Fiscal Year 2003
Annual Report
U.S. Environmental Protection Agency
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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
It gives me great pleasure to present the Environmental Protection Agency's Annual Report
for FY 2003 as I begin my tenure as Administrator. Like the annual reports of other major
organizations, EPA's incorporates a set of audited annual financial statements with a summary
of the Agency's accomplishments over the past fiscal year. EPA's Annual Report is distinct,
however, because it provides a public accounting of both the results of its efforts, in terms of a
cleaner and healthier environment for the American people, and the good uses to which the
Agency has put taxpayer resources. As the newest leader of the EPA community, I take pride
in the environmental and managerial achievements described in this Annual Report and
pledge to build on them in the future.
I hope all readers of this Report will take from it a sense of the hard work that EPA has done
and continues to do on behalf of all Americans. At the same time, this Report emphasizes
other significant messages, including the importance of EPA's collaboration with state, tribal,
and local governments to bring environmental protection programs to every part of the nation.
The Report addresses also the range of resources that support EPA efforts—not just public
funding, but also scientific knowledge, environmental information, and skilled people applying
their expertise to real-world issues relevant to communities everywhere. In addition, EPA's
Annual Report helps fulfill our responsibility to inform citizens about environmental problems
and solutions, especially solutions that all of us, as citizens, can help to promote.
EPA is fortunate in its dedication to a valuable mission: to protect human health and the
environment. Thank you for your continuing interest in our work and your shared
commitment to sound stewardship of our natural resources.
Michael O. Leavitt
Administrator
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Message from the Chief Financial Officer
I am pleased to provide EPA's Annual Report for FY 2003. At the 10-year mark
following the enactment of the Government Performance and Results Act of 1993,
we are proud of our accomplishments in fulfilling its mandate. At EPA, the cycle of
planning, budgeting, program implementation, performance measurement, and annual
reporting is producing valuable results. Working with our partners in state, tribal,
and local governments, we manage the nation's environmental programs effectively
and efficiently. Our Annual Report describes these partnerships, highlighting the
environmental outcomes of our collaboration, and provides a public accounting of
EPA's use of taxpayer resources in the form of audited financial statements. We hope
all readers—members of the public as well as our partners and stakeholders in other
federal agencies, Congress, OMB, industry, and the environmental community—will
find this Annual Report useful and informative. We have endeavored to make it more
timely, too, by working closely with our colleagues in EPA's Office of Inspector General
to accelerate its preparation ahead of the government-wide schedule and publish it
only 8 weeks after the close of the fiscal year.
Results are central to the President's Management Agenda, and EPA has made a number
of advances this year in support of results-oriented, citizen-centered government. In
June 2003, EPA became the third federal agency to achieve a "green" results score for
Improved Financial Performance on the Executive Branch Management Scorecard.
This score is based on success in several financial management efforts. We are especially
proud of EPA's proven record of making timely and accurate financial information
available to environmental program managers, who use this information—integrated
with information about program results—to make decisions on a daily basis. This means
we can give our assurance to the public that EPA strives to deliver the best results with
the greatest efficiencies.
We always are interested in our readers' suggestions for improvements to the Annual
Report, and we welcome your ideas for making the Annual Report for 2004 more
informative and interesting. We invite you to send comments by postal or electronic
mail to the addresses provided on the inside back cover of this Report.
Thank you for contributing to the nation's efforts to bring a clean environment and
good health to all Americans.
Linda M. Combs
Chief Financial Officer
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INTRODUCTION—TABLE OF CONTENTS
Table of Contents
INTRODUCTION
Message from the Administrator i
Message from the Chief Financial Officer ii
Table of Contents iii
SECTION I - OVERVIEW AND ANALYSIS
Introduction 2
Performance Results 3
Improving Results 10
Financial Analysis 14
Sustained Progress in Addressing Management Issues 20
OIG Key Management Challenges Requiring Sustained Agency Attention 24
SECTION II - PERFORMANCE RESULTS
Goal I—Clean Air and Global Climate Change 28
Goal 2—Clean and Safe Water 47
Goal 3—Land Preservation and Restoration 59
Goal 4—Healthy Communities and Ecosystems 72
Goal 5—Compliance and Environmental Stewardship 91
Chapter 6—Support for Environmental Results 109
SECTION III - FY 2OO3 ANNUAL FINANCIAL STATEMENTS
Chief Financial Officer's Analysis 122
Principal Financial Statements 126
Summary of OIG's Audit Report 183
APPENDICES
Appendix A—Program Evaluations 192
Appendix B—Acronyms and Abbreviations 214
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Overview
and
Analysis
The U.S. Environmental Protection Agency
(EPA) has a clear mission: to protect human health
and the environment. Under this mission, the Agency
is responsible for ensuring that the nation's air is safe
to breathe, the water is clean and safe to drink, and
the land is restored and protected. In FY 2000, under
the Government Performance and Results Act
(GPRA), EPA issued its second Strategic Plan, with
10 long-term strategic goals identifying the environ-
mental results that the Agency would work to achieve
and reflecting the sound
financial and management
practices it would employ.
Since then, the Agency has
been working to sharpen
its focus on achieving
measurable environmental
results, and has revised its
Strategic Plan, as well as
EPA's supporting financial
architecture.
With the release
of EPA's revised 2003
Strategic Plan in September 2003, the Agency moved
from 10 strategic goals—including both outcome-
oriented goals, such as Clean Air, and functional or
support goals, such as Effective Management—to five
goals centered on environmental and human health
results. By directing attention to fewer outcome-
oriented goals, EPA hopes to develop effective
strategies that achieve better environmental results
and use taxpayer dollars more wisely and effectively.
EPA regional offices, for example, working with their
state and tribal partners, will be better able to
conduct regional strategic planning activities and
address regional or geographic priorities under the
Agency's five national goals.1
With this Annual Report, the Agency begins
framing its performance and results under its 2003
Strategic Plan. Discussion of FY 2003 performance
in terms of the more outcome-oriented, five-goal
structure enables the Agency to present a stronger
focus on achieving mission results of protecting
human health and the environment. EPA has cross
walked its FY 2003 Annual Performance Goals,
established in the FY 2003 Annual Plan under the
10-goal architecture of EPA's 2000 Strategic Plan, to
the new five-goal frame-
work of the 2003 Strategic
Plan. The Agency also
included a sixth chapter to
discuss annual results for
supporting programs.
The Agency is
submitting this year's
report on an accelerated
schedule of November 21,
2003, sooner than the
statutory deadline of
January 31, 2004.
Operating under this new schedule will position the
Agency to meet the statutory deadline of November
15, 2004, for FY 2004 reporting. A significant impli-
cation of the accelerated schedule is that final
performance data for several key programs were not
available in time for this report's release. As allowed
by GPRA, performance data not available at the time
of this document's publication will be reported in
EPA's FY 2004 and future Annual Reports.
This Annual Report provides an assessment of the
Agency's environmental, programmatic, and financial
performance. Building on the previous year's results,
EPA made progress during FY 2003 toward protecting
human health and the environment by using a mix of
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SECTION I . OVERVIEW AND ANALYSIS—PERFORMANCE RESULTS
tools and approaches, and by working
closely with its valued partners whose
contributions were critical to many of the
results achieved.
This report contains three sections.
