
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 28.
       States with New or Revised WQSs That EPA Has Reviewed
         and Approved or Disapproved and Promulgated Federal
                       Replacement Standards
                                                   Tribes with WQSs Adopted and Approved (cumulative)
           2001
                        2002         2003
                           Fiscal Year
                                                2004
                                                                       2001
                                                                  2002         2003
                                                                      Fiscal Year
                                                                                                            2004
APG 2.9 Watershed Protection                                                        Planned         Actual
FY 2004         By 2005, water quality will improve on a watershed basis such that         500           Data avail
                 500 of the nation's 2,262 watersheds will  have greater than 80% of                        FY 2005
                 assessed waters meeting all water quality standards.
FY 2003          By FY 2003, water quality will improve on a watershed  basis such that
                 600 of the nation's 2,262 watersheds will have greater than 80% of
                 assessed waters meeting all WQSs, up from 500 watersheds in  I998.
                 Goal  Not Met.
                                                                            600

FY 2002
Same goal, different targets. Goal Not Met
600

FY 2001
Same goal, different targets. Goal Not Met
550
 FY 2004 Result: EPA relies on states' biennial reporting under Clean Water Act Section 305(b) to assess progress for this measure.
 EPA's analysis of states' 2004 305(b) reports, which will provide the actual performance data from FYs 2004 and 2005, will be
 completed by the end of FY 2005.
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 28.
 FY 2003 Result Available in FY 2004: EPA and states did not meet the 2003 target for a variety of reasons. Among the most critical,
 states have broader indication of water quality problems due to new integrated reporting methodologies in accordance with EPA
 guidance. EPA's and states'  abilities to achieve the expected results have also been complicated by the incorporation of new water
 quality standards for mercury and additional pollutants.
 Note: The FY 2003 Annual Report indicated that the data for this measure would be available in 2005. This was an error; the data for
 FY 2003, reflecting analysis  of state 305(b) data from the 2002 reporting cycle, was available in late 2003. Because states' 305(b) water
 quality data reports are submitted  biennially, targets and actuals are the same for each 2-year cycle.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
     APG 2.10  NPDES Permit Requirements
    FY 2004        Current national pollutant discharge elimination system (NPDES)
                    permits  reduce or eliminate discharges into the nation's waters of
                    (I) inadequately treated discharges from municipal and industrial
                    facilities; and (2) pollutants from urban SW, CSO, and concentrated
                    animal feeding operations (CAFOs). Goal Not Met.

                    Performance Measures:
                    —Major point sources are covered by current permits.
                    —Minor point sources are covered by current permits.
                    —Loading reductions (pounds per year) of toxic, non-conventional,
                       and conventional pollutants from NPDES permitted facilities
                       (POTWs, Industries, SlUs,  CAFOs, SW, CSOs).
                                                                      Planned
               Actual
                                                                       90%
                                                                       87%
                                                                     2,750 M
               85.5%
               87.4%
              2,336 M
     FY 2004 Result: For FY 2004, EPA and the states met
     the target for the percent of minor point sources
     covered by current permits. In FY 2004, EPA and states
     issued permits to achieve 85.5% coverage with current
     major permits. The continuing challenge of issuing major
     permits is due to competing priorities and the
     increasing complexity of permitting  in a watershed
     context. This challenge is being addressed by the
     Permitting for Environmental Results initiative, which is
     designed to focus on permits expected to produce the
     most significant environmental results. An increasing
     number of states are issuing permits on a watershed
     basis and incorporating other innovative techniques,
     such as trading, to address the NPDES backlog and
     issue permits to reduce or eliminate discharges into the
     nation's waters. EPA also expects the reduction in
     pollutant loadings to increase as EPA continues to
     implement the revised CAFO regulation, and focuses
     on the most environmentally significant permits.
     A description of the quality of the data used to
     measure EPA's performance can be found in Appendix
     B, pages 28-29.
                                               Major Point Sources Covered by Current Permits
                                               2001
                                                           2002        2003
                                                              Fiscal Year
                                                                                  2004
                                               Minor Point Sources Covered by Current Permits
                                                2001
                                                           2002         2003
                                                               Fiscal Year
                                                                                  2004
     APG 2. II  Wastewater Treatment Facility Compliance
    FY 2004         Enhance public health and environmental protection by securing the
                     nation's critical wastewater infrastructure through support for home-
                     land security preparedness, including vulnerability assessments,
                     emergency operations planning, and system operator train ing. Goal Met

                     Performance  Measures:
                     Percent of the population served by, and the number of large and
                     medium-sized (serving populations of IO,OOI and larger) POTWs
                     that have taken action for homeland security preparedness.
                                                                      Planned
               Actual
                                                                       75%
                                                                       8,000
                75%
                8,000
    FY 2003
Same goal, different targets. Goal Met.
 65%
5,000
 65%
5,000

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                                                 SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
 APG2. II  Wastewater Treatment Facility Compliance  (continued)
  FY 2004 Result: In FY 2004 an additional 3,000 large and medium-sized publically owned treatment works (POTWs) improved their
  homeland security preparedness through EPA and state operator assistance training. This brings the cumulative number of wastewater
  facilities prepared for a potential terrorist threat or other intentional act to 8,000. In order to track this measure, EPA grantees that
  provide the training report the numbers of utilities trained. EPA then  uses the Clean Watersheds Needs Survey and the Permits
  Compliance System databases to determine and report the population served by each utility.
  A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 29.
  STRATEGIC OBJECTIVE: PROVIDE AND APPLY A SOUND SCIENTIFIC FOUNDATION TO EPA's GOAL OF CLEAN
  AND SAFE WATER BY CONDUCTING LEADING-EDGE RESEARCH AND DEVELOPING A BETTER UNDERSTANDING
  AND CHARACTERIZATION OF THE ENVIRONMENTAL OUTCOMES UNDER GOAL 2. FY 2004 Cost (in
  thousands): $149,571  (3.7% of FT 2004 Goal 2 Total Costs)

Progress Toward Strategic Objective:  EPA research continues to provide crucial information for developing effective and pro-
tective drinking water standards, including verifying the effectiveness of arsenic treatment technologies and pathogen detection.
In FY 2004 EPA provided an improved  method for detecting Cryptosporidium in water The method that is currently used  on
a widespread basis requires the collection and analysis of two environmental samples, while the new method requires only one
environmental sample. This method will allow EPA,  states, tribes, and others to more efficiently collect  occurrence  data on
human protozoans in source water". EPA research  has also supported Agency efforts to protect the nation's waters so that
they support designated uses. In FY 2004, EPA provided important new information on lesion formation in menhaden fish and
its relationship to pfiesteria, a toxic dinoflagellate associated with major fish kills about which little is known.20
 APG 2.12  Drinking Water Research
 FY 2004        Provide final reports on the performance of arsenic treatment
                 technologies and/or engineering approaches to the Office of Water
                 and water supply utilities to aid in the implementation of the arsenic
                 rule and the protection of human health. Goal Met.
 Planned
9/30/04
 Actual
9/30/04
  FY 2004 Result: In FY 2004 EPA provided information to utilities, utility consultants and states on the performance and cost of arsenic
  treatment technologies for drinking water for use in complying with the 2002 arsenic standard of 10 parts per billion. Nearly 97% of the
  water systems affected by this rule are small systems that serve less than 10,000 people each. These small systems have limited
  resources and need more cost-effective technologies to meet the new standard. EPA's two completed reports detail the cost to
  purchase arsenic treatment technologies based on technology demonstrations, and document the performance of arsenic treatment
  modifications at one of the treatment technology demonstration sites21. These demonstrations showed that the total cost of arsenic
  treatment technologies can vary widely, depending upon the type of technology, design features, and site conditions.
  A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 30.
APG 2. 13 Wet Weather Flow Research Planned
FY 2004 Provide to states, regions and watershed managers' indicators,
monitoring strategies, and guidance for determining the effective-
ness of Best Management Practices (BMPs) for wet weather flows
in meeting water quality goals. Goal Met.
Performance Measures:
— Report on fecal indicator monitoring protocols for different | report
types of recreational water.
— Provide guidance on indicator selection and monitoring strate- 9/30/04
gies for evaluating the effectiveness of BMPs.
Actual
1 report
9/30/04

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
     APG 1.13  Wet Weather Flow Research  (continued)
Planned
Actual
      FY 2004 Result: In FY 2004, EPA completed a report on fecal contamination indicators in recreational waters, and guidance on
      indicator selection and effectiveness monitoring for best management practices (BMPs). The costs and complexities of meeting water
      quality goals subject to urban stormwater permits are daunting. The role of BMPs as both an effective and economical means to meet
      permit requirements remains the central regulatory and non-regulatory approach for restoring much of the nation's degraded water
      quality in urban environments. The scientific literature and reviews of current design and  monitoring practices show that the
      effectiveness of BMPs varies, is often defined and reported differently, and that monitoring rarely documents biological water quality
      improvements. EPA's guidance provided in  2004 will provide states, regions and watershed managers with a means for determining the
      effectiveness of BMPs in meeting water quality goals.22
      For more  information please visit: http://www.epa.gov/ednnrmrl/publish/main.htm. EPA also provided information to states and others
      for selecting indicators of water quality contamination. In FY 2004, EPA completed a report entitled "The EMPACT Beaches
      Report-Results from a Study on Microbiological Monitoring in Recreational Waters." This report describes the physical and biological
      factors that significantly influence the results obtained using microbiological  monitoring methods to measure the quality of bathing beach
      waters, and should improve the quality of data obtained from these monitoring efforts.
      A description of the quality of the data used to measure EPA's performance can  be found in Appendix B, page 30.
         ASSESSMENT OF  IMPACTS OF FY 2004 PERFORMANCE ON FY 2005 ANNUAL PLAN:
      THERE ARE NO CHANGES TO NEXT YEAR'S PROJECTED PERFORMANCE GOALS ASSOCIATED WITH THIS YEAR'S RESULTS.
    NOTES

    1    U.S. Environmental Protection Agency. List of Contaminants and Their MCLs. Available at http://www.epa.gov/safewater/
        mcl.html#mcls
    2    U.S. Environmental Protection Agency. Drinking Water Data Reliability and Action Plan. Available at http://www.epa.gov/
        safewater/data/pdfs/reports_draap_final_2003.pdf
    3    More information is available at http://epa.gov/waterscience/fish/advisories/
    4    U.S. Environmental Protection Agency, Office of Water. August 2004. EPA-823-F-04-016. EPA Fact Sheet.NatiorwJ Listing of Fish
        Advisories. Available at http://www.epa.gov/waterscience/fish/advisories/factsheet.pdf
    5    U.S. Department of Health and Human Services and U.S. Environmental Protection Agency. March 2004. EPA-823-R-04-005.
        What You Need To Know About Mercury In Fish and SheRfish. Available at http://www.epa.gov/waterscience/fishadvice/advice.html
    6    U.S. Environmental Protection Agency. Press Release. "Safer Water at Nation's Beaches: New Rule to Protect Against
        Pathogens." July 2, 2004. Available at http://yosemite.epa.gov/opa/admpress.nsf/
        blab9f485b098972852562e7004dc686/9925d96bd2f8555485256ec50058clb7?OpenDocument
    7    U.S. Environmental Protection Agency, Office of Water. July 9, 2004. "Water Quality Standards for Coastal and Great Lakes
        Waters." Federal Register Vol. 69, No. 131, pp 41720-41743. Available at http://www.epa.gov/fedrgstr/EPA-WATER/2004/July/
        Day-09/w 15614.pdf

    8    U.S. Environmental Protection Agency, Office of Water. March 2004. National List of Beaches. EPA-823-R-04-004.
        Washington, DC. Available at http://www.epa.gov/waterscience/beaches
    9    U.S. Environmental Protection Agency. Press Release. "Bush Administration Commits $10 million to Protect the Nation's
        Beaches." April 29, 2004. R*080. Available at http://yosemite.epa.gov/opa/admpress.nsf/
        blab9f485b098972852562e7004dc686/e30191e77589659985256e850051a36a?OpenDocument
    10  U.S. Environmental Protection Agency, Office of Water. August 23, 2004. "Effluent Limitations Guidelines and New Source
        Performance Standards for the Concentrated Aquatic Animal Production Products Point Source Category." Federal Register Vol.
        69, No. 162, pp. 51892-51930. Available at: http://www.epa.gov/fedrgstr/EPA-WATER/2004/August/Day-23/wl5530.htm
    11  U.S. Environmental Protection Agency, Office of Water. September 8, 2004. "Effluent Limitations Guidelines and New Source
        Performance Standards for the Meat and Poultry Products Point Source Category." Federal Register Vol. 69, No. 173, pp.
        544476-54555. Available at http://www.epa.gov/fedrgstr/EPA-WATER/2004/September/Day-08/wl2017.htm

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                                                    SECTION  2. PERFORMANCE  RESULTS—GOAL 2. CLEAN AND SAFE WATER
12   U.S. Environmental Protection Agency, Office of Water. July 9, 2004. "National Pollutant Discharge Elimination System—Final
    Regulations to Establish Requirements for Cooling Water Intake Structures at Phase II Existing Facilities." Federal Register Vol.
    69, No. 131, pp. 415760-41693. Available at http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/
    2004/04-4130.htm
13   U.S. Environmental Protection Agency, Office of Water. September 2, 2004. "Notice of Availability of 2004 Effluent Guidelines
    Program Plan." Federal Register Vol. 69, No. 170, pp 53705-53721. Available at http://www.epa.gov/fedrgstr/
    EPA-WATER/2004/September/Day-02/w20040.htm
14   Loading reductions are calculated using a spreadsheet maintained by the Office of Science and Technology. U.S. Environmental
    Protection Agency, Office of Science and Technology. Updated 2004. Loadings Reduction Spread Sheet for Direct Discharges from
    Point Sources Subject to Effluent Guidelines. Unpublished Lotus 1-2-3 spread sheet.
    Issuance of major permits (individual and non-storm water general permits) and  individual minor permit issuance is tracked
    using the Permit Compliance System. U.S. Environmental Protection Agency, Office of Enforcement and Compliance
    Assurance, Permit Compliance  System (database).
    Non-storm water general permit issuance for minor permits is tracked using the Permit Issuance Forecasting Tool.
    U.S.Environmental Protection Agency, Office of Wastewater Management. Permit Issuance Forecasting Tool (database).
15   U.S. Environmental Protection Agency, Office of Water. December 2003.Watershed'Based NPDES Permitting Implementation
    Guidance. EPA-83333-B-03-004. Washington, DC. Available at http://www.epa.gov/npdes/publications
16   Refer toSustained Progress in Addressing Management Issues available at http://www.epa.gov/ocfo/finstatement/2004ar/2004ar.htm
17  Achieving Environmental Excellence: An Environmental Management Systems Handbook for Wastewater Utilities is available at
    http://www.peercenter.net, http://www.epa.gov/ow, or http://www.epa.gov/ems
18  Continual Improvement in Utility Management: A Framework for Integration is available at http://www.wef.org and
    http://www.peercenter.net
19   Francy D.  S., Simmons O.D., Ware M.W, Granger E.J., Sobsey M.D., and Schaefer F.W Effects of spiking procedures and water
    quality on recovery of Cryptosporidium in stream  water using USEPA Method 1623.

20  Choich, ]., J.D. Saliemo, E.K. Silbergeld, and A.S. Kane. "Altered brain activity in brevetoxin-exposed bluegill, Lepomis macrochirus,
    visualized using in vivo 14C 2-deoxyglucose labeling." Environmental Research 94 (2004) 192-197. Researchers found that a
    certain water mold, A. invadans, was the causative agent responsible for the development of characteristic lesions on menhaden
    that were formerly ascribed to Pfiesteria, and causes significant mortality in infected fish.

21   For more information, please visit http://www.epa.gov/etv.
22   Clar, M., B. Barfield, and T.P. O'Connor. "Stormwater Best Management Design Guide: Volume 1  General Considerations"
    EPA 600/R-04/121, Volume 2 EPA 600/R-04/121A, and Volume 3 EPA 600/R-04/121B. For more information, please visit
    http://www.epa.gov/ednnrmrl/publish/main.htm.

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     GOALS:     _and   Preservation   and   Restoration
        During FY 2004, EPA's waste management and
     emergency response programs worked with state, tribal,
     and local governments to implement and oversee 15 sepa-
     rate statutory authorities.1 Many stakeholders—including
     non-governmental organizations, industry associations,
     and Federal Advisory Committee Act groups—assisted
     these efforts. Through these partnerships, the Agency
     met or exceeded all of its haz-
     ardous waste cleanup and
     prevention goals for FY 2004.
                              From J 986 through 2002,
                              using innovative cleanup
                              technologies resulted in an
                              estimated net cost savings  of
One Cleanup Program;            ,
Recycling, Waste Minimization,    $2.7 button and an average
                              savings of 71  percent per site
        Four themes characterize
     EPA's land program activities
     under Goal 3: Revitalization;
     and Energy Recovery; and
     Homeland Security. The
     Agency's enforcement and
     research programs are essential elements common to all
     four themes. For example, private parties pay for and con-
     duct most cleanups of contaminated sites. EPA's
     Superfund program has a  longstanding "enforcement first"
     policy to pursue viable, responsible parties to pay for or
     carry out cleanups. At Resource Conservation and
     Recovery Act (RCRA) corrective action facilities, own-
     ers and operators conduct studies and perform cleanups.
     Because EPA's enforcement program provides leverage to
     encourage  voluntary efforts, many private parties have
     undertaken cleanups without enforcement orders.
   EPA's research helps to accelerate development of
scientifically defensible, cost-effective waste management
and remediation methods. EPA's Office of Research
and Development contributed significantly to EPA's new
guidance on remediating contaminated sediments2 and
continues to advise managers of large contaminated
sediment cleanup projects. The Superfund Innovative
                     Technology Evaluation (SITE)
                     program identifies, demon-
                     strates, and assesses innovative
                     and alternative environmental
                     technologies and distributes
                     information to developers,
                     remediation site managers, and
                     regulators, resulting in more
                     efficient site characterization
                     and remediation. From the
                     SITE program's inception in
1986 through 2002, the use of innovative technologies to
clean up contaminated sites has resulted in an estimated
net cost savings of $2.7 billion and an average savings of
71 percent per site.3

REVITALIZATION

   EPA and its partners are restoring contaminated land
to make it economically productive or available as green
space. Like the Agency's Brownfields Program discussed
under Goal 4, these revitalization efforts complement
traditional cleanup programs and enable affected com-
munities to reuse contaminated lands in beneficial ways.4
64

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                              SECTION 2.  PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
For example, restoring Michigan's Torch
Lake, a former copper mining site of over
800 acres of slag, stamp sands, and other
mine spoils, has increased plant diversity
from 5 to 76 species and bird sightings from
0 to over 24 species. In FY 2004, EPA and
Michigan Technological University institut-
ed a unique program under which local area
high schools continue to monitor birds,
plants, and soil at Torch Lake. EPA is devel-
oping performance measures to assess its
success in restoring and revitalizing sites
under all of its cleanup  programs.

    EPA's partnership with the Wildlife
Habitat Council (WHC), an organization of
corporations and environmental groups that
promotes ecological enhancement projects,
has given rise to other innovative revitaliza-
tion efforts. Projects are  underway to improve
habitat, restore native species, and forge
stronger bonds between  communities and
their natural environments. In FY 2004, EPA
challenged WHC companies to identify
opportunities for enhancing the ecology of
properties contaminated by hazardous waste by
2005, to design and initiate at least one proj-
ect by 2006, and to address 10 percent of the
remaining projects in each subsequent year.
   PIPELINE  RUPTURE IN FAIRFIELD,
   In FY 2004, a pipeline rupture released
   approximately 95,000 gallons of diesel fuel
   into a marsh in Fairfield, California, con-
   taminating the 220-acre area. Over 2
   months, EPA combined traditional removal
   techniques and bioremediation to clean up
   the site. Removal activities are now com-
   plete; the marsh has been protected and
   returned to productive use.
                                     VI
 ONE CLEANUP PROGRAM

    Under its One Cleanup Program, EPA
 looks across all cleanup programs to increase
 consistency and enhance effectiveness. Using
 the One Cleanup Program approach, the
 Agency and its partners are streamlining
 existing programs to achieve greater efficien-
 cies. For example, EPA is working with
 Arkansas and Oklahoma on a pilot project to
 streamline the RCRA corrective action
 process and promote flexible practical


Streamlining pilot saves an estimated

 19  years in  cleanup time and $11.25

million in  cleanup  costs at five facilities.

 approaches, while preserving the integrity of
 existing guidance and regulations. The pilot,
 which includes five facilities, thus far has
 saved an estimated 19 years in cleanup time
 and $11.25 million in cleanup costs. In April
 2004, EPA and Pennsylvania signed a One
 Cleanup Program memorandum of agreement
 to facilitate implementing  the state's volun-
 tary  cleanup program. This agreement will
 leverage existing cleanup authorities, coordi-
 nate cleanup programs to promote sound and
 effective remedies, and maximize infrastruc-
 ture  development.5 In another case, a federal
 environmental work group was formed in
 November 2003 to discuss  ways to improve
 cleanup at federal facilities by focusing on
 RCRA/CERCLA (Comprehensive
 Environmental Response, Compensation,
 and Liability Act) coordination, mine waste
 repositories, and  lead Agency designation.6

    The Agency's two major cleanup pro-
 grams, Superfund and RCRA now rely on
 similar environmental indicators.7 In
 FY 2004, Superfund and RCRA cleanup
 programs met or  exceeded  annual and multi-
 year goals for human  health environmental
 indicators and for groundwater protection
 environmental indicators. Eighty-three
 percent of Superfund sites  (1,242 sites) and
 84 percent of RCRA correction action

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               facilities (1440 facilities) met human health
               indicators, having adequately protective con-
               trols in place to prevent any unacceptable
               human exposure under current land and
               groundwater use. EPA's Superfund program
               met this human health goal in part by pro-
               viding alternative drinking water to nearly
               615,000 people at National Priority List
               (NPL) and non-NPL sites where available
               supplies were determined to be unsafe, and
               relocating over 45,000 people in instances
               where contamination posed the most severe,
               immediate threats to life and health. Sixty-
               seven percent of Superfund sites (875 sites)
               and 70 percent of RCRA corrective action
               facilities (1199 facilities) met groundwater
               protection indicators, having abated the
               migration of contaminated groundwater
               through engineered remedies or natural
               processes.

                   By the end of FY 2004, the Superfund
               program completed construction at 926 NPL
               sites, nearly 61 percent. 458 construction
               projects are continuing at 345 NPL sites
               (excluding federal facilities). Two-thirds of
               these projects (309)  are led by Potentially
               Responsible Parties.  As a result of
               Superfund's cleanups, 490 NPL sites now
               have land ready for reuse,  and 300 of these
               are in use.
      900TH SUPERFUND CONSTRUCTION COMPLETED
      In FY 2004, EPA completed the 900th Superfund con-
      struction, at the Solitron Microwave Superfund site in
      Port Salerno, Florida. The developer who purchased
      the Solitron property plans to construct a 20-acre
      industrial park, which will provide 150,000 square feet
      of warehouse and light industrial space.
RECYCLING, WASTE MINIMIZATION,
AND ENERGY RECOVERY
 WHAT CAN YOU
 SAVE TODAY?
 RESOURCE CONSERVATION
 CHALLENGE
                           EPA's Resource
                       Conservation
                       Challenge (RCC)
                       is a voluntary pro-
                       gram that increases
                       regulatory flexibili-
                       ty, promotes
                       opportunities for
                       converting waste to
                       economically
                       viable products,
and encourages resource conservation
through efficient materials management. In
FY 2004, EPA and the states initiated a
strategic planning process based on five RCC
program elements: product stewardship, ben-
eficial use, energy conservation and recovery,
priority chemicals, and greening the govern-
ment. In March 2004, the RCC published its
first annual report on the program's accom-
plishments and progress.8

   The RCC's success is evident in a number
of states.  In North Carolina, EPA and the
Land-of-Sky Regional Council's Waste
Reduction Partners developed  a model recy-
cling market for used wooden pallets. The
project demonstrated that unique, highly styl-
ized flooring can be made from used pallet
deck boards, and that a market exists for this
material at prices that make the process eco-
nomically viable for small private enterprises
with wood processing expertise. In  another
project, EPA, Michigan, Ohio, Illinois,
Indiana, New York, Pennsylvania,
Connecticut, Alabama, and supporting
private-sector organizations collaborated to
inventory and map scrap tire piles,  plan
cleanups, set resource priorities, and develop a
guidebook and training program on best prac-
tices for tire pile mitigation.

   EPA's Waste Wise program, another suc-
cessful voluntary effort, promotes reductions
in municipal solid waste and targeted indus-
trial wastes. WasteWise participants design
waste reduction programs  tailored to their

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                              SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
own needs, benefiting both the environ-
ment and their bottom lines. Through
Waste Wise, the Fort Independence
Reservation in California was awarded a
2004 Program Champion Award for devel-
oping and implementing an innovative solid
waste management program. To date, the
Tribe has recycled more than 1,200 pounds
of glass, plastic, paper, cardboard, aluminum,
and other materials. Further, by successfully
                      encouraging com-
                      munity recycling
                      and making
                      arrangements with
                      the local landfill,
                      the tribe is generat-
                      ing enough money
                      from the sale of
                      these materials to
                      fund the program.
            &EPA
    -VW\STE
    Wise
Preserving Resources,
  Preventing Waste
HOMELAND SECURITY

    EPA continues to improve its emergency
preparedness and response capability, particu-
larly in terms of homeland security. During
FY 2004, EPA worked with its federal part-
ners to enhance the incident command/
unified command system across government
and the private sector; deliver federal assis-
tance to states at the Federal Emergency
Management Agency's direction; and, as a
member of the Catastrophic Disaster
Response Group, develop national policy and
guidance on response coordination and emer-
gency support function issues.

    In FY 2004, EPA reduced by 56 percent
the deficit in core emergency response readi-
ness, thus improving the Agency's capability
for responding to multiple chemical, biologi-
cal, and radiological incidents. EPA field
responders and National Response System
special forces received extensive response-
related training: scientific and technical
training for detecting, analyzing, and
responding to chemical, biological, and radi-
ological agents and training in managing
incident command system responses. During
                                              PLASTICS RECYCLING IN  NEW
                                              HAMPSHIRE
Each year, nearly 200,000 tons of plastic
are sent to landfills in New Hampshire
alone. Disposal costs, excluding trans-
portation, run about $70 per ton.  In
1998, EPA awarded $141,000 to the
New Hampshire Governor's Recycling
Program to study the feasibility of
developing a facility to recycle  mixed
plastics in northern New England.  In June
2004, a new company — New Frontier
Industries — was incorporated and  began
manufacturing and selling plastic highway
sound barriers and lumber.
                                            FY 2004, EPA first responders participated in
                                            more than 150 training exercises with their
                                            federal, state, and local counterparts.


                                            Challenges  and Directions
                                            for the Future

                                                Cleanup and waste management pro-
                                            grams faced several challenges in FY 2004
                                            that affected activities under one or more of
                                            the Goal 3 themes. For example, the
                                            Superfund program faced a growing backlog
                                            of projects ready to begin construction, cou-
                                            pled with the challenge of funding several
                                            large and complex ongoing projects. During
                                            FY 2004, Superfund underwent a series of
                                            internal and external evaluations to explore
                                            this  problem.9 As a result, the program has
                                            engaged in a public dialogue to identify and
                                            implement a series of reforms that will
                                            address these issues over the coming years.10
                                            The Base Realignment and  Closure
                                            (BRAG) program anticipates challenges in
                                            meeting requirements  for existing bases and
                                            putting those facilities back into productive

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               reuse, while at the same time addressing a
               new round of BRAG sites to be announced
               in 2005.

                   Because MTBE (methyl tertiary-butyl
               ether) contamination and increased techni-
               cal complexities make cleaning up remaining
               leaking underground  storage tank (UST)
               sites particularly challenging, states are hav-
               ing greater difficulty meeting cleanup targets.
               As a result, the
               UST program
               may not meet its
               FY 2004 target of
               21,000 cleanups.
               EPA recognizes that
               completing fewer
               cleanups extends
               the potential for
               environmental
               harm and  delays
               restoration and
               reuse of contami-
               nated sites.
               However,  during
               the first half of
               FY 2004 the
               Agency and its
               partners were able
               to complete more
               than 8,000
               cleanups,11 reducing
               the backlog to
               132,443, and are on
               track for reducing the UST cleanup backlog
               by 50 percent by 2008.

                   In FY  2004, the UST program began a
               review to  improve  measurement of environ-
               mental and public  health outcomes of tank
               cleanups. Findings are expected by
               December 2004. In addition, the program is
               exploring  methodologies for setting its cur-
               rent cleanup targets for 2005 and beyond,
               using results from a backlog characterization
               pilot currently underway and a state-based
               model that projects future cleanup results.  In
               FY 2003, EPA clarified the terms "confirmed
               releases," "cleanups initiated," and "cleanups
completed" to address some states' concerns
about sites where they have determined no
cleanup action is necessary to meet risk-
based cleanup levels.

    Finally, the most recent data available for
municipal solid waste (MSW) recycling show
that per capita generation of MSW is
remaining stable at slightly less than 4.5
pounds daily, while increases in the rate
                        of recycling are
                        not occurring
                        as projected.
                        Consequently, EPA
                        is unlikely to reach
                        its goal of 35 per-
                        cent recycling by
                        2005 and  is extend-
                        ing this goal to
                        2008. To help
                        increase recycling,
                        EPA will focus its
                        RCC more strategi-
                        cally, targeting
                        specifically the
                        paper, plastics,
                        packaging, and
                        organics segments
                        of the MSW
                        stream. In addition,
                        EPA recently
                        launched its
                        "Greenscapes" pro-
                        gram to encourage
composting of food and yard wastes—organic
materials representing over 25 percent of
MSW—and using the compost to landscape
roads, highways,  golf courses, ski resorts, and
industrial and institutional facilities.

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                                   SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
                                                              Annual Performance Goals Met:          4
                                                              Annual Performance Goals Not Met:     0
                                                              Data Available After 11/5/04:             3
  STRATEGIC OBJECTIVE: BY 2008, REDUCE ADVERSE EFFECTS TO LAND  BY REDUCING WASTE GENERATION,
  INCREASING RECYCLING, AND ENSURING  PROPER MANAGEMENT OF WASTE AND PETROLEUM PRODUCTS
  AND FACILITIES IN WAYS THAT PREVENT RELEASES.  FY 2004 Cost (in thousands): $228,653 (11.3% of FY 2004
  Goal 3 Total  Costs)

Progress Toward Strategic Objective: EPA waste management programs are on track to meet their obligations under the
Agency's 2003 Strategic Plan. Although recycling rates are less than expected, EPA  expects that the nation will meet the 2008
challenge of recycling 35% of municipal solid waste and generating a level of no more than 4.5 pounds per capita daily The
Resource Conservation and Recovery Act (RCRA) permitting program  is making progress on the goal of attaining permits or
approved controls at 95% of the permitted facilities, and is establishing a framework to ensure prompt permit renewals. More
than 85% of the 2,751  hazardous waste management facilities nationwide have permits or approved controls. The underground
storage tank program is on track with developing methods to monitor compliance, and the level of confirmed releases from
tanks has already demonstrated a significant decline. The hazardous waste  combustion program is successfully developing meas-
ures and controls to reduce hazardous waste combustion facility  emissions of dioxins, furans and particulate matter
FY 2003
Same Goal, different target.
74 M
4.5 Ibs
Data
avail 2005
  APG3.I  Municipal Solid Waste Source Reduction                                 Planned        Actual
 FY2004        Divert an additional  I % (for a cumulative total of 33% or 79 million       79 M            Data
                 tons) of municipal solid waste from land filling and combustion, and      4.5 Ibs         avail 2006
                 maintain  per capita generation of RCRA municipal solid waste at 4.5
                 pounds per day.
 FY 2002
Same Goal, different target.
 69 M
4.5 Ibs
                                                                                                     avail 2004
 FY 2001
Same Goal, different target. Goal Not Met.
 67 M
4.3 Ibs
 68 M
4.4 Ibs
  FY 2004 Result: Municipal solid waste (MSW) recycling data for 2004 will be available in December 2006. The latest available data for
  year 2001 recycling, along with data from previous years, indicate that recycling continues to grow, but at a pace slower than anticipated.
  As a result, the Agency extended the time necessary for the nation to achieve the 35% recycling rate from 2005 to 2008 in the 2003
  Strategic Plan. To increase the rate of recycling, EPA is directing its Resource Conservation Challenge (RCC) to strategically focus on
  particular segments of the MSW stream, specifically, paper, plastics, packaging, and organics. For example, to address one of the largest
  segments, paper, EPA is increasing its efforts with the American Forest and Paper Association to help reach its goal of recovering 55% of
  the paper consumed  in the United States by 2012. In recent years, domestic paper recovery efforts have been severely strained by fierce
  competition in China where demand for recovered paper is at an all-time high. Data for exported waste are not available, so it is
  possible that part of the decline in recycling is due to exports rather than an increase in the percentage of waste landfilled or

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                                 250
     APG 3.1  Municipal Solid Waste Source Reduction   (continued)
combusted. Furthermore, diversion of massive quantities of paper
to China results in shuttering of paper-making capacity in the United
States, leading to a reduction in industrial demand for recovered
paper. In addition, EPA recently launched its "Greenscapes"
program to foster the composting of food and yard wastes, which
represent more than 25% of MSW, and the use of this compost for
landscaping of roads, highways, golf courses, ski resorts, and
industrial and institutional facilities. Per capita generation of MSW
continues to be stable at slightly less than 4.5 pounds daily
Data for the charts displayed available at http://www.epa.gov/
epaoswer/non-hw/muncpl/facts.htm.
A description of the quality of the data used  to measure EPA's
performance can be found in Appendix B, page 30.
FY 2001 Result Available in FY 2004: Municipal solid waste diverted
from landfilling and combustion exceeded expectations with a total
of 68 million tons, but the per capita generation number did not
decline to the expected level of 4.3 pounds per day
                                                                                      Planned
                                                                                                        Actual
                                                                          Municipal Solid Waste Generation, 1960-2001
                                                                      1960  1970  1980   1990   1995  1999   2000   2001
                                                                                          Year
APG 3.2  Manage Hazardous Waste and Petroleum Products Properly
FY 2004        Reduce releases to the environment by managing hazardous wastes
                and petroleum products properly.

                Performance Measures:
                —RCRA hazardous waste management facilities with permits or
                   other approved controls.
                —Confirmed UST releases nationally.
                —Increase in  UST facilities in significant operational compliance
                   with leak detection requirements.
                —Increase in  UST facilities in significant operational compliance
                   with spill, overfill and corrosion protection regulations.
                                                                                           Planned
                                                                                                       Actual
                                                                                            2.4%
                                                                                             4%
                                                                                                       3.7%
                                                                                           < 10,000     Data avail 2004
                                                                                             4%       Data avail 2004
                                                                                                  Data avail 2004
FY 2003         Increase the number of waste and petroleum facilities with accept-
                able or approved controls in place to prevent releases to the
                environment. Goal Not Met.

                Performance Measures:
                —Percent of RCRA hazardous waste management facilities with
                   permits or other approved controls.
                —Increase in UST facilities in significant operational compliance with
                   leak detection requirements.
                —Increase in UST facilities in significant operational compliance with
                   spill, overfill and corrosion protection regulations.
                                                                                            772%

                                                                                             3%

                                                                                             3%
                                                                                                       83.2%

                                                                                                        -8%

                                                                                                        -6%
FY 2002         75.8% of the hazardous waste management facilities will have
                approved controls in place to prevent dangerous releases to air, soil,
                and groundwater, representing an average increase of 39 additional
                facilities per year. Goal Met.
                                                                                            75.8%
                                                                                                       79.0%
    FY 200 1
               Same Goal, different targets. Goal Met.
                                                                                        68%
74%

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                                     SECTION 2.  PERFORMANCE RESULTS—GOAL 3.  LAND PRESERVATION AND RESTORATION
  APG  3.2 Manage Hazardous Waste and Petroleum Products Properly  (continued)
                                                                               RCRA Permitting Progress
                                                                          -Progress Toward the FY 2005 Goals
                                                                                (National Results: I
                                                                               Confirmed Releases: Nationwide
FY 2004 Result: In FY 2004 the RCRA permitting program
exceeded its annual goal of 2.4% by establishing permits or
approved controls at 103 of 2,752 facilities for an additional 3.7%.
As a result, 87% of the 2,752 hazardous waste management
facilities have permits or approved controls, meaning that the
program has already exceeded its FY 2005 goal of 80%.
End-of-year performance data for the underground storage
tank (UST) compliance program for FY 2004 will not be
available until December 2004, but EPA does not anticipate that
the goals for the two compliance measures will be met. As of
mid-year FY 2004, the compliance rate for leak detection was
71 %, or 5% below the target compliance  rate of 76% at the end
of the year. As of mid- year FY 2004, the compliance rate for
release prevention was 77% or 6% below the target
compliance rate of 83% at the end of the year. While these compliance rates are slightly lower than those in past reports, they are
more accurate indicators of operational compliance since states are now following new EPA guidance (issued at the end of FY 2003) on
what constitutes operational compliance.  These compliance rates represent a snapshot in time. Some UST facilities that are compliant
one year may be out of compliance the following year
For FY 2004, states and regional offices reported the
percent  of UST facilities in operational compliance with
release prevention requirements, release  detection
requirements, and both requirements together. For the
combined measure,  EPA established a goal of increasing the
compliance rate by I % per year from FYs 2005-FY 2008.
This is a reasonable goal since constant vigilance is required
to ensure facilities remain in significant operational
compliance. Even maintaining existing compliance rates will
require effort by EPA and its state partners.  FY 2004 is the
baseline  year for the combined compliance rate measure. At
the mid-year FY 2004, the combined compliance rate was
62%. The decline  in confirmed releases of underground
storage tanks between FY2003 and the first half of FY 2004
demonstrates the effectiveness of state efforts to implement
improved release detection and prevention requirements. In
the first half of FY 2004, there were only 4,185 confirmed
releases, 50% fewer than in the first half of FY 2003.
A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 30-31.
FY 2003 Result Available in FY 2004: In FY 2003, EPA did not meet its goal to increase by 3% to 80% for the leak detection
requirements or to increase by 3% to 85% for the spill, overfill and corrosion protection  requirements. The final compliance rates for
FY 2003 were 72% (or 8% less than the target of 80%) for UST facilities in significant operational compliance with leak detection
requirements, and 79% (or 6% less than the target of 85%) for UST facilities in significant operational compliance with spill, overfill and
corrosion protection. Although the Agency has been working with the states to improve their reporting of both measures, the
compliance rates for both have been steady  or declining.  Several reasons could explain this trend: some states have more stringent
requirements; some states target non-compliant UST facilities for inspection that are not  representative of state sampling;  and the
compliance rates represent a snapshot in  time so that some UST facilities which are compliant I year may be out of compliance the
following year, thus compliance rates appear  low.
                                                                     1993 1994 1995 1996  1997 1998 1999 2000 2001 2002 2003 2004*

                                                                                        Fiscal Year
                                                                     *Reflects data through mid-FY04
  STRATEGIC OBJECTIVE: BY 2008, CONTROL THE RISKS TO HUMAN HEALTH AND THE ENVIRONMENT BY
  MITIGATING THE IMPACT OF ACCIDENTAL OR INTENTIONAL RELEASES AND BY CLEANING UP AND
  RESTORING CONTAMINATED SITES OR PROPERTIES TO APPROPRIATE LEVELS. FY 2004 Cost (in thousands):
  $  ,736,294 (85.9% of FT 2004 Goal 3 Total Costs)
Progress Toward Strategic Objective: EPA cleanup programs have made considerable progress meeting their commitments.
Superfund and the  RCRA corrective action programs are also striving to attain indicators that demonstrate protection of

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
   human health and the environment, and to clean up contamination at designated sites and facilities. Through the end of
   FY2004, EPA had assessed more than 45,000 sites and completed final cleanup plans at more than  1,100 Superfund baseline
   sites. In addition, more than 33,000 sites have  been removed from the CERCLIS waste site list since the beginning of the
   program indicating they would be  addressed by other authorities, they were clean or that no additional federal action was
   required. Deleting sites is a helpful step in promoting the economic redevelopment of these properties. Also, the Superfund
   Program cleaned up or had construction underway at 94% (1,442) of the 1,529 sites on the final NPL (includes final and
   deleted sites). Of these 1,529 sites, 926, or nearly 61%, have cleanup construction completed. Construction projects are
   ongoing at more than 346 NPL sites. In the course of construction since the Superfund program began, EPA has treated or
   removed I  billion cubic yards of hazardous solid waste and addressed 381 billion gallons of hazardous liquid waste (including
   contaminated groundwater). At the close of FY 2004, nearly 83% (1,242 of 1494) of baseline  Superfund  sites had human
   exposures under control, meaning that adequately protective controls are in place to prevent any unacceptable human
   exposures from occurring under current land and groundwater use. In addition, the migration of contaminated groundwater
   was under control at nearly 67% (875 of 1,306) of baseline Superfund sites by the close of FY 2004. In addition to cleanup
   activities, EPA has accomplished this protection of human health since the program's inception by: (I) providing alternative
   drinking water supplies to nearly 615,000  people at NPL and non-NPL sites to  protect them from contaminated ground and
   surface water, and (2) relocating more than 45,000 people  at NPL and non-NPL sites in instances where contamination
   posed the most severe immediate threats. Meeting ambitious cleanup goals continues to be a challenge for the leaking
   underground storage tank (LUST) program. The rate of LUST cleanups has been declining in recent years, and available data
   suggest that the program will  not meet its 2008 goals. Efforts are currently underway to identify opportunities for program
   improvement and create  a new model for establishing future LUST cleanup targets.
     APG 3.3 Assess and Clean Up Contaminated Land
    FY 2004         Control the risks to human health and the environment at contami-
                    nated properties or sites through cleanup, stabilization, or other
                    action, and make land available for reuse.

                    Performance Measures:
                    —Superfund final site assessment decisions.
                    —Superfund construction completions.
                    —Superfund hazardous waste sites with human exposures controlled.
                    —Superfund hazardous waste sites with groundwater migration
                      controlled.
                    —Final remedies (cleanup targets) selected at Superfund sites.
                    —High priority RCRA facilities with human exposures to toxins
                      controlled.
                    —High priority RCRA facilities with toxic releases to groundwater
                      controlled.
                    —LUST cleanups completed.
Planned
     Actual
 500
 40
  10
  10

 20
 166

 129

21,000
     548











Data avail 2004
    FY2003          Assess waste sites. Goal Met,

                    Performance Measures:
                    —Number of Superfund final site assessment decisions.
                    —Number of Superfund removal response actions initiated.
  475
  275

    FY 2003         Clean up and reduce risk at waste sites. Goal Not Met.

                    Performance Measures:
                    —Number of Superfund construction completions.
                    —Number of Superfund hazardous waste sites with human expo-
                      sures  (HE) controlled.
  40
   10
      40
      28

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                                   SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
APG 3.3  Assess and Clean Up Contaminated  Land    (continued)                     Planned
FY 2003          —Number of Superfund hazardous waste sites with groundwater            10
(continued)         migration controlled.
                 —Number of high priority RCRA facilities with human exposures to          197
                   toxins controlled.
                 —Number of high priority RCRA facilities with toxic releases to              158
                   groundwater controlled.
                 —Number of leaking underground storage tank (LUST) cleanups           21,000
                   completed.

Superfund Cleanup

FY 2002          EPA and its partners will complete 40 Superfund cleanups                   40
                 (construction  completions). Goal Met.
                                                                                                        Actual
                                                                                                         54

                                                                                                         230

                                                                                                         175

                                                                                                        18,518
                                                                                                         42
FY 2001         Same Goal, different targets. Goal Not Met.

RCRA Corrective Actions

FY 2002         172 (for a cumulative total of 995 or 58%) of high priority RCRA facil-
                ities will have human exposure (HE) controlled and  172 (for a
                cumulative total of 882 or 51%) of high priority RCRA facilities will
                have groundwater releases (GWR) controlled. Goal Met.
                                                                                         75
                                                                                       172 HE
                                                                                      172 GWR

                 205 HE
                171  GWR
FY 2001
                Same Goal, different targets. Goal Not Met.
Leaking Underground Storage Tank Cleanups

FY 2002        EPA and its partners will complete 22,000 LUST cleanups for a
                cumulative total of approximately 290,000 cleanups since  1987 Goal
                Not Met.
 172 HE
172 GWR
                                                                                       22,000
 179 HE
154 GWR
                  15,769
FY 2001
                Same Goal, different targets. Goal Not Met.
 21,000
  19,074
                                                                         Number of Construction Completions
                                                                             and Final/Deleted NPL Sites
FY 2004 Result: In FY 2004, the Superfund program improved
public health through response activities that reduced current,
direct human exposures to hazardous pollutants. The program
achieved its target of 40 construction completions, and
surpassed targets for all other goals. At the close of FY 2004,
more than 83% (1,242 of 1,494) of baseline sites had human
exposures under control, meaning that adequately protective
controls are in place to prevent any unacceptable human
exposures from occurring under current land and
groundwater use. In addition, the migration of contaminated
groundwater was under control at nearly 67% (875 of 1,306) of
baseline sites  by the close of FY 2004. EPA has accomplished
this protection of human health since the program's inception
by: (I) providing alternative drinking water supplies to nearly
615,000 people at NPL and non-NPL  sites to protect them
from contaminated and surface water, and (2) relocating more than 45,000 people at NPL and non- NPL sites in instances where
contamination posed the most severe immediate threats.
EPA is unlikely to meet its FY 2004 target of completing 21,000 LUST cleanups, and reducing the national LUST cleanup backlog of
132,000 to 66,000 by FY 2008. EPA has established a range for the annual national cleanup goal of 18,000 to 23,000 cleanups to
encourage state progress in reducing  the cleanup backlog in  half It has, however, been more difficult for the states and regional offices
                                                                                     Fiscal Year

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 3.3  Assess and Clean Up Contaminated Land   (continued)
                                                                              Decreasing UST National Cleanup Backlog
to meet these goals because of the increasing complexities
with the remaining backlog of cleanups and MTBE
contamination. In the first half of FY 2004, EPA and its
partners were able to complete more than 8,000 cleanups12
and reduce the cleanup backlog to 132,443. The completion
of fewer cleanups will potentially result in extended impacts
to the environment and natural resources and delay
functional re-use  of the land or resources.
The RCRA corrective action program also met its goals, and
has reported documentation of controlled human
exposures at 195  sites (annual goal of 166) and groundwater
migration at 150 sites (annual goal of 129). Cumulatively, the
program has controlled human  exposures at 84% (1,440) of
1,714 high-priority RCRA sites, and groundwater migration at 70% of these sites (1,199).
A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 31-32.
FY 2003 Result Available in FY 2004: EPA did not meet the FY 2003 goal of completing 21,000 cleanups at leaking underground storage
tank sites;  18,518  cleanups were  completed. The reasons for not meeting this goal are the same as those discussed above for FY 2004.
                                                                      1992 1993 1994 1995 1996 1997  1998 1999 2000 2001 2002 2003 2004*
                                                                                           Fiscal Year
                                                                      *Reflects data through mid-FY04
                                               RCRA Environmental Indicators
                              Human Exposure
                                                                                  Groundwater Migration
                 2001
                             2002        2003
                                 Fiscal Year
                                                     2004
                                                                              2001
                                                                                    2002         2003

                                                                                       Fiscal Year
                                                                                                                 2004
     APG 3.4  Superfund Potentially Responsible Party Participation                     Planned         Actual
     FY 2004         Reach a settlement or take an enforcement action by the start of          90%             98%
                      remedial action at 90% of those Superfund sites having known non-
                      Federal, viable, liable parties. Goal Met.
      FY 2004 Result: In FY2004, EPA reached a settlement or took an enforcement action by the start of remedial action at more than
      98% of those Superfund sites having known non-Federal, viable, liable parties, and achieved its goal. Settlements or enforcement actions
      include: Consent Decree (CD), Administrative Order on  Consent (AOC), Consent Agreement (CA), Unilateral Administrative Order
      (UAO), voluntary cost recovery action, or litigation referral.
      A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 31-32.

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                                  SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
APG 3.5 Superfund Cost Recovery
FY 2004         Ensure trust fund stewardship by getting PRPs to initiate or fund the
                work and recover costs from PRPs when EPA expends trust fund
                monies. Address cost recovery at all NPL and non-NPL sites with a
                statute of limitations on total past costs equal to or greater than
                $200,000. Goal  Met.
                                                                    Planned
                                                                     100%
               Actual
               100%
FY 2003
Same Goal. Goal Met,
100%
100%
FY 2002
Same Goal. Goal Met,
100%
100%
FY 2001
Same Goal. Goal Not Met.
100%
978%
 FY 2004 Result: EPA achieved its goal of addressing,
 through enforcement, settlement or
 compromise/write-off, all of the pending cost
 recovery cases with outstanding unaddressed past
 costs greater than $200,000 and pending statute of
 limitations (SOL) concerns. In FY 2004, EPA
 addressed cost recovery actions at  183 NPL and
 non-NPL sites, of which 84 had total past costs
 greater than or equal to $200,000 and potential
 SOL concerns. EPA secured cost recovery
 commitments valued at $1574 million.
 A description of the quality of the data used to
 measure EPA's performance can be found in
 Appendix B, pages 31-32.
                                              Cumulative Response and Cost Recovery Settlements
                                          1981 1983  1985 1987 1989 1991  1993 1995 1997 1999 2001 2003
                                                              Fiscal Year
APG 3.6 Prepare for and Respond to Accidental and Intentional Releases
FY 2004         Reduce and control the risks posed by accidental and intentional
                releases of harmful substances by improving our nation's capability
                to prepare for and respond more effectively to these emergencies.
                Goal Met.

                Performance Measures:
                —Superfund removal response actions initiated.
                —Oil spills responded to or monitored by EPA.
                —Percentage of emergency response and homeland security
                  readiness improvement.
                                                                    Planned
               Actual
                                                                      350
                                                                      300
                                                                      10%
                308
                56%
FY 2003         Improve homeland security response readiness and continue assess-
                ment of critical facility vulnerability. Goal Not Met.

                Performance Measures:
                —Develop baseline data for response readiness, incorporation of
                  Homeland Security into community contingency plans, and critical
                  facilities requiring vulnerability assessments.
                —Number of oil facilities  in compliance with spill prevention, control
                  and countermeasure provisions of oil pollution prevention regulations.
                                                                  Baseline data   823 (Baseline)
                                                                      600
                525
FY 2002         Respond to or monitor 300 significant oil spills in the inland zone.
                Goal Met.
                                                                      300
                322

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 3.6  Prepare for and Respond to Accidental and Intentional Releases   (continued)
     FY 2004 Result: EPA continues to respond to or monitor oil spills to prevent oil discharges into the nation's inland waterways as stated
     in the National Contingency Plan. In FY 2004 EPA initiated 385 removal cleanup actions at hazardous waste sites to reduce immediate
     threats to human health and the environment, for a total of 8,286 removal actions over the life of the program. EPA was also involved
     in 308 oil spill response actions. As part of the National Response System, EPA ensures that inland oil spills are evaluated and addressed
     by the local, state, or tribal government or by the responsible party, and serves as the "safety net" for those responses that are beyond
     the capabilities of those other agencies. EPA receives approval from the Coast Guard for use of the oil spill trust fund administered by
     National Pollution Funds Center. A readiness performance measure for core emergency response programs was established in FY 2003
     that will prove a useful management tool in assuring the Agency's ability to respond to simultaneous large scale emergencies resulting
     from accidental or intentional  uncontrolled releases. In FY 2004 EPA exceeded its target of 10% by reducing the deficit of core
     emergency response readiness 56%. The program will maintain high degrees of readiness for the foreseeable future. Efforts are ongoing
     with facility response plan and risk management plan evaluation that demonstrate the effectiveness of safeguards in place.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 31-33.
     STRATEGIC OBJECTIVE: PROVIDE AND APPLY SOUND SCIENCE FOR PROTECTING AND RESTORING LAND BY
     CONDUCTING LEADING-EDGE RESEARCH AND DEVELOPING A BETTER UNDERSTANDING AND
     CHARACTERIZATION OF THE ENVIRONMENTAL OUTCOMES UNDER GOAL 3. FY 2004 Cost (in thousands):
     $56,726 (2.8% of FY 2004 Goal 3 Total Costs)

   Progress Toward Strategic Objective: To meet this objective, EPA is providing important information on monitored  natu-
   ral recovery as a remedy for contaminated sediments at Superfund sites. EPA is also providing information on the
   performance of an innovative treatment technology that can destroy or remove PCBs from contaminated river sediment,
   and result in a product with beneficial reuse. Specifically, this process treats river sediment impacted by PCBs, other organ-
   ics, and metals by melting the sediment at nearly 3,000 degrees, destroying the contaminants and producing a glass
   aggregate than can be used as an additive to concrete,  a material in floor tiles, and construction fill.l:
    APG 3.7  Scientifically Defensible Decisions for Site Clean-up
    FY 2004         Provide risk assessors and managers with site-specific data sets on
                    3 applications detailing the performance of conventional remedies
                    for contaminated sediments to help determine the most effective
                    techniques for remediating contaminated sites and protecting
                    human health and the environment. Goal Met.

                    Performance Measure:
                    Reports on performance data for conventional sediment remedies
                    for three sites.
  Planned
   Actual
3 reports
3 reports
    FY 2003         To ensure cost-effective and technically sound site clean-up, deliver
                    state-of-the-science reports and methods to EPA and other stake-
                    holders for risk management  of fuel oxygenates; organic and
                    inorganic contamination of sediments, groundwater and/or soils; and
                    oil spills. Goal Met.

                    Performance Measure:
                    Complete draft of the FY 2002 Annual Superfund Innovation
                    Technology Evaluation (SITE) Report to Congress.

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                                 SECTION  2.  PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
 APG 3.7  Scientifically Defensible Decisions for Site Clean-up   (continued)
 FY 2002        Provide at least 6 innovative approaches that reduce human health
                and ecosystem exposures from dense non-aqueous phase liquids and
                methyl-tertiary butyl ether in soils and groundwater, and from oil and
                persistent organics in aquatic systems. Goal Met,

                Performance Measure:
                Deliver the Annual SITE Program Report to Congress detailing 4-6
                innovative approaches, their cost savings and future direction; reports
                summarizing pilot scale evaluation of in situ remedies for solvents.
Planned
Actual
 FY 2001         Provide technical information to support scientifically defensible and
                cost-effective decisions for cleanup of complex sites, hard-to-treat
                wastes, mining, oil spills near shorelines, and Brownfields to reduce
                risk to human health and the environment. Goal  Not Met.

                Performance Measure:
                Deliver the Annual SITE Program Report to Congress.
   I
  0
  FY 2004 Result: In FY 2004 EPA completed and submitted for publication 3 reports describing the performance of conventional
  remedies for contaminated sediments for use by remedial project managers in determining the feasibility of various remedial approaches.
  These reports will help reduce the uncertainty associated with remedy selection and identify the methods that efficiently chart remedy
  performance over time. EPA's reports respond to a National Research Council report recommending that "long-term monitoring and
  evaluation of PCB-contaminated sediment sites should be conducted to evaluate the effectiveness of the management approach and to
  ensure adequate continuous protection of humans and the environment"14
  A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 33.
     ASSESSMENT OF IMPACTS OF FY 2004 PERFORMANCE ON FY 2005 ANNUAL PLAN:
     THE GOAL HIGHLIGHTS PRECEDING THE FY 2004 PERFORMANCE RESULTS PROVIDE A DISCUSSION OF
                     CHANGES AND DIRECTIONS FOR THE FUTURE OF SEVERAL PROGRAMS.
FY 2003 Annual  Performance  Goals
(No Longer Reported for FY 2004)

 •  Oil facilities in compliance with spill prevention, control and countermeasure provisions of oil pollution prevention
   regulations.
 •  Maximize all aspects of potentially responsible  party (PRP) participation which includes maximizing PRP work at 70% or
   the new remedial construction starts at non-Federal facility Superfund sites, and emphasize fairness in the enforcement
   process.

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
   NOTES

   1    Statutory authorities can be found in the FY 2004 Annual Performance Plan and Congressional Justification http://www.epa.gov/
        ocfopage/budget/2004/g05final.pdf.
   2    U.S. EPA, Office of Solid Waste and Emergency Response.Contaminated Sediment Remediation Guidance for Hazardous Waste
        Sites. (OSWER 9355.0-85 Draft). Washington DC. (2004)
   3    U.S. EPA, Office of Research and Development.TJie Superfund Innovative Technology Evaluation Program: Annual Report to
        Congress FY 2002. (EPA/540/R-03/502). Washington DC: Government Printing Office. (2004). For more information about
        EPA's SITE program, see http://www.epa.gov/ORD/SITE/
   4    General information for the revitalization program is found at http://www.epa.gov/swerrims/landrevitalization/index.htm.
   5    For more information on the EPA/Pennsylvania agreement, go to http://www.epa.gov/reg3hwmd/newsletters/2004'04'21.htm.
   6    For additional information, refer to June 21, 2004 OSWER/Federal Facilities Restoration and Reuse Office documents: Federal
        Environmental Work Group issue papers entitled RCRA/CERCLA Overlap, Joint Mine Waste Repository, and Lead Agency
        Designation (June 21, 2004).
   7    Additional information on the One Cleanup Program may be found at http://www.epa.gov/oswer/onecleanupprogram/index.htm.
   8    U.S. Environmental Protection Agency, Office  of Solid Waste and Emergency Response. February 2004-Resource Conservation
        Challenge: A Year of Progress. EPA530'R'04'001. Washington, D.C. Available at http://www.epa.gov/epaoswer/osw/conserve.
        Priority chemicals activities discussed in Goal 5  are an important component of the RCC partnership. Additional information
        on the Resource Conservation Challenge may be found at http://www.epa.gov/epaoswer/osw/conserve.
   9    Refer toSustained Progress in Addressing Management Issues available at http://www.epa.gov/ocfo/finstatement/2004ar/2004ar.htm.
   10   Links to various reports and workgroups may be accessed at the Superfund cleanup program's main site
        http://www.epa.gov/superfund/.
   11   Memorandum from Cliff Rothenstein, Director, EPA Office of Underground Storage Tanks to Underground storage
        Tanks/Leaking Underground Storage Tanks Division Directors in EPA Regions 1-10, May 13, 2004, "Semi Annual (Mid-Year)
        Activity Report."
   12   Memorandum from Cliff Rothenste in, Director, EPA Office of Underground Storage Tanks to Underground storage
        Tanks/Leaking Underground Storage Tanks Division Directors in EPA Regions 1-10, May 13, 2004, "Semi Annual (Mid-Year)
        Activity Report."
   13   U.S. Environmental Protection Agency, Office  of Research and Development. March 2004-Minergy Corporation Glass Furnace
        Technology Evaluation; Innovation Technology Evaluation Report.  EPA 540/R-03/500. Cincinnati, OH. Available at
        http://www.epa.gov/ORD/SITE/reports/540r03500/540r03500.html.
   14   National Research Council. A Risk Management Strategy for PCB-Contaminated Sediments. 2001. National Academy Press.
        Washington, DC.

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                    It


                                                              mf
             Protect, sustain, or restore the health of people, communities, and ecosystems
                    using integrated and comprehensive approaches and partnerships.
    EPA's work to achieve healthy communities and
ecosystems encompasses a variety of programs and proj-
ects across the Agency and relies on both regulatory and
collaborative approaches. To
accomplish its objectives
under Goal 4, EPA screens
and manages chemicals and
pesticides, restores and rede-
velops contaminated
properties and communities,
works to make America's
most significant water bod-
ies safe for swimming and
fishing, and conducts cut-
ting-edge research to bring
the best scientific expertise
to bear on the nation's envi-
ronmental challenges.
WASHINGTON  STATE TESTS PESTICIDE-
EXPOSED WORKERS
The Washington Departments of Agriculture, Health,
and Labor and Industries tested farm workers to
determine their cholinesterase levels. Certain pesti-
cides may lower the normal protective levels of
cholinesterase, affecting the nervous system and caus-
ing symptoms from headaches, blurred vision, and
diarrhea to breathing difficulties and death in severe
cases. Testing can  detect levels of concern prior to
the onset of symptoms. As of June 2004, about 2,600
pesticide-exposed workers were tested, and 27 farm
workers had  severely depressed  cholinesterase levels
and needed to avoid further exposure.
CHEMICALS AND
PESTICIDES
    EPA is committed to
preventing risks from new
chemicals and pesticides
entering the environment,
as well as to addressing lega-
cy issues from old bad actors. The Agency reviews new
chemicals and pesticides before they are put on the mar-
ket, reassesses older chemicals  and pesticides already in
use, and takes appropriate action should they pose unac-
ceptable risks. EPA has now screened over 22 percent of
the more than 76,000 commercial and/or industrial
chemicals in the U.S. inventory.1

                              Recent studies have
                           raised concerns about the
                           toxicological risks presented
                           by certain commercial or
                           industrial chemicals.
                           Perfluorooctane sulfonate,
                           for example, has been docu-
                           mented to be extensively
                           distributed and persistent in
                           humans and wildlife. And
                           household and industrial
                           applications for many such
                           organic fluorochemicals are
                           increasing: perfluorooc-
                           tanoic acid is used in
                           surfactant coatings for fab-
                           rics and paper products,
                           fire-fighting foams, elec-
                           tronic etching baths, and
                           insecticides. In addition,
                           brominated fire retardants
                           (BFRs) are widely used in
                           consumer products to pre-
vent fire-related injury and property damage. Recently,
polybrominated diphenyl ethers (PBDEs), a type of BFR,
were found to be persistent in the environment and capa-
ble of accumulating in animal, fish, and human tissue.
                                                                                                               79

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
      MERCURY CONTAMINATION: How
      EFFECTIVE ARE REGULATIONS?
      In November 2003, Dr. Thomas Atkeson
      presented the results of a decade-long
      study of regulatory efforts to reduce
      local and regional mercury emissions.
      Sponsored by the Florida Department
      of Environmental Protection and
      EPA, the study found that regulatory
      efforts translated into dramatic environ-

A major research effort is underway to determine whether
PBDEs pose a health risk to humans.2

    Increasingly, newer chemicals are being substituted
for older chemicals that present known risks. In 2004,
EPA provided tools that enable industry to "pre-screen"
new chemicals for adverse effects early in their develop-
ment, thereby saving costs, promoting stewardship, and
enhancing environmental protection. EPA also accelerated
the review of older chemicals, to date recording active
test development for 2,200 high-production-volume
chemicals, or 92 percent of those with incomplete hazard
screening data.3

    Similarly, new pesticides are being registered that pro-
vide alternatives to older, often riskier pesticides. In 2004,
EPA met new standards for efficiency and new deadlines
under the Pesticide Registration Improvement Act of
2003, allowing innovative and safer pesticide products to
reach the marketplace quickly. During 2004, for example,
EPA registered a new active ingredient alternative for
methyl bromide, a substance that is known to deplete the
ozone layer and is scheduled for phase-out. The deadline
for reassessing all 9,721 tolerances for older pesticides is
less than 2 years away; EPA has now completed over 69
percent of the reassessments, greatly increasing the safety
of America's food supply.

    EPA is also making progress in protecting children's
health. For example, follow-on actions to changes in the
registration for one older pesticide, chlorpyriphos, have
reduced its use by 50 percent,  virtually eliminating it from
        INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT MAKES $1,000,000
        LOAN To CLEAN UP FREDERICKSON PARK LANDFILL
        The City of South Bend borrowed $ ,000,000 from the Indiana Department of Environmental
        Management's Brownfields Cleanup Revolving Loan Fund program to assist with costs incurred in
        cleaning up the 16-acre Frederickson Park Landfill, which accepted wastes from the 1930s to the
        early 1970s. The City of South Bend plans to redevelop the site into the Frederickson Park
        Environmental Education Center to enrich the city's environmental stewardship programs. The
        redevelopment project has been a cooperative effort between the city, the University of Notre
        Dame, South Bend's Community School Corporation, and local neighborhood organizations.
     methylmercury-contaminated areas.4
     From 1991-99, mercury emissions in
     south Florida declined by 92 percent,
     and mercury levels in Everglades' wildlife
     declined by 60-70 percent. The declines
     are associated with state and federal
     regulatory efforts taken in the mid-1990s
     to address outdated  municipal and med-
     ical waste incinerators in south  Florida
     and pollution prevention efforts taken in
     the late 1980s that reduced mercury
     going into incinerators.

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                             SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
areas where children may be exposed, such as
residences, schools, and parks. The incidence
of childhood lead poisoning has been halved
since the early 1990s.5 In 2004, EPA began to
focus its outreach and evaluation efforts on
remaining "hot spots," which are often disad-
vantaged urban areas, where the incidence of
childhood lead poisoning remains high.

RESTORING  COMMUNITIES

    In addition to preventing potential new
risks to the environment, EPA is working to
protect and restore  communities affected by
past contamination. The Agency provides
states, tribes, local governments, and stake-
holders with the tools and financial
assistance they need to assess, clean up, and
redevelop brownfields properties. In 2004,
EPA awarded $69.3 million in brownfields
grants in 42 states and Puerto Rico. The
grants included 150 Assessment Grants, 15
Revolving Loan Fund Grants, 16 Job
Training Grants, and  75 Cleanup Grants. In
2004, EPA also distributed  $49.7 million
among all 50 states, the District of Columbia,
3 territories, and 40 tribes to develop or
enhance the infrastructure  and capabilities of
their response programs. From 1995 through
March 2004, EPA grantees  assessed 4,880
brownfields properties, leveraging $6.6 billion
in clean up and redevelopment funding and
29,600 jobs. Additionally EPA has conducted
1,167 targeted brownfields assessments.

COMMUNITY  AND GEOGRAPHICAL
INITIATIVES

    EPA collaborates  with other nations;
state, tribal, and local governments; and
community groups, industry, and other stake-
holders to address geographic and local issues.

    More than 30 million people live in the
Great Lakes basin, and their daily activities—
from water consumed  to waste
returned—directly affect Great Lakes envi-
ronments. On May  18, 2004, President Bush
signed an Executive Order directing
Administrator Leavitt to establish the Great
Lakes Federal Task Force, comprising nine
Cabinet members, the Army Corps of
Engineers, and the Council on
Environmental Quality, to coordinate the
federal effort to improve water quality in
the Great Lakes. The Order calls for regional

Administrator Leavitt heads

Great Lakes Federal Task Force

collaboration to develop action plans that
address  priorities, identify resource needs,
develop an implementation schedule, and
facilitate a cohesive management process.6

    The health of the nation's estuaries
depends in part on maintaining high-quality
habitat. In FY 2004, EPA protected and
restored over 107,000 acres of estuarine habi-
tat within the 28 estuaries of the National
Estuary Program (NEP),7 helping these
estuaries to support healthy populations of
wildlife and marine organisms and to perform

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
              the economic, environmental, and aesthetic
              functions on which coastal populations
              depend for their livelihood. In 2004, the
              President announced an aggressive new
              national goal to achieve an overall increase
              in America's wetlands: over the next 5 years,
              6,000 acres of restoration and 6,000 acres of
              enhancement (an average of 1,200 acres per

              107,000 acres  of estuarine

              habitat  protected

              year in each category).8 EPA believes that
              emphasizing aquatic habitat protection
              through such mechanisms as the NEP, non-
              point source management, source water
              protection, and watershed management, will
              enable us to achieve this goal. EPA is also
              committed to improving wetland-tracking
              systems to accurately report wetland acres
              enhanced and restored.
     GREEN POWER: LANDFILL GAS-TO-ENERGY
     BMW Manufacturing implemented an EPA Region 4
     suggestion to pipe methane gas generated from
     decomposing trash in the neighboring Palmetto
     Landfill to its manufacturing plant. BMW found the
     landfill's methane gas supplies 25 percent of its energy
     needs, which is equivalent to the amount necessary
     for heating 15,000 homes a year. BMW's conversion
     of landfill-generated waste into an energy resource
     has resulted in a reduction of carbon dioxide emis-
     sions equivalent to the removal
     of 61,000 cars from U.S.  high-
     ways each year. This
     successful project has
     improved local air quality
     and has reduced the
     purchase and con-
     sumption of natural
     gas and electricity9
As  a result of wet weather in
2003,  EPA intensified efforts
to reduce nutrient and
sediment pollution in
Chesapeake Bay,

     In Chesapeake Bay in 2003, EPA meas-
 ured 64,709 acres of submerged aquatic
 vegetation (SAV), an important habitat for
 aquatic life and an indicator of the Bay's
 health. Record wet weather washed massive
amounts of nutrients and sediment into the
Bay, resulting in a 30 percent decline  in SAV
in a  single year. To achieve a goal of 185,000
acres of SAV by 2010, EPA will intensify
efforts to reduce nutrient and sediment pollu-
tion. In 2004, EPA also led efforts to develop
an integrated, regional Gulf of Mexico
Coastal Ocean Observing System; to develop
a plan for detecting, predicting, and forecast-
ing harmful algal blooms in the Gulf of
Mexico; and to facilitate access to and
exchange of Gulf data.

INTERNATIONAL ACTIVITIES
    In 2004, EPA made significant progress
toward reducing risks to human health and
the environment internationally, initiating
work on lead reduction and air monitoring.
For example, the Agency is on target to


Seven more  countries  phased
out leaded gasoline—On  track
to phase out leaded gasoline
worldwide by 2008.

achieve the worldwide phase-out of leaded
gasoline by 2008.10 On the African continent,
Cape Verde, Ethiopia,  Ghana, Mauritius,
Mauritania, Nigeria, and Rwanda have
phased lead out of their gasoline, reducing the
exposure of more than 117 million people to

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                             SECTION 2. PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND ECOSYSTEMS
    STOCKPILES OF USED TIRES ALONG THE U.S.-MEXico BORDER
    Along the U.S.-Mexico Border, massive stockpiles of waste tires pose health risks to people living in sur-
    rounding communities. The tires represent a significant waste management problem, offering breeding
    grounds for mosquitoes, rodents, and other disease carriers and causing severe air quality issues when
    noxious fumes emitted from the piles ignite. Under the Border 2012 Program, EPA and the Mexican gov-
    ernment are working jointly to reduce land contamination by eliminating three major tire stockpiles by
    2012. They have reached an agreement to dispose of 800,000 used tires per year over the next 5 years in
    environmentally safe cement kilns in the Juarez area, providing an alternative source of enerpv ftire-derive.
    fuel). In addition, more tires will be crumbled for alternative uses such as road paving. Rr"~;-
    pijpp:„„-!-„„ j-u,, „-!-„,-!,„:!„„  „„ j	j, ,„„ u~~i4-u ,„:„!„ ,. ,u:i~ „.„!,:„„ „„„ j, .,-1-:, ,„  . „— ^t j-u:.—„
the toxic effects of lead. Under another collaborative
international effort, EPA worked with the California Air
Resources Board and the India Ministry of Environment
and Forests to develop a detailed inventory of air emissions
for Pune, India, where dangerously high levels of particu-
late matter are endangering the health of Pune's 2.5
million inhabitants. The Pune emission inventory repre-
sents a critical step in developing effective strategies for
reducing air pollution, and it is serving as a model for two
of India's largest cities, Kolkata and Mumbai, which
together are home to 29.6 million inhabitants.11

SCIENCE AND RESEARCH

    EPA continues to break new scientific ground in the
area of biomarkers, indicators that can be used to meas-
ure the exposure or effects of environmental agents.
With the  Centers for Disease Control, EPA is funding a
National Academy of Sciences report on biomonitoring
that will identify key principles and uncertainties in esti-
mating and interpreting health risks from environmental
contaminants. To support the Agency's Report on the
Environment, EPA research also identified human
health and environmental indicators for measuring
environmental progress.12 Many of the environmental
indicators used in the Report on the Environment were
derived from EPA's Environmental Monitoring and
Assessment Program, which pioneered the concept of
probabilistic, statistically valid monitoring using a set of
consistent indicators.13

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                  SAFELY MANAGING OBSOLETE AND  PROHIBITED PESTICIDES IN  THE ARCTIC
                  EPA and Arctic Nations have established a cooperative project to address stockpiles of
                  obsolete and prohibited pesticides in the Arctic. A part of the Arctic Council Action Plan,
                  this international  project is assisting Russia in managing its extensive stocks (over 35,000
                  metric tonnes) of Soviet Era obsolete and prohibited pesticides in an environmentally safe
                  manner. Many of these stockpiled pesticides are migrating great distances; pesticides have
                  been found in Alaska, affecting indigenous peoples' subsistence foods.14
                  Arkhangelsk, located at the Arctic Circle on the White Sea, served as the demonstration
                  region for the project. By the completion of this demonstration project in 2004, all 63
                  metric tonnes of Arkhangelsk's stock of obsolete pesticides had been inventoried, analyzed
                  for heavy metals  and chlorinated compounds, repackaged, and moved to safe temporary
                  storage awaiting destruction. The Arkhangelsk model is being implemented in ten other
                  Arctic regions.
                   Federal, state, and local emergency
               personnel also rely on EPA to develop
               approaches that will aid decision making in
               the event of a terrorist attack. In 2004, EPA
               research scientists and engineers developed
               information and tools to help detect the
               intentional introduction of chemical or bio-
               logical contaminants in buildings or water
               systems, contain these contaminants, decon-
               taminate buildings and/or water systems,
               and dispose  of material after cleanups. EPA
also assessed the vulnerabilities and techni-
cal challenges facing the water industry.
The Water Security Research and Technical
Support Action Plan, released in 2004,
focuses on protecting water systems from
threats by identifying contaminants in
drinking water systems and developing
effective decontamination products and
options for disposal.15 The plan also presents
information on risks and potential impacts
on human health.