Section I, Overview and Analysis, provides
a broad picture of EPA's environmental
and fiscal performance during FY 2003.*
It also summarizes EPA's accomplishments
in financial management
and in addressing
programmatic
management challenges
and audit management
activities for FY 2003, as
well as progress toward
enhancing the Agency's
capacity for achieving
results. 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 new
goals. It also presents
progress toward meeting the Annual
Performance Goals established in EPA's
FY 2003 Annual Plan. Section III,
FY 2003 Audited Financial Statements,
summarizes EPA's financial activities and
achievements and presents the Agency's
annual financial statements, which have
been independently audited by EPA's
Inspector General.
EPA CHANGED
2000 Strategic Plan
STRATEGIC GOALS IN FY 2003
an & Safe Wa
3. Safe Food
4. Preventing
5. Better Waste Management
6. Reduced Global & Cross Border
Environmental Risks
7 Quality Environmental Informatior
8. Sound Science
9. A Credible Deterrent to Pollutior
Effective Management
I. Clean Air & Global
Climate Change
2. Clean & Safe Water
3. Land Preservation
& Restoration
4. Healthy Communitie
& Ecosystems
5. Compliance &
Environmental
Stewardship
* The Overview and Analysis also addresses requirements for a "Management's Discussion and Analysis" of the
annual financial statements included in EPA's FY2003 Annual Report. Because the FY2003 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. For a discussion of the Agency's performance goals and
results, refer to Section II. Financial statements, along with a discussion of systems, controls, and legal
compliance, are presented in Section III. Environmental Accomplishments
Performance Results
Building on FY 2002 accomplishments,
EPA and its partners made significant
progress during FY 2003 toward protecting
the nation's air, water, and land. This section
describes key environmental and program
results, summarizes the Agency's performance
in meeting its FY 2003 annual performance
goals, and discusses some of EPA's current
performance issues and concerns.
ENVIRONMENTAL ACCOMPLISHMENTS
Clean Air and Global Climate Change. In
FY 2003, an additional 6.8 million people in
the United States are now breathing healthier
air. Work by EPA and its partners through
FY 2003 led to decreased emissions of the six
principal air pollutants for which EPA has
established National Ambient Air Quality
Standards under the Clean Air Act: carbon
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
EPA's NEW FY 2003 EMISSION STANDARDS
FOR NON-ROAD DIESEL ENGINES WILL:
Annually Reduce:
• 825,000 tons of nitrogen dioxide.
Annually Prevent More Than:
• 9,600 premature deaths.
• 8,300 hospitalizations.
• 16,000 heart attacks.
• 5,700 children's asthma-related emergency
room visits.
• 260,000 respiratory problems in children.
Nearly z
ays lost du
monoxide, ground-level ozone, particulate
matter, nitrogen dioxide, sulfur dioxide, and
lead. For example, 92 percent of the geo-
graphic areas in the country that were not
meeting the clean air standard for carbon
monoxide are now measuring clean air. The
same is true for 49 percent of those areas that
were not previously meeting the 1-hour
ozone standard and 81 percent of the areas
that were not attaining the particulate matter
(PM10) standard.
In FY 2003, EPA proposed new emission
standards for non-road diesel engines used in
construction, agricultural, and industrial
operations. This proposal will reduce
emission levels for particulate matter and
nitrogen oxide by more than 90 percent, and
eliminate 99 percent of the sulfur content in
fuel used by these engines, resulting in signif-
icant health benefits.2
In addition to the six common air
pollutants, the Clean Air Act identifies 188
toxic air pollutants to be regulated. In FY 2003,
EPA issued rules regulating 29 major sources
of toxic air pollutants. The Agency estimates
that when fully implemented, these rules will
prevent more than 140,000 tons of toxic air
emissions each year.
A/ater. In FY 2003, the
nation maintained the quality of its drinking
water, sustaining gains made in the past
decade. EPA estimates that as a result of its
support for state and tribal drinking water
programs in FY 2003, the percentage of the
population served by community water
systems receiving drinking water that meets
existing health-based standards remained
high. The nation also increased its knowledge
of the quality of fresh waters in new biennial
reporting from states and tribes.
During FY 2003, for the first time, 13
states were able to identify specific water
where all fish are safe to eat. This was due in
part to increased monitoring of the health of
the nation's surface waters. In calendar year
2002, 15 percent of river miles (representing
544,036 miles) and 33 percent of lake acres
(representing 13,413,763 acres) were under
one or more advisories not only for risks to
the general population, but also to recre-
ational and subsistence fishers, and sensitive
sub-populations such as pregnant women,
nursing mothers, and children. State and
local agencies also reported that beaches
were open 95 percent of the beach days (the
number of days in a specific beach's recre
ational season) during calendar year 2002.
Land Preservation and Restoration. EPA
continues to make substantial progress toward
cleaning up contaminated lands and safely
managing hazardous waste. In FY 2003, the
Agency achieved its performance goal of
completing the cleanup ("construction
completes") of and reducing the risks posed to
human health at 40 sites on the Superfund
National Priorities List (NPL). Since the
program's inception, the Agency has
completed all remedial cleanup construction
activities at 886 Superfund sites, or 58 percent
of the sites on the NPL. This work, and that
at non-NPL sites, has included providing
alternative drinking water supplies to nearly
613,000 people to protect them from
contaminated groundwater and surface water,
and relocating more than 33,000 people in
instances where contamination posed the
most severe immediate risk.
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SECTION I . OVERVIEW AND ANALYSIS—PERFORMANCE RESULTS
In FY 2003, EPA met its targets of
197 and 158 for achieving intermediate
environmental indicators for the Resource
Conservation and Recovery Act's (RCRA's)
Corrective Action Program. Adequate
controls were put in place to prevent human
exposures to hazardous waste at an additional
230 facilities, and migration of contaminated
groundwater is under control at 175 facilities.
As a result, actual or potential threats from
releases of hazardous wastes have been
reduced at nearly 73 percent of the 1,174
high priority RCRA corrective action facili-
ties and migration of contaminated
groundwater has been controlled at 61
percent of those facilities.
The Agency surpassed its annual
performance goal for the number of hazardous
waste management facilities operating with
approved permits. These permits require that
controls be put in place to prevent dangerous
releases to air, soil, and groundwater at facili-
ties. Based on preliminary results for FY 2003,
83.2 percent of the nation's management
facilities have approved controls in place, or
6 percent more facilities than the Agency's
FY 2003 annual goal.
Healthy Communities and Ecosystems.
Throughout FY 2003, EPA achieved signifi-
cant results toward preventing or reducing
risks in communities from chemicals,
microorganisms, and pesticides. For example,
in FY 2003, EPA continued to make progress
toward its goal of evaluating the potential
risk of 20 chemicals to which children have a
high likelihood of exposure.3 EPA and other
federal partner actions have also made
significant progress toward the national goal
of eliminating childhood lead poisoning by
2010. Specifically, the incidence of children
1 to 5 years of age with elevated blood lead
levels has been reduced approximately by half
in the last decade.4 Newly released Centers
for Disease Control data from 1999 and 2000
show the number of children younger than
6 years old with elevated blood lead levels has
fallen to approximately 400,000, a decrease
from an estimated 900,000 for the period
1991 through 1994. Through reviewing risks
posed by older pesticides, EPA has eliminated
or restricted many uses of organophosphate
pesticides in and around the home, thus
reducing exposure to children of chemicals
that affect the functioning of the nervous
system by 60 percent.5
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
In FY 2003, EPA also worked to build
community capabilities to make sound envi-
ronmental and human health decisions.
Under its Brownfields Program, the Agency
provided $118.6 million in grants to states,
tribes, local governments, and stakeholders to
assess, clean up, and redevelop brownfield
properties. Since 1995, EPA has assessed a
total of 4,300 brownfield properties. Property
assessment and cleanup completed under
the Brownfields Program are the first steps
towards reuse and redevelopment.
The cleanup and redevelopment of these
properties enables the leveraging of $5.1 billion
in public and private investments, as well as
the leveraging of 25,000 jobs.6
EPA continues to make progress towards
its goal of protecting and restoring 250,000
acres of estuarine habitat by 2008, with more
than 118,000 acres protected and/or restored
in FY 2003.' EPA has also made progress in
protecting and restoring ecosystems in the Gulf
of Mexico, the Great Lakes, and Chesapeake
Bay. A cumulative total of 6,662 acres of
coastal and marine habitat has been restored or
protected in the Gulf of Mexico, exceeding the
target for FY 2003 and contributing toward a
10-year goal of 20,000 acres. Levels of the most
critical, persistent pollutants around the Great
Lakes (including mercury, polychlorinated
biphenyls (PCBs), dioxin, benzo(a)pyrene, and
hexachlorobenzene) continue to decrease, as
part of a downward trend in toxic substances
in the Great Lakes over the last 15 years. By
FY 2003, more than 89,500 acres of submerged
aquatic vegetation (SAV) have been measured,
which is an indicator of the health of the
Chesapeake Bay. This represents a strong
recovery of SAV in the middle bay, and
significant progress towards the goal of 185,000
acres by 2010.8
During FY 2003, EPA made progress
in addressing cross-border and global
environmental issues as well. For example,
the number of residents along the U.S.
Mexico border who were protected against
health risks, beach pollution, and damaged
ecosystems as a result of improved water and
wastewater sanitation systems has increased
by 152,000 for a cumulative total of approxi-
mately 872,000 residents. Also, in
cooperation with the New Independent
States (NIS) of the former USSR, EPA and
its partners have eliminated Russia's produc-
tion of ozone-depleting substances and have
helped prevent the deterioration of drinking
water supplies for 700,000 people in the NIS.
Sound science must be the basis of
standard-setting and guide EPA in identifying
and addressing emerging issues, as well as
updating and advancing its understanding
of long-standing human health and
environmental challenges. In FY 2003, EPA
completed a draft report on the condition of
the nation's estuaries that provides the first
scientifically defensible baseline from which
to measure trends in the health and status of
these vital ecosystems.9 In addition, in
FY 2003 EPA reported on the performance
and cost of control technologies to reduce
emissions from coal-fired utility boilers, identi-
fied as one of the most significant contributors
of mercury to the air. This information will
support the development of regulations that
will cost-effectively reduce human health and
environmental risks from mercury.10
Compliance and Environmental
Stewardship. In FY 2003, EPA prevented or
eliminated the release of millions of pounds
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SECTION I . OVERVIEW AND ANALYSIS—PERFORMANCE RESULTS
of pollutants through programs that promote
and monitor compliance with environmental
laws, pollution prevention efforts, and envi-
ronmental stewardship. EPA also finalized
several enforcement actions that significantly
advanced environmental and human health
protection by reducing 633 million pounds of
pollutants. Further, in FY 2003, 848 facilities
disclosed and corrected violations of environ-
mental regulations, due to EPA's compliance
incentive policies.
In FY 2003, EPA's Green Chemistry
Challenge Awards Program continued to
make significant progress toward reducing the
amount of toxic substances and waste released
into the environment. From the program's
creation in 1996 through the end of FY 2003,
326 million pounds and 7 million gallons of
hazardous chemicals and solvents have been
eliminated from the environment, including
chlorofluorocarbons; volatile organic solvents;
persistent, toxic, and bioaccumulative
chemicals and solvents; and very corrosive,
and toxic chemical substances. For example,
in FY 2003 under the Agency's Hospitals for
a Healthy Environment Program, 1,062
hospitals voluntarily eliminated mercury use
and reduced hospital waste containing
hazardous substances by 50 percent.
Based on the most recent available
Toxics Release Inventory data, industry is
releasing 42 percent less priority chemicals in
hazardous waste than in 1991. There are 30
priority chemicals contained in hazardous
waste that EPA's National Waste
Minimization Partnership Program focuses
on reducing or eliminating through waste
minimization. They include 27 persistent,
bioaccumulative, and toxic organics and
cadmium, lead, and mercury.11 The reduction
represents substantial progress toward
meeting EPA's longer-term goal of reducing
priority chemical releases by 50 percent by
FY 2008. Further, in FY 2003, EPA obtained
final commitments from industry for the
voluntary elimination of nearly 13,000 pounds
of priority chemicals in wastes annually,
through the Agency's Waste Minimization
Partnership Program. EPA has also obtained
commitments for an additional 151,000
pounds of priority chemicals and 114 grams
of dioxin annually, pending final approval.
THE PRESIDENT'S
MANAGEMENT
AGENDA
EPA recognizes
that managing its
organization and its
resources effectively
is a critical part of
achieving long-term
environmental
results. In FY 2003,
the Agency made significant progress in
implementing the President's Management
Agenda (PMA) reforms for Strategic
Management of Human Capital,
Competitive Sourcing, Expanding
E-Government, Improved Financial
Performance, and Budget and Performance
Integration.12
EPA also continued to strengthen its
oversight of Agency grants, which comprise
slightly less than half of EPA's budget, to
ensure achievement of the highest fiduciary
standards. In FY 2003, the Agency developed
its first long-term Grants Management Plan,
which provides the framework for more effec-
tive and efficient management, including
improving competition and linking grant
work plans to the Agency's mission results of
protecting human health and the environ-
ment. Of particular note, EPA increased the
percentage of grants awarded to nonprofit
recipients subject to the Agency's grants
competition policy by threefold in FY 2003—
75.4 percent, as compared to 24 percent
during FY 2002.
Effectively managing its information
resources is important not only to EPA, but
also to the Agency's federal, state, local, and
tribal partners. EPA made significant progress
during FY 2003 toward achieving its goal of
an information exchange network that will
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
EPA CONTINUES STEADY PROGRESS TOWARD PMA GOALS
(As of September 30, 2003)
INITIATIVE
STATUS
PROGRESS
HIGHLIGHTS
Human Capital
•
Red
•
Green
-Made progress in aligning Agency human capital activities with
Agency strategic planning and budgeting processes.
-Completed draft of Investing in Our People II, EPA's Strategy for
Human Capital, 2003-2008.
-Included Human Capital Cross-Goal Strategy in EPA's 2003 Strategic
Plan.
-Pilot tested National Strategic Workforce Planning System.
-Continued implementing EPA's comprehensive Workforce
Development Strategy
-Developed draft human capital accountability plan.
Competitive
Sourcing
Red
Green
-Created EPA Competitive Sourcing Council to set course for
Agency effort.
-Established Agency Competitive Sourcing Office to implement the
initiative, reporting directly to the Agency's Competitive Sourcing
Official.
-Completed three competitions with other cost comparisons underway
-Received "green" progress scores for each quarter in FY 2003.
Expanded E-
Government
Yellow
•
Green
-As federal agency lead, established the project management office
and launched Regulations.gov, providing online access to federal rule-
makings for public comment.
-Active participant in 14 of 25 federal e-Gov projects. These 14
projects cover 3 of the 4 project categories.
-Completed two significant components of EPA's Modernization
Blueprint, which created the necessary infrastructure for the
Agency's target architecture.
-Secured and verified 94 percent of EPA's operational IT systems.