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                                 SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
                                                             Annual Performance Goals Met:         12
                                                             Annual Performance Goals Not Met:    7
                                                             Data Available After 11/5/04:             4
  STRATEGIC OBJECTIVE: PREVENT AND REDUCE PESTICIDE, CHEMICAL, AND GENETICALLY ENGINEERED
  BIOLOGICAL  ORGANISM RISKS TO HUMANS, COMMUNITIES, AND ECOSYSTEMS. FY 2004 Cost (in thousands):
  $417571  (36.5% of FY 2004 Goal 4 Total Costs)


Progress Toward Strategic Objective: EPA uses a wide range of approaches to preventing and reducing risks from chemi-
cals. More than  76,000 chemicals are  identified in the TSCA chemical inventory, and they impact every aspect of our daily
life. Pesticides are applied to food, or people may be exposed to them through the workplace or at home. EPA reviews
every new chemical or pesticide that enters the marketplace.

At the end of 2004, EPA is on track to complete long-term goals for reviewing every  pesticide tolerance needing reassess-
ment, as well as all  reregistrations. Organophosphate residues and poisonings are decreasing as a result of actions and
outreach on the use of alternatives to these older,  riskier pesticides. New registrations also reduce potential risk. One
example is a biopesticide registered in 2004 to be used against mosquito larvae in aquatic environments. It helps protect
the public from  disease such as the West Nile Virus; it also avoids the potential for polluting surface water while controlling
mosquitoes. EPA continues to seek means to reduce review cycles for its regulatory decisions, thus making newer, less risky
pesticides  accessible to the public quicker and in greater quantity. For example, in 2004 the pesticides program revised the
review process for  health  risk assessments, flagging  resource intensive and/or low risk chemicals early in the process and
reducing multiple critical decision points.

Chemicals that have been on the marketplace since before EPA reviews began—a bit more than 75% of the total—must
also be screened for potential risks. EPA exceeded  2004 targets for closing the gap in  publicly available risk screening data
for more than 2,200 chemicals produced or imported in quantities of I  million pounds per year and substantially expanded
knowledge of the risks associated with chemicals encountered in everyday  life, such as flame  retardants and fabric protec-
tors. New tools and processes are making it more  efficient to reduce the adverse effects from older chemicals and
contaminants already  in the environment—things like lead and polychlorinated biphenyls (PCBs).  For instance, successful
pilot efforts in 2004 to make innovative use of available data  sets to target hot spots with high concentrations of cases
offer encouragement  that EPA and government-wide goals for eliminating incidences of lead  poisoning by 2010 will be
achieved. Revamping strategies to meet the  changing landscape of who's at risk, economic pressures on  the affected indus-
try and other evolving factors pave the  way for smart and effective action  to reduce such risks using the expanding arsenal
of regulatory and voluntary tools.
  APG 4.1   Review Pesticide Active Ingredients
 FY 2004         Ensure that through on-going data reviews, pesticide active ingredi-
                 ents and the products that contain them are reviewed to assure
                 adequate protection for human health and the environment, taking
                 into consideration exposure scenarios such as subsistence lifestyles
                 of Native Americans. Goal Not Met.

                 Performance Measures:
                 —Product Reregistration.
  Planned
Actual
400 actions
 127

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 4.1   Review Pesticide Active Ingredients   (continued)
    FY2004
  -Reregistration Eligibility Decision (RED) (cumulative).
  -Tolerance Reassessment (cumulative).
  -Tolerance Reassessments for top 20 foods eaten by children
   (cumulative).
  -Number of inert ingredients tolerances reassessed.
                                                                        Planned
81.7%
 78%
 83%

 100
                 Actual
77.6%
73.0%
68.9%
    FY 2003         Assure that pesticides' active ingredients registered prior to  1984 and
                     the products that contain them are reviewed to assure adequate
                     protection for human health and the environment. Also consider the
                     unique exposure scenarios such as subsistence lifestyles of Native
                     Americans in regulatory decisions. Goal Not Met.
                     Performance Measures:
                     —Product Reregistration.
                     —Reregistration Eligibility Decision (RED) (cumulative).
                      —Tolerance  Reassessment.
                      —Tolerance  reassessments for top 20 foods eaten by children.
                                                                      350 actions
                                                                          76%
                                                                          68%
                                                                          75%
                  306
                  75%
                  68%
                 65.6%
    FY 2002         Same goal, different targets. Goal Not Met.
                     Performance Measures:
                     —Product Reregistration.
                     —RED (cumulative).
                                                                          750
                                                                         76.4%
                  314
                 72.7%
    FY 2002         By the end of 2002 EPA will reassess a cumulative 66% of the 9,721
                     pesticide tolerances required to be reassessed more than 10 years.
                     This includes 67% of the 893 tolerances having the greatest potential
                     impact on dietary risks to children. Goal Met.
                                                                          66%
                                                                          67%
                 66.9%
                 65.6%
    FY 2001
Same goal, different targets. Goal Not Met.
 40%
 46%
 40%
 44%
     FY 2004 Result: The Agency did not meet its FY 2004 targets       Performance Measure: % Tolerance Reassessment and Tolerance
     for this goal. Measurements for REDs ; tolerance reassessments;       Reassessments for Top 20 Foods Eaten by Children Completed
     tolerance reassessments for the top 20 foods eaten by children;           (Cumulative) and% ^stntion ^biliiy Decisions
     and the number of inert ingredients with tolerances reassessed
     began in 1996 when FQPA became effective. The Pesticide
     Registration Improvement Act (PRIA) of 2003, which became
     effective on March 23, 2004 stipulates that the universe of 612
     REDs be completed by October 2008 and product
     reregistrations by 2010. Tolerance reassessments, with a universe
     of 9,721, have a statutory deadline for completion in August 2006.
     Product reregistrations are based on the REDs completed in
     previous years. Product reregistrations are generally completed
     2 years after the RED is  done. EPA has  not met its  REDs targets
     in earlier years, therefore it did not meet its product
     reregistration targets for FY 2004. It should also be noted that
     the  previously reported  planned target  of 750 actions for product reregistrations is in error; the target, which is an estimate, should
     have been 400. Additionally, determining a target is difficult because there is no fixed target for products eligible for reregistration
     because the number of products that need registration/reregistration changes with each request for registration, and with each action
     taken in reregistration. For example, if there is a request for a new use for a  product, or if a RED  is issued to reregister a pesticide,
     then the associated  products  become eligible for reregistration, thereby changing the universe of products eligible for reregistration.
                                                  2001
                                                         2002
                                                                 2003    2004
                                                                     Year
                                                                                2005
                                                                                       2006

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                                   SECTION 2. PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND  ECOSYSTEMS
APG 4.1   Review Pesticide Active Ingredients  (continued)
 Despite having not met its targets in previous years, the Agency is committed to meeting its 2008 deadline. The reregistration
 program is continuing to review data and issue REDs while examining means to streamline activities and consolidate resources.
 In FY 2004, EPA completed 17 REDs for a cumulative total of 475 REDs completed. The Agency is on track to complete all 612 REDs
 to meet its 2008 statutory deadline.
 In FY 2004, EPA reassessed 467additional tolerances for a cumulative total of 7,093 tolerance reassments completed. The Agency is on
 track to complete all 9,721  tolerances to meet its 2006 statutory deadline. Meeting this goal will help ensure that human health and the
 environment are protected from the harmful effects of pesticides, and that food remains safe for consumption. Children's tolerances
 are a smaller subset of the broader category of tolerances. In FY 2004,  the Agency reassessed 23 children's tolerances, meeting 68.9%
 of its planned target of 893. To date, 615 children's tolerances have been reassessed.
 In FY 2004, EPA reassessed 28 inert ingredients tolerances/tolerance exemptions. To date 445 have been reassessed. The Agency is on
 track to complete all 870 inert ingredient tolerances to meet its statutory 2006 deadline.
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 33-34.
APG 4.2
FY 2004
FY 2003
FY 2002
FY 2002
Decrease Risk from Agricultural Pesticides
Decrease adverse risk from agricultural uses from 1995 levels.
Goal Not Met.
Performance Measures:
— Register safer chemicals and biopesticides (cumulative).
— New Chemicals (cumulative).
— New Uses (cumulative).
— Percentage of acre-treatments with reduced risk pesticides.
— Occurrences of residues on a core set of 19 foods eaten by children
relative to occurrence levels for those foods reported in 1994- 1996.
Decrease adverse risk from agricultural uses from 1995 levels and
assure that new pesticides that enter the market are safe for humans
and the environment through ensuring that all registration actions are
timely and comply with standards mandated by law. Goal Not Met.
Performance Measures:
— Register safer chemicals and biopesticides (cumulative).
— New Chemicals.
— New Uses.
— Percentage of acre treatments with reduced risk pesticides.
— Occurrences of residues on a core of 19 foods eaten by children
relative to occurrence levels for those foods reported in 1994-1996.
Same goal, different targets. Goal Met,
Performance Measure:
Register safer chemicals and biopesticides (cumulative).
Detections of residues of carcinogenic and cholinesterase inhibiting
neurotoxic pesticides on foods eaten by children will have decreased
by 15% (cumulative) from their average 1994 to 1996 levels. Goal Met,
Planned Actual
131 143
74 79
3,079 3,142
8.5% Data avail 12/04
25% 34%
118 124
67
350 425
8.1% 8.0%
20% 34.3%
105 107
15%

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 4.2   Decrease Risk from Agricultural  Pesticides  (continued)                    Planned
     FY 2002         At least  \% of acre-treatments will use applications of reduced risk            \%
                     pesticides. Goal Met.
                                            Actual
     FY 2001         Same goal, different targets. Goal Not Met.

                     Performance Measure:
                     Register safer chemicals and biopesticides.
                             96

     FY 2004 Result: The baseline is zero for registration of reduced risk
     pesticides, new chemicals, and new uses, beginning in 1996, the year
     FQPA was enacted. Progress is measured  cumulatively since  1996. The
     baseline for acres-treated is 3.6% of total acreage in  1998, when the
     reduced-risk pesticide acre-treatments was 30,332,499 out of a total
     (all pesticides) of 843,063,644 acre- treatments. Each year's total acre-
     treatments, reported by Doane Marketing, Inc. with  USDA's National
     Agricultural Statistical Survey serve as the  basis for computing the
     percentage of acre- treatments using reduced risk pesticides. Acre-
     treatments count the total number of pesticide treatments each acre
     receives each year. Information on the percentage of acre-treatments
     will be analyzed and available by December 2004. The baseline for
     residues on children's foods is the occurrence on 33.5% of composite
     sample of children's foods in the baseline years 1994- 1996. FY 2003
     results were not known in time to adjust the FY 2004 target After 2
     years of experience in analyzing the data, the measure has been
     determined to be too general with too many variables from  year to
     year in order to provide a consistent, reliable trend.  Information is
     being reviewed to  determine a more appropriate measure.
     A description of the quality of the data used to measure EPA's
     performance can be found in Appendix B, pages 34-35.
           Decrease Risk from Agricultural Pesticides
    450

    400

    350

    300
i
 3

J
      0
• Cumulative New Uses
• Cumulative Registrations
• Cumulative New Chemicals
          2001    2002
            2003    2004
                Year
2005   2006
     FY 2003 Result Available in FY 2004: EPA missed its FY 2003 goal.
     Actual detections of pesticide residues on foods eaten by children
     went up (from 33.1 % in 2002 to 34.3% in 2003), however, it is unclear whether this is due to the different foods analyzed, number of
     samples analyzed, pesticides analyzed for, or a combination  of all variables. Information is being reviewed to determine a more
     appropriate measure. The slight miss on acre treatments had no effect on overall program activity or performance.
     APG 4.3  Exposure to Industrial/Commercial  Chemicals
     FY 2004         Reduce exposure to and health effects from priority industrial/
                     commercial chemicals.

                     Performance Measures:
                     —Certified  nationally to perform lead-based paint abatement.
                     —Children aged I -5 years with elevated blood lead levels (> lOug/dl).
                     —Safe disposal of transformers.
                     —Safe disposal of capacitors.
                     —Number of participants in Hospitals for a Healthy Environment
                        (cumulative).
                          Planned
                               Actual
                           18,000
                           270K
                           8,000
                           6,000
                           2,000
                              24,000
                          Data avail 2005
                          Data avail 2006
                          Data avail 2006
                              2,930
     FY 2003         Reduce lead exposure in housing units and in the deleading of bridges
                     and structures. Goal  Met.

                     Performance Measure:
                     Certified nationally (federally-administered and state-administered program).
                           5,000
                               5,561

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                                   SECTION 2. PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 4.3  Exposure to Industrial/Commercial Chemicals  (continued)
FY 2002         Implement certification and training of lead abatement professionals.
                 Goal Met.

                 Performance Measure:
                 Certified nationally (federally-administered and state-administered
                 program).
                                                                                             Planned
Actual
                                                                                             4,000
4,574
                                                                              Elevated Blood Lead Levels in Children
                                                                   1,000
                                                                                        • Actual number of children with
                                                                                          elevated blood lead levels (>10ug/dL)
                                                                                        A Target projection to meet 2010
                                                                                          Elimination Goal
                                                                                    434,000
                                                                       1994
                                                                               1999-2000
                                                                                            2004
                                                                                            Year
                                                                                                      2008
                                                                                                                2010
FY 2004 Result: EPA substantially exceeded its goal of certifying
national users to perform lead-based paint abatement
National Health and Nutrition Examination Survey (NHANES)
data are currently released in two year data sets.  I999-2000
NHANES data, released in January 2003, estimated 434,000
children with elevated blood lead levels, a steep reduction of the
estimate of more than 900,000 cases in the early  1990s. EPA
expects to be able to update this estimate through 2002 in 2005,
providing additional evidence of progress towards the
government-wide  goal of virtually eliminating childhood lead
poisoning by 2010.
CY 2004 data will not be available until mid-2006. Recently
released 2002 data indicate a continuation of an improving
trend. EPA is nonetheless expanding efforts to promote
voluntary early retirement of high concentration PCB
transformers to reduce the risks of exposure through accidents
and equipment breakdowns.
CY 2004 data will not be available until mid-2006. CY 2002
results were released in January 2004. The figures show a total
of 2,204 large capacitors safely disposed of annually CY 2003
results will not be  reported until 2005. The current industrial
disposals, downward trend is of concern and is  under
investigation. Investigations are being made into data  quality
issues. Additionally, successful pilot programs are being scaled up
to retire PCB containing equipment
Participation in the H2E program throughout the  healthcare
sector continued to  increase, exceeding expectations for 2004.
Increased participation in H2E improves environmental results through reduced use of mercury and reduced generation of mercury-
containing healthcare and total healthcare waste.
A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 35-36.
                                                                            Hospitals for Healthy Environment, 2002-2004
APG 4.4
FY 2004
FY 2003
Process and Disseminate Toxics Release Inventory (TRI) Information
The increased use of the TRI-Made Easy (TRI-ME) will result in a
total burden reduction of 5% for Reporting Year 2003 from
Reporting Year 2002 levels. Goal Not Met.
Performance Measure:
Percentage of TRI chemical forms submitted over the Internet
using TRI-ME and the CDX.
Expanded information on releases and waste management of lead
and lead compounds will be reported by 8,000 facilities in TRI in
Reporting Year 2001 and increased usage of TRI-ME will result in
total burden reduction of 25% for Reporting Year 2002. Goal Met.
Planned
50%
50%
8,000
25%
Actual
36%
38%
8,561
25%

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 4.4  Process and Disseminate Toxics Release Inventory (TRI) Info, (continued)  Planned
     FY 2002         EPA will reduce reporting burden,  improve data quality, lower pro-
                     gram costs, and speed data publication by increasing the amount of
                     TRI electronic reporting from 70% to 85%. Goal Met.
                                                                                          85%
                                                                                                         Actual
  92%
     FY 2001          Process all submitted facility chemical release reports; publish annual
                     summary of TRI data; provide improved information to the public about
                     TRI chemicals; and maximize public access to TRI information. Goal Met.

                     Performance Measures:
                      -TRI Public Data Release.
                     —Chemical submissions and revisions processed.
                                                                                        I report
                                                                                         110,000
I  report
 120,000
                                                                                   T Rl Submissions by Media Type

                                                                                        21 "
FY 2004 Result: Information on toxic chemical releases is needed
to assist communities in making informed decisions about
protecting their environment In June 2004, the Agency released
the Toxics Release Inventory (TRI) annual Public  Data Release
(PDR) report that contains information on toxic chemical
releases and other waste management activities by certain
industries, as well as by federal facilities. EPA is continuing to focus
resources on modernization of TRI data collection, processing,
and dissemination processes with the goal of releasing more
reliable information sooner to all communities. As an aid to the
reporting community and to improve data collection accuracy
and efficiency, EPA  introduced TRI-Made Easy (TRI- ME) software
in FY 200I. In FY 2004, 92% of all reporting facilities used TRI-ME
to prepare their submissions. Comparing FY 2004 to FY 2003, there was a 50% increase in the number of reports on chemical releases
and other waste management data submitted to EPA via the internet and  EPA's Central Data Exchange (CDX). However, even with
this sizable increase, only 36% of all chemical forms were submitted using CDX, short of the FY 2004 goal of 50%. EPA is aggressively
working to increase the CDX submissions through  various efforts such as targeted training and outreach to the reporting community
A description of the quality of the data used to measure EPA's performance can be found in Appendix B,  page 43.
                                                                          2001   2002
                                                                                       2003    2004   2005

                                                                                       Fiscal Reporting Year
                                                                                                           2006    2007
APG 4.5 Risks from Industrial/Commercial Chemicals
FY 2004 Identify, restrict, and reduce risks associated with industrial/com-
mercial chemicals.
Performance Measures:
— TSCA pre-manufacture notice reviews (annual).
— Number of Notice of Commencements (NOCs) received as percent-
age of total number of chemicals in TSCA inventory (cumulative).
— Make screening level health and environmental effects data pub-
licly available for sponsored HPV chemicals (cumulative).
— Annual number of TSCA Section 5 Pre-Manufacturer Notices
(PMNs) received self-audited using complete battery of P2
Framework/PBT Profiler screening tools.
— Reduction in current year production-adjusted risk screening
environmental indicators risk-based score of releases and trans-
fers of toxic chemicals.
— Cumulative number of chemicals for which AEGL values proposed.
— High Production Volume chemicals with complete Screening
Information Data Sets (SIDS) submitted to OECD SIDS Initial
Assessment Meeting (annual).
Planned



1,700
22.6%

1,300

40


2%


128
75


Actual



1,377
22.8%

1,309

71


Data avail 2006


134
98



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                                 SECTION  2.  PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 4.5  Risks from Industrial/Commercial Chemicals   (continued)
FY 2003          Of the approximately 1,800 applications for new chemicals and
                 microorganisms submitted by industry, ensure those marketed are
                 safe for humans and the environment. Increase proportion of com-
                 mercial chemicals that have undergone pre-manufacture notice
                 review to signify they are  properly managed and may be potential
                 green alternatives to existing chemicals. Goal Met.
                                                                                        Planned
                                                                                          1,800
                     Actual
                      1,633
FY 2002
                Same goal. Goal Met.
     1,800
1,943
FY 2001
                Same goal. Goal Met.
                      1,770
FY 2003          Provide information and analytical tools to the public for accessing
                 the risk posed by toxic chemicals. Goal  Met.

                 Performance Measure:
                 Make existing screening level health and environmental effects information
                 and plans to develop needed data publicly available for high production
                 volume (HPV) chemicals  sponsored in the US HPV Challenge.
                                                                                          1,200
                      1,235
FY 2002
                Same goal. Goal Met.
   10% data
(280 chemicals)
                                                                                                       843 chemicals
FY 2001          EPA will make publicly available data from test plans submitted by
                 industry or chemicals already in commerce. Goal Met.

                 Performance Measure:
                 Through chemical testing program, obtain test data for HPV chemi-
                 cals on master testing list.
                                                                                          800
                 724 chemicals
                                                               1400
                                                                           HPV Challenge Program: 2002-2004
                                                                   Number of HPV Chemicals with Screening Sets of Data
                                                                                   Publicly Available
FY 2004 Result: PMN submissions are not controlled by EPA,
fluctuating from year to year, and do not reflect the program's
success in meeting its goal of preventing introduction of new
unreasonable risks associated with entry of new chemicals into
commerce. Accordingly this measure will be tracked internally
commencing in FY 2005 as an input to assessments of the PMN
Review Program's efficiency, and replaced with an outcome
measure tracking success in meeting the program's goal.
EPA has made substantial progress in the New Chemicals
Program reviewing chemicals in commerce to assess risks and
ensure controls are in place. At the end of FY 2004, 22.8% of all
chemicals in commerce had been assessed for risks.
EPA met the target of making screening level health and
environmental effects data publicly available through the HPV
website for  1,300 chemicals through 2004. With additional
submissions from sponsors expected through the end of the calendar year, the Agency will be approaching completion of the initial data
collection for the  1,494 chemicals sponsored by companies planning to submit their data to EPA, setting the stage for risk screening and
priority setting for appropriate follow-up actions. The screening process allows EPA to prioritize chemicals in terms of hazard and risk.
EPA exceeded the FY 2004 target for receiving 40 PMN's per year that have been pre-screened by submitters using the full set of P2
Framework and PBT Profiler screening tools. This contributes to increased program efficiency due to the fact that pre-screened PMN
submissions  are less likely to require the full 90-day PMN review effort, lowering the cost per PMN review. The PMN process prevents
the occurrence of new unreasonable human health and environmental risks associated with the entry of new chemicals into U.S.
commerce.
The 2004 results will not be available until  at least 2006. 2002 results will be available in the first quarter of FY 2005.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 4.5  Risks from Industrial/Commercial Chemicals   (continued)
                                                                         Planned
      Actual
     The Agency exceeded the FY 2004 target of 128 chemicals, as well as the 2008 target of 180 chemicals, with proposed Acute Exposure
     Guideline (AEGL) values. The program develops short-term exposure limits applicable for a wide range of extremely hazardous
     substances.  Proposed AEGL values are used immediately by first responders in dealing with chemical emergencies, increasing EPA's
     ability to deal with threats of chemical terrorism and assist with homeland security preparations.
     EPA significantly exceeded this measure, reflecting the strong progress being made by the international component of the HPV
     Challenge program to make SIDS available for all HPV chemicals. Industry sponsors of HPV chemicals are allowed to direct their
     submissions to either EPA, OECD SIDS or the International Council of Chemical Associations (ICCA). Through EPA's and ICCA's work
     with voluntary sponsors and EPA's work to issue TSCA Test Rules, the program goal  is to make data publicly available on all 2,800 HPV
     chemicals by 2008.
     A description of the quality of the data used to measure  EPA's performance can be found in Appendix B, pages 36-38.
     FY 2003 Result Available in FY 2004: EPA exceeded the  target of making screening level health and environmental effects information
     publically available for  1,200 HPV chemicals. This is an initial step in committing the Agency to eliminate or effectively manage all
     identified significant risks associated with HPV chemicals.
     APG 4.6  Chemical, Organism, and Pesticide Risks
                                                                         Planned
      Actual
     FY 2004
Standardization and validation of screening assays. Goal Not Met.
     FY 2004 Result: In its projection for FY 2004, EPA stated that it would complete the validation of II  Tier I  assays. Substantial scientific
     issues and  difficulties arose unexpectedly during validation that impeded  EPA's ability to meet this goal. In order to provide more
     meaningful measures, the Agency will track progress through each stage  of the process, rather than reporting only the end product.
     EDSP has developed five new measures for FY 2006 which include: Detailed Review Papers Completed, Prevalidation Studies
     Completed, Validation Studies Completed, Peer Reviews, and Assays Ready for Use.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 38-39.
     APG 4.7  Chemical, Organism, and Pesticide Risks
    FY 2004         Reduce wildlife incidents and mortalities. Goal Not Met.

                     Performance Measure:
                     Number of incidents and mortalities to terrestrial and aquatic
                     wildlife caused by the 15 pesticides responsible for the greatest
                     mortality to such wildlife (cumulative).
                                                                         Planned
     Actual
                                                                         -25%
Insufficient data
  for analysis
    FY 2003         Reduce public and ecosystem risk from pesticides. Goal Not Met.

                     Performance Measure:
                     Number of incidents and mortalities to terrestrial and aquatic wildlife
                     caused by the 15 pesticides responsible  for the greatest mortality to
                     such wildlife  (cumulative).
                                                                          -20%
       9%
    FY 2002         Implementation of 10-15 additional model agricultural partnership
                     projects that demonstrate and facilitate the adoption of farm manage-
                     ment decisions and practices that provide growers with a "reasonable
                     transition" away from the highest risk pesticides. Goal Met,
                                                                          10-15
        12
     FY 2004 Result: The data received during FY 2004 was reviewed and found insufficient to provide a meaningful analysis. A cooperative
     agreement is being awarded to the American Bird Conservancy for the development of a database (American Incident Monitoring
     System-AIMS) in order to collect more meaningful information on avian mortalities to develop a more effective measure.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 39.

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                                 SECTION 2. PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND ECOSYSTEMS
  APG 4.8  Chemical, Organism, and Pesticide Risks
 FY 2004        Protect human health, communities, and ecosystems from chemical
                 risks and releases through facility risk reduction efforts and building
                 community infrastructures.

                 Performance Measure:
                 Risk management plan audits completed.
Planned
     Actual
 400
Data avail 2005
  FY 2004 Result: Although data will not be available until the first quarter of FY 2005, EPA expects to meet or exceed this target. The
  RMP program is currently ahead of projections for the FY 2008 goal. Currently, there are approximately 14,400 Risk Management Plans
  (RMPs) in the RMP database. Each year, since the RMP program began in 1999, EPA's goal is to complete on-site audits of 3% of those
  facilities in order to determine the completeness and accuracy of the RMP,  understand the various processes used in chemical facilities,
  review the policies, procedures, and processes in place to prevent chemical accidents, and learn from accidents and follow-up actions at
  RMP facilities. This activity assists EPA in understanding techniques and technology currently used in chemical facilities to prevent
  chemical accidents and share those with chemical facilities throughout the United States and, in some cases, with other countries. EPA is
  working toward identifying measures for RMP audits to gain a more complete understanding of improvements in chemical safety
  resulting from the Risk Management Plan program.
  A description of the quality of the data used to measure  EPA's performance can be found in Appendix B, page 39.
  STRATEGIC OBJECTIVE: SUSTAIN, CLEAN UP, AND RESTORE COMMUNITIES AND THE ECOLOGICAL SYSTEMS
  THAT SUPPORT THEM.  FY 2004  Cost (in thousands): $187,969 (16.4% of FY 2004 Goal 4 Total  Costs)

Progress Toward Strategic Objective: In FY 2004 EPA made significant progress towards its goal to sustain, cleanup, and
restore communities and the ecological systems that support them. Recent  available data show that EPA grantees have
assessed 4,880 brownfields properties which enabled the leveraging of $6.6  billion in clean up and redevelopment funding
and 29,600 jobs. EPA has also conducted 1,167 targeted brownfields assessments from 1995 through  March 2004.
Additionally, adequate drinking water supply and wastewater treatment systems were provided for an additional 291,000
people in the U.S.-Mexico  Border area by EPA funding assistance through the Border Environment Cooperation
Commission and North American Development Bank. To date, systems have been provided for 1,163,000 people or 117%
of the target for FY 2004.  ERA is on  track to meet the 2005 goal of providing adequate drinking water supply and waste-
water treatment systems to 1.5 million people. Additionally, ERA conducted  50 training sessions for 10,000 farm workers on
pesticide risks and safe handling, including minimizing risks to families and children.
APG 4.9 Assess and Cleanup Brownfields
FY 2004 Assess, cleanup, and promote the reuse of Brownfields properties,
leveraging cleanup and redevelopment funding and jobs. Leverage or
generate funds through revitalization efforts.
Performance Measures:
— Brownfields cleanup grants awarded.
— Brownfield properties assessed.
— Properties cleaned up using Brownfields funding.
— Brownfield property acres available for reuse or continued use.
— Jobs generated from Brownfields activities (annual).
— Percentage of Brownfields job training trainees placed.
— Amount of cleanup and redevelopment funds leveraged at
Brownfields sites.
Planned


25
1,000
no target
no target
2,000
65
$0.9B
Actual


75
Data avail 2005
Data avail 2005
Data avail 2005
Data avail 2005
Data avail 2005
Data avail 2005

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
     APG 4.9 Assess and Cleanup Brownfields   (continued)
     FY 2003         Assess, cleanup, and promote the reuse of Brownfields properties,
                     leveraging cleanup and redevelopment funding and jobs. Leverage or
                     generate funds through revitalization efforts. Goal Met.

                     Performance Measures:
                     —Amount of cleanup and redevelopment funds leveraged at
                       Brownfields sites.
                     —Number of Brownfield properties assessed.
                     —Jobs generated from Brownfields activities (annual).
                     —Percentage of Brownfields job trainees placed.
                                                                        Planned
                     Actual
                                                                         1,000
                                                                         2,000
                                                                         65%
                     $I.49B

                      1,052
                     5,023
                      62%
     FY 2002         EPA will provide additional site assessment funding to 38 new communi-
                     ties, and to 38 existing communities, resulting in a cumulative total of
                     3,100 properties assessed, the generation of 19,300 jobs, and the leverag-
                     ing of $4.0 B in cleanup and redevelopment funds since 1995. Goal Met.
                                                                         3,100
                                                                         19,300
                     3,807
                     21,737
     FY 2001
Same goal, different targets. Goal Met.
2,500 properties
   12,000 jobs
     $3. IB
2,754
17307
$3.7B
     FY 2004 Result: In FY 2004, the Brownfields Program awarded 75 Clean up Grants. Due to the grant recipient reporting cycle, the Program
     will not have complete FY 2004 performance data until March 2005. EPA anticipates that it will meet the FY 2005 performance targets.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 40-41.
     FY 2003 Result Available in FY 2004: In FY 2003 Brownfields grantees reported assessing 1,052 brownfields properties, leveraging 5,023
     cleanup and redevelopment jobs and $1.49 billion in cleanup and redevelopment fund ing. Brownfields Job Training Grant Recipients placed
     62% (meeting 96% of the target) of the program graduates into jobs. This slight miss has no effect on overall program or activity performance.
     APG 4.10  US-Mexico Border Water/Wastewater Infrastructure
     FY 2004         Increase the number of residents in the Mexico border area who are
                     protected from health risks, beach pollution, and damaged ecosystems
                     from nonexistent and failing water and wastewater treatment infrastruc-
                     ture by providing improved water and wastewater service. Goal Met

                     Performance Measure:
                     Number of additional people in Mexico border area protected from
                     health risks because of adequate water and wastewater sanitation
                     systems funded through border environmental infrastructure funding.
                                                                        Planned
                     Actual
                                                                       990,000
                   1,163,000
     FY 2004 Result: In FY 2004 adequate drinking water
     supply and wastewater treatment systems were provided
     for an additional 291,000 people in the U.S.-Mexico
     Border area by EPA funding assistance through the
     Border Environment Cooperation Commission and
     North American Development Bank. To date, systems
     have been provided for 1,163,000 people or 117% of the
     target for FY 2004. This effort requires considerable
     coordination among 6 Mexican and 4 U.S. states,
     municipalities with varying capacity, and 2 international
     organizations that certify the projects and issue subgrants
     for individual projects.
     A description of the quality of the data used to measure
     EPA's performance can  be found in Appendix B, page 41.
                                                    Mexico Border Protected from Health Risks
                                                                       2001
                                                                                   2002        2003
                                                                                      Fiscal Year
                                                                                                          2004

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                                 SECTION  2.  PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 4. II  Mexico Border Outreach
FY 2004         Protect the public health and the environment in the US-Mexico
                border region. Goal Met.

                Performance Measures:
                —Increase number of people with adequate water and wastewater
                  sanitation systems.
                —Train farmworkers on pesticide risks and safe handling, including
                  ways of minimizing families' and children's risks.
  Planned
   Actual
  990,000
50 sessions
 1,163,000

50 sessions
 FY 2004 Result: The FY 2004 previously reported planned target of $1.5 million was in error and should have been 990,000. The
 cumulative target of 1.5 million is planned for the end of FY2005. The interim target for FY 2004 was 990,000. Projects in FY 2005 are
 intended to allow access to safe drinking water and wastewater sanitation systems to the remaining approximately 337 thousand people.
 At the end of FY2004, 78% of the FY 2005 target has been met. Additionally 50 training sessions have been held for approximately
 10,000 farmworkers on pesticides handling.
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 40-41.
APG 4. 12
FY 2004
FY 2003
FY 2002
FY 2001
Enhanced Institutional Capabilities Planned
Enhance environmental management and institutional capabilities in
priority countries. Goal Met.
Performance Measures:
— Assist in the development or implementation of improved envi- | country
ronmental laws or regulations in priority countries.
— Increase the transfer of environmental best practices among the 3 countries
United States and its partner countries and build the capacity of
developing countries to collect, analyze, or disseminate environ-
mental data.
Same Goal, different targets. Goal Met,
Performance Measures:
— Assist in the development or implementation of improved envi- | country
ronmental laws or regulations in priority countries.
— Increase the transfer of environmental best practices among the 3 countries
United States and its partner countries and build the capacity of
developing countries to collect, analyze, or disseminate environ-
mental data.
— Increase the capacity of programs in Africa or Latin America to | country
address safe drinking water quality issues.
Same Goal, different targets. Goal Met. 2
3
3
Same Goal, different targets. Goal Met,
Performance Measures:
— Number of countries or localities (3) that have adopted new or 3
strengthened environmental laws and policies.
— Number of organizations (3) that have increased environmental 3
planning, analysis, and enforcement capabilities.
Actual
1 country
6 countries
country
3 countries
country
2
3
3
3
3

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S.  ENVIRONMENTAL PROTECTION AGENCY
     APG 4.12  Enhanced Institutional Capabilities   (continued)                           Planned         Actual
    FY 2001         —Number of organizations (3) that have increased capabilities to            3
    (continued)        generate and analyze environmental data and other information.
                    —Number of organizations (3) that have increased public outreach          3
                      and participation.
                    —Number of targeted sectors (3) that have adopted cleaner               3               2
                      production practices.
                    —Number of cities (3) that have reduced mobile-source based              3
                      ambient air pollution concentrations.
     FY 2004 Result: In FY 2004, EPA worked with India's government officials to develop an emission inventory and source apportionment,
     impacting 3 million Indian citizens. Additionally, six countries (Mexico, Kazakhstan, India, Peru, Kenya, and Vietnam) were provided
     technical assistance that enhanced air quality and energy efficiency For example, EPA's diesel retrofit project in Mexico City influenced
     Pemex, the national oil company to switch to low-sulfur fuel in Mexico City When fully implemented, switching to low sulfur fuel in
     Mexico City will reduce exposures to about 25 million people, who live and work in Mexico City
      A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 40.
     STRATEGIC OBJECTIVE: PROTECT, SUSTAIN, AND RESTORE THE HEALTH OF NATURAL HABITATS AND
     ECOSYSTEMS. FY 2004 Cost (in thousands): $ 139,064 (12.2% of FY 2004 Goal 4 Total Costs)

   Progress Toward Strategic Objective: EPA's ecosystem protection programs encompass a wide range of approaches that
   target specific at-risk regional areas, along with broader categories of threatened ecosystems such as estuaries and wet-
   lands. Locally generated pollution, combined with pollution transported by rivers and streams and through air deposition,
   collects in these closed and semi-closed  ecosystems, degrading them overtime.  EPA has exceeded its 2008 goal of protect-
   ing and restoring 250,000 acres of estuarine habitat. Since 2001, cumulatively 432,800 acres have been protected or
   restored, with more than 107000 acres protected and/or restored in FY 2004.l6

   EPA also continues to  make progress toward ecosystem protection and restoration in the Great Lakes, Chesapeake Bay,
   and the Gulf of Mexico. Fewer persistent toxics under the Great Lakes Binational Toxics Strategy were used  and released.
   A key source of toxics was addressed via remediation of a record 975,000 cubic  yards of contaminated sediment in 2003
   and initiation of EPA's first Great Lakes Legacy Act  project to  clean  up sediments in the Black Lagoon in Michigan. In the
   Gulf of Mexico, a total of 13,368 acres of coastal and marine habitats were restored or protected as of 2004, exceeding
   the target in  FY 2004 and contributing to the  10-year goal of 20,000 acres. In the Chesapeake  Bay, 64,709 acres of sub-
   merged aquatic vegetation (SAV), an indicator of the health of the bay and  important habitat for aquatic species, was
   reported in  FY 2004. Though record wet weather  events in 2003 deposited nutrient-laden sediments into the Chesapeake
   Bay and resulted in less acres of submerged aquatic vegetation (SAV) than anticipated, the extent of SAV continues to gen-
   erally show a positive trend, with an increase of 26,709 acres from 1984 levels. EPA is making progress toward the  2010 goal
   of 185,000 acres of SAV in the Chesapeake Bay.
     APG 4.13  Protecting and Enhancing Estuaries
    FY 2004        Restore and protect estuaries through the implementation of
                    Comprehensive Conservation and Management Plans (CCMPs).
                    Goal Met.

                    Performance Measure:
                    Acres of habitat restored and protected nationwide as part of the
                    National Estuary Program (annual).
Planned
 Actual
25,000
107,000

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                                  SECTION  2.  PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND  ECOSYSTEMS
APG 4.13  Protecting and Enhancing Estuaries   (continued)
 FY 2004 Result: The National Estuary Program
 significantly exceeded this year's goal,  reflecting the
 continuing emphasis by NEPs on key components of
 their CCMPs relating to coastal  habitat. The target
 was exceeded due to several factors including
 increased community interest and involvement in
 protection and restoration as well as the enhanced
 capacity of EPA and its partners to collect and
 report on data depicting protection and  restoration
 achievements. In addition, it is difficult to  predict
 precisely to what extent NEPs will choose to address
 habitat preservation in their annual workplans.
 A description of the quality of the data used to
 measure EPA's performance can be found in
 Appendix B, pages 41 -42.
                   Planned
Protecting and Enhancing Estuaries
Actual
                                                                  2001
                                                                              2002         2003
                                                                                  Fiscal Year
                                                                                                       2004
APG 4. 14 Great Lakes: Ecosystem Assessment Planned
FY 2004 Great Lakes ecosystem components will improve, including
progress on fish contaminants, beach closures, air toxics, and troph-
ic status. Goal Not Met.
Performance Measures:
— Long-term concentration trends of toxics (PCBs) in Great Lakes 5%
top predator fish.
— Long-term concentration trends of toxic chemicals in the air. 7%

— Total phosphorus concentrations (long-term, Ug/l) in the Lake |Q
Erie Central Basin.
FY 2003 Same Goal, different targets. Goal Not Met.
Performance Measures:
— Long-term concentration trends of toxics (PCBs) in Great Lakes 5%
top predator fish.
— Long-term concentration trends of toxic chemicals in the air. 7%

—Total phosphorus concentrations (long-term, Ug/l) in the Lake Erie |Q
Central Basin.
FY 2002 Same goal, different targets. Goal Not Met.
Performance Measures:
— Long-term concentration trends of toxics (PCBs) in Great Lakes declining
top predator fish.
— Long-term concentration trends of toxic chemicals in the air. declining
—Total phosphorus concentrations (long-term, Ug/l) in the Lake Erie improving
Central Basin.
Actual


Data avail
FY 2005
Data avail
FY 2005
2I.2 Ug/l


Data avail
FY 2005
Data avail
FY 2005
I8.4


declining
declining
mixed

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 4.14 Great Lakes:  Ecosystem Assessment    (continued)
     FY 2001          Great Lakes ecosystem components will improve, including progress
                      on fish contaminants, beach closures, air toxics, and trophic status.
                      Goal Met.

                      Performance Measures:
                      —Concentration trends of toxics  (PCBs) in Great Lakes top
                         predator fish.
                      —Concentration trends of toxic chemicals in the air.
                       —Trophic status and phosphorous concentrations in the Great Lakes.
 Planned
  Actual
 declining

 declining
improving
uncertain

 declining
improving
      FY 2004 Result: The data for the measures regarding toxics concentrations in fish and air will not be available until the second quarter
      of FY 2005. The phosphorus concentration target was not met, this is discussed in detail below.
      PCB concentrations in predator fish are tracked because it is a prime indicator of whether contaminant levels in the Great Lakes are
      decreasing, increasing, or staying level. Data are available from 1972. Monitoring results from 2002 were planned to be reported  in 2004.
      However, quality assurance problems continue to delay reporting on PCB concentrations in top-predator fish.  EPA is providing
      contractor assistance and has conducted a site visit to assist with resolution of the problems. It is anticipated that quality assured data
      will be available in FY 2005. Historical trends suggest the concentration  level will be less than 2 parts per million (the  FDA Action level)
      for the reporting year 2004 ( sample year 2002), but far above the Great Lakes Initiative target or levels at which fish advisories  can be
      removed. Year-to-year variations are expected and will influence the long-term trend, making it difficult to see statistically significant
      trends on a year-to-year basis.
      Atmospheric deposition has been shown to be a significant source of pollutants to the Great Lakes. Atmospheric deposition data are
      available for this measure beginning in 1990 collected through the joint US/Canadian Integrated Atmospheric Deposition Program and
      includes  PCBs, PAHs, and pesticides.  Monitoring results from 2002 were planned to be reported in 2004.  However, although United
      States atmospheric deposition data are available through 2002 to  calculate annual decline in PCBs (Lake Erie 7%, Lake Michigan  10%,
      Lake Superior 3.6%, which averages approximately  7%), Canadian reporting for atmospheric deposition in Lakes Huron and Ontario,
      which is  anticipated in 2005, needs to be aggregated with the U.S. data  in order to determine FY 2004 performance.  Targets for
      FY 2005  and  FY 2008 are 7% and 30% annual  decline, respectively, and  historical trends suggest that trends will continue to decline. For
      instance, depending on the lake, PCB concentrations could be expected to range from 50 to 250 pg/m3  (picograms per cubic meter).
      Year-to-year variations are expected and will influence the long-term trend, making it difficult to see statistically significant trends on a
      year-to-year basis. Success will require participation in the Great Lakes Strategy, State of the  Lakes Ecosystem Conferences, Lakewide
      Management Plans, and  Remedial Action Plans.
      Phosphorus concentrations in Lake Erie have been  tracked since 1983. Results from  monitoring in 2003 are reported in  2004 and at 21.2
      ug/Liter are at a concentration approximately twice the target of 10 ug/Liter.  The Lake Erie Central Basin is the focus  of this measure
      because  Lake Erie exceeded phosphorus guideline levels in recent years and because its central basin is most representative of Lake
      Erie's anoxia problems.  The Lake Erie phosphorus problem  is linked to the increased "dead zone," or zone of limited dissolved oxygen
      which is  the subject of an ongoing EPA-led study EPA expects to  issue the final report in FY 2005. Causes and management implications
      are still being determined;  however, invasive species, especially zebra and quagga mussels, appear to be a factor As a  result of
      discussions with scientists from Environment Canada in 2003 and 2004, the Canadian government has extended the study of Lake Erie
      through  2004. Canadian efforts are focused on areas which complement the ongoing EPA-led study and  include estimates of zebra and
      quagga populations and water movement in Lake Erie. For further information on Great Lakes indicators see http://www.epa.gov/
      glnpo/glindicators/.
      A description of the quality of the data used to measure EPA's performance  can be found in Appendix B, page 42.
      FY 2003  Result Available in FY 2004: The data for the measures  regarding toxics concentrations in fish will not be available until the
      second quarter of FY 2005. Quality assurance problems continue to delay reporting on PCB concentrations in top predator fish. EPA is
      providing contractor assistance and it is anticipated  that quality assured  data will be  available  in FY 2005.
      The data for the measures regarding long-term concentration trends of toxic chemicals in the air will not be available until FY 2005
      Although United States data is available for 2001  and 2002 to calculate annual decline in PCBs in atmospheric deposition, Canadian
      reporting for atmospheric deposition  in Lakes  Huron and  Ontario, which is anticipated in 2005,  needs to be aggregated with the U.S.
      data in order to determine FY 2003 results. The  U.S. data for 2001, which EPA had planned to report in 2003, shows the following
      declines:  Lake Erie 71 %, Lake Michigan 10.5%, Lake Superior 4%, which  averages approximately 7% overall. EPA continues to discuss the
      Canadian lag time for this data with Canada.

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                                   SECTION 2. PERFORMANCE  RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 4.15  Chesapeake Bay Habitat
FY 2004         Improve habitat in the Chesapeake Bay. Goal Not Met.

                 Performance Measure:
                 Acres of submerged aquatic vegetation present in the Chesapeake
                 Bay (cumulative).
                                                                          Planned
                                              Actual
                                                                          90,000
                                             64,709
 FY 2004 Result: While acreage estimates fluctuate year to
 year, data generally show a slow, steady increase from
 38,000 acres in 1984 to nearly 90,000 acres in 2002 as
 reported in FY 2003. (SAV data is collected from April
 through  October of a given year, then data go through
 QA/QC from  October through April, i.e. the FY 2004
 Result derives  from an April through October 2003
 sampling period).  However, record wet weather in 2003
 washed massive amounts of nutrients and sediment into the
 Bay, which resulted in a 30% decline in SAV in  a single year.
 Chesapeake Bay Program partners will increase efforts to
 reduce nutrient and sediment pollution to achieve the
 185,000 acre goal  by 2010.
 A description of the quality of the data used to measure
 ERA's performance can be found in Appendix  B, page 42.
                                              600
                                                              Healthy Bay Grasses

                                                           Potential Habitat (600.000 acres)
                                                
                                                       e s I

                                                                   SOooLooooooo^-or^o^-
                                                                   r^r^cDLncDCDCDCDcor^cocD
Bay grass
beds are
vital
habitats
for fish
and crabs.

Improved
water
quality will
promote
Bay grass
growth.

APG 4.16 Gulf of Mexico                                                              Planned         Actual
FY 2004         Assist the Gulf States in implementing watershed restoration               71               71.2
                 actions in 71 (5-year rolling average) priority impaired coastal river
                 and estuary segments. Goal Met.
FY 2003
Same Goal, different target. Goal Met.
                               14
 FY 2004 Result: In FY 2000, the Agency established, through consensus with the Gulf States, a strategic performance target to focus
 the program's collaborative capacity towards helping the states address and correct water quality issues impacting 20% of the
 impaired waters contained in coastal watersheds bordering the Gulf of Mexico. The 20% target represents 71 of the 354 segments
 listed by the states 1998 303(d) report. The strategy allowed the states to incrementally ramp up to the 20% target over the 5-year
 period from 2000-2004. To accomplish this, the Agency, in cooperation with the states, set target increments of 14 segments per year
 (FYs 2000-2003) and, 15 in FY 2004.
 Through the implementation  of this strategy, the Agency achieved its "71  segment rolling average" as originally targeted in FY 2004
 and as outlined below:
Fiscal
Year
2000
2001
2002
2003
2004
Annual Target
Increments (Segments)
14
14
14
14
15
Cumulative Target
(Segments)
14
28
42
56
71
Actual Annual Program
Performance (Segments)
32
31
35
95
163
Rolling Average Target
(i.e., "71 by 2004") (Segments)
32
32
33
48
71
 Leading this process, the Gulf States have identified the priority impaired waterbody segments sub-population that will serve to further focus
 the program's restoration assistance efforts through 2008. Beginning in FY 2005, and carrying through FY 2008, the program's goal will be to
 sustain assistance in 71 segments in order to achieve the overall 2008 performance goal of 20% priority impaired waters restoration.
 A description of the quality of the data used to measure ERA's performance can be found in Appendix B, pages 42-43.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     STRATEGIC OBJECTIVE: THROUGH 2008, PROVIDE A SOUND SCIENTIFIC FOUNDATION FOR EPA's GOAL OF
     PROTECTING, SUSTAINING, AND RESTORING THE HEALTH OF PEOPLE, COMMUNITIES, AND ECOSYSTEMS BY
     CONDUCTING LEADING-EDGE RESEARCH AND DEVELOPING BETTER UNDERSTANDING AND
     CHARACTERIZATION OF ENVIRONMENTAL OUTCOMES UNDER GOAL 4. FY 2004 Cost (in thousands):
     $398,586 (34.9% of FY 2004 Goal 4 Total Costs)

   Progress Toward Strategic Objective: EPA is on track to meet this objective. EPA's cutting-edge research provides the  sci-
   entific basis for determining the status of and protecting the health of the Nation's people, communities, and ecosystems.
   In addition to providing an  innovative method for determining the biological integrity offish communities, EPA also assessed
   the accuracy of important data used throughout the Agency to measure environmental improvements and found that it
   meets accuracy standards. National Land Cover Data (NLCD) is the most widely-used land-cover data across EPA, with
   approximately 30% of the indicators used in EPA's Report on the Environment based  on NLCD. A thematic accuracy
   assessment of these data, never undertaken prior to this effort that was completed in 2004, shows that these data meet
   accuracy standards17. EPA also provided important information on best management practices for controlling amounts of
   nitrogen and phosphorous, nutrients that can result in eutrophication (an overabundance of algae that blocks  light and uses
   up oxygen).  This information will assist states in meeting Total Maximum Daily Load (TMDL) requirements for nutrients.
   EPA has also made significant strides in the area of protecting children's health. Research completed in 2004 includes an
   emission model for estimating inhalation exposure of children to cleaning products used in schools, and a report on the
   long-term developmental effects of dioxin exposure during pregnancy16
     APG 4.17  Regional Scale Ecosystem Assessment Methods
    FY 2004        Provide federal, state, and local resource managers with a means to
                    more effectively determine long-term trends in the condition and
                    vitality of Eastern U.S. stream ecosystems through measurements of
                    changes in the genetic diversity of stream fish populations. Goal Met.

                    Performance Measure:
                    A study of fish genetic diversity that demonstrates the power of
                    this modern approach for evaluating condition and vitality of biotic
                    communities to federal, state and local resource managers.
 Planned
 Actual
I report
I report
     FY 2004 Result: The development and application of new and more powerful methods to evaluate ecological integrity is central to
     many state and Federal assessment programs. Technological progress in the fields of molecular biology and genetics has allowed, for the
     first time, the cost-effective analysis of patterns in the genetic diversity of aquatic populations over large regional scales. This genetic
     information brings new and powerful information to our understanding of aquatic ecosystems, including the identification of appropriate
     ecological assessment units, the linkages between environmental  condition and population responses, and estimates of the future
     susceptibility of populations due to loss of genetic diversity. In FY 2004, EPA summarized the results of research on the genetic diversity
     of indicator fish species inhabiting wadeable streams in the Mid-Atlantic, as well as in parts of Ohio. The report found that genetic
     diversity of stream fish was reduced in areas of poor environmental quality. This loss of genetic diversity is likely to impact the ability of
     fish  in these areas to respond to future environmental challenges. In addition, genetic identification provides a more precise and less
     subjective method for identifying species than methods based on physical characteristics. This report will provide resource managers
     and the public with a more complete understanding of the present condition  of these biological  resources and their vulnerability to
     predicted environmental changes.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 43.
     APG 4.18  Homeland Security Research
    FY 2004        Provide a database of EPA experts on topics of importance to
                    assessing the health and ecological impacts of actions taken against
                    homeland security that is available to key EPA staff and managers
                    who might be called upon to rapidly assess the impacts of a signifi-
                    cant terrorist event. Goal Met.
 Planned
 Actual

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                                 SECTION  2.  PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 4.18  Homeland Security Research   (continued)
FY 2004
(continued)
Performance Measure:
A restricted access database of EPA experts with knowledge,
expertise, and experience for use by EPA to rapidly assess health
and ecological impacts focused on safe buildings and water security.
                                                                       Planned
                                                                                     I  database
  Actual
I database
 FY 2004 Result: This restricted access database has been distributed to key EPA staff and managers, and is updated quarterly It will
 facilitate rapid deployment in response to an incident.
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 43.
APG 4.19  Homeland Security Research
FY 2004        Provide to building owners, facility managers, and others, methods,
                guidance documents, and technologies to enhance safety in large
                buildings and to mitigate adverse effects of the purposeful introduc-
                tion of hazardous chemical or biological materials into indoor air.
                Goal Met.

                Performance Measures:
                —Prepare Environmental Technology Verification (ETV) evalua-
                  tions on at least 5 new technologies  for detection, containment,
                   or decontamination of chemical/biological contaminants in build-
                   ings to help workers select safe alternatives.
                —Through Small Business Innovative Research awards, support at
                   least 3 new technologies/methods to decontaminate heating, ven-
                  tilation,  and air conditioning systems in smaller commercial
                   buildings or decontaminate valuable or irreplaceable materials.
                —Prepare technical guidance for building owners and facility man-
                  agers on methods/strategies to minimize damage to buildings
                  from intentional  introduction of biological/chemical contaminants.
                                                                       Planned
  Actual

                                                                      9/30/04
 9/30/04
 FY 2004 Result: Anthrax contamination and the extensive clean-up efforts in postal facilities and several other government and
 commercial buildings emphasized the need for improved methods to enhance security against terrorist activities in buildings and to
 provide additional options for cleaning up buildings. EPA is focusing on research, development, testing, and communication of enhanced
 methods for detection and containment of biological and chemical warfare agents and toxic industrial chemicals intentionally introduced
 into large buildings. Research is also addressing decontamination of building surfaces, furnishings, and equipment with safe  disposal of
 residual materials. In FY 2004, EPA provided emergency responders, building owners and managers, and decontamination crews with
 information,  including guidance documents and technology evaluations, needed to enhance safety in buildings and to mitigate adverse
 effects of the purposeful introduction of hazardous chemicals or biological materials into indoor air."
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 43.
APG 4.20  Homeland Security Research
FY 2004        Verify two point-of-use drinking water technologies that treat
                intentionally introduced contaminants in drinking water supplies for
                application by commercial and residential users, water supply utili-
                ties, and public officials. Goal Met.
                                                                       Planned
  Actual

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FISCAL YEAR 2OO4 ANNUAL  REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 4.20  Homeland Security Research   (continued)
  Planned
  Actual
     FY 2004 Result: Evaluations of point-of-use drinking water treatment technologies have been ongoing for years and technologies are
     commercially available to remove disagreeable tastes and odors, and capture or neutralize contaminants. These point-of-use treatment
     technologies are now being considered as an additional means of treating water that may have been exposed to biological or chemical
     contaminants through terrorist attacks. In  FY 2004, EPA's Environmental Technology Verification (ETV) program formally verified such
     technologies using a standard protocol developed by a group of critical stakeholders. This additional line of defense can help reassure
     home and building owners and users, water supply utilities, and public officials that the drinking water supply in  a residential or
     commercial building can be treated again once it enters the water distribution system of a building.20
     A description of the quality of the data used to measure EPA's performance can  be found in Appendix B, page 43.
     APG 4.21   Risk Assessment Research
     FY 2004         Through FY 2005 initiate or submit to external review 28 human
                     health assessments and complete 12 human health assessments
                     through the Integrated  Risk Information System (IRIS). This infor-
                     mation will improve  EPA's and other decision-makers' ability to
                     protect the public from harmful chemical exposure. Goal Met.

                     Performance  Measures:
                     —Complete 4 human health assessments and publish their results
                        on the IRIS website21.
                     —Initiate or submit  to  external peer review human health assess-
                        ments of at least 20 high priority chemicals.
  Planned      Actual
    4

   20

     FY 2004 Result: The Integrated Risk Information System (IRIS) is an EPA data base containing Agency consensus scientific positions on
     potential adverse human health effects that may result from exposure to chemical substances found in the environment. IRIS currently
     provides information on health effects associated with chronic exposure to more than 500 specific chemical substances. IRIS contains
     chemical-specific summaries of qualitative and quantitative health information in support of the first two steps of the risk assessment
     process, i.e., hazard identification and dose-response evaluation. Combined with specific situational exposure assessment information,
     the information  in IRIS may be used as a source in evaluating potential public health risks from environmental contaminants.  IRIS is
     widely used in risk assessments for EPA regulatory programs and site-specific decision making. Updating IRIS with new scientific
     information is critical to maintaining information quality and providing decision makers with a credible source of health effects
     information. The health assessments completed and  initiated in FY 2004 will provide EPA and other decision makers with needed
     updates to IRIS so they can make informed decisions on how to best protect the public from harmful chemical exposure. In 2004, EPA
     completed human health assessments on four chemicals (2-methylnaphthalene, lead, boron, and ethylene dibromide) and  has posted
     these on the IRIS web site. In FY 2005, EPA will complete an additional 8 assessments and initiate 8 more for a two year total of 28
     initiated assessments and 12 completed health assessments.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 43.
     APG 4.22  Computational Toxicology
     FY 2004         Develop a computation toxicology research strategy (strategic
                     framework) that provides the framework for research that will help
                     fill major data gaps for a large number of chemical testing programs
                     and reduce the cost and use of animal testing. Goal Met.

                     Performance Measure:
                     Produce a computational toxicology research strategic framework.
  Planned      Actual
I  strategy
I strategy
     FY 2004 Result: In FY 2004, EPA completed "A Framework for a Computational Toxicology Research Program in ORD."22 This
     document identifies the major research gaps and approaches for the development of an EPA program on computational toxicology
     The objective of the Computational Toxicology research program is to integrate modern computing and information technology with

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                               SECTION 2.  PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 4.22  Computational Toxicology   (continued)
Planned      Actual
 molecular biology to improve the Agency's prioritization of data requirements and risk assessment of chemicals. The ultimate goal of
 the program is to demonstrate the feasibility of setting mechanistically-based priorities for chemical risk assessment and to optimize
 testing requirements through the use of computational methods and molecular profiling afforded by the advances in emerging
 technologies such as proteomics and genomics.

 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 43.
APG 4.23 Human Health Risk Assessment Research
FY 2004        Contribute to protecting children from harmful environmental
               agents in their daily lives by providing risk assessors and managers
               with better data on children's aggregate exposures in their home
               and daycare settings. Goal Met.

               Performance Measure:
               Analysis of the "Children Total Exposure to Pesticides and
               Persistent Organic Pollutants (including EDCs) Study" to estimate
               aggregate exposures and identify critical exposure factors that can
               be used by the Agency to improve exposure and risk assessments.
Planned      Actual
 FY 2004 Result: In FY 2004, EPA completed a report for Congress on the aggregate exposures of preschool children to pollutants
 commonly found in their everyday environments. Current risk assessments for children are severely hampered by a lack of exposure
 data and by exposure factors that are insufficient to describe how exposures change as children grow up and change their activities.
 The report found that the relative contribution of the various exposure pathways (the air kids breathe, the food and  drink kids
 consume, or the things that they touch) varies from chemical to chemical. For the more than 50 chemicals studied, the dietary pathway
 was often the most significant pathway for exposure. The updated exposure factors are more reliable since they incorporate more
 complete and better data and approaches to describe children's exposures to environmental pollutants. These data and factors should
 significantly improve the reliability of the estimates of children's exposure and risk used by regulatory decision-makers throughout EPA.

 A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 43.
    ASSESSMENT OF IMPACTS OF FY 2004 PERFORMANCE ON FY 2005 ANNUAL PLAN

 Based on the results of FY 2004 performance, adjustments will be made to three FT 2005 performance
 measure targets. The first is reducing wildlife incidents and  mortalities which will be reduced from a cumu-
 lative total  of 27% to 12% for FY 2005. These targets have been missed for the prior 2 years so the FY 2005
 change is necessary to  account for that reality.
 The  second measure which will be changed for FY 2005  is the  occurrence of residues  on a core set of 19
 foods eaten by children relative to occurrence levels for  those  foods reported in 1994-1996. After 2 years
 of experience in  analyzing the  data, the measure has been determined to be too general with too many
 variables from year to year in order to  provide a consistent, reliable trend. Information is being reviewed to
 determine  a more appropriate measure.
 The  final measure which will be changed for FY 2005 is the safe disposal of capacitors.  CY 2002 results
 released  in January of 2004 show a total of 2,204 large capacitors safely disposed, compared to 9,494 in
 CY 2001. CY 2004 results will not be released  until 2006. The FY 2004 annual performance target is 6,000
 large capacitors safely disposed and the FY 2005 annual performance target increases that number to  9000.
 Due to the downward  industrial disposal trend in CY 2002, data quality issues are being investigated and
 depending  on findings,  the FY  2005 performance target may  need to be adjusted.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
   Prior Year Annual Performance Goals Without Corresponding

   FY 2004  Goals

   (Actual performance data available in FY 2004 and beyond)


   FY 2000       Administer federal programs and oversee state implementation of programs for lead-      target year
               based paint abatement certification and training in 50 states, to reduce exposure to         is FY 2005
               lead-based paint and ensure significant decreases in children's blood levels by 2005.


   FY 1999      Complete the building of a lead-based paint abatement certification and training in 50      target year
               states, to ensure significant decreases in children's blood levels by 2005 through             is FY 2005
               reduced exposure to lead-based  paint.


   FY 1999      Develop and verify innovative methods and models for assessing the susceptibilities of      target year
               population to environmental agents, aimed at enhancing risk assessment and manage-        is FY 2008
               ment strategies and guidelines.
   FY 2003 Annual Performance Goals
   (No Longer Reported  for FY 2004)

    •  Reduce public and ecosystem risk from pesticides.

    •  Provide the public with a reliable and statistically valid baseline for the condition of nation's estuaries against which
      to  measure the success of ecosystem protection and risk management practices.

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                                    SECTION 2. PERFORMANCE RESULTS—GOAL A.  HEALTHY COMMUNITIES AND ECOSYSTEMS
NOTES

1   U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. "TSCA New Chemicals Program." Internal
    monthly report by Chemical Abstract Services.
2   For more information, please visit: http://www.epa.gov/Region9/cross_pr/childhealth/pbde.html.
3   U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. "High Production Volume Challenge
    Program, HPV Commitment Tracking System." Available at http://www.epa.gov/chemrtk/viewsrch.htm.
4   Florida Department of Environmental Protection. 2003. Integrating Atmospheric Mercury Deposition and Aquatic Cycling in the
    Florida Everglades: An approach for Conducting a Total Maximum Daily Load Analysis for an Atmospherically Derived PoRutant.
    Final Report. Tallahassee, Florida. Available at ftp://ftp.dep.state.fl.us/pub/labs/assessment/mercury/tmdlreport03.pdf
5   Centers for Disease Control, National Center  for Health Statistics. National Health and Nutrition Examination Survey: 1999-
    2002.  More information is available at http://www.cdc.gov/nchs/nhanes.htm.
6   More information on the Executive Order is available at http://www.epa.gov/glnpo/taskforce.
7   More information is available at http://www.epa.gov/owow/estuaries/pivot/overview/intro.htm.
8   More information is available at http://www.whitehouse.gov/news/releases/2004/04/20040422'4.html.
9   More information is available at http://www.bmwusfactory.com/community/environment/gastoenergy.asp.
10  More information is available at http://www.unep.org/PCFV/Data/data.htm#leaded.
11  For more information, please visit: http://www.unipune.ernet.in/dept/env/pei/index.html.

12  For more information, please visit: http://www.epa.gov/indicators/roe/html/tsd/tsdHealth.htm#43.
13  For more information on EMAP, please visit: http://www.epa.gov/emap/.
14  Arctic  Pollution Issues: A State of the Arctic Environment Report. Arctic Monitoring and Assessment Programme,  1997.
    ISBN  82-7655-060-6
15  U.S. Environmental Protection Agency, Office of Research and Development. 2004.  Water Security and Technical Support Action
    Plan. EPA/600/R-04/063. Washington, DC: U.S. Government Printing Office.
16  The specific language for this strategic target reads as follows: "By 2008, working with  National Estuary Program (NEP) partners,
    protect or restore an additional 250,000 acres of habitat within the study areas for the  28 estuaries that are part of the NEP."
17  U.S. Environmental Protection Agency, Office of Research and Development. Not yet published. Thematic Accuracy of Multi-
    Resolution Land Characterization-National Land Cover Database Land Cover for  the Western United States.
18  Vorderstrasse, B, S.E Fenton., A.A Bonn., J.A.Cundiff, and B.P. Lawrence. 2004. "A novel effect of dioxin: exposure during
    pregnancy severely impairs mammary gland differentiation." Toxicol. Sci. (In  Press).
    Lawrence, B.P, B.A. Vordestrasse, S.E. Fenton, and A.A. Bohn. 2003. "Exposure to 2,3,7,8-tetrachlorodibenzo-p-diozin
    (TCDD)  impairs Mammary Gland Differentiation in Pregnant c57Bl/6 Mice and Prevents Pup Survival." Toxicologist 72:230.
19  Information is available at http://www.epa.gov/etv/verifications/vcenterlO-l.html and at
    http://cfpub.epa.gov/ncer_abstracts/index.cfm/fuseaction/outlinks.sbir/rc_id/916/show Year/all
20  Information is available at http://www.epa.gov/etv/verifications/verification-index.html.
21  Information is available at http://www.epa.gov/iris.
22  U.S. Environmental Protection Agency. Framework for a Computational Toxicology Research Program at ORD. EPA-600/R-03/065.
    Information is available at http://www.epa.gov/comptox.

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      )AL5:  Compliance  and  Environmental  Stewardship
          Improve environmental performance through compliance with environmental requirements,
          preventing pollution, and promoting environmental stewardship. Protect human health and
            the environment by encouraging innovation and providing incentives for governments,
                     businesses, and the public that promote environmental stewardship.
        Under Goal 5, EPA continues to improve national
    environmental performance by ensuring compliance with
    environmental law and promoting
    environmental stewardship to con-
    serve resources, prevent pollution,
    and reduce waste. The Agency uses
    a wide spectrum of regulatory and
    nonregulatory strategies, including
    compliance assistance and incen-
    tives, monitoring and data analysis,
    pollution prevention, and civil and
    criminal enforcement. EPA also
    conducts research to identify inno-
    vative approaches to environmental
    protection and encourages states,
    tribes, and regulated entities to
    develop new approaches, ideas, and
    techniques.

        EPA's compliance programs
    work to ensure that regulated entities understand and
    comply with environmental law requirements. The
    Agency helps business—small businesses in particular—
    achieve and maintain compliance1 and provides
    incentives2 for facilities to conduct voluntary audits, cor-
    rect problems,  and return to compliance. EPA also uses
    enforcement actions3 to correct and deter violations. In
    settling these civil cases, the Agency often negotiates
    supplemental environmental projects4 that improve
    health and the environment in affected communities.
   Civil enforcement actions completed in FY 2004 will
reduce, properly treat, or eliminate an estimated 1 billion
                  pounds of pollutants from release
                  into the environment. In addition,
                  25.3 million pounds of pollutants
                  will be reduced as a result of
                  FY 2004 criminal enforcement
                  actions.5 Enforcement actions will
                  also require companies to invest
                  $4.8 billion in pollution control
                  and improve environmental man-
                  agement practices at facilities. In
                  FY 2004, 969 facilities voluntarily
                  disclosed violations and corrected
                  problems to achieve compliance.6
                  Ninety percent of the regulated
                  community responding to compli-
                  ance assistance center surveys
                  indicated an improved understand-
ing of environmental regulation, and 72 percent
improved environmental management  practices as a

Enforcement actions reduce an
estimated  1  billion pounds of pollution

result of the assistance. Forty-eight percent of survey
respondents reported that they reduced, treated, or elimi-
nated pollution as a result of the assistance.7
106

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                      SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
Strong environmental
stewardship protects
the environment and
conserves natural
resources

    EPA works directly with the
regulated community to recognize
and encourage outstanding envi-
ronmental leadership and
performance through innovative
programs. The National
Environmental Performance Track
Program is building a culture of
corporate environmental responsi-
bility and superior performance by
recognizing and rewarding high-
performing environmental leaders
who go well beyond complying
with environmental law. During FY
2004, high-achieving companies
used Performance Track's perform-
ance goals and measures to
demonstrate significant, tangible
benefits for the environment. Led
by EPA and 23 states, the 344
member facilities have cumulative-
ly conserved 3.1 trillion British
Thermal Units of energy and 775
million gallons of water. Since FY
2000, Performance Track members
have reduced their use of hazardous
materials  by nearly 18,000 tons and  	-^vl
cut generation of solid waste by
more than 176,000 tons. Members
also have preserved or restored 4,485 acres of
habitat. During 2004, Performance Track
demonstrated its capability as an engine for
SUPPLEMENTAL ENVIRONMENTAL  PROJECTS-
BENEFITING BOSTON COMMUNITIES:
Integrating pollution prevention into enforcement
actions can help to promote environmental steward-
ship. For example, recognizing that many scientific
studies have linked  breathing particulate matter with
a series of significant health problems, including aggra-
vated  asthma,10  EPA's Region  negotiated settlements
against the Mystic Station power plant and the
Massachusetts Bay Transit Authority that included
supplemental environmental projects to address this
air issue in the local community. As a result of the
supplemental projects, the City of Boston's school
bus fleet and the commuter trains that pass through
Boston were modified to burn low-sulfur rather than
high-sulfur diesel fuel, reducing emissions of particu-
late matter." These projects benefit environmentally
disadvantaged Boston communities which have some
  r''     'ion's highest  rates of children's as'1
       driving environmental change in business
       systems, resulting in dramatic performance
       improvements that would not have been
       realized through regulatory approaches.8

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
                EPA's Sector Strategies Program also
             collaborates with the Agency's business
             partners to improve their environmental
             performance. Under this program, EPA works
             with 12 business sectors that have a significant
             impact on the nation's economy and the envi-
             ronment to identify cost-effective methods for
             reducing energy use and protecting the envi-
             ronment.  In FY 2004, the Agency published
             the Sector Strategies Performance Report,9 which
             establishes baseline trends data from which to
             measure future program progress.
                EPA and its partners used a variety of col-
             laborative, nonregulatory approaches to reduce
             pollution, conserve water and energy, and
             minimize business costs. The Agency's
             Pollution Prevention (P2) program employs a
             threefold approach: (1) "greening" the nation's
             supply and demand chains to make them more
             environmentally sound; (2) integrating P2
             into such regulatory processes as permitting;
             and (3) delivering P2 services, such as techni-
             cal assistance and information, to businesses,
             communities, and the public. EPA's P2 pro-
             grams made significant progress in FY 2004:

             •  The Agency's Green Chemistry Challenge
                Program12 award winners eliminated the
                use of 134 million pounds of hazardous
                chemicals.