Improved
Financial
Performance
Green
Green
-Earned "green" status score, one of only three agencies to do so.
-Achieved greater financial accountability by resolving all material
weaknesses and maintained less than I percent erroneous payments
rate.
-Tripled grants awarded under competition policy from 24 percent in
2002 to 75.4 percent in 2003.
-Developed new reporting tool to increase real-time access to finan-
cial and performance data to support day-to-day decision making.
Budget and
Performance
Integration
Yellow
Green
-Issued revised 2003 Strategic Plan with five outcome-oriented goals
focused on results and included social costs and benefits.
-Developed new financial architecture to plan and track resources
and performance data across the goals in the 2003 Strategic Plan,
and further integrate planning, budgeting, and accountability
-Received "green" progress scores for each quarter of FY 2003.
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SECTION I . OVERVIEW AND ANALYSIS—PERFORMANCE RESULTS
make environmental information held at all
levels of government accessible to all users.
Through the exchange network program,
EPA, the states, and tribes are migrating from
old, inaccessible information systems to
digital, high-quality, integrated air, water, and
waste information systems. These new systems
have "network portals" through which data
can be exchanged over the Internet, among
EPA, states, tribes, the regulated community,
and the public. As a result of the progress
made on the network this year, 49 states are
now reporting electronically through EPA's
network portal, and the number of users
(states, tribes, industry) of the portal
increased by 113 percent (from 7,647 at the
end of FY 2002 to 16,335 in FY 2003).
SUMMARY OF PERFORMANCE DATA
In FY 2003, EPA met 73 percent of the
annual performance goals (APGs) for which
data are provided in this report. (EPA had
committed to a total of 64 APGs in its
FY 2003 Annual Plan; however, because data
for 23 of these APGs will not be available
until later in FY 2004 or beyond, they are not
included in these tallies.) EPA also made
significant progress toward the 11 APGs that
were not achieved in FY 2003. Figure 1
provides an update of results for prior years;
charts presenting EPA's performance results
for each of the Agency's FY 2003 APGs are
provided with each chapter in Section II.
PERFORMANCE ISSUES AND
CONCERNS
Despite the best efforts of EPA and its
partners, the Agency was not able to meet all
planned targets for FY 2003. EPA did not
meet 11 of the 41 FY 2003 APGs for which
performance data are currently available.
However, the Agency does not expect the
shortfall in meeting these APGs to compro-
mise progress toward achieving its long-range
goals and strategic objectives. The Agency is
considering the various causes of these short-
falls as it adjusts APGs and program strategies
Figure I: EPA's Updated Performance
Results for Prior Years
•5
100
80
60
40
20
1999
2000
2001
2002
Years
During FY 2QG3 final performance results data became available for a number of APGs
from prior years: nine for FY 2002, seven for FY 2001, seven for FY 2000, and four for
FY 1999 APGs. The information above includes these additional results. Delays in reporting
cycles and targets set beyond the fiscal year continue to affect four FY 2002 APGs, two
FY 2001 APGs, two FY 2000 APGs, and three FY 1999 APGs.
for FY 2004 and beyond. The performance
data charts in Section II provide more
complete information on missed targets. The
remainder of this section describes several
examples of performance goals EPA did not
meet, and what the Agency is doing to meet
the target in the future.
Under the Agency's Clean Air and Global
Climate Change Goal, EPA had anticipated
that seven areas would be redesignated to
attainment of the ozone standard in FY 2003,
but due to delays in the redesignation process
for many areas, the Agency fell short of its
target and achieved only five. Many areas are
awaiting the 8-hour designation decisions to
develop clean air plans to meet attainment.
In FY 2004, EPA will have information to
determine how many areas are monitoring
clean air under the 1 -hour ozone standard.
EPA and states continue to work together to
ensure progress in meeting the present ozone
standards.
Under the Agency's Clean Water Goal,
EPA missed its targets for issuing National
Pollutant Discharge Elimination System
(NPDES) permits for major point sources as
well as pollutant loading reductions. NPDES
permits help reduce or eliminate discharges
into the nation's waters of inadequately
treated wastewater from municipal and
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
industrial facilities and of pollutants from
urban stormwater, combined sewer overflows,
and concentrated animal feeding operations.
In FY 2003, permits issued covered 84 percent
of the targeted 90 percent for major point
sources. While EPA and
states met the goal for
issuing minor permits, the
continuing challenge for
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, designed to
address the permit backlog
and focus resources on attaining the
most significant environmental results. In
FY 2003, 2,200 million pounds of industrial
discharges of pollutants to the nation's
waters were eliminated, which failed to
meet the target of 2,500 million pounds.
The pollutant loadings reduction target
was not met due to a delay in issuing a key
permit in FY 2003, which will be issued in
FY 2004.
NO
SWIMMING
OF
HtALTH DEPT
In FY 2003, EPA anticipated that the
Great Lakes ecosystem components would
improve, including progress on fish contami-
nants, beach closures, air toxics, and trophic
status. Although EPA and state partners have
made progress in removing
contaminants from the
Great Lakes ecosystem,
concentrations of certain
contaminants in Lake Erie
and Lake Superior fish are
no longer decreasing. Other
significant challenges to the
Great Lakes that EPA and
partners are attempting to
address include an apparent
increase of phosphorus lev-
els in Lake Erie in FY 2003
of 18.3 Ug/1 from a targeted
10 Ug/1 and continuing entry of non-native
species (e.g. zebra mussels). EPA is developing
positive working relationships with the
environmental community to establish effec-
tive programs, coordinate authorities and
resources, report on progress, and hold forums
for information exchange and collective
decision making. This will ensure the
protection of the Great Lakes and the
achievement of the objectives of the Great
Lakes Water Quality Agreement.
mproving Results
With the release of its revised Strategic
Plan in FY 2003, the Agency accomplished an
important and far-reaching milestone. The
Strategic Plan contains five outcome-oriented
strategic goals and supporting objectives and
sub-objectives that focus on environmental
results and reflect the work of the EPA
regional offices, the states, and tribes. In
FY 2003, the Agency also established a new
financial architecture under the goal/objective
framework of the new Strategic Plan.
In FY 2003, EPA improved its capacity
for managing for results in other key ways as
well. Agency program and regional offices
worked with the Environmental Council
of the States (EGOS) on strengthening the
alignment between Agency and state
planning, budgeting, and accountability
processes. EPA also improved its ability to
conduct and apply the results of program
evaluations, track and measure performance,
address environmental data issues, and
anticipate future trends and issues.
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SECTION I . OVERVIEW AND ANALYSIS—IMPROVING RESULTS
STRENGTHENING PARTNERSHIPS
Many of the Agency's FY 2003
performance results discussed in Section II
would not have been accomplished without
strong participation by and support from the
Agency's federal, state, and tribal partners.
Over the past 3 decades, EPA has delegated
or authorized primary responsibility to states
for implementing many day-to-day program
activities, such as issuing permits, conducting
compliance and enforcement programs, and
monitoring environmental conditions. As in
previous years, EPA continued to collaborate
closely with states and tribes and is committed
to strengthening vital partnerships with such
organizations as EGOS and the Tribal Caucus.
For example, to increase the role states and
tribes play in the Agency's annual planning
and budgeting, EGOS and tribal representa-
tives attended EPA's FY 2005 Annual Planning
Meeting and presented their respective
recommendations for the Agency's FY 2005
budget priorities. Similarly, during FY 2003,
EPA regional offices consulted with states and
tribes in developing the regional strategies
that will contribute to achieving national
objectives in the 2003 Strategic Plan.