             •  One aerospace company realized an annu-
                al savings of $425,000 as a result of a
                Green Supplier Network" review.

             •  The Design for the
                Environment partnership
                with the industrial laundry
                industry eliminated the use
                of 63 million pounds of haz-
                ardous chemicals, conserved
                23 million gallons of water,
                and realized $488,000  in
                business cost savings.15

                As  EPA more frequently
             turns to pollution prevention to
             address high-risk human health
             and environmental problems,
             the need for innovative design
and production techniques has increased.
Research that EPA conducts to support Goal 5
informs federal, state, and local government
officials; industry; academia; citizen groups;
and other stakeholders about pollution preven-
tion and new technology opportunities and
alternatives. On December 31, 2003, EPA
launched the Environmental Technology
Opportunities Portal Internet site to assist cus-
tomers seeking funding opportunities,
information, and links to programs that sup-
port environmental technology development
and commercialization.16 EPA is currently
reorienting its pollution prevention program
research agenda to introduce sustainability
concepts and approaches. This research will
enable Agency, state, community and other
decision makers to include risk reduction and
pollution prevention as quantifiable, measura-
ble, and scientifically defensible components
of a holistic approach to  risk management.

    EPA works with federally recognized
American Indian and Alaska Native tribes to
assess environmental conditions,  build tribal
capacity, and implement programs to protect
health and the environment in Indian
Country. In FY 2004, the number of tribes
developing their own environmental programs
increased, and EPA increased its presence in
Indian Country by directly implementing
environmental programs and developing
EPA/tribal environmental agreements.

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                       SECTION 2.  PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
    In the months ahead, EPA will continue
to pursue reductions in priority chemical
waste, evaluate trends, and rely on collabo-
rative programs to promote environmental
stewardship and improve environmental
performance. EPA will work with regulated
entities to better define their needs for com-
pliance assistance, environmental
management, and innovative technologies.
The Agency will build upon progress in
greening all levels of government and the
marketplace, leverage the power of govern-
ment  purchasing to promote environmental
stewardship and sustainable practices, and
expand and improve the delivery of P2 serv-
ices to small and mid-sized companies. EPA's
compliance program will use performance-
based national strategies and priorities and
improved performance data to better direct
its assistance, incentive, and enforcement
efforts to improve environmental perform-
ance and increase environmental
stewardship by the regulated community.
THE NATior
ENVIRONMEr
Through the National Partnership for Environmental
Priorities (NPEP), General Electric facilities in Ohio,
Pennsylvania, Virginia, and Puerto Rico have commit-
ted to reducing their use of lead by  165,000 pounds
over the next 3 years. Overall, 36 industrial and feder-
al partners committed to using source reduction and
recycling to eliminate 1.9 million pounds of  hazardous
waste. More information on  NPEP is available at
http://www.epa.gov/epaoswer/hazwaste/minimize/
partnership.htm

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                           Annual Performance Goals Met:
                                                           Annual Performance Goals Not Met:     0
                                                           Data Available After 11/5/04:
     STRATEGIC OBJECTIVE:  BY 2008, MAXIMIZE COMPLIANCE TO PROTECT HUMAN HEALTH AND THE
     ENVIRONMENT THROUGH COMPLIANCE ASSISTANCE, COMPLIANCE INCENTIVES, AND ENFORCEMENT BY
     ACHIEVING A 5% INCREASE IN THE POUNDS OF POLLUTION REDUCED, TREATED, OR ELIMINATED,17 AND
     ACHIEVING A 5% INCREASE IN THE NUMBER OF REGULATED ENTITIES MAKING IMPROVEMENTS IN
     ENVIRONMENTAL MANAGEMENT PRACTICES.18 (BASELINE TO BE DETERMINED FOR 2005.) FY 2004 Cost (in
     thousands): $434,585 (60.6% of FY 2004 Goal 5 Total  Costs)


   Progress Toward Strategic Objective: EPA continues to protect human health and the environment through compliance
   assistance, compliance incentives, monitoring, and civil and criminal enforcement. In FY 2004, I billion pounds of pollution
   are estimated to be reduced, treated, or eliminated as a result of facilities returning to compliance through enforcement
   settlements reached during the year. Through FYs 2001-2004, EPA reduced, treated, or eliminated 2.5 billion pounds of
   pollution. In addition, 83% of enforcement actions in FY 2004 resulted in environmental improvements or changes in facility
   environmental management or information practices resulting in a 75.5% average from FYs 2001-2004. During FY 2004
   there was no direct measure for increased improvements in environmental practices. Measurement for this new Strategic
   Objective will begin with new Annual Performance Measures in FY 2005. However since FY 2001, EPA has measured the
   percent of concluded enforcement actions that require an action that results in environmental benefits and/or changes in
   facility management or information practices. These changes  address environmental management practices from enforce-
   ment actions. Improvements in environmental practices also occur through compliance assistance and compliance
   incentives and these improvements will  be addressed by additional measures beginning in FY 2005.
APG 5. 1
FY 2004
FY 2003
Compliance Assistance Planned
Increase the regulated community's compliance with environmental
requirements through their expanded use of compliance assistance.
The Agency will continue to support small business compliance
assistance centers and develop compliance assistance tools such as
sector notebooks and compliance guides. Goal Met.
Performance Measure:
Facilities, states, technical assistance providers or other entities 500,000
reachedthrough targeted compliance assistance.
Same goal, different target. Goal Met. 475,000
Actual

721,000

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                          SECTION  2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 5.1  Compliance Assistance   (continued)
 FY 2004 Result: EPA continues to increase the regulated
 community's understanding of environmental requirements and
 improve facility environmental management practices by
 providing direct and practical assistance through the Compliance
 Clearinghouse," Compliance Assistance Centers20 for 13 industry
 sectors, and direct assistance at the facility level or through
 state and local workshops. EPA collaborates with states and
 tribes to provide assistance, and to get their comments on
 proposed new requirements and development of new pollution
 prevention techniques. By helping businesses, local governments,
 and federal facilities understand federal environmental
 requirements,  EPA promotes best management practices that
 reduce pollution while saving money.
 A description of the quality of the data used to measure EPA's
 performance can be found in Appendix B, page 43-44.
                   Targeted Compliance Assistance
             2000
                      2001
                              2002
                           Fiscal Year
                                      2003
                                              2004
APG 5.2  Compliance Incentives
FY 2004         Increase opportunities through new targeted sector initiatives for
                 industries to voluntarily self-disclose and correct violations on a
                 corporate-wide basis. Goal Met.

                 Performance Measure:
                 Facilities voluntarily self-disclose and correct violations with
                 reduced or no penalty as a result of EPA self-disclosure policies.
                             Planned
Actual
                              500

 FY 2004 Result: EPA offers an incentive program21 of
 reduced or eliminated penalties for facilities that
 conduct voluntary self- audits, and report and correct
 violations. These incentives are often used in targeted
 initiatives directed at specific industrial sectors and are
 occasionally developed in collaboration with the
 industry or industrial associations. Since 2001, the
 incentives programs have helped return thousands of
 facilities to compliance, furthering environmental
 stewardship through the provision of information,
 incentives and innovative approaches to reduce or
 eliminate pollution.
 A description of the quality of the data used to
 measure EPA's performance can be found in Appendix
 B, page 44.
             Increase Opportunities Through New
                 Targeted Sector Initiatives
2000
         2001
                    2002        2003
                        Fiscal Year
                                           2004
APG 5.3  Inspections/Investigations
FY 2004         EPA will conduct inspections, criminal investigations, and civil inves-
                 tigation targeted to areas that pose risks to human health or the
                 environment, display patterns of non-compliance, or include dispro-
                 portionately exposed populations. Goal Met.
                             Planned
Actual

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 5.3 Inspections/Investigations   (continued)
    FY 2004         Performance Measures:
                     —Number of EPA inspections conducted.
                     —Number of criminal investigations.
                     —Number of civil investigations.
                             Planned
                             15,500
                              400
                              ISO
 Actual
21,000
 425
 455
     FY 2004 Result: EPA exceeded its FY 2004 targets for
     inspections, evaluations and investigations, maintaining
     an effective deterrent to violations of federal
     environmental laws. Investigatory activities, both civil22
     and criminal,23 help ensure a level playing field by
     removing any economic or competitive advantage
     which may be gained through noncompliance. EPA
     identifies, apprehends,  and assists prosecutors in
     successfully convicting those responsible for the most
     significant and egregious criminal violations of
     environmental law. EPA eliminates or mitigates
     substantial risks to human health and the environment.
     A description of the quality of the data used  to
     measure EPA's performance can be found in
     Appendix B, pages 44-45.
               EPA Exceeds FY 2004 Target for Criminal Investigations
                  482	484
                 2001
                            2002        2003         2004
                                Fiscal Year
                EPA Inspections Help Deter Violations
                   of Federal Environmental Laws
   20000
2  15000
o
U
   10000
    5000
                                                                    600
                                                                           2001
                                                                                      2002       2003
                                                                                         Fiscal Year
                                                                                                             2004
            Civil Investigations Help Ensure a Level Playing Field
                    by Deterring Non-Compliance
                                                                            2001
                                                                                       2002
                                                                                                   2003        2004
                           Fiscal Year
     APG 5.4 Increased Compliance
    FY 2004         EPA will direct enforcement actions to maximize compliance and
                     address environmental and human health problems. Goal Met.

                     Performance Measures:
                     —Percent of concluded enforcement actions that require an action
                       that results in environmental benefits and/or changes in facility
                       management or information practices.
                     —Millions of pounds of pollutants required to be reduced through
                       enforcement actions settled this fiscal year.
                     —Develop and use valid compliance rates or other indicators of
                       compliance for selected populations.
                             Planned
 Actual
                              75%


                             350 M

                               5
 83%


  IB

  5

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                        SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 5.4 Increased Compliance   (continued)
FY 2003        Same Goal, different measures. Goal  Not Met.

               Performance Measures:
               —Percent of concluded enforcement actions require physical action
                 that result in pollutant reductions and/or changes in facility man-
                  agement or information practices.
               —Millions of pounds of pollutants required to be reduced through
                  enforcement actions settled this fiscal year.
               —Develop and use valid compliance rates or other indicators of
                  compliance for selected populations.
   Planned
Actual
    75%
   300 M
 63%
600 M
5 populations   5 populations
FY 2002        Same Goal, different measures. Goal  Not Met.

               Performance Measures:
               —Percent of concluded enforcement actions require physical action        75%
                 that result in pollutant reductions and/or changes in facility man-
                  agement or information practices.
               —Millions of pounds of pollutants required to be reduced through        300 M
                  enforcement actions settled this fiscal year.
               —Develop and use valid compliance rates or other indicators of
                  compliance for selected populations.
               —Reduce by 2 percentage points overall the level of significant non-        2%
                  compliance recidivism among CAA, CWA, and RCRA programs
                 from FY 2001  levels.
               —Increase by 2% over FY 2001 levels the proportion of significant         2%
                  noncomplier facilities under CAA,  CWA, and RCRA which
                  returned to compliance in less than 2 years.
               —Produce report on the number of civil and criminal enforcement          |
                  actions initiated and concluded.
                   77%
                   261 M
5 populations   5 populations
                    1.6%
                   -3.8%
FY 2001         Same goal, different targets. Goal Met,

               Performance Measures:
               —Percent of concluded enforcement actions require pollutant             75%            79%
                  reductions and/or changes in facility management or information
                  practices.
               —Estimated pounds of pollutants reduced.                              350 M          660 M
               —Increase or maintain existing compliance rates or other indicators    5 populations   6 populations
                  of compliance for populations with established baselines, or devel-
                  op additional rates for newly selected populations.
               —Reduce by 2 percentage points overall the level of significant non-        2%            2.4%
                  compliance recidivism among the CAA, CWA, and RCRA
                  programs from FY 2000 levels.
               —Increase by 2% over FY 2000  levels the proportion of significant         2%            1.33%
                  non-complier facilities under CAA, CWA, and  RCRA which
                  returned to compliance in less than 2 years.
               —Produce a report on the number of civil and criminal enforcement         |
                  actions initiated and concluded.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 5.4  Increased Compliance   (continued)
Planned
Actual
     FY 2004 Result: EPA focused its enforcement actions in areas with the greatest potential to protect human health and the
     environment by identifying significant environmental, public health, and compliance problems; using data to make strategic decisions on
     resource use; using the most appropriate tool to achieve the outcome, and assessing and communicating effectiveness of program
     actions.24 The enforcement actions taken required defendants to reduce, treat, or eliminate  illegal emissions and discharges, establish
     improved environmental management practices25 that will help to detect and prevent potential future non-compliance, and change their
     information/data practices to ensure the facilities can correctly identify and track wastes, waste processes, and their own compliance
     with environmental requirements. Eighty-three percent of enforcement actions concluded in FY 2004 will result in increased
     environmental protection or improved long-term facility environmental management practices; 38% will result in increased
     environmental benefits; and 71% will result in changes to facility management or information practices.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 45-46.
     APG 5.5  Quality Assurance
    FY 2004        Identify noncompliance and focus enforcement and compliance
                    assurance on human health and environmental problems, by main-
                    taining and improving quality and accuracy of data. Goal Met.

                    Performance Measure:
                    Complete the data migration plan and begin software development
                    as part of the system implementation life cycle stage (i.e., data
                    migration and testing) of Phase II of Integrated Compliance
                    Information System (ICIS) (modernization of the Permit
                    Compliance System) by September 2004.
Planned
Actual
 I plan
I  plan
    FY 2003         Same Goal, different measures. Goal Met,

                    Performance Measures:
                    —Operate 14 information systems housing national enforcement and
                      compliance assurance data with a minimum of 95% operational
                      efficiency.
                    —Complete the detailed design and software development system
                      lifecycle stage of Phase II of ICIS (modernization of the Permit
                      Compliance System) by September 2003.
  95%
 95%
    FY 2002         Maintain and improve quality and accuracy of EPA's enforcement and
                    compliance data to identify noncompliance and focus on human
                    health and environmental problems. Goal Met,

                    Performance Measures:
                    —Operate 14 information systems housing national enforcement and
                      compliance  assurance data with a minimum of 95% operational
                      efficiency.
                    —Have Phase I of the ICIS fully operational in March 2002.
  95%
Phase I
 95%
Phase
    FY 2001         Same goal, different measures. Goal Met,

                    Performance Measures:
                    —Continue operation and maintenance/user support of 14 informa-         95%
                      tion systems housing national enforcement and compliance
                      assurance data with a minimum of 95% operational efficiency.
                    —Complete Phase I of ICIS development (programming) and begin       Phase
                      design of Phase II.
                 95%
                Phase

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                          SECTION  2.  PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 5.5  Quality Assurance   (continued)
FY 2001         —Complete Quality Management Plan project for additional data
(continued)         systems.
                —Complete detailed design (development of screens, prototypes)
                   including a pilot NPDES permitting desk model for Permit
                   Compliance  System modernization.
                —Conduct four data analyses of environmental  problems in Indian
                   Country using the American Indian Lands Environmental Support
                   Project and the baseline assessment survey.
Planned
Actual
                   0





                   12
 FY 2004 Result: FY 2004 modernization of the ICIS included Phase II for the Permit Compliance System which tracks the permitting,
 enforcement, and compliance programs within the Clean Water Act to ensure that surface waters can be used for drinking, recreation,
 and other activities. EPA is working with the states to improve the quality and comprehensiveness of the data and to reduce transaction
 costs through strategies such as exchanging data electronically, adhering to all Agency data standards, and integrating the new system
 with other EPA systems. When complete, ICIS will enable EPA to better review environmental and compliance data to help target
 compliance and enforcement efforts on those permitees that pose the greatest potential risks to human health and the environment
 A description of the quality of the data used to measure EPA's performance can be found  in  Appendix  B, page 46.
APG 5.6
FY 2004


FY 2003
FY 2002






FY 2001






Capacity Building
Improve capacity of states, localities and tribes to conduct enforce-
ment and compliance assurance programs. EPA will provide training
as well as assistance with state and tribal inspections to build capac-
ity. Goal Met.
Performance Measure:
Conduct EPA-assisted inspections to help build state program capacity.
Same Goal, different target. Goal Met,
Same Goal, different measures. Goal Met,
Performance Measures:
— Conduct EPA-assisted inspections to help build state program capacity.
— Number of EPA training classes/seminars delivered to states, locali-
ties and tribes to build capacity.
— Provide tribal governments with 50 computer-based training (CBT)
modules.
—Total number of state and local students trained.
—Train tribal personnel.
Same Goal, different targets. Goal Met,
Performance Measures:
— Conduct EPA-assisted inspections to build capacity.
— Number of EPA training classes/seminars delivered to states,
localities and tribes to build capacity.
—The National Enforcement Training Institute will provide tribal
governments with 50 CBT modules.
—Total number of state and local students trained.
—The National Enforcement Training Institute will train tribal personnel.
Planned


400
250


400
200
50
4,900
95


ISO
220
50
4,900
105
Actual



1,027


1,081
319
116
6,631
808


895
128
235
4,727
428

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
    APG 5.6 Capacity Building   (continued)
Planned
Actual
     FY 2004 Result: EPA has authorized most states and some tribes to carry out Federal environmental regulatory programs. Although
     state regulatory partners have the responsibility for conducting the majority of inspections, EPA maintains a parallel regulatory authority
     and ensures that authorized states and tribes have the capacity to properly conduct inspections, especially for modified or new
     regulations. EPA conducts joint inspections with the states and tribes to build capacity to conduct thorough and complete inspections
     under both existing and new regulations.

     A description of the quality of the data used to measure EPA's performance can be found in Appendix B, page 46-47
     STRATEGIC OBJECTIVE:  BY 2008, IMPROVE ENVIRONMENTAL PROTECTION AND ENHANCE NATURAL
     RESOURCE CONSERVATION ON THE PART OF GOVERNMENT, BUSINESS, AND THE PUBLIC THROUGH THE
     ADOPTION OF POLLUTION PREVENTION  AND SUSTAINABLE PRACTICES THAT INCLUDE THE DESIGN OF
     PRODUCTS AND MANUFACTURING PROCESSES THAT GENERATE LESS POLLUTION, THE REDUCTION OF
     REGULATORY BARRIERS, AND THE ADOPTION OR RESULTS-BASED, INNOVATIVE, AND MULTIMEDIA
     APPROACHES.  FY 2004 Cost (in thousands): $131,245 (18.3% of FT 2004 Goal 5 Total Costs)


   Progress Toward Strategic Objective: Through 2004 EPA and its state and tribal partners have achieved considerable
   progress towards this objective. Combined 2004 results of EPA's pollution prevention programs exceeded elimination of 600
   million pounds of hazardous chemical use, 495  million gallons of water saved, and $936,000 in company cost savings. An addi-
   tional benefit of the Agency's pollution prevention work was the elimination of 77 metric tons of carbon dioxide. Through
   expanded outreach  efforts, EPA has made considerable progress in encouraging development of new safer and environmen-
   tally-friendly chemicals, products and processes through its Design for the Environment, Green Chemistry Challenge, and
   Green Supplier Network Programs that will deliver continuing environmental and human health benefits in coming years.

   Current data show that EPA has accomplished its 2008 goal of a voluntary 50% reduction in priority chemicals in  haz-
   ardous waste streams using the FY 1991 baseline.26 In response to this success, EPA has developed a new data set,
   performance measure and baseline to track reductions in priority chemicals that were introduced in the FY 2006 annual
   plan and budget cycle. The new performance  measure will capture information from an expanded list of chemicals (23 as
   opposed to 17) and will address both hazardous and non-hazardous waste  streams. Beginning in November 2005, EPA will
   report on FY 2003 results and provide trend data using the new baseline.
    APG 5.7  Reducing Persistent Bioaccumulative Toxics (PBTs)                      Planned        Actual
              in Hazardous Waste Streams
    FY 2004        Reduce waste minimization priority list chemicals in hazardous            3%           Data
                   waste streams an additional 3% {from  1991 levels} (for a cumulative                    avail 2006
                   total of 46% or 81 million pounds) by expanding the use of state
                   and industry partnerships and regional pilots. Goal  Met.
    FY 2003        Reduce waste minimization priority list chemicals in hazardous waste
                   streams by 43% to 86 million pounds by expanding the use of state
                   and industry partnerships and regional pilots. Goal Met,
  3%
              avail 2005

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                         SECTION  2.  PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 5.7  Reducing Persistent Bioaccumulative Toxics (PBTs)
          in Hazardous Waste Streams    (continued)
 FY 2003 and 2004 Results: FY 2001 data, the most recent
 data available, show a voluntary reduction of 53% from the
 adjusted FY 1991 baseline of approximately 147 million
 pounds. Thus the target established for FY 2004 has already
 been met. In response to these better-than-expected
 results, EPA created a new performance goal and measure
 which monitors an expanded list of chemicals in both
 hazardous and non-hazardous waste streams. EPA's work
 to reduce or eliminate waste in manufacturing promotes
 economic development that does not compromise future
 needs.
 A description of the quality of the data used to measure
 EPA's performance can be found in Appendix B, page 47
                           Planned
   Actual
       Trend for GPRA Priority Chemicals (1991 -2001)
o  60-
                                                                                 Year
APG 5.8  Improve Environmental Performance Through Pollution
          Prevention and Innovation
FY 2004         Prevent, reduce and recycle hazardous industrial/commercial chemi-
                cals and municipal solid wastes.

                Performance Measures:
                — Reduction of TRI non-recycled waste (normalized).

                — Alternative feed stocks, processes, or safer products identified
                  through Green Chemistry Challenge Award (cumulative).
                — Quantity of hazardous chemicals/solvents eliminated through the
                  Green Chemistry Challenge Awards Program
                — For eco-friendly detergents, track the number of laundry
                  detergent formulations developed.
                           Planned
   Actual
                         200 M Lbs
                       210 prod/proc
                         ISO M Lbs
                            36
Data avail
 FY 2006
   429

460 M Lbs
FY 2003         The quantity of TRI pollutants released, disposed of, treated or com-
                busted for energy recovery in 2003 (normalized for changes in industrial
                production) will be reduced by 200 million pounds, or 2%, from 2002.
                           -200 M
 Data avail
  FY 2005
FY 2002         The quantity of TRJ pollutants released, disposed of, treated or combusted
                for energy recovery in 2002 (normalized for changes in industnal production)
                will be reduced by 200 million pounds, or 2%, from 2001. Goal Not Met
                           -200 M
  +366 M
FY 2001          The quantity of TRI pollutants released, disposed of, treated or com-
                busted for energy recovery in 2001 (normalized for changes in
                industrial production) will be reduced by 200 million pounds, or
                6.3%, from 2000. Goal Met.
                           -200 M
  -464 M

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG 5.8 Improve Environmental Performance Through Pollution
               Prevention and Innovation   (continued)
                           Planned
Actual
     FY 2004 Result: EPA's efforts to prevent pollution through
     outreach, recognition and technical support resulted in the
     elimination of 387 million pounds of hazardous
     chemicals/solvents and increased demand for "green"
     products and purchases. The Agency's Green Chemistry
     Challenge program provides Presidential recognition to
     industries and academia for the development of cleaner and
     safer chemicals, products and processes. The Agency's recently
     expanded outreach to promote the Challenge competition
     helped EPA to greatly exceed other pollution prevention
     targets. In  FY 2004, EPA's efforts resulted in the saving of 440
     million gallons of water. An  additional benefit of the Agency's
     pollution prevention work was the elimination  of 77 metric
     tons of carbon dioxide. EPA also exceeded its target for
     developing 8  additional environmentally-friendly laundry
     detergent formulations bringing the cumulative total to 38.
     Introduction of these new products into commerce results in
     reduced use of water, energy and hazardous chemicals.
     A description of the quality of the data used to measure EPA's
     performance can be found  in Appendix B, pages 47-48.
     FY 2002 Result Available in FY 2004: EPA did  not meet its
     goal. TRI non-recycled waste increased  by approximately
     601 million pounds (6.6%) from 2001-2002, compared to the
     target of a 2% reduction. When these numbers are adjusted
     to account for changes in production, the result is only a 366
     million pound increase (5.7%). EPA's progress toward
     reduction of TRI pollutants  can vary from year to year, due to
     reporting system rules, industry estimation methods, and
     collection methods. The Agency is aware of the performance
     issue and has taken the necessary steps to enhance data
     quality and perform the analysis to address potential outliers
     within the TRI data.  However, even with the 2002 increase in
     TRI non-recycled wastes, the long-term trend (1992-2002)
     shows continued reduction  of 3  billion pounds of TRI wastes
     that would otherwise have  been generated.
       Green Chemistry Challenge Program, 2000-2004
       Number of Pounds of Hazardous Chemicals/Solvents Eliminated
       2000     2001      2002      2003     2004

                      Fiscal Year

    Toxics Release Inventory (TRI) Non-Recycled Waste Trends
o
&
                              Actual
                              Production-Adjusted (
     1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

                        Fiscal Year
    Data Soiree EPA's To>dcs Relfase Invento-fl Offfce of Environment Irfa-mation, March 7, 2O>3 TRI Data
        Green Chemistry Challenge Award, 2001-2004
                                                                         2001
                                                                                    2002        2003
                                                                                        Fiscal Year
                                                                                                          2004
     STRATEGIC OBJECTIVE: THROUGH 2008, ASSIST ALL FEDERALLY RECOGNIZED TRIBES IN ASSESSING THE
     CONDITION OF THEIR ENVIRONMENT, HELP IN  BUILDING THEIR CAPACITY TO IMPLEMENT ENVIRONMENTAL
     PROGRAMS WHERE NEEDED TO IMPROVE TRIBAL HEALTH AND ENVIRONMENTS, AND IMPLEMENT PROGRAMS
     IN INDIAN COUNTRY WHERE NEEDED TO ADDRESS ENVIRONMENTAL ISSUES. FY 2004 Cost (in thousands):
     $63,856 (8.9% of FT 2004 Goal  5 Total Costs)

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                          SECTION  2.  PERFORMANCE RESULTS—GOAL 5.  COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
Progress Toward Strategic Objective:  In FY 2004, EPA increased assistance to tribes for assessing environmental condi-
tions, building capacity to administer multi-media programs, and implementing environmental programs in Indian country.
EPA is on track to meet it FY 2008  objective. EPAs strategy for increasing tribal capacity involves working with tribes to
develop environmental expertise for tribes and providing information tribes need to meet EPA and tribal environmental
priorities. The Agency is also enhancing its ability to analyze conditions on Indian lands and evaluate the effects of EPA and
tribal actions on environmental conditions. In FY 2004, EPA increased the number of tribes who  are developing environ-
mental program capacity and the Agency increased its environmental presence in Indian County through its direct
implementation and the EPA/tribal environmental agreements.
  APG 5.9  Tribal Environmental  Baseline/Environmental Priority
 FY 2004        Percent of Tribes will have an environmental presence (e.g., one or
                 more persons to assist in building Tribal capacity to develop and
                 implement environmental programs. Goal Met.

                 Performance Measures:
                 —Tribes with delegated and non-delegated programs (cumulative).
                 —Tribes with EPA-reviewed monitoring and assessment occurring
                   (cumulative).
                 —Tribes with EPA-approved multimedia workplans (cumulative).
                                                                    Planned
              Actual
                                                                      5%
                                                                     20%

                                                                      18%
              28%
              44%
 FY 2003         In 2003 the American Indian Environmental Office will evaluate non-
                 Federal sources of environmental data pertaining to conditions in Indian
                 Country to enrich the Tribal Baseline Assessment Project. Goal Met,
                                                                      20
                20
 FY 2002         Baseline environmental information will be collected for 38% of tribes
                 (covering 50% of Indian Country). Goal Met,

                 Performance Measure:
                 Environmental assessments for tribes (cumulative).
                                                                   217 tribes
             331 tribes
 FY 2001
Same goal, different targets. Goal Met,
193
  FY 2004 Result: Under Federal environmental statutes, EPA has responsibility for assuring human health and environmental protection
  in Indian country. EPA has worked toward this goal by providing 86% of tribes with access to funds to hire environmental expertise. As
  of FY 2004, 490 of the 572 eligible federally recognized tribes and intertribal consortia have at least one person working in their
  communities to help build and administer environmental programs. In turn 28% of tribes have developed the capacity to implement
  tribal environmental programs through delegated and non-delegated  program authority EPA continues to work with tribes to develop
  multi-media workplans that prioritize their environmental protection  programs.
  A description of the quality of the data used to measure EPA's performance can be found in Appendix B, pages 48-49.
  STRATEGIC OBJECTIVE: THROUGH 2008, STRENGTHEN THE SCIENTIFIC EVIDENCE AND RESEARCH
  SUPPORTING ENVIRONMENTAL POLICIES AND DECISIONS ON COMPLIANCE, POLLUTION PREVENTION, AND
  ENVIRONMENTAL STEWARDSHIP. FY 2004 Cost (in thousands): $87,372 (12.2% of FY 2004 Goal 5 Total  Costs)
Progress Toward Strategic Objective:  In FY 2004 EPA continued its progress in conducting leading-edge research in
support of environmental policies and decisions on compliance, pollution prevention, and environmental stewardship. In
addition to verifying the performance of 35 innovative environmental technologies to assist states, technology purchasers,
and the public in making technology selection decisions, EPA also  provided tools and assessments for reducing environmental
impacts in both the private and public sectors. Specifically, EPAs Office of Research and Development issued a web-based
catalog of current state-of-the-art environmental impact models, released a multi-media training CD-rom  for federal,
regional, state, and local governments, and for assistance providers for use in developing organizational pollution prevention
strategies, and held a workshop on effective electronics product stewardship, reuse, recycling, and disposal. In total, these
efforts will assist industry, regulators, and the public in making  informed decisions that prevent and/or reduce pollution.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG5.10  New Technologies
    FY 2004        Verify 35 air, water, greenhouse gas, and monitoring technologies
                    (through the Environmental Technology Verification (ETV) pro-
                    gram) so that states, technology purchasers, and the public will have
                    highly credible data and performance analyses on which to make
                    technology selection decisions. Goal Met.
Planned
  35
Actual

    FY 2003         Develop 10 testing protocols and complete 40 technology verifica-
                    tions for a  cumulative ETV program total of 230 to aid industry,
                    states,  and  consumers in choosing effective technologies to protect
                    the public and environment from high risk pollutants. Goal Met,
   10
  40

    FY 2002        Formalize generic testing protocols for technology performance veri-
                    fication, and provide additional performance verifications of pollution
                    prevention, control and monitoring technologies in all environmental
                    media. Goal Met,

                    Performance Measure:
                    Complete 20 stakeholder approved and peer-reviewed test proto-
                    cols in all environmental technology categories under ETV, and
                    provide them to testing organizations world-wide.
  20
  20
    FY 2001         Develop, evaluate, and deliver technologies and approaches that
                    eliminate, minimize, or control high risk pollutants from multiple sec-
                    tors. Emphasis will be placed on preventive approaches for industries
                    and communities having difficulty meeting control/emission/effluent
                    standards. Goal Not Met.

                    Performance Measure:
                    Deliver a Report to Congress  on the status and effectiveness of the
                    ETV Program during its first 5 years.
     FY 2004 Result: Actual environmental risk reduction is directly related to performance and effectiveness of environmental technologies
     purchased and used. Private sector technology developers produce almost all the new technologies purchased in the U.S. and around
     the world. Purchasers and permitters of environmental technologies need an independent, objective, high quality source of
     performance information in order to make more informed decisions; and vendors with innovative, improved, faster and cheaper
     environmental technologies need a reliable source of independent evaluation to be able to penetrate the environmental technology
     market In FY 2004 the ETV program verified the performance of innovative environmental technology in the areas of drinking water
     treatment, water quality protection, air and water monitoring, air pollution control, pollution prevention, and greenhouse gas reduction.
     For example, EPA verified the performance of a technology to remove solids and nutrients from swine manure at a concentrated
     animal feeding operation (CAFO). If these technologies are employed at CAFO facilities, solids could be removed from wastewater
     entering a lagoon storage pond and,  in  turn, reduce solids and nutrient loading to receiving streams and/or groundwater27. EPA also
     verified diesel retrofit technologies which improve the environmental performance of diesel engines by reducing emission of particulate
     matter, nitrogen oxides, hydrocarbons,  and carbon monoxide28. These highly credible data and performance analyses will assist states,
     technology purchasers, and the public in making technology selection decisions.29
     A description of the quality of the data used to measure EPA's performance can  be found  in Appendix B, page 49.
         ASSESSMENT OF IMPACTS OF FY 2004 PERFORMANCE ON FY 2005 ANNUAL PLAN:
            THERE ARE NO  CHANGES TO FY 2005 APGs BASED  ON RESULTS OF FY 2004  PERFORMANCE.

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                             SECTION  2.  PERFORMANCE  RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
NOTES
1    More information on compliance assistance programs is available at http://www.epa.gov/compliance/assistance/index.html
2    More information on compliance incentives programs and the self-audit policy is available at http://www.epa.gov/compliance/
     incentives/index.html
3    More information on compliance monitoring and civil enforcement is available at http://www.epa.gov/compliance
4    More information on supplemental environmental projects is available at http://www.epa.gov/compliance/civil/programs/seps/index.html
5    For criminal enforcement actions, pounds of pollutants are calculated through the remediation of damages and/or compelling
     proper disposal, or from otherwise stopping pollutants from illegally entering the environment. More information on the criminal
     enforcement program is available at http://www.epa.gov/compliance/criminal/index.html. Appendix B contains information on
     data quality of the CRIMDOC data system.
6    U.S. Environmental Protection Agency, Office of Enforcement and Compliance Assurance, Case Conclusion Data Sheets, available at
     http://www.epa.gov/compliance/resources/publications/planning/caseconc.pdf. More information on settled cases and the environmental
     benefits achieved, including pounds of pollutants reduced, is available at http://www.epa.gov/compliance/resources/cases/civil
7    This information was collected through exit surveys completed by users of the National Compliance Assistance Centers. U.S.
     Environmental Protection Agency, Office of Enforcement and Compliance Assurance. "Compliance Assistance Results."
     Available at http://www.assistancecenters.net/results.
8    U.S. Environmental Protection Agency. April 2004. Performance Track Progress Report: Top Performers Solid Results.
     EPA-100-R-04-004. Washington, DC. Available at http://www.epa.gov/performancetrack.
9    Available at http://www.epa.gov/sectors/performance.html
10   More information on health and environmental impacts of particulate matter is available at http://www.epa.gov/air/urbanair/
     pm/hlthl.html.
11   More information on enforcement cases and supplemental environmental projects is available at http://www.epa.gov/regionl/
     enforcementandassistance/index.html.
12   U.S. Environmental Protection Agency, Office of Pollution Prevention and Toxics. "Green Chemistry Challenge." Internal
     database. Continually updated.
13   U.S. Environmental Protection Agency. Spring 2004.  Internal document; no title. Prepared by CONNSTEP for Green Supplier Network.
14   U.S. Environmental Protection Agency. 2002 Performance Track Annual Report. Available at http://www.epa.gov/performancetrack.
15   Electronic communication from Noramtech Corporation to EPA Design for Environment staff, November 20, 2002.
16   See http://www.epa.gov/etop for more information.
17   "Pounds of pollutants reduced, treated, or eliminated" is an EPA measure of the quantity of pollutants that will no longer be
     released to the environment as a result of a noncomplying facility returning to its allowable limits through the successful
     completion of an enforcement settlement. In civil enforcement actions, facilities may further reduce pollutants by carrying out
     voluntary Supplemental Environmental Projects, which are actions taken to go beyond legal requirements.  Online compliance
     information is available to the public via EPA's Enforcement and Compliance History Online (ECHO) Web Site:
     http://www.epa.gov/echo,  EPA's Office of Enforcement and Compliance Assurance. Washington, DC.
18   "Environmental management practices" refers to a specific set of activities EPA tracks to evaluate changes brought about through
     assistance, incentives, and concluded enforcement actions. Implementing or improving environmental management practices- for
     example, by changing industrial processes; discharges; or testing, auditing, and reporting- may assist a regulated facility in remaining in
     compliance with environmental requirements.  Further information on environmental management practices is available in EPA's Case
     Conclusion Data Sheet Training Booklet, available online at http://www.epa.gov/compliance/resources/publications/planning/caseconc.pdf.
19   Compliance Clearinghouse is available at http://cfpub.epa.gov/clearinghouse.
20   Compliance Assistance Centers are available at http://www.assistancecenters.net.
21   More information on compliance incentives programs available at http://www.epa.gov/compliance/incentives/index.html.
22   More information on compliance monitoring and civil enforcement available at http://www.epa.gov/compliance.
23   More information on the  criminal enforcement program is available at http://www.epa.gov/compliance/criminal/index.html.
24   More information on settled cases and the environmental benefits achieved, including pounds of pollutants reduced, available at
     http://cfpub.epa.gov/compliance/resources/cases/civil.
25   More information on EMS available at http://www.epa.gov/compliance/incentives/ems/index.html.
26   A report on voluntary priority chemical reductions is found at http://www.epa.gov/epaoswer/hazwaste/minimize/trends.htm. For
     general information on the waste minimization program, go to http://www.epa.gov/epaoswer/hazwaste/minimize/index.htm.
2 7   Http://www.epa.gov/etv/pdfs/vrvs/09_vr_max 1016.pdf
28   Http://www.epa.gov/etv/pdfs/vrvs/05_vr_lubrizol.pdf
     Http://www.epa.gov/etv/pdfs/vrvs/05_vr_CDT.pdf
29   See http://www.epa.gov/etv for more information.

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    CHAPTER 6:    Supporting Achievement  of
                         Environmental  Results
       EPA's ongoing efforts to strengthen its management
    practices are integral to accomplishing its environmental
    and human health goals. The Agency continues to be
    recognized across government for linking resources
    to performance and using financial and performance
    information in day-to-day decision making. Making the
    connection between resources and results, for example,
    is a critical component of the Agency's effort to
    EPA received the 2003 President's
    Quality Award for its accomplishments
    in financial performance
    improve the ways it awards, administers, and oversees
    assistance agreements. Notably, EPA has worked to
    strengthen information security and to make real-time,
    high-quality environmental data more accessible to its
    federal, state, and tribal partners and to the American
    public. And Agency-wide human capital initiatives
    have strengthened the link between workforce plan-
    ning, employee performance standards, and staff
    development and EPA's goals and mission. Through
    FY 2004, EPA continued its progress in managing for
    results and achieving reforms outlined in the President's
    Management Agenda (PMA).1
Strengthening Results-Based
Management

USING  FINANCIAL AND PERFORMANCE DATA
IN DAY-TO-DAY PROGRAM MANAGEMENT AND
DECISION MAKING
   In recognition of the Agency's efforts to use cost and
performance information in making day-to-day decisions
and its success in earning an unqualified (clean) audit
opinion on its financial statements, EPA received the 2003
President's Quality Award for significant accomplishments
in financial performance.2 Since June 2003, EPA has main-
tained a green status score for "Improved Financial
Performance"3 under the PMA. In addition, since June
2002 EPA has earned green progress scores for "Budget and
Performance Integration" for all but one quarter.4 During
FY 2004, EPA sustained its focus on managing for results
and more closely linking cost and performance informa-
tion. The Agency's FY 2004 accomplishments include:
•  a comprehensive Agency-wide strategy for improving
   performance measurement through Measure
   Development and Implementation Plans, consideration
   of environmental indicators, and using other tools;
•  more outcome-oriented annual performance goals and
   measures and new efficiency measures;
•  a new financial structure providing greater program
   and  project detail in the Agency's accounting system
122

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            SECTION 2. PERFORMANCE RESULTS—CHAPTER 6. SUPPORTING ACHIEVEMENT OF ENVIORONMENTAL RESULTS
    for tracking resources across the Agency's
    five strategic goals; and

•   launching the Office of the Chief
    Financial Officer's Reporting and Business
    Intelligence Tool, a reporting tool that
    makes financial and operational informa-
    tion readily accessible to Agency managers.

A COMMON  FRAMEWORK

    In FY 2004, EPA regions, working with
states and tribes, developed the first set of
Regional Plans,v which link  regional envi-
ronmental priorities to the Agency's five
strategic goals. In addition, the Agency is
continuing to develop and implement a new
Annual Commitment  System that fosters dis-
cussion and agreement between regional and
national program offices on FY 2005 regional
performance commitments. The new system
facilitates regional, state, and tribal negotia-
tions; makes the commitment process more
             open, inclusive, and accessible to all parties;
             and reduces transaction costs.6

             LINKING  RESOURCES WITH RESULTS

                 Assistance agreements allow EPA's
             national program managers to work with
             grant recipients to deliver environmental
             protection to the public. To ensure that
             resources are being used efficiently and effec-
             tively, EPA is committed to improving its
             oversight of the award and administration of
             these agreements. In April 2003, EPA's Office
             of Administration and Resources
             Management (OARM) issued the  Agency's
             first long-term Grants Management Plan7
             outlining an aggressive approach to ensure
             that commitments are fully implemented and
             that employees are held accountable for
             effective grants management. The plan
             includes specific performance targets to meas-
             ure progress (see sidebar). In FY 2004, EPA
                     Performance Targets and Current Results
                       Under EPA's Grants Management Plan
    Performance Measure
  Percentage of grants managed by
  certified project officers

  Percentage of new grants subject
  to the competition order that
  are competed

  Percentage of new grants to
  non-profit recipients subject to
  the competition order that
  are competed

  * Percentage of active recipients
  who receive advanced monitoring
 ^^^^^•^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H
  Percentage of regional grant
  packages submitted electronically

  Percentage of eligible grants
  closed out

  ** Percentage of grant workplans
  that include a discussion of
  environmental results
          Target
                                 Progress in FY 2004
100%
                              98.1% in 2002
                              82.6% in 2003
99% in 2002
90% in 2003
70%
* This performance measure is tracked on a calendar year basis.  EPA is on track to meet its 2004 target.
** The Agency expects the percentage of workplans that include environmental results to substantially increase
in 2005 as the result of the issuance of the Environmental Results Order, which takes effect in January 2005.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               senior managers approved the Agency's first
               long-term Grants Management Training
               Plan.8 Linked to EPA's Human Capital
               Strategy,9 the training plan is designed to
               enhance the skills of all EPA personnel
               involved in grants management and to
               improve grant recipients' understanding of
               federal grant requirements. During FY 2004,
               for example, the Agency conducted several
               training sessions to assist tribes and nonprofit
               organizations in understanding and fulfilling
               their grants management responsibilities.10

                  EPA continues to identify potential
               vulnerabilities and address Agency-level
               challenges associated with grants manage-
               ment. In January 2004, the Agency issued an
               interim policy11 on environmental results to
               improve EPA's ability to align grant activities
               with the goals and objectives outlined in the
               Agency's Strategic Plan.12 Effective January 1,
               2005, EPA will replace  the interim policy
               with an EPA Order ensuring that EPA
               grants are results-oriented and aligned with
               the Agency's strategic goals. In addition,
               beginning in 2005, EPA intends to promote
               greater competition for grant awards by
               lowering the competition threshold and
               improving the quality of its competition
               review; enhancing procedures for advanced
               monitoring reviews (by identifying systemic
               issues earlier, adopting a statistical approach
to post-award monitoring, and other means);
and issuing a policy on pre-award review of
nonprofit applicants.


Improving Access to

Environmental Information

SECURE, TIMELY INFORMATION FOR
ENVIRONMENTAL DECISION  MAKING

    EPA's work in electronic government
(e-Gov) and information security has
improved federal, state, and public access to
real-time, quality environmental information.
EPA is enhancing its analytical capabilities
by developing and deploying the Integrated
Portal,13 the Environmental Information
Exchange Network14 (Exchange Network),
and the Electronic Content Management
System15 and is implementing a standardized
Agency infrastructure. These activities pro-
vide a foundation for the secure information
sharing and exchange needed to  promote
data analysis and informed environmental
decision making.

    In FY 2004, targeted efforts to increase
public participation, strengthen information
security, and share critical environmental
information helped EPA achieve a "green"
status score for the first time on the PMA's
e-Gov Initiatives scorecard.16 In FY 2004, the
Exchange Network, a unified network inte-
grating air, water, and waste systems,
expanded its state and tribal links, adding
nodes and data systems necessary for effective
information sharing. The Exchange Network
now has over 30,000 users; 13 states have
active portals into the system, and more than
10 national systems are linked for informa-
tion sharing.17 Several states are using the
Exchange Network to allow industries to sub-
mit their discharge monitoring reports
electronically, publish beach closures and
advisory information on the  Internet, and
portray regional water quality.18

    To ensure consistency between EPA,
state, and tribal data, EPA developed web

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            SECTION 2.  PERFORMANCE RESULTS—CHAPTER 6. SUPPORTING ACHIEVEMENT OF ENVIORONMENTAL RESULTS
services for its Substance Registry System and
Facility Registry System, providing state and
tribal access to the most current information
on chemicals and facilities. In addition,
EnviroFlash,19 a new service offered by the
Central Data Exchange,20 allows the public
and EPA's government partners access to
environmental news, updates, and real-time
information by sending environmental
updates on  specific programs to citizens and
providing alerts on air, land, and water issues.
During FY 2004 EPA continued to imple-
ment its comprehensive Quality System to
ensure that quality data is used and dissemi-
nated. In addition, by correcting potential
vulnerabilities in laboratory data practices,
the Agency strengthened its ability to gener-
ate credible data for environmental decision
making. EPA continued to implement the
Data Quality Act, reviewing informational
products in response to public notifications
and making corrections as needed.21


Implementing  Human
Capital  Strategies  to
Achieve  Results

   EPA's achievement of its environmental
and human health goals depends on its ability
to develop and sustain a highly skilled, diverse,
results-oriented workforce with the right mix
of technical expertise, experience, and leader-
ship capabilities. In FY 2004, EPA revised its
human capital strategy to reflect lessons
learned in implementing its original FY 2000
strategy and to incorporate PMA human capi-
tal requirements.22 In FY 2004, the Agency
implemented many of the initiatives presented
in Investing in  Our People II, EPA's Strategy for
Human Capital: 2004 and Beyond: linking all
employee performance standards to EPA's five
strategic goals; developing a comprehensive
strategic workforce strategy and deployment
plan; providing restructuring options to all
EPA senior managers; and monitoring and
reporting diversity statistics so the Agency can
address under-representation. EPA also devel-
oped an accountability plan to track the
Agency's progress in implementing its human
capital strategy and to assess the strategy's
effectiveness and impact.23

    In FY 2004, EPA implemented a
National Strategic Workforce Planning
System24 that  allows the Agency to identify
the skills and competencies of the current
workforce, project future workforce require-
ments, and identify and fill any gaps. A
consulting team of human resource profes-
sionals schooled in workforce planning
assessment and analysis will assist EPA pro-
gram offices in shaping their workforce
planning efforts.25 EPA also developed a plan
for moving all GS (general schedule)
employees to  a multilevel performance
appraisal system by July 2005.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
              Assessing Management
              and  Program  Operations

                  EPA's Office of the Inspector General
              (OIG) contributes to improved environmen-
              tal quality and human health by assessing the
              effectiveness of EPA's program management
              and results, developing recommendations for
              improvement, and ensuring that Agency
              resources are used as intended. The OIG's
               activities help promote operational integrity
               and public confidence in the Agency. In
               addition to conducting audits, evaluations,
               and investigations that examine systemic
               issues and provide recommendations for
               strengthening the Agency's efforts, the OIG
               provides hotline services and reviews public
               complaints about EPA programs and activi-
               ties. The following examples are illustrative
               of the OIG's work to help EPA more effi-
               ciently and effectively achieve
               environmental results:26

               •   As a result of OIG investigations, fraudu-
                  lent testing of discharge monitoring
                  samples by one company's laboratories
                  has been  halted, and a university has
                  instituted a robust quality assurance pro-
                  gram and is now providing high-quality
                  data to the public.
•  An OIG report described the serious
   environmental effects of hardrock
   mining on ground and surface waters,
   soils, and air and the billions in poten-
   tial cleanup costs (potential costs to
   EPA are more than 12 times the
   Agency's current Superfund budget).
   As a result, EPA proceeded to imple-
   ment OIG recommendations for
   improving decision making at hardrock
   mining sites, including identifying inno-
   vative or new remediation technologies
   for hardrock mining sites and assessing
   the need for technical or mining man-
   agement guidance.

•  In response to OIG recommendations,
   EPA arranged for a peer review of an
   alternative  asbestos demolition method
   that resulted in significant changes to
   ensure a more valid test.

•  The OIG evaluated an October 2003
   EPA rule regarding Clean Air Act New
   Source Review (NSR) applications to
   existing facilities that contribute to air
   pollution. The OIG raised significant
   concerns about the rule's impact on
   EPA's enforcement policies and proce-
   dures and recommended that NSR
   enforcement against coal-fired electric
   utilities continue in the  same manner
   and to the same extent as before the
   2003 rule was issued.

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            SECTION 2. PERFORMANCE RESULTS—CHAPTER 6. SUPPORTING ACHIEVEMENT OF ENVIORONMENTAL RESULTS
   EPA's  SUPPORTING
   MANAGEMENT GOALS (SMG)
                                                          Annual Performance Goals Met:
                                                          Annual Performance Goals Not Met:
                                                          Data Available After 11/5/04:
APG SMG-1   Information Exchange Network
FY 2004        Improve the quality, comparability, and availability of environmental
               data for sound environmental decision-making through the Central
               Data Exchange (CDX). Goal Met.

               Performance Measures:
               —Number of private sector and local government entities, such as
                 water authorities, using CDX to exchange environmental data
                 with EPA.
               —CDX offers online data exchange for all major national systems
                 by the end of FY 2004.
               —Number of states using CDX as the means by which they rou-
                 tinely exchange environmental data with two or more EPA media
                 programs or regions.
                                                                                 Planned
Actual
                                                                                 2,000

                                                                                   13

                                                                                  46
7,050
FY 2003        Decision makers have access to the environmental data that EPA col-
               lects and manages to make sound environmental decisions while
               minimizing the reporting burden on data providers. Goal  Not Met.

               Performance Measures:
               —States using the CDX to send data to EPA.
               —In preparation for increasing the exchange of information
                 through CDX,  implement 4 data standards  in  13 major systems
                 and develop 4  additional  standards  in 2003.
                                                                                   46
                                                                                                  7
FY 2002        The CDX, a key component of the environmental information
               exchange network, will become fully operational and 15 states will be
               using it to send data to EPA thereby improving data consistency with
               participating states. Goal Met.
                                                                                   15

                                                               Growth in Registered Users of EPA's Central Data Exchange
FY 2004 Result: Significant progress has been made in developing the
Exchange Network over the past 3 years, including offering online data
exchange through all 13 of EPA's major national databases. The
numbers of Exchange Network nodes and data flows have increased
making it possible for EPA and states to exchange and integrate large
volumes of environmental data to enhance environmental decision-
making. A key component to the Network is EPA's Central Data
Exchange (CDX) and its ability to facilitate data exchange and
information sharing for all environmental media. As a result of the
deployment of electronic features that improve access (e.g., the
updated Electronic Notice of Intent to Release and the Institutional
Controls Tracking System) and increased TRI reporting through the
CDX, EPA greatly exceeded its FY 2004 target for users of the CDX and the Exchange Network. The adjacent graph illustrates the
increased total number of users  (includes individuals from the private sector, local governments, and states) and the estimated growth
through FYs 2005 and 2006.
A description of the  quality of the data used to measure EPA's performance can be found in Appendix B page 49.
                                                                               Fiscal Year

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG SMG-2   Data Quality and Accessibility
    FY 2004        EPA increasingly uses environmental indicators to inform the public
                    and manage for results. Goal Met.

                    Performance Measure:
                    Establish the baseline for the suite of indicators that are used by
                    EPA's programs and partners in the Agency's strategic planning and
                    performance measurement process.
                                                                     Planned
                                                  Actual
                                                                     I report
                                                 I report
    FY 2003         The public will have access to a wide range of federal, state, and
                    local environmental conditions and features in an area of their choice.
                    Goal Met.

                    Performance Measure:
                    Window-to-My-Environment nationally deployed and provides
                    citizens across the  country with Federal, state, and local environmen-
                    tal information specific to an area of their choice.
                                                                      Nationally
                                                                      Deployed
                                                 Nationally
                                                 Deployed
    FY 2002         100% of the publicly available facility data from EPA's national systems
                    accessible on the EPA Website will be part of the Integrated  Error
                    Correction Process, reducing data error. Goal Met,
                                                                       100%
                                                   100%
     FY 2004 Result: EPA released the first Draft Report on the Environment in June 2003. (The Report and additional information on EPA's
     Indicators Initiative are available at: http://www.epa.gov/indicators.) Through FY 2004, EPA maintained a national dialogue on the draft
     report with its partners and stakeholders on how to improve the Agency's ability to assess the nation's environmental quality and
     human health and how that information can be used to measure environmental results. EPA used remaining key data gaps and critical
     information needs identified to develop additional environmental indicators, which build EPA's analytical capacity and support sound
     environmental decision making. In FY 2004, EPA also developed a management report on options for enhancing access to the next
     Report on the Environment by making
     it easily available electronically These
     FY 2004 efforts will guide the
     development of the next Report,
     expected to be released in FY 2006.27
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B pages 49-50.
                     FY 2001
FY 2003  \   FY 2004
FY 2005
Release nroto
FY 2006
     APG SMG-3   Information Security
    FY 2004        OMB reports that all EPA information systems meet/exceed estab-
                    lished standards for security. Goal Met.

                    Performance Measures:
                    —Percent compliance with criteria used by OMB to assess Agency
                       security programs  reported annually to OMB under the Federal
                       Information Security Management Act.
                    —Percent of intrusion detection monitoring sensors installed and
                       operational.
                                                                     Planned
                                                                      75%
                                                                      75%
                                                  Actual
                                                  91%
                                                  100%
    FY 2003
Same Goal. Goal Met,
                                   75%
                                   75%
                      100%
                      100%

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             SECTION 2. PERFORMANCE RESULTS—CHAPTER 6. SUPPORTING ACHIEVEMENT OF ENVIORONMENTAL RESULTS
APG SMG-3   Information Security  (continued)
FY 2002         Complete risk assessments on the Agency's critical infrastructure sys-
                tems, critical financial systems, and mission critical environmental
                systems. Goal Met.

                Performance Measures:
                —Critical infrastructure systems risk assessment findings will  be for-
                  mally documented and transmitted to systems owners and
                  managers in a formal Risk Assessment document.
                —Critical financial systems risk assessment findings will be formally
                  documented and transmitted to systems owners and managers in
                  a formal Risk Assessment document.
                —Mission critical  environmental  systems risk assessment findings will
                  be formally documented and  transmitted to system owners and
                  managers in a formal Risk Assessment document.
Planned
     Actual
   12
   13
       12
 FY 2004 Result: EPA has made significant progress over the last 4 years in improving its information security program. For example,
 EPA succeeded for a second year in achieving 100% intrusion detection, and the Agency's compliance with OMB's security program
 criteria increased from 75% in FY 2003 to 91 % in FY 2004. As part of this process, EPA implemented the Automated Security Self-
 Evaluation and Remediation Tracking (ASSERT) system to help manage its information security program. The ASSERT system provides a
 means for assessing security measures of EPA systems and generates the Federal Information Security Management Act (FISMA) report
 which is sent to  OMB and forms the basis for Congressional FISMA scores.28
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B page 50.
APG SMG-4  Agency-Wide IT Infrastructure                                       Planned        Actual
FY 2004        Manage Agency-wide information technology assets consistent with     I  report        I  report
                the Agency's multi-year strategic information  resource manage-
                ment plan (Enterprise Architecture) reflecting current Agency
                mission priorities and resources. Goal Met.
 FY 2004 Result: An essential component of EPA's multi-year strategic information resource management plan is the implementation of
 Agency-wide information technology (IT) enterprise solutions. EPA's IT infrastructure standardization and modernization efforts are
 integral components of the Agency's IT enterprise solutions. In FY 2004, EPA deployed Microsoft Office Suite as the first step in
 implementing its multi-phased strategy Once fully implemented, the overall strategy will produce long-term cost savings; increased
 security; more rapid agency-wide deployment of e-Gov solutions and compliance with Federal Enterprise Architecture directions; and
 the ability to maintain cost-effective, stable information services over time as technology changes and new mission needs arise. These
 accomplishments are reported in the Technology Infrastructure business case of EPA's FY 2006 Annual Plan and Budget, and will be
 available after the release of the FY 2006 President's Budget request
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B page 52.
APG SMG-5   Energy Consumption and Reduction
FY 2004        By 2004, EPA will achieve a 16% energy consumption reduction
                from 1990 in its 21 laboratories which is in line to meet the 2005
                requirement of a 20% reduction from the 1990 base (this includes
                Green Power purchases).
Planned
  16%
     Actual
Data avail 2005

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
     APG SMG-5  Energy Consumption and Reduction   (continued)
Planned
Actual
     FY 2004 Result: The Agency is forecasting a 171 % savings in overall energy consumption in FY 2004 from the FY 1990 baseline. This
     estimate is based on actual data from the first two quarters of FY 2004 plus a forecasting process that looks at all energy projects due
     for completion during FY 2004 and the aggregate percent reductions that should be achieved from completing these projects.
     A description of the quality of the data used to measure EPA's performance can be found in Appendix B page 50.
    APG SMG-6  GPRA Implementation
    FY 2004         Strengthen EPA's management services in support of the Agency's
                    mission while addressing the challenges included in the President's
                    Management Agenda. Goal Met.

                    Performance Measures:

                    —Offices using workforce planning model which identifies skills and
                      competencies needed by the Agency for strategic recruitment,
                      retention, and development.
                    —Percentage of total eligible service contracting dollars obligated
                      as performance-based in FY 2004.
                    —The number of financial and resource performance metrics
                      where the Agency has met pre-established Agency or
                      Government-wide performance goals. The inventory of financial
                      performance metrics are found in the Agency's Chief Financial
                      Officer Financial Performance Measures and the Government-
                      wide Performance Metrics. The inventory of resource
                      performance metrics are found in the Senior Resource Official
                      Performance Measures.
                    —Agency audited financial statements are timely, and receive an
                      unqualified opinion.
Planned
Actual
  10


 20%

  14
 21%
    FY 2003         Strengthen EPA's management services in support of the Agency's
                    mission while addressing the challenges included in the President's
                    Management Agenda. Goal Not Met.

                    Performance Measures:
                    —Offices using workforce planning model which identifies skills and
                      competencies needed by the Agency for strategic recruitment,
                      retention, and development.
                    —Percentage of total eligible service contracting dollars  obligated as
                      performance-based in FY 2003.
                    —Agency audited financial statements are timely, and receive an
                      unqualified opinion.
  30

   I
   19
    FY 2002         EPA strengthens goal-based decision making by developing and issuing
                    timely planning planning and resource  management products that
                    meet customer needs. Goal Met.

                    Performance Measures:
                    —Agency's audited financial statements and Annual Report are
                      submitted on time.
                    —Agency's audited financial statements receive an unqualified opin-
                      ion and provide information that is  useful and relevant to the
                      Agency and external parties.
3/01/02
2/27/02

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              SECTION  2.  PERFORMANCE RESULTS—CHAPTER 6. SUPPORTING ACHIEVEMENT OF ENVIORONMENTAL RESULTS
APG  SMG-6   GPRA Implementation  (continued)
FY 2001
Same goal. Goal Met.
                                                                           Planned
                                                                 3/01/01
                                                                (timelines)
                                                                I (opinion)
                                                                                   Actual
  3/01/01
(timelines)
I  (opinion)
 FY 2004 Result: In February 2004, the Agency completed the 2003/2004 National Strategic Workforce Planning System pilot which
 tested the functional elements of the Agency's workforce planning process. As a result of lessons learned during the pilot, the Agency
 focused the remainder of its FY 2004  workforce planning efforts on developing and implementing the Agency's strategic workforce
 requirements and the capacity to meet those requirements. Based on Agency strategic goals and ongoing work, EPA was able to
 identify priority occupations and mission critical competencies needed to accomplish its goals through 2008. In addition, the Agency
 identified anticipated gaps in these priority occupations and is using these data to establish recruitment, retention, and development
 strategies (including succession planning).
 Twenty-one percent of the Agency's total eligible service contracting dollars were performance-based in FY 2004, exceeding the annual
 target. EPA's success with performance-based contracting includes lower contractor performance risks, use of more efficient and
 innovative methods by contractors, results-oriented approaches, and more meaningful contractor surveillance.
 EPA met its target of 14 financial and performance metrics. Examples of financial and resource performance metrics used by the
 Agency to measure financial management excellence include SF 224 reconciliation, electronic funds transfer payroll payments, obligation
 monitoring, percent of non-credit card invoices paid on time, and purchase card delinquency rates.
 In addition, EPA's FY 2004 financial statements received a clean audit opinion from the Office of the Inspector General (OIG).
 A description of the quality of the  data used to measure EPA's performance can be found in Appendix B pages 50-51.
APG  SMG-7   Contributing to Improved Agency Business Practices
                 and Accountability
FY 2004         Improve Agency business and operations by identifying 240 recom-
                 mendations, risks, and best practices; contributing to potential
                 savings and recoveries equal to ISO percent of the annual investment
                 in the OIG;  100 actions for greater efficiency and effectiveness, and
                 80 criminal, civil, or administrative actions reducing the risk of loss
                 or integrity. Goal Not Met.
                                                                           Planned
                                                                             240

                                                                             150%

                                                                              100

                                                                              80
                                                                                   Actual
                                                                                    390

                                                                                    48%

                                                                                     133
 FY 2004 Result: The OIG has exceeded its annual targets within this goal, except for realizing 150% potential dollar return on its budget.
 However, the cumulative return on the OIG budget from FY 2001 through FY 2004 far exceeded the cumulative target for the four
 years as illustrated in the adjacent chart. The individual target missed in FY 2004 is due to the unpredictability of fines, settlements, and
 questioned costs for any specific year. Longer term results for this measure are a more valid indicator of performance.
 A description of the quality of the data used to measure EPA's performance can be found in Appendix B page 52.
                EPA's OIG Helps Improve Agency Management,
                   Accountability, and Program Operations
                                                                 EPA's OIG's Questioned Costs,
                                                               Efficiencies, Savings, Fines, Recoveries
          Planned Actual
           Criminal, Civil,
           Administrative
              Actions
                             Planned Actual
 Improvements in
Business Processes,
and Resolve Public
   Concerns
                                               Planned Actual
                           Recommendations, Best
                           Practices, Management
                            and FMFIA Challenges
                                Identified
                                                                                   Planned
                                                                                                      Actual
          Data obtained from OIG information systems, IGOR and PMRS.

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S.  ENVIRONMENTAL PROTECTION AGENCY
     APG SMG-7  Contributing to Improved Agency Business Practices
                    and Accountability   (continued)
                Planned
Actual
                    Audit and Advisory Services Resulting
                         in Environmental Actions
  Environmental Recommendations, Best
Practices, and Risks Identified through Agency
      Audit and Advisory Services
                                                                          2001
                                                                                                         2004
                2001
                           2002        2003       2004
                              Fiscal Year
                                                                                       Fiscal Year
APG SMG-8 Contributing to Improved Health and Environment
FY 2004
Improve environmental quality and human health by identifying 80
recommendations, risks, or best practices; and contributing to the
reduction or elimination of 18 environmental risks, and 42 actions
influencing positive environmental or health impacts. Goal Met.
FY 2001
Additional Performance Measure:
Overall customer and stakeholder satisfaction with
audit products
Planned Actual
80 II6
IO AC
lo ^D
42 49
77% 80%



and services (timeliness, relevancy, usefulness, and responsiveness).
FY 2004 Result: The OIG
FY 2005 to
exceeded all of its FY 2004 targets for this goal. The OIG plans to conduct additional follow-up work in
more completely capture
results occurring in subsequent years for which there may be a significant time-lag. The adjacent
chart illustrates OIG's long-term results against cumulative targets for FY 2001 through FY 2004.
A description of the quality of the data used to measure EPA's
performance can be found in Appendix B paj
EPA's Audit and Advisory Services Contributing
to the Reduction or Elimination of Environmental Risks
~S 50 -i
+J
rt

O
-§ 30-

"• ?n

a:
'o 10-
e52.

EPA's OIG Contributes to Improved
Human Health and Environmental Quality










• 42 H49
160 48

150 -I*
at







• FY 2004
FY 2003
FY 2002
• FY 2001









Im „•





• „
• %l
.<<.:; -I
fanned Actual Planned Actua
Planned Actual










Environmental Environmental or Environmental
Improvements. Actions. Infrastructure Risks Recommendations. Best
Changes Reduced or Eliminated Practices. Risks Ident fied
Data obtained from OIG information syste
ms, IGOR and PMRS,


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               SECTION  2. PERFORMANCE RESULTS—CHAPTER 6.  SUPPORTING ACHIEVEMENT OF  ENVIRONMENTAL RESULTS
     ASSESSMENT OF IMPACTS OF FY 2004 PERFORMANCE ON FY 2005 ANNUAL PLAN:
       THERE ARE  NO CHANGES TO  FY 2005 APGs BASED ON THE RESULTS OF FY 2004 PERFORMANCE.
NOTES

1   Executive Office of the President, Office of Management and Budget. 2002. The President's Management Agenda: FY 2002.
    Washington, DC: U.S. Government Printing Office. Available at http://www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf.
2   Office of Personnel Management. December 17, 2003. Memorandum for Heads of Executive Departments and Agencies: The 2003
    President's Quality Award Winners. Available at http://www.opm.gov/hrmc/2003/msg'087a.asp.
3   The President's Management Agenda Scorecard. Available at http://results.gov/agenda/scorecard.html.
4   The President's Management Agenda Scorecard. Available at http://results.gov/agenda/scorecard.html.
5   U.S. Environmental Protection Agency. 2004 Regional Plans. Available at http://epa.gov/ocfo/regionplans/regionalplans2.htm.
6   Refer to Sustained Progress in Addressing Management Issues, available at http://www.epa.gov/ocfo/finstatement/2004ar/
    2004ar.htm.
7   U.S. Environmental Protection Agency. April 2003. Grants Management Plan. EPA-216-R-03-001. Washington, DC. Available
    at http://epa.gov/ogd/EO/finalreport.pdf.
8   U.S. Environmental Protection Agency. September 2004. Grants Management Training Plan. EPA-216-R-04-001. Washington, DC.

9   U.S. Environmental Protection Agency. February 2004. In-vesting in Our People 11, EPAs Strategy for Human Capital: 2004 and
    Beyond. EPA-200-R-04-001. Washington, DC. Available at http://www.epa.gov/oarm/strategy.pdf.
10  Refer to Sustained Progress in Addressing Management Issues, available at http://www.epa.gov/ocfo/finstatement/2004ar/
    2004ar.htm.
11  Interim Policy on Environmental Results Under DPA Assistance Agreements. GPI-04-02. Washington, DC.

12   U.S. Environmental Protection Agency. September 2003. Direction for the Future. EPA-190-R-03-003, Washington, DC.
    Available at http://www.epa.gov/ocfo/plan/2003sp.pdf.
13  U.S. Environmental Protection Agency, Office of Environmental Information. October 2004. Celebrating Five Years of Success,
    Accelerating Our Progress in the Future. EPA-245-R-04-003. Washington, DC. Available at http://www.epa.gov/OEI/pdf/
    oei_5th_anniversaryreport_final.pdf.
14  Environmental Information Exchange Network. Available at http://www.exchangenetwork.net.
15  U.S. Environmental Protection Agency, Office of Environmental Information. October 2004. Celebrating Five Years of Success,
    Accelerating Our Progress in the Future. EPA-245-R-04-003. Washington, DC. Available at http://www.epa.gov/OEI/pdf/
    oei_5th_anniversaryreport_final.pdf.
16  The President's Management Agenda Scorecard. Available at http://results.gov/agenda/scorecard.html. Also refer to Sustained
    Progress in Addressing Management Issues, available at http://www.epa.gov/ocfo/finstatement/2004ar/2004ar.htm.
17  U.S. Environmental Protection Agency. June 2004. e'Government @ EPA: Accelerating Our Progress Using New Information
    Technologies. EPA-245-R-04-002. Washington, DC. Available at http://epa.gov/pmaresults/e-gov.pdf.
18  Refer to Sustained Progress in Addressing Management Issues, available at http://www.epa.gov/ocfo/finstatement/2004ar/
    2004ar.htm.
19  EnviroFlash. Available at http://www.exchangenetwork.net.
20  U.S. Environmental Protection Agency. EPA's Central Data Exchange. Available at http://www.epa.gov/cdx/.
21  Memorandum from Paul Oilman, Assistant Administrator, Office of Research and Development, March 10, 2004, "New Policy
    Directive on Assuring and Documenting the Competency of Agency Laboratories." More information on EPA's Information
    Quality Guidelines is available at http://epa.gov/quality/informationguidelines/index.html.
22  U.S. Environmental Protection Agency. February 2004. Investing in Our People 11, EPAs Strategy for Human Capital: 2004 and
    Beyond. EPA-200-R-04-001. Washington, DC. Available at http://www.epa.gov/oarm/strategy.pdf.

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FISCAL YEAR 2OO4  ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
    23   U.S. Environmental Protection Agency. February 2004-Investing in Our People II, EPA's Strategy for Human Capital: 2004 and
        Beyond. EPA-200-R-04-001. Washington, DC. Available at http://www.epa.gov/oarm/strategy.pdf.
    24   U.S. Environmental Protection Agency. February 2004-Investing in Our People II, EPA's Strategy for Human Capital: 2004 and
        Beyond. EPA-200-R-04-001. Washington, DC. Available at http://www.epa.gov/oarm/strategy.pdf.
    25   Refer to Sustained Progress in Addressing Management Issues, available at http://www.epa.gov/ocfo/finstatement/2004ar/
        2004ar.htm.
    26   U.S. Environmental Protection Agency. Office of Inspector General Semiannual Reports to Congress for the periods October 1, 2003
        to March 31, 2004; and April 1, 2004 to September 30, 2004.  Available at http://www.epa.gov/oig.
    27  U.S. Environmental Protection Agency, Office of Environmental Information. April 2004. Summary Report the National
        Dialogue on the Draft Report on the Environment 2003. Available at http://www.epa.gov/indicators/docs/
        National_Dialogue_Summary_Report.pdf.
    28  U.S. Environmental Protection Agency's FY 2004 Federal Information Security Management Act Reportwill be released consistent
        with Office of Management and Budget schedule and guidance available at http://www.whitehouse.gov/omb/memoranda/
        fy04/m04'25.pdf.

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CONTENTS
Chief Financial Officer's Analysis
Principal Financial Statements ...
Summary of OIG's Audit Report

-------
    Chief Financial  Officer s Analysis      EPA's  Fiscal
    Year 2004        2003  Financial  Statements
    Summary of Auditor's Report and Opinions
       The Environmental Protection Agency (EPA)
    prepared the following Fiscal Year (FY) 2004
    Financial Statements: Statement of Financial
    Position (Balance Sheet), Statement of Changes in
    Net Position, Statement of Net Cost, Statement of
    Budgetary Resources, Statement of Financing, and
    Statement of Custodial Activity. In addition, we
prepared a Statement of Net Cost by Goal for each
of the Agency's 5 Strategic Goals.

   The Office of Inspector General (OIG) Audit
Report issued an unqualified audit opinion on the
EPA's Fiscal Years 2004 and 2003 Financial
Statements.
       I. Reportable Conditions
       During the audit, the OIG observed and noted 10
    reportable conditions, none of which are considered mate-
    riall. The reportable conditions are summarized below,
    along with a short statement of the Agency's position
    with respect to each of those items.

    EPA's Financial Management Quality Assurance
    Process. The OIG recommended improvements to EPA's
    Quality Assurance program. OCFO oversees the efforts
    performed in the Agency's finance community and
    believes the existing Quality Assurance program is effec-
    tive. While there is always room for improvement, OCFO
    is in the process of updating the Quality Assurance Guide,
incorporating new principles and standards. In addition,
OCFO will develop an action plan to monitor the pro-
gram and provide annual training.

Unearned Revenue and Superfund Unbilled Oversight
Cost Accruals. During the course of the audit, OIG noted
some discrepancies in the unearned revenue and unbilled
oversight cost accounts. However, they acknowledged the
many improvements EPA made in accounting for
Superfund State Contracts (SSCs) unearned revenue and
unbilled oversight account transactions. During Fiscal
Year 2004, OCFO automated several processes and made
procedural improvements that resulted in more accurate
136
      A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not
      reduce, to a relatively low level, the risk that misstatement of amounts would be material in relation to the financial statements being audited
      and would not be detected within a timely period by employees in the normal course of performing their assigned functions.

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  SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—CFO's ANALYSIS OF FY 2OO4 AND 2OO3 FINANCIAL STATEMENTS
information. The OCFO's frequent commu-
nications within the finance community
significantly reduced the level of effort
required for year-end adjustments and con-
firmed that adequate internal controls exist.
In addition, OCFO consolidated certain
aspects of the unearned revenue accrual
process. CFO will continue making progress
in these two areas and explore additional
improvement opportunities in concert with
pending realignment of Agency financial
duties.

Supporting Documentation for Accounts
Receivable. The OIG noted instances where
documentation for accounts receivables was
not received timely, precluding transactions
from being recorded in the financial manage-
ment system consistent with Agency policy.
OCFO believes the current policies and pro-
cedures adequately address accounts
receivable reconciliation issues. OCFO, along
with the finance community, reviewed more
than 2,500 administrative actions totaling
$245.6 million and determined that less than
0.010 percent of the documents amounting
to $452,691.00, or 0.002 percent, were fell in
this category. Although the amounts are
immaterial for financial reporting, OCFO
will collaborate with applicable agency
offices and programs, ensure existing  policies
are followed and increase awareness on the
importance of recording accounts receivable
timely.

Recording Marketable Securities. The OIG
found that OCFO did  not promptly record
marketable  securities received from compa-
nies in settlement of debts. In Fiscal Year
2004, OCFO issued the marketable securities
policy that documented roles and responsibil-
ities and emphasized the need to strengthen
processes associated with recording mar-
ketable securities. Historically, EPA receives
very few securities each year in settlement of
debts. In FY 2005, OCFO will evaluate poli-
cy implementation and identify and resolve
needed improvements. In addition, existing
marketable  securities policy and procedures
will be updated to require quarterly
Superfund Accounts Receivables analyses.

Accounting for Contractor-Held Property,
The OIG noted an accounting difference
that understated the acquisition value and
accumulated depreciation for contractor-held
property. OCFO and the Office of
Administration and Resources Management
modified the methodology for estimating net
book value, depreciation expense, acquisition
value, and accumulated depreciation for all
contractor-held property. This methodology
was applied and resulted in accurate report-
ing in FY 2004 and continuing into the
future.

Accounting for Obligations. The OIG
observed few instances of obligations record-
ed in improper accounting periods. As noted
by the OIG, the transactions in question,
about one million, are immaterial in and of
themselves to the  financial statements with
the billions in outstanding obligations. As a
result, OCFO did  not record the recommend-
ed adjustment for  recording  obligations.
However, OCFO will ensure that there are
strong internal controls over obligations and
deobligations in order to prevent material
misstatements.

Systems Development for Grant and Inter-
Governmental Applications. The OIG
considers two applications used to process
grant payments and track intra-governmental
documents as major systems as the data feeds
into the Agency's  financial management sys-
tem. As a result, the OIG outlined several
documentation and risk assessment require-
ments that the OCFO has agreed to perform.
Several actions have taken place. A risk
assessment was completed for the grants pay-
ment and tracking applications in August
2004 and October 2004, respectively. OCFO
will conduct and document  a formal review
of the grants payment application's compli-
ance with all applicable and relevant Joint
Financial Management Improvement
Program requirements. In addition, an

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
              office-wide Standard Operating Procedure
              will be developed to insure that all future
              system development efforts, including
              enhancements, follow relevant agency system
              development policy.

              System Certification and Accreditation for
              Grant and Inter-Governmental
              Applications. Consistent with the OIG
              observation noted above, OCFO agreed to
              conduct several assessments on these applica-
              tions. Formal certifications on both
              applications were completed by October
              2004. The accreditation documents were
              included with the security plans signed in
              September 2004. OCFO will develop a
              Standard Operating Procedure that will for-
              malize the patch management process in
              November 2004. In addition, procedures will
              be developed to assure vulnerability scanning
              and control testing takes place on a regular
              basis. These efforts will be coordinated with
              the OIG.

              Integrated Financial Management System
              Change Control Procedures. In Audit
              Report No. 2002-P-00026, EPA Needs to
              Improve Change Controls for Integrated
              Financial Management System, OIG noted a
              general breakdown of security controls that
could undermine the integrity of the central
accounting system's software libraries and
financial system data. The OIG provided sev-
eral recommendations. However, OCFO
disagrees that there is a breakdown of securi-
ty controls affecting the integrity of the
Agency's accounting system. OCFO has
instituted a formal, structured change control
process. This process serves to mitigate risk
and provides assurance to the Agency that
information is reliable within the Agency's
financial management system.

Integrated Financial Management System
Automated Application Processing Controls,
The OIG notes that it is unable to assess the
adequacy of the automated internal control
structure of the Agency's legacy accounting
system based on existing documentation.
OCFO has plans to update its legacy financial
management system and will address documen-
tation issues as part of the replacement
anticipated by Fiscal Year 2008. However, in
the interim, OCFO maintains that current
documentation levels are sufficient for opera-
tions. OCFO is in the process of developing an
acquisition strategy, governance structure,
replacement system project plan, and concept
of operations document to support pending
financial systems replacement.
                     Federal  Financial Management Improvement Act
                     (FFMIA)  Noncompliance  Issues
               The OIG identified no substantial non-
               compliance issues with FFMIA, however, four
               other noncompliances are noted below:

               EPA Continues to Make Efforts to Improve
               its Cost Accounting  Processes. The OIG
               recognizes that OCFO has made improve-
               ments in its cost accounting. OCFO remains
               committed to insuring that financial informa-
               tion is available for decision-making within
               the Agency. The efforts to date, as acknowl-
               edged by the OIG, moves the Agency further
               along in defining program specific financial
               information needs and enhancing decision-
making capabilities. During FY 2005, OCFO
will continue making progress

Reconciliation  of Intragovernmental
Transactions. The OIG referenced govern-
ment-wide difficulties in reconciling
intragovernmental transactions. EPA contin-
ues to make strides in reconciling the
Agency's intra-governmental transactions
and complying with Federal financial report-
ing requirements. Although this requirement
is a major issue government-wide, EPA per-
forms exceptionally well.

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  SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS-
                                              ;FO's ANALYSIS OF FY 2OO4 AND 2OO3 FINANCIAL STATEMENTS
Financial System Security Plans. The OIG
identified that EPA had taken several actions
to correct security issues and implement the
FY 1999 Remediation plan, to include issuing
a policy on personnel security screening
processes. The OIG noted the policy was
fully implemented, except for establishing a
target date for addressing security certifica-
tion for non-Federal personnel (e.g.,
contractors). OCFO has outlined appropriate
corrective actions concerning contractors'
access to the agency's financial management
system and assured that all contractors
receive suitable background investigations or
investigations are in process. OARM is also
committed to mitigating potential security
risks. OARM currently has adequate interim
procedures in place to guide offices through
the  security screening process. The Office of
Administration and Resources Management
(OARM) is also committed to mitigating
potential security risks at the Agency level.
OARM has interim procedures that guide
offices through the security screening process.
OARM is also implementing several
improved processes, such as insertion of suit-
ability criteria into contract requirements;
fingerprint and national criminal history
checks; and commercial checks performed by
private firms. Existing internal controls, com-
bined with planned improved processes,
ensure that EPA's security screening process is
solid and meets future goals.

EPA Continues to Improve Its Compliance
with Reconciling Its Funds Balance with
Treasury The OIG noted that EPA has made
significant progress in reconciling its cash
balances with Treasury. However, two offices
continued to include amounts on the
Statement of Transactions that did not come
from the Agency's accounting system. OCFO
provided training in September 2004 and
each finance office instituted the appropriate
reconciliation procedures. EPA took action
to implement Treasury procedures consistent
with Agency policy during the fiscal year.
OCFO will continue to monitor cash recon-
ciliations to ensure they are properly
completed.
Improving  Financial  Management
Goals and Strategies for Improved Financial
Performance. EPA's strategy in support of
the President's Management Agenda is to
provide accurate data in a timely manner by
using technology to maximize data collection
and reporting capabilities. EPA's financial
management activities include improving
financial reporting by integrating perform-
ance and financial data; improving the
Agency's ability to reduce or eliminate
Improper Payments; deploying E-Travel
Agency-wide; replacing legacy systems to
meet Federal reporting requirements; and
improving overall financial management per-
formance. EPA expects to obtain clean audit
opinions, reduce improper payments, improve
financial reporting, and issue the PAR 45
days after the fiscal year ends.
Financial  Management  Performance
   EPA does not anticipate significant
impediments to its financial performance.
There may be minor impediments, e.g.,
requirements for tracking the payment cycle
to satisfy the improper payments criteria.
Although EPA cannot state with certainty
the difficulty in meeting that requirement,
we believe we can resolve issues as they arise.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
              Approaches to Clean Audit Opinions:
              Clean opinions are a top management priori-
              ty, and the Agency will continue providing
              resources for financial statement preparation,
              improving and automating the statement
              preparation process, and reflecting these pri-
              orities in the Agency's Annual Performance
              Plan and Budget.

              Accelerated Year-End and Periodic
              Reporting Requirements: EPA aggressively
              managed the financial statement acceleration
              effort and has adopted government-wide
              "best practices." EPA will continue to pro-
              duce: (a) accelerated audited statements, (b)
              more timely, accurate, and useful interim
              statements and (c) timely financial data to
assess program costs and aid the annual
budget formulation process.

Improved Financial Reporting: EPA launched
the Office of the Chief Financial Officer
Reporting and Business Intelligence Tool
(ORBIT), which is designed to provide users
Agency-wide with improved access to finan-
cial, administrative, and operational
information. Future development phases will
enhance ORBIT's functionality, focus on pro-
grammatic and performance reporting
capability, and provide additional data sources.
               Financial  Management  Systems  Framework
                  EPA has undertaken a comprehensive
              effort to modernize the suite of financial sys-
              tems that record transactions and perform
              accounting and budget tasks. Our current core
              accounting system, the Integrated Financial
              Management System (IFMS) dates back to
              1989. While IFMS performs most functions
              adequately, it is inefficient by today's stan-
              dards, and EPA plans to replace it with a
              modern JFMIP certified system are under way.
                  Several financial and mixed systems inter-
              face with IFMS. Modern reporting and
              warehousing tools include a Financial Data
              Warehouse, an Administrative Data Mart,  and
              the Office of the Chief Financial Officer
              Reporting and Business Integration Tool, a
              state of the art commercial off the shelf report-
              ing tool. Two EPA financial systems are
              unique in federal government. In FY 2004, we
              completed preparations for the October 2004
              launch of PeoplePlus, a fully integrated


              Grants  Management
Human Resource / payroll / time and labor
system, and EPA is the only Federal agency
with an automated budget formulation system,
the Budget Automation System. Additional
systems support program financial activities
such as Super Fund and administrative activi-
ties such as grants, contracts, and travel.

   Our modernization effort will take
advantage of technology and business oppor-
tunities to better integrate systems and add
functionality to improve EPA's financial
management and  budget performance inte-
gration. Our efforts are consistent with the
e-government initiatives led by OMB that
seek to gain efficiencies and improve finan-
cial management  across government. See
http://www.whitehouse.gov/omb/egov/.

   EPA's Five Year Plan contains a listing of
OCFO's systems at http://www.epa.gov/
ocfopage/finstatement/5yearplan2005-
2009.pdf.
              EPA's guidance that prescribes the OMB for-
              mat for use by all offices that award
              discretionary grants or cooperative agree-
ments is posted on the EPA intranet at the
Grants website.

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  SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—CFO's ANALYSIS OF FY 2OO4 AND 2OO3 FINANCIAL STATEMENTS
EPA's guidance to implement OMB's require-
ment for grant applicants to use a D&B
DUNS number when applying for EPA
grants and cooperative agreements is posted
on the EPA intranet on the Grants web site.
EPA has also posted on its intranet site the
guidance to implement OMB's requirement
to post synopses of funding opportunity
announcements at Grants.gov using the
government-wide standard data elements for
these synopses.

EPA is the first agency to bind to the
Grants.gov WSDL. EPA anticipates six pro-
grams available for application through
Grants.gov during FY 2005. Recently, EPA
posted electronic applications for the Science
to Achieve Results program and received 16
electronic applications. Other programs will
be posted later this year.
COSTS RELATING To GRANTS
MANAGEMENT

There are approximately 155 employees,
whose salaries range from GS-5 to GS-15
($24,075 - $113,674) in four job categories:
grants management specialist, grants manage-
ment officer, grants policy specialist, and
information technology specialist with
responsibilities related to grant databases and
web applications. In addition, there are over
1700 project officers who have grants man-
agement responsibilities. Additional grants
management information is in the Five Year
Plan at http://www.epa.gov/ocfopage/
finstatement/5yearplan2005-2009.pdf.

-------
      Principal   Financial   Statements
                              '"   -
                               •::::•
142
FINANCIAL STATEMENTS

I.   Consolidating Balance Sheet
2.   Consolidating Statement of Net Cost
3.   Consolidated Statement of Net Cost by Goal
4.   Consolidating Statement of Changes in Net Position
5.   Combined Statement of Budgetary Resources
6.   Consolidating Statement of Financing
7   Consolidated Statement of Custodial Activity

NOTES  TO FINANCIAL  STATEMENTS

Note I. Summary of Significant Accounting Policies
Note 2. Fund Balance with Treasury
Note 3. Cash
Note 4. Investments
Note 5. Accounts Receivable
Note 6. Other Assets
Note 7 Loans Receivable, Net - Non-Federal
Note 8. Accounts Payable and Accrued Liabilities
Note 9. General Plant, Property and Equipment
Note 10. Debt
Note II. Custodial Liability
Note 12. Other Liabilities
Note 13. Leases
Note 14. Pensions and Other Actuarial Benefits
Note 15. Cashout Advances, Superfund
Note 16. Unexpended Appropriations, All Other Funds
Note 17 Amounts Held by Treasury
Note 18. Commitments and Contingencies
Note 19. Exchange Revenues, Statement of Net Cost
Note 20. Environmental Cleanup Costs
Note 21. Superfund State Credits
Note 22. Superfund Preauthorized Mixed Funding Agreements
Note 23. Income and Expenses from Other Appropriations; General
       Support Services Charged to Superfund
Note 24. Custodial Revenues and Accounts Receivable
Note 25. Statement of Budgetary Resources
Note 26. Recoveries and Resources Not Available, Statement of
       Budgetary Resources
                                                               NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                                               Note 27 Unobligated Balances Available
                                                               Note 28. Offsetting Receipts
                                                               Note 29. Statement of Financing
                                                               Note 30. Costs Not Assigned to Goals
                                                               Note 31. Transfers-ln and Out, Statement of Changes in Net Position
                                                               Note 32. Imputed Financing
                                                               Note 33. Payroll and Benefits Payable
                                                               Note 34. Other Adjustments, Statement of Changes in Net Position
                                                               Note 35. Nonexchange Revenue, Statement of Changes in Net
                                                                      Position
                                                               Note 36. Superfund Trust Fund Balances

                                                               REQUIRED SUPPLEMENTAL INFORMATION

                                                               I.   Deferred Maintenance (Unaudited)
                                                               2.   Intragovernmental Assets (Unaudited)
                                                               3.   I ntragovern mental Liabilities (Unaudited)
                                                               4.   Intragovernmental Revenues and  Costs (Unaudited)
                                                               5.   Supplemental Statement of  Budgetary Resources (Unaudited)
                                                               6.   Working Capital Fund Supplemental Balance Sheet (Unaudited)
                                                                   Working Capital Fund Supplemental Statement of Net Cost
                                                                   (Unaudited)
                                                                   Working Capital Fund Supplemental Statement of Changes in
                                                                   Net Position (Unaudited)
                                                                   Working Capital Fund Supplemental Statement of Budgetary
                                                                   Resources (Unaudited)
                                                                   Working Capital Fund Supplemental Statement of Financing
                                                                   (Unaudited)
                                                               7   Annual Stewardship Information (Unaudited)
                                                               8.   Improper Payments Information Act of 2002 (IPIA) Report

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                                       SECTION 3.  FY  2OO4  ANNUAL FINANCIAL STATEMENTS—PRINCIPAL  FINANCIAL STATEMENTS
                                       Environmental Protection Agency
                                      Consolidating  Balance Sheet
                                      As of September 30, 2004 and 2003
                                                 (Dollars in Thousands)
                                               Superfund     Superfund
                                              Trust Fund    Trust Fund    All Others    All Others
                                                FY2004       FY2003        FY 2004       FY 2003
ASSETS
  Intragovernmental
  Fund Balance With Treasury (Note 2)
  Investments (Notes 4 and 17)
  Accounts Receivable, Net (Note 5)
  Other (Note 6)

  Total Intragovernmental
  Cash and Other Monetary Assets (Note 3)
  Accounts Receivable, Net (Note 5)
  Loans Receivable, Net—Non-Federal (Note 7)
  Property, Plant and Equipment, Net (Note 9)
  Other (Note 6)

  Total Assets
       199,406
      2,217,334
         27,212
         6,781
$     2,450,733
            0
       369,148
            0
        47821
          699
  26,448
 2,516,147
  34,665
    7414
11,865,739
 2,317,164
  89,267
2,584,674  $    14,273,458
      0
 428,486
      0
  45,855
      10
  45,347
  48,927
 625,542
                                                            Combined
                                                              Totals
                                                             FY 2004
11,758,357  $
2,114,684
  119,941
   3,827
      10
  65,296
  53,506
 579,471
   3,502
12,065,145
4,534,498
   116,479
   8,069
              13,996,809  $     16,724,191
      10
  414,495
  48,927
  673,363
    1,508
                                                   2,868,401   $    3,059,695  $   14,994,093   $    14,698,594  $     17,862,494
LIABILITIES
  Intragovernmental
  Accounts Payable and Accrued Liabilities (Note 8)   $
  Debt Due to Treasury (Note 10)
  Custodial Liability (Note II)
  Other (Note 12)

  Total Intragovernmental                         $

  Accounts Payable and Accrued Liabilities (Note 8)
  Pensions and Other Actuarial Liabilities (Note 14)
  Environmental Cleanup Costs (Note 20)
  Cashout Advances, Superfund (Note 15)
  Commitments and Contingencies (Note 18)
  Payroll and Benefits Payable (Note 33)
  Other (Notes 12  and 13)

  Total Liabilities                                $
140,781 $
0
0
37752
178,533 $
145,369
7263
0
259,361
0
31,695
46,211
145,631 $
0
0
30,600
176,231 $
165,550
7937
0
279,092
0
31,039
49,809
37592 $
24, 101
52,216
47118
161,027 $
736,482
33,018
8,407
0
1,625
149,051
57705
70,156 $
21,189
78,776
21,611
191,732 $
722,784
36, 159
8,880
0
18
142,791
53, 105
178,373
24, 101
52,216
84,870
339,560
881,851
40,281
8,407
259,361
1,625
180,746
103,916
       668,432  $
 709,658  $
 1,147,315  $     1,155,469  $
               1,815,747
NET POSITION
  Unexpended Appropriations (Note 16)
  Cumulative Results of Operations
    (Note 36)

  Total Net Position

  Total Liabilities and Net Position
      2,199,969
      0  $     10,860,136

2,350,037        2,986,642
              10,768,236  $    10,860,136

              2,774,889        5,186,611
      2,199,969        2,350,037       13,846,778        13,543,125       16,046,747

$    2,868,401  $     3,059,695  $    14,994,093   $     14,698,594  $    17,862,494
                      The accompanying notes are an integral part of these statements.

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION  AGENCY
                                               Consolidating  Balance Sheet
   —icy
      ontinued)
and 2003
                   ASSETS
                     I ntragovernmental
                     Fund Balance With Treasury (Note 2)
                     Investments (Notes 4 and 17)
                     Accounts Receivable, Net (Note 5)
                     Other (Note 6)
                     Cash and Other Monetary Assets (Note 3)
                     Accounts Receivable, Net (Note 5)
                     Loans Receivable, Net—Non-Federal (Note 7)
                     Property, Plant and Equipment, Net (Note 9)
                     Other (Note 6)
                     Total Assets

                   LIABILITIES
                     I ntragovernmental
                     Accounts Payable and Accrued Liabilities (Note f
                     Debt Due to Treasury (Note  10)
                     Custodial Liability (Note II)
                     Other (Note 12)
                     Accounts Payable and Accrued Liabilities (Note 8)
                     Pensions and Other Actuarial Liabilities (Note 14)
                     Environmental  Cleanup Costs  (Note 20)
                     Cashout Advances, Superfund (Note 15)
                     Commitments  and Contingencies (Note 18)
                     Payroll and Benefits Payable (Note 33)
                     Other (Notes  12 and 13)
                     Total Liabilities

                   NET POSITION
                     Unexpended Appropriations (Note 16)
                     Cumulative Results of Operations
                       (Note 36)

                     Total Net Position
                     Total Liabilities and Net Position
                                                                v_)ollars in Thousands)
                                                               Combined   Intra-agency  Intra-agency  Consolidated  Consolidated
                                                                 Totals      Elimination    Elimination      Totals        Totals
                                                                FY2003      FY2004       FY 2003       FY 2004      FY 2003
11,784,805 $
4,630,831
154,606
11,241
16,581,483 $
10
493,782
53,506
625,326
4,182
17,758,289 $
215,787 $
21,189
78,776
52,211
367963 $
888,334
44,096
8,880
279,092
18
173,830
102,914
1,865,127 $
10,768,236 $
5, 124,926
15,893, 162
17,758,289 $
0 $
0
(73,709)
(6,749)
(80,458) $
0
0
0
0
0
(80,458) $
(73,709) $
0
0
(6,749)
(80,458) $
0
0
0
0
0
0
0
(80,458) $
0 $
0
0
(80,458) $
0 $
0
(89,789)
(7269)
(97,058) $
0
0
0
0
0
(97,058) $
(89,789) $
0
0
(7269)
(97,058) $
0
0
0
0
0
0
0
(97,058) $
0 $
0
0
(97,058) $
12,065, 145 $
4,534,498
42,770
1,320
16,643,733 $
10
414,495
48,927
673,363
1,508
17,782,036 $
-
104,664 $
24, 101
52,216
78, 121
259,102 $
881,851
40,281
8,407
259,361
1,625
180,746
103,916
1,735,289 $
-
10,860,136 $
5,186,611
16,046,747
17,782,036 $
11,784,805
4,630,831
64,817
3,972
16,484,425
10
493,782
53,506
625,326
4,182
17,661,231
125,998
21,189
78,776
44,942
270,905
888,334
44,096
8,880
279,092
18
173,830
102,914
1,768,069
10,768,236
5, 124,926
15,893, 162
17,661,231
                                        The accompanying notes are an integral part of these statements.

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                                   SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
                           Consolidating Statement of Net Cost
COSTS
  Intragovernmental
  With the Public
  Expenses from Other Appropriations (Note 23)
  Total Costs
  Less:
  Earned Revenues, Federal (Note 19)
  Earned Revenues, Non-Federal (Note 19)
  Total Earned Revenues (Note 19)

NET COST OF OPERATIONS
 368,045
1,262,540
  82,776
 1,713,361  $

  27,450  $
 233,171
 260,621
 341,817
1,246,427
 75,597
1,663,841

  16,682
 394,295
 410,977
 860,314  $
6,387327
 (82,776)
7164,865  $

  61,475  $
  46,928
 108,403
 816,624
6,427,497
 (75,597)
1,228,359
7649,867
      0
7168,524

 124,233
  31,304
8,878,226
  88,925
  155,537
 369,024
1,452,740  $    1,252,864  $     7,056,462  $
                           7,012,987  $   8,509,202
                      Consolidating Statement of Net Cost (continued)
COSTS
  Intragovernmental
  With the Public
  Expenses from Other Appropriations (Note 23)
  Total Costs
  Less:
  Earned Revenues, Federal (Note 19)
  Earned Revenues, Non-Federal (Note 19)
  Total Earned Revenues (Note 19)

NET COST OF OPERATIONS
1, 158,441 $
7673,924
0
8,832,365 $
140,915 $
425,599
566,514
8,265,851 $
(22,663) $
0
0
(22,663) $
(22,663) $
0
(22,663)
0 $
(20,240) $
0
0
(20,240) $
(20,240) $
0
(20,240)
0 $
1,205,696
7649,867
0
8,855,563
66,262
280,099
346,361
8,509,202
                                                      1,138,201
                                                      7673,924
                                                           0
                                                      8,812,125

                                                       120,675
                                                       425,599
                                                       546,274
                                                     8,265,851
                    The accompanying notes are an integral part of these statements.

-------
FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                     Consolidated  Statement of Net Cost by Goal
                  COSTS
                   I ntragovernmental
                   With the Public
      168,684
      774,151
                                                       942,835
  177,573
3,835,046
                   4,012,619
  411,593
 1,610,080
               2,021,673
 257,208
 885,982
159,492
557567
                               717059
                   Less:
                   Earned Revenue, Federal
                   Earned Revenue, Non-Federal

                   Total Earned Revenue
21,092 $
970
22,062
6,320 $
1,996
8,316 $
19,877 $
227,936
247,813 $
7117 $
33,556
40,673 $
13,857
1,498
15,355
                  NET COST OF
                  OPERATIONS
     920,773   $
4,004,303  $
1,773,860  $
1,102,517  $
701,704
                                     Consolidated Statement of Net Cost by  Goal
                  COSTS
                   I ntragovernmental
                   With the Public
                   Less:
                   Earned Revenue, Federal
                   Earned Revenue, Non-Federal
 84,961
532,480
                                                   617441
         31,028
        97848
      54,492  $
      281,634
   409,312
  1,581,550
            3,957,004  $
        128,876
      336,126  $
  1,990,862
 35,643
 219,692
255,335
3,234 $
71
3,305 $
55,231
5,394 $
1,876
7,270 $
83,892
37 $
20,729
20,766 $
24,379
1,197 $
300
1,497 $
36,784
80,029 $
396,738
476,767 $
136,240
3,911
1,652
5,563
15,031
                  NET COST OF
                  OPERATIONS
669,367  $    4,033,626  $
        132,489  $
      371,413  $    1,650,335  $
               264,803
                 * The agency implemented a 5-goal strategic plan structure for FY 2004 costs. FY 2003 costs are presented in the
                 former 10-goal structure.
                                     The accompanying notes are an integral part of these statements.

-------
                                 SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
                   Consolidated Statement of Net Cost by  Goal
COSTS
  Intragovernmental
  With the Public
  Total Costs

  Less:
  Earned Revenue, Federal
  Earned Revenue, Non-Federal
                                                   31,146
                                                  (12,959)
                                                    18,187
                                                  1,205,696
                                                 7649,867
                                                 8,855,563
                                                                66,262
                                                                                               346,361
NET COST OF OPERATIONS
                                                    6,045  $   8,509,202
                    Consolidated Statement of Net Cost by Goal*
COSTS
  I ntragovernmental
  With the Public

  Total Costs

  Less:
  Earned Revenue, Federal
  Earned Revenue, Non-Federal

  Total Earned Revenue

Management Cost Allocation
174,224
 191,351
365,575
  51,118  $
293,552
 93,695
325,968
 40,751  $
343,036
             419,663
             383,787  $
23,674
              12,786
 1,138,201
7,673,924
           8,812,125
126,261 $
121
126,382 $
26,018
1,198 $
364
1,562 $
28,766
272 $
1,220
1,492 $
76,507
(100,428) $
1,367
(99,061) $
(482,848)
(430) $
1,161
731 $
0
120,675
425,599
546,274
0
NET COST OF
OPERATIONS
265,211  $
371,874  $
494,678  $
    0  $
12,055  $    8,265,851
* The agency implemented a 5-goal strategic plan structure for FY 2004 costs. FY 2003 costs are presented in the
former 10-goal structure.
** See Note 30.
                   The accompanying notes are an integral part of these statements.

-------
FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                    Consolidating Statement of Changes  in Net Position
                   Net Position—Beginning of Period
                     Prior Period Adjustments
                   Beginning Balances, as Adjusted

                   Budgetary Financing Sources:
                     Appropriations Received
                     Appropriations Transferred In/Out (Note 31)
                     Other Adjustments (Note 34)
                     Appropriations Used
                     Nonexchange Revenue (Note 35)
                     Transfers In/Out (Note 31)
                     Trust Fund Appropriations
                     Income from Other Appropriations (Note 23)
                   Total Budgetary Financing Sources

                   Other Financing Sources:
                     Transfers In/Out (Note 31)
                     Imputed Financing Sources (Note 32)
                   Total Other Financing Sources

                   Net Cost of Operations
                   Net Position—End of Period
     2,350,037
           0
3,115,737
     0
2,774,889
      0
2,518,705
      0
$    2,350,037
3,115,737  $    2,774,889
      1,282,966
 467081
 7159,496
5,124,926
      0
              2,518,705  $    5,124,926
0
0
0
0
30,239
(87586)
1,257537
82,776
0
0
0
0
(49,692)
(191,131)
632,307
75,597
0
0
0
8, 162,544
269,486
67779
(1,257,537)
(82,776)
0
0
0
7,496,463
260,515
111,614
(632,307)
(75,597)
0
0
0
8, 162,544
299,725
(19,807)
0
0
7160,688 $    8,442,462
(1)
19,707
19,706 $
(1,452,740)
2, 199,969 $
84
19,999
20,083 $
(1,252,864)
2,350,037 $
(435)
109,154
108,719 $
(7056,462)
2,986,642 $
287
108, 196
108,483 $
(7012,987)
2,774,889 $
(436)
128,861
128,425
(8,509,202)
5,186,611
                   * This statement does not have any intra-agency eliminations for FY 2004 or 2003.
                                        The accompanying notes are an integral part of these statements.

-------
                                     SECTION  3. FY 2OO4 ANNUAL  FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
           Consolidating Statement of Changes in  Net  Position  (continued)
Net Position—Beginning of Period
  Prior Period Adjustments
Beginning Balances, as Adjusted

Budgetary Financing Sources:
  Appropriations Received
  Appropriations Transferred In/Out (Note 31)
  Other Adjustments (Note 34)
  Appropriations Used
  Nonexchange Revenue (Note 35)
  Transfers  In/Out (Note 31)
  Trust Fund Appropriations
  Income from Other Appropriations (Note 23)
Total Budgetary Financing Sources

Other Financing Sources:
  Transfers  In/Out (Note 31)
  Imputed Financing Sources (Note 32)
Total Other Financing Sources

Net Cost of Operations
Net Position—End of Period
5,634,442  $    10,768,236
      0             0
10,923,889  $     15,893,162
       0              0
5,634,442  $    10,768,236
10,923,889  $     15,893,162
 7627,769  $
 (155,653)  $     8,534,362
 16,558,331
	0
 16,558,331
0
0
0
7,496,463
210,823
(79,517)
0
0
8,322,860
152
(68,568)
(8, 162,544)
0
0
0
0
7408, 126
4,550
(71,866)
(7496,463)
0
0
0
0
8,322,860
152
(68,568)
0
299,725
(19,807)
0
0
7408, 126
4,550
(71,866)
0
210,823
(79,517)
0
0
  7472,116
371
128, 195
128,566 $
(8,265,851)
0
0
0 $
0
0
0
0 $
0
(436)
128,861
128,425 $
(8,509,202)
371
128, 195
128,566
(8,265,851)
                                           $    5,124,926  $    10,860,136  $    10,768,236  $    16,046,747  $    15,893,162
 This statement does not have any intra-agency eliminations for FY 2004 or 2003.
                     The accompanying notes are an  integral part of these statements.

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
                                          Combined Statement of  Budgetary Resources
                    BUDGETARY RESOURCES
                    Budgetary Authority:
                     Appropriations Received
                     Borrowing Authority
                     Net Transfers
                    Unobligated Balances:
                     Beginning of Period
                     Net Transfers, Actual
                    Spending Authority from Offsetting Collections:
                     Earned and Collected
                     Receivable from Federal Sources
                     Change in Unfilled Customer Orders:
                       Advance Received
                       Without Advance from Federal Sources
                     Transfers from Trust Funds

                    Total Spending Authority from Collections
                    Recoveries of Prior Year Obligations (Note 26)
                    Temporarily Not Available Pursuant to Public Law (Note 26)
                    Permanently Not Available (Note 26)

                     Total Budgetary Resources (Note 25)

                    STATUS OF BUDGETARY RESOURCES
                    Obligations Incurred:
                     Direct
                     Reimbursable

                    Total Obligations Incurred (Note 25)
                    Unobligated Balances:
                     Apportioned (Note 27)
                     Unobligated Balances  Not Available (Note 27)

                    Total Status of Budgetary Resources

                    RELATIONSHIP OF OBLIGATIONS TO  OUTLAYS
                    Obligations Incurred, Net
                    Obligated Balances, Net—Beginning of Period
                     Accounts Receivable
                     Unfilled Customer Orders from Federal Sources
                     Undelivered Orders, Unpaid
                     Accounts Payable

                    Total Outlays (Note 25)

                     Disbursements
                     Collections
                     Less; Offsetting Receipts (Note 28)

                    Net Outlays
                                                                                            Superfund    Superfund
                                                                                            Trust Fund    Trust Fund    All Others
                                                                                             FY 2004      FY 2003       FY 2004
0 $
0
1,259,096
766,805
0
229,658 $
(7853)
(44,218)
5,978
0
183,565 $
98,848
(7464)
0
0 $
0
1,286,342
750,994
0
211,066 $
(1,728)
(41,608)
5,259
(9,642)
163,347 $
124,797
0
(8,274)
8,353,924
5,554
77,690
2,098,872
(1,538)
242,119
(15,303)
13,011
1,310
51,666
292,803
95,927
(790)
(71,203)
$    2,300,850  $
2,317,206  $    10,851,239
      1,328,864  $
       148,273
 1,373,144
  177257
      1,477137  $

      823,694
           19
1,550,401

 766,786
      19
$    1,463,868  $_

     1,649,308  $
     (185,440)
      (74,063)
1,605,329
(159,816)
(146,502)
 8,416,742
   261,502
 8,678,244

 2,080,155
   92,840
$    2,300,850  $     2,317,206  $    10,851,239
1, 194,724 $
1,838,503
(5,886)
77685
(1,374,232)
(266,926)
1,262,257 $
2,021,759
1,965
71,707
( 1,612,994)
(299,181)
8,289,514
9,582,216
86,440
226, 184
(9,093,405)
(857,634)
 1,445,513  $    8,233,315
 8,556,405
 (323,090)
(1,276,778)
$    1,389,805  $     1,299,011  $     6,956,537
                                         The accompanying notes are an integral part of these statements.

-------
             SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
^^^9^v71vi^^^*T^^E^^^Uv^fl*Y^Rri^^K
Combined Statement of Budgetary



Esl


Resources
Hi
All Others
FY 2003
(continued)

Combined
Totals
FY 2004


^Totals6' ^^^^^1
FY 2003 ^^^^^^^^^^^^^1
BUDGETARY RESOURCES
Budgetary Authority:
Appropriations Received
Borrowing Authority
Net Transfers
Unobligated Balances:



Beginning of Period
Net Transfers, Actual
Spending Authority from Offsetting Collections:
Earned and Collected
Receivable from Federal Sources
Change in Unfilled Customer Orders:
Advance Received
Without Advance from Federal Sources
Transfers from Trust Funds
Total Spending Authority from Collections
Recoveries of Prior Year Obligations (Note 26)
Temporarily Not Available Pursuant to Public Law (Note 26)
Permanently Not Available (Note 26)
Total Budgetary Resources (Note 25)

$ 7424,350
0
76,863

2,045,248
0
273,703
5,074
(20,362)
(28,473)
96, 135
$ 326,077
114,437
0
(76, 182)
$ 9,910,793

$ 8,353,924
5,554
1,336,786

2,865,677
(1,538)
$ 471,777
(23,156)
(31,207)
7,288
51,666
$ 476,368
194,775
(8,254)
(71,203)
$ 13,152,089

$ 7424,350
0
1,363,205

2,796,242
0
$ 484,769
3,346
0
(61,970)
(23,214)
86,493
$ 489,424
239,234
0
(84,456)
$ 12,227,999







H
8
o
K
^^9

STATUS OF BUDGETARY RESOURCES
Obligations Incurred:
Direct


Reimbursable
Total Obligations Incurred (Note 25)
Unobligated Balances:

Apportioned (Note 27)
Unobligated Balances Not Available (Note 27)
Total Status of Budgetary Resources
RELATIONSHIP OF OBLIGATIONS TO OUTLAYS
Obligations Incurred, Net

Obligated Balances, Net — Beginning of Period
Accounts Receivable

Unfilled Customer Orders from Federal Sources
Undelivered Orders, Unpaid
Accounts Payable
Total Outlays (Note 25)
Disbursements
Collections
Less: Offsetting Receipts (Note 28)
Net Outlays

$ 7,539,595
272,326
$ 7811,921

2,011,471
87,401
$

$ 7,371,407
9,608,652
118,037
224,874
(9,077583)
(847544)
$ 7,397,843
$ 7,706,933
(309,090)
(643,956)
$ 6,753,887

$ 9,745,606
409,775
$ 10, 155,381

2,903,849
92,859
$ 13,152,089

$ 9,484,238
11,420,719
80,554
303,869
( 10,467,637)
(1,124,560)
$
$ 10,205,713
(508,530)
(1,350,841)
$ 8,346,342

$ 8,912,739
449,583
$ 9,362,322

2,778,257
87,420
$ 12,227,999

$ 8,633,664
11,630,411
120,002
296,581
(10,690,577)
(1,146,725)
$ 8,843,356
$ 9,312,262
(468,906)
(790,458)
$ 8,052,898

•a
1








The accompanying notes are an integral part of these statements.

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                  Consolidating  Statement of  Financing
                    RESOURCES USED TO FINANCE ACTIVITIES:
                    Budgetary Resources Obligated
                      Obligations Incurred
                      Less: Spending Authority from Offsetting Collections and Recoveries

                      Obligations, Net of Offsetting Collections
                      Less: Offsetting Receipts (Note 28)

                      Net Obligations
                    Other Resources
                      Transfers In/Out without Reimbursement, Property (Note 31)
                      Imputed Financing Sources (Note 32)
                      Income from Other Appropriations (Note 23)

                      Net Other Resources Used to Finance Activities

                      Total Resources Used To Finance Activities
 1,477 137
(282,413)
1,194,724
(74,063)
1,120,661   $

     (I)   $
  19,707
  82,776
 102,482

1,223,143
 1,550,401
(288,144)
 1,262,257
(146,502)
 1,115,755
   19,999
  75,597
  95,680

  1,211,435
 8,678,244
 (388,730)
 8,289,514
(1,276,778)
 7012,736

        I
   109,154
  (82,776)
   26,379

  7039,115
                    RESOURCES USED TO FINANCE ITEMS NOT PART OF
                    NET COST OF OPERATIONS
                    Change in Budgetary Resources Obligated
                    Resources that Fund Prior Period Expenses (Note 29)
                    Budgetary Offsetting Collections and Receipts that Do Not Affect
                      Net Cost of Operations:
                    Credit Program Collections Increasing Loan Liabilities for Guarantees of
                      Subsidy Allowances
                    Offsetting Receipts Not Affecting Net Cost
                    Resources that Finance Asset Acquisition
                    Adjustments to Expenditure Transfers that Do Not Affect Net Cost
 199,979
 (2,243)
      0

  74,063
 (16,104)
 (51,666)
  179,096
      0
  146,502
  (16,287)
(105,777)
    4,142

    19,241
  (90,081)
    51,666
                      Total Resources Used to Finance Items Not Part of the Net Cost of Operations
                      Total Resources Used to Finance the Net Cost of Operations
 204,029
 1,427,172
 203,534
 1,414,969
  (33,752)
 7005,363
                                          The accompanying notes are an integral part of these statements.

-------
                                    SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
                      Consolidating Statement of Financing (continued)
COMPONENTS OF NET COST OF OPERATIONS THAT
WILL NOT REQUIRE OR GENERATE RESOURCES IN THE
CURRENT PERIOD
Components Requiring or Generating Resources in Future Periods:
  Increase in Annual Leave Liability (Note 19}
  Increase in Environmental and Disposal Liability (Note 19}
  Increase in Unfunded Contingencies (Note 19}
  Up/Downward Reestimates of Subsidy Expense  (Note 19}
  Increase in Public Exchange Revenue Receivable
  Increase in Workers Compensation Costs (Note 19}
Total Components of Net Cost of Operations that Requires
  or Generates Resources in the Future
Components Not Requiring/Generating Resources:
  Depreciation and Amortization
  Revaluation of Assets or Liabilities
  Expenses Not Requiring Budgetary Resources
Total Components of Net Cost of Operations that Will Not Require
  or Generate Resources
Total Components of Net Cost of Operations that Will Not Require
  or Generate Resources in the Current Period

  Net Cost of Operations
0 $
0
0
0
(41,446)
0
1,088 $
0
0
0
(205,844)
246
0
1,244
22,425
0
(18,491)
0
 (41,446)  $    (204,510)
   7939
  59,075
  67014  $
  25,568
   8,915
      0
  33,490
  42,405
(162,105)
                5,178
39,852
    0
 6,069
45,921
51,099
1,452,740  $    1,252,864  $
             7,056,462
                    The accompanying notes are an integral part of these statements.

-------
FISCAL YEAR 2OO4  ANNUAL REPORT,  U.S.  ENVIRONMENTAL PROTECTION AGENCY
                                          Consolidating Statement  of  Financing (continued)
                   RESOURCES USED TO FINANCE ACTIVITIES:
                   Budgetary Resources Obligated
                     Obligations Incurred
                     Less: Spending Authority from Offsetting Collections and Recoveries

                     Obligations, Net of Offsetting Collections
                     Less: Offsetting Receipts (Note 28)

                     Net Obligations
                   Other Resources
                     Transfers In/Out without Reimbursement, Property (Note 31)
                     Imputed Financing Sources (Note 32)
                     Income from Other Appropriations (Note 23)

                     Net Other Resources Used to Finance Activities

                     Total Resources Used To Finance Activities
                                                                                           All Others
                                                                                             FY 2003
        Consolidated  Consolidated
           Totals*       Totals*
           FY 2004       FY 2003
7811,921 $
(440,514)
7,371,407 $
(643,956)
10, 155,381 $
(671, 143)
9,484,238 $
(1,350,841)
9,362,322
(728,658)
8,633,664
(790,458)
6,727451   $

    (84)  $
  108,196
 (75,597)
  32,515

6,759,966
8,133,397

      0
  128,861
      0
  128,861

8,262,258
 7,843,206

       0
   128,195
	0
   128,195

 7,971,401
                   RESOURCES USED TO FINANCE ITEMS NOT
                   PART OF NET COST OF OPERATIONS
                   Change in Budgetary Resources Obligated
                   Resources that Fund Prior Period Expenses (Note 29)
                   Budgetary Offsetting Collections and Receipts that Do Not Affect
                     Net Cost of Operations:
                   Credit Program Collections Increasing Loan Liabilities for Guarantees
                     of Subsidy Allowances
                   Offsetting Receipts Not Affecting Net Cost
                   Resources that Finance Asset Acquisition
                   Adjustments to Expenditure Transfers that Do Not Affect Net Cost
165,667 $
0
4,980
11,649
(66,321)
96, 135
192,871 $
(13,855)
4,142
93,304
(106,185)
0
344,763
0
4,980
158,151
(82,608)
(9,642)
                   Total Resources Used to Finance Items Not Part of the Net Cost of Operations
  212,110  $
  170,277
  415,644
                   Total Resources Used to Finance the Net Cost of Operations
6,972,076  $    8,432,535
              8,387,045
                     This statement did not have any intra-agency eliminations for FY 2004 or 2003.
                                         The accompanying notes are an integral part of these statements.

-------
                                    SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
                      Consolidating Statement of Financing (continued)
COMPONENTS OF NET COST OF OPERATIONS THAT
WILL NOT REQUIRE OR GENERATE RESOURCES IN THE
CURRENT PERIOD
Components Requiring or Generating Resources in Future Periods:
  Increase in Annual Leave Liability (Note 19}
  Increase in Environmental and Disposal Liability (Note 19}
  Increase in Unfunded Contingencies (Note 19}
  Up/Downward Reestimates of Subsidy Expense (Note 19}
  Increase in Public Exchange Revenue Receivable
  Increase in Workers Compensation Costs (Note 19}

Total Components of Net Cost of Operations that Requires or Generates
  Resources in the Future
Components Not Requiring/Generating Resources:
  Depreciation and Amortization
  Revaluation of Assets or Liabilities
  Expenses Not Requiring Budgetary Resources

Total Components of Net Cost of Operations that Will Not Require or
  Generate Resources
Total Components of Net Cost of Operations that Will Not Require
  or Generate Resources in the Current Period

  Net Cost of Operations
5,647 $
(3,276)
0
170
(1,706)
4,591
0 $
1,244
22,425
0
(59,937)
0
6,735
(3,276)
0
170
(207,550)
4,837
   5,426  $
  36,289
      0
  (804)
(36,268)
 47791
     0
 65,144
  35,485  $
  40,911
 112,935
 76,667
(199,084)
  45,204
      0
  32,686
  77890
7,012,987  $    8,509,202  $    8,265,851
  This statement did not have any intra-agency eliminations for FY 2004 or 2003.
                    The accompanying notes are an integral part of these statements.

-------
FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION  AGENCY
                                       Consolidated Statement of Custodial Activity
                  Revenue Activity:
                  Sources of Collections
                    Fines and Penalties
                    Other
 162,948 $
 24,463
                                                                                                        187,411
                                                                                                       (24,865)
161,544
 5,793
               167,337
                7,172
                    Total Custodial Revenue (Note 24)
 162,546 $
174,509
                  Disposition of Collections:
                    Transferred to Others (General Fund)
                    Increases/Decreases in Amounts to be Transferred
                    Total Disposition of Collections
 187,194 $
(24,648)
 162,546 $
165,440
 9,069
174,509
                    Net Custodial Revenue Activity (Note 24)
     0 $
                                     The accompanying notes are an integral part of these statements.

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                              SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS


Environmental  Protection  Agency
Notes  to  Financial Statements  (Dollars in Thousands)

Note  I. Summary of Significant Accounting Policies
A.  BASIS  OF PRESENTATION

These consolidating financial statements have been prepared to report the financial position and results of
operations of the U. S. Environmental Protection Agency (EPA or Agency) for the Hazardous Substance
Superfund (Superfund) Trust Fund and All Other Funds, as required by the Chief Financial Officers Act of
1990 and the  Government Management Reform Act of 1994. The reports have been prepared from the
financial system and records of the Agency in accordance with Form and Content of Agency Financial
Statements, OMB Bulletin No. 01 -09, and the EPA's accounting policies which are summarized in this note.
In addition to the reports required by OMB Bulletin No. 01 -09, the Statement of Net Cost has been pre-
pared by the Agency's strategic goals.


B.  REPORTING  ENTITIES

The EPA was created in 1970 by executive reorganization from various components of other federal agen-
cies in order to better marshal and coordinate federal pollution control efforts. The Agency is generally
organized around the media and substances it regulates—air, water, land, hazardous waste, pesticides and
toxic substances. For FY 2004 the reporting entities are grouped as the Superfund Trust Fund and All
Other Funds.

Superfund Trust Fund

In 1980, the Superfund Trust Fund, Treasury fund group 8145, was established by the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) to  provide resources needed
to respond to and clean up hazardous substance emergencies and abandoned, uncontrolled hazardous
waste sites. The Superfund Trust Fund financing is shared by federal and state governments as well as indus-
try. The EPA allocates funds from its appropriation to other federal agencies to carry out CERCLA. Risks to
public health and the environment at uncontrolled hazardous waste sites qualifying for the Agency's
National Priorities List (NPL) are reduced  and addressed through a process involving site assessment and
analysis and the design and implementation of cleanup remedies. NPL cleanups and removals are conducted
and financed by the EPA, private parties, or other federal agencies. The Superfund Trust Fund includes
Treasury's collections  and investment activity.

The accompanying financial statements include the accounts of all funds described in this note. EPA uses an
expense allocation methodology as a financial statement estimate to present EPA programs' full cost. This
methodology is used because Superfund programs may charge some costs directly to the Superfund Trust
Fund and  charge the remainder of their costs to All Other Funds in the Agency-wide appropriations. These
amounts are presented as Expenses from Other Appropriations on the Statement of Net Cost and as
Income from  Other Appropriations on the Statement of Changes in Net Position and the Statement of
Financing. (See Note 23.)

In addition, specific general support services costs (e.g., rent, communications, utilities, and mail operations)
initially charged to the Agency's Science and Technology (S&T) and Environment Programs and
Management  (EPM) appropriations, are  allocated to the Superfund Trust Fund. During the year, these costs
are allocated based on a ratio of Superfund direct labor hours to the Agency total of all direct labor hours,
using budgeted or actual full-time equivalent personnel charged to these appropriations. Agency general
support services cost charges to the Superfund Trust Fund may not exceed the  ceilings established  in its
appropriation. (See Note 23.)

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                 All Other Funds

                 All Other Funds include other Trust Fund appropriations, General Fund appropriations, Revolving Funds,
                 Special Funds, the Agency Budgetary Clearing accounts, Deposit Funds, General Fund Receipt accounts, the
                 Environmental Services Special  Fund  Receipt Account, the Miscellaneous Contributed Funds Trust Fund, and
                 General Fund appropriations transferred from other federal agencies as authorized by the Economy Act of
                 1932. General Fund appropriation activities that no longer receive current definite appropriations but  have
                 unexpended authority are the Asbestos Loan Program and Energy, Research and Development. Detailed
                 descriptions of All Other Funds are as follows:

                 The Leaking Underground Storage Tank (LUST) Trust Fund, Treasury fund group 8153, was authorized by
                 the Superfund Amendments and  Reauthorization Act of 1986 (SARA) as amended by the Omnibus Budget
                 Reconciliation Act of 1990. The LUST appropriation provides funding to respond to releases from leaking
                 underground  petroleum tanks.  The Agency oversees  cleanup and enforcement programs which are imple-
                 mented by the states. Funds are allocated to the states through cooperative agreements to clean up those
                 sites posing the greatest threat  to human health and the environment. Funds are used for grants to non-
                 state entities including Indian tribes under Section 8001 of the Resource Conservation and Recovery Act.
                 The program  is financed by a one cent  a gallon tax on motor fuels which will expire in 2005.

                                              The  Oil Spill Response Trust Fund, Treasury fund group 8221, was authorized
                                              by the Oil Pollution Act of 1990 (OPA). Monies were appropriated  to the
                                              Oil Spill Response Trust Fund in 1993. The Agency is responsible for direct-
                                              ing, monitoring and providing technical  assistance for major inland oil spill
                                              response activities. This involves setting oil prevention and response stan-
                                              dards, initiating enforcement  actions for compliance with OPA and Spill
                                              Prevention Control and Countermeasure  requirements, and  directing
                                              response actions when appropriate. The Agency carries out research to
                                              improve response  actions to oil spills including research on the use of
                                              remediation techniques such as dispersants and bioremediation. Funding for
                                              oil spill  cleanup actions is provided through the Department of
                                              Transportation under the Oil Spill Liability Trust Fund  and reimbursable
                                              funding from other federal agencies.

                 The State and Tribal Assistance Grants (STAG)  appropriation, Treasury fund group 0103, provides funds for
                 environmental programs and infrastructure assistance including capitalization grants for State revolving funds
                 and performance  partnership grants. Environmental programs and infrastructure supported  are: Clean and
                 Safe Water; Capitalization grants for the Drinking Water State Revolving Funds; Clean  Air; Direct grants for
                 Water and Wastewater Infrastructure needs, Partnership grants to meet Health Standards, Protect
                 Watersheds, Decrease Wetland Loss, and Address Agricultural and Urban Runoff and  Storm Water; Better
                 Waste Management; Preventing Pollution and Reducing Risk in Communities, Homes, Workplaces and
                 Ecosystems; and Reduction of Global and Cross Border Environmental Risks.

                 The S&T appropriation, Treasury fund group 0107, finances salaries, travel, science, technology, research and
                 development  activities including laboratory and center supplies, certain operating expenses, grants, con-
                 tracts, intergovernmental agreements, and purchases of scientific equipment. These activities provide the
                 scientific basis for the Agency's  regulatory actions. In FY 2004, Superfund research costs were appropriated
                 in Superfund and transferred to S&T to allow for proper accounting of the costs. Environmental scientific
                 and technological  activities and  programs include Clean Air;  Clean and  Safe Water; Americans Right to
                 Know About Their Environment;  Better Waste Management; Preventing Pollution and Reducing Risk in
                 Communities, Homes, Workplaces, and  Ecosystems; and Safe Food.

                 The EPM appropriation, Treasury fund group 0108, includes funds for salaries, travel, contracts, grants,  and
                 cooperative agreements for pollution abatement, control, and compliance activities and administrative activi-
                 ties of the Agency's operating programs. Areas  supported from this appropriation include: Clean Air, Clean
                 and Safe Water, Land Preservation and  Restoration, Healthy  Communities and Ecosystems, and Compliance
                 and Environmental Stewardship.

                 The Office of Inspector General (OIG)  appropriation, Treasury fund group 0112, provides funds for  audit
                 and investigative functions to identify and recommend corrective actions on management and administra-
                 tive deficiencies that create the conditions for existing or potential instances of fraud, waste and

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                                SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
mismanagement. Additional funds for audit and investigative activities associated with the Superfund and the
LUST Trust Funds are appropriated under those Trust Fund accounts and transferred to the Office of
Inspector General account. The audit function provides contract, internal controls and performance, and
financial and grant audit services. The appropriation includes expenses incurred and reimbursed from the
appropriated trust funds accounted for under Treasury fund group 8145 and 8153.

The Buildings and Facilities appropriation, Treasury fund group 0110, provides for the construction, repair,
improvement, extension, alteration, and purchase  of fixed equipment or facilities that are owned or used by
the EPA.

The Payment to the Hazardous Substance Superfund appropriation Treasury fund group 0250, authorizes
appropriations from the General Fund of the Treasury to finance activities conducted through the
Hazardous Substance Superfund Program.

The Asbestos Loan  Program was authorized by the Asbestos School Hazard
Abatement Act of 1986 to finance control of asbestos building materials in
schools. Funds have  not been appropriated for this Program since FY  1993. For
FY 1993 and FYI992, the program was funded by a subsidy appropriated from the
General Fund for the actual cost of financing the  loans, and by borrowing  from
Treasury for the unsubsidized portion of the loan. The Program  Fund  disburses
the subsidy to the Financing Fund  for increases in the subsidy. The Financing Fund
receives the subsidy payment, borrows from Treasury and collects the asbestos
loans. The Asbestos Loan  Program is accounted for under Treasury fund group
0118 for the subsidy  and administrative support; under Treasury fund group 4322
for loan disbursements, loans  receivable  and  loan collections on  post FY 1991
loans; and under Treasury fund group 2917 for pre FY 1992 loans receivable and
loan collections.

The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) Revolving Fund,
Treasury fund group 4310, was authorized by the FIFRA Act of 1972,  as amended
in  1988 and as amended by the Food Quality Protection Act of 1996. Pesticide
Maintenance fees are paid by industry to offset the costs  of pesticide reregistration
and reassessment of tolerances for pesticides used in or on food  and animal feed, as required by  law.

The Tolerance Revolving Fund, Treasury fund group 4311, was authorized in  1963 for the deposit of tolerance
fees. Fees are paid by industry for federal services to set pesticide chemical residue limits in or on food  and
animal feed. The fees collected prior to January 2,  1997 were accounted for under this fund. Presently these
fees are being deposited in the FIFRA fund (see above).

The Working Capital Fund (WCF), Treasury fund group, 4565, includes two activities:  computer support
services and postage. The WCF derives revenue from these activities based upon a fee for services. WCF's
customers currently consist solely  of Agency  program offices. Accordingly, revenues generated by WCF and
expenses recorded by the program offices for use of such services along with the related advances/liabilities,
are eliminated on consolidation.

The Exxon Valdez Settlement Fund, Treasury fund group  5297, has funds available to carry out authorized
environmental  restoration  activities. Funding is derived from the collection of reimbursements under the
Exxon Valdez settlement as a  result of an oil spill.

The Pesticide Registration Fund, Treasury fund group 5374, was authorized in 2004 for the  expedited pro-
cessing of certain registration petitions and associated establishment of tolerances for pesticides to be used
in or on food and animal feed. Fees covering these activities, as authorized under the FIFRA Act of 1988,
are to be paid by industry and deposited into this fund group.

Allocations and appropriations transferred to the Agency from other federal agencies include funds from
the Appalachian Regional  Commission, which provides economic assistance to state and local developmen-
tal activities,  and the Agency for International Development, which provides assistance on environmental
matters at international levels. The transfer allocations are accounted for under Treasury fund group 0200
and the appropriation transfers are accounted for under 0108.

The EPA Department of the Treasury Clearing Accounts  include: (I) the Budgetary Suspense Account,  (2)
the Unavailable Check Cancellations and  Overpayments Account, and (3) the Undistributed Intra-agency

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                 Payments and Collections (IPAC) Account. These are accounted for under Treasury fund groups 3875, 3880
                 and 3885, respectively.

                 Deposit funds include: Fees for Ocean Dumping; Nonconformance Penalties; Clean Air Allowance Auction
                 and Sale; Advances without Orders; and Suspense and payroll deposits for Savings Bonds, and State and
                 City Income Taxes Withheld. These funds are accounted for under Treasury fund groups 6050, 6264, 6265,
                 6266, 6275 and 6500.

                 General Fund Receipt Accounts include: Hazardous Waste Permits; Miscellaneous Fines,  Penalties and
                 Forfeitures; General Fund Interest; Interest from Credit Reform Financing Accounts; Downward
                 Reestimates of Subsidies; Fees and Other Charges for Administrative and Professional Services; and
                 Miscellaneous Recoveries and Refunds. These accounts are accounted for under Treasury fund groups 0895,
                 1099, 1435, 1499, 2753.3, 3200 and 3220, respectively.

                 The Environmental Services Receipt account, Treasury fund group 5295, was established for the deposit of
                 fee receipts associated with environmental programs, including radon measurement proficiency ratings and
                 training, motor vehicle engine certifications, and water pollution permits. Receipts in this special fund will be
                 appropriated to the S&T and the EPM appropriations to meet the expenses of the programs that generate
                 the receipts.

                 The Miscellaneous Contributed Funds Trust Fund, Treasury fund group 8741, includes  gifts for pollution con-
                 trol programs that are usually designated for a specific use  by donors and/or deposits from  pesticide
                 registrants to cover the costs of petition hearings when such hearings result in unfavorable decisions to the
                 petitioner.


                 C.  BUDGETS AND BUDGETARY ACCOUNTING
                 Superfund

                 Congress adopts an annual appropriation amount to be available until expended for the Superfund Trust
                 Fund. A transfer account for the Superfund Trust Fund has been established for purposes of carrying out
                 the program activities. As the Agency disburses obligated amounts from the transfer account, the Agency
                 draws down monies from the Superfund Trust Fund at Treasury to cover the amounts being disbursed.

                 All Other Funds

                 Congress adopts an annual appropriation amount for the LUST and the Oil Spill Response Trust Funds to
                 remain available until expended. A transfer account for the LUST Trust Fund has been established for pur-
                 poses of carrying out the program activities. As the Agency disburses obligated amounts from the transfer
                 account, the Agency draws down monies from the  LUST Trust Fund at Treasury to cover the amounts
                 being disbursed. The Agency draws down all the  appropriated monies from the Treasury's Oil Spill Liability
                 Trust Fund to the Oil Spill Response Trust Fund when Congress adopts the appropriation amount.
                                      Congress adopts an annual appropriation for STAG, B&F, and for Payments to the
                                      Hazardous Substance Superfund to be available until expended, as well as annual
                                      appropriations for S&T, EPM and for the OIG to be available for 2 fiscal years.
                                      When the appropriations for the General Funds are enacted, Treasury issues a war-
                                      rant to the respective appropriations.  As the Agency disburses obligated amounts,
                                      the balance of funds available to the appropriation is reduced at Treasury.

                                      The Asbestos Loan Program is a commercial activity financed from a combination of
                                      two sources,  one for the long term costs of the loans and another for the  remaining
                                      non-subsidized portion  of the loans. Congress adopted a I  year appropriation, avail-
                                      able for obligation in the fiscal year for which it was appropriated, to cover the
                                      estimated long term cost  of the Asbestos loans. The long term costs are defined as
                                      the net present value of the estimated cash flows associated with the loans. The
                                      portion of each loan disbursement that did not represent long term cost is financed
                                      under permanent indefinite  borrowing authority established with the Treasury. A
                                      permanent indefinite appropriation is  available to finance the costs of subsidy re-
                                      estimates that occur after the year in which the loan was disbursed.

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                                SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Funding of the FIFRA and Pesticide Registration Funds is provided by fees collected from industry to offset
costs incurred by the Agency in carrying out these programs. Each year the Agency submits an apportion-
ment request to OMB based on the anticipated collections of industry fees.

Funding of the WCF is provided by fees collected from other Agency appropriations to offset costs
incurred for providing the Agency administrative support for computer support and postage.

Funds transferred from other federal agencies are funded by a nonexpenditure transfer of funds from the
other federal agencies. As the Agency disburses the obligated amounts, the balance of funding available to
the appropriation is reduced at Treasury.

Clearing accounts, deposit accounts, and receipt accounts receive no appropriated funds. Amounts are
recorded to the clearing and deposit accounts pending further disposition. Amounts recorded to  the
receipt accounts capture amounts collected for or payable to the Treasury General Fund.


                  \CCOUNTING

Transactions are recorded on an accrual accounting basis and on a budgetary basis  (where budgets are
issued).  Under the accrual method, revenues are recognized when earned and expenses are recognized
when  a  liability is incurred, without regard to receipt or payment of cash. Budgetary accounting facilitates
compliance with legal constraints and controls over the use of federal funds.  Material interfund balances and
transactions are eliminated.


E. REVENUES AND OTHER  FINANCING  SOURCES.

The following EPA policies and procedures to account for inflow of revenue and other financing sources
are in accordance with Statement of Federal Financial Accounting Standards  (SFFAS) No. 7  Accounting for
Revenues and Other Financing Sources."

Superfund

The Superfund  program receives most of its funding through appropriations that may be used, within spe-
cific statutory limits, for operating and capital expenditures (primarily equipment). Additional financing for
the Superfund program is obtained through: reimbursements from other federal agencies, state cost share
payments under Superfund State Contracts (SSCs), and settlement proceeds from  Potentially Responsible
Parties (PRPs), under CERCLA Section I22(b)(3), placed in special accounts. Special accounts were previ-
ously limited to settlement amounts for future costs. However, beginning in FY 2001, cost recovery amounts
received under CERCLA Section ?!22(b)(3) settlements could be placed in special accounts. Cost recovery
settlements that are not placed in special accounts continue to be deposited in the Trust Fund.

All Other Funds

The majority of All  Other Funds receive funding needed to support programs through appropriations,
which may be used, within statutory limits,  for operating and capital expenditures. However, under Credit
Reform  provisions, the Asbestos Loan Program received funding to support the subsidy cost of loans
through appropriations which may be  used with statutory limits. The Asbestos Direct Loan  Financing fund,
an off-budget fund, receives additional funding to support the outstanding loans through collections from
the Program fund for the subsidized portion of the loan. The last year Congress provided appropriations to
make  new  loans was  1993. The  FIFRA and Pesticide Registration funds receive funding through fees collect-
ed for services provided and interest on invested funds. The WCF receives revenue through fees  collected
for services provided to Agency program offices. Such  revenue  is eliminated with related Agency  program
expenses upon  consolidation of the Agency's financial statements. The Exxon Valdez Settlement Fund
receives funding through reimbursements.

Appropriated funds are recognized as Other Financing  Sources expended when goods and services have
been rendered without regard to payment of cash. Other revenues are recognized when earned, i.e., when
services have been  rendered.

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                   F. FUNDS  WITH THE TREASURY

                                   The Agency does not maintain cash in commercial bank accounts. Cash receipts and
                                   disbursements are handled by Treasury. The major funds maintained with Treasury
                                   are Appropriated Funds, Revolving Funds, Trust Funds, Special Funds, Deposit Funds,
                                   and Clearing  Accounts. These funds have balances available to pay current liabilities
                                   and finance authorized obligations, as applicable. (See Note 2.)


                                   G. INVESTMENTS  IN U.S. GOVERNMENT  SECURITIES

                                   Investments in U.S. Government securities are maintained by Treasury and are
                                   reported at amortized cost net of unamortized discounts.  Discounts are amortized
                                   over the term of the investments and reported as interest income. No provision is
                                   made  for unrealized gains or  losses on these securities because, in the majority of
                                   cases,  they are held to maturity. (See Note 4.)
                H.  NOTES RECEIVABLE

                The Agency records notes receivable at their face value and any accrued interest as of the date of receipt.


                I.  MARKETABLE SECURITIES

                The Agency records marketable securities at cost as of the date of receipt. Marketable securities are held
                by Treasury and reported at their cost value in the financial statements until sold. (See Note 6.)


                J.  ACCOUNTS  RECEIVABLE AND  INTEREST  RECEIVABLE (SEE  NOTE 5.)

                Superfund

                CERCLA as amended by SARA provides for the recovery of costs from PRPs. However, cost recovery
                expenditures are expensed when incurred since there is no assurance that these funds will be recovered.

                It is the Agency's policy to record accounts receivable from PRPs for Superfund site response costs when a
                consent decree, judgment, administrative order, or settlement is entered. These agreements are generally
                negotiated after site response costs have been incurred.  It is the Agency's position that until a consent
                decree or other form of settlement is obtained, the amount recoverable should not be recorded.

                The Agency also records accounts receivable from states for a percentage of Superfund site remedial
                action costs incurred by the  Agency within those  states. As agreed to under SSCs, cost sharing arrange-
                ments may vary according to whether a site  was privately or publicly operated at the time of hazardous
                substance disposal and whether the Agency response action was removal  or remedial. SSC agreements are
                usually for  10 percent or 50  percent of site remedial action costs. States may pay the full amount of their
                share  in advance, or incrementally throughout the remedial action process. Allowances for uncollectible
                state cost share receivables have  not been recorded, because the Agency has not  had collection problems
                with these  agreements.

                All Other Funds

                The majority of receivables for All Other Funds represent penalties and interest receivable for general fund
                receipt accounts, unbilled intragovernmental  reimbursements receivable, allocations receivable from
                Superfund  (eliminated  in consolidated totals), and refunds receivable for the STAG appropriation.
                K.  ADVANCES AND  PREPAYMENTS

                Advances and prepayments represent funds advanced or prepaid to other entities both internal and exter-
                nal to the Agency for which a budgetary expenditure has not yet occurred. (See Note 6.)

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                                SECTION  3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
L.  LOANS RECEIVABLE

Loans are accounted for as receivables after funds have been disbursed. Loans receivable resulting from
obligations on or before September 30, 1991, are reduced by the allowance for uncollectible loans. Loans
receivable resulting from loans obligated on or after October I, 1991, are reduced by an allowance equal to
the present value of the subsidy costs associated with these loans. The subsidy cost is calculated based on
the interest rate differential between the loans and Treasury borrowing, the estimated delinquencies and
defaults net of recoveries offset by fees collected and other estimated cash flows associated with these
loans. (See Note 7)


M.  APPROPRIATED AMOUNTS  HELD  BY TREASURY

For the Superfund  and  LUST Trust Funds and for amounts appropriated from the Superfund Trust Fund to
the OIG, cash available to the Agency that is not needed immediately for current disbursements remains in
the respective Trust Funds managed by Treasury. (See Note  17)
N.  PROPERTY,  PLANT, AND EQUIPMENT

EPA accounts for its personal and real property accounting records in accordance with SFFAS No. 6,
"Accounting for Property, Plant and Equipment." For EPA-held property, the Fixed Assets Subsystem (FAS)
automatically generates depreciation entries monthly based on acquisition dates. (See Note 9).

A purchase of EPA-held or contractor-held personal property is capitalized if it is valued at $25 thousand
or more and has an estimated useful life of at least 2 years. Prior to implementing FAS, depreciation was
taken on a modified straight-line basis over a period of 6 years depreciating 10  percent the first and sixth
year, and 20 percent in years 2 through 5. This modified straight-line method is still used for contractor-
held property; detailed records are maintained and accounted for in contractor systems, not in FAS. All
EPA-held personal property purchased before the implementation of FAS was assumed to have an  estimat-
ed useful life of 5 years. New acquisitions of EPA-held personal property are depreciated using the
straight-line method over the specific asset's useful life, ranging from 2 to 15 years.

Superfund contractor-held property used as part of the remedy for site-specific response actions is capital-
ized in accordance with the Agency's capitalization threshold. This property is part of the remedy at the
site and eventually becomes part of the site itself Once the response action has been completed and the
remedy implemented, EPA will retain control of the property, e.g., pump and treat facility, for 10 years or
less, and will transfer its interest in the facility to the respective state for mandatory operation and mainte-
nance - usually 20 years or more. Consistent with EPA's 10 year retention period, depreciation for this
property will be based on a 10 year life.  However, if any property is transferred
to a state  in a year or less, this property will be charged to expense. If any
property is sold prior to EPA relinquishing  interest, the proceeds from the sale
of that property shall be applied against contract payments or refunded as
required by the Federal Acquisition Regulations.

Real property consists of land, buildings, and capital and leasehold improve-
ments. Real property, other than land, is capitalized when the value is $75
thousand or more.  Land is capitalized  regardless of cost. Buildings were valued
at an estimated original cost basis, and land was valued at fair market value if
purchased prior to  FY 1997 Real property  purchased during and after FY 1997
are valued at actual cost. Depreciation for real property is  calculated using the
straight-line method over the specific asset's useful life, ranging from 10 to 102
years. Leasehold improvements are amortized over the lesser of their useful life
or the unexpired lease term. Additions to property and improvements not
meeting the capitalization criteria, expenditures for minor alterations, and
repairs and maintenance are expensed as incurred.

In FY 1997 EPA's Working Capital Fund, a revenue generating activity, imple-
mented requirements to capitalize  software if the purchase price was $100
thousand or more with an estimated useful life of 2 years or more. In  FY 2001,
the Agency began capitalizing software for All Other Funds whose acquisition

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                value is $500 thousand or more in accordance with the provisions of SFFAS No. 10, "Accounting for
                Internal Use Software." Software is depreciated using the straight-line method over the specific asset's use-
                ful life ranging from 2 to 10 years.


                O.  LIABILITIES

                Liabilities  represent the amount of monies or other resources that are likely to be  paid by the Agency as
                the result of a transaction  or event that has already occurred. However, no liability can be paid by the
                Agency without an appropriation or other collections. Liabilities for which an appropriation has not  been
                enacted are classified as unfunded liabilities and there is no certainty  that the appropriations will be  enact-
                ed. Liabilities of the Agency arising from other than contracts can be  abrogated by the Government acting
                in its sovereign capacity.