In addition to soliciting state input and
participation in its annual planning processes,
EPA worked closely with EGOS and other
partner organizations in FY 2003 in finalizing
the 2003 Strategic Plan. EPA requested and
carefully considered all of the comments it
received at each stage of developing the plan,
from discussion on the strategic goals and
objectives to comments on the full-text draft.
For example, in FY 2003, EGOS and other
stakeholders participated in a meeting to
discuss the goals and desired environmental
results the Agency wants to achieve in the
coming years. EPA's regional offices also
conducted outreach with states and tribes to
obtain their views on their unique issues and
problems, which were considered by the
Agency in drafting the final document.
Additional input was sought in two formal
rounds of review of the draft strategic plan, in
December 2002 and March 2003.
In FY 2003, EPA and EGOS convened a
joint workgroup to identify and implement
improvements to EPA's planning, budgeting,
and accountability processes. The workgroup
has focused on improvements in two primary
areas: better alignment of EPA's planning and
budgeting process with state processes, and
refinement of the Performance Partnership
Agreement process. The input from this joint
workgroup has already lead to improvements
in EPA processes, and has significantly
enhanced the Agency's FY 2005 planning
and budgeting process by fostering increased
state involvement.
During FY 2003, EPA also collaborated
with its partners in many programmatic areas.
Agency support ranged from providing
important environmental information to
key decision makers, to designing and
implementing environmental programs. For
example, in FY 2003, EPA, the National
Oceanic and Atmospheric Administration,
the U.S. Geological Survey, and the Delaware
River Basin Commission developed partnerships
with 24 coastal states to monitor the health
of their coastal resources. In addition, in
April 2003, EPA announced the creation of
the "Clean School Bus USA Program"—a
new national partnership with industry,
communities, and local governments designed
to minimize air pollution caused by school
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
buses. The program encourages local efforts to
eliminate unnecessary school bus idling,
install effective emission control systems on
new buses, and replace the oldest school buses
in a fleet. Also, in FY 2003, EPA worked with
the City of Chicago and several locomotive
companies to implement a voluntary program
to reduce locomotive idling emissions. This
project examined both the actual emission
reductions (estimated at 90 percent) for
pollutants such as nitrogen oxides, particulate
matter, hydrocarbons, and carbon monoxide,
as well as the market potential of the locomo-
tive idle reduction technology. EPA will use
this information to develop guidance on how
states can take credit for these programs as
part of their air quality planning process.
In addition, tribes continued to work
with EPA to develop their own regulatory
infrastructure and implement their own regu-
latory programs. In FY 2003, the St. Regis
Mohawk Tribe submitted its Tribal Air
Implementation Plan to the Agency for
review so the tribe could establish a minor
source permit program; the Nez Perce Tribe
developed, and is implementing, a smoke
management plan to address and manage
grass burning on their reservation; and the
Navajo Nation and the Southern Ute Tribe
are both developing permitting programs
under the Clean Air Act to enable them to
regulate major sources of air pollution on
their reservations.
USING PROGRAM EVALUATION
EPA uses program evaluations and analyses
to inform management decisions, enhance
organizational learning, promote effective
strategies, and improve environmental results.
In FY 2003, the Agency continued to build its
capacity to conduct program evaluations in
anticipation of the use of the Administration's
Program Assessment Rating Tool (PART)
to evaluate, for FY 2004 and 2005, 20 key
programs that account for almost half of the
Agency's budget. The PART is an evaluation
and accountability tool that the Office of
Management and Budget (OMB) and federal
agencies use to determine the strengths and
weaknesses of federal programs, with a
particular focus on program effectiveness." In
FY 2003, EPA used the results of these program
assessments to set priorities and make funding
decisions that were reflected in the Agency's
FY 2005 budget request. EPA is continuing to
prepare more focused and outcome-oriented
performance measures, as identified in the
PART assessments. For example, as a result of
the PART assessments, the Agency has devel-
oped multi-year Performance Measurement
Development Plans for air toxics risk reduction,
wetlands, safe drinking water in tribal lands,
surface water quality standards in the Mexico
Border region, site cleanup, and land reuse.
To complement its outcome-based
environmental performance measures, EPA
also focused on developing efficiency measures
for programs that have undergone PART
assessments. In FY 2003, the Agency began
developing efficiency measures to better assess
how program results relate to the resources
invested or time spent to achieve those
results. For example, EPA developed an
efficiency measure in its Enforcement
Program to track the pounds of pollutants
reduced against the time EPA staff spend in
enforcement activities. Under the Pesticides
Program, EPA will be tracking the average
number of days that it takes to make registra-
tion decisions for conventional and new
reduced-risk pesticide ingredients.
Other types of program evaluations were
conducted as well. In FY 2003, EPA completed
an evaluation of the partnership between EPA
Region 8 and the National Park Service,
which found that the preliminary goals of
the partnership have been met. The report
recommended that the partnership map its
goals to performance measures and enlist
broader institutional support for a scaled-up
effort. In the human resources area, an
evaluation found that the EPA Intern Program
is effectively hiring a diverse group of high-
potential employees. The evaluation provided
findings and recommendations on all phases of
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SECTION I . OVERVIEW AND ANALYSIS—IMPROVING RESULTS
the program, including recruitment and hiring;
activities during the 2-year development pro-
gram (training, rotations, development); and
retention after the program is complete.14
Appendix A contains descriptions of program
evaluations completed in FY 2003.
IMPROVING
ENVIRONMENTAL
INDICATORS,
PERFORMANCE
MEASUREMENT,
AND DATA QUALITY
In FY 2003, to help
assess the current state
of the environment
and provide a baseline
of environmental
information for
measuring future
performance, EPA
issued its first Draft
Report on the
Environment. The
report describes what
EPA does and does not
know about the current
state of the environment at the national level.
The report also describes draft measures—or
environmental indicators—that can be used
to track the status of the environment and
human health over time. This information
and the Agency's continued efforts to refine
it will be critical to EPA's strategic planning
efforts. Information on key environmental
indicators will inform priority setting and help
EPA to focus its resources on the areas of
greatest concern, manage its work more
effectively to achieve measurable results, and
report more clearly on progress in achieving
environmental and human health goals to the
American people.
Also in FY 2003, EPA continued to set
annual performance goals and measures that
are increasingly focused on environmental
outcomes, instead of activity-based outputs.
The Agency increased the percentage of
annual performance goals that are classified
as environmental or intermediate outcomes
to approximately 39 percent of the total in
the FY 2004 Annual Performance Plan
(published in FY 2003)—up from 35 percent
in the previous year's plan. Likewise, the
percentage of annual
performance
measures classified
as outcomes grew
to approximately
51 percent, up from
40 percent the
previous year.
Finally, during
FY 2003 the Agency
continued to
improve its ability
to ensure that the
performance and
financial data it
collects and uses
are reliable and
complete. EPA
worked to detect
and correct errors in
environmental data,
standardize report
ing, and exchange and integrate electronic
data and data quality information among its
federal, state, and local data-sharing partners.15
For more information on data quality for
assessments of FY 2003 performance measures,
visit http://www.epa.gov/ocfo/finstatement/
2003ar/2003ar.htm.
CONSIDERING FUTURE TRENDS AND
LOOKING AHEAD TO FY 2OO4
EPA realizes that today's environmental
issues are far more complex than those of 20
or 30 years ago, and that new areas of focus
will challenge its ability to assess and measure
its performance. The environmental problems
the Agency faces today are difficult to define,
and possible solutions are more difficult to
identify than before. Population growth, and
the resources that are consumed to sustain
this growth, are altering the Earth in new
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
ways, and rapid scientific advances and
technological developments pose new issues
as well as important opportunities for human
health and the environment.