                P.  BORROWING  PAYABLE TO THE TREASURY

                Borrowing payable to Treasury results from loans from Treasury to fund the Asbestos direct loans
                described in part B and C of this note. Periodic principal payments are made to Treasury based on the col-
                lections of loans receivable.


                0.  INTEREST  PAYABLE  TO  TREASURY

                The Asbestos Loan Program makes periodic interest payments to Treasury based on its debt to Treasury.
                At the end  of FY 2003  and FY 2004, there was no outstanding interest  payable to Treasury since payment
                was made through September 30.


                R. ACCRUED UNFUNDED ANNUAL  LEAVE

                Annual, sick and other leave is expensed as taken during the fiscal year.  Sick leave earned but not  taken is
                not accrued as a liability. Annual leave earned but not taken as of the end of the fiscal year is accrued as an
                unfunded liability. Accrued unfunded annual leave is included in the Statement of Financial Position as a
                component of "Payroll and Benefits  Payable." (See Note 33.)


                S.  RETIREMENT PLAN

                There are two primary retirement systems for federal employees. Employees hired prior to January I,  1984,
                may participate in  the Civil Service Retirement System  (CSRS). On January  I,  1984, the Federal Employees
                Retirement System (FERS) went into effect pursuant to Public Law 99-335. Most employees hired after
                December 31,  1983, are automatically covered by FERS  and Social Security. Employees hired prior to January
                I, 1984, elected to either join FERS and Social Security or remain in CSRS. A primary feature of FERS is that
                it offers a savings plan to which the Agency automatically contributes one percent of pay and matches any
                employee contributions up to an additional four percent of pay. The  Agency also contributes the employer's
                matching  share for Social Security.

                With the issuance  of SFFAS No. 5, "Accounting for Liabilities of the Federal Government," accounting and
                reporting standards were  established for liabilities relating to the federal employee  benefit programs
                (Retirement, Health Benefits and Life Insurance). SFFAS No. 5 requires that the employing agencies recog-
                nize the cost of pensions and other retirement benefits during their employees' active years of service.
                SFFAS No. 5 requires that the Office of Personnel Management (OPM), as administrator of the Civil
                Service Retirement and Federal Employees Retirement Systems, the Federal Employees Health Benefits
                Program,  and the  Federal  Employees Group Life Insurance Program,  provide federal agencies with the actu-
                arial cost  factors to compute the liability for each program.
                T  PRIOR PERIOD ADJUSTMENTS

                Prior period adjustments will be made in accordance with SFFAS No. 21, "Reporting Corrections of Errors
                and Changes in Accounting Principles." Specifically, prior period adjustments will only be made for material

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                                 SECTION  3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
prior period errors to: (1) the current period financial statements, and (T) the prior period financial state-
ments presented for comparison. Adjustments related to changes in accounting principles will only be made
to the current period financial statements, but not to prior period financial statements presented for com-
parison.
Note 2. Fund

Balances with Treasury


Fund Balances with Treasury as of September 30, 2004 and 2003, consist of the following:



Trust Funds:
Superfund
LUST
Oil Spill & Misc

Revolving Funds:
FIFFWTolerance
Working Capital
Cr. Reform Finan.
Appropriated
Other Fund Types
Total
FY 2004 FY 2003 ^^^^H
Assets Assets Total Assets Assets Total ^^^^^^^^H


$ 199,406 $ $ 199,406 $ 26,448 $ $ 26,448
14,825 14,825 34,008 34,008
10,222 10,222 5,581 5,581

4,913 4,913 1,826 1,826
53,560 53,560 57,780 57,780
492 492 492 492
11,639,189 11,639,189 11,526,823 11,526,823
136,646 5,892 142,538 111,599 20,248 131,847
$ 12,059,253 $ 5,892 $ 12,065,145 $ 11,764,557 $ 20,248 $ 11,784,805



•H
^1 o
mm
^^9

H
I
Entity fund balances, except for special fund receipt accounts, are available to pay current liabilities and to
finance authorized purchase commitments (see Status of Fund Balances below). Entity Assets for Other
Fund Types consist of special purpose funds and special  fund receipt accounts, such as the Pesticide
Registration funds and the Environmental Services receipt account. The Non-Entity Assets for Other Fund
Types consist of clearing accounts and deposit funds, which are either awaiting documentation for the
determination of proper disposition or being held by EPA for other entities.
Status of Fund Balances:
Unobligated Amounts in Fund Balances:
Available for Obligation
Unavailable for Obligation
Net Receivables from Invested Balances
Balances in Treasury Trust Fund (Note 17)
Obligated Balance not yet Disbursed
Balances not subject to Obligation
Totals
FY 2004 FY 2003
Superfund All Others Superfund All Others

$ 823,694 $
19
(2,381,849)
188,182
1,569,360

$ 199,406 $

2,080,155 $
92,842
(89,725)
13,256
9,638,406
130,805
11,865,739 $

766,786 $
19
(2,579,726)
866
1,838,503

26,448 $

2,011,471
87,404
(66,574)
12,377
9,582,206
131,473
11,758,357
The funds available for obligation may be apportioned by the OMB for new obligations at the beginning of
the following fiscal year. Funds unavailable for obligation are mostly balances in expired funds, which are
available only for adjustments of existing obligations. For FY 2004 and FY 2003 no differences existed
between Treasury's accounts and EPA's statements for fund balances with Treasury.

-------
FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION  AGENCY
                  Note  3. Cash
                 As of September 30, 2004 and 2003, cash consists of an imprest fund of $10 thousand.
                  Note 4. Investments
                 As of September 30, 2004 and 2003, investments consist of the following
                  Superfund
                  Intragovernmental Securities:
                   Non-Marketable
                 All Others
                 Intragovernmental Securities:
                    Non-Marketable
                                                                    Unamortized
                                                                      (Premium)      Interest    Investments,
                                                                      Discount    Receivable       Net      Market Value
FY 2004   $   2,226,973
          :
FY 2003   $    2,507,927



FY 2004   $    2,232,674

FY 2003   $    2,037,560
                                                                                           38  $    2,217,334  $    2,217,334

                                                                                           37  $    2,516,147  $    2,516,147
                                                                                        27,277  $    2,317,164  $
                         2,317,164
                                                                                        25,834  $    2,114,684  $    2,114,684
                 CERCLA, as amended by SARA, authorizes EPA to recover monies to clean up Superfund sites from
                 responsible parties (RP). Some RPs file for bankruptcy under Title II of the U.S. Code. In bankruptcy settle-
                 ments, EPA is  an unsecured creditor and is entitled to receive a percentage of the assets remaining after
                 secured creditors  have been satisfied. Some RPs satisfy their debts by issuing securities of the reorganized
                 company. The Agency does not intend to exercise ownership rights to these securities, and instead will con-
                 vert them to cash as soon as practicable. (See Note 6.)
                  Note  5. Accounts Receivable
                 The Accounts Receivable for September 30, 2004 and 2003, consist of the following
                                                                             FY 2004
                                                       FY 2003
                                                                     Superfund    All Others    Superfund    All Others
                 Intragovernmental Assets:
                 Accounts & Interest Receivable
                                                                            27,212 $
                                         89,267  $
              34,665  $
               119,941
                 Non-Federal Assets:
                 Unbilled Accounts Receivable
                 Accounts & Interest Receivable
                 Less: Allowance for Uncollectibles

                  Total
                             91,758  $
                            911,452
                          (634,062)
                                                                           369,148 $
   1,682
 104,269
(60,604)
                                         45,347  $
  109,272  $
  815,119
(495,905)
             428,486  $
  1,668
 113,130
(49,502)
              65,296
                 The Allowance for Doubtful Accounts is determined both on a specific identification basis, as a result of a
                 case-by-case review of receivables, and on a percentage basis for receivables not specifically identified.

-------
                                 SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Note 6.  Other Assets
Other Assets for September 30, 2004, consist of the following
                                                                                          Combined
                                                                 Superfund    All Others     Totals
 Intragovernmental Assets:
  Advances to Federal Agencies
  Advances to Working Capital Fund
  Advances for Postage

Total Intragovernmental Assets
  32 $
6,749
6,781  $
              735
              553
1,288
              767
             6,749
              553
8,069
Non-Federal Assets:
  Travel Advances
  Letter of Credit Advances
  Grant Advances
  Other Advances
  Operating Materials and Supplies
  Inventory for Sale

Total Non-Federal Assets
 (53)  $
 751
(955) $
271
1,164
79
199
51
( 1,008)
271
1,164
830
200
51
 699  $
              809
             1,508
Other Assets for September 30, 2003, consist of the following
Intragovernmental Assets:
  Advances to Federal Agencies
  Advances to Working Capital Fund
  Advances for Postage

Total Intragovernmental Assets
                                                                                          Combined
                                                                 Superfund    All Others     Totals
  146
7,268
7,414  $
3,233

 594
3,827 $
3,379
7,268
 594
 1,241
Non-Federal Assets:
  Travel Advances
  Letter of Credit Advances
  Grant Advances
  Other Advances
  Operating Materials and Supplies
  Inventory for Sale
  Securities Received in Settlement for Debt

Total Non-Federal Assets
 731
(918) $
601
1,544
95
217
51
1,912
(969)
601
1,544
826
217
51
1,912
 680 $
3,502 $
4,182
Note 7 Loans Receivable, Net—Non-Federal
Asbestos Loan Program loans disbursed from obligations made prior to FY  1992 are net of allowances for
estimated uncollectible loans, if an allowance was considered necessary. Loans disbursed from obligations

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
                  made after FY 1991  are governed by the Federal Credit Reform Act, which mandates that the  present value
                  of the subsidy costs (i.e., interest rate differentials, interest subsidies, anticipated delinquencies, and defaults)
                  associated with direct loans be recognized as an expense in the year the loan is made. The  net present
                  value of loans is the amount of the gross loan receivable less the present value of the subsidy. For All Other
                  Funds, the loans receivable, allowances, and the nature and amounts of the subsidy expenses associated
                  with the loans as of September 30, 2004 and 2003,  are as follows:
                                                           FY 2004
                                                                        Value of
                                                                         Assets
  Loans                     Assets        Loans
Receivable,                 Related to    Receivable,
  Gross      Allowance*  Direct Loans     Gross
  FY 2003
              Value of
               Assets
              Related to
Allowance*   Direct Loans
                  Direct Loans Obligated
                   Prior to FY 1992

                  Direct Loans Obligated
                   After FY 1991

                  Total
25,243 $
30,466
55,709 $
$
(6,782)
(6,782) $
25,243 $
23,684
48,927 $
33,245 $
34,597
67,842 $
$
(14,336)
(14,336) $
33,245
20,261
53,506
                  * Allowance for Pre-Credit Reform loans (prior to FY I 992 ) is the Allowance for Estimated Uncollectible Loans, and the
                  Allowance for Post Credit Reform Loans (after FY I 991) is the Allowance for Subsidy Cost (present value).

                  Subsidy Expenses for Credit Reform Loans (reported on a cash basis):
Interest Rate Technical
Re-estimate Re-estimate
Direct Loan Subsidy Expense — FY 2004
Downward Subsidy Reestimate — FY 2004
FY 2004 Totals
Direct Loan Subsidy Expense— FY 2003
Downward Subsidy Reestimate — FY 2003
$ $
(2,660)
$ (2,660)
$ 377 $
(170)
$
(2,894)
(2,894)
528 $
(201)
Total
0
(5,554)
(5,554)
905
(371)
                  FY 2003 Totals
                                                                                        207
                                                                                                       327  $
                                                                                                                      534

-------
                                 SECTION  3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Note 8.  Accounts  Payable and  Accrued  Liabilities
The Accounts Payable and Accrued Liabilities are current liabilities and consist of the following amounts as
of September 30, 2004:
Intragovernmental:
Accounts Payable to other Federal Agencies
Liability for Allocation Transfers
Expenditure Transfers Payable to other EPA Funds
Accrued Liabilities, Federal

Total
                                                                             All Other    Combined
                                                                Superfund      Funds        Total
 1,602  $
31,286
69,793
38,100
                                                                                     206
                                                                                   37386
31,286
69,793
75,486
                                                                      140,781  $
                                                                                   37,592  $
                         178,373
Non-Federal:
Accounts Payable, Non-Federal
Advances Payable, Non-Federal
Interest Payable
Grant Liabilities
Other Accrued Liabilities, Non-Federal

Total
36,546 $
3
*
21,694
87, 126
56,716 $
16
41
572,430
107279
93,262
19
41
594, 124
194,405
                                                                      145,369 $
                                                                                  736,482  $
                         881,851
* Dashes indicate a balance below the rounding level of one thousand dollars.
The Accounts Payable and Accrued  Liabilities consist of the following as of September 30, 2003:


Intragovernmental:
Accounts Payable to other Federal Agencies
Liability for Allocation Transfers
Expenditure Transfers Payable to other EPA Funds
Accrued Liabilities, Federal

Superfund

$ 593
20,017
86,087
38,934
All Other Combined
Funds Total

$ 618 $ 1,211
20,017
86,087
69,538 108,472
Total
                                                                      145,631  $
                                                                                   70,156  $
                         215,787
Non-Federal:
Accounts Payable, Non-Federal
Advances Payable, Non-Federal
Interest Payable
Grant Liabilities
Other Accrued Liabilities, Non-Federal

Total
45,880 $
3
553
21,714
97,400
165,550 $
71,160 $
13
2
545,872
105,737
722,784 $
117040
16
555
567586
203, 137
888,334
Note 9.  General  Plant,  Property and  Equipment
Superfund plant, property and equipment consist of personal property items held by contractors and the
EPA. EPA also has property funded by various other Agency appropriations. The property funded by these

-------
FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
appropriations is presented in the aggregate under "All Others" and
Contractor-Held personal, and capital lease property.
As of September 30, 2004
^^^^m
•
EPA-Held Equipment
Software
Contractor-Held Property:
Superfund Site-Specific
General
Land and Buildings
Capital Leases
Total
As of September 30, 2003,

•
EPA-Held Equipment
Software
Contractor-Held Property:
Superfund Site-Specific
General
Land and Buildings
Capital Leases
Total
Note 10. Debt
The debt due to Treasury
•

• AN Others Funds
consists of software; real, EPA-Held and
Plant, Property and Equipment consist of the following:
Superfund
Acquisition Accumulated Net Book
Value Depreciation Value
$ 29,159 $ (15,544) $ 13,615
7,432 (1,147) 6,285

31,328 (11,702) 19,626
9,556 (1,261) 8,295


$ 77,475 $ (29,654) $ 47,821
Plant, Property and Equipment consisted
Superfund
Acquisition Accumulated Net Book
Value Depreciation Value
$ 28,990 $ (15,664) $ 13,326
3,649 (138) 3,511

40,505 (16,642) 23,863
7607 (2,452) 5, 155


$ 80,751 $ (34,896) $ 45,855

consists of the following as of September
FY 2004
Beginning Net Ending
Balance Borrowing Balance
All Others
Acquisition Accumulated
Value Depreciation
$ 159,685 $ (97,249)
98,202 (13,734)


20,687 (6,422)
547876 (114,184)
49,956 (19,275)
$ 876,406 $ (250,864)
of the following:
All Others
Acquisition Accumulated
Value Depreciation
$ 158,199 $ (97785)
53,888 (4,397)


15,679 (6,429)
536,212 (100,826)
41,535 (16,605)
$ 805,513 $ (226,042)

30, 2004 and 2003:
FY 2003
Beginning Net
Balance Borrowing

Net Book
Value
$ 62,436
84,468


14,265
433,692
30,681
$ 625,542


Net Book
Value
$ 60,414
49,491


9,250
435,386
24,930
$ 579,471



Ending
Balance
                Intragovernmental:
                 Debt to Treasury
21,189

-------
                                  SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Note  II.  Custodial Liability
Custodial Liability represents the amount of net accounts receivable that, when collected, will be deposited
to the Treasury General Fund. Included in the custodial liability are  amounts for fines and penalties, interest
assessments, repayments of loans, and miscellaneous other accounts receivable.
Note  12.  Other Liabilities
Other Liabilities consist of the following as of September 30, 2004:
Other Liabilities—Intragovernmental
Superfund—Current
  Employer Contributions & Payroll Taxes
  Other Advances
  Advances, HRSTF Cashout
  Deferred HRSTF Cashout
Superfund—Non-Current
  Unfunded FECA Liability

    Total Superfund

All Other—Current
  Employer Contributions & Payroll Taxes
  WCF Advances
  Other Advances
  Liability for Deposit Funds
  Resources Payable to Treasury
  Subsidy Payable to  Treasury
All Other—Non-Current
  Payable to Treasury Judgment Fund *
  Unfunded FECA Liability

    Total All Other

Other Liabilities—Non-Federal
Superfund—Current
    Unearned Advances, Non- Federal

All Other—Current
    Unearned Advances, Non- Federal
    Liability for Deposit Funds, Non-Federal
All Other—Non-Current
  Capital Lease Liability

    Total All Other
                                                                  Covered by  Not Covered
                                                                   Budgetary  by Budgetary
                                                                   Resources    Resources      Total
                                                                           1,918
                                                                          1,538
                                                                         32,724
                                                                             3
                                                                         36,183  $
                                                                         46,211  $
                                                                          10,613
                                                                          5,601
                                                                                       1,569
              1,918
              1,538
             32,724
                3

              1,569
 1,569  $
37,752
8,842 $
6,749
1,984
(30)
1
437


17,983 $
$ 8,842
6,749
1,984
(30)
1
437
22,000 22,000
7 135 7 135
29,135 $ 47,118
             46,211
                                                                                      41,491
              10,613
              5,601

             41,491
                                                                          16,214  $
41,491  $
57,705
* This amount represents a Contract Disputes Ad settlement paid by the Treasury Judgment Fund on EPA's behalf for
which the Agency is liable.

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                 Other Liabilities consist of the following as of September 30, 2003:

Other Liabilities — Intragovernmental
Superfund — Current
Employer Contributions & Payroll Taxes
Other Advances
Advances, HRSTF Cashout
Deferred HRSTF Cashout
Superfund — Non-Current
Unfunded FECA Liability
Total Superfund
All Other — Current
Employer Contributions & Payroll Taxes
WCF Advances
Other Advances
Liability for Deposit Funds
Resources Payable to Treasury
All Other — Non-Current
Unfunded FECA Liability
Total All Other
Other Liabilities — Non-Federal
Superfund — Current
Unearned Advances, Non-Federal
All Other — Current
Unearned Advances, Non-Federal
Liability for Deposit Funds, Non-Federal
All Other — Non-Current
Capital Lease Liability
Total All Other
Covered by Not Covered
Budgetary by Budgetary
Resources Resources

$ 1,379 $ $
1,811
25,016
947
1,447
$ 29,153 $ 1,447 $_

$ 6,589 $ $
7269
1,674
(515)
1

6,593
$ 15,018 $ 6,593 $

$ 49,809 $ $

$ 5,044 $ $
12,261

35,800
$ 17,305 $ 35,800 $
Total

1,379
1,811
25,016
947
1,447
30,600
^^^^^^^^^^^=

6,589
7269
1,674
(515)
1

6,593
21,611

49,809

5,044
12,261

35,800
53,105
                 Note  13.  Leases

                 CAPITAL  LEASES:
                 The Capital Leases for All Other Funds as of September 30, 2004 and 2003, consist of the following:
                Summary of Assets Under Capital Lease:
                Real Property
                Personal Property
                Software License

                Total
                Accumulated Amortization
FY 2004
FY 2003
     40,913  $      40,913
     2,606          622
      6,437
     49,956  $
     41,535
                                                                                                19,275  $
                 16,605

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                                 SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
EPA has three capital leases for land and buildings housing scientific laboratories and/or computer facilities.
All of these leases include a base rental charge and escalator clauses based upon either rising operating
costs and/or real estate taxes. The base operating costs are adjusted annually according to escalators in the
Consumer Price Indices published by the  Bureau of Labor Statistics, U.S.  Department of Labor. The real
property leases terminate in FYs 2010, 2013, and 2025. EPA also has capital leases terminating in FY 2007 for
seven shuttle buses. These charges are expended out of the EPM  appropriation.
During FY 2004 EPA entered into lease agreements for an  IBM Supercomputer and Microsoft Office soft-
ware. These leases terminate in 2006 and 2009, respectively. These charges are expended out of the
Working Capital Fund.
The  total future minimum lease payments of the capital leases are  listed below.
Future Payments Due:
Fiscal Year
2005
2006
2007
2008
2009
After 5 Years

Total Future Minimum Lease Payments
Less: Imputed Interest

Net Capital Lease Liability

Liabilities not Covered by Budgetary Resources (See Note 12)
                                                                                         All Others
                                                                                                8,734
                                                                                                8,716
                                                                                                8,050
                                                                                                7,821
                                                                                                6,295
                                                                                                71,014

                                                                                               110,630
                                                                                              (69,139)
OPERATING  LEASES:

The GSA provides leased real property (land and buildings) as office space for EPA employees. GSA
charges a Standard Level User Charge that approximates the commercial rental  rates for similar properties.
For All Other Funds, EPA has three direct operating leases for land and buildings housing scientific laborato-
ries and/or computer facilities during FY 2004. Most of these leases include a base rental charge and
escalator clauses based upon either rising operating costs and/or real estate taxes. The base operating costs
are adjusted annually according to escalators in the Consumer Price Indices published by the Bureau of
Labor Statistics. Two of these leases expire in FYs 2017 and 2020. A third  lease that expired in FY 2001 was
extended until FY 2007 These charges are expended from the EPM appropriation. The total minimum
future costs of operating leases are listed  below.
                                                                                          Operating
                                                                                         Leases, Land
                                                                                        & Buildings—
                                                                                          All Others
Fiscal Year
2005
2006
2007
2008
2009
Beyond 2009
                                                                                                  87
                                                                                                  87
                                                                                                  81
                                                                                                  74
                                                                                                  74
Total Future Minimum Lease Payments
                                                                                                 1,101

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                Note  14.  Pension  and  Other Actuarial  Liabilities
                The Federal Employees' Compensation Act (FECA) provides income and medical cost protection to cov-
                ered federal civilian employees injured on the job, employees who have incurred a work-related
                occupational disease, and  beneficiaries of employees whose death is attributable to a job-related  injury or
                occupational disease. Annually, EPA is allocated the portion of the long term FECA actuarial liability attrib-
                utable to the entity. The liability is calculated to estimate the expected  liability for death, disability, medical
                and miscellaneous costs for approved compensation cases. The liability amounts and the calculation
                methodologies are provided by the Department of Labor.

                The FECA Actuarial Liability at September 30, 2004 and 2003, consists of the following:
                                                                     FY 2004
                       FY 2003
                                                               Superfund    All Others    Superfund    All Others
                FECA Actuarial Liability
7,263  $
33,018 $
7,937 $
36,159
                The FY 2004 present value of these estimated outflows are calculated using a discount rate of 4.883 per-
                cent in the first year, and 5.235 percent in the years thereafter. The estimated future costs are recorded as
                an unfunded liability.


                Note   15.  Cashout Advances,  Superfund

                Cashouts are funds received by EPA, a state, or another PRP under the terms of a settlement agreement
                (e.g., consent decree) to finance response action costs at a specified Superfund site. Under CERCLA
                ?Section I22(b)(3), cashout funds received by EPA are placed in site-specific,  interest bearing accounts
                known as special accounts and are used in accordance with the terms of the settlement agreement. Funds
                placed in special accounts may be used without further appropriation by Congress.


                Note   16.  Unexpended Appropriations, All Other Funds
                As of September 30, 2004 and 2003, the Unexpended Appropriations consist of the following for All Other
                Funds:
Unexpended Appropriations:
Unobligated
Available
Unavailable
Undelivered Orders
FY 2004

$ 1,911,797
39,591
8,908,748
FY 2003

$ 1,797,410
41,667
8,929, 159
               Total
                $   10,860,136  $   10,768,236
                Note  17. Amounts Held  by Treasury
                Amounts Held by Treasury for Future Appropriations consist of amounts held in trusteeship by Treasury in
                the Superfund Trust Fund and the LUST Trust Fund.

-------
                                   SECTION  3. FY 2OO4  ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Superfund (Audited)
Superfund is supported primarily by general revenues, cost recoveries of funds spent to clean up hazardous
waste sites, interest income, and fines and  penalties. Prior to December 31,  1995, the fund was also support-
ed by other taxes on crude oil and petroleum and on the sale or use of certain chemicals. The authority to
assess those taxes and the environmental tax on  corporations also expired on December 31,  1995, and has
not been renewed by Congress. It is not known  if or when such taxes will be reassessed in the future. (See
Note 36 for more  information on the status of this trust fund.)
The following reflects the Superfund Trust Fund  maintained by Treasury as of September 30,  2004 and
2003. The  amounts contained  in these  notes have been  provided by Treasury and are audited. As indicated,
a portion of the outlays represents amounts received by EPA's Superfund Trust Fund; such funds are elimi-
nated on consolidation with the Superfund Trust Fund maintained by Treasury.
                                        SUPERFUND FY 2004
Undistributed Balances
  Uninvested Fund Balance

Total Undisbursed Balance
Interest Receivable
Investments, Net

   Total Assets

Liabilities & Equity
Liability for Allocation to CDC

Equity (Note 36)

   Total Liabilities and Equity

Receipts
  Corporate Environmental
  Cost Recoveries
  Fines & Penalties

Total Revenue
Appropriations Received
Interest Income

   Total Receipts

Outlays
  Transfers to/from EPA, Net
  Transfers to CDC

   Total Outlays

Net Income
                                                                                 Treasury     Combined
                     8,182
     2,402,074

$    2,402,074  $
$    2,402,074

$    2,402,074
     1,256,790  $
     1,256,790
                    188,182
 (184,778)
$    1,256,790  $
(1,256,790)
  (30,763)

(1,287,553)

    75,111
2,217,296
    3,442 $    2,405,516
       -   	


    11,061          11,061

   (7619) $    2,394,455
    3,442 $    2,405,516
867 $
74,063
2,818
77,748
1,257,536
27380
867
74,063
2,818
77,748
1,257,536
27380
             $    1,362,664  $     1,362,664
     0
(30,763)
1,331,901

-------
FISCAL YEAR 2OO4 ANNUAL  REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                          SUPERFUNDFY2003
                                                                                                  Treasury     Combined
                  Undistributed Balances
                   Available for Investment

                  Total Undisbursed Balance
                  Interest Receivable
                  Investments, Net

                  Total Assets

                  Liabilities & Equity
                  Equity (Note 36)

                  Total Liabilities and Equity

                  Receipts
                   Corporate Environmental
                   Cost Recoveries
                   Fines & Penalties

                  Total Revenue
                  Appropriations Received
                  Interest Income

                  Total Receipts

                  Outlays
                   Transfers to EPA
                   Transfers to CDC

                     Total Outlays

                  Net Income
     2,599,744

$    2,599,744  $


$    2,599,744  $

$    2,599,744  $
$    1,283,223
     1,283,223
$    1,283,223  $
866
37
(83,634)
(82,731) $_
(82,731) $
(82,731) $_
(99,355) $
146,502
2,873
50,020
632,307
48,945
731,272 $
(1,283,223) $
(80,200)
( 1,363,423)
(632,151) $
866
37
2,516,110
2,517,013
^^^^^^^^^=
2,517,013
2,517,013
^^^^^^^^^=
(99,355)
146,502
2,873
50,020
632,307
48,945
731,272
0
(80,200)
(80,200)
651,072
                  LUST (Audited)
                  LUST is supported primarily by a sales tax on motor fuels to clean up LUST waste sites. In FYs 2004 and
                  2003 there were no fund receipts from cost recoveries. The following represents the LUST Trust Fund as
                  maintained by Treasury. The amounts contained in these notes have been provided by Treasury and are
                  audited. Outlays represent appropriations received  by EPA's LUST Trust Fund; such funds  are eliminated on
                  consolidation with the LUST Trust  Fund maintained by Treasury.

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SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS



Undistributed Balances
Uninvested Fund Balance
Total Undisbursed Balance
Interest Receivable
Investments, Net
Total Assets
Liabilities & Equity
Equity
Total Liabilities and Equity
Receipts
H ighway TF Tax
Airport TF Tax
Inland TF Tax
Refund Gasoline Tax
Refund Diesel Tax
Refund Aviation Tax
Total Revenue
Interest Income
Total Receipts
Outlays
Transfers to/from EPA, Net
Total Outlays
Net Income
LUST FY 2004
EPA Treasury

$ $ 13,256
13,256
27277
89,725 2,200, 165
$ 89,725 $ 2,240,698
$ 89,725 $ 2,240,698
$ 89,725 $ 2,240,698
$ $ 180,763
11,678
454
(1,535)
(2,136)
(227)
188,997
66,762
$ $ 255,759
$ 75,552 $ (75,552)
75,552 (75,552)
$ 75,552 $ 180,207

Combined ^^^^^^^^H

$ 13,256
13,256
27277
2,289,890
$ 2,330,423
$ 2,330,423
$ 2,330,423
$ 180763
11,678
454
(1,535)
(2,136)
(227)
188,997
66,762
$ 255,759
$ 0
0
$ 255,759

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
                  Undistributed Balances
                    Uninvested Fund Balance

                  Total Undisbursed Balance
                  Interest Receivable
                  Investments, Net

                     Total Assets
                                                              LUST FY 2003
                                                                                       EPA        Treasury     Combined
             12,377
                                                                                          66,574  $    2,060,490  $
  12,377
             12,377         12,377
             25,834         25,834
66,574       2,022,279       2,088,853
                        2,127,064
                  Liabilities & Equity
                  Equity
                     Total Liabilities and Equity
66,574  $    2,060,490
2,127,064
66,574  $    2,060,490  $    2,127,064
                  Receipts
                    Highway TF Tax
                    Airport TF Tax
                    Inland TF Tax
                    Refund Gasoline Tax
                    Refund Diesel Tax
                    Refund Aviation Tax

                  Total Revenue
                  Interest Income

                     Total Receipts
177340 $
12,241
448
(2,064)
(3,214)
(274)
184,477
64,447
177340
12,241
448
(2,064)
(3,214)
(274)
184,477
64,447
            248,924  $
 248,924
                  Outlays
                   Transfers to/from EPA, Net
                  Net Income
71,843  $
                                                                                           71,843
                                                                                           71,843  $
             177,081  $
 248,924
                  Note  18. Commitments and  Contingencies
                  EPA may be a party in various administrative proceedings, legal  actions and claims brought by or against it.
                  These include:
                   •    Various personnel actions,  suits, or claims brought against the Agency by employees and others.
                   •    Various contract and assistance program claims brought against the Agency by vendors, grantees and
                       others.
                   •    The  legal recovery of Superfund costs incurred for pollution cleanup of specific sites, to include the
                       collection of fines and penalties from responsible parties.
                   •    Claims against recipients for improperly spent assistance funds which may be settled by a  reduction  of
                       future EPA funding to the grantee or the  provision of additional grantee matching funds.

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                               SECTION  3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Superfund:

Under CERCLA Section  I06(a), EPA issues administrative orders that require parties to clean up contami-
nated sites. CERCLA Section I06(b) allows a party that has complied with such an order to petition EPA
for reimbursement from the fund of its reasonable costs of responding to the order, plus interest. To be eli-
gible for reimbursement, the party must demonstrate either that it was not a liable party under CERCLA
Section  I07(a) for the response action ordered, or that the Agency's selection of the response action was
arbitrary and capricious or otherwise not in accordance with law.

As of September 30, 2004, there are currently five CERCLA Section I06(b) administrative claims. If the
claimants are successful, the total losses on the administrative and judicial  claims could amount to approxi-
mately $68.0 million. The Environmental Appeals Board  has not yet issued final decisions on any of these
administrative claims; therefore, a definite estimate of the amount of the  contingent loss cannot be  made.
The claimants' chance of success overall is characterized as reasonably possible.

All Other Funds:

As of September 30, 2004, there are three claims which may be considered threatened litigation involving
all other appropriated funds of the Agency. If the claimants are successful, the total losses of the claims are
estimated to range from $79 to $13.9 million. The largest claim (estimated range from $6.0 to $12.0 million,
deemed reasonably possible) is an unasserted Contract Disputes Act matter which EPA will contest if
asserted.

Judgment Fund:

In cases that are paid by the U.S. Treasury Judgment  Fund, the  Agency  must recognize the full cost  of a
claim  regardless of who is actually paying the claim. Until these  claims are settled or a court judgment is
assessed and the Judgment Fund is determined to be the appropriate source for the payment, claims that
are probable and estimable must be recognized as an expense and liability of the Agency. For these cases,
at the time of settlement or judgment, the liability will be reduced and  an imputed financing source recog-
nized. See Interpretation of Federal Financial  Accounting Standards No. 2, "Accounting for Treasury
Judgment Fund Transactions."

As of September 30, 2004, there are no material claims  pending in the  Treasury Judgment Fund.


Note   19.  Exchange  Revenues,  Statement of Net Cost


Exchange revenues on the Statement of Net Cost include  income from services provided, interest revenue
(with the exception of interest earned on trust fund  investments), and  miscellaneous earned  revenue.
Note  20.  Environmental  Cleanup Costs
As of September 30, 2004, the EPA has three sites that require clean up stemming from its activities. Costs
amounting to $1.22 million may be paid out of the Treasury Judgment Fund. One claimant's chance of suc-
cess ($1.20 million) is characterized as probable; the other two are characterized as reasonably possible.

Accrued Cleanup Cost:

The EPA has 12 sites that will require future clean up associated with permanent closure and two sites with
clean up presently underway. The estimated costs are approximately $8.4 million. Since the cleanup costs
associated with permanent closure are not primarily recovered through user fees, EPA has elected to rec-
ognize the estimated total cleanup cost as a liability and record changes to the estimate  in subsequent
years.

The FY 2004 estimate for unfunded cleanup costs decreased by $62 thousand from the FY 2003 estimate.
There was a net decrease of $535 thousand in funded cleanup costs from FY  2003 to FY 2004. EPA could
also be potentially liable for cleanup costs, at a GSA-leased site; however, the  amounts are not known.

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
                Note 21. Superfund  State  Credits
                Authorizing statutory language for Superfund and related federal regulations require states to enter into
                SSCs when EPA assumes the lead for a remedial action in their state. The SSC defines the state's role in
                the remedial action and obtains the state's assurance that they will share in the cost of the remedial action.
                Under Superfund's authorizing statutory language, states will provide EPA with a 10 percent cost share for
                remedial action costs incurred at privately owned or operated sites, and at least 50 percent of all response
                activities (i.e., removal, remedial  planning,  remedial action, and enforcement) at publicly operated sites. In
                some cases, states may use EPA approved credits to reduce all or part of their cost share requirement that
                would otherwise be borne by the states.  Credit is limited to state site-specific expenses EPA has deter-
                mined to be reasonable,  documented, direct out-of-pocket expenditures of non-federal funds for remedial
                action.

                Once EPA has reviewed  and approved a  state's claim for credit, the state must first apply the credit at the
                site where it was earned. The state may apply any excess/remain ing credit to another site when approved
                by EPA. As of September 30,  2004, the total remaining state credits have been estimated at $5.4 million.
                The estimated ending credit balance on September 30, 2003 was $9.6 million.


                Note 22.  Superfund  Preauthorized  Mixed  Funding Agreements


                Under Superfund preauthorized mixed funding agreements, PRPs agree to perform response actions at
                their sites with the understanding that EPA will  reimburse the PRPs a certain percentage of their total
                response action costs.  EPA's authority to  enter into  mixed funding agreements is provided under CERCLA
                Section  III (a)(2). Under  CERCLA Section I22(b)(l), as amended by SARA, PRPs  may assert a claim
                against the Superfund Trust Fund for a portion of the costs they incurred while conducting a preauthorized
                response action agreed to under a mixed funding agreement. As of September 30, 2004,  EPA had  15 out-
                standing preauthorized mixed funding agreements with obligations totaling $34.0 million. A liability is not
                recognized for these amounts until all work has been performed by the PRP and has been approved by
                EPA for payment. Further, EPA will not disburse any funds under these agreements until the PRP's applica-
                tion, claim, and  claims adjustment processes have been reviewed and approved by EPA.


                Note 23.  Income and  Expenses  from  other Appropriations;

                General  Support Services Charged to Superfund
                The Statement of Net Cost reports costs that represent the full costs of the program outputs. These costs
                consist of the direct costs and all other costs that can be directly traced, assigned on a cause and effect
                basis, or reasonably allocated to program outputs. (See Note I B, Reporting Entities, Superfund.)

                During FYs 2004 and 2003, the EPM appropriation funded a variety of programmatic and non-programmatic
                activities across the Agency, subject to statutory requirements. This appropriation was created to fund per-
                sonnel compensation and benefits, travel, procurement, and contract activities.

                All of the expenses from EPM are distributed between  EPA's two Reporting Entities: Superfund and All
                Other Funds. This distribution is calculated using a combination of specific  identification of expenses to
                Reporting Entities, and a weighted average that distributes expenses proportionately to total programmatic
                expenses. As illustrated below, this estimate does not impact the consolidated totals of the Statement of
                Net Cost or the Statement of Changes in Net Position.

-------
                               SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Superfund
All Others

    Total
                                       FY 2004
                         Income From  Expenses From
                            Other        Other
                        Appropriations Appropriations
                                            FY 2003
                               Income From  Expenses From
                                 Other       Other
                              Appropriations Appropriations
 82,776
(82,776)
(82,776)
 82,776
 75,597
(75,597)
(75,597)
 75,597
                            0  $
In addition, the related general support services costs allocated to the Superfund Trust Fund from the S&T
and EPM funds are $14.1  million for FY 2004 and $11.9 million for FY 2003.
Note  24.  Custodial Revenues and Accounts  Receivable
EPA uses the accrual basis of accounting for the collection of fines, penalties and miscellaneous receipts.
Collectibility by EPA of the fines and penalties is based on the RPs' willingness and ability to pay.
Fines, Penalties and Other Misc. Revenue (EPA)

Accounts Receivable for Fines, Penalties and Other Miscellaneous Receipts
  Accounts Receivable
  Less: Allowance for Doubtful Accounts
Total
                                                162,546  $
                                                103,847
                                                (51,630)
                                                                                52,217  $
                                                174,509
                                                             76,880
Note  25.  Statement of Budgetary Resources

Budgetary resources, obligations incurred, and outlays, as presented in the audited Statement of Budgetary
Resources, are  reconciled to amounts to be included in  the Budget of the United States Government,
FY 2006, as follows. The Budget of the United States Government with actual numbers for FY 2004 has not
yet been published. We expect it will be published by March 2005, and it will be available on the OMB
website at http://www.whitehouse.gov/omb/budget/fy2006. The actual amounts published for the year
ended September 30, 2004, will be included in EPA's FY 2005 financial statement disclosures.
FY 2004
Superfund
Statement of Budgetary Resources
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Expired Funds *
Reported for Budget of the U. S. Government
All Other
Statement of Budgetary Resources
Funds Reported by Other Federal Entities
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Expired and Immaterial Funds *
Budgetary
Resources Obligations Outlays

$ 2,300,850 $

5,885
$ 2,306,735 $

$ 10,851,239 $
1,185
622
(91,468)

1,477137 $

5,903
1,483,040 $

8,678,244 $
1,185
(6,726)
2,740

1,463,868


1,463,868

8,233,315



Reported for Budget of the U. S. Government
                                   10,761,578  $    8,675,443  $
                                               8,233,315

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                Budgetary resources, obligations incurred, and outlays, as presented in the audited Statement of Budgetary
                Resources, are reconciled to amounts included in the Budget of the United States Government, FY 2005-
                Appendix (Budget Appendix), as follows. The Budget Appendix with actual numbers for FY 2003 was
                published after the audited financial statements were issued. In accordance with FASAB Technical Bulletin
                2002-2, the applicable Budget Appendix amounts for FY 2003  are included below.
FY 2003
Superfund
Statement of Budgetary Resources
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Expired Funds *
Reporting by other Agencies with Allocations
OMB-level Adjustment - appropriation temporarily not available, special account
interest
Rounding differences **
Budget of the United States Government
All Other
Statement of Budgetary Resources
Funds Reported by Other Federal Entities
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Expired and Immaterial Funds *
Rounding differences **
Budget of the United States Government
Budgetary
Resources Obligations
$ 2,317,206 $
2,114
17636
(141,000)
(1,956)
$ 2,194,000 $_
$ 9,910,793 $
(353)
622
(83,946)
(1,116)
$ 9,826,000 $
1,550,401 $
2,133
5,499

(33)
1,558,000 $
1 !
7811,921 $

4,142
(63)
7,816,000 $
Outlays
1,445,513
1,313

7,741

433
1,455,000
7,397,843
(36)
26

167
7398,000
                * Expired funds are not included in Budgetary Resources Available for Obligation and Total New Obligations in the
                Budget Appendix (lines 23.90 and 10.00). Also, minor funds are not included in the Budget Appendix.
                ** Balances are rounded to millions in the Budget Appendix.


                Note 26.  Recoveries and Resources Not  Available, Statement of
                Budgetary Resources

                Recoveries of Prior Year Obligations, Temporarily Not Available, and Permanently Not Available on the
                Statement of Budgetary Resources consist of the following amounts:
                 Superfund
FY 2004      FY 2003
                                                                                                       124,797
                                                                                                       (8,274)

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                                  SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
  All Others
Recoveries of Prior Year Obligations-downward adjustments of prior years' obligations
Temporarily Not Available-rescinded authority

Permanently Not Available:
  Payments to Treasury
  Rescinded Authority
  Canceled Authority

Total Permanently Not Available

Note  27 Unobligated  Balances Available
                                                                                 FY 2004
             FY 2003
     95,927  $
     (2,641)
    (49,099)
    (19,463)
 114,437
The availability of unobligated balances consists of the following as of September 30, 2004 and 2003.
Unexpired unobligated balances are available to be apportioned  by the OMB for new obligations at the
beginning of the following fiscal  year. The expired unobligated balances are only available for upward adjust-
ments of existing obligations.
  Superfund
Unexpired Unobligated Balance
Expired Unobligated Balance

Total
FY 2004      FY 2003
    823,694
         19
 766,786
     19
     823,713 $
766,805
Unexpired Unobligated Balance
Expired Unobligated Balance

Total
   2,080,155
     92,840
2,011,471
  87401
   2,172,995 $    2,098,872
Note  28.  Offsetting  Receipts
Distributed offsetting receipts credited to the general fund, special fund, or trust fund receipt accounts off-
set gross outlays. For FYs 2004 and 2003, the following receipts were generated from these activities:
  Superfund
Trust Fund Recoveries

Total
FY 2004
     74,063
 146,502
     74,063 $      146,502
Special Fund Environmental Service
Downward Re-estimates of Subsidies
Trust Fund Appropriation

Total
      5,554
    1,257536
                   11,649
 632,307
   1,276,778 $
643,956
* Not reported as part of Offsetting Receipts in FY 2003. FY 2003 downward re-estimates were $371 thousand.

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
                  Note  29.  Statement of Financing
                 Specific components requiring or generating resources in future periods and resources that fund expenses
                 recognized in prior periods are related to changes in liabilities not covered by budgetary resources. For
                 FYs 2004 and 2003, the following line items are reconciled to the increases or decreases in those liabilities.
                 Statement of Financing lines FY 2004:
                 Resources that fund prior period expenses
                 Components requiring or generating resources in future periods:
                   Increases in environmental liabilities
                   Increase in contingencies

                 Total
             All Other    Combined
Superfund      Funds         Total
      (2,243)
(11,612)


 1,244
22,425
                                 1,244
                               22,425
                                 9,814
Increases (Decreases) in Liabilities Not Covered by Budgetary
Resources and Reconciling Items
Unfunded Annual Leave Liability
Unfunded Contingent Liability
Unfunded Judgment Fund Liability
Unfunded Workers Compensation Liability
Actuarial Workers Compensation Liability
Unfunded Clean-up Costs Liability
Allowance for Subsidy
Subsidy re-estimates
Total
Statement of Financing lines FY 2003:
Components requiring or generating resources in future periods:
Increase in annual leave liability
Increases in environmental liabilities
Increase in workers compensation costs
$ (1,690) $ (5,339)
1,607
22,000
122 542
(675) (3, 140)
61
(3,097)
(577)
$ (2,243) $ 12,057
All Other
Superfund Funds

$ 1,088 $ 5,647
(3,276)
246 4,591
$ (7029)
1,607
22,000
664
(3,815)
61
(3,097)
(577)
$ 9,814
Combined
Total

$ 6,735
(3,276)
4,837
                 Total

                 Increases (Decreases) in Liabilities Not Covered by Budgetary
                 Resources and Reconciling Items
                 Unfunded Annual Leave Liability
                 Unfunded Contingent Liability
                 Unfunded Workers Compensation Liability
                 Actuarial Workers Compensation Liability
                 Subsidy Payable to Treasury
                 Unfunded Clean-up Costs Liability
                 Allowance for Subsidy
                 Subsidy re-estimates

                 Total
       1,334  $
          7
        239
 6,962  $
8,296
              6,976
               (2)
               198
              4,639
              (371)
             (3,274)
               201
               (71)
       1,334  $
 6,962  $
8,296
                  Note  30.  Costs  Not  Assigned  to Goals
                  FY 2004's Statement of Net Cost by Goal has $18.2 million in gross costs not assigned to goals. This
                  amount is comprised of decreases of $5.7 million in unfunded cleanup costs, $5.6 million in overhead costs,
                  $270 million in other unfunded expenses and $2.9 in subsidy expense; offset by increases of $13.8 million in

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                              SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
undistributed federal payroll costs, $3.7 million in depreciation expense, $40.1  million in operating expenses,
and $1.8 million change in actuarial liability.

FY 2003's Statement of Net Cost by Goal has $ 12.8 million in gross costs not assigned to goals. This amount
is comprised of decreases of $3.3 million  in environmental cleanup costs, $1.4 million in  bad debt expenses,
and $1.2 million in capitalized overhead charges; offset by increases of $0.4 million in undistributed federal
payroll-related costs, $3.8 million in depreciation expenses not assigned, $0.2 million in imputed costs, $0.3
million in other unfunded expenses, and $14.0 million in operating program expenses.


Note 31. Transfers-ln and Out,  Statement of Changes in Net

Position
APPROPRIATION TRANSFERS,  IN/OUT:

For FYs 2004 and 2003, the Appropriation Transfers under Budgetary Financing Sources on the Statement
of Changes in Net Position are comprised of nonexpenditure transfers that affect Unexpended
Appropriations for non-invested appropriations. These amounts are included in the Budget Authority, Net
Transfers and Prior Year Unobligated Balance, Net Transfers lines on the Statement of Budgetary Resources.
Detail of the Appropriation Transfers on the Statement of Changes in Net Position and a reconciliation with
the Statement of Budgetary Resources follow:
Fund/Type of Account
GSA Building Fund
Appalachian Regional Commission
EPM
Total Appropriation Transfers
Net Transfers from Invested Funds
Transfers to Other Agencies
Allocations Rescinded
Total of Net Transfers on Statement of Budgetary Resources
Superfund Superfund All Others All Others
FY2004 FY2003 FY 2004 FY 2003


$ $
$ $
1,256,790
(5,157)
7463
$ 1,259,096 $


$
$
1,283,223
(5,155)
8,274
1,286,342 $
(1,538)
60
1,630 $
152 $
75,552

448
76, 152 $


4,550
4,550
71,843

470
76,863
TRANSFERS IN/OUT WITHOUT  REIMBURSEMENT, BUDGETARY:

For FY 2004 and 2003, Transfers In/Out under Budgetary Financing Sources on the Statement of Changes in
Net Position consist of transfers to or from other federal agencies and between EPA funds. These transfers
affect Cumulative Results of Operations. Detail of the transfers-in and transfers-out, expenditure and non-
expenditure, follows:
Superfund Superfund All Others All Others
Type of Transfer/Funds FY 2004 FY 2003 FY 2004 FY 2003
Transfers-in(out), expenditure, Superfund to S&T fund $
Transfers-in(out), expenditure, Superfund to OIG fund
Transfers-out, nonexpenditure, from Superfund to other federal agencies
Transfer-out, expenditure, to Superfund Special Accounts
Transfers-out, nonexpenditure, from Treasury trust fund to CDC
Transfers-in, nonexpenditure, Oil Spill
Transfer-in(out), cancelled funds
Total Transfers in(out) without Reimbursement, Budgetary $
(44,433) $
(13,136)
(5,157)

(30,763)

5,903
(87,586) $_
(85,608) $
(12,659)
(5,155)
(9,642)
(80,200)

2,133
(191,131) $_
44,433 $
13, 136



16,113
(5,903)
67,779 $
85,608
12,659



15,480
(2,133)
111,614

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S.  ENVIRONMENTAL PROTECTION AGENCY
                TRANSFERS IN/OUT WITHOUT REIMBURSEMENT, OTHER FINANCING SOURCES:

                For FYs 2004 and 2003, Transfers In/Out without Reimbursement under Other Financing Sources on the
                Statement of Changes in Net Position are comprised of transfers of property, plant and equipment
                between EPA funds and transfers of negative subsidy to a special receipt fund for the credit reform funds.
                The amounts reported on the Statement of Changes in Net Position are as follows:
                Type of Transfer/Funds
                Transfer-in(out) of property, between Superfund and EPM
                Transfers of negative subsidy, transfer-in paid and funded in year follow-
                  ing transfer-(out)

                  Total Transfers in(out) without Reimbursement, Budgetary
Superfund    Superfund    All Others    All Others
 FY2004      FY2003      FY 2004      FY 2003
        (I)
(84)

 371
                                           287
                 Note 32. Imputed  Financing
                 In accordance with SFFAS No. 5, "Liabilities of the Federal Government," federal agencies must recognize
                 the portion of employees' pensions and other retirement benefits to be paid by the OPM trust funds.
                 These amounts are recorded as imputed costs and imputed financing for each agency. Each year the OPM
                 provides federal agencies with cost factors to calculate these imputed costs and financing that apply to the
                 current year. These cost factors are multiplied by the current year's salaries or number of employees, as
                 applicable, to provide an estimate of the imputed financing that the OPM trust funds will provide for each
                 agency. The estimates for FY 2004 were $19.7 million and $106.3 million for Superfund and All Other
                 Funds, respectively. For FY 2003, the estimates for Superfund and All Other Funds were $17.8 million and
                 $103.2 million, respectively.
                 In addition  to the pension and retirement benefits described above, EPA also records imputed costs and
                 financing for Treasury Judgment Fund payments on behalf of the agency. Entries are made in accordance
                 with the Interpretation of Federal Financial Accounting Standards No. 2, "Accounting for Treasury Judgment
                 Fund Transactions." For FY 2004 entries for Judgment Fund payments for Superfund and All Other Funds
                 totaled $23.6 thousand and  $2.8 million, respectively. For FY 2003,  entries for Judgment Fund payments for
                 Superfund  and All Other Funds totaled $2.2 million and  $5 million, respectively.

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                                   SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Note  33. Payroll and Benefits  Payable
Payroll and benefits payable to EPA employees for the years ending September 30, 2004 and 2003, consist
of the following:
FY 2004 Payroll and Benefits Payables
Superfund — Current
Accrued Funded Payroll and Benefits
Withholdings Payable
Employer Contributions Payable — TSP
Other Post-employment Benefits Payable
Accrued Unfunded Annual Leave
Total — Superfund — Current
All Other Funds — Current
Accrued Funded Payroll and Benefits
Withholdings Payable
Employer Contributions Payable — TSP
Other Post-employment Benefits Payable
Accrued Funded Leave, WCF
Accrued Unfunded Annual Leave
Total — All Other Funds — Current
Covered by Not Covered
Budgetary by Budgetary
Resources Resources
$ 5,307 $ $
4,059
282
3
22,044
$ 9,651 $ 22,044 $

$ 24,538 $ $
18,712
1,301
33
320
104, 147
$ 44,904 $ 104,147 $
Total
5,307
4,059
282
3
22,044
31,695

24,538
18,712
1,301
33
320
104, 147
149,051
FY 2003 Payroll and Benefits Payables
Covered by   Not Covered
 Budgetary   by Budgetary
 Resources    Resources
Superfund—Current
Accrued Funded Payroll and Benefits
Withholdings Payable
Employer Contributions Payable—TSP
Other Post-employment Benefits Payable
Accrued Unfunded Annual Leave

Total—Superfund—Current

All Other Funds—Current
Accrued Funded Payroll and Benefits
Withholdings Payable
Employer Contributions Payable—TSP
Other Post-employment Benefits Payable
Accrued Funded Leave, WCF
Accrued Unfunded Annual Leave
        4,097 $
        3,007
          197
           3
        7,304  $
23,735 $
              4,097
              3,007
                197
                 3
             23,735
31,039
17645 $
14,366
940
33
320

$ 17645
14,366
940
33
320
109,487 109,487
Total—All Other Funds—Current
                                                                          33,304 $
                    109,487  $
             142,791

-------
FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
                Note  34. Other Adjustments, Statement of Changes  in  Net
                Position

                The Other Adjustments under Budgetary Financing Sources on the Statement of Changes in Net Position
                consist of rescissions to appropriated funds and cancellations of funds that expired five years earlier. These
                amounts affect Unexpended Appropriations for All Other Funds.
               Rescissions to General Appropriations
               Canceled General Authority

               Total Other Adjustments
49,105
 19,463
48,147
23,719
68,568  $
71,866
                Note  35. Nonexchange Revenue, Statement  of Changes in  Net
                Position

                The Nonexchange Revenue, Budgetary Financing Sources, on the Statement of Changes in Net Position for
                FYs 2004 and 2003 consists of the following items:

FY 2004
Interest on Trust Fund Investments
Tax Revenue, Net of Refunds
Fines and Penalties Revenue
Special Receipt Fund Revenue
Total Nonexchange Revenue


FY 2003
Interest on Trust Fund Investments
Tax Revenue, Net of Refunds*
Fines and Penalties Revenue
Special Receipt Fund Revenue
Total Nonexchange Revenue

Superfund
$ 27380
867
1,992

$ 30,239


Superfund
$ 48,945
(99,355)
718

$ (49,692)

All Others
$ 66,762
188,997
(19)
13,746
$ 269,486


All Others
$ 64,447
184,477

11,591
$ 260,515
Combined
Total
$ 94, 142
189,864
1,973
13,746
$

Combined
Total
$ 113,392
85, 122
718
11,591
$ 210,823
               * In FY 2003 the Superfund trust fund refunded $99,355 thousand in previously accrued corporate environmental taxes.


               Note  36. Superfund  Trust Fund Balances


               In FY 2004, the EPA received an appropriation for Superfund of $1,257.5 million. Treasury's Bureau of Public
               Debt (BPD), the manager of the Superfund Trust Fund assets, records a liability to EPA for the amount of
               the appropriation. BPD does this to indicate those trust fund assets that have been assigned for use and,
               therefore, are not available for appropriation. As of September 30, 2004 and 2003, the Treasury Trust Fund
               has a liability to EPA for previously appropriated funds of $2,402.1 million and $2,599.7 million, respectively.
               During FY 2004 and 2003, the Superfund Trust Fund revenue from cost recoveries and investment interest
               was less than anticipated. In addition, in FY 2003 the Internal Revenue Service issued approximately $99.4

-------
                                SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
million in corporate net tax refunds that were previously deposited in the Trust Fund. Due to these circum-
stances, the amount appropriated to EPA for Superfund activities exceeded the assets available for
appropriation in the Trust Fund by $76 million and $82.7 million at the end of FY 2004 and 2003, respec-
tively. The Agency expects the Trust Fund to continue to receive revenues from cost recoveries and
investment interest. In EPA's view the shortfall will be covered by the collection of cost recoveries and
receipt of interest income to the Trust Fund overtime. This is evidenced by FY 2004's shortfall reduction
of $75.1 million from the shortfall at the end of FY 2003.

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                        Required Supplemental Information
                The EPA classifies tangible property, plant, and equipment as follows: (I) EPA-Held Equipment, (2)
                Contractor-Held Equipment, (3) Land and Buildings, and, (4) Capital Leases. The condition assessment sur-
                vey method of measuring deferred maintenance is utilized. The Agency adopts requirements or standards
                for acceptable operating condition in conformance with industry practices. No deferred maintenance was
                reported for any of the four categories.
1.
Intragovernmental Assets
Intragovernmental amounts represent transactions between all federal departments and a^
reported by trading partner (entities that EPA did business with during FY 2004).
Trading
Partner
Code
4
II
12
13
14
15
17
18
19
20
21
31
45
47
49
57
61
64
68
69
70
71
72
75
80

86

89
95
96
97
99
0
Total
Investments Accounts Receivable
jencies and are
Other Assets
Agency Superfund All Other Superfund All Other Superfund All Other
Government Printing Office
Executive Office of the President
Department of Agriculture
Department of Commerce
Department of Interior
Department of Justice
Department of the Navy
U. S. Postal Service
Department of State
Department of the Treasury 2,217334 2,317,164
Department of the Army
Nuclear Regulatory Commission
Equal Employment Opportunity Commission
General Services Administration
National Science Foundation
Department of the Air Force
Consumer Product Safety Commission
Tennessee Valley Authority
EPA (between Superfund and All Others)
Department of Transportation
Department of Homeland Security
Overseas Private Investment Corporation
Agency for International Development
Department of Health and Human Services
National Aeronautics and Space
Administration
Department of Housing and Urban
Development
Department of Energy
Independent Agencies
US Army Corps of Engineers
US Department of Defense
Treasury General Fund
Unassigned
$ 2,217,334 2,317,164 $


214

13,243
102
99
166
(274)
56
9,840
2

(3)

II



(18)
(2)


288




(62)

126
924

2,500
27,212

123
13
912
(168)
5
316

(41)
103
233
1
(95)
380
36
8
8
(5)
73,709
3,948
4,273
(13)
602
1,119
175

192

562
(26)
1,497
537
443
420
89,267 $
12 701


4 67

58

553










6,749










(58)



16 (33)
6,781 1,288

-------
                                SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS

^governmental Liabilities ^^^H

Trading

Investments Accrued Liabilities
Other Liabilities ^^^^^^^H
Code Agency Superfund All Other Superfund All Other Superfund All Other 1
3
4
5
10
II
12
13
14
15
16
17
18
19
20
21
24
31
33
36
45
47
49
57
59
64
68
69
70
72
73
75
80

86

89
93
95
96
97
99
0
Total
Library of Congress
Government Printing Office
General Accounting Office
The Judiciary
Executive Office of the President
Department of Agriculture
Department of Commerce
Department of Interior
Department of Justice
Department of Labor
Department of the Navy
United States Postal Service
Department of State
Department of the Treasury
Department of the Army
Office of Personnel Management
US Nuclear Regulatory Commission
Smithsonian Institution
Dept. of Veterans Affairs
EEOC
General Services Administration
National Science Foundation
Department of the Air Force
Nat'l Foundation on Arts and Humanities
Tennessee Valley Authority
EPA (between Superfund and All Others)
Department of Transportation
Department of Homeland Security
Agency for International Development
Small Business Administration
Department of Health and Human Services
National Aeronautics and Space
Administration
Department of Housing and Urban
Development
Department of Energy
Federal Mediation Service
Independent Agencies
US Army Corps of Engineers
Office of the Secretary of Defense
Treasury General Fund
Unassigned
$






(1,702)
(96)
617
1,609
351














69,793

14,428


11,078







1,659
(351)
6,081
(786)
102,681
16
38



414
295
2,463
8,444
112
(40)


153
27
112
6
2
176

19




3,916
4,895
1,542


1,071
22



459


189 13,403
207

17 348
206 $
168
1,163


22
854
2,223
3,188
50
446
4
322
100
140

725
II
37
128
29
12,301
113


95

133
65
3
17
6,459
232



3,739
8
1,561
1,038
1,238

774
37,386 $

(9)
(367)


2,285

49
571
1,569
1,814
14

143
3,278
1,412




10,775

9,701












5

1,460

7269
506
(2,723)
37,752
(54)
1,145
(1)
(18)
16
1,254
(1,033)
937
(2,971)
3,869
118
(216)
(20)
22,004
(17)
6,953

(26)
(1,051)

(12,147)
26


70
6,749
11,112
(851)

100
6,065
(8)

231

273

3,019
50
(1,475)
2,768
247
47,118
For All Other Funds remaining intragovernmental liabilities, $24,101 thousand in Debt is assigned to the
Department of the Treasury (trading partner Code 20), and $52,216 thousand in Custodial Liability is
assigned to the Treasury General Fund (trading partner Code 99).

EPA has confirmed the year-end intragovernmental fiduciary assets, liabilities, revenue, and expenses with
the BPD, the  DOL, and the OPM. EPA has also contacted several other federal agencies to confirm non-
fiduciary intragovernmental balances for year-end as required.

-------
FISCAL YEAR  2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL  PROTECTION AGENCY
                                                    Intragovernmental  Revenues and Costs
                   EPA's intragovernmental earned revenues are not reported by trading partners because they are below
                   OMB's threshold of $500 million.
                   Intragovernmental Earned Revenue
                   Associated Costs to generate above Revenue (Budget Functional Classification 304)
                                                                                                       Superfund    All Others
                                                            27450 $
                                                            27450 $
                       61,475
                       61,475
                         Supplemental  Statement of Budgetary Resources—All  Other Funds
BUDGETARY RESOURCES

Budgetary Authority:
  Appropriations Received         $
  Borrowing Authority
  Net Transfers
  Other
Unobligated Balances:
  Beginning of Period
  Net Transfers, Actual
  Anticipated Transfers Balance
Spending Authority—Offsetting
  Collections
  Earned and Collected
  Receivable from Federal Sources
  Change in Unfilled Customer
    Orders
  Advance Received
  Without Advance from Federal
    Sources
  Transfers from Trust Funds

Total Spending Auth. from
  Collections
  Recoveries of Prior Year
    Obligations
  Temporarily Not Available

  Permanently Not Available

Total Budgetary Resources
3,900,400
      0
      0
 1,400,831
      0
                                                                2,293,578
                                                                     0
                                                                   1,630
                                                                 295,696
                                                                     0
11,684
0
0
0
0
11,684
71,427
0
(23,012)
$ 5,361,330 $_
44,308
(10,084)
486
222
0
34,932
12,545
0
(31,953)
2,606,428
786,588  $
     0
     0
294,234
     0
                                                                               6,409
                                                                                  64
                                                                                 833
                                                                               (1,748)

                                                                               38,680

                                                                               44,238

                                                                                6,382

                                                                                (264)

                                                                               (5,596)
890
  0
                                        22,220
                                            0
                                       	0

                                        26,349

                                           40

                                            0

                                            0
    0 $
    0
76,000
 3,896
    0
                                 1,373,358  $   8,353,924
                                    5,554        5,554
                                      60       77690
                                  103,325
                                  (1,538)
4
0
0
0
0
4
225
(448)
0
157,494
(5,283)
7563
2,836
12,986
175,596
5,308
(78)
( 10,642)
2,098,872
  (1,538)
                      242,119
                      (15,303)
                        13,011
                        1,310

                       51,666
                                                                       $     1,125,582  $     27,279 $    79,677 $   1,650,943 $  10,851,239

-------
SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS


STATUS OF BUDGETARY
Obligations Incurred:
Direct
Reimbursable
Total Obligations Incurred
Unobligated Balances:
Apportioned
Exempt from Apportionment
Unobligated Balances Not Available
Total Status of Budgetary Resources
STAG
RESOURCES

$ 3,908,755 $
0
3,908,755

1,452,575

0
$ 5,361,330 $_
RELATIONSHIP OF OBLIGATIONS TO
Obligated Balances, Net
— Beginning
Accounts Receivable
Unfilled Customer Orders
— Federal Sources
Undelivered Orders
Accounts Payable
Total Outlays
Disbursements
Collections
Less: Offsetting Receipts
Net Outlays
8,352,080
0
0

(7753,563)
(518,598)
$ 3,905,563 $_
$ 3,917246 $
(11,683)
0
$ 3,905,563 $
EPM


2,223,938 $
50,565
2,274,503

257,752

74, 173
2,606,428 $
• =
OUTLAYS
640,523
12,019
125,112

(637,253)
( 190,062)
2,177,365 $
^^^^^^^^^^B =
2,222,158 $
(44,793)
0
2,177,365 $
S&T


832,230 ?
7958
840, 188

269,948

15,446
1,125,582 3
~

474,874
68,396
9,020

(519,995)
(93, 122)
728,741 3
^^^^^^^^^^=
789,628 ?
(60,887)
0
728,741 3
FIFRA


0 $
24,747
24,747

2,532

0
27,279 $

904
0
0

(1,197)
(1,151)
(3,086) $
23,263 $
(26,349)
0
(3,086) $
LUST


73,390 1
0
73,390

6,287

0
79,677 3
^^^^^^^^^

84,307
0
0

(76, 189)
(8,817)
72,462 3
^^^^^^^^^=
72,466 ?
(4)
0
72,462 3
Other


1,378,429
178,232
1,556,661

91,061

3,221
1,650,943

29,528
6,025
92,052

( 105,208)
(45,884)
1,352,270
1,531,644
( 179,374)
(1,276,778)
75,492
Total ^^^^^^^1


$ 8,416,742
261,502
8,678,244

2,080,155

92,840
$ 10,851,239










9,582,216
86,440
226,184
Hs
(9,093,405)
(857634)
$ 8,233,315
$ 8,556,405
(323,090)
(1,276,778)
$ 6,956,537

-------
FISCAL YEAR 2OO4 ANNUAL  REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                                    Environmental Protection Agency
                                                          •ed Supplement;' '  "
                                  Working Capital
Balance Sheet
                                                     the Year Ended September 30, 20
                                                             (Dollars in Thousands)
                  ASSETS
                    Intragovernmental
                    Fund Balance With Treasury
                    Accounts Receivable, Net Federal
                    Other

                    Total Intragovernmental
                    General Property, Plant and Equipment, Net
                    Other Non Federal Assets

                    Total Assets

                  LIABILITIES
                    Intragovernmental
                    Accounts Payable & Accrued Liabilities, Federal
                    Other Federal Liabilities

                    Total Intragovernmental
                    Accounts Payable & Accrued Liabilities, Non Federal
                    Payroll and Benefits Payable Non Federal
                    Capital Lease Liability

                    Total Liabilities

                  NET POSITION
                    Cumulative Results of Operations

                    Total Net Position

                    Total Liabilities and Net Position
                                                                                                               Unaudited
                             53,560
                             24,233
                             	555

                             78,348
                             16,693
                             	53

                             95,094
                              1,378
                             30,413

                             31,791
                             24,969
                              1,451
                             6,727

                             64,938
                             30,156
                             30,156
                                                                                                                     95,094
                            Working Capital Fund—Supplemental Statement of Net Cost
                  COSTS
                    Intragovernmental
                    With the Public

                    Total Costs
                    Less:
                    Earned Revenues, Federal
                    Earned Revenues, Non Federal

                    Total Earned Revenues

                  NET COST OF OPERATIONS
                             70,739
                             71,923
                            142,662
                              2,418

-------
                                 SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
                                 Environmental Protection Agency
                                Required Supplemental Informatioi
    Working Capital Fund—Suppl
Changes in Net  Position
                                         ar Ended September 30, 21
                                         (Dollars in Thousands)
                                                                                         Unaudited
Net Position—Beginning of Period
  Prior Period Adjustments

Beginning Balances, as adjusted

Other Financing Sources:
  Transfers In/Out
  Imputed Financing Sources

Total Other Financing Sources

Net Cost of Operations

Net Position—End of Period
                           31,770

                              0
                            804
                            804
                          (2,418)
                                                                                               30,156

-------
FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                     Working Capital  Fui
                                                      Environmental Protection Agency
                                                      .equired Supplemental Informa
                                                   Forth
                       )f Budgetary Resources
led September 30, 20
                                                               (Dollars in Thousands)
                   BUDGETARY RESOURCES
                   Budgetary Authority:
                    Appropriations Received
                    Borrowing Authority
                    Net Transfers
                    Other
                   Unobligated Balances:
                    Beginning of Period
                   Spending Authority from Offsetting Collections:
                    Earned and Collected
                    Receivable from Federal Sources
                    Change in Unfilled Customer Orders
                    Advance Received
                    Without Advance  from Federal Sources
                   Transfers from Trust  Funds

                   Total Spending Authority from Offsetting Collections
                   Recoveries of Prior Year Obligations
                   Permanently Not Available

                   Total Budgetary Resources

                   STATUS  OF BUDGETARY RESOURCES
                   Obligations Incurred:
                    Reimbursable
                   Unobligated Balances:
                    Apportioned
                   Unobligated Balances Not Available

                   Total Status of Budgetary Resources

                   RELATIONSHIP OF OBLIGATIONS TO OUTLAYS
                   Obligations Incurred, Net
                   Obligated Balances, Net—Beginning of Period
                   Accounts Receivable
                   Unfilled Customer Orders from Federal Sources
                   Undelivered Orders
                   Accounts Payable

                   Total Outlays

                    Disbursements
                    Collections
                    Less: Offsetting Receipts
                                                                                                                    Unaudited
                                                    22,324

                                                    140,268
                                                        0

                                                      7564
                                                    (2,991)
                                                        0
                                                    144,841
                                                      1,352
                                                        0
                                                    168,517
                                                    163,897

                                                     4,620
                                                        0
                                                    168,517
                                                     17704
                                                     35,457
                                                        114
                                                     23,091
                                                    (38,710)
                                                    (33,436)
                                                     4,220
                                                    152,052
                                                   (147832)
                                                        0
                   Net Outlays
                                                     4,220

-------
                                   SECTION  3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
           Working Capital
 Environmental Protection Agency
 Required Supplemental Informatioi

>r the Year Ended September 30, 200
          (Dollars in Thousands)
;nt of Financing
RESOURCES USED TO FINANCE ACTIVITIES:
Budgetary Resources Obligated
  Obligations Incurred
  Less: Spending Authority from Offsetting Collections and Recoveries

  Obligations Net of Offsetting Collections and Recoveries
Other Resources
  Transfers In/Out Without Reimbursement, Property
  Imputed Financing Sources

  Net Other Resources Used to Finance Activities
  Total Resources Used To Finance Activities

RESOURCES USED TO FINANCE ITEMS  NOT PART OF NET COST OF OPERATIONS
Change in Budgetary Resources Obligated
  Resources that Fund Prior Period Expenses
  Budgetary Offsetting Collections and Receipts that Do Not Affect Net Cost of Operations
  Resources that Finance the Acquisition of Assets
  Other Resources or Adjustments to Net Obligated Resources that Do Not Affect Net Cost of Operations

  Total Resources Used to Finance Items Not Part of Net Cost of Operations

  Total Resources Used to Finance the Net Cost of Operations

COMPONENTS OF THE NET COST OF  OPERATIONS THAT WILL NOT REQUIRE OR
GENERATE RESOURCES IN THE CURRENT PERIOD
Components Requiring or Generating Resources in Future Periods
  Increase in Annual Leave Liability
  Increase in Exchange Revenue Receivable from the Public

  Total Components of Net Cost of Operations that Will Require or Generate Resources in Future Periods
Components Not Requiring or Generating Resources
  Depreciation and Amortization
  Revaluation of Assets or Liabilities
  Other Expenses Not Requiring Budgetary Resources

  Total Components of Net Cost of Operations that Will Not Require or Generate Resources
  Total Components of Net Cost of Operations That Will Not Require or Generate Resources in the Current Period
                                                                                                Unaudited
                                                                    163,897
                                                                   (146,193)
                                                                        0
                                                                      804
                                                                      804
                                                                     3,508
                                                                    (21,047)

                                                                    (2,539)
                                                                     4,933
                                                                        0
                                                                       24
                                                                     4,957
                                                                     4,957
Net Cost of Operations
                                                                     2,418

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
                                                Environmental Protection Agency
                                         Required Supplemental Stewardship Information
                                             For the Year Ended September 30, 2004
                                                        (Dollars in Thousands)
                 Investment in the Nation's  Research and  Development:


                 Public and private sector institutions have long been significant contributors to our nation's environment
                 and human health research agenda. The Environmental Protection Agency's (EPA) Office of Research and
                 Development, however, is unique among scientific institutions in this country in combining research, analysis,
                 and the integration of scientific information across the full spectrum of health and ecological issues and
                 across both risk assessment and risk management. Science enables us to identify the most important sources
                 of risk to human health and the environment, and by so doing, informs our priority-setting, ensures credibili-
                ty for our policies, and guides our deployment of resources. It gives us the  understanding and technologies
                we need to detect, abate, and avoid environmental problems. Science provides the crucial underpinning for
                 EPA decisions and challenges us to apply the best available science and technical analysis to our environmen-
                tal problems and to practice more integrated, efficient and effective approaches to reducing environmental
                 risks.