In FY 2003, the Agency held its first
competition to promote the development
and use of futures analysis at EPA. Futures
analysis represents an effort to think years
ahead—to examine how to better accommo-
date emerging driving forces that are likely to
transform how and what we do. The purpose
of the competition is to build a knowledge
base and skill level that will enable EPA and
its partners to incorporate futures analysis
into the Agency's annual, strategic, and long-
term planning processes. This competition
was initiated, in part, in response to numerous
recommendations from the National
Advisory Council for Environmental Policy
and Technology, the EPA Scenario Project,
and the Agency's senior-level Managing for
Improved Results Steering Group, among
others, to develop and improve environmental
foresight capacity at EPA. Six Agency
program offices and 7 regional offices, either
by themselves or in teams, submitted 20 high-
caliber proposals to compete for support in
undertaking futures analysis projects. While
the proposals addressed a wide range of ideas
and issues that the Agency will face in the
future, the two selected for support will be
identifying environmental impacts of and
regulatory issues regarding hydrogen fuel
cells, and analyzing the potential impacts of
different land-use forms on agriculture.
In looking ahead to FY 2004, the Agency
expects to improve further the use of
performance information in its planning and
budgeting activities. In FY 2004, the Agency
will operate under the five-goal 2003 Strategic
Plan and account for its resources at a finer
level of detail, by programs and projects. The
environmental indicator information con-
tained in the Draft Report on the Environment
will inform Agency planning and budgeting
decisions, and PART will be used to assess
the effectiveness of an additional 20 percent
of the Agency's resources and programs in
the development of EPA's FY 2006 budget.
EPA will continue its work with its state
partners on improving the alignment of state
and EPA planning and budgeting processes,
and EPA regions and states will finalize
strategies in regional plans and use them
as the basis for setting annual performance
commitments to achieve Agency
environmental goals and objectives. This
streamlined approach is expected to reduce
transaction costs for the EPA and states
and to enhance performance.
Financial Analysis
EPA is proud to be one of only three
federal agencies to earn a status score of
"green" for Improved Financial Performance
on the President's Management Agenda.
Agency efforts to achieve greater financial
accountability included resolving all previously
reported material weaknesses, maintaining a
less than 1 percent erroneous payments rate,
and improving access to timely cost accounting
information for program management. The
financial statements provided in Section III, a
snapshot of EPA's financial position at the end
of FY 2003, are another important aspect of
Figure 2: EPA Financial Trends
Dollars in Billions
•M VI W -W
O\ vo SJ Ln
-
*i- Budgetary Resources Obligations - • - Total Outlays
12.3 12.2
9.5 9.4
8.9 9'° _ - -
._ •"-- 8.8
^--"-"sT 8.2 8.4
74
1999 2000 2001 2002 2003
Years
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SECTION I . OVERVIEW AND ANALYSIS—FINANCIAL ANALYSIS
Figure 3: Government Net Outlays
by Selected Agencies
$20 r
g $15
o
CD
~ $10
_ea
$5
$0
Figure 4. FT 2003
Obligations by Appropriation
(Dollars in Thousands)
Appropriation
State & Tribal
Assistance Grants
All Other
Superfund
TOTAL
Obligations
$3,902,081 (41.7%)
$3,909,840 (41.8%)
$ ,550,401 (16.5%)
$9,362,322(100.0%)
EPA Commerce State Interior NASA Energy
Agencies
Agency accountability. These financial statements
are prepared in accordance with established federal
accounting standards and are audited by EPA's
Inspector General. In addition to the financial state
ments, other views of how the Agency spends its
resources are depicted in the following discussion.
ERA RESOURCES: I 999 TO 2OO3
Figure 216 depicts EPA's aggregate budgetary
resources (congressional appropriations and some
Agency collections), obligations (authorized commit-
ment of funds), and total outlays (cash payments) for
each of the last 5 fiscal years. The Statement of
Budgetary Resources in Section III provides more detail
on the makeup of the Agency's resources.
Figure 5: Costs by Funding Source
$8
$7
$5
CO
$3
$2
$1
$0
I.7
I.6
7.2
6.3 6.4 6.3
D. I
I.7 • I.7 I.7
1999 2000 2001 2002 2003
Years
EPA FY 2OO3 SPENDING
As published in the Treasury Department's annual
Statement of Receipts and Outlays, EPA's net outlays
are relatively small compared to those of other federal
agencies and the entire federal government. A
comparison of EPA with selected cabinet-level
departments is displayed in Figure 3.
FY 2003 obligations incurred in connection with
EPA's activities are presented by appropriation in
Figure 4. Figures 5 and 6 present EPA's costs (expenses
for services rendered or activities performed) by funding
source and by cost category.17 The difference between the
costs depicted in these graphs and the Statement of Net
Figure 6: FY 2003 Cost Categories
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Figure 7: FY 2003 Major Grant Categories
Superfund
3.6%
Costs in Section III is that net
costs reflect a reduction for any related
offsetting income, such as Superfund cost
recovery receipts.
Grant programs comprise more than
55 percent of EPA's costs. As depicted in
Figure 7, nearly half of the Agency's grants
are awarded under two state revolving funds
that support the Agency's Clean and Safe
Water Goal. Other major EPA environmental
grant programs include assistance to states
and tribes, consistent with EPA's authorizing
statutes, and research grants to universities
and nonprofit institutions.
HOMELAND SECURITY SPENDING
EPA's actions regarding homeland
security are described in Goal Chapters 2, 3
and 4 in Section II of this report. During
FY 2003, the Agency obligated a total of
$118 million18 for homeland security
activities—preparedness, response,
mitigation, and recovery. Most of these
resources have been devoted to preparedness
($100.1 million), which addresses many
potential kinds of terrorism incidents.
Response covers the immediate actions
taken in response to terrorist attacks.
Mitigation is action taken to reduce the risk
and potential damage caused by future
events, and recovery constitutes actions
to rebuild and otherwise return to normal
(refer to Sustained Progress in Addressing
Management Issues available at
http://www.epa.gov/ocfo/finstatement/2003ar/
2003ar.htm for further discussion).
SUPERFUND COST RECOVERY
The Superfund Program was enacted
under the Comprehensive Environmental
Response, Compensation, and Liability Act
(CERCLA) of 1980 to address public health
and environmental threats from abandoned
toxic waste dumps and releases of hazardous
substances. CERCLA also established the
Hazardous Substance Response Trust Fund,
now known as the Hazardous Substance
Superfund (Trust Fund), to finance the
remediation of abandoned hazardous waste
sites and emergency responses to chemical
spills and other incidents.
The Trust Fund was largely funded
by excise taxes charged on crude oil and
petroleum and on the sale or use of certain
chemicals, and a corporate environmental
tax levied on corporations having a taxable
annual income in excess of $2 million. The
authority to tax expired on December 31,
1995. Consequently, Trust Fund revenues
have declined over the years. Cost recoveries
(see Figure 8), fines and penalties, interest,
and transfers from the general fund currently
Figure 8: Cumulative Superfund
Cost Recoveries, 1998-2003
1998 1999 2000 2001 2002 2003
Years
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SECTION I . OVERVIEW AND ANALYSIS—FINANCIAL ANALYSIS
finance the Trust Fund. For FY 2003,
Congress appropriated the Superfund
Program $1.3 billion, of which $632 million
came from the general fund.