                Among the Agency's highest priorities are research programs that address  the effects of the environment
                 on children's health; the development of alternative techniques for prioritizing chemicals for further testing
                through computational toxicology; the provision of near-term, appropriate, affordable, reliable, tested, and
                 effective technologies and guidance for potential threats to homeland security; the potential risks of unregu-
                 lated contaminants in drinking water; the health effects of air pollutants such as particulate matter; and the
                 protection of the nation's ecosystems. For FY 2004, the full cost of the Agency's Research and
                 Development activities totaled over $673 million. Below is a breakout of the expenses (dollars in
                thousands):

Programmatic Expenses
Allocated Expenses
FY 2000
541,117
59,523
FY 2001
555,794
90,039
FY 2002
559,218
123,307
FY 2003
593,295
106,971
FY 2004
581,323
91,675
                 Investment in the Nation's  Infrastructure:
                The Agency makes significant investments in the nation's drinking water and clean water infrastructure. The
                investments are the result of three programs: the Construction Grants Program which is being phased out
                and two State  Revolving Fund (SRF) programs.

                Construction Grants Program: During the  1970s and  1980s, the Construction Grants Program was a source
                of Federal funds, providing more than $60 billion of direct grants for the construction of public wastewater
                treatment projects. These projects, which constituted a significant contribution to the nation's water infra-
                structure,  included sewage treatment plants, pumping stations, and collection and intercept sewers,
                rehabilitation of sewer systems,  and the control of combined sewer overflows. The construction grants led
                to the improvement of water quality in thousands of municipalities nationwide.

                Congress set 1990 as the last year that funds would be appropriated for Construction Grants. Projects fund-
                ed  in  1990 and prior will continue until completion. After 1990, EPA shifted the focus of municipal financial
                assistance  from grants to loans that are provided by State Revolving Funds.

                State  Revolving Funds: EPA  provides capital, in the form of capitalization grants, to state revolving funds
                which state governments use to make  loans to  individuals, businesses, and governmental entities for the con-
                struction of wastewater and drinking water treatment infrastructure. When the loans are repaid to the

-------
                                SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
state revolving fund, the collections are used to finance new loans for new construction projects. The capi-
tal is reused by the states and is not returned to the Federal Government.

The Agency also is appropriated funds to finance the construction of infrastructure outside the Revolving
Funds. These are reported below as Other Infrastructure Grants.

The Agency's expenses related to investments in the nation's Water Infrastructure are outlined below (dol-
lars in thousands):

Construction Grants
Clean Water SRF
Safe Drinking Water SRF
Other Infrastructure Grants
Allocated Expenses
FY 2000
55,766
1,564,894
588,116
212, 124
266,299
FY 2001
63,344
1,548,270
728,921
282,914
424,999
FY 2002
149,841
1,389,048
708,528
367,259
576,536
FY 2003
15,845
1,295,394
842,936
582,091
493,349
FY 2004
48,948
1,407345
802,629
341,767
410, 129
Stewardship  Land.

The Agency acquires title to certain land and land rights under the authorities provided in Section  104 (J)
CERCLA related to  remedial clean-up sites. The land rights are in the form of easements to allow access to
clean-up sites or to  restrict usage of remediated sites. In some instances, the Agency takes title to the land
during remediation and returns it to private ownership  upon the completion of clean-up. A site with "land
acquired" may have  more than one acquisition property. Sites are not counted as a withdrawal until all
acquired properties  have been transferred.
As of September 30, 2004, the Agency possesses the following land and land rights:
Superfund Sites with Easements
Ending Balance
                                                                                                31
                                                                                                 I
                                                                                                 0
                                                                                                32
Superfund Sites with Land Acquired
Beginning Balance
Additions
Withdrawals

Ending Balance
Human  Capital
25
 2
 2
25
Agencies are required to report expenses incurred to train the public with the intent of increasing or main-
taining the nation's economic productive capacity. Training, public awareness, and research fellowships are
components of many of the Agency's programs and are effective in achieving the Agency's mission of pro-
tecting public health and the environment, but the focus is on enhancing the nation's environmental, not
economic, capacity.

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S.  ENVIRONMENTAL PROTECTION AGENCY
                The Agency's expenses related to investments in the Human Capital are outlined below (dollars in thou-
                sands):
                Training and Awareness Grants
                Fellowships
                Allocated Expenses
                                                       FY 2000
49,265
9,570
6,472
48,697
 11,451
 9,744
                       FY 2002
49,444
 8,728
 12,827
47,827
6,572
9,808
                                   FY 2004
48,416
7,553
8,826
                                                Environmental Protection Agency
                                               Required Supplemental  Information
                                             For the Year Ended September 30, 2004
                 Improper Payments Information Act of 2002 (IPIA) Report

                 I. RISK ASSESSMENTS:  After reviewing and sampling disbursements made in the highest risk susceptible
                 inventories, EPA determined that its programs do not have significant erroneous payments, as defined by
                 the IPIA as payments exceeding $10 million and 2.5% of program payments. The error rates for EPA's
                 largest programs were as follows.
                Program
                 Clean Water and Drinking Water State Revolving Funds
                               Erroneous Pay  Error Rate
                                $10.3 million
                                      .49%
                Where erroneous payments exceed $10 million, each Agency must identify the reasons why its programs
                are at  risk.  In addition, the two EPA programs identified above, being former Section 57 programs, require
                a corrective action plan.  EPA prepared corrective action plans for the Clean Water and Drinking Water
                State Revolving Funds. We also recognize there are areas that require further EPA review. In particular,
                EPA must:

                 •   Review and enhance internal controls, as needed,  in the Agency's overall payment processes,

                 •   As part of the post award process, continue to monitor payments made to sub-recipients,

                 •   Comply with new Performance Accountability Report (PAR)  reporting requirements for improper
                     payments, and

                 •   Implement and operate the Agency's audit recovery program.
                 I. STATISTICAL SAMPLING PROCESS:  For the initial action plan submitted to OMB on May 28, 2004,
                 EPA pulled a statistical sample of approximately 300 payments out of a population of 45,000 grant pay-
                 ments. Based  on additional instructions from OMB, EPA expanded its initial review to incorporate findings
                 from program and auditor reviews and audits of the two state revolving funds.

                 III. CORRECTIVE ACTION PLANS: In order to meet OMB's objectives, EPA conducted additional risk
                 assessments by forming four subgroups with expertise in grants, contracts, payroll, and travel/purchase cred-
                 it  cards to review internal controls, identify and measure high risk areas, and develop corrective action
                 plans for each subject area. Planned actions in each of the areas are as follows:

                 A. Grants:  EPA began collecting information on grants management findings to include erroneous payment
                 (i.e., funding is not being utilized for the intended purpose) in calendar year 2004.  Based on information in
                 the Grantee Compliance Tracking Systems, EPA will prepare statistical reports on  the number of recipients

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                                SECTION 3.  FY 2OO4 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
where erroneous payments were found.  In addition, comparisons will be made to the total recipient popu-
lation to determine if there are particular types of recipients who are more likely to have erroneous
payment problems.

The Office of Grants and Debarment will complete an erroneous payment review by February 28, 2005,
covering calendar year 2004. This review will identify whether or not "high  risk" grant areas exist and will
develop, as appropriate, corrective action plans to be implemented in the years ahead.

In FY 2005 EPA will be revising its policy on compliance, review, and monitoring. This policy provides guid-
ance and protocols to  EPA headquarters and regional offices on how to conduct advanced monitoring
reviews. As part  of these revisions, EPA will propose that offices evaluate the extent and nature of grantee
monitoring of sub-recipients. For example, how frequently do grantees monitor/evaluate sub-recipients and
what  have been the results of this monitoring. The expanded monitoring is designed to  assist the Agency in
expanding its improper payment identification, beyond recipients to sub-recipients.  The Agency anticipates
the compliance policy changes will be effective starting in calendar year 2006.

B. Contracts: EPA continues to take appropriate action as needed to reduce or eliminate improper pay-
ments. The appropriate Contracts Officer Representatives or On Scene Coordinators are notified of all
improper  payments discovered. In FY 2004, there were  8 improper payments due to an error in the billing
number used to  retrieve the banking information for a contractor. Billing numbers received on contracts
are now verified  prior to entering information in Contract Payment System. Keying errors are reviewed  by
the staff and efforts are made to prevent or detect these types of errors in the future. The problem of
credit invoice and refunds processed is closely reviewed to prevent this  type of occurrence in the future.

In January 2003, EPA implemented a monthly Improper Payment Report. The report categorizes the num-
ber of improper  payments per month and provides information on each improper payment including the
reason.

In FY 2003, from  January through  September, EPA  found 25 improper payments in the 24,056 payments
processed for contracts. For FY 2004, there have been 21 improper payments found as  of July 31, 2004, in
the 20,417 payments processed. Considering that there is not a full year to compare, the number of
improper  payments is decreasing. The percentage of proper payments is 99.9%.

Additional actions include the addition of an improper payment review  element for the Quality Assurance
Review for invoices and the initiation of the Recovery Audit process which  is  currently underway.

The continued pro-active process of reviewing and implementing changes as needed when an improper
payment occurs should continue to reduce the  number of improper payments. The Contracts Officer
Representatives, On Scene Coordinators or Contracting Officers will continue to be notified of all improp-
er payments that involve their contract. Suggested  actions will be provided  and if the problem continues,
actions will be  elevated. Previously documented keying errors are being noted by the staff at EPA to assist
in the detection by the initial data entry personnel as well  as the sample reviewer and the certifying officer.

C. Commodity Payments: Since no high risk areas have been identified, no corrective action is required.
EPA continues  to take appropriate action as needed to reduce or eliminate any improper payments. There
have been  19 improper payments identified from the 14,772 invoices paid from January through July 2004.
Eleven improper payments have been attributed to selection of incorrect vendor codes. The payment and
certifying staff  have been alerted to this fact and are making an  effort to double check all vendor codes to
prevent this in  the future. Six of the improper payments were identified as  duplicate payments on invoices
the vendor submitted twice. The edits in Small  Purchase Information Tracking System have been enhanced
to prevent this in the future. All invoices marked past due are being reviewed to determine if they are
duplicate invoices.

A tracking mechanism was put in place  in January 2004 to gather improper payment data in anticipation
that purchase order payments would be included in the erroneous  payment process in  2004. The result of
this tracking system provides the data for a monthly Improper Payment  Report. The report provides infor-
mation on each improper payment.

D. Payroll:  By  December 31, 2004, the Payroll Workgroup will:

  I.   Review Payroll internal control documentation.

 2.   Conduct  personnel  interviews to verify/test whether internal controls are understood and being utilized.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                 3.  Summarize the results of the review of the internal controls.

                 4.  Submit recommendations to reduce improper payments.

                Additionally, by the end of the second quarter FY 2005, the workgroup will develop a corrective action
                plan/best practices.

                E. Travel Card/Purchase Card: The Agency will continue to monitor the charge card transactions and
                employee accounts using the tools described above to  ensure that the cards are used in accordance with
                the Agency policies  and procedures.

                The Agency will  continue to monitor the issuance of purchase cards to ensure that spending limits and span
                of control are  kept to a minimum. The Office of Acquisition Management is in the process of implementing
                a  monitoring program that is to be performed by each of the Senior Resource Officials in the Agency. This
                program will mandate that each office perform yearly reviews of the  purchases made within their program
                offices. These  reviews will ensure the integrity of the purchase card program.

                IV. IMPROPER PAYMENT REDUCTION OUTLOOK FY 2004 - FY 2007 (dollars in millions)
                 PROGRAM
  FY04
OUTLAYS
                  Clean Water and Drinking Water Revolving   $2,105 (est)
                    Funds
                                                                          10.3
                 V. RECOVERY AUDIT PROGRAMS: The Agency has hired a contractor, Business Strategy, Inc (BSI), to
                 conduct the recovery audit. BSI has completed its preliminary interviews as part of the Discovery phase of
                 its work. This involved discussions with key individuals involved in the contract obligation and payment
                 process and individuals knowledgeable in EPA financial systems.

                 BSI has received  data from the Integrated Financial Management System and begun its field work to identify
                 and collect contract overpayments. BSI hopes to complete its fieldwork by the end of the first quarter FY
                 2005. Once improper payments are identified, EPA will work with  BSI to strengthen  payment processes and
                 internal controls  to prevent further occurrences.

                 VI. ENSURING MANAGEMENT ACCOUNTABILITY: As previously outlined in the corrective action
                 plans, the Agency is moving to strengthen already strong internal controls in key payment  processes.
                 Information on erroneous payments from reviews and audits for the two state revolving funds, our largest
                 grant programs, is reported quarterly to management in both the  Office of Water and the Office of the
                 Chief Financial Officer. In  all cases action is taken with the appropriate officials to ensure improper pay-
                 ments are recovered and to avoid future improper payments.

                 VII. INFORMATION SYSTEMS AND INFRASTRUCTURE: The  Agency's information systems are suffi-
                 cient to reduce improper payments to targeted levels.

                 VIII. STATUTORY AND REGULATORY BARRIERS: Currently, EPA is  determining what  information exists
                 within our current review process that looks at sub-recipients invoices and financial operations. We will
                 determine to what extent we can gather information from a sample to develop baseline numbers without
                 interfering with current federal/state cooperative relationships.

                 IX. CONCLUSIONS: In the  Ist quarter of FY 2005, we will:

                 A.  Continue monitoring for improper payments in the two State Revolving Funds;

                 B.  Research payments to sub-recipient in the two  State Revolving Funds; and

                 C.  Research payments by grantee types to determine if some are more susceptible to creating improper
                     payments.

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Summary  of  OIG's  Audit  Report
  Inspector General's  Report on  EPA's
  Fiscal  2004  and  2003  Financial  Statements
  The Administrator
  U.S. Environmental Protection Agency

     We have audited the consolidating balance sheets of the U.S. Environmental Protection Agency (EPA, or the
  Agency) and its subsidiary funds, the Superfund Trust Fund (Superfund), and All Other Appropriated Funds (All
  Other), as of September 30, 2004 and 2003, and the related consolidating statements of net cost, changes in net posi-
  tion and financing, and consolidated statements of net cost by goal, custodial activity, and combined statements of
  budgetary resources for the years then ended. These financial statements are the responsibility of EPA's management.
  Our responsibility is to express an opinion on these financial statements based upon our audit.

     We conducted our audit in accordance with auditing standards generally accepted in the United States of America;
  the standards applicable to financial statements contained in Government Auditing Standards, issued by the Comptroller
  General of the United States; and Office of Management and Budget (OMB) Bulletin 01-02, Audit Requirements for
  Federal Financial Statements. These standards require that we plan and perform the audit to obtain reasonable assurance
  about whether the financial statements are free of material misstatements.
  An audit includes examining, on a test basis, evidence supporting the
  amounts and disclosures in the financial statements. An audit also includes
  assessing the accounting principles used and significant estimates made by
  management, as well as evaluating the overall financial statement presen-
  tation. We believe that our audit provides a reasonable basis for our
  opinion.

     The financial statements include expenses of grantees, contractors,
  and other Federal agencies. Our audit work pertaining to these expenses
  included testing only within EPA. Audits of grants, contracts, and intera-
  gency agreements performed at a later date may disclose questioned costs
                                                                                                203

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               of an amount undeterminable at this time. In addition, the U.S. Treasury collects and accounts
               for excise taxes that are deposited into the Superfund and Leaking Underground Storage Tank
               Trust Funds.1 The U.S. Treasury is also responsible for investing amounts not needed for cur-
               rent disbursements and transferring funds to EPA as authorized in legislation. Since the U.S.
               Treasury, and not EPA, is responsible for these activities, our audit work did not cover these
               activities.

                  As more fully described in Note 36 to the financial statements, the Superfund Trust Fund,
               managed by the U.S. Treasury Bureau of Public Debt, transferred funds to EPA in excess of the
               assets available to be transferred by $7.6 million in fiscal 2004 and $82.7 million in fiscal
               2003. EPA's view is that the shortfalls will be covered by the collection of cost recoveries and
               receipt of interest income over time. In our opinion, because cost recoveries have declined and
               the investment principal upon which the interest is earned has steadily decreased, any deficit
               and future financing will have to be covered almost entirely by appropriations from the
               Treasury's general fund in order for the Superfund Trust Fund to continue operations.

                  The Office of Inspector General (OIG) is not independent with respect to amounts per-
               taining to OIG operations that are presented in the financial statements. The amounts
               included for the OIG are not material to EPA's  financial statements. The OIG is organization-
               ally independent with respect to all other assets of the Agency's activities.

                  In our opinion, the consolidating financial  statements present fairly, in all material
               respects, the consolidated and individual assets, liabilities, net position, net cost, net cost by
               goal, changes in net position, budgetary resources, reconciliation of net cost to budgetary obli-
               gations, and custodial activity of EPA and its subsidiary funds, the Superfund Trust Fund, and
               All Other Appropriated Funds, as of and for the years ended September 30, 2004 and 2003, in
               conformity with accounting principles generally accepted in  the United States of America.
                                  REVIEW OF  EPA's REQUIRED SUPPLEMENTAL STEWARDSHIP
                                  INFORMATION, REQUIRED  SUPPLEMENTAL  INFORMATION,
                                  AND MANAGEMENT DISCUSSION AND  ANALYSIS
                                      We inquired of EPA's management as to their methods for preparing
                                  Required Supplemental Stewardship Information (RSSI), Required
                                  Supplemental Information, and Management Discussion and Analysis,
                                  and reviewed this information for consistency with the financial state-
                                  ments. However, our audit was not designed to express an opinion and,
                                  accordingly, we do not express an opinion.
                                      We did not identify any material inconsistencies between the infor-
                                  mation presented in EPA's financial statements and the information
                                  presented in EPA's RSSI, Required Supplemental Information, and
                                  Management Discussion and Analysis. OMB Bulletin No. 01-09, Form
                                  and Content of Agency Financial Statements, requires agencies to report, as
                                  Required Supplemental Information, their intra-governmental assets and
                                  liabilities by Federal trading partner. We did find EPA continues to expe-
                                  rience  difficulties in reconciling some of its intragovernmental
                                  transactions due to some Federal entities not providing information for
                                  reconciliations (see Attachment 2 for additional details on this issue).
                  The Leaking Underground Storage Tank Trust Fund is included in the All Other Appropriated Funds column
                  of the financial statements.

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                            SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—SUMMARY OF OIG's AUDIT REPORT
EVALUATION OF INTERNAL  CONTROLS

    As defined by OMB, internal control, as it relates to the financial statements, is a process,
affected by the Agency's management and other personnel, designed to provide reasonable
assurance that the following objectives are met:

Reliability of financial reporting—Transactions are
properly recorded, processed, and summarized  to permit
the preparation of the financial statements and RSSI in
accordance with generally accepted accounting princi-
ples; and assets are safeguarded against loss from
unauthorized acquisition, use, or disposition.

Reliability of performance reporting—Transactions
and other data that support reported performance
measures are properly recorded, processed, and
summarized to permit the preparation of performance
information in accordance with criteria stated by
management.

Compliance with applicable laws and regulations—Transactions are executed in accordance
with laws governing the use of budget authority and other laws and regulations that could have
a direct and material effect on the financial statements or RSSI; and any other laws, regula-
tions, and government-wide policies identified by OMB.
    In planning and performing our audit, we  considered EPA's internal controls over financial
reporting by obtaining an understanding of the Agency's internal controls, determining
whether internal controls had been placed in operation, assessing control risk, and performing
tests of controls in order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements. We limited our internal control testing to those controls
necessary to achieve the objectives described in OMB Bulletin No.  01-02, Audit Requirements
for Federal Financial Statements, as supplemented by an OMB memorandum dated January 4,
2001, Revised Implementation Guidance for the Federal Financial Management Improvement Act.
We did  not test all internal controls relevant to operating objectives as broadly defined by  the
Federal  Managers' Financial Integrity Act of 1982, such as those controls relevant to ensuring
efficient operations. The objective of our audit was not to provide assurance on internal con-
trols and, accordingly, we do not express an opinion on internal controls.
    Our consideration of the internal controls  over financial reporting would not necessarily
disclose all matters in the internal control over financial reporting that might be reportable
conditions. Under standards issued by the American  Institute of Certified Public Accountants,
reportable conditions are matters coming to our attention relating to significant deficiencies in
the design or operation of the internal control that, in our judgment, could adversely affect  the
Agency's ability to  record, process, summarize,  and report financial data consistent with the
assertions by management in the financial statements. Material weaknesses are reportable condi-
tions in which the design or operation of one or more of the internal control components does
not reduce to a relatively low level the risk that misstatements in amounts that would be materi-
al in relation to the financial statements being audited may occur and not be detected within  a
timely period by employees in the normal course of performing their assigned functions. Because
of inherent limitations in internal controls, misstatements, losses, or noncompliance may never-
theless occur and not be detected. We noted certain matters discussed below involving the

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               internal control and its operation that we consider to be reportable conditions, although none
               of the reportable conditions is believed to be a material weakness.

                   In addition, we considered EPA's internal control over the RSSI by obtaining an under-
               standing of the Agency's internal controls, determined whether these internal controls had
               been placed in operation, assessed control risk, and performed tests of controls as required by
               OMB Bulletin No. 01-02. Our procedures were not designed to provide assurance on these
               internal controls and, accordingly, we do not express an opinion on such controls.

                   Finally, with respect to internal controls related to performance measures presented in
               EPA's Fiscal Year 2004 Annual Report, Section  1, Overview and Analysis (which addresses
               requirements for a Management's Discussion and Analysis), we obtained an understanding of
               the design of significant internal controls relating to the existence and completeness assertions,
               as required by  OMB Bulletin No. 01-02. Our procedures were not designed to provide assur-
               ance on internal control over reported performance measures and, accordingly, we do not
               express an opinion on such controls.
               REPORTABLE  CONDITIONS

                   Reportable conditions are internal control weakness matters coming to the auditor's atten-
               tion that, in the  auditor's judgment, should be communicated because they represent
               significantdeficiencies in the design or operation of internal control that could adversely affect
               the organization's ability to meet the OMB objectives for financial reporting discussed above.
               In evaluating the Agency's internal control structure, we identified 10 reportable conditions,
               as follows:

               Financial Management Quality Assurance Process

                   EPA's Quality Assurance Guide, which is the framework for implementing the Agency's
               financial management quality assurance program, is out of date. EPA  offices did not consistent-
               ly review all required accounting events identified in the guide, and those reviews conducted
               were not sufficiently comprehensive. Financial Centers placed minimal emphasis on financial
               system functional reviews to  support Federal Managers' Financial Integrity Act (FMFIA) certi-
               fications, and EPA has no central oversight of the Quality Assurance  program. As a result, the
               program's effectiveness was minimized.

               Unearned Revenue and Superfund Unbilled Oversight Cost Accruals

                   Although EPA made financial improvements in fis-
               cal 2004 by reconciling State Superfund Contracts'
               unearned revenue and implementing accelerated
               unbilled oversight cost accrual procedures, errors con-
               tinued to occur in regional spreadsheet calculations.
               Regional calculations did not include the proper
               amounts of cumulative disbursements, resulting in a
               $14 million understatement of unearned revenue.
               Regional billed oversight calculations did not follow all
               the new accrual procedures, resulting in a $3 million
               understatement of the accrual, and the prior year's
               unbilled oversight accrual was overstated by $10 mil-
               lion due to prior  year errors.

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                           SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—SUMMARY OF OIG's AUDIT REPORT
Supporting Documentation for Accounts Receivable

    Finance offices were unable to record accounts receivable
transactions promptly in the Integrated Financial Management
System (IFMS) due to the Office of General/Regional Counsel
and program offices not submitting documentation in a timely
manner. Finance offices received documentation supporting the
establishment of receivables up to 6 months after the agree-
ments were executed. Further, we identified $1,963,980 in fines
and penalties that were unrecorded at the time of our audit. We
noted numerous instances in which the finance offices request-
ed support for previously unrecorded accounts receivable only
after collected.

Recording of Marketable Securities

    EPA did not promptly record marketable securities received from companies in settlement
of debts. During fiscal 2004, the Agency received securities from three companies for settle-
ment of debts under receivables recorded at four accounting offices. Of the four accounting
offices, only one recorded receipt of non-cash assets. The  accounting offices that did not record
the receipt of non-cash assets either were not aware that marketable securities were received or
stated that  they were awaiting additional information from Headquarters.

Accounting for Contractor-Held Property

    Contractor-held property acquisition values were understated by about $6.9 million. When
we attempted to tie the ending balances as shown on all the EPA Reports of Government-
Owned/Contractor-Held Property documents to the  September 30,  2004 general ledger balance
for contractor-held property, we discovered that contractor-held balances did not include a
$6,883,574 contract.  Also, the Agency improperly accounted for surplused contractor-held
property in depreciation computations.

Accounting for Obligations

    Obligations were not recorded in the proper accounting period. In one region and a
finance  center, we found 10 out of 16 obligations tested were recorded in fiscal 2005 but were
actually fiscal 2004 obligations. Also, for one of the obligation transactions tested, involving an
adjustment, the finance center had no supporting documentation. Further, in one region, four
out of seven inactive unliquidated obligations were not deobligated in a timely manner.

Systems Development for Qrant and Inter-(governmental Systems

    The Operations Systems Staff of the Office of the Chief Financial Officer (OCFO)  devel-
oped and implemented accounting systems without assessing the risks these systems pose to
Agency assets, personnel, and operations. The staff also did  not produce key  documents for the
Grant Payment Allocation System and Inter-Governmental Document Online Tracking
System because they  did not deem these systems to be major applications. However, since both
systems  are used to submit information into IFMS, EPA's main financial accounting system, we
consider these systems to be major applications.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
                                       System Certification and Accreditation for Qrant and Inter'
                                       (governmental Systems

                                           OCFO's Operations Systems Staff did not ensure management
                                       controls were operating effectively by assessing and testing security
                                       controls for the Grant Payment Allocation System and Inter-
                                       Governmental Document Online Tracking System. Specifically the
                                       staff's policies and procedures could not provide reasonable assur-
                                       ance that applications achieved their intended results; resources
                                       were protected from fraud, waste, and abuse; and applications fol-
                                       lowed applicable Agency policies and Federal guidelines. Also, we
                                       found four "high risk" security holes on a critical server hosting eight
                                       financial applications.

               IFMS Change Control Procedures

                   In an August 24, 2004, audit report, EPA Needs to Improve Change Controls for Integrated
               Financial Management System (2004-P-00026), we reported a general breakdown of security
               controls related to software changes that could undermine the integrity of IFMS software
               libraries and financial system data. Weaknesses included inadequate segregation of change
               management duties, and inappropriate ID use. In response to the recommendations in our prior
               report, OCFO concurred with our recommendations and generally outlined appropriate correc-
               tive actions.

               IFMS Automated Application Processing Controls

                   We continue to be unable to assess the adequacy of the automated application control
               structure as it relates to automated input, processing, and output controls for IFMS. Since
               IFMS applications have a direct and material impact on the Agency's financial statements,
               assessing each application is necessary to determine the reliance we can place on the financial
               statements. During past financial statement audits, we attempted to evaluate  controls without
               systems documentation, but these alternatives proved to be inefficient and impractical. OCFO
               has no plans to update the IFMS system documentation until it implements the new financial
               replacement software package, currently projected for fiscal 2008. Until the new system is in
               place, we cannot assess the adequacy of the automated internal control structure.

                   Attachment 1 describes each of the above reportable conditions in more  detail, and con-
               tains our recommendations on actions that should be taken to correct these conditions. We
               have also reported other less significant matters involving the internal control structure and its
               operations in separate position papers during the course of our audit. We will not be issuing a
               separate management letter.
               COMPARISON OF ERA'S FMFIA REPORT WITH OUR EVALUATION  OF INTERNAL
               CONTROLS
                   OMB Bulletin No. 01-02, Audit Requirements for Federal Financial Statements, requires us to
               compare material weaknesses disclosed during the audit with those material weaknesses report-
               ed in the Agency's FMFIA report that relate to the financial statements and identify material
               weaknesses disclosed by audit that were not reported in the Agency's FMFIA report. EPA
               reports on Integrity Act decisions in EPA's Fiscal Year 2004 Annual Report. For a discussion on

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                           SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—SUMMARY OF OIG's AUDIT REPORT
Agency reported Integrity Act material weaknesses and corrective
action strategy, please refer to EPA's Fiscal Year 2004 Annual Report,
Section I—Overview and Analysis.

    For reporting under FMFIA, material weaknesses are defined dif-
ferently than they are for financial statement audit purposes. OMB
Circular A-123, Management Accountability and Control, defines a
material weakness as a deficiency that the Agency head determines
to be significant  enough to be reported outside the Agency.

    For financial statement audit purposes, OMB defines material
weaknesses in internal control as reportable conditions in which the
design or operation of the internal control does not reduce to a relatively low level the risk
that errors, fraud, or noncompliance in amounts that would  be material in relation to the
financial statements or RSSI being audited, or material to a  performance measure or aggrega-
tion of related performance measures, may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.

    The Agency did not report as part of the Integrity Act process, and our audit did not
detect, any material weaknesses for fiscal 2004.
TESTS  OF  COMPLIANCE  WITH  LAWS AND  REGULATIONS

    EPA management is responsible for complying with laws and regulations applicable to the
Agency. As part of obtaining reasonable assurance about whether the Agency's financial state-
ments are free of material misstatement, we performed tests of its compliance with certain
provisions of laws and regulations, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts, and certain other laws and regula-
tions specified in OMB Bulletin No. 01-02, Audit Requirements for Federal Financial Statements,
as supplemented by an OMB Memorandum dated January 4, 2001, Revised Implementation
Guidance for the Federal Financial Management Improvement Act. The OMB guidance requires
that we evaluate compliance with Federal financial management system requirements, includ-
ing the requirements referred to in the Federal Financial Management Improvement Act
(FFMIA) of 1996. We limited our tests of compliance to these provisions and did not test  com-
pliance with all laws  and regulations applicable to EPA.

    Providing an opinion on compliance with certain provisions of laws and regulations was
not an objective of our audit and, accordingly, we do not express such an opinion. There are a
number of ongoing investigations involving EPA's grantees and contractors that could disclose
violations of laws and regulations, but a determination about these cases has not been made. In
                                    addition, the Agency reported that the  approximately
                                    9,000 confidential financial disclosure forms filed  by
                                    EPA employees by November 1, 2004, will be reviewed
                                    by the deputy ethics officials no later than January 22,
                                    2005. Since the Agency has not had time to review
                                    such reports and disclose matters that would require
                                    further inquiry, resolution, or reporting, we did not
                                    perform any tests or additional inquiries about those
                                    reports. Had the Agency been able  to review the
                                    reports and we had been able  to perform tests or make

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
               additional inquiries, matters may have come to our attention that would require reporting.

                  None of the noncompliances discussed below would result in material misstatements to the
               audited financial statements.
                                       FFMIA  NONCOMPLIANCE

                                          Under FFMIA, we are required to report whether the Agency's
                                       financial management systems substantially comply with the Federal
                                       financial management systems requirements, applicable Federal
                                       accounting standards, and the United States Government Standard
                                       General Ledger at the transaction level. OMB Bulletin No. 01-02,
                                       as supplemented by an OMB memorandum dated January 4, 2001,
                                       Revised Implementation Guidance for the Federal Financial Management
                                       Improvement Act, substantially changed the guidance for determining
                                       whether or not an Agency substantially complied with the Federal
                                       financial management systems requirements, applicable Federal
                                       accounting standards, and the United States Government Standard
                                       General Ledger at the transaction level. The document is intended
                                       to focus Agency and  auditor activities on the essential requirements
                                       of FFMIA. The document lists the specific requirements of FFMIA,
                                       as well as factors to consider in reviewing systems and for determin-
                                       ing substantial compliance with FFMIA. It also provides guidance to
                                       Agency heads for developing corrective action plans to bring an
                                       Agency into compliance with FFMIA. To meet the FFMIA require-
                                       ment,  we performed tests of compliance with FFMIA section 803(a)
               requirements and used the OMB  guidance, revised on January 4, 2001, for determining sub-
               stantial noncompliance with FFMIA.

                  The results of our tests did not disclose any  instances where the Agency's financial man-
               agement systems did not substantially comply with the applicable Federal accounting standard.

                  We recognize improvements OCFO has made in cost accounting and believe that while
               there are still noncompliance issues with cost accounting, those noncompliances do not meet
               OMB's definition of substantial noncompliance. However, the Agency was not in compliance
               with Statement of Federal Financial Accounting Standards No. 4 that requires EPA to provide
               full costs per output to management in a timely fashion.

                  We identified two other FFMIA non-
               compliances, related to reconciliation of
               intragovernmental transactions and strength-
               ening practices regarding security screening
               for non-Federal personnel. However, these
               noncompliances do not meet the definition
               of substantial noncompliance as described in
               OMB guidance.

                  Our tests also noted one other instance
               of noncompliance with laws and  regulations,
               related to the Treasury Financial  Manual for
               preparation of Statement of Transactions.

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                           SECTION 3. FY 2OO4 ANNUAL FINANCIAL STATEMENTS—SUMMARY OF OIG's AUDIT REPORT
Subsequent to the completion of our audit work, the Agency took action to implement
Treasury procedures for preparation of Statement of Transactions.

    Attachment 1 provides additional details, as well as our recommendations on actions that
should be taken on these matters. We have also reported other less significant matters involv-
ing compliance with laws and regulations in position papers during the course of our audit. We
will not be issuing a separate management letter.
PRIOR AUDIT COVERAGE

    During previous financial or financial-related audits,
weaknesses that impacted our audit objectives were
reported in the following areas:

 •   Reconciling and reporting intra-governmental trans-
     actions, assets, and liabilities by Federal trading
     partner.

 •   Complying with Statement of Federal Financial
     Accounting Standards No. 4, including accounting
     for the cost to achieve goals and identifying and allo-
     cating indirect costs.

 •   Interagency Agreement invoice approval process.

 •   Documenting EPA's IFMS.

 •   Complying with Federal financial management system security requirements.

 •   Preparation and reconciliation of Statement of Transactions.

 •   Documentation and approval of journal vouchers.
 •   Assessing automated application processing controls for IFMS.

 •   Reconciling Unearned Revenue for State Superfund Contracts.

 •   Managing EPA's Accounts Receivable.

    Attachment 3, Status of Prior Audit Report Recommendations, summarizes the current
status of corrective actions taken on prior audit report recommendations with corrective
actions in process.

    The Chief Financial Officer, as the Agency's Audit Followup Official, oversees EPA's fol-
lowup on audit findings and recommendations, including resolution and implementation of
corrective actions. For these prior audits, final action occurs when the Agency completes
implementation of the corrective actions to remedy weaknesses identified in the audit.

    We acknowledge that many actions and initiatives have been taken to resolve prior finan-
cial statement audit issues. We also recognize that the issues we have reported are complex,
and require extensive, long-term corrective actions and coordination by the Chief Financial
Officer with various Assistant Administrators, Regional Administrators, and Office Directors
before they can be completely resolved. A few issues have been unresolved for many years. The
OIG will continue to work with the OCFO in helping to resolve all audit issues resulting from
our financial statement audits.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
              AGENCY COMMENTS AND OIG EVALUATION

                  In a memorandum dated November 12, 2004, OCFO responded to our draft report.

                  The rationale for our conclusions and a summary of the Agency comments are included in
              the appropriate sections of this report, and the Agency's complete response is included as
              Appendix II to the OIG's complete audit report.

                  This report is intended solely for the information and use of the management of EPA,
              OMB, and Congress, and is not intended to be and should not be used by anyone other than
              these specified parties.
                                                                            Paul C. Curtis, Director
                                                                                   Financial Audit
                                                                         Office of Inspector General
                                                              U.S. Environmental Protection Agency
                                                                                November 5, 2004

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Appendices

      Appendix A
      Program Evaluations Completed in FY 2004	

      Appendix B
      Data Quality for Assessments of FY 2004 Performance Measures

      Appendix C
      Program Assessment Rating Tool (PART) FY 2004/2005	

      Appendix D
      Acronyms and Definitions	

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
   Appendix   A
    Program   Evaluations
    Completed   in    FY  2004
       Evaluation Title
          and Scope
     Goal I, Objective I

     Air Quality Management
     in the United States

     This report:

     — Assessed the effec-
       tiveness of the major
       air quality provisions
       of the Clean Air Act
       (CAA) from a scien-
       tific and technical
       perspective and
       their implementation
       by federal, state,
       tribal, and local gov-
       ernment agencies.
     — Presented scientific
       and technical recom-
       mendations for
       strengthening the
       nation's air quality
       management (AQM)
       system with  respect
       to the way it identi-
       fies and incorporates
       important sources of
       exposure to humans
       and ecosystems and
       integrates new
       understandings of
       human and ecosys-
       tem  risks.
   Findings of the Evaluation
The National Academy of Sciences
(MAS) concluded:

— Implementation of the CAA has
  contributed to substantial
  decreases in emissions of several
  pollutants.
— Air quality monitoring networks
  have confirmed that ambient pol-
  lutant concentrations, especially in
  urban areas, have decreased over
  the past three decades, and long-
  term atmospheric deposition
  monitoring has documented a
  reduction in sulfate deposition in
  the eastern  United States.
— Despite uncertainties, economic
  assessments of the overall costs
  and benefits of AQM in the
  United States indicated that
  implementation of the CAA has
  had and will probably continue to
  have substantial net economic
  benefits.
— Scientific and technical limitations
  identified in the current AQM
  system will hinder future progress
  as the nation attempts to meet
  upcoming challenges.
 — To meet these challenges the
  Committee on Air Quality
  Management in the United States
  identified a  set of long-term
  objectives that guide future
  improvements of the AQM sys-
  tem. AQM  should strive to:
  identify and  assess more clearly
  the most significant exposures,
  risks, and uncertainties; take an
  integrated multipollutant
  approach to controlling emissions
  of pollutants posing the most sig-
  nificant risks; take an
     Planned Response
- EPA believes that the NAS's com-
 prehensive, thoughtful report and
 recommendations contain reason-
 able long-term goals for AQM in
 the United States.  EPA plans to
 use the report and recommenda-
 tions as a framework for
 improving the current system.
-The findings are consistent with
 ERA's continuing efforts to pro-
 vide Americans with cleaner air.
-EPA has applied  multipollutant
 approaches and  the cap-and-
 trade programs  in the President's
 proposed Clear  Skies Act and in
 ERA's recently proposed
 Interstate Air Quality Rule and
 mercury rule.
- EPA plans to continue its research
 on fine particles, including
 research that should improve the
 Agency's ability to relate benefits
 to specific fine particle reduc-
 tions.
- EPA has launched programs, such
 as Clean School  Bus USA, to
 retrofit existing diesel vehicles.
- EPA is working toward prioritizing
 air toxics so as to focus on those
 that are of concern in urban
 areas.
- EPA has supported legislation and
 is taking administrative steps that,
 together, will allow states to
 coordinate air quality plans for
 reducing ozone,  fine particle, and
 regional haze pollution, rather
 than addressing each air pollution
 problem individually.
    Public Access
Committee on Air
Quality Management in
the United States,
National Academy of
Sciences

ISBN: 0-309-08932-8

January 2004

Available at:
http://www.nap.edu/
catalog/10728.html

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                                               APPENDICES—APPENDIX A. PROGRAM EVALUATIONS  COMPLETED IN FY 2OO4
   Evaluation Title
      and Scope
    Findings of the Evaluation
                           airshed-based approach by assess-
                           ing and controlling emissions of
                           important pollutants arising from
                           local, multistate, national, and inter-
                           national sources; and emphasize
                           results over process, create
                           accountability for the results, and
                           dynamically adjust and correct the
                           system as data on progress are
                           assessed.
      Planned Response
                                      - EPA agrees with the need to better
                                       integrate planning for various air
                                       pollutants.  The CAA has a variety
                                       of programs with  different time-
                                       frames and requirements,
                                       depending on the nature of the
                                       pollutant.  EPA is working to inte-
                                       grate these programs as much as
                                       possible, given the statutory differ-
                                       ences.
                                      - EPA is working to develop new air
                                       indicators of ecological  condition,
                                       building, where possible, on ongo-
                                       ing national long-term monitoring
                                       and assessment efforts  (e.g.,
                                       CASTNet,  NADP, TIME/LTM).
    Public Access
Goal  I, Objective I

Air Pollution: EPA Could
Tote Additional Steps to
Help Maximize the
Benefits from the 2007
Diesel Emissions
Standards

This GAO report
examined:

 — The effectiveness of
   the accelerated
   (October 2002)
   deadline for 2004
   Diesel Emissions
   Standards on indus-
   try and emissions.
— Stakeholders' views
   on the readiness  of
   technology for the
   2007 Diesel Emission
   Standards and  EPA's
   efforts to ensure
   this.
GAO found:

— Implementing the 2004 diesel
   emissions standards 15 months
   early disrupted some  industries'
   operations.  Concerned that the
   new engines would be costly and
   unreliable, some companies said
   they bought more trucks with old
   engines than planned  before
   October 2002. While accelerat-
   ing the schedule for new engines
   accelerated  emissions benefits, it
   did not do so to the extent or
   the time frames anticipated.
   Because companies initially built
   more trucks with old  engines and
   owners are  now operating trucks
   longer, some of the expected
   emission reductions will likely be
   delayed.
— While EPA has taken  a number of
   steps to aid the transition to the
   new diesel engines in  accordance
   with the 2007 emission and fuel
   standards, some stakeholders
   would like more help. Engine,
   emission control, and  fuel industry
   representatives stated that the
   needed technologies will be avail-
   able on time.
- EPA believes that, in many key
 respects, the report is consistent
 with the Agency's assessment of
 the situation leading up to imple-
 mentation of the 2007 standards.
 The report accurately notes that
 "Stakeholders designing new
 emissions control, engine and fuel
 technologies say they will be
 ready." "All of the engine  manu-
 facturers reported that they
 expect to have engines ready by
 2007" "The [fuel] representatives
 agreed that EPA should make no
 changes to the 2007 rules' imple-
 mentation dates and  low sulfur
 diesel fuel requirements."  These
 statements—which reflect the
 views of the companies that must
 comply with the 2007 program—
 are consistent with our analysis of
 the progress that these industries
 have made  in complying with the
 new standards.
-All major engine makers have
 committed to having test  engines
 ready for customers by certain
 dates.
Government
Accountability Office

GAO-04-313

March 2004

Available at:
http://www.gao.gov/
newitems/d043l3.pdf
Goal  I, Objective I

New Source Review
Revisions: Stakeholder
Views

GAO examined the revi-
sions to the EPA New
Source Review (NSR)
program in October
GAO found:

— A majority of the 44 state air qual-
  ity officials responding to the GAO
  survey believe that the December
  2002 final rules will provide indus-
  try greater flexibility to modify
  facilities without having to install
  pollution controls in some cases.
- EPA agrees with GAO that the
 emissions data available to analyze
 the NSR revisions' impacts are
 limited.
- EPA had concerns about the
 methodology and some of the find-
 ings. Specifically, EPA is concerned
 that GAO: used the opinions
 expressed in the survey responses
Government
Accountability Office

GAO-04-274

February 2004

Available at:
http://www.gao.gov/
new. items/d04274. pdf

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
         Evaluation Title
            and Scope
     2002 and December
     2003 by surveying part-
     ners and stakeholders on
     the impacts and potential
     effects of all the NSR
     revisions.
     Findings of the Evaluation
— Stakeholders were divided on the
  rules' impact on emissions and
  agencies' workloads. A majority of
  officials also think that this flexibility
  will come at the cost of increases in
  emissions and agencies' workloads.
— Other stakeholders believe the
  revisions in the final rule and the
  two proposed exclusions will
  decrease the regulatory burden on
  industry.
— Given the conflicting opinions of
  state officials and stakeholders,
  determining the likely impact of the
  revisions is difficult, primarily
  because few data exist to substanti-
  ate opinions. In addition to
  recommendations included in
  GAO's  earlier NSR-related reports,
  GAO recommends that EPA identi-
  fy available data, or ways to obtain
  the data, to monitor the emissions
  impact  of the NSR exclusion for
  routine equipment replacement.
  GAO also recommends that,
  before  issuing a final rule on the
  proposed annual maintenance
  allowance, EPA consider the state
  officials' and stakeholders'  concerns
  about the emission and workload
  impacts identified.
      Planned Response
as fact from which to draw conclu-
sions and make recommendations
about the NSR program; did not
ensure balance and objectivity; used
a skewed survey sample; and
should have evaluated whether the
survey results were consistent with
the facts cited in EPA's analyses of
the revisions' effects.
    Public Access
A copy of the survey
and detailed tables
showing the state and
local officials' responses
to the questions in a
separate report are
available: Survey of
State and Local Air
Quality Officials
Opinions on the
Impacts of the
Environmental
Protection Agency's
Revisions to the Clean
Air Act's New Source
Review Program
(GAO-04-337SP)
      Goal I, Objective 6

      Research Priorities for
      Airborne Paniculate
      Matter. IV. Continuing
      Research Progress

      This report examined:

       — The extent to which
        completed and
        ongoing research is
        addressing gaps that
        decision makers
        need to consider as
        they review the sci-
        entific evidence
        relevant to the par-
        ticulate matter (PM)
        National Ambient
        Air Quality
        Standards
        (NAAQS).
The National Research Council
(NRC) reported:

 — Much has been learned since the
    1998 research investment, and the
   evidence gained is already being
   used in decisions that will contin-
   ue to be made, even with the
   remaining uncertainties.
 — Much is still to be learned, partic-
   ularly in the area of
   characterization of emission
   sources, air quality  model devel-
   opment and testing, and
   assessment of hazardous PM
   components.
— A failure to invest in advancing
   the understanding of PM would
   result in not taking full advantage
   of the substantial investment to
   date and the  nation's ability to
   make evidence-based health poli-
   cy and air quality regulatory
   choices in the future.
- EPA has acknowledged in its
 response to the NRC the evolu-
 tion of the  complexity of the PM
 science as documented in this
 capstone report, generally agrees
 with the recommendations, and is
 continuing its research program
 to address the uncertainties and
 challenges identified by the
 Subcommittee.
-In response to NRC recommen-
 dations, EPA is reviewing specific
 steps and plans with the Agency's
 Clean Air Science Advisory
 Committee.
- EPA is initiating in FY 2005 a
 mechanism  for conducting peri-
 odic independent expert reviews
 of its research programs, which
 will qualitatively assess reductions
 in scientific  uncertainty, as well  as
 the quality,  relevance, and per-
 formance of each program.
National Research
Council of the National
Academies

ISBN 0-309-09199-3

March  2004

Available at:
http://books.nap.edu/
catalog/I0957html

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                                               APPENDICES—APPENDIX A.  PROGRAM  EVALUATIONS  COMPLETED  IN FY 2OO4
   Evaluation Title
      and Scope
    Findings of the Evaluation
                          — The NRC identified seven specific
                           scientific challenges and three man-
                           agement of science challenges that
                           need careful attention  as the PM
                           research program continues, and
                           indicated that some progress has
                           been made in addressing these
                           challenges.
      Planned Response
                                        Public Access
Goal 2, Objective  I

Drinking Water. Experts'
Views on How Future
federal funding Can
Best Be Spent to
Improve Security

The purpose of this
evaluation was:

—To report to
   Congress on the
   views of national
   experts concerning
   drinking water secu-
   rity,  including serious
   vulnerabilities of
   drinking water sys-
   tems, criteria for
   allocating federal
   funds among systems
   to improve security,
   and activities that
   most warrant federal
   support to mitigate
   the  risk of terrorism.
GAO reported:
— Distribution systems are among
   the most vulnerable physical com-
   ponents of drinking water utilities,
   as well as computer systems that
   manage critical utility functions,
   treatment chemicals stored on
   site, and source water supplies.
— Individual utilities have insufficient
   information to identify threats and
   lack of redundancy in vital system
   components as vulnerabilities.
— Activities most deserving of sup-
   port included: physical and
   technological upgrades, education
   and training to support simulation
   exercises, and strengthening rela-
   tionships between water utilities
   and other agencies.
— Direct federal grants or the
   Drinking Water State Revolving
   Fund (DWSRF) should  be used to
   improve security and should be
   aimed at utilities' vulnerability
   assessments.
- EPA has agreed to consider the
 national experts' views should
 Congress appropriate additional
 funds for water security
- EPA is currently considering the
 use of a federal grant program,
 which is different from the exist-
 ing  DWSRF program in that it
 would exclusively fund security
 upgrades and provide grants
 directly to water systems. The
 DWSRF generally provides loans
 for  a diverse array of projects
 through individual state DWSRF
 programs.
- EPA has recently provided guid-
 ance on the types of
 security-related projects that are
 eligible for Clean Water and
 Drinking Water State Revolving
 Fund assistance and has undertak-
 en several of the activities
 identified in the report (e.g., exten-
 sive technical training and research
 into contaminant detectors).
                                    Government
                                    Accountability Office

                                    GAO-04-29

                                    October 2003

                                    Available at:
                                    http://www.gao.gov/
                                    newitems/d0429.pdf
Goal 2, Objective  I

Impact of EPA and State
Drinking Water Capacity
Development Efforts
Uncertain

The OIG examined:

— EPA and state for-
   mulation and initial
   implementation of
   capacity develop-
   ment programs.
 — The extent to which
   such programs have
   been formulated and
   initially implemented,
   consistent with the
   requirements and
   overall objectives of
   the Safe Drinking
   Water Act (SDWA).
OIG reported:

— With assistance from EPA, states
   designed capacity development
   strategies that generally met the
   requirements of the 1996 SDWA
   Amendments.
OIG recommended:

— Development of a national capac-
   ity strategy that promotes
   technical, managerial, and financial
   capacity in a proactive, integrated,
   flexible, and accountable way and
   provides additional guidance
   accordingly.
— Revision of 40 CFR 35.3515
   (DWSRF withholding regulations) to
   provide more specific criteria that
   will allow EPA to conduct meaning-
   ful annual assessments of state
   capacity development strategies.
- EPA has agreed to develop a
 national comprehensive evalua-
 tion tool for the regions to use
 when reviewing state reports to
 promote and improve national
 consistency of state program
 implementation.
-The tool will help EPA to analyze
 and review information more
 consistently and will a better
 equip the Agency for assessing
 program success at the national
 level.
- Once the tool is developed, EPA
 will assess whether national-level
 goals are appropriate for the
 capacity development program, in
 addition to the measures for the
 drinking water program as a
 whole.
                                    EPA Office of the
                                    Inspector General

                                    No. 2003-P-OOOI8

                                    September 30, 2003

                                    Available at:
                                    http://www.epa.gov/
                                    oigearth/reports/2003/
                                    2003-p-OOOIS-
                                    20030930.pdf

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
         Evaluation Title
            and Scope
       - How states are inte-
         grating capacity
         development,
         together with other
         SDWA initiatives and
         drinking water pro-
         gram activities, to
         assist community
         water systems to
         consistently achieve
         the SDWA's  health
         objectives.

    Findings of the Evaluation
 - Development of a comprehensive
  evaluation tool to assess imple-
  mentation of states' capacity
  development strategies, and that
  the tool be required for regions to
  use as part of their oversight
  responsibilities.
 - Identification of common meas-
  ures to develop/implement
  performance goals and  determine
  what common capacity develop-
  ment data are available  to support
  such measures, without burdening
  the states and utilities.
      Planned Response
    Public Access
      Goal 1, Objective I

      EPA Claims to Meet
      Drinking Water Goals
      Despite Persistent Data
      Quality Shortcomings

      The purpose of this
      report was to:

      — Evaluate the drinking
         water performance
         measure and deter-
         mine how
         "incomplete or inac-
         curate" drinking
         water data affects
         this measure.
      — Determine what
         actions EPA has
         taken to  ensure that
         drinking water data
         collected and  distrib-
         uted to the public
         are reliable and valid.
OIG reported:

— EPA's drinking water performance
   reporting in recent annual per-
   formance reports might have
   been skewed by data inconsisten-
   cies in SDWIS/FED
OIG suggested:

— EPA and the states  should contin-
   ue to move forward in correcting
   data deficiencies.
— EPA should account for missing
   and inaccurate data when report-
   ing performance  under the
   Government Performance and
   Results Act to compensate for
   data reliability concerns.
- EPA's data verifications audits and
 associated analyses indicate that
 data in SDWIS/FED are highly
 accurate with very few errors,
 but are still incomplete.
- EPA and the states have made sig-
 nificant progress in improving the
 quality of data.
- EPA's "Drinking Water Data
 Reliability Analysis and Action
 Plan" (2003) highlights the
 Agency's continuing efforts and
 additional steps EPA will take in
 partnership with states to further
 improve the data's reliability.
- EPA will continue to engage in
 discussions with states regarding
 potential new approaches for
 reporting drinking water data.
EPA Office of the
Inspector General

No. 2004-P-0008

March 5, 2004

Available at:
http://www.epa.gov/oig
earth/reports/2004/200
40305-2004-P-0008.pdf
      Goal 2, Objective I

      States Making Progress
      on Source Water
      Assessments, But
      Effectiveness Still to Be
      Determined

       — The Source Water
         Assessment Program
         (SWAP) is intended
         to encourage states
         to form voluntary,
         mutually beneficial
         partnerships to
         develop source
         water protection
         strategies.
OIG reported:

— SWAP appears to have been
   beneficial.
— While states approached it differ-
   ently, there is consensus that the
   information obtained through the
   assessment process and the  quali-
   ty of the assessments themselves
   can  lead to protection efforts and
   be incorporated into other water
   quality management programs.
— Most states used a wide variety of
   available information sources to
   develop the assessments.
— Recommendations were: (I) EPA
   and  states  should finalize the
- EPA generally agreed with the
 IG's recommendations and is in
 the process of developing appro-
 priate corrective actions.
EPA Office of the
Inspector General

No. 2004-P-OOOI8

May 27 2004

Available at:
http://www.epa.gov/oig
earth/reports/2004/200
40527-2004-P-OOOI9.pdf

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                                               APPENDICES—APPENDIX A.  PROGRAM  EVALUATIONS COMPLETED IN FY 2OO4
   Evaluation Title
      and Scope
The purpose of this
report was to:

— Evaluate the status of
   source water assess-
   ment submissions.
— Determine if source
   water assessments
   are fulfilling the needs
   of the program.
— Determine  how the
   success of the pro-
   gram is measured.
    Findings of the Evaluation
   SWAP measures and reporting
   requirements; (I) EPA should
   revisit the state agency concerns
   raised in this report, solicit and
   evaluate alternatives, and resolve
   the concerns to the satisfaction of
   the group; (3) EPA  should contin-
   ue its effort to develop and  issue
   guidance for states  on what  infor-
   mation  is appropriate for release
   to the public.
      Planned Response
    Public Access
Goal 1, Objective 1

Water Infrastructure:
Comprehensive Asset
Management Has
Potential to Help Utilities
Better Identify Needs
and Plan Future
Investments

GAO examined:

 — The potential bene-
   fits of comprehensive
   asset management
   for drinking water
   and wastewater utili-
   ties and the
   challenges that could
   hinder  its implemen-
   tation, and the role
   that the federal gov-
   ernment might play
   in encouraging utili-
   ties to implement
   asset management.
GAO found:

— Utilities see benefits from using
   comprehensive asset manage-
   ment, but face implementation
   challenges.
GAO recommends that EPA:

— Better coordinate
   ongoing/planned initiatives to pro-
   mote asset management within
   and  across the drinking water and
   wastewater programs.
— Explore opportunities to take
   advantage of asset management
   tools/informational materials devel-
   oped by other federal agencies.
— Strengthen efforts to educate util-
   ities on how implementing asset
   management can help them com-
   ply with certain regulatory
   requirements.
— Establish a web site to provide a
   central repository of information.
- EPA agrees with GAO's findings
 and believes there are significant
 benefits to be realized by further
 adoption of asset management
 practices. The federal government
 can do much to encourage utili-
 ties to implement asset
 management.
-The Agency has already engaged
 in a series of collaborative and
 training-related efforts with utili-
 ties on asset management.
- EPA will implement a sustainable
 infrastructure strategy to enhance
 the operating efficiencies of water
 and wastewater systems, which
 will focus on better management,
 water efficiency, full-cost pricing,
 and the watershed approach.
Government
Accountability Office

GAO-04-461

March  19, 2004

Available at:
http://www.gao.gov/
newitems/d0446l .pdf
Goal 2, Objective 2

Program Enhancements
Would Better Ensure
Adequacy of Boat
Pumpout Facilities in No-
Discharge Zones

This report examined:

— ERA's process for
   determining the ade-
   quacy of facilities to
   remove and treat
   sewage in proposed
   no-discharge zones
   (NDZs).
 — The extent to which
   EPA and the states
GAO reported:

— ERA's process for determining
   whether adequate facilities are
   reasonably available could be
   improved.
 — There is no EPA oversight and
   limited state oversight of
   pumpout facilities after NDZs are
   established.
 — The Coast Guard limits its
   enforcement of no-discharge pro-
   hibitions to  the three federally
   designated NDZs; it  does not
   enforce them in the  56 state-des-
   ignated zones.
— A number of EPA, state, and local
   officials believe that water quality
- EPA recently completed a survey
 of 958 boaters and 69 marinas
 from 15  coastal and Great Lakes
 NDZs around  the country to
 obtain information about
 pumpout availability, pumpout
 use, and NDZ  awareness. A
 majority of the respondents
 reported favorably as to the ade-
 quacy, availability, accessibility, and
 functionality of pumpout facilities.
- EPA has initiated work to develop
 national  guidance to assist the EPA
 regional  offices in improving the
 evaluation of pumpout adequacy
 in proposed NDZs and to better
 maintain adequate pumpout capa-
 bility in existing NDZs.
Government
Accountability Office

GAO-04-613

May 2004

Available at:
http://www.gao.gov/
newitems/d046l3.pdf

-------
FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S.  ENVIRONMENTAL PROTECTION  AGENCY
         Evaluation Title
            and Scope
         ensure that adequate
         facilities remain avail-
         able after designation.
        -The extent to which
         the U.S. Coast
         Guard and states
         enforce discharge
         prohibitions.
        -Various effects of
         NDZs, as identified
         by EPA, states, and
         localities.
    Findings of the Evaluation
   and environmental stewardship
   have improved after designation
   of these zones.
        Planned Response
    Public Access
      Goal 2, Objective 2

      Watershed
      Management. Better
      Coordination of Data
      Collection Efforts
      Needed to Support Key
      Decisions

      GAO examined the
      water quality monitor-
      ing efforts supported
      by EPA and  15 other
      agencies

      Specifically, GAO was
      asked to determine:

       — The key entities that
         collect water quanti-
         ty data, including the
         types of data they
         collect, how they
         store their data, and
         how entities can
         access the data.
       — The extent to which
         these entities coor-
         dinate their water
         quantity data collec-
         tion efforts.
GAO found:

 — The availability of timely, reliable,
   and complete data about the
   nation's waters has significant
   environmental and financial impli-
   cations.
— More efficient coordination of
   data collection efforts could
   improve the quality of the data
   and provide more information for
   decision making.
GAO listed three actions for con-
gressional consideration:

— Support for the development and
   continued operation of regional
   and state monitoring councils.
— Coordination of the development
   of an Internet-based clearinghouse
   (e.g., a geospatial Internet-based
   query tool) to convey information
   on entities collecting data and
   what types of data are available
   within a given watershed.
— Coordination of the development
   of clear guidance on metadata
   standards so that data users can
   integrate data from various
   sources.
  - EPA is working with other agen-
   cies to address each of these
   issues.
  - EPA has helped to create and
   support several of the eight state
   and regional water monitoring
   councils that exist today, which
   model the coordination efficiency
   GAO recommends in  its report.
  - EPA, working with the U.S.
   Geological Survey (USGS), has
   begun to implement an Internet
   portal that will give access to
   water quality data housed in the
   two large agency water quality
   data systems.
  -EPA, working with USGS, is initi-
   ating a project to demonstrate
   the integration of data from many
   sources for use in watershed
   management efforts.
  - EPA, working with many federal
   agencies through the National
   Water Quality Monitoring
   Council, has defined and adopted
   a set of metadata elements to
   help ensure the comparability of
   data from disparate sources.
Government
Accountability Office

GAO-04-382

June 2004

Available at:
http://www.gao.gov/
newitems/d04382.pdf
      Goal 2, Objective 3

      Effectiveness of Effluent
      Guidelines Program for
      Reducing  Pollutant
      Discharges Uncertain

      The objectives of the
      evaluation were to
      determine:

       — To what extent
         ERA's  effluent guide-
         lines development
OIG found that the effluent guide-
lines program experienced the
following changes over the past
decade:

— broader range of pollutants,
— broader array of industries,
— more effluent guidelines promul-
   gated.
Indicators of the program's success
include whether:
EPA will:

— Conduct a retrospective analysis
   of several guidelines to determine
   their effectiveness, using an
   approach similar to OIG's.
— Determine the usefulness of com-
   paring sampling  data collected
   during guideline revision with the
   data collected during the original
   promulgation.
ERA's Office of Water will continue
to develop the tools described in
EPA Office of the
Inspector General

Record  No. 2004-P-
00025

August 24,  2004

Contact:

Dan Engelberg,
Director of Program
Evaluation,  Water
Issues, OIG
202/566-0830

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                                               APPENDICES—APPENDIX A.  PROGRAM  EVALUATIONS COMPLETED IN FY 2OO4
   Evaluation Title
      and Scope
   process has changed
   over time.
  - How effectively
   effluent guidelines
   are used to reduce
   pollutant loadings.
  -The extent to which
   EPA measures the
   effectiveness of the
   effluent guidelines
   program.
    Findings of the Evaluation
— Guidelines were used in the
   National Pollutant Discharge
   Elimination System permits ana-
   lyzed.
— Limits in reissued permits were
   derived from effluent guidelines
   to a very large extent.
Indicators of the program's impact
remain uncertain:

— EPA does not measure the effec-
   tiveness of the  effluent guidelines
   program or of individual effluent
   guidelines.
— Data were not available to deter-
   mine actual reductions in
   pollutant discharges.
        Planned Response
the Permitting for Environmental
Results Strategy that are responsive
to the conclusions of this report.
    Public Access
Renee McGhee-Lenart
Project Manager, OIG
913/551 -7534

Available at:
http://www.epa.gov/oig/
reports/2004/20040824-
2004-P-00025.pdf
Goal 2, Objective 3

Evaluation of the
Analytical Methods
Review and Approval
Program

The objectives of the
evaluation were to
assess the effectiveness
of program/process for:

— Reviewing alterna-
   tive test procedures
   for use by the regu-
   lated community to
   comply with moni-
   toring requirements.
— Updating or revising
   existing analytical
   methods  or approv-
   ing improved or
   new analytical meth-
   ods in the Code of
   Federal Regulations.
— Stakeholder outreach
   and communication.
The study also planned
to identify short-term
and long-term improve-
ments to address the
needs of all stakeholders.
The evaluation found that the
Analytical Methods Program:

— Has been successful in meeting
   the requirements of the Effluent
   Guidelines program.
— Has lacked the visibility and
   resources to successfully meet the
   needs of external stakeholders
   regarding the review and
   approval of new methods. This
   has slowed down the use of
   more efficient technologies.
— Needs to take a more strategic
   role in coordination with all
   stakeholders and long-term plan-
   ning.
  -The Office of Science and
   Technology (OST) received the
   final report in September 2004.
   The findings are currently being
   evaluated and will be used  in  the
   development of a 5-year analyti-
   cal methods strategy.
  - OST will seek input  from other
   Office of Water offices and
   regional methods contacts to
   develop the strategy.
SRA International, Inc.;
Industrial Economics,
Inc.

September 2004

EPA Contact:
Meghan Hessenauer
Office of Science and
Technology
202 566-1040
Goal 3, Objective 2

Immediate Action Needed
to Address Weaknesses in
EPA Efforts to Identify
Hazardous Waste Sites in
Indian Country
OIG reported:

— Some delays were caused by mis-
   management by a grantee.
— EPA had not sufficiently defined
   its data needs for the inventory.
EPA has:
          to continue close over-
   sight of the grantee.
 — Taken steps to improve commu-
   nication of information needs to
   the grantee.
EPA Office of the
Inspector General

Report No. 2004-P-
00003

January 30, 2004

-------
FISCAL YEAR 2OO4 ANNUAL  REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
         Evaluation Title
           and Scope
      OIG examined:

      — EPA's efforts to
        develop an invento-
        ry of hazardous
        waste sites on Indian
        lands.
      — EPA's methodology
        to get tribal input to
        the inventory.
    Findings of the Evaluation
— Problems with the grantee's
   methodology may preclude
   development of an accurate and
   reliable inventory.
— EPA did not  have a sufficient plan
   for validating, managing, storing,
   or updating the  inventory
        Planned Response
 -  Provided technical assistance to
the grantee to help develop a clear
management plan.

 — Begun working with the grantee
to address data management and
data quality issues.
    Public Access
Available at:
http://www.epa.gov/oig/
reports/2004/20040130-
2004-p-00003.pdf
      Goal 3, Objective 2

      Superfund Building on
      the Past Looking to the
      Future (120-day Study)

      This report examined:

      — The Superfund pro-
        gram to identify
        opportunities for
        program efficiencies
        that would enable
        the Agency to begin
        and ultimately com-
        plete more
        long-term cleanups
        with current
The report found that overall, the
program is strong and diverse and
continues to strive to meet high
expectations.

 — The report contains 102 recom-
   mendations, which are intended
   to improve a program that is fun-
   damentally sound and does not
   need a major overhaul. The rec-
   ommendations can be grouped
   into the following key areas:
   — Provide leadership and vision.
   — Build on past successes.
   — Continue to build a better,
     more effective program.
   — Improve the use and manage-
     ment of Agency resources.
   — Improve communications and
     program accountability.
   — Make purposeful resource
     shifts to better link organiza-
     tional structure with program
     needs.
 — The Agency has convened a
   Board of Directors, as recom-
   mended by the study, and is
   currently evaluating the recom-
   mendations and drafting work
   plans to address them.
U.S. Environmental
Protection Agency

April 22, 2004

Available at:
http://www.epa.gov/
superfund/news/
I20daystudy.pdf
      Goal 3, Objective 2

      National Advisory
      Council for
      Environmental Policy and
      Technology (NACEPT)
      Final Report

      The purpose of this
      report was to:

      — Reach  consensus-
        based
        recommendations on
        three major issues:
        (I) the role  of the
        National Priorities
        List (NPL), (2) the
        role of Superfund
        "mega-sites,  and (3)
        measurement of pro-
        gram performance.
NACEPT reported:

The Subcommittee developed  17
consensus-based recommendations
on how the Agency could improve
its operations.
  -The Agency is evaluating the rec-
   ommendations to determine the
   specific actions that will be taken.
  -The Agency is working to  priori-
   tize the listing and funding of sites
   using a consistent set of factors,
   to make sure to only refer sites
   that must be handled by
   Superfund to the NPL, and to
   provide better information to the
   public on accomplishments and
   distinguish megasite progress from
   non-megasite progress. EPA is
   also developing an institutional
   control tracking system and a
   strategic plan for addressing insti-
   tutional control issues.
Superfund
Subcommittee of the
National Advisory
Council for
Environmental Policy
and Technology

April 12, 2004

Available at:
http://www.epa.gov/
oswer/docs/
naceptdocs/
NACEPTsuperfund-
Final-Report.pdf

-------
                                               APPENDICES—APPENDIX A.  PROGRAM EVALUATIONS COMPLETED IN  FY 2OO4
   Evaluation Title
      and Scope
Goal 4, Objective I

Substantial Progress
Made, But Further
Actions Needed in
Implementing
Brownfields Program

The purpose of this
evaluation was to:

— Assess the first year
   of implementation of
   the  Brownfields pro-
   gram, and
   effectiveness in insti-
   tuting major
   program  compo-
   nents.
— Review EPA's success
   in identifying and
   securing resources
   for carrying out the
   expanded
   Brownfields pro-
   gram.
    Findings of the Evaluation
OIG reported:

— Stakeholders have generally been
   pleased with the program.
 — There are some concerns about
   the clarity, timeliness, and suffi-
   ciency of guidance to regions and
   grant applicants.
 — There is limited opportunity for
   feedback from  regional offices
   during grant review.
 — The process for determining
   applicant and site eligibility is not
   well defined or documented.
— Property ownership deadlines are
   not being met.
— It is difficult to  assess the pro-
   gram's environmental
   performance.
        Planned Response
  - EPA has held training sessions and
   conference calls during FY 2004
   to improve and enhance guid-
   ance.
  - EPA has streamlined the grant
   application process, from two
   steps to one step.
  - EPA has begun developing a
   process for conducting a more
   detailed evaluation of
   applicant/site eligibility, on a sam-
   ple basis.
  - EPA has decided not to extend
   property ownership deadlines this
   year
  - EPA has begun developing a
   process to use property profiles
   to assess program performance.
                                                                              Public Access
                                                                          EPA Office of the
                                                                          Inspector General

                                                                          Report No. 2004-P-
                                                                          0020

                                                                          June 21, 2004

                                                                          Available at:
                                                                          http://www.epa.gov/oig/
                                                                          reports/2004/20040621 -
                                                                          2004-P-0020.pdf
Goal 4, Objective I

Preliminary Assessment
of the Premanufacture
Notice Review Program

The purpose of this
evaluation was to
  -The structure and
   function of
   Premanufacture
   Notice (PMN) pro-
   gram.
  -The perceptions of
   program employees
   as to the program's
   effectiveness.
  - Possible program
   improvements.
  -Areas for further
   investigation.
  -The evaluation identified methods
   of tracking program expenditures
   that could be  improved.
  -Since many chemicals submitted
   as PMNs are never manufactured
   commercially,  benefits could be
   gained from identifying features of
   PMNs that correlate well with
   subsequent filing of Notices of
   Commencement of
   Manufacturing.
  - Employees cited receipt of incom-
   plete or inaccurate data as the
   primary cause of program delays.
  -Assessment of internal bottle-
   necks, industry issues, and
   scientific assessment process
   could provide benefits.
EPA initiated Phase
tion to:
                                                        of the evalua-
— Determine methods for tracking
   program expenditures.
— Develop more detailed cost
   information covering a longer
   period of time to support devel-
   opment of efficiency measures
   (measure development occurring
   under a separate project).
— EPA will assess the need for con-
   ducting a third phase of this
   evaluation, pending review of the
   Phase II report in the second or
   third quarter of FY 2005.
Industrial Economics,
Inc.

September 2004
Interim Report

This is an internal EPA
report and is not pub-
licly available.
Goal 4, Objective I

Pesticide Environmental
Stewardship Program

The purpose of this
evaluation was to:
The evaluation recommended:

— Improving the effectiveness of
   strategy development by aligning
   grants with risk reduction priori-
   ties; providing additional training
   to  liaisons on how to best assist
   members; and creating a
                                      - EPA will develop an action plan
                                        for addressing the recommenda-
                                        tions.
                                     Industrial Economics,
                                     Inc.

                                     July 2004

                                     This is an internal EPA
                                     report and is not pub-
                                     licly available.

-------
FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
         Evaluation Title
            and Scope
        - Maximize value of
         the Pesticide
         Environmental
         Stewardship
         Program (PESP) to
         EPA and participants.
        -Assess what makes
         the program suc-
         cessful.
        -Assess what needs
         improvement or
         redesign.
        - Assess the effective-
         ness of the strategy
         development
         process.
        - Evaluate the capacity
         of PESP liaisons to
         further program
         goals.
        - Determine how to
         implement strategies
         more effectively.
    Findings of the Evaluation
   performance measurement clear-
   inghouse.
  - Increasing program support with
   additional travel and  training
   funds.
  -Facilitating the implementation of
   effective strategies by reinstating
   the annual meeting; promoting
   PESP in trade journals; and creat-
   ing a searchable database of
   reduced risk grant projects.
  - Providing additional member ben-
   efits,  such as publicizing champion
   awards; providing more intensive
   assistance with  grant applications;
   reenlisting inactive members and
   providing additional incentives for
   members; and considering
   umbrella memberships for trade
   associations.
        Planned Response
    Public Access
      Goal 4, Objective 1

      Water and Wetlands:
      Corps of Engineers
      Needs to  Evaluate Its
      District Office Practices
      in Determining
      jurisdiction

      The purpose of this
      evaluation was to
      describe the:

      — Regulations and
         guidance  used to
         determine jurisdic-
         tional waters and
         wetlands  and  related
         developments since
         2001 Solid Waste
         Agency of Northern
         Cook  County vs.
         U.S. Army Corp of
         Engineers case which
         struck down the
         migratory bird rule.
      — Extent to which the
         U.S. Army Corps of
         Engineers district
         offices vary in their
         interpretation of
GAO reported:

— EPA and Corps regulations defin-
   ing waters of the United States
   leave room for interpretation by
   Corps districts when considering
   (I) adjacent wetlands, (2) tribu-
   taries, and (3) ditches and other
   man-made conveyances.
— Corps districts differ in how they
   interpret and apply the federal
   regulations when determining
   which waters and wetlands are
   subject to federal jurisdiction.
GAO recommends that the Corps
and EPA:

— Survey district office practices,
— Evaluate whether and how to
   resolve differences, and
— Require districts to document
   practices and make information
   publicly available.
EPA and the Corps are:

—Jointly evaluating proposed juris-
   dictional determinations subject
  to review under EPA and  Corps
   of Engineers guidance issued in
  2003.
— Sharing information on determi-
  nations of no Clean Water Act
  jurisdiction.
— Making more information  on
  jurisdictional calls available to the
  public.
— Pursuing development of guid-
  ance and/or training to promote
   consistency  in problem areas.
Government
Accountability Office

GAO-04-297

February 2004

Available at:
http://www.gao.gov/
newitems/d04297pdf

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                                               APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED  IN FY 2OO4
    Evaluation Title
      and Scope
   these regulations and
   guidance, document
   their practices, and
   make this informa-
   tion available.
    Findings of the Evaluation
      Planned Response
    Public Access
Goal 4, Objective 1

Toxics Release Inventory
System Can Improve
Industrial User Reporting
and Metal Transfers
Identification

The purpose of this
report was to:

— Evaluate the process
   used to report trans-
   fers of  pollutants to
   publicly owned treat-
   ment works
   (POTWs).
OIG recommended four items for
improvement:

— Correct the Toxic Release
   Inventory (TRI) database using OIG
   work as support for the changes.
— Use auditing software to flag spikes
   and overall pollutant increases or
   decreases for future evaluation.
— Determine whether TRI Form R
   should be revised to reduce
   industry completion errors.
— Add a column to TRI Explorer
   reports showing metals/metal
   compound transfers to POTWs.
- Database corrections cannot be
 unilaterally made by EPA/TRI.
 Facilities have been contacted with
 requests for corrected input.
-TRI-ME software and Facility Data
 Reports (FDRs) are being
 enhanced to include historical
 trend data.  FDR enhancement
 available FY 2004.
- Form A and R modifications were
 considered as part of the
 Information Collection Request
 renewal process.
-TRI Explorer currently has the
 suggested POTW information.
EPA Office of the
Inspector General

Report No. 2004-P-
00004

November 17, 2003

Available at:
http://www.epa.gov/oig/
reports/2004/20040202-
2004-P-00004.pdf
Goal 4, Objective 2

EPA Needs to Consistently
Implement the Intent of
the Executive Order on
Environmental justice

The purpose of this
report was to deter-
mine how:

— EPA is integrating
   environmental justice
   into its day-to-day
   operations.
 — The Agency imple-
   mented  Executive
   Order 12898 and
   integrated its con-
   cepts into EPA's
   regional  and head-
   quarters offices.
— Environmental justice
   areas are defined at
   the  regional levels and
   what is their impact
OIG found:

— EPA has neither fully implemented
   Executive Order  12898 nor consis-
   tently integrated environmental
   justice into its day-to-day opera-
   tions.
— EPA has not identified minority
   and low-income populations or
   populations addressed in the
   Executive Order,  and has neither
   defined nor developed criteria for
   determining disproportionately
   affected populations.
 — The Agency restated its commit-
   ment to environmental justice  in
   2001  in a manner that does not
   emphasize minority and low-
   income populations, which is the
   intent of the  Executive Order.
- EPA disagrees with the central
 premise that Executive Order
 12898  requires the Agency to
 identify and address the environ-
 mental effects of its programs on
 minority and low-income popula-
 tions.
- EPA believes it is complying with
 the spirit and the letter of
 Executive Order 12898.
EPA Office of the
Inspector General

Report No. 2004-P-
00007

March  I, 2004

Available at:
http://www.epa.gov/
oig/reports/2004/
20040301 -2004-P-
00007pdf
Goal 4, Objective 2

The Effectiveness of the
Office of Children's Health
Protection Cannot Yet Be
Determined Quantitatively

The purpose of this
report was to determine:
OIG reported:
 — There is no overall, coordinated
  strategy integrating children's envi-
  ronmental health efforts into the
  Agency as a whole and no active
  communication process in place
  among the program offices and
  OCHP.
- EPA will expedite the appoint-
 ment of a permanent Director for
 OCHP.
- EPA will establish an official chil-
 dren's health contact within each
 media program office to improve
 coordination and communication.
EPA Office of the
Inspector General

Report No. 2004-P-
00016

May 17 2004

-------
FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title ..,..,.-, ™ • r, ^ • • A
.„ Findings of the Evaluation Planned Response Public Access
and Scope
— EPA's agenda for fos- — OCHP has no formal mechanism
tering children's in place to ensure performance
health and how the results or assess the relationships
Office of Children's among program costs, activities,
Health Protection and results.
(OCHP) ensures its
achievement.
— The impediments to
OCHP's ensuring
the achievement of
the Agency's
National Agenda to
Protect Children's
Health from
Environmental
Threats.
- How well OCHP's
plan coordinates
children's health
activities within the
Agency.
Goal 4, Objective 5
















OIG reported:
EPA's Final Water - The Office of Research and
Security Research and Development (ORD) should
— EPA will direct OCHP to make
improvements to its annual plan-
ning process to include a
methodology to set priorities to
ensure resources are being allo-
cated to problems that pose the
greatest environmental risks to
children, as well as periodic meet-
ings with the program offices.












— EPA will immediately grant
Available at:
http://www.epa.gov/oig/
reports/2004/20040517-
2004-P-OOOI6.pdf

















EPA Office of the
responsibility to ORD officials for Inspector General
developing, prioritizing, and imple-
menting critical water security epor o.
Technical Support Action access utility VAs to validate its research projects access to VAs POOQ23
Plan May Be research priorities. provided by uti|itjes Qnce gpant_
Strengthened Through _ Prob|ems may exist in the VAs, ed access, appropriate ORD
Access to Vulnerability especially in ( 1 ) identifying and officials should review the VAs to
prioritizing specific threats, partic- 1 determine the extent to which
The purpose of this ularly terrorist scenarios; and (2) EPA's Research Action Plan
report was to deter assessing the full breadth of a addresses utilities' most significant
mine whether:

- Vulnerability
Assessments (VAs)
submitted to EPA by
water utilities ade-
quately address all
the components
required by the
Bioterrorism Act

and whether corre-
lations can be found
between utility char-
acteristics and VA
content.
- VAs are an appro-
priate tool for EPA
to use in setting a
baseline for water
security perform-
ance measurement
and in prioritizing
water security activi-
ties.
water system's infrastructure, par- vulnerabilities.
ticularly the distribution system.





















— EPA will immediately request
access to a sample of vulnerability
assessments to enable it to more
effectively formulate questions for
contractor review, and Office of
Water should expedite a contract
amendment to have the contrac-
tor address ORD's additional

questions.














July 1, 2004
Available at:
http://www.epa.gov/
oigearth/reports/2004/
20040701 -2004-P-
00023.pdf























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                                              APPENDICES—APPENDIX A.  PROGRAM EVALUATIONS COMPLETED IN FY 2OO4
   Evaluation Title
      and Scope
Goal 5, Objective I

EPA Needs to Improve
Tracking of National
Petroleum Refinery
Compliance Program
Progress and Impacts
Report

The purpose of this
evaluation was to
determine:

— Whether EPA effec-
   tively implements
   and manages the
   petroleum refinery
   program.
 — The nature and
   extent of the regu-
   lated petroleum
   refinery universe.
 -The extent that EPA,
   the Department of
   Justice, and its part-
   ners are working to
   develop an integrat-
   ed strategy to
   address priority non-
   compliance
   problems at petrole-
   um refineries.
— Whether the per-
   formance
   measurement and
   reporting approach
   for petroleum
   refineries provides
   the information nec-
   essary to effectively
   implement, manage,
   evaluate, and
   improve the OECA's
   petroleum refinery
   program.
    Findings of the Evaluation
      Planned Response
    Public Access
OIG reported:

 — The Office of Enforcement and
   Compliance Assistance's
   (OECA's) performance measure-
   ment and reporting approach for
   the national petroleum refinery
   program did  not provide useful
   and reliable information necessary
   to effectively implement,  manage,
   evaluate, and improve the pro-
   gram.
— OECA did not clearly and pre-
   cisely define official program goals
   and measures, or ensure  the goals
   were clearly and consistently
   shared. As a result, OECA did
   not have a consensus on  what
   the program goals were.  Existing
   EPA performance  measurement
   and reporting systems were inef-
   fective for monitoring or
   reporting refinery program per-
   formance.
- EPA will continue to develop and
 articulate appropriate goals and
 performance measures.
- EPA will provide additional train-
 ing at the regional level, and
 empower regional experts to
 review and respond to company
 reports.
- EPA agrees with the need for
 national enforcement priorities to
 be managed by a senior enforce-
 ment official.
-OIG's recommendations were
 considered  when OECA devel-
 oped the FY 2005 - 2007 National
 Priority Performance-Based
 Strategy for the petroleum refin-
 ing sector.
-The recommendations with
 which OECA agreed or partially
 agreed have been addressed by
 the Performance-Based Strategy
 for the petroleum refining sector,
 other activities related to the
 petroleum sector work, and the
 overall  national priority strategy
 development process.

EPA Office of the
Inspector General

No.  2004-P-0002I

June 22, 2004

Available at:
http://www.epa.gov/
oigearth/reports/2004/
20040622-2004-P-
0002l.pdf
Goal 5, Objective I

Measuring the Toxics
Use and Waste
Reduction Assistance
Program (TUWRAP's)
Influence

The purpose of this
evaluation was to:

— Determine the
   impact that
The evaluation found:

— Case studies and limited technical
   assistance follow-up information
   indicate that technical assistance
   site visits are resulting in positive
   environmental outcomes.
   However, the available data do
   not support drawing conclusions
   about the range, scope, or regu-
   larity of the environmental
   improvements.
- Implementing the identified
 opportunities for improvement
 will significantly improve DEQ's
 ability to measure and report on
 the environmental outcomes.
- EPA Region 10 and  Oregon DEQ
 are working on an implementa-
 tion plan to further incorporate
 TUWRAP into the  overall com-
 pliance program.
U.S. Environmental
Protection Agency

May 5, 2004

Available at:
http://www.epa.gov/
evaluate/tuwrap I .pdf

Also available by
request through the
Evaluation Support
Division:

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
         Evaluation Title
           and Scope
        TUWRAP has on
        hazardous waste
        handler compliance
        in Oregon.
       - Identify the environ-
        mental outcomes of
        the program.
       - Identify the costs
        (range, per "unit")
        associated with
        TUWRAP compli-
        ance inspections.
       - Determine how
        program effective-
        ness should be
        measured.
       - Determine how
        Oregon's
        Department of
        Environmental
        Quality (DEQ) and
        EPA Region 10 can
        strategically integrate
        TUWRAP with the
        authorized haz-
        ardous waste
        program's enforce-
        ment strategy to
        help achieve EPA's
        Goal 5 compliance
        improvement objec-
        tives.
  Findings of the Evaluation
- DEQ has detailed plans to rou-
 tinely track technical assistance
 and inspection environmental
 outcomes when the next phase
 of the Oregon Hazardous Waste
 Information Management
 Exchange database implementa-
 tion is complete.
Planned Response
                                                                                                    Public Access
                            http://www.epa.gov/
                            evaluate/feedback.htm
Goal 5, Objective I

Comprehensive Review of
the Office of Criminal
Enforcement Forensics
and Training.

The former Assistant
Administrator of OECA
requested a manage-
ment review of this
office. The comprehen-
sive review of the
criminal program cov-
ered both
programmatic and
organizational  issues.
                              The review led to recommendations
                              regarding the organizational and
                              management processes, and struc-
                              ture of the criminal enforcement
                              program. Major recommendations
                              included: developing closer strategic
                              relationships with the civil enforce-
                              ment throughout EPA; developing
                              new performance measures for
                              assessing program performance,
                              reassessing the  balance between
                              more routine and more complex
                              criminal  enforcement investigations;
                              transferring some functions to out-
                              side offices; and developing an
                              explicit personnel policy regarding
                              the hiring, promotion, and reassign-
                              ment of agents.
                                  Most of the review's recommenda-
                                  tions were accepted by OECA's
                                  senior management and are current-
                                  ly being implemented.
                            U.S Environmental
                            Protection Agency

                            Office of Criminal
                            Enforcement, Forensics
                            and Training

                            December 15, 2003

                            Available at:
                            http://www.epa.gov/
                            oeca/resources/
                            reports/review/oceft-
                            managementreview.pdf

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                                               APPENDICES—APPENDIX A.  PROGRAM EVALUATIONS COMPLETED  IN FY 2OO4
   Evaluation Title
      and Scope
Goal 5, Objective 2

Encouraging EMS:
Lessons Learned from a
Sector Approach

The purpose of this
evaluation was to:

— Provide advice to
   EPA, states, and
   other technical assis-
   tance providers
   (TAP)  about the
   most cost-effective
   way to promote
   Environmental
   Management
   Systems (EMS) in
   industry sectors.
    Findings of the Evaluation
The evaluation found:

 — The elements that were consis-
   tently agreed upon as valuable
   across the sectors were the sec-
   tor-specific EMS implementation
   guides and sharing with peers.
   Also deemed valuable, but slightly
   less so, were instructor-led train-
   ing workshops, online
   communication tools, EMS docu-
   ment review by TAPs, and  on-site
   assistance.
— Small and medium-sized businesses
   highly value getting feedback from
   and working with their peers.
   Large businesses value one-on-
   one assistance much more than
   working in groups. Large business-
   es are also much  more likely to
   see value in being recognized by
   their state or EPA.
       Planned Response
 - EPA's Sectors Strategies Program
  will continue to work with other
  EPA programs, states, and other
  technical assistance providers to
  make efficient decisions based on
  the report's insights of "what
  works" and "what doesn't work"
  in terms of project elements, and
  to make better use of the wealth
  of sector-specific resources and
  publications.
                                       Public Access
                                   U.S. Environmental
                                   Protection Agency

                                   Office of Policy,
                                   Economics, and
                                   Innovation

                                   "Encouraging EMS" EPA
                                   IOO-R-04-002

                                   June 2004

                                   Available by request
                                   through the Evaluation
                                   Support Division:
                                   http://www.epa.gov/
                                   sectors
Goal 5, Objective 2

Evaluation of
Environmental
Management System
(EMS) Pilots in K-12
Schools

The purpose of this
evaluation was to:

— Collect and assess
   data that identify the
   benefits, costs, and
   challenges related to
   EMS development
   and implementation.
— Determine whether
   the pilots are trans-
   ferable to schools
   more  broadly
The evaluation's findings:

— Outline pilot efforts' performance
   thus far.
— Assess the satisfaction of partici-
   pating K-12 schools.
— Consider and integrate experi-
   ences with other school EMS
   efforts.
— Identify lessons for promoting
   future EMS use in the schools
   sector.
— EPA Region  I (Boston) will
  address mid-course correction to
  the pilots and will consider ele-
  ments that can be more broadly
  transferable to other school sec-
  tors.
                                   U.S. Environmental
                                   Protection Agency

                                   New England Region
                                   (Boston)

                                   October 2004

                                   Available by request
                                   through the Evaluation
                                   Support Division:
                                   http://www.epa.gov/
                                   sectors
Goal 5, Objective 2

Significant Modifications
Needed to Ensure
Success of Fort Worth
Asbestos Demolition
Method

The purpose of this
evaluation was to
answer specific ques-
tions that address:

— How the design and
   methodology of the
The evaluation found:

 — The current design  and method-
   ology of the Fort Worth Method
   are not adequate to demonstrate
   protection of human health and
   the environment.
— Significant modifications to the
   design and methodology will be
   necessary for EPA to ensure that
   the data generated  and used to
   evaluate this project will be valid.
   The adequacy of the ambient air
-The EPA Innovation Action
 Council recommended moving
 forward to Phase II, provided that
 certain conditions were
 addressed, including that the Fort
 Worth Method and the Quality
 Assurance Project Plan for Phase
 II be peer reviewed. Further, City
 of Fort Worth officials met with
 Agency and OIG officials and
 provided additional documenta-
 tion, including a revised method.
                                    EPA Office of the
                                    Inspector General

                                    Report No. 2004-P-
                                    00002

                                    December 19, 2003

                                    Available at:
                                    http://www.epa.gov/oig/
                                    reports/2003/20031219-
                                    2004-p-00002.pdf

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
         Evaluation Title
            and Scope
         Fort Worth Method
         could be improved.
        - How EPA could
         improve its oversight
         of this project and
         other Innovation
         proposals.

    Findings of the Evaluation
   monitoring that would take place
   during Phase II and the Phase II
   proposal have not been inde-
   pendently peer reviewed to
   ensure that they are based on
   sound science.
  -Although initially proposed in
   September 1999, the Fort Worth
   Method does not yet meet EPA's
   Project XL criteria of superior
   environmental performance,
   appropriate regulatory flexibility,
   adequate stakeholder  involve-
   ment, or transferability.
  - EPA's oversight to date has  not
   ensured that the Fort Worth
   Method-Phase II proposal will
   allow the Agency to reach valid
   conclusions on the effectiveness
   of this alternative demolition
   technique for each type of
   asbestos.
       Planned Response
 - EPA Region 6 has reported that
  the City of Fort Worth is fully
  supportive of the need to meet
  the requirements under Project
  XL.
    Public Access
      Supporting
      Achievement of
      Environmental  Results

      EPA Needs to Better
      Manage Counter-terror-
      ism/Emergency Response
      Equipment.

      The purpose of this
      report was to:

      — Determine whether
         EPA has adequate
         processes for identi-
         fying, obtaining,
         maintaining, deploy-
         ing, and tracking
         equipment needed
         to respond to ter-
         rorist acts and
         Nationally Significant
         Incidents (events
         that may exceed the
         resources of a single
         EPA region).
DIG found:

— EPA has complied with the
   Federal Acquisitions Regulation
   when purchasing Counter-
   Terrorism/Emergency Response
   equipment, and has an adequate
   process for moving equipment.
   However, EPA does not have
   adequate  processes for identify-
   ing, obtaining, maintaining, and
   tracking equipment needed to
   respond to terrorist acts and
   Nationally Significant Incidents.
— EPA leadership did not move
   expeditiously to develop sufficient
   Agency capability and capacity to
   respond to the consequences of
   a major terrorist act or Nationally
   Significant Incident.
 - EPA generally agrees with the
  recommendations made in the
  report and has work underway
  to implement many of them.
EPA Office of the
Inspector General

Report No. 2004-P-
00011,

March 29,  2004

http://www.epa.gov/
oigearth/reports/2004/
2004_P_OOOII.pdf
      Supporting
      Achievement of
      Environmental  Results

      EPA's Computer Security
      Self-Assessment Process
      Needs Improvement

      The purpose of this
      report was to examine
OIG reported:

— Self-assessments contain unreli-
   able data.
— Systems inventory is incomplete.
— Greater oversight of certification/
   accreditation is needed.
— Security plans are not sufficient.
— ERA has fully responded by imple-    EPA Office of the
  menting corrective actions for all
  areas identified in this audit.
 -Testing and evaluation plans have
  been expanded and are being
  implemented, and milestones for
  full Agency compliance to NIST
  800-18 were provided.
Inspector General

Report No. 2003-P-
00017

September 30, 2003

-------
                                               APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN  FY 2OO4
   Evaluation Title
      and Scope
policies, procedures,
and practices regarding
EPA's self-assessments
of major applications
and general support
systems.
    Findings of the Evaluation
      Planned Response
                                       -Notified system owners to add
                                        required materials to the web-
                                        based Automated Security
                                        Self-Evaluation and Reporting
                                        Tool.
    Public Access
                                   Available at:
                                   http://www.epa.gov/
                                   oigearth/reports/2003/
                                   2003pOOOI7-
                                   20030930.pdf
Supporting
Achievement of
Environmental Results

EPA's Homeland Security
Role to Protect Air from
Terrorist Threats Needs
to Be Better Defined

The purpose of this
report was to identify
how effectively EPA is
fulfilling its homeland
security role and
responsibilities, specifi-
cally in protecting the
air from chemical or
biological terrorism.
OIG reported:

— EPA does not have clear statutory
   authority to establish and enforce
   health-based regulatory standards
   for indoor air.
— EPA's Office of Homeland
   Security does not have a frame-
   work in place to  carry out  its
   responsibilities as designated by
   the Administrator.
— EPA's homeland security roles and
   responsibilities related to air pro-
   tection are limited and not
   sufficiently defined to enable EPA
   to be prepared for future events.
- EPA will clarify its future role and
 responsibilities to enable it to
 properly prioritize and commit
 resources to its traditional and
 homeland  security missions.
- EPA will clarify the roles and
 responsibilities of its Office of
 Homeland Security and the dis-
 tinction between the
 responsibilities delegated to that
 office versus those that remain
 with EPA's program  and regional
 offices.
- EPA remains committed to
 actively implementing responsibili-
 ties that are clearly delegated to
 EPA pursuant to Homeland
 Security Presidential Directives
 and national response plans and
 structures.
EPA Office of the
Inspector General

Report No. 2004-M-
000005

February 20, 2004

Available at:
http://www.epa.gov/oig/
reports/2004/20040220-
2004-m-000005.pdf

-------
FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
   Appendix   B
    Data   Quality  for  Assessments  of
    FY2004   Performance   Measures
   GOAL  I — CLEAN AIR AND GLOBAL CLIMATE CHANGE
     Total number of people who live in areas designated in attainment of the clean air standards for 1-hr ozone, PM|0, CO, SO2,
     NO2, and Pb. - Additional people living in newly designated areas with demonstrated attainment of the 1-hr ozone, PM |0, CO,
     SO2, NO2, and Pb standards. - Cumulative percent increase in the number of people who live in areas with ambient I -hour
     ozone, PM|0, CO, SO2, NO2, and Pb concentrations below the level of the NAAQS as compared to 1992. - Cumulative percent
     increase in the number of areas with ambient I-hour ozone, PM|0, CO, SO2, NO2, and Pb concentrations below the level of the
     NAAQS as compared to  1992. - Areas designated to attainment for the ozone, PM |0, CO, SO2, NO2, and Pb standards.
     - Cumulative percent increase in the number of people who live in areas with ambient 8-hour ozone, and PM25 concentrations
     below the level of the NAAQS as compared to 2001. - Cumulative percent increase in the number of areas with ambient 8-hour
     ozone, and PM25 concentrations below the level of the NAAQS as compared to 2001. - Percent of areas with improving ambient
     PM 10 concentrations.

     [PM = particulate matter, PM|0 = particulate matter 10 micrometers or less in  diameter, PM25 = particulate matter 2.5 micrometers
     or less in diameter, CO = carbon monoxide, SO2 = sulfur dioxide, NO2 = nitrogen dioxide, Pb = lead.]
   Performance results related to these measures are presented in Goal I, pages 32-34, 36, 40.

   DATABASE: The Air Quality Subsystem (AQS), which stores ambient air quality data used to evaluate an area's air quality levels relative
   to the National Ambient Air Quality Standards (NAAQS). The Findings and Required Elements Data System (FREDS) is used to track
   the progress of states and regions in reviewing and approving the required data elements of the State Implementation Plans (SIPs). SIPs
   are clean air plans and define what actions a state will take to improve the air quality in areas that do not meet the NAAQS.

   DATA COMPLETENESS AND RELIABILITY: Data will not be available until August 2005 for the criteria pollutants (ozone, PM ,0, CO,
   SO2, NOX, and lead). However, EPA designated attainment status for the 8-hour ozone in April 2004, which establishes the baseline to
   monitor progress. We will have performance data for 8-hour ozone in the summer of 2005 (the latest air quality monitoring data from
   2001 through 2003) and the period of performance is based on a calendar year. We will also designate the attainment status for PM2 c
   areas in December 2004. Data are reliable and usable by the Agency in carrying out its decision-making responsibilities.

   DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
   Congressional Justification, verification & validation, page 1-47 (http://www.epa.gov/ocfopage/budget/budget.htm).

   DATA IMPROVEMENTS: EPA enhanced the AQS to include data standards (e.g., latitude/longitude, chemical nomenclature) developed
   under the Agency's Reinventing Environmental Information (REI) Initiative. Also,  EPA has completed reengineering the AQS to make it a
   more user friendly, Windows-based system. As a result, air quality data will be more easily accessible via the Internet.


     Combined stationary and mobile source reduction  in air toxics emissions. - Stationary source air toxics emissions reduced. - Mobile
     source air toxics emissions reduced. - Area and all other Air Toxics Emissions  Reduced.


   Performance results related to these measures are presented in Goal I, page 39-40.

   DATABASES: National Toxics Inventory (NTI) and National Emissions Inventory  (NEI) for Hazardous Air Pollutants (HAPS).

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4  PERFORMANCE MEASURES
DATA COMPLETENESS AND RELIABILITY: Data are incomplete and will be available as follows: data for FY 2000 and FY 2001 avail-
able in 2nd quarter of FY 2005, data for FY 2002 available in 1st quarter of FY 2006, and data for FY 2003 and FY 2004 available in
latter part of FY 2006. Data are reliable and accepted by Agency decision makers in carrying out their responsibilities.

DATA QUALITY: For more comprehensive  information on performance data quality and methodologies,  please see the FY 2004
Congressional Justification, verification & validation, page 1-66 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: In 2004 for the first time, all primary data submitters and reviewers were required to submit their data  and
revisions to EPA in a standardized format using the Agency's Central Data Exchange (CDX). For more information on CDX,  please see
the Agency's web site: http://www.epa.gov/ttn/chief/nif/cdx.html.


  Volatile organic compound  (VOC) emissions reduced from mobile sources. - Nitrous oxides (NOx) reduced from mobile
  sources. - CO reduced from mobile sources. - PM|0 reduced from mobile sources. - PM25 reduced from  mobile sources.


Performance results related to these measures are presented in Goal I,  page 41.

DATABASE: National Emissions Inventory Database.

DATA COMPLETENESS AND RELIABILITY: Data are complete and available for MOBILE6 and NONROAD models. Data are reliable
and accepted by Agency decision makers  in carrying out their responsibilities.

DATA QUALITY: For more comprehensive  information on performance data quality and methodologies,  please see the FY 2004
Congressional Justification, verification & validation, page 1-47 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: EPA is currently working on a new modeling system termed the Multi-scale Motor Vehicles and Equipment
Emission System (MOVES).  This system will estimate emissions for on-road and off-road sources, cover a broad range of pollutants, and
allow  multiple-scale analysis from fine-scale analysis to national inventory estimation. The new system will encompass the necessary tools,
algorithms, underlying data,  and guidance necessary for use in all official analyses associated with regulatory development, compliance
with statutory requirements, and national/regional inventory projections. Once fully implemented, MOVES will serve as the replacement
for  MOBILE6 and NONROAD analytical models. MOBILE6 is an analytical model used to estimate emissions for on-road  sources (cars,
trucks, and motorcycles). NONROAD is an analytical model used to estimate emissions from non-road sources (construction, agricultur-
al, and industrial diesel-powered equipment).


  Percent of tribes with tribal  land monitoring for ozone and/or PM. - Percent of monitoring tribes monitoring clean air for ozone.
  - Percent of monitoring tribes monitoring clean air for  PM.  - Number of tribes implementing air programs.


Performance results related to these measures are presented in Goal I,  page 39.

DATABASE: Tribal monitoring database maintained by EPA headquarters in Washington, DC.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in  carrying
out their responsibilities.

DATA QUALITY: For more comprehensive  information on performance data quality and methodologies,  please see the FY 2004
Congressional Justification, verification & validation, page 1-49 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: EPA continued  to work with tribal governments to increase monitoring in Indian Country to ensure that data
exist to adequately characterize air quality in  Indian Country, and to identify, prevent,  and  address violations of the national ambient air
quality standards.


  SO2 emissions (reduced). - Total annual average sulfur  deposition and mean ambient sulfate concentrations reduced. - Total
  annual average nitrogen  deposition and mean ambient nitrate concentrations reduced.


Performance results related to these measures are presented in Goal I,  page 38.

DATABASES: Acid Rain Emissions Tracking System (SO2 emissions reduced); Clean Air Status and Trends Network (CASTNet)  (dry
deposition and ambient sulfate and nitrate concentrations); National Atmospheric Deposition Program (NADP) (wet deposition). See
"Data and Maps" at http://www.epa.gov/airmarkets for a description of deposition monitoring network databases.

-------
FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
    DATA COMPLETENESS AND RELIABILITY: Data will not be available until July 2005. Data are reliable and accepted by Agency deci-
    sion makers in carrying out their responsibilities.

    DATA QUALITY: For more comprehensive information on  performance data quality and methodologies, please see the FY 2004
    Congressional Justification, verification & validation, page 1-76 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS:  EPA is investigating ways to modernize aging CASTNet equipment; streamline site operation, data collection,
    and processing methods; reduce system operating costs; and provide a foundation for multipollutant measurement compatible with
    other networks.
      NOX emissions (reduced).


    Performance results related to these measures are presented in Goal I, page 41.

    DATABASE: Emissions Tracking System (for acid rain and NOX budget programs).

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
    Congressional Justification, verification & validation, page 1-76 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS:  No tangible improvements were made during FY 2004. However, the Title IV Acid Rain NOX reduction goal
    was satisfied in 2000, and reduction was maintained in 2001, 2002, and 2003. The annual performance measure has been replaced with
    two new performance measures developed under Office of Management and Budget (OMB) review of the acid rain program.


      People living in healthier indoor air.


    Performance results related to these measures are presented in Goal I, page 42.

    DATABASE: This performance measure is comprised  of individual internal measures for radon, environmental tobacco smoke, and asth-
    ma. An external survey was produced by the National Association of Home Builders  Research Center and  reviewed by EPA to
    estimate the percentage of homes that are built radon resistant. Manufacturers report their radon fan sales to the Agency EPA assumes
    one fan per radon-mitigated home and then multiplies it by the assumed average of 2.67 people per household. An EPA-developed
    telephone survey (National Survey on Environmental Management of Asthma) seeks information about the measures taken to minimize
    exposure to indoor environmental asthma triggers and how many people permit smoking in their home.

    DATA COMPLETENESS AND RELIABILITY: Data will not be available until FY 2005. Data are reliable and accepted by Agency deci-
    sion makers in carrying out their responsibilities.

    DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
    Congressional Justification, verification & validation, pages IV-71 through IV-76 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS:  No tangible improvements were made during FY 2004.
      Students/staff experiencing improved indoor air quality in schools.


    Performance results related to these measures are presented in Goal I, page 42.

    DATABASE: EPA-developed survey. Results are tracked in an internal database.

    DATA COMPLETENESS AND RELIABILITY: Data will not be available until FY 2005.  Data are reliable and accepted by Agency deci-
    sion makers in carrying out their responsibilities.

    DATA QUALITY: For more comprehensive information on  performance data quality  and methodologies, please see the FY 2004
    Congressional Justification, verification & validation, page IV-76 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS:  No tangible improvements were made in FY 2004.

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                      APPENDICES—APPENDIX  B.  DATA QUALITY FOR ASSESSMENTS  OF FY 2OO4 PERFORMANCE MEASURES
  Domestic consumption of class II hydrochlorofluorocarbons. - Domestic-exempted production and import of newly produced
  Class I chlorofluorocarbons and halons.


Performance results related to these measures are presented in Goal I, page 43.

DATABASE: Clean Air Act (CAA) Title VI Stratospheric Ozone Tracking Database.

DATA COMPLETENESS AND RELIABILITY: There will be a data lag for the actual results for this performance measure. Data will be
available in 2005. Progress on restricting domestic-exempted consumption of Class I CFCs and halons is tracked by monitoring industry
reports of compliance with EPA's CAA phase out regulations and U.S. obligations under the Montreal Protocol. Data are provided quar-
terly by U.S.  companies producing, importing, and exporting ozone-depleting substances. Data are reliable and accepted by Agency
decision makers in carrying out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
Congressional Justification, verification & validation, page VI-63 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: No tangible improvements made during FY 2004.
  Number of 55-gallon drums of radioactive waste disposed of according to EPA standards.


Performance results related to these measures are presented in Goal I, page 44.

DATABASE: The performance data used by EPA are collected and maintained by the Department of Energy (DOE). EPA ensures the
safe characterization and disposal of drums of transuranic waste.

DATA COMPLETENESS AND RELIABILITY:  Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
Congressional Justification, verification & validation, page V-94 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: No tangible improvements made during FY 2004.
  Purchase and deploy state-of-the-art monitoring units.


Performance results related to these measures are presented in Goal I, page 44.

DATABASE: Output measure; internal performance tracking database.

DATA COMPLETENESS AND RELIABILITY:  Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
Congressional Justification, verification & validation, page V-64 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: Data system will go  on-line in 2007
  Annual greenhouse gas reductions - all EPA programs. - Reductions from EPA's buildings sector programs (Energy Star). -
  Greenhouse gas reductions from EPA's industrial efficiency/waste management programs. - Greenhouse gas reductions from EPA's
  industrial methane outreach programs. - Greenhouse gas reductions from EPA's industrial HFC/PFC programs. - Greenhouse gas
  reductions from EPA's transportation programs. - Greenhouse gas reductions from EPA's state and local programs.

Performance results related to these measures are presented in Goal I, page 45-46.

DATABASE: EPA maintains a "tracking system" for emission reductions  relative to appropriate baselines. Baseline data for carbon emis-
sions related to energy use come from DOE's Energy Information Administration. Baseline data for non-carbon dioxide emissions,

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
    including nitrous oxide and other global warming potential gases, are maintained by EPA and are compiled with input from industry and
    also independently from partners' information. EPA develops methane emission baselines and reductions using information from indus-
    try partners, including the natural gas, coal, and landfill gas development industries. EPA continues to develop annual inventories as well
    as update methodologies as new information becomes available.

    Many of EPA's voluntary programs collect partners' reports on facility-specific improvements (e.g., number of projects implemented,
    quantity of methane saved). A carbon-conversion factor is used to convert this information to estimated greenhouse gas reductions. For
    other programs, EPA has developed peer-reviewed methodologies for estimating impacts on greenhouse gas reductions.

    DATA COMPLETENESS AND RELIABILITY: Performance data lag by approximately 9 months. Results will be reported in the
    FY 2005 Annual Performance Report. Data are reliable and accepted  by Agency decision  makers in carrying out their responsibilities.

    DATA QUALITY: EPA devotes considerable effort to obtaining the best possible information  on which to evaluate emission reductions
    from voluntary programs.  For example, EPA has a quality assurance process in  place to check the validity of partner reports.

    Peer-reviewed  carbon-conversion factors are used to ensure consistency with  generally accepted measures of greenhouse gas emissions.
    The Administration regularly evaluates the effectiveness of its climate programs through interagency evaluations. The second such intera-
    gency evaluation, led by the White House Council on Environmental Quality, examined the status of U.S. climate change programs. The
    review included participants from EPA and the Departments of State, Energy, Commerce, Transportation, and Agriculture. The results
    were published in the U.S. Climate Action Report-2002 as part of the United  States' submission to the United Nations Framework
    Convention on Climate Change (FCCC). The previous evaluation  had  been published in U.S. Climate Action Report-1997 A  1997 audit
    by EPA's Office of the  Inspector General (OIG)  concluded that the climate programs examined "used good management practices and
    effectively estimated the impact their activities had on reducing risks to health  and the environment."

    For more comprehensive  information on  performance data quality and methodologies, please see the FY 2004 Congressional
    Justification, verification & validation, page VI-52  (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: EPA continues to update inventories and methodologies as new information  becomes available.
      Annual energy savings - all EPA programs.


    Performance results related to these measures are presented in Goal I, page 46.

    DATABASE: Climate Protection Partnerships  Division Tracking System.

    DATA COMPLETENESS AND RELIABILITY: Data collected by EPA's voluntary programs include national market data on shipments of
    efficient products, and engineering measurements of equipment power levels and usage patterns. Performance data lag by approximate-
    ly 9 months and are not currently available. Data will be reported in the FY 2005 Annual Performance Report. Data are reliable and
    accepted by Agency decision makers in carrying out their responsibilities.

    DATA QUALITY: EPA devotes considerable effort to obtaining the best possible information on which to evaluate energy savings from
    its voluntary programs. For example, EPA has a quality assurance process in place to check the validity of partner reports, and peer-
    reviewed methodologies are used to calculate energy savings from these programs.

    The Administration regularly evaluates the effectiveness of its climate programs through interagency evaluations. The second such intera-
    gency evaluation, led by the White House Council on Environmental Quality, examined the status of U.S.  climate change programs. The
    review included participants from EPA and the Departments of State, Energy, Commerce, Transportation, and Agriculture. The  results
    were  published in U.S. Climate Action Report-2002 as part of the United States' submission to the FCCC. The previous evaluation had
    been published in U.S. Climate Action  Report-1997 A 1997 audit by EPA's OIG concluded that the climate programs examined  "used
    good  management practices and effectively estimated the impact their activities had on reducing risks to health and the environment."

    For more comprehensive information on performance data quality and methodologies, please see the FY 2004 Congressional
    Justification, verification & validation, page VI-53 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: EPA continues to update inventories and methodologies as new information  becomes available.
      Fuel Economy of typical SUV with EPA-developed hybrid technology over EPA driving cycles tested.


    Performance results related to these measures are presented  in Goal I, page 47

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4  PERFORMANCE MEASURES
DATABASE: EPA fuel economy tests performed at the EPA's National Vehicle and Fuel Emissions Laboratory (NVFEL) in Ann Arbor,
Michigan. Results are maintained in an internal EPA database.

DATA COMPLETENESS AND RELIABILITY: Data are complete. NVFEL is recognized as a national and international facility for fuel
economy and emissions testing. NVFEL  is also the reference point for private industry. Data are reliable and accepted by Agency deci-
sion makers in carrying out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies,  please see the FY 2004
Congressional Justification, verification & validation, page VI-55 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: EPA is using solid  engineering judgment and consultations with  other expert organizations (including major
auto companies) to develop internal procedures for testing hybrid vehicles.
  Report on the chronic respiratory health effects in children of intra-urban gradients of participate matter and co-pollutants in El
  Paso, TX. - Report on epidemiologic studies examining acute cardiac and respiratory effects in the elderly and children exposed
  to particulate matter  (PM) and co-pollutants.

Performance results related to these  measures are presented in Goal I, page 47

DATABASE: No internal database; program output. Therefore other data elements are not applicable.


GOAL 2 — CLEAN  AND SAFE WATER
  Number of community water systems (CWSs) and percent of population served by those CWSs that are implementing source
  water protection programs.


Performance results related to these measures are presented in  Goal 2, pages 54-55.

DATABASE: The Source Water Assessment Program (SWAP) identifies at the state level the risk of contamination to drinking water
supplies. The assessment-reporting database currently tracks five parameters:

• the number of source water assessments completed within a state;

• the most prevalent sources of contamination identified within a state;

• the most threatening sources of contamination identified within a state;

• a (high-medium-low) ranking of overall risk to the sources of drinking water within a state; and

• the number of source water areas that have source water protection strategies in place.

EPA currently holds these data for  all states, the  District of Columbia, and Puerto Rico in an Excel spreadsheet. Beginning in 2004, states
with approved programs will begin using a Safe Drinking Water Information System (SDWIS)-based  source protection module to submit
all assessment and contamination prevention data to the Agency.

DATA COMPLETENESS AND RELIABILITY: Data are incomplete and will be available in January 2005. Data are reliable and accepted
by Agency decision makers in carrying out their responsibilities.

DATA QUALITY: For more comprehensive information  on performance data quality and methodologies, please see the FY 2005
Congressional Justification, pages 11-38 through 11-40 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: In FY2004, EPA conducted a I -year pilot to assess the  potential for collecting electronic submissions of states
implementation  of source water protection  programs. Data results from the pilot are currently unavailable. Efforts also are currently
underway to facilitate the  adoption of a Geographical Information System (GIS) database for all source water areas. This GIS effort as
well as the electronic data collection through the SDWIS will provide solid information on states' source water protection efforts.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
      Population served by community water systems will receive drinking water meeting health-based standards promulgated in 1998.
      - Population served by community water systems will be receiving drinking water meeting all health-based standards, up from
      83% in 1994.


    Performance results related to these measures are presented in Goal 2, page 55.

    DATABASE: SDWIS or SDWIS-FED,  which  is a data warehouse system.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA QUALITY: For more comprehensive information on performance data quality and methodologies, see the FY 2005
    Congressional Justification, pages 11-32 through 11-38 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: EPA continued to work with the states to implement  the Data Reliability Action Plan (DRAP) and
    Information Strategic Plan (ISP), which are improving the completeness, accuracy, timeliness, and consistency of the data in SDWIS-FED.

    More states are using SDWIS-STATE, a software information system jointly designed by the states and EPA, to  support states as they
    implement the drinking water program. SDWIS-STATE  links directly to SDWIS-FED, which aids in easing the states' reporting burden to
    EPA, and in the process minimizes data conversion errors and improves data quality and accuracy

    EPA is modifying SDWIS-FED to:

    • streamline its table structure, which simplifies updates and retrievals;

    • minimize data entry options that result in complex software and  prevent meaningful edit criteria;

    • enforce compliance with permitted values and Agency data standards through software edits;

    • ease the flow of data to EPA through a secure data exchange environment incorporating modern technologies, all  of which will
      improve the accuracy of the data.

    EPA has developed SDWIS, which is optimized for analyzing, retrieving, and integrating data from other sources, such as information
    from data verifications, sample data, source water quality data, and indicators from inspections conducted at the water systems. This
    system will improve EPA's ability to more efficiently use information to support  decision-making and effectively manage the drinking
    water program.

    EPA, in partnership with the states, has developed SDWIS-linked  modules on other drinking water programs: the Source Water
    Protection Program, the Underground Injection  Control Program (UIC), and the Drinking Water State Revolving Fund. These modules
    provide a more comprehensive data set with which to assess the  nation's drinking water supplies, a key component of the goal.
    Additionally, EPA has worked with the states to develop an action plan to address data completeness and data timeliness. This plan
    includes data verification audits of state drinking water tracking processes.
      Lake acres assessed for the need for fish advisories and compilation of state-issued fish consumption advisory methodologies. -
      River miles assessed for the need for fish consumption advisories and compilation of state-issued fish consumption advisory
      methodologies. (Both cumulative)


    Performance results related to these measures are presented in Goal 2, pages 55-56.

    DATABASE: National Listing  of Fish Advisories.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA QUALITY: For more  comprehensive information  on performance data quality and methodologies, please see the FY 2004
    Congressional Justification, pages 11-40 through 11-41 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: EPA is using grants to help states assess additional waters for the need for advisories and to help states
    reevaluate some waters to determine whether environmental conditions have improved. This support could increase the absolute num-
    ber of water bodies assessed  and would lead to a more accurate and complete characterization of the safety offish in the nation's
    rivers, lakes, and streams.

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                      APPENDICES—APPENDIX  B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
  Cumulative number of beaches for which monitoring and closure data is available to the public at http://www.epa.gov/
  waterscience/beaches/.

Performance results related to these measures are presented in Goal 2, page 56.

DATABASE: PRAWN (PRogram tracking, beach Advisories, Water quality standards, and  Nutrients), a new internal database that feeds
into the National Health  Protection Survey of Beaches Information Management System.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see both the FY 2004
Annual Performance Plan, pages 11-18 and 11-19, and the FY 2004 Congressional Justification, pages 11-41 and 11-42
(http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: With the passage of the BEACH Act of 2000, the Agency is authorized to award grants to states to develop
and implement monitoring and notification programs consistent with federal requirements. As the Agency awards these implementation
grants, it will require standard program procedures, sampling and assessment methods, and data elements for reporting. It is anticipated
that continued  EPA support will enable the states to increase the quantity of available beach data and improve the quality of the data.
  Percent of the population and the number of community water systems serving more than 50,000 but less than 100,000 people
  have certified the completion of their vulnerability assessment and submitted a copy to EPA. - Percent of the population and the
  number of community water systems serving more than 50,000 but less than 100,000 people have certified the completion of
  their emergency response plan.  - Percent of population and number of community water systems serving more than 3,300 but
  less than 50,000 people have certified the completion of their vulnerability assessment and submitted a copy to EPA.


Performance results related to these measures are presented in Goal 2, page 57

DATABASE: In consultation with the states, EPA developed an Excel spreadsheet that listed all large, medium, and small systems subject
to the requirements of the Bioterrorism Act of 2002. This list served as the database for tracking submissions of Vulnerability Assessments
(VAs) and the certification of Emergency Response Plans to EPA from water utilities. EPA will not track these measures in FY 2005.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and  accepted by Agency decision makers in carrying
out their responsibilities.

DATA QUALITY: The VAs are due to EPA in three phases, with the first phase due  at the beginning of the summer of 2004. The last
phase of the VAs for small systems  is due December 31, 2004. For more comprehensive information  on performance data quality and
methodologies, please see the  FY 2004 Congressional Justification page 11-30 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: The submittal of these VAs and certification of the completion of emergency response plans to EPA is a one-
time event, as required by the  Bioterrorism Act. The Act also defines large, medium, and small drinking water systems differently from
the definition in the Safe Drinking Water Act.
  Clean Water State Revolving Fund projects that have initiated operations.


Performance results related to these measures are presented in Goal 2, page 58.

DATABASE: Clean Water State Revolving Fund National Information Management System.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
Congressional Justification, pages 11-91 through 11-92 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: In FY 2004, EPA headquarters and regional offices conducted a quality review of data submitted by the states.

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FISCAL YEAR  2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
      States with new or revised water quality standards that EPA has reviewed and approved or disapproved and promulgated federal
      replacement standards. - Tribes with water quality standards adopted and approved.

    Performance results related to these measures are presented in Goal 2, pages 58-59.

    DATABASE: EPA maintains files on all approval/disapproval actions on new and revised state water quality standards and on promulgat-
    ed federal replacement standards. EPA also maintains files on all tribal water quality standards actions.

    DATA COMPLETENESS AND RELIABILITY: Data are complete.  Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA QUALITY: For more comprehensive information on performance  data quality and methodologies, please see the FY 2004
    Congressional Justification, pages 11-65 through 11-67 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: In 2004, EPA developed an electronic tracking system for state Water Quality Standard submissions that will
    track the incoming packages and allow EPA to accurately measure progress in improving processing times.
      By 2005, water quality will improve on a watershed basis, such that 500 of the nation's 2,262 watersheds will have greater than
      80% of assessed waters meeting all water quality standards.

    Performance results related  to these measures are presented in Goal 2, page 59.

    DATABASE: Watershed Assessment Tracking Environmental Results System (WATERS).

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted  by Agency decision makers in carry-
    ing out their responsibilities.

    DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2005
    Congressional Justification, page 11-67 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: The Office of Water is working with partners to enhance monitoring networks and assessment tools to
    achieve comprehensive coverage of all waters; use a consistent suite of core water quality indicators (supplemented with additional indi-
    cators for specific water quality questions); and document key data elements, decision criteria, and assessment methodologies in
    electronic data systems.

    EPA is working with the states to enhance their monitoring and  assessment programs, with a particular emphasis on the probabilistic
    approach that uses a statistical sample to generate a cost-effective assessment of the condition of all waters, and other predictive tools that
    help states prioritize areas needing more intensive or site-specific monitoring. EPA is also working with state and other partners to increase
    the use of electronic data systems, such as STORET and the Assessment Database (ADB), for maintenance and submission of data and
    information of documented quality These enhancements, along with improving the  quality and timeliness of data for making watershed-
    based decisions, will greatly improve EPA's ability to use state assessments in consistently portraying national conditions and trends.
      Major point sources are covered by current permits. - Minor point sources are covered by current permits.


    Performance results related to these measures are presented in Goal 2, page 60.

    DATABASE: U.S. EPA Permit Compliance System (Washington, DC, Office of Enforcement and Compliance Assurance) and Permit
    Issuance Forecasting Tool  (Washington, DC, Office of Water).

    The Permit Compliance System (PCS) is used to determine which individual permits are current through date fields for permit issuance and
    expiration. EPA has carried out detailed permit renewal backlog tracking with PCS data since November 1998. To supplement the individual
    permit data from PCS, EPA uses the Permit Issuance Forecasting Tool (PIFT) to track the current or expired status of facilities covered under
    non-stormwater general permits. The PIFT has been used to track non-stormwater general permit facilities since January 2001.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted  by Agency decision makers in carry-
    ing out their responsibilities.

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF  FY 2OO4 PERFORMANCE MEASURES
DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
Congressional Justification pages 11-86 through 11-88 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS:

• PCS: EPA continued to improve the quality of the data in PCS, while simultaneously working to design the new Integrated Compliance
  Information System (ICIS) data system.

• Legacy PCS: EPA continues to modify the existing PCS system to improve the quality and utility of the data.  Data being added include
  state data, locational data for combined sewer overflows (CSOs) based on the database used to  develop the CSO/Storm Sewer
  (storm sewer overflow) Report to Congress, and reconciled locational data from the Clean Water Needs Survey for Publicly Owned
  Treatment Works and other collections systems, including Municipal Separate Storm Sewer Systems (MS4s). In addition, to prepare
  for migration to the new ICIS, EPA is analyzing data items and correcting  incorrect and incomplete data.

• PER Management Report: As part of the Permitting for  Environmental Results (PER) Strategy, a review is currently underway to  iden-
  tify discrepancies between PCS and  state data. Any discrepancies will be included as part of the state program action plans to be
  developed in FY 2005.

• ICIS: EPA has completed the final design of the new ICIS,  and is now developing the technical specifications and code. ICIS will be make
  data entry more user friendly than PCS, and will link to state data systems to avoid the need for dual entry
  Loading reductions (pounds per year) of toxic, non-conventional, and conventional pollutants from NPDES permitted facilities
  (POTWs, Industries, SILJs, CAFOs, SW, CSOs).

Performance results related to these measures are presented in Goal 2, page 60.

DATABASE: This measure is calculated  using an internal EPA spreadsheet that draws from several data sources. An average "per facility"
loadings value is assigned to each permitted direct discharger that is subject to effluent guidelines. The average per facility value for pol-
lutant reduction is derived from the Technical Development Documents produced at the time of the effluent guideline rulemaking for
each industrial sector. Each EPA regional office reports the actual number of permits issued in the past year for each industrial sector,
which is typically drawn  from EPA's PCS. Using both the average per facility value and the number of permits issued, the spreadsheet
then generates the values for the total pollutants reduced. In 2003,  an estimate for CSOs was added, using a model that draws informa-
tion from the Clean Water Needs Survey

DATA COMPLETENESS AND RELIABILITY:  Data are complete.  Data are reliable and  accepted by Agency decision makers in carrying
out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies, please see the FY 2004
Congressional Justification, pages 11-89 through  11-91  (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: EPA continues to maintain and update the pollutant-loading reduction spreadsheet,  and to improve PCS.
  Percent of the population served by, and the number of large and medium-sized (10,001 and larger), publicly owned treatment
  works (POTWs) that have taken action for preparedness.

Performance results related to these measures are presented in Goal 2, pages 60-61.

DATABASE: To track this measure, EPA requires grantees that provide workshops and other means for making POTWs more secure to
report to the Agency on the number of utilities trained. EPA then uses the Clean Water Needs Survey and PCS databases to determine
and report the population served by each utility EPA plans to continue offering this training to water system operators, first responders,
and law enforcement personnel. These data are in an Excel  spreadsheet. EPA will not track this measure in FY 2005.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA QUALITY: For more comprehensive information on performance data quality and methodologies related to PCS and the Clean
Water Needs Survey, please see the FY 2004 Congressional Justification, page 11-85 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA IMPROVEMENTS: In FY 2004, EPA provided contractor assistance to improve the data quality of PCS. This  modernization effort
has made the system  more user-friendly

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
      Final reports of full-scale demonstrations of arsenic treatment technologies. - Report on fecal indicator monitoring protocols
      for different types of recreational water. - Provide guidance on indicator selection and monitoring strategies for evaluating the
      effectiveness of BMPs.


    Performance results related to these measures are presented in Goal 2, pages 61 -62.

    DATABASE: No  internal database; program output. Therefore  other data elements are not applicable.


    GOAL  3 -  - LAND PRESERVATION AND  RESTORATION


      Daily per capita generation. - Millions of tons municipal solid waste diverted.


    Performance results related to these measures are presented in Goal 3, pages 69-70.

    DATABASE: Data are provided by the Department of Commerce, which collects materials production and consumption data from
    various industries. EPA does not maintain a database for this information.  The baseline numbers for municipal solid waste  (MSW)
    source reduction and recycling are developed using a materials  flow methodology employing data largely from the Department of
    Commerce and described in the EPA report titled Characterization of Municipal Solid Waste in the United States.

    DATA  COMPLETENESS AND RELIABILITY: FY 2004 data will be available in December 2007 Data are reliable and accepted by
    Agency decision makers in carrying out their responsibilities. Quality assurance and quality control are provided by the Department of
    Commerce's internal procedures and systems. The report prepared by the  Agency, Characterization of Municipal Solid Waste in the
    United States, is reviewed by a number of experts for accuracy  and soundness. The report, including the baseline numbers and annual
    rates of recycling  and per capita municipal solid waste generation, is widely accepted among experts.

    Data limitations stem from the fact that the baseline statistics and annual  rates of recycling and per  capita municipal solid waste genera-
    tion are based on a series of models, assumptions, and extrapolations and, as such, are not an empirical accounting of municipal solid
    waste generated  or recycled.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information  on  performance  data quality and methodologies,
    please see the FY 2005 Congressional Justification, Goal 3 narrative, page 111-31 (http://wwwepa.gov/ocfopage/budget/budget.htm).

    DATA  QUALITY IMPROVEMENTS: Because the statistics on MSW generation and recycling are widely reported and  accepted by
    experts, no new  efforts to improve the data  or the methodology have been identified or are necessary EPA plans to develop regula-
    tions for improving reporting  of source reduction activities by Toxics  Release Inventory reporting facilities.


      Percent of RCRA hazardous waste management facilities with  permits or other approved controls in place.


    Performance results related to these measures are presented in Goal 3, pages 70-71.

    DATABASE: The Resource Conservation Recovery Act Information System (RCRAInfo) is the national database that supports EPA's
    RCRA  program. Data are entered by the states.  Supporting documentation and reference materials are maintained in regional and state
    files.  EPA's regional offices and authorized states  enter data on a rolling basis.

    DATA  COMPLETENESS AND RELIABILITY: FY 2004 data are available. Data are reliable and accepted by Agency decision makers in
    carrying out their responsibilities. RCRAInfo contains  information on entities (generically referred to as "handlers") engaged in hazardous
    waste generation and management activities regulated under the portion  of RCRA that provides for regulation of hazardous waste.
    RCRAInfo has several different modules,  including status of RCRA facilities in the RCRA  permitting  universe.

    States and EPA's regional offices generate the data and manage data quality related to timeliness and accuracy. Within RCRAInfo, the
    application software enforces structural controls that ensure high-priority  national components of the data are properly entered.
    RCRAInfo documentation, which is available to all users on-line at http://www.epa.gov/rcrainfo/, provides guidance to facilitate the gen-
    eration and interpretation of data. Training  on use of RCRAInfo is provided  on a regular basis, usually annually, depending on the nature
    of system changes and user needs.  Determination of whether the annual  performance goals are met is based on the legal and operating
    status codes for each unit (e.g., a facility can have more than one unit).  Each year since  1999,  in discussions with the regions and states,

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                       APPENDICES—APPENDIX B.  DATA QUALITY FOR ASSESSMENTS OF FY 2OO4  PERFORMANCE MEASURES
EPA has highlighted the need to keep the data that support the permitting goal current. RCRAInfo is the sole repository for this infor-
mation and is a focal point for planning from the local to the national level.

Note: Access to RCRAInfo is open only to EPA headquarters, regional, and authorized state personnel. It is not available to the general
public because the system contains enforcement-sensitive data. The general public is referred to EPA's  Envirofacts Data Warehouse to
obtain filtered information on RCRA-regulated hazardous waste sites.

The 1995 General Accounting Office report Hazardous Waste: Benefits of EPA's Information System Are  Limited (AIMD-95-167, August 22,
1995, http://www.gao.gov/archive/l995/ai95l67pdf) on EPA's  Hazardous Waste Information System  reviewed whether national RCRA
information systems support  EPA and the states in managing their hazardous waste programs. Recommendations coincide with ongoing
internal efforts to improve the definitions of data collected, ensure that data collected provide critical information and minimize the bur-
den on states. RCRAInfo,  the current national database has evolved in part as a response to this report.

No data limitations have been identified. The states have ownership of their data, and EPA has to rely on them to make changes. The data
that determine if a facility  has met its permit requirements are prioritized in update efforts. Basic site identification data  may become out-
of-date because RCRA does not mandate annual or other periodic notification by the regulated entity when site name, ownership and
contact information changes. Nevertheless, EPA tracks the facilities by their IDs, which should not change even during ownership changes.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and  methodologies,
please see the FY 2005 Congressional Justification, Goal 3 narrative, page  111-32 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: None in FY 2004.


   Increase in LIST facilities in significant operational compliance with leak detection requirements. -  Increase in LIST facilities in sig-
   nificant operational compliance with spill, overfill, and corrosion protection regulation. - Number of confirmed releases at LIST
   facilities nationally. - LUST cleanups completed.


Performance  results related to these measures are presented in Goal 3, pages 70-74.

DATABASE: There is no national database. States individually maintain records for reporting state program accomplishments.
Designated state agencies submit semi-annual progress reports to the  EPA regional offices.

DATA COMPLETENESS AND RELIABILITY: FY 2004 data will be available in April 2005. Data are reliable and accepted by Agency
decision makers in carrying out their responsibilities. EPA's regional offices verify and then forward the  data in a word  processing table to
EPA's Office of Underground Storage Tanks (OUST). OUST staff examine the data and resolve any discrepancies with the regional
offices. The data are displayed in a word processing table on a region-by-region basis, which enables regional staff to check their data.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, Goal  3 narrative, pages 111-31 and 111-71 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: Refer to the Goal 3 Highlights section of this report for discussion of improvements to the data
gathering policy for this program.


   Superfund  removal  response actions initiated. - Superfund site assessment decisions. - Superfund hazardous waste sites with
   human exposures controlled. - Superfund hazardous waste sites with groundwater migration controlled. - Remedies (cleanup
   targets) selected at  Superfund sites. - Number of Superfund construction completions. - Refer to  DOJ, settle, or write off 100%
   of Statute of Limitations (SOLs) cases for Superfund sites with total unaddressed past costs equal  to or greater than $200,000,
   and report value of costs recovered. - Reach a settlement or take an  enforcement action before the start of a  remedial action at
   90 percent of Superfund sites having viable, liable responsible parties other than the Federal government.


Performance  results related to these measures are presented in Goal 3, pages 72-76.

DATABASE: The Comprehensive Environmental Response, Compensation, and Liability Information System (CERCLIS) is the automated
database  used by the Agency to track, store, and report Superfund site information. EPA's headquarters and regional offices enter data
into CERCLIS on a rolling basis. Each performance measure is a specific variable within CERCLIS.

DATA COMPLETENESS AND RELIABILITY: FY 2004 data are available. Data are reliable  and accepted by Agency decision makers in
carrying out their responsibilities.

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FISCAL YEAR  2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
    To ensure data accuracy and control, the following administrative controls are in place: (I) the Superfund Implementation Manual
    (SPIN), the program management manual that details what data must be reported; (2) Report Specifications, which are published for
    each report detailing how reported data are calculated; (3) the Coding Guide, which contains technical instructions to such data users
    as Regional Information Management Coordinators, program personnel, report owners, and data input personnel; (4) Quality Assurance
    (QA) Unit Testing, an extensive QA check against report specifications; (5) the Regional CERCLIS Data Entry Internal Control Plan,
    which includes: (a) regional policies and procedures for entering data into CERCLIS, (b) a  review process to ensure that all Superfund
    accomplishments are supported by source documentation, (c) delegation of authorities for approval of data input into CERCLIS, and (d)
    procedures to ensure that reported accomplishments meet accomplishment definitions; and (6) a historical lockout feature that ensures
    that changes in past fiscal year data are made only by approved and designated personnel and are logged to a change-log report.
    Specific directions for these controls are contained in the Fiscal Year 2004/2005 SPIN (http://www.epa.gov/superfund/action/
    process/spim04.htm).

    An EPA Office of the Inspector General audit, Information Techno/ogy - Comprehensive Environmental Response, Compensation, and Liability
    Information System (CERCLIS) Data Quality (Report No. 2002-P-OOOI6), dated September 30, 2002, identified weaknesses in CERCLIS
    that were attributed to the  lack of an effective QA process and adequate internal controls for CERCLIS data quality Although the
    Agency disagrees with the study design and report conclusions, the report provided II recommendations with which EPA concurs.
    Many of the identified problems have  been corrected, or actions that would address these recommendations are underway. The devel-
    opment and implementation of a QA process for CERCLIS data have begun. This process includes delineating QA responsibilities in the
    program office and periodically selecting random samples of CERCLIS data points to check against source documents in site files.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2005  Congressional Justification, Goal 3 narrative, page 111-71 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS:  A CERCLIS modernization effort is currently underway to enhance CERCLIS, with a focus on
    data collection and data analysis and how to best satisfy the  current needs of the Superfund program. Among other initiatives, this
    effort includes reviewing current and anticipated data needs.  Items in CERCLIS that are no longer needed will be deleted, and new
    items identified will be added. Strict standards for quality will be enforced.


      High-priority RCRA facilities with human exposures to toxins controlled. - High-priority RCRA facilities with toxic releases to
      groundwater controlled.


    Performance results related  to these measures are presented in Goal 3, pages 72-74.

    DATABASE: RCRAInfo is the national database that supports EPA's RCRA program. The states and regions enter a "yes"  or "no" entry
    in the database with respect to meeting the measures for human exposures to toxins controlled and releases to groundwater con-
    trolled. Supporting documentation and reference materials are  maintained in the regional  and state files. EPA's regional offices and
    authorized states enter data  on a continual basis.

    The annual performance measures are used to summarize and  report on the facility-wide environmental conditions at the RCRA
    Corrective Action Program's highest-priority facilities. They are  used to track the RCRA program's progress in controlling  releases at the
    highest-priority contaminated facilities. Known and suspected  facility-wide conditions are evaluated using a series of simple questions and
    flow-chart logic to arrive at a reasonable, defensible determination. (These questions were issued as a memorandum titled: Interim Final
    Guidance for RCRA Corrective Action Environmental  Indicators, Office of Solid Waste, February 5, 1999.) Lead regulators for the facili-
    ty (authorized state or EPA  personnel) make the environmental indicator determination; however, facilities or their consultants may
    assist EPA in the evaluation by providing information on the  current environmental conditions. Remedies selected and complete con-
    structions of remedies are used to track the RCRA program's progress in moving the highest-priority contaminated facilities toward final
    cleanup. The  lead regulators for the facility select the remedies  and complete constructions of remedy determinations.

    DATA COMPLETENESS AND RELIABILITY: FY 2004 data are available. Data are reliable and accepted by Agency decision makers in
    carrying out their responsibilities. States and regions generate the data and manage data quality related to timeliness and accuracy (i.e.,
    the data correctly reflect the environmental conditions and determination). Within RCRAInfo, the application software enforces struc-
    tural controls that ensure that high-priority national components of the data are properly  entered. RCRAInfo documentation, which is
    available to all users on-line, provides guidance to facilitate the generation and interpretation of data. Training on use of RCRAInfo is
    provided on a regular basis,  usually annually, depending on the nature of systems changes and user needs.

    Access to RCRAInfo is open only to EPA headquarters, regional, and authorized state personnel. It is not available to the general public
    because the system contains enforcement-sensitive data. The general public is referred to  EPA's Envirofacts Data Warehouse to obtain
    filtered  information on RCRA-regulated hazardous waste facilities.

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, Goal 3 narrative, page  111-71 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: None during FY 2004.


  Percentage of emergency response and homeland security readiness improvement.


Performance results related to these measures are presented in Goal 3, pages 75-76.

DATABASE: There is no database. Data are  collected through  detailed surveys of all regional programs, and interviews with personnel
and managers in each program office. Results are scored, tabulated, and stored using standard software (spreadsheets, etc.). The survey
instrument was developed based upon Core Emergency Response (ER) elements needed to ensure an excellent emergency response
program, including such elements as Regional Response Centers, transportation, coordination with backup regions, health and safety, del-
egation and warrant authorities, response readiness, response equipment, identification clothing, training and exercises, and outreach.

DATA COMPLETENESS AND RELIABILITY: FY 2004 data are available. Data are reliable and accepted  by Agency decision makers in
carrying out their responsibilities. An evaluation team reviews the data during the data collection and analysis process. The data are
reviewed after they have been  analyzed to ensure that the scores are consistent with the data and program information.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Annual  Plan and the FY 2005 Congressional Justification, Goal  3 narrative, page 111-71 (http://www.epa.gov/
ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: None during FY 2004.


  Oil spills responded to or monitored by EPA.


Performance results related to these measures are presented in Goal 3, pages 75-76.

DATABASE: There is no database. Currently a new, more streamlined  reporting system is under development to store oil spill preven-
tion, emergency preparedness, and response information. Information included in the  new database will be similar to CERCLIS
information, but definitions and activities pertaining to oil will be included to support oil  spill program needs for FY 2004 and beyond.

DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable and accepted  by Agency decision makers in carrying out their
responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, Goal 3 narrative, page  111-71 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: Not applicable.


  Reports on performance data for conventional sediment remedies for 3 sites.


Performance results related to these measures are presented in Goal 3, pages 76-77

DATABASE: No internal database; program output. Therefore other data elements are not applicable.


GOAL 4 - -  HEALTHY  COMMUNITIES AND  ECOSYSTEMS


  Reregistration eligibility decisions. - Product reregistration. - Number of inert ingredients tolerances reassessed.

Performance results related to these measures are presented in Goal 4, pages 85-87

DATABASE: The Office of Pesticide  Programs Information Network (OPPIN) is a consolidation  of various Office of Pesticide Program
(OPP) databases. One of OPPIN's functions is to track regulatory data submissions and studies submitted by the registrant (pesticide
manufacturer/producer) in support of the application for registration of a pesticide.  OPP staff updates the data regularly.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2005 Congressional Justification, page IV-13 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: OPPIN consolidated 19 separate systems into one storage, tracking, and decision information sys-
    tem. This has greatly reduced the amount of resources spent on data entry and collection, and has reduced the potential for loss of
    data/documents. Analysis of information and error detection have also improved with the consolidation.

    EPA is working internally and with stakeholders from environmental organizations and industry to develop outcome data and measures
    that more accurately depict risk from pesticides.
      Tolerance reassessment. - Tolerance reassessments for top 20 foods eaten by children.


    Performance results related to these measures are presented in Goal 4, pages 85-87

    DATABASE: Tolerance Reassessment Tracking System (TORTS) is an OPP in-house system that contains records on all 9,721 tolerances
    subject to reassessment. It includes the total number of tolerances reassessed by fiscal year, the outcomes of reassessments (number of
    tolerances raised, lowered, revoked, or unchanged), and the  appropriate priority group for the tolerance. Additionally, it breaks out the
    tolerances for specific chemical groups, including organophosphates, carbamates, organochlorines, carcinogens, high-hazard inerts, chil-
    dren's foods, and minor uses. OPP staff updates the data regularly In addition, OPP is investigating the integration of the TORTS
    information into OPPIN.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION:  For more comprehensive information on  performance data quality and methodologies,
    please see the FY 2005 Congressional Justification, page  IV-13 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: EPA is working internally, as well as with stakeholders from environmental  organizations and indus-
    try, to develop outcome data and measures that more accurately depict risk from pesticides.
      Register safer chemicals and biopesticides. - New chemicals. - New uses.


    Performance results related to these measures are presented in Goal 4, pages 87-88.

    DATABASE: OPPIN is a consolidation of various OPP databases. One of OPPIN's functions is to track regulatory data submissions and
    studies submitted by the registrant (pesticide manufacturer/producer) in support of the registration application for registration of a pes-
    ticide. OPP staff updates the data regularly

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2005 Congressional Justification, page IV-5 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: OPPIN consolidated  19 separate systems into one storage, tracking, and decision information sys-
    tem. This has greatly reduced the amount of resources spent on data entry and collection, and has reduced the potential for loss of
    data/documents. Analysis of information and error detection have also improved with the consolidation.

    EPA is working internally and with stakeholders from environmental organizations and industry to develop outcome data and measures
    that more accurately depict risk from pesticides.
      Percentage of acre-treatments with reduced risk pesticides.


    Performance results related to these measures are presented in Goal 4, pages 87-£

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                       APPENDICES—APPENDIX B.  DATA QUALITY FOR ASSESSMENTS  OF FY 2OO4 PERFORMANCE  MEASURES
DATABASE: Two non-EPA databases are used for this measure: the Doane Marketing Research database, and the U.S. Department of
Agriculture's (USDA's) National Agricultural Statistical Survey database.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA VERIFICATION AND VALIDATION:  For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, page IV-5 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: USDA and Doane Marketing Research have not indicated that any improvements are planned in
the foreseeable future.
   Occurrences of residues on a core set of 19 foods eaten by children relative to occurrence levels for those foods reported in
   1994-1996.

Performance results related to these measures are presented in Goal 4, Pages 87-88.

DATABASE: Data collection is conducted by the states. Information is coordinated by USDA agencies, cooperating state agencies, and
USDA's Pesticide Data Program (POP).

DATA COMPLETENESS AND RELIABILITY: Data will not be available until 2005. Data are reliable and accepted by Agency decision
makers in carrying out their responsibilities. The core of PDP's quality assurance (QA) program is the standard operating procedure
(SOP) based on EPA's Good Laboratory Practices. At each participating laboratory, there is a QA unit, which  operates independently
from the rest of the laboratory staff. QA Plans are followed as the standard procedure, with any deviations documented extensively.
Final QA review is conducted by POP staff responsible for collating and reviewing data for conformance with  SOPs. POP staff also moni-
tors the performance of participating laboratories through proficiency evaluation samples, quality  assurance internal reviews, and on-site
visits. Additionally, analytical methods have been standardized in such various areas as analytical standards, laboratory operations, data
handling, instrumentation, and QA. With the exception of California, all samples of a commodity collected for POP are forwarded to a
single state  laboratory, allowing greater consistency, improved QA, and reduced sample loss. Program plans  may be accessed at
http://www.ams.usda.gov/science/pdp/SOPs.htm.