Under CERCLA Section 122(b)(3), EPA
may retain and use the proceeds received
under settlement agreements to conduct
response actions at Superfund sites. Funds
received under these settlements are placed
in interest-bearing, site-specific special
accounts. Having the authority to combine
both past and future cost settlement amounts
has increased the amount of resources avail-
able in special accounts to fund EPA-lead site
responses and to reimburse responsible parties
for response work performed at sites pursuant
to a settlement agreement with EPA. As of
September 30, 2003, EPA had established
343 special accounts with $1.1 billion in
receipts. These accounts earned an additional
$175.6 million in interest.19
FINANCIAL MANAGEMENT
PERFORMANCE
Internally EPA continues to track
finance office and Senior Resource Officials'
(SROs') performance in key financial man
agement areas. Semiannually, EPA measures
finance office performance for processing
payments, reconciling cash, and managing
accounts receivable. Annually, the Agency
Figure 9: Financial Management
Performance Measures
100
80
60
40
20
98.7%
- 85.0%
32.9*
58.2%
-•— Electronic Salary
Payments
Electronic Travel
Payments
• • - Eligible Debts Referred
to Treasury
2000
2001
2002
2003
Years
measures the SROs' performance for
management of budgets, contracts, Superfund
billings, and property. In FY 2003, the
finance offices and SROs generally met or
exceeded their performance goals for these
measures. Where targets were missed,
corrective actions to improve performance
were implemented. Additionally, EPA reports
to OMB a required set of monthly and
quarterly financial indicators that measure
Agency cash reconciliation, accounts receiv-
able, and vendor payment performance.
More than 99 percent of EPA's vendor
payments were made on time; interest
penalties totaled less than a Vi percent of all
vendor disbursements. Figure 9 depicts EPA's
performance in several financial management
areas. Although only 58.2 percent of eligible
debts were referred to Treasury, almost 99.7
percent of eligible dollars were referred.
EPA made significant progress in FY 2003
in improving its financial performance by
reviewing internal controls to assess the
potential for making erroneous payments
under the State Revolving Funds managed
by the Water Program. EPA completed its
review of the State Revolving Funds in
October 2002, and continued monitoring of
the funds during FY 2003. The review
identified a very low incidence rate of
erroneous payments; specifically, less than
/4 percent for both funds. The review will be
expanded in FY 2004 to assess the potential
for significant erroneous payments in all
Agency funds and to comply with the
Improper Payments Act requirements.
INNOVATIVE ENVIRONMENTAL
FINANCING: THE ADVANTAGE OF
PUBLIC-PRIVATE PARTNERSHIPS
EPA leverages federal funds through
several innovative environmental financing
efforts that are mutually beneficial public-
private partnerships, such as the Clean Water
and Drinking Water State Revolving Funds,
the Brownfields Program, and the
Environmental Finance Program.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
State Revolving Funds (SRFs). The Clean
Water SRF (CWSRF) provides assistance
for the implementation of wastewater and
nonpoint-source pollution control and
estuaries projects. The Drinking Water SRF
(DWSRF) helps finance improvements to
water systems to sustain their technical
capacity to provide safe, affordable drinking
water to consumers. The DWSRF also funds
other state activities that support their
drinking water programs (refer to Section II,
Goal 2, for more information on the SRFs).
EPA awards capitalization grants to
states, which then make loans to municipali-
ties and other entities for construction of
infrastructure projects and implementation of
other water quality activities. State matching
funds and leveraged bond proceeds expand
the capital available in the SRFs to address
priority water quality and public health
needs. Loan repayments and earnings ensure
funding for these activities far into the future.
The flexibility and revolving nature of the
SRFs provide states with a powerful tool to
apply needed funding toward their clean
water and drinking water infrastructure
needs. These top-priority needs are estimated
in two EPA documents: the new Clean
Watersheds Needs Survey 2000 Report to
Congress20 (reporting clean water needs at
$182.2 billion, an increase of $26.6 billion
from the last Survey) and the Drinking Water
Infrastructure Needs Survey Second Report to
Congress21 (reporting $150.9 billion for
drinking water).
As of early FY 2003, CWSRFs have
converted nearly $21 billion in federal
capitalization grants into more than $43.4
billion in assistance to municipalities and
other entities for wastewater projects. In
recent years, CWSRFs have directed approxi-
mately $4 billion in annual loan assistance to
wastewater projects. On average, $115 million
of these funds are used each year to manage
polluted runoff, making the CWSRF
an effective tool in addressing nonpoint
source problems.22
The newer DWSRFs have converted $5
billion in federal capitalization grants into
more than $8.1 billion available for drinking
water assistance, of which $6.4 billion cumu-
lative has been provided. Assistance totaling
$1.3 billion was provided in FY 2003.23 In
addition to loans, $796 million DWSRF
grants have been set aside by states to fund
a variety of programs and activities that
enhance water system management and
protect sources of drinking water.
Brownfields Program. Since 1995, the
Brownfields Program has been one of EPA's
most successful public-private partnerships,
leveraging public and private investments and
creating jobs in cleanup, construction, and
redevelopment. Brownfields are abandoned,
idle, or underused industrial and commercial
properties where redevelopment or expansion
is complicated by real or perceived contami-
nation. The Small Business Liability Relief
and Brownfields Revitalization Act,
implemented in FY 2003, further promotes
brownfields redevelopment by providing
financial assistance for assessment and cleanup,
reforming Superfund liability, and enhancing
state response programs. In addition to the
activities that have been carried out in the
past, the new legislation has expanded EPA's
ability to address sites contaminated with
petroleum and permits EPA to establish grants
for brownfields cleanups.
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SECTION I . OVERVIEW AND ANALYSIS—FINANCIAL ANALYSIS
Environmental Finance Program. The
Environmental Finance Program assists the
public and private sectors in finding creative
approaches to funding environmental
programs, projects, and activities. The program
seeks to lower costs, increase investment, and
build capacity by creating strong partnerships
with state and local governments and the pri-
vate sector. It leverages its resources through
support of three distinct, but related,
components that provide financial outreach
services to these partners: the federally chartered
Environmental Financial Advisory Board
(EFAB), the university-based Environmental
Finance Center Network (EFCN), and the
online data base, Environmental Financing
Information Network (EFIN).24 A good
example of how these components work
together to leverage results is represented by
the EFIN document Paying for Sustainabk
Environmental Systems: A Guidebook of
Financial Tools. EFAB and the EFCN, working
with EPA staff, developed this working tool,
which helps environmental practitioners
in the public and private sectors find the
appropriate methods to pay for environmental
protection efforts. The Guidebook destination
on the EFIN website is accessed, on average,
more than 6,000 times a month. In addition,
hundreds of hard copies and more than 5,000
CD-ROM copies of the Guidebook have been
provided in response to specific requests.
NEW FINANCIAL MANAGEMENT
INITIATIVES
Cost Accounting. To assess how well EPA's
financial systems and information meet the
cost accounting requirements of program
managers, the Agency reviewed the needs and
capabilities in all offices. Based on the results
of this effort, the Agency created additional
coding structures within IFMS to capture and
report cost information. These efforts con-
tributed to the EPA achieving the President's
Management Agenda criterion for integrated
financial and performance management. EPA
has shown that real-time use of financial and
performance data improves environmental
performance and supports the Agency's goals
for achieving cleaner air, water, and land.
Financial information is integral to
program management,
as managers review
costs and outcomes
and seek ways to
deliver better
environmental results
with greater efficiency.