DATA VERIFICATION AND VALIDATION:  For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, page IV-5 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: USDA has not informed EPA of any improvements.


   Certified nationally (federally-administered and state-administered program) to perform lead based paint abatement.


Performance results related to these measures are presented in Goal 4, pages 88-89.

DATABASE: Currently, all information is received through informal reporting from EPA's regional offices, and  originates from informa-
tion submitted via certification applications.  In the future, EPA will track certifications  centrally using the newly created Federal
Lead-based Paint Program (FLPP) database.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA VERIFICATION AND VALIDATION:  For more comprehensive information on performance data quality and methodologies,
please see FY 2005 Congressional Justification, page IV-51 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: The FLPP database was launched in June 2003 to incorporate new regional certification applications.
  Number of children aged 1-5 years with elevated blood lead levels (> 10 ug/dL).


Performance  results related to these measures are presented in Goal 4, pages 88-89.

DATABASE: Begun in the early 1960s, the National Health and Nutrition Examination Survey conducted by the Centers for Disease
Control is a coordinated program of studies designed to assess the health and nutritional status of adults and children in the United

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
    States. The survey examines a nationally representative sample of approximately 5,000 men, women, and children each year located
    across the nation.

    DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable, and accepted by Agency decision makers in carrying out
    their responsibilities.

    DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2005 Congressional Justification, page IV-69 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: None.
      Annual number of PCB-containing capacitors safely disposed and annual number of PCB-containing transformers safely disposed.


    Performance results related to these measures are presented in Goal 4, pages 88-89.

    DATABASE: Performance Database is the PCB Annual Report Database.

    DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable, and accepted by Agency decision makers in carrying out
    their responsibilities. Data are provided by annual reports from commercial storers and disposers of PCB waste. One data limitation is
    missing and inaccurate submissions. PCB-contaminated transformers,  of PCB  concentrations 50 to 499 parts per million (ppm), and
    those containing 500 ppm PCBs or greater are not distinguished in the data.  Similarly, large and small capacitors of PCB waste may not
    be differentiated. Data are collected for the previous calendar year on July I  of the next year, creating a lag of approximately one year.
    Despite these limitations, the data provide the only estimate of the amount of PCB waste disposed of annually.

    DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2005 Congressional Justification, page IV-69 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: None.
      Cumulative number of participants in Hospitals for a Healthy Environment (H2E).


    Performance results related to these measures are presented in Goal 4, pages 88-89.

    DATABASE: EPA, in cooperation with its institutional  partners, operates a voluntary program whereby hospitals and associated indus-
    tries can voluntarily sign up to become an H2E Partner (hospitals)  or Champion (associated industries). Sign-up forms from participating
    H2E institutions are used to track the number of participants in H2E.

    DATA COMPLETENESS AND RELIABILITY: Data are reliable and  accepted by Agency decision makers in carrying out their responsi-
    bilities. Limitations arise from reliance on  individual healthcare facilities to gather data. Efforts to coordinate data collection with
    compliance audits and Joint Commission on the Accreditation of Healthcare Organizations will help manage the data collection activity

    DATA VERFICATION AND VALIDATION:  For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2004 Congressional Justification, page IV-98 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: None.
      Number of TSCA pre-manufacture notice reviews.


    Performance results related to these measures are presented in Goal 4, pages 90-92.

    DATABASE: The New Chemicals Management Information Tracking System (HITS), maintained by the Office of Pollution Prevention
    and Toxics (OPPT).

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2005 Congressional Justification, pages IV-7 and IV-36 (http://www.epa.gov/ocfopage/budget/budget.htm).

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
DATA QUALITY IMPROVEMENTS: No improvements made during FY 2004.
  Cumulative number of Notice of Commencements (NOCs) received as percent of total number of chemicals on TSCA Inventory.


Performance results related to these measures are presented in Goal 4, pages 90-92.

DATABASE: The New Chemicals Management Information Tracking System (HITS) tracks information from the beginning of the
Premanufacture Notice (PMN) program (1979) to the present. Information includes the number of PMNs submitted, the final disposi-
tion (whether regulated or not), and the number of low-volume and test market exemptions.

DATA COMPLETENESS AND RELIABILITY: Data are complete, aggregated nationally, and suitable for cross-year comparisons. Data
are reliable and accepted by Agency decision makers in carrying out their responsibilities.

DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the final FY 2004 Congressional Justification, page IV-57 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: None.
  Make screening level health and environmental effects data publicly available for HPV chemicals.


Performance results related to these measures are presented in Goal 4, pages 90-92.

DATABASE: Currently, this is an output measure with no associated database; however, a U.S. High-Production Volume (U.S. HPV)
Database is being developed.

DATA COMPLETENESS AND RELIABILITY: The database will be available January 2005. Data are reliable and accepted by Agency
decision makers in carrying out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, page IV-7 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: No major improvements for FY 2004. However, EPA continues to solicit input on system design
from potential users of the U.S. HPV database.
  Annual number of TSCA Section 5 Pre-Manufacture Notices (PMNs) received self-audited using complete battery of P2
  Framework/PBT Profiler screening tools.

Performance results related to these measures are presented in Goal 4, pages 90-92.

DATABASE: The New Chemicals Management Information Tracking System (MITS) tracks information from the beginning of the
Premanufacture Notice (PMN) program (1979) to the present. Information includes the number of PMNs submitted, the final disposi-
tion (whether regulated or not), and the number of low-volume and test market exemptions.

DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable, and accepted by Agency decision makers in carrying out their
responsibilities.

DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the final FY 2004 Congressional Justification, pages IV-56 and IV-57 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: None.
  Annual reduction in the current year production-adjusted Risk Screening Environmental Indicators (RSEI) risk-based score of
  releases and transfers of toxic chemicals.

Performance results related to these measures are presented in Goal 4, pages 90-92.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
    DATABASE: The RSEI Model uses annual reporting from individual industrial facilities, along with a variety of other information, to eval-
    uate chemical emissions and other waste management activities. RSEI incorporates detailed data from EPA's Toxics Release Inventory
    (TRI) and Integrated Risk Information System, the U.S. Census, and many other sources.

    DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable, and accepted by Agency decision makers in carrying out
    their responsibilities. RSEI relies on data from a variety of EPA and other sources. TRI data may have  errors that are not corrected in
    the standard TRI quality control process. In the past, RSEI has identified some of these errors, and corrections have been made by
    reporting companies. Data sources are updated annually, and all RSEI values are recalculated annually

    DATA VERFICATION AND VALIDATION: For more comprehensive information on  performance  data quality and methodologies,
    please see the final FY 2005 Congressional Justification, pages IV-70 through IV-73 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA IMPROVEMENTS: None.
      Cumulative number of chemicals for which AEGL values proposed.


    Performance results related to these measures are presented in Goal 4, pages 90-92.

    DATA BASE: EPA manages a Federal Advisory Committee Act (FACA) committee that reviews short-term exposure values for
    extremely hazardous chemicals. The supporting data, from both published and unpublished sources and from which the acute exposure
    guideline  level (AEGL) values are derived, are collected, evaluated, and summarized by FACA Chemical Managers and Oak Ridge
    National Laboratory scientists. Proposed AEGL values are published for public comment in the Federal Register. After reviewing public
    comments, EPA presents  interim values to the AEGL Subcommittee of the National Academies of Sciences (NAS) for review and com-
    ment. After review and comment resolution, the National Research Council under the auspices of the National Academies of Sciences
    (NAS) publishes the values as final. Performance is measured by the cumulative number of chemicals with "Proposed," "Interim," and/or
    "Final" AEGL values. There  is no performance database.

    DATA COMPLETENESS  AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2005 Congressional Justification, pages IV-73 and  IV-74 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: None.
      Annual number of HPV chemicals with complete Screening Information Data Sets (SIDS) submitted to OECD SIDS Initial
      Assessment Meeting (SIAM).

    Performance results related to these measures are presented  in  Goal 4, pages 90-92.

    DATABASE: Record of submission maintained by both the U.S. EPA and Organization for Economic Cooperation and
    Development(OECD). U.S. EPA submission packages are located at http://wwwl.oecd.org. U.S. SIDS packages
    that have been to a SIAM are marked in the table by "SIAM assessed."

    DATA COMPLETENESS AND RELIABILITY: Data are complete and suitable to support screening-level assessments only Data are
    reliable and accepted by Agency decision makers in carrying out their responsibilities.

    DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2004 Congressional Justification, pages VI-73  and VI-74 (http://www.epa.gov/ocfo/budget/2004/g06final.pdf).

    DATA QUALITY IMPROVEMENTS: None.
      Standardization and validation of screening assays.


    Performance results related to these measures are presented in Goal 4, page 92.

    DATABASE: Program output; internal tracking system. Data collected by program office on number of screening assays validated.

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                       APPENDICES—APPENDIX  B. DATA QUALITY  FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
DATA COMPLETENESS AND RELIABILITY: All screening assays are peer reviewed by the Scientific Advisory Panel or the Agency
Science Advisory Board. Study reports will be presented to the Endocrine Disrupter Methods Validation Subcommittee for review and
comment.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, pages  IV-14 and  IV-136 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: This measure is not accurately depicting the standardization and validation of screening assays. As a
result, the Agency has undertaken the task of revising this measure and has developed a series of measurement development plans to
better assess the goal's performance.


  Number of incidents and mortalities to terrestrial and aquatic wildlife caused by the 15 pesticides responsible for the greatest
  mortality to such wildlife.


Performance results related to these measures are presented in Goal 4, page 92.

DATABASE: The Ecological Incident Information System  (ENS) is a  national database of information on poisoning  incidents of non-target
plants and animals caused by pesticide use. Data are extracted from written reports offish and wildlife  incidents submitted to the
Agency by pesticide registrants under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), Section 6(a)(2), as well as from
incident reports voluntarily submitted by state and federal agencies involved in  investigating such incidents.

DATA COMPLETENESS AND RELIABILITY: FY 2004 data will not be available until 2005. Data are reliable and accepted by Agency deci-
sion makers in  carrying out their responsibilities. Internally and externally conducted data quality reviews related to data entry are ongoing.
EPA follows a quality assurance plan for accurately extracting data from reports and entering it into the ENS database. This quality assurance
plan is described in Appendix D of the Quality Management Plan for pesticides programs. When resources allow incorporation of wildlife
data from private organizations, such as the American Bird Conservancy, the new data and ENS data are reviewed for quality during data
entry  using the same standards.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, pages  IV- II and  IV-66 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: The Agency is currently conducting a project with the American Bird  Conservancy, reviewing the
data in its Avian Incident Monitoring System  on  bird kills caused by pesticides. These data will be incorporated into ENS.  The project is
expected to improve the quantity and quality of the data in the ENS database on avian incidents. However, this enhancement does not
address the ability to quantify the extent to which reported incidents reflect environmental conditions.
  Number of risk management plan audits completed.

Performance  results related to these measures are presented in Goal 4, page 93.

DATABASE: There is no database for this measure. EPA's regional offices and the states provide the data to EPA headquarters. Data are
collected and analyzed by surveying EPA's regional offices to determine how many audits of facilities' risk management plans have been
completed.

DATA COMPLETENESS AND RELIABILITY:  FY 2004 data will be  available in November 2004. Data are reliable and accepted by
Agency decision makers in carrying out their responsibilities. Data quality is evaluated by both regional and headquarters personnel.
Data quality is dependent on completeness and accuracy of the data provided by state programs.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, Goal 4 narrative, page IV-61 (http://wwwepa.gov/ocfopage/budget/budget.htm ).

DATA QUALITY IMPROVEMENTS: No significant improvements in FY 2004.

 For more information on the Brownfields program, see Reusing Land and Restoring Hope: A Report to Stakeholders from the US EPA
 Brownfields  Program (http://wwwepa.gov/brownfields/news/stake_report.htm); assessment demonstration pilots and grants
 (http://wwwepa.gov/brownfields/assessment_grants.htm); cleanup and revolving loan fund pilots and grants (http://www.epa.gov/
 brownfields/rlflsthtm); job training pilots and grants (http://www.epa.gov/brownfields/job.htm); and cleanup grants (http://www.epa.gov/
 brownfields/cleanup_g rants.htm).

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FISCAL YEAR 2OO4  ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
      Assist in the development or implementation of improved environmental laws or regulations in priority countries. - Increase the
      transfer of environmental best practices among the U.S. and its partner countries and build the capacity of developing countries
      to collect, analyze, or disseminate environmental data. - Train farmworkers on pesticide risks and safe handling, including ways
      of minimizing families' and children's risks.

    Performance results related to these measures are presented in Goal 4, pages 95-96.

    DATABASE: Manual collection.

    DATA COMPLETENESS AND RELIABILITY:  Data are complete for assessment of whether 2004 targets have been met. Data are reli-
    able and accepted by Agency decision makers  in carrying out their responsibilities.

    DATA VERIFICATION AND VALIDATION: Validating measurements under international capacity-building programs presents several
    challenges. Technical assistance projects, for instance, typically target developing countries, which often do not have sound data collec-
    tion and analysis systems in place. Several of the Agency's activities under Goal 4 attempt to improve this data gathering and analysis
    process. Nontechnical projects, such as assistance  in regulatory reform, frequently must rely on more subjective measures of change,
    such as the opinions of project staff or reviews by third-party organizations, including other U.S. government organizations, in judging
    the long-term efficacy of the assistance provided. For more comprehensive information on performance data quality and methodolo-
    gies, please see the FY 2003 Final Annual  Plan,  page VI-24.

    DATA QUALITY IMPROVEMENTS: None.
      Number of Brownfields properties assessed. - Number of Brownfields cleanup grants awarded. - Number of properties cleaned
      up using Brownfields funding. - Number of acres of Brownfields property available for reuse. - Number of jobs leveraged from
      Brownfields activities. - Percentage of Brownfields job training trainees placed. - Amount of cleanup and redevelopment funds
      leveraged at Brownfields properties.

    Performance results related to these measures are presented in Goal 4, pages 93-94.

    DATABASE: The Brownfields Management System (BMS) contains the performance information identified in the above measures. Key
    fields related to  performance measures  include:

    • Properties with Assessment Completed with Pilot/Grant Funding

    • Properties assessed with  Targeted Brownfields Assessment Funding

    • Properties with Cleanup  Complete

    • Acres Made Ready for Reuse

    • Cleanup/Redevelopment Jobs Leveraged

    • Assessment/Cleanup/Redevelopment  Dollars Leveraged

    • Number of Participants Completing Training

    • Number of Participants Obtaining Employment

    Data are extracted from  quarterly reports prepared by assessment, cleanup, revolving loan fund (RLF), and job training cooperative
    agreement award recipients. Information on Targeted Brownfields Assessments is collected from EPA regions.

    DATA COMPLETENESS AND RELIABILITY: FY 2004 data will be available in FY 2005. Data are reliable and accepted by Agency deci-
    sion makers in carrying out their responsibilities. Cooperative agreement award recipients submit reports quarterly on project progress
    to EPA. Data used to track  performance measures are extracted from quarterly reports by an EPA contractor. Data are then forward-
    ed to regional pilot managers for review and finalization. Given the reporting cycle and the data entry/QA period, there is typically a
    six-month data lag for BMS  data.

    Note that accomplishments reported by Brownfields Assessment Grantees, Brownfields Cleanup Grantees, Brownfields Revolving Loan
    Fund Grantees, Brownfields Job Training Grantees, and Targeted Brownfields Assessments all contribute towards these performance
    measures. "Number of Brownfields properties assessed" is an aggregate of assessments completed with Assessment Grant funding and

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
assessments completed with Targeted Brownfields Assessment funding. "Number of Brownfields properties cleaned up" is an aggregate
of properties cleaned up by RLF Grantees and Cleanup Grantees. "Number of acres made ready for reuse" is an aggregate of acreage
assessed that does not require cleanup under Assessment Grants, acreage cleaned  up under RLF Grants, and acreage cleaned up under
Cleanup Grants. "Number of cleanup and redevelopment jobs leveraged" is the aggregate of jobs leveraged by Assessment, Cleanup,
and RLF Grantees. "Amount of cleanup and redevelopment funds leveraged at Brownfields properties" is the aggregate of funds lever-
aged by Assessment, Cleanup, and RLF Grantees. "Percentage of Brownfields job training trainees placed" is based on the "Number of
Participants Completing Training" and the "Number of Participants Obtaining Employment" reported by Job Training Grantees.

Data reported by cooperative award agreement recipients are reviewed by EPA regional  pilot managers for accuracy and to ensure
appropriate interpretation of key measure definitions. Reports are produced monthly with detailed data trends analyses.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, Goal 4 narrative, page IV-95 (http://www.epa.gov/ocfopage/budget/budget.htm).2

DATA QUALITY IMPROVEMENTS: In FY 2004, the Brownfields Program fully implemented the Property Profile and Job Training
Profile reporting forms to be used by Assessment, Cleanup, RLF, and Job Training Grantees awarded under the Brownfields Law. These
forms, approved  by the  Office of Management and Budget (OMB), allow EPA to collect standardized data and will improve data quality
and reliability. The BMS database has been updated to track and store the data reported  in these forms.
  Number of additional people in Mexico border area protected from health risks because of adequate water and wastewater san-
  itation systems funded through border environmental infrastructure funding.

Performance results related to these measures are presented in Goal 4, pages 94-95.

DATABASE: There is no associated database. Performance is tracked and reported quarterly by the Border Environmental Cooperation
Commission (BECC) and the North American Development Bank (NADBank).

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
see the FY 2004 Congressional Justification, pages IV-97 and IV-98 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: Partners meet quarterly, providing standardized  progress reports for their areas of responsibility
EPA project officers conduct periodic program reviews of BECC and NADBank operations and performance. Annual performance and
progress reports  are submitted to EPA.
  Acres of habitat restored and protected nationwide as part of the National Estuary Program (annual).


Performance results related to these measures are presented in Goal 4, pages 96-97

DATABASE: EPA developed a database/tracking system that documents the number of acres of habitat restored and protected, based
on specific National Estuary Program (NEP) reports.  Key fields include the type of actions (e.g., protection or restoration) and habitat
type (e.g., estuarine, riparian).

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
seethe FY 2005 Congressional Justification, page IV-112 (http://www.epa.gov/ocfopage/budget/budget.htm).
2 For more information on the Brownfields program, see Reusing Land and Restoring Hope: A Report to Stakeholders from the US EPA
 Brownfields Program (http://wwwepa.gov/brownfields/news/stake_report.htm); assessment demonstration pilots and grants
 (http://wwwepa.gov/brownfields/assessment_grants.htm); cleanup and revolving loan fund pilots and grants (http://www.epa.gov/
 brownfields/rlflsthtm); job training pilots and grants (http://www.epa.gov/brownfields/job.htm); and cleanup grants (http://www.epa.gov/
 brown fields/cleanup_g rants.htm).

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FISCAL YEAR 2OO4  ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
    DATA QUALITY IMPROVEMENTS: EPA is exploring the development and use of an on-line reporting tool that will enable the NEPs
    to directly input their data into a Lotus Notes database. Currently, NEPs send their individual reports to EPA to compile the reports
    into a central spreadsheet or database (Excel or Access), after which the data are revised as necessary An on-line tool would be
    housed on EPA's NEP web site and would be password protected. Use of this tool would make reporting more efficient and accurate,
    thereby reducing the time needed to conduct quality assurance and quality control.
      Long-term concentration trends of toxics (PCBs) - in Great Lakes top predator fish, and in the air. Phosphorus concentration in
      the Lake Erie Central Basin.

    Performance results related to these measures are presented in Goal 4, pages 97-98.

    DATABASE: The Great Lakes National Program Office (GLNPO) base monitoring  program and the GLNPO integrated atmospheric
    deposition network (IADN), operated jointly with Canada.

    DATA COMPLETENESS AND RELIABILITY: Data are incomplete and anticipated  to be available in 2005. Data are reliable and
    accepted by Agency decision makers in carrying out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2003 Congressional Justification, pages IV-118 and IV-119 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: The data system specifically for the Great Lakes index is being developed. Data continue to be col-
    lected through the State of the Lakes Ecosystem Conference (SOLEC) process by various agencies, including GLNPO. Efforts are
    currently in progress to integrate various Great Lakes monitoring programs to better meet SOLEC objectives and to increase efficiencies
    in data collection and reporting. To address data lags, EPA is increasing quality assurance support for fish toxics data and is discussing
    speedier atmospheric deposition data delivery with Environment Canada.
      Acres of submerged aquatic vegetation (SAV) present in the Chesapeake Bay (cumulative).


    Performance results related to these measures are presented in Goal 4, page 99.

    DATABASE: The data for the Submerged Aquatic Vegetation Acres in Chesapeake Bay measure are located at:
    http://www.chesapeakebay.net/pubs/statustrends/88-data-2002.xls. The data source is the Virginia Institute of Marine Sciences.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and  accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see FY 2005 Congressional Justification, pages IV-126 and IV-127 (http://www.epa.gov/ocfopage/budget/budget.htm).

    DATA QUALITY IMPROVEMENTS: No improvements made  in FY 2004.
      Assist the Gulf States in implementing watershed restoration actions in 71 (5-year rolling average) priority impaired coastal river
      and estuary segments.

    Performance results related to these measures are presented in Goal 4, page 99.

    DATABASE: State Water Quality Agencies supply EPA's Office of Water with lists of waters reported under Clean Water Act Section
    303(d) every even year (http://www.epa.gov/surf/).

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance  data quality and methodologies,
    please see the 2003 Congressional Justification, pages IV-129 and IV-130 (http://www.epa.gov/ocfopage/budget/budget.htm).

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
DATA QUALITY IMPROVEMENTS: The Gulf of Mexico Program Office compared the 1998, 2000, 2002, and 2004 lists for removal
and addition of segments listed by the states. The locations of impaired segments provided by grantees receiving funding for restoration
efforts were quality assured with the state 303(d) lists.
  A study of fish genetic diversity that demonstrates the power of this modern approach for evaluating condition and vitality of
  biotic communities to federal, state and local resource managers. - A restricted access database of EPA experts with  knowledge,
  expertise, impacts focused on safe buildings and water security. - Prepare ETV evaluations on a least 5 new technologies for
  detection containment, or decontamination of chemical/biological contaminants in buildings to help workers select safe alterna-
  tives. - Through SBIR awards, support at least 3 new technologies/methods to decontaminate HVAC systems in smaller
  commercial buildings or decontaminate valuable or irreplaceable materials. - Prepare technical guidance for building owners and
  facility managers on methods/strategies to minimize damage to buildings from intentional introduction  of biological/chemical
  contaminants. - Verify two treatment technologies for application in  buildings by commercial and residential users, utilities, and
  public officials to treat contaminants in drinking water supplies. - Complete 4 human health assessments and publish their results
  on the IRIS website. - Initiate or submit to external peer review human health assessments of at least 20 high priority chemicals.
  - Produce a computational toxicology  research strategic framework. - Analysis of the "Children Total Exposure to  Pesticides
  and Persistent Organic Pollutants (including EDCs) Study" to estimate aggregate exposures and identify critical exposure factors
  that can be used by the Agency to improve exposure and risk assessments.

Performance results related to these measures are  presented in Goal 4, pages  100-103.

DATABASE: No internal database; program output. Therefore the other data elements are not applicable.
  The increased use of the TRI-Made Easy (TRI-ME) will result in a total burden reduction of 5% for Reporting Years 2003 and
  2002 levels.

Performance results related to these measures are presented in Goal 4, pages 89-90.

DATABASE: CDX and the Toxics Release Inventory (TRI) System; TRI Data Processing and Operations Statistical Report.

DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable, and accepted by Agency decision makers in carrying out their
responsibilities.

DATA VERIFICATION AND VALIDATION: Please reference the FY 2005 Congressional Justification, page IV-94 (http://www.epa.gov/
ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS:

• 52 training workshops were held during FY 2004 for the reporting community to improve data accuracy and enhance reporting pro-
  cedures.

• More than 750 data quality alert phone calls were placed to reporting facilities that had questionable submissions. The facilities were
  asked to verify their data and submit corrections as necessary.

• Expanded and improved data quality checks were added to the TRI-ME software used by the facilities for reporting.

• Improved data reconciliation processing was implemented at the data center.

• A 73% increase in on-line data submissions through  CDX reduced the data entry error rate over FY 2003 levels.  FY 2004 data accu-
  racy was less than 99%.
GOAL 5  — COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
  Number of facilities, states, technical assistance providers or other entities reached through targeted compliance assistance.

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
    Performance results related to these measures are presented in Goal 5, pages 110-III.

    DATABASE: EPA headquarters manages data on the number of entities reached through targeted compliance assistance in the
    Integrated Compliance Information System (ICIS).

    DATA COMPLETENESS AND RELIABILITY:  Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2004 Final Annual Plan, page IX-17 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
    Compliance Quality Management Plan (internal use).

    DATA QUALITY IMPROVEMENTS: The Office  of Enforcement and Compliance Assistance (OECA) reviews the quality of the data
    quarterly Deputy Regional Administrators and OECA managers certify the data at the middle and end of the year


      Facilities voluntarily self-disclose and correct violations with reduced or no penalty as a result of EPA self-disclosure policies.


    Performance results related to these measures are presented in Goal 5, page III.

    DATABASE: Headquarters manages information  on the self-disclosing policies in ICIS Phase I.

    DATA COMPLETENESS AND RELIABILITY:  Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2004 Final Annual Plan, page IX-16 (http://www.epa.gov/ocfopage/budget/2004/ 2004ap/goal9.pdf), and the Office of
    Compliance Quality Management Plan (internal use).

    DATA QUALITY IMPROVEMENTS: OECA reviews the quality of the data quarterly Deputy Regional Administrators and OECA
    managers certify the data at the middle and end  of the year.


      Number of EPA inspections conducted.


    Performance results related to these measures are presented in Goal 5, pages III-112.

    DATABASE: Data from national enforcement and  compliance systems, including: Permit Compliance System (PCS), Airs Facility System, the
    Resource Conservation Recovery Act Information  System (RCRAInfo), the National Compliance Database System and FIFRA/TSCA Tracking
    System (NCDB/FTTS), and ICIS. Also data are provided  manually for several program areas.

    DATA COMPLETENESS AND RELIABILITY:  Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2004 Final Annual Plan, page IX-10 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
    Compliance Quality Management Plan (internal use).

    DATA QUALITY IMPROVEMENTS: OECA performs a mid-year and end-of-year data quality review of inspection/
    evaluation data. Deputy Regional Administrators and OECA managers certify the data at the middle and end of the year.


      Number of criminal investigations.


    Performance results related to these measures are presented in Goal 5, page III-112.

    DATABASE: The Criminal Docket System (CRIMDOC) is a criminal case management, tracking, and reporting system. Information
    about criminal cases investigated by EPA's Criminal Investigation Division (CID) is entered into CRIMDOC at case initiation, and  investi-
    gation and prosecution information is tracked until case conclusion.

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                      APPENDICES—APPENDIX B. DATA  QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2004 Final Annual Plan, page IX-11 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
Compliance Quality Management Plan (internal use).

DATA QUALITY IMPROVEMENTS: A new case management, tracking, and reporting system (Case Reporting System) is currently being
developed that will replace CRIMDOC. This new system allows for a more user-friendly database and greater tracking, management,  and
reporting capabilities. OECA performs a mid-year and end-of-year data quality review of criminal investigation data. Deputy Regional
Administrators and OECA managers certify the data at middle and end of the year
  Number of civil investigations.


Performance results related to these measures are presented in Goal 5, pages III-112.

DATABASE: Data are manually collected and there is no database.

DATA COMPLETENESS AND RELIABILITY:  Data are complete, reliable and accepted by Agency decision makers in carrying out their
responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2004 Final Annual Plan, page IX-11 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
Compliance Quality Management Plan (internal use).

DATA QUALITY IMPROVEMENTS: OECA performs a mid-year and end-of-year data quality review of civil  investigation data.  Deputy
Regional Administrators and OECA managers certify the data at middle and end of the year.


  Seventy-five percent of concluded enforcement actions require physical action that result in pollutant reductions and/or changes
  in facility management or information practices.


Performance results related to these measures are presented in Goal 5, pages 112-114.

DATABASE: Phase I of ICIS, a modernized system,  replaced DOCKET and tracks EPA civil, judicial, and enforcement actions.

DATA COMPLETENESS AND RELIABILITY:  Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2004 Final Annual Plan, page IX-7 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
Compliance Quality Management Plan (internal use).

DATA QUALITY IMPROVEMENTS: OECA reviews the quality of the data quarterly Deputy Regional Administrators and OECA man-
agers certify the data at middle and end of the year.
  Millions of pounds of pollutants required to be reduced through enforcement actions settled this fiscal year.


Performance results related to these measures are presented in Goal 5, pages 112-114.

DATABASE: Phase I of ICIS, a modernized system, replaced DOCKET and tracks EPA civil, judicial, and enforcement actions.

DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carrying
out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2004 Final Annual Plan, page IX-8  (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
Compliance Quality Management Plan (internal use).

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
    DATA QUALITY IMPROVEMENTS: OECA reviews the quality of the data quarterly Deputy Regional Administrators and OECA
    managers certify the data at the middle and end of the year.
      Develop and use valid compliance rates or other indicators of compliance for selected populations.


    Performance results related to these measures are presented in Goal 5, pages 112-114.

    DATABASE: Inspection-based compliance rates are managed manually PCS tracks National  Pollutant Discharge Elimination System
    (NPDES) permit and enforcement actions, reporting, and scheduling requirements and is used for self-reported rates.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on  performance data quality and methodologies,
    please see the FY 2004 Final Annual Plan, page IX-9 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
    Compliance Quality Management Plan (internal use).

    DATA QUALITY IMPROVEMENTS: Not applicable.
      Complete the data migration plan and begin software development as part of the system implementation life cycle stage (i.e.
      data migration and testing) of Phase II of ICIS (modernization of the Permit Compliance System (PCS) by September 2004.

    Performance results related to these measures are presented in Goal 5, pages 114-115.

    DATABASE:  No database; internal tracking of measure.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERIFICATION AND VALIDATION:  For more comprehensive information on performance  data quality and methodologies,
    please see the FY 2004 Final Annual Plan, page IX-12 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
    Compliance Quality Management Plan (internal use).

    DATA QUALITY IMPROVEMENTS: New and Improved Data or Systems: The  modernization of OECA's legacy media systems into
    one multi-media system, ICIS, will support core enforcement, compliance monitoring, and NPDES permitting program needs. Phase I of
    ICIS, the core federal enforcement data component of ICIS, was implemented in FY 2002.

    PCS Modernization (ICIS Phase II: ICIS-NPDES) is currently underway Progress on PCS Modernization in FY 2004 is as follows:

    • data migration (ongoing);

    • Data Migration Plan completed April 2004;

    • Data Migration Workgroup formed May 2004, with participants from  13  states (AR, CO,GA,HI,IN,WI,MD,MO,NJ,NY,OH,UT,VA), all
      10 regions, and headquarters (OW,OECA,OEI);

    • system software development begun May 2004; and

    • software technical specifications completed  September 2004.
      Conduct EPA-assisted inspections to help build state program capacity.


    Performance results related to these measures are presented in Goal 5, pages 115-116.

    DATABASE: Output measure; internal regional tracking system.

    DATA COMPLETENESS AND RELIABILITY: Data  are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

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                       APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4  PERFORMANCE MEASURES
DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2004 Final Annual Plan, page IX-12 (http://www.epa.gov/ocfopage/budget/2004/2004ap/goal9.pdf), and the Office of
Compliance Quality Management Plan (internal use).

DATA QUALITY IMPROVEMENTS: OECA performs a mid-year and end-of-year data quality review of EPA-assisted inspection data.
Deputy Regional Administrators and OECA managers certify the data at the middle and end of the year.
  Percentage reduction in generation of priority list chemicals from 1991 levels.


Performance results related to these measures are presented  in Goal 5, pages 116-117

DATABASE: The Toxics Release Inventory (TRI) provides facility/chemical-specific data quantifying the amount of TRI-listed chemicals
entering wastes associated with production processes in each  year. The total amount of each chemical in production-related wastes can
be broken out by the methods employed in managing such wastes, including recycling, energy recovery, treatment, and disposal/release.
Amounts of these wastes that are not recycled are tracked for this performance measure. The performance measure uses the Chemical
Abstract System (CAS) numbers for the 23 chemicals identified by EPA as priority chemicals (http://www.epa.gov/epaoswer/
hazwaste/minimize/chemlist.htm).

Regulated facilities report facility-specific, chemical-specific release, waste, and recycling data to EPA For example, in calendar year 1999,
22,639 facilities filed 84,068 TRI reports. TRI  data are collected,  as required by Emergency Planning and Community Right-to-Know Act of
1986 (EPCRA) and expanded by the Pollution Prevention Act of 1990 (40 CFR Part 13101; http://www.epa.gov/tri/).  Only certain facilities in
specific Standard Industrial Classification (SIC) codes are required to report annually the quantities of over 650 listed toxic chemicals and
chemical categories released to each environmental medium and otherwise managed as waste (40 CFR Part 13101; http://www.epa.gov/tri).
Regulation requires covered  facilities to use monitoring, mass balance, emission factors, and/or engineering approaches to estimate releases
and recycling volumes. For purposes of the performance measure, data controls are employed to facilitate cross-year comparisons; a subset
of chemicals and sectors is assessed that are consistently reported in all years; and data are normalized to control for changes in production
using published U.S. Bureau of Economic Analysis gross product indices (chain-type quantity index for the manufacturing sector).

DATA COMPLETENESS AND RELIABILITY: Data will be available  in November 2006. FY 2001  data, the most  recent data available,
show a reduction of 53 percent from the adjusted FY 1991 baseline of approximately 147 million pounds.  Thus, the target established for
FY 2004 has already been met. In response to these better-than-expected results, EPA created a new measure that monitors an
expanded  list of chemicals in both hazardous and nonhazardous waste streams. This new measure will be introduced as part of the
FY 2006 annual  plan and budget.

Data are reliable and accepted by Agency decision makers in  carrying out their responsibilities.  Most facilities use EPA-certified automat-
ed TRI FORM R reporting tools, which  contain automated error-checking mechanisms. Upon receipt of the facilities' reports, EPA
conducts automated  edits, error checks, data scrubs, corrections, and normalization during data entry and subsequent processing. While
the Agency does not control the quality of the data submitted by the regulated community, it does, work with the regulated community
to improve the  quality of the estimates submitted.

Use of the data should  be based on the user's understanding that the Agency does not have direct assurance of the accuracy of the
facilities' measurement and reporting processes. TRI release data are reported by facilities on a good-faith, best-estimate basis. EPA does
not have the resources to conduct on-site validation of each facility's reporting data, although on-site investigations do occur each year
at a subset of reporting facilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the FY 2005 Congressional Justification, Goal 4 narrative, page IV-93 (http://www.epa.gov/ocfopage/budget/budget.htm).

DATA QUALITY IMPROVEMENTS: There were no significant improvements during FY 2004.
  Annual reduction of TRI non-recycled waste (production-normalized pounds).


Performance results related to these measures are presented  in Goal 5, pages 117-118.

DATABASE: The Toxics Release Inventory System (http://www.epa.gov/tri/).

DATA COMPLETENESS AND RELIABILITY: Performance data are not available currently; data will be available in the spring of 2005.
Data are reliable and accepted by Agency decision makers in  carrying out their responsibilities.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION AGENCY
    DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2005 Congressional Justification, pages V-58 and V-59 (http://www.epa.gov/ocfo/budget/2005/g05final.pdf).

    DATA IMPROVEMENTS: None.
      Cumulative number of alternative feed stocks, processes, or safer products identified by Green Chemistry Challenge Award winners.


    Performance results related to these measures are presented in Goal 5, pages 117-118.

    DATABASE: Industry and academia submit nominations annually to EPA in response to the Presidential Green Chemistry Challenge
    Awards. Environmental and economic benefit information, included in the nomination  packages, is pulled into a metrics database.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERFICATION  AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2004 Congressional Justification, pages IV-97 and IV-98 (http://www.epa.gov/ocfo/budget/2004/g04final.pdf).

    DATA IMPROVEMENTS: None.
      Cumulative number of pounds of hazardous chemicals/solvents eliminated by Green Chemistry Challenge Awards Program
      nominations.

    Performance results related to these measures are presented in Goal 5, pages 117-118.

    DATABASE: Industry and academia submit nominations annually to EPA in response to the Presidential Green Chemistry Challenge
    Awards. Environmental and economic benefit information, included in the nomination packages, is pulled into a metrics database.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the final FY 2005 Congressional Justification, pages V-60 through V-64 (http://www.epa.gov/ocfo/budget/2005/g05final.pdf).

    DATA IMPROVEMENTS: None.
      Cumulative number of eco-friendly laundry detergent formulations developed.


    Performance results related to these measures are presented in Goal  5, pages 117-118.

    DATABASE: EPA is developing an electronic ("metrics") database that will allow organized storage and retrieval of green chemistry data
    submitted to the Agency on alternative feedstocks, processes, and safer chemicals. The database is being designed  to systematically
    store and retrieve  information on the environmental and, where available, economic benefits that these alternative green chemistry
    technologies offer.  The database is also being designed to track the quantity of hazardous chemicals and solvents eliminated through
    implementation of these alternative  technologies.

    DATA COMPLETENESS AND RELIABILITY: Data are complete. Data are reliable and accepted by Agency decision makers in carry-
    ing out their responsibilities.

    DATA VERFICATION AND VALIDATION: For more comprehensive information on performance  data quality and methodologies,
    please see the final FY 2004 Congressional Justification, page IV-98 (http://www.epa.gov/ocfo/budget/2004/g04final.pdf)..

    DATA IMPROVEMENTS: None.


      Percent of Tribes with delegated  and non-delegated programs. - Percent of Tribes with EPA-reviewed monitoring and assess-
      ment occurring. - Percent of Tribes with EPA-approved multimedia workplans.

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                     APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
Performance results related to these measures are presented in Goal 5, page  119.

DATABASE: Progress on these measures is tracked through the Goal 5.3 Reporting system, an internal EPA program management data-
base.

DATA COMPLETENESS AND RELIABILITY: Data are complete to assess that these FY 2004 targets have been reached. Data are reli-
able and accepted by Agency decision makers in carrying out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please see the final FY 2005 Congressional Justification, pages IV-73 through IV-75 (http://www.epa.gov/ocfo/budget/2005/g05final.pdf).

DATA QUALITY IMPROVEMENTS: None.
  Through the ETV program, verify the performance of 35 commercial-ready environmental technologies.


Performance results related to these measures are presented in Goal 5, page  120.

DATABASE: No internal database; program output. Therefore other data elements are not applicable.


CHAPTER 6 - - SUPPORTING ACHIEVEMENT OF  ENVIRONMENTAL  RESULTS

  Number of private sector and local government entities, such as water authorities, will use CDX to exchange environmental data
  with EPA. - CDX offers online data exchange for all major national systems by the end of FY 2004. - Number of states using CDX
  as the means by which they routinely exchange environmental data with two or more EPA media programs or regions.


Performance results related to these measures are presented in Chapter 6, page  127

DATABASE: Central Data Exchange (CDX) Customer Registration Subsystem.

DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable and accepted by Agency decision makers  in carrying out their
responsibilities.

DATA VERIFICATION AND VALIDATION:  For more comprehensive information on performance data quality and methodologies,
please refer to FY 2005 Congressional Justification, Enabling Support Programs chapter, pages ESP-5  and ESP-6
(http://www.epa.gov/ocfopage/budget).

DATA QUALITY IMPROVEMENTS: Weekly  audits of CDX data collection procedures and customer service operations are conduct-
ed. Weekly project management meetings are held, during which progress on performance measures is reviewed and actions are
identified when necessary.
  Establish the baseline for the suite of indicators that are used by EPA's programs and partners in the Agency's strategic planning
  and performance measurement process.

Performance results related to these measures are presented in Chapter 6, page  128.

DATABASE: Output measure; initial  collection of indicators compiled during the drafting of EPA's Report on the Environment, supple-
mented by indicators currently used  in the Agency's strategic planning and performance measurement process (e.g., EPA's Strategic Plan,
Annual Performance Plan, Annual  Performance Report, Annual Operating Plan, and National Environmental Performance Partnership
Agreements), will comprise an Agency baseline of indicators (http://www.epa.gov/indicators/roe/index.htm).

DATA COMPLETENESS AND RELIABILITY: Data are reliable and accepted by Agency decision makers in carrying out their responsibilities.

DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
please refer to EPA's FY 2005 FY 2005 Congressional Justification, Enabling Support Programs chapter, pages ESP-6 and ESP-7
(http://www.epa.gov/ocfopage/budget).

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
    DATA QUALITY IMPROVEMENTS:

    • EPA conducted an extensive national dialogue on the Draft Report on the Environment to collect additional input into the suite of
      Environmental  Indicators.

    • Efforts are underway to develop environmental indicators and other analytical tools to answer more questions in the next Report on
      the Environment, anticipated for release in FY 2006.
      Percent compliance with criteria used by OMB to assess Agency security programs reported annually to OMB under the
      Federal Information Security Management Act. - Percent of intrusion detection monitoring sensors installed and operational.

    Performance results related to these measures are presented in Chapter 6, page 128-129.

    DATABASE: The Automated Security Self-Evaluation and Remediation Tracking (ASSERT) database.

    DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable and accepted by Agency decision makers in carrying out
    their responsibilities.

    DATA VERIFICATION AND VALIDATION: The Office of the Inspector General staff and the Chief Information Officer's information
    security staff conduct independent evaluations of security assessments, consistent with §3545 of the Federal Information Security
    Management Act (FISMA). The Agency certifies results to the Office of Management and  Budget (OMB) in the annual FISMA report.
    For more comprehensive information on performance data quality and  methodologies, please refer to EPA's FY 2005 Congressional
    Justification, Enabling Support Programs  chapter, page ESP-7 (http://www.epa.gov/ocfopage/budget).

    DATA QUALITY IMPROVEMENTS:

    • Automated edit checking routines are performed in accordance with ASSERT design specifications, to ensure answers to questions in
      ASSERT are consistent.

    • EPA's information security staff reviews the self-reported data, conducts independent validation  of a sample, and discusses anomalies
      with the submitting office.

    • EPA released version 3.0 of ASSERT in FY 2004, offering users easier access to the tool.
      Cumulative percentage reduction in energy consumption in EPA's 21 laboratories from the 1990 base.


    Performance results related to these measures are presented in Chapter 6, page 129-130.

    DATABASE: The Agency's contractor receives energy bills regularly—either monthly or quarterly—from the utility companies. This
    information is compiled in the contractor's database and provided to the Agency quarterly and annually. The contractor is responsible
    for validating the data.

    DATA COMPLETENESS AND RELIABILITY: The data are complete, reliable, and accepted by Agency decision makers in carrying out
    their responsibilities.

    DATA QUALITY: For more information on performance data quality and methodologies, please see the FY 2005 Congressional
    Justification, page ESP-13.

    DATA QUALITY IMPROVEMENTS: None.
      Offices using workforce planning model which identifies skills and competencies needed by the Agency for strategic recruit-
      ment, retention, and development.

    Performance results related to these measures are presented in Chapter 6, page 130-131.

    DATABASE: The National Strategic Workforce Planning System (NSWPS), a component of People Plus human resources software.

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                      APPENDICES—APPENDIX B. DATA QUALITY FOR ASSESSMENTS OF FY 2OO4 PERFORMANCE MEASURES
DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable, and usable by the Agency in carrying out decision-making
responsibilities. Ten offices have completed pilot implementation of the system, which utilizes several feedback mechanisms to capture
participant information useful for making improvements to the system.

DATA QUALITY: Data quality is good and has been validated by senior managers across EPA.

DATA QUALITY IMPROVEMENTS: EPA will utilize pilot results to  make modifications to the NSWPS and to the full strategic work-
force planning approach.
  Percentage of total eligible service contracting dollars obligated as performance-based in FY 2004.

Performance results related to these measures are presented in Chapter 6, pages 130-131.

DATABASE: The Integrated  Contracts Management System (ICMS).

DATA COMPLETENESS AND RELIABILITY: Data are complete,  reliable and usable by the Agency in carrying out decision-making
responsibilities. A very detailed report is created that shows, on a contract-by-contract basis, whether individual contracts and task
orders were coded as a Performance Based Service Acquisition. The report is provided to managers (including program managers,
when requested) for review (of whether the annual performance goal has been met or not) and to verify with the contracting officers
if contracts and/or orders were correctly coded in ICMS.

DATA QUALITY: When an action in ICMS is coded as performance-based, there are edit checks performed for applicable North
American  Industrial Classification codes (NAICS) and Product Service Codes (PSC) like those in the Federal Procurement Data System
(FPDS) to which the data are reported quarterly The FPDS also flags any errors, which are corrected in ICMS and resubmitted. Few, if
any, Performance Based Service Code errors have been returned. When ICMS begins transactional processing with the new FPDS-Next
Generation (FPDS-NG) in 2004, there will be edit checks in that system, which will help data quality on a real-time basis.

DATA QUALITY IMPROVEMENTS: None.
  The number of financial and performance metrics where the Agency has met pre-established Agency or Government-wide per-
  formance goals.

Performance results related to these measures are presented in Chapter 6, page 130-131.

DATABASE: There is no one database for this measure. The inventory of 14 key financial and resource performance measures, including
for example, payroll payments, non-credit card invoices paid timely, and purchase card delinquency rates, originate from the following:
Financial Management Officer certification, Senior Resource Officer certification, EPAYS payroll system, IFMS accounting system, or
General Services Administration (GSA).

DATA COMPLETENESS AND RELIABILITY: Data are complete, reliable, and accepted by Agency decision makers in carrying out their
responsibilities.

DATA QUALITY: Data complied from Financial Management Officer and Senior Resource Officer certifications are accepted only by
email  or signed certifications from those two sources. Both the EPAYS payroll system and the IFMS accounting system are audited annu-
ally by the Office of the Inspector General. GSA data are verified annually through their annual audit process.

DATA QUALITY IMPROVEMENTS: Data are reviewed periodically throughout the year by management and appropriate  actions are
identified when improvements are necessary
  Agency audited Financial Statements are timely, and receive an unqualified opinion.

Performance results related to these measures are presented in Chapter 6, page 130-131.

DATABASE: Output measure-none. Therefore the other data elements are not applicable.

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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S.  ENVIRONMENTAL PROTECTION  AGENCY
      The number of actions taken for environmental improvement, reductions in environmental risks, and recommendations made
      for environmental improvement. - The number of actions taken for improvements in business practices, criminal/civil/adminis-
      trative actions, recommendations for improved business practices, and value of potential dollar return.


    Performance results related to these measures are presented in Chapter 6, pages 131-132.

    DATABASE: Performance data are in the OIG Performance Measurement and Reports System (PMRS). PMRS is used to capture and
    aggregate information on an array of measures in a logic-model format, linking immediate outputs with longer-term intermediate out-
    comes and results. Data in PMRS  include numbers of recommendations for environmental program and management improvement;
    legislative, regulatory policy, directive, or process changes; environmental and integrity risks identified, reduced, or eliminated; best prac-
    tices identified and transferred; environmental and management improvements; and monetary value of fines and costs questioned,
    saved, and recovered.

    DATA COMPLETENESS AND RELIABILITY: EPA expects  data to be complete by the end of October 2004. Data are reliable and
    accepted by Agency decision makers in carrying  out their responsibilities.

    DATA VERIFICATION AND VALIDATION: For more comprehensive information on performance data quality and methodologies,
    please see the FY 2005 Congressional Justification, pages ESP-54 and ESP-55 (http://www.epa.gov/ocfopage/budget).

    DATA QUALITY IMPROVEMENTS:

    • Revised and clarified performance measure definitions.

    • Provided  tutorial sessions and presentations on the use of PMRS.

    • Performed audits and reconciliations of performance data.
      Manage Agency-wide information technology assets consistent with the Agency's multi-year strategic information resource
      management plan (Enterprise Architecture) reflecting current Agency mission priorities and resources.

    Performance results related to these measures are presented in Chapter 6, page 29.

    DATABASE: No internal database; program output. Therefore other data elements are not applicable.

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                APPENDICES—APPENDIX C. PROGRAM ASSESSMENT RATING TOOL (PART) FY2OO4/2OO5
Appendix C



Program Assessment  Rating



Tool  (PART)  FY 2004/2005


PART is a tool developed and used by OMB to assess and improve performance of federal programs. In addition to assess-
ing programs, the PART process identifies potential performance metrics, which can help to better quantify environmental
results. The following is a table of measures identified in PART assessments conducted in FY 2004 and FY 2005.*
PROGRAM
Acid Rain
Acid Rain
Acid Rain
Acid Rain
Acid Rain
Acid Rain
Air Toxics
Air Toxics
TERM
Long-term
Long-term
Annual
Annual
Annual
Long-term
Long-term
Measure
Annual
Measure
MEASURE
TYPE
Outcome
Output
Output
Outcome
Outcome
Efficiency
(Outcome)


MEASURE
Percent change in number of
chronically acidic waterbodies in
acid-sensitive regions.
Sulfur dioxide emissions from
electric power generation sources.
Tons of sulfur dioxide emitted
from electric power generation
sources.
Percent change in average nitro-
gen deposition and mean ambient
nitrate concentrations.
Percent change in average sulfur
deposition and mean ambient
sulfate concentrations.
Measure Under Development
Long-term Measure:
Percent of U.S. population free
from unacceptable risks of cancer
and other significant health prob-
lems from air toxic emissions
Annual Measure:
Percentage reduction in nation-
wide air toxics emissions from
stationary and mobile sources
combined (actual data available
later in 2003).
EXPLANATION
Progress is measured as percent reduc-
tion from 2001 baseline number of
waterbodies. Acid-sensitive regions
include the Northeast, Mid-Atlantic,
and Upper Midwest.
Progress is measured as tons reduced
from I960 baseline of 174 million tons.
Progress is measured as tons reduced
from I960 baseline of 174 million tons.
Data is mainly from Eastern U.S. and is
reported as 3-year averages due to
varying meteorological conditions and
other factors. Progress is measured as
percent reduction from 1990 baseline.
Data is mainly from Eastern U.S. and is
reported as 3-year averages due to
varying meteorological conditions and
other factors. Progress is measured as
percent reduction from 1990 baseline.



* Source: Office of Management and Budget (OMB)

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
PROGRAM
Air Toxics
Brownfields
Brownfields
Brownfields
Brownfields
Civil
Enforcement
Civil
Enforcement
Civil
Enforcement
Civil
Enforcement
Civil
Enforcement
Civil
Enforcement
Clean Water
State
Revolving
Fund
TERM

Long-term
Annual
Long-term
Annual
Long-term
Long-term
Measure
Annual
Annual Measure

Annual
Long-term
MEASURE
TYPE

Outcome
Outcome
Output
Efficiency
(Outcome)
Outcome

Outcome


Efficiency
Outcome
MEASURE
Efficiency Measure:
Measure Under Development
Brownfields Properties Assessed
Assessed Properties Redeveloped
(new measure — targets under
development)
Dollars leveraged at Brownfields
properties
Measure Under Development
Pounds of pollutants reduced
(characterized as to risk and
exposure) (revised measure and
targets under development).
Long-term Measure:
Measure Under Development
Millions of pounds of pollutants
reduced through concluded
enforcement actions
Annual Measure:
Millions of pounds of pollutants
reduced by eliminating discharges
through enforcement activities
Efficiency Measure:
Dollars negotiated per workyear
from polluters for Supplemental
Environmental Projects that
restore, protect or improve the
environment
Pounds of pollutants (in thou-
sands) reduced, treated or
removed per workyear (targets
under development).
Percent of stream miles/acres of
water identified in 2000 as not
attaining standards that fully attain
water quality standards.
EXPLANATION

This measure tracks the number of
brownfields properties assessed by pro-
gram grant recipients. Grantees report
on this measure in quarterly reports.
This measure shows if assessments are
leading to redevelopment.
This measure tracks the amount of
cleanup/redevelopment funding lever-
aged by program grant recipients at
brownfields properties. Grantees report
on this measure in quarterly reports.
Sites Redeveloped per million dollars.
For fiscal years 2000 through 2002
over 5.23 billion pounds of pollution
was reduced (1.63 billion pounds) and
soil treated or removed (3.60 billion
pounds) as a result of concluded
enforcement cases.





2002 Baseline: 0% of the 255,408 miles
and 6,803,419 acres of waters on I998/
2000 lists of impaired waters developed
by States and approved by EPA under
section 303(d) of the Clean Water Act.

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APPENDICES—APPENDIX C. PROGRAM ASSESSMENT RATING TOOL (PART) FY2OO4/2OO5
PROGRAM TERM M^^RE MEASURE EXPLANATION
Clean Water
State
Revolving
Fund


Clean Water
State
Revolving
Fund
Clean Water
State
Revolving
Fund
Clean Water
State
Revolving
Fund
Criminal
Enforcement

Criminal
Enforcement
Criminal
Enforcement
Drinking
Water State
Revolving
Fund
Drinking
Water State
Revolving
Fund
Drinking
Water State
Revolving
Fund
Drinking
Water State
Revolving
Fund
Long-term


Long-term
Annual
Long-term

Long-term

Annual

Long-term
Long-term
Annual
Long-term

Long-term
Outcome


Outcome
Outcome
Efficiency
(Outcome)

Outcome

Average number per year of
waterborne disease outbreaks
attributable to swimming in, or
other recreational contact with,
the ocean, rivers, lakes, or
streams.
Percent of water miles/acres with
fish consumption advisory
removed.
Percent of all major Publicly
Operated Treatment Works
(POTWs) that comply with their
permitted wastewater discharge
standards
Measure Under Development

Millions of pounds of pollutants,
reduced, eliminated, or curtailed
(to be further developed as to
risk and exposure)
Intermediate Reduction from recidivism base-
Outcome
Efficiency
Outcome
Outcome
Efficiency
(Outcome)

Output
line (baseline and targets under
development)
Pounds of pollutants reduced per
workyear (targets under develop-
ment)
Percent population served by
community water systems in com-
pliance with health-based drinking
water standards.
Percent community water systems
in compliance with drinking water
standards.
Measure Under Development

DWSRF Long-term revolving level
($ in billions/yr)
2002 Baseline: average of 9 outbreaks
per year reported by CDC.


2002 Baseline: 485,205 river miles and
11,277,276 lake acres with fish consump-
tion advisory
2002 Baseline: 976% of major POTWs.
Measure includes discharge violations
only (excludes administrative viola-
tions).








This measure tracks the compliance
rate of the nation's 53,000 community
water systems with drinking water
standards. If systems are in compliance,
the population's exposure to contami-
nants is reduced.


Indicates the amount of funds dis-
persed from the DWSRF program.
The target is an average level of $ 1.2
billion/yr for the period 2018-2028.

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
PROGRAM
Ecological
Research
Ecological
Research
Environmental
Education
Existing
Chemicals
Existing
Chemicals
Existing
Chemicals
Existing
Chemicals
Existing
Chemicals
Existing
Chemicals
Existing
Chemicals
TERM
Long-term
Annual
Long-term
Long-term
Long-term
Measure
Annual Measure
Long-term

Annual
Annual
MEASURE
TYPE
Outcome
Output
Outcome
Outcome


Output

Outcome
Outcome
MEASURE
The states and tribes use a com-
mon monitoring design and
appropriate ecological indicators
to determine the status and
trends of ecological resources
Measure Under Development
Measures not needed due to zero
funding.
Percent cumulative reduction of
chronic human health risk from
environmental releases of industri-
al chemicals in commerce since
2001.
Long-term Measure:
Measure Under Development
Annual Measure:
Percent reduction in current year
production-adjusted Risk
Screening Environmental
Indicators (RSEI) chemical risk
based index
(New measure)
Percentage of high-priority chemi-
cals for which EPA has developed
short-term exposure limits.
Efficiency Measure:
Measure Under Development
Reduction in the current year
production-adjusted risk-based
score of releases and transfers of
toxic chemicals.
Reduction in the current year
production-adjusted hazard-based
score of releases and transfers of
toxic chemicals.
EXPLANATION



Target is 2008. Goal is 7%. Baseline is
2001 levels, as measured by EPA's Risk
Screening Environmental Indicators
(RSEI) model. 1999 and 2000 are being
investigated as anomalies and are not
believed to be reflective of future
performance.


Target is 2008. Goal is 85%. Baselines
under development. From the chemi-
cals identified as priority by the Acute
Exposure Guideline Levels (AEGL)
Program and representing a wide
range of acutely toxic substances.

Baseline is prior year's data (for 2000,
baseline is 1999). Currently, 1999 data
is under review. Chemicals are those
reported to the Toxic Release
Inventory (TRI) from the level of pre-
vious year (reported two years after
current year due to TRI data lag).
Baseline is prior year's data. For 2000,
the baseline is 1999. Chemicals are
those reported to TRI from the level
calculated for the previous year
(reported two years after current year
due to TRI data lag). EPA uses RSEI
model to determine hazard.

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APPENDICES—APPENDIX C. PROGRAM ASSESSMENT RATING TOOL (PART) FY2OO4/2OO5
PROGRAM
Existing
Chemicals
Existing
Chemicals
Existing
Chemicals
Leaking
Underground
Storage Tanks
Leaking
Underground
Storage Tanks
Leaking
Underground
Storage Tanks
Leaking
Underground
Storage Tanks
Leaking
Underground
Storage Tanks
Leaking
Underground
Storage Tanks
New
Chemicals
New
Chemicals
TERM
Annual
Long-term
Annual
Long-term
Long-term
Measure
Annual
Annual Measure

Annual
Long-term
Long-term
Measure
MEASURE
TYPE
Output
Efficiency
(Outcome)
Efficiency
(Output)
Outcome

Outcome


Efficiency
(Outcome)
Outcome

MEASURE
Cumulative number of chemicals
with proposed, interim, and/or
final values for Acute Exposure
Guideline Levels (AEGL).

Cost and time to establish AEGL
value per chemical (under devel-
opment).
Measure Under Development
Long-term Measure:
Measure Under Development
Number of Cleanups Completed
Annual Measure:
Leaking underground storage tank
cleanups completed
New annual outcome measures
being developed
Efficiency Measure:
Measure Under Development
Measure Under Development
Risks avoided to workers and the
general population from preven-
tion of the entry of new
chemicals into commerce (under
development).
Long-term Measure:
Reduction of hazardous sub-
stances from products and
processes in millions of pounds
(Targets under development)
EXPLANATION
The numbers represented are cumula-
tive. Supports AEGL Long-Term Goal.
A companion efficiency measure for
RSEI is under development for possible
inclusion in the FY 2005-2008 Strategic
Plan based on the concept of increas-
ing the efficiency of achieving RSEI risk
reductions through improved targeting
of program activities.
Analyses currently being conducted
into feasibility of demonstrating how
program has found ways to make the
process more efficient. Support AEGL
Long-Term Goal.
Health benefit of underground storage
tank clean up.

This measure is the number of
cleanups completed that have met
state-set risk-based health and/or envi-
ronmental standards that are
protective of human health and the
environment.


Benefit per unit cost of clean up.
Will show releases and exposures (to
worker and general population) that
otherwise would have occurred had
the program not been in place, which
would have threatened human health
and environmental quality


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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
PROGRAM
New
Chemicals
New
Chemicals
New
Chemicals
New
Chemicals
New
Chemicals
New
Chemicals
New
Chemicals
New
Chemicals
New
Chemicals
Nonpoint
Source
Grants
Nonpoint
Source
Grants
Nonpoint
Source
Grants
TERM

Long-term

Long-term
Long-term
Annual
Annual
Annual
Annual
Long-term
Long-term
Measure
Annual
MEASURE
TYPE

Outcome

Outcome
Efficiency
(Output)
Output
Outcome
Efficiency
(Output)
Outcome
Outcome

Outcome
MEASURE
Annual Performance Goal:
Annual quantity of hazardous sub-
stances eliminated through the
Green Chemistry Challenge
Awards Program from 1996 levels,
in millions of pounds
Cumulative reduction of releases
of industrial hazardous chemicals
to the environment and in industri-
al wastes in millions of pounds.
Efficiency Measure:
Measure Under Development
Cumulative conservation of mil-
lions of BTUs of energy and gallons
of water.
Review costs per chemical (for
EPA and industry) (under develop-
ment).
Number of TSCA 8(e) notices
received for PMN-reviewed chem-
icals.
Cumulative reduction of industrial
hazardous chemical releases to the
environment and hazardous chemi-
cals in industrial wastes, in millions
of pounds.
Annual number of pre-screened
new chemical alternatives generat-
ed through industry's participation
during the earliest stages of
research and development.
Annual cumulative quantity of water
conserved (millions of gallons).
Number of primarily nonpoint
source impaired waters that will par-
tially or fully attain designated uses
Long-term Measure:
Current measure achieved
New measures under development
Annual reduction in amount of
sediment loadings (tons)
EXPLANATION

Baseline is 0 in 1996.

Timeline is 2008. Goal is 30/650/160.
Baseline is 0 in 1996. NA denotes that
BTUs of energy cannot be targeted
until 2007
Timeline is 2008. Baseline is 2002.
Goal to be determined from Phase II
of OPPT PMN Program Evaluation,
completed in September 2003.
These notices are submitted to EPA
by industry identifying potential risks
associated with PMN-reviewed chem-
icals (chemicals for which zero risk
was previously determined). A proxy
measure is to show zero risk.



Will report progress every reporting
cycle (currently every 2 years).

This measure tracks the amount (in
pounds) of sediment loading reduced
through CWA section 319 funded
projects.

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                                 APPENDICES—APPENDIX C.  PROGRAM ASSESSMENT  RATING TOOL (PART) FY2OO4/2OO5
 PROGRAM
Nonpoint
Source
Grants
                    MEASURE
                      TYPE
Annual Measure
                           MEASURE
                 Annual Measure:
                 Measures Under Development
                                           EXPLANATION
Nonpoint
Source
Grants
                                  Efficiency Measure:
                                  Measures Under Development
Nonpoint
Source
Grants
Annual
Outcome         Annual reduction of total nitrogen
                 loadings in thousands of pounds
                 (targets under development)
                                 This measure tracks the amount (in
                                 pounds) of nitrogen loading reduced
                                 through CWA section 319 funded proj-
                                 ects.
Nonpoint
Source
Grants
Annual
Outcome      |  Annual reduction of total phos-
                 phorus loadings in thousands of
                 pounds (targets under develop-
                 ment)
                                 This measure tracks the amount (in
                                 pounds) of phosphorus loading
                                 reduced through CWA section 319
                                 funded projects.
Particulate
Matter
Research
Long-term
Outcome
Measure Under Development
Particulate
Matter
Research
Annual
Outcome
Measure Under Development
Particulate
Matter
Research
Long-term
Efficiency
(Outcome)
Measure Under Development
Pesticide
Registration
Long-term
Outcome
Percent reduction in terrestial and
aquatic wildlife mortality incidents
involving pesticides
The baseline is 80 reported bird inci-
dents involving 1150 mortalities and 65
reported fish incidents involving
632,000 mortalities averaged for the
period 1994-1996. The data is available
annually from Ecological Incident
Information System (ENS).
Pesticide
Registration
Long-term
Measure
                 Long-term Measure:
                 Measure Under Development
Pesticide
Registration
Annual
Output
Percentage of agricultural acres
treated with  reduced-risk pesti-
cides
Indirectly measures the increase in reg-
istration of pesticides that are lower
risk than conventional pesticides by
measuring the use, availability, and
effectiveness (demand) for them.
Pesticide
Registration
Annual Measure
                 Annual Measure:
                 Number of new reduced risk
                 active ingredients registered
Pesticide
Registration
                                  Long-term Efficiency Measure:
                                  Measure Under Development
Pesticide
Registration
Long-term
Efficiency
(Output)
Percent reduction in review time
for registration of conventional
pesticides.
Measures reduction in decision-making
time for new active ingredient registra-
tion actions.  From 2002 baseline.

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FISCAL YEAR 2OO4 ANNUAL REPORT,  U.S. ENVIRONMENTAL PROTECTION AGENCY
PROGRAM TERM M^^RE MEASURE EXPLANATION
Pesticide
Reregistration
Pesticide
Reregistration

Pesticide
Reregistration
Pollution
Prevention
and New
Technologies
Pollution
Prevention
and New
Technologies
Pollution
Prevention
and New
Technologies
RCRA
Corrective
Action
RCRA
Corrective
Action
RCRA
Corrective
Action
RCRA
Corrective
Action
RCRA
Corrective
Action
Long-term
Measure
Annual Measure



Long-term


Annual


Long-term

Long-term
Annual
Long-term
Long-term
Annual





Outcome


Output


Efficiency
(Output)

Outcome
Outcome
Efficiency
(Outcome)
Outcome
Outcome
Long-term Measure:
Measure Under Development
Annual Measure:
Percent of Reregistration Eligibility
Decisions (REDs) completed
A RED document summarizes the
reregistration conclusions and out-
lines any risk reduction measures
necessary for the pesticide to con-
tinue to be registered in the U.S.
Efficiency Measure:
Measure Under Development








Current human exposures under
control (baseline and target under
development)
Current human exposures under
control (baseline and targets
under development)
Measure Under Development
Migration of contaminated
groundwater under control (base-
line and targets under
development)
Migration of contaminated
groundwater under control (base-
line and targets under
development)













Goal measures the percentage of sites
at which stabilization and/or final
cleanup efforts have been sufficient to
ensure that people are not being
exposed to unacceptable levels of con-
tamination that could be reasonably
expected under current conditions.
New 2006-2008 targets are needed to
support revised baseline for associated
long-term measure.

Goal measures the percentage of sites
at which stabilization and/or final
cleanup efforts have been sufficient to
ensure plumes of contaminated
groundwater are not expanding above
levels of concern or are not adversely
affecting surface water bodies.
New 2006-2008 targets are needed to
support revised baseline for associated
long-term measure.

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APPENDICES—APPENDIX C. PROGRAM ASSESSMENT RATING TOOL (PART) FY2OO4/2OO5
PROGRAM TERM M^^RE MEASURE EXPLANATION
Superfund
Removal
Superfund
Removal
Superfund
Removal
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Tribal
General
Assistance
Long-term
Measure
Annual Measure


Annual
Annual
Annual Measure

Annual
Long-term
Long-term
Long-term
Long-term




Output
Output


Output
Outcome
Outcome
Outcome
Efficiency
(Outcome)
Long-term Measure:
Measure Under Development
Annual Measure:
Number of removals completed
Efficiency Measure:
Measure Under Development
Long term Measure:
Measure Under Development
% of tribes with delegated and
non-delegated programs, (new
targets under development)
% of tribes with EPA-approved
multimedia workplans.
Annual Measure:
Percent of tribes with delegated
and non-delegated environmental
programs
(New measure, targets under
development)
Efficiency Measure:
Measure Under Development
% of tribes with EPA-reviewed
monitoring and assessment occur-
ring (targets under development).
% decrease in the number of
households in Indian Country with
inadequate wastewater sanitation
systems.
% decrease in the number of
households on tribal lands lacking
access to safe drinking water.
Show at least a 10 percent
improvement for each of four
parameters — total nitrogen, total
phosphorus, dissolved oxygen, and
fecal coliforms — at not fewer than
90 monitoring stations in tribal
waters for which baseline data are
available.
Number of environmental pro-
grams implemented in Indian
Country per million dollars (tar-
gets under development).




Number of tribe-as-state (TAS)
approvals for program authorization
delegation or approval, implementation
or direct implementation tribal coop-
erative agreements (DITCAs).
Number of Tribes with MOUs, EAs,
PPGs, DITCAs or grant eligible TAS
approvals.


Number of Tribes with EPA-approved
QAPPs.





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FISCAL YEAR 2OO4 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
  Appendix   D
  Acronyms  and
   Definitions
   APG          annual performance goal

   AQM          air quality management


   BEACH Act     Beaches Environmental Assessment and
                Coastal Health Act

   BFR          brominated fire retardant

   BRAC         Base Realignment and Closure


   CAA          Clean Air Act

   CAFO         concentrated animal feeding operation

   CASTNet      Clean Air Status and Trends Network

   CCMP         Comprehensive Conservation and
                Management Plan

   CDX          Central Data Exchange

   CERCLA       Comprehensive Environmental
                Response, Compensation, and Liability
                Act

   CFC          chlorofluorocarbon

   CFO          Chief Financial Officer

   CO           carbon monoxide

   CSO          combined sewer overflow

   CWS          community water system

   CWSRF        Clean Water State  Revolving Fund


   DWSRF        Drinking Water State Revolving Fund


   ECOS         Environmental Council of the States

   EFC          Environmental Finance Center
                e-gov electronic government
EMS          Environmental Management System

EPA          Environmental Protection Agency

ERP          emergency response plan

ETV          Environmental Technology Verification


FDA          U.S. Food and Drug Administration

FDR          facility data report

FMFIA        Federal Managers Financial Integrity Act

FQPA        Food Quality Protection Act


GAO         Government Accountability Office

GHG         greenhouse gas

GWR         groundwater release


HCFC        hydrochlorofluorocarbon

HPV          high production volume


IAQ          indoor air quality

IPIA          Improper Payments Information Act

IRIS          Integrated Risk Information System


LUST         leaking underground storage tank


MACTS       Maximum Achievable Control
             Technology Standards

MSW         municipal solid waste

MTBE         methyl tertiary-butyl ether

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                                                             APPENDICES—APPENDIX D. ACRONYMS AND DEFINITIONS
NAAQS        National Ambient Air Quality Standards
NACEPT        National Advisory Council for
                Environmental Policy and Technology
NADP          National Atmospheric Deposition
                Program
NAS            National Academy of Sciences
NDZ           no-discharge zone
NEI             National Emissions Inventory

NEP            National Estuary Program
NOX            nitrogen oxides
NO2            nitrogen dioxide
NPDES          National Pollutant Discharge Elimination
                System
NPL            National Priorities List

NRC            National Research Council
NSR            New Source Review
NTI             National Toxics Inventory


OCHP          Office of Children's Health Protection
ODMPT        ozone depletion potential-weighted
                metric tons
OIG            Office of the Inspector General
OMB           Office of Management and Budget
OST            Office of Science and Technology


P2              Pollution Prevention

PART           Program Assessment Rating Tool
Pb              lead
PBDE           polybrominated diphenyl ether
PCB            polychlorinated biphenyl
PER             Permitting for Environmental Results
PESP            Pesticide Environmental  Stewardship
                Program
PM              particulate matter
PMA            President's Management Agenda
PMN            pre-manufacture notice
POTW          publicly owned treatment works
PRIA           Pesticide Registration Improvement Act


RCC           Resource Conservation Challenge
RED            Registration Eligibility Decision
RCRA          Resource Conservation and Recovery
                Act


SAV            submerged aquatic vegetation

SDWA          Safe Drinking Water Act
SDWIS          Safe Drinking Water Information System
SIP             Site Implementation Plan
SITE            Superfund Innovative Technology
                Evaluation
SFR             State Revolving Fund

SO2             sulfur dioxide
SWAP          Source Water Assessment Program


TAP            technical assistance provider
TAS             treatment as a state
Time/LTM       Temporally Integrated Monitoring of
                Eco-systems and Long-Term Monitoring
                (networks)
TMDL          Total Maximum Daily Load
TRI             Toxic Release Inventory
TUWRAP       Toxics Use and Waste Reduction
                Assistance Program


USGS           U.S. Geological Survey
USDA          U.S. Department of Agriculture
LIST            underground storage tank
UV             ultra-violet


VA             vulnerability assessment
VOC           volatile organic chemical


WIPP           Waste  Isolation Pilot Project
WQS           water quality standards

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                          EPA-I90-R-04-OOI
                   l.S. Environmental Protection Agency
                     Fiscal Year 2004 Annual Report
                         November 15, 2004

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November 2004

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