For example, EPA
offices can now track
information technology
expenses, including
related maintenance,
development, and
security costs. EPA's
Office of Prevention,
Pesticides and Toxic
Substances uses a
separate feature of
IFMS to obtain detailed information about
resource use in certain program areas (e.g.,
asbestos and mercury). In numerous briefings
for OMB, EPA program managers have
demonstrated how they access integrated
financial and performance information,
generate reports, analyze data, and make
day-to-day decisions based on their findings.
Currently the Agency is assessing the
viability of establishing links between
Agency-wide cost systems and programmatic
systems for several program offices.
Brownfields Site Codes. Under the new
Brownfields Law, grants awarded in FY 2003
and beyond have new funding limitations.
Legal financial maximum limits now apply to
funding used at properties with petroleum-
only contamination, health monitoring
funding, institutional controls monitoring
and enforcement funding, insurance funding,
and revolving loan fund subgrant funding. In
FY 2003, EPA established new site codes in
its financial systems to track each of these
activities and better control funding.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Financial Replacement System (FinRS).
FinRS will replace legacy systems that are
inefficient by today's standards. It will
improve integration among systems, as well
as EPA's ability to perform core financial
management functions, and provide
additional functionality. EPA structured
development of the FinRS suite of
applications to deliver both short-term
and long-term results.
With the FY 2004 implementation of the
Payroll Time and Labor system, which fully
supports the e-Payroll initiative, the Agency
will realize substantial on-going cost savings.
In addition, EPA will realize benefits from
standardizing interfaces through use of an
Enterprise Application Integration tool.
The Agency will improve ad-hoc financial
reporting by re-engineering the Financial
Data Warehouse to include enhanced busi-
ness activity monitoring capabilities (e.g.,
expanded integration with environmental
indicators and administrative areas) and
implementing BusinessObjects, a modern
web-based reporting software. Finally, the
cornerstone of the FinRS suite of applications
will include the implementation of a new
Joint Financial Management Improvement
Program (JFMIP) certified core financial
system that complies with recently
established federal financial management
system requirements.
FedTrip. This year EPA implemented the
on-line reservation booking engine known
as FedTrip as the first component of
government-wide e-Travel services. When
all components are fully implemented,
e-Travel service will offer end-to-end
travel services from planning to voucher
reimbursement. This effort is part of the
expansion of electronic government, a key
area in the President's Management Agenda.
Sustained Progress in
Addressing Management Issues
The Reports Consolidation Act of 200025
authorizes agencies to consolidate various
management reports and submit them as part
of their annual reports. This section provides
a comprehensive discussion of EPA's progress
in strengthening its management practices to
achieve program results. It includes the
strategies implemented and progress made in
addressing management concerns identified
under the Federal Managers Financial
Integrity Act (FMFIA);26 the Agency's efforts
to carry out corrective actions on audits
issued by EPA's Office of Inspector General
(OIG); and the OIG's list of top manage
ment challenges facing the Agency.
FISCAL YEAR 2003
ANNUAL ASSURANCE STATEMENT
am pleased to give an unqualified state-
ment of assurance that the Agency's
programs and resources are protected
from fraud, waste, and mismanagement,
based on EPA's annual self-assessment of
its internal management and financial
control systems.
L.
Marianne L. Horinko
Acting Administrator
October 23, 2003
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SECTION I . OVERVIEW AND ANALYSIS—SUSTAINED PROGRESS IN ADDRESSING MANAGEMENT ISSUES
FY 2OO3 INTEGRITY ACT REPORT
In FY 2003, for the 2nd year, EPA reported
no material weaknesses under FMFIA and
resolved almost one third of its less severe,
internal Agency weaknesses tracked by the
Administrator (see Figure 10). To identify
management issues and monitor progress in
addressing them, Agency senior leaders use a
system of internal and independent reviews
and program evaluations, audits by the
General Accounting Office (GAO) and EPAs
OIG, and performance measurement. These
efforts 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. In FY 2003, the
Office of Management and Budget (OMB)
recognized EPAs success in correcting material
weaknesses, which contributed to the Agency
achievement of a "green" status score in
Improved Financial Performance, a key initia-
tive of the President's Management Agenda.27
In FY 2003, EPA addressed a wide range
of major management challenges, thereby
strengthening its ability to achieve environ-
mental and human health results. EPA's
advancements in establishing and imple-
menting effective management controls in
environmental programs include:
• Using a comprehensive, integrated
strategy to address risks from all
sources of air toxics—major, area,
mobile, and indoor sources28. EPA is
on target to complete all of its 10-
year Maximum Achievable Control
Technology (MACT) standards by
February 27, 2004.29
• Improving water quality by reducing
the backlog of National Pollutant
Discharge Elimination System
(NPDES) permits30 and increasing
the focus on water permit prioritiza-
tion for environmental results.
Figure 10: 3-Year Trend of Material
and Agency-Level Weaknesses
201
18.
16.
a 14.
3l2-
q 10.
*!:
2.
0
2001 2002 2003
Years
• Enhancing EPA's program to prevent
risks to human health and/or the
environment from land application
of sewage sludge by increasing public
involvement, expanding biosolids
related research, and actively
enforcing safe land-application.31
The Agency also addressed a number of
management challenges in administrative and
management program areas, which provide
the infrastructure supporting EPA's efforts to
achieve results. Following are examples of
FY 2003 accomplishments toward continued
improvement in effective management
of resources:
• EPA is aggressively implementing a
comprehensive approach to managing
its grants awards, which make slightly
less than half of the Agency's budget.32
To improve oversight for the award
and administration of assistance
agreements, EPA established a
competition policy that in FY 2003
more than tripled the percentage of
competitive awards to nonprofit
organizations covered by the policy.
The Agency also established a new
post-award monitoring policy that
will significantly increase oversight
and strengthen accountability for
grants management.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
• EPA strengthened its data manage
ment and information technology
systems. During FY 2003 the Agency
developed new management controls
to ensure consistent quality manage-
ment practices throughout EPA;
launched a modernized RCRAInfo
system33 that reduces burden and
provides better data; and enhanced
its comprehensive information
technology investment review
process, which is integrated with
EPA planning and budgeting.
• EPA completed a draft of its new
Strategy for Human Capital, Investing
in Our People II, 2003 through 2008,
and included a human capital cross-
goal strategy in the Agency's 2003
Strategic Plan. These efforts reflect
progress in aligning workforce
planning, recruitment, and staff
development efforts with the
Agency's environmental goals.
For more information, visit
http://www.epa.gov/ocfo/finstatement/2003ar/
2003ar.htm.
FY 2OO3 MANAGEMENT'S REPORT
ON AUDITS
The Inspector General Act of 1978, as
amended,34 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 2003, EPA was responsible for
addressing OIG recommendations and
tracking follow-up activities on 211 audits.
The Agency achieved final action on 115
audits, which include Program
Evaluation/Program Performance Audits,
Assistance Agreements Audits, Contracts
Audits, and Single Audits. Results achieved
during FY 2003 for the Agency's audit
management activities are summarized below:
Final Corrective Action Taken. EPA
completed final corrective actions on 18
performance and 97 financial audits. Of the 97
financial audits, the OIG questioned costs of
more than $90.7 million. After careful review,
the OIG and the Agency agreed to disallow
approximately $45.3 million of these
questioned costs. In the performance audit
arena, EPA management 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 2003, 91 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 91 audits listed above, EPA
officials had not completed final action on 26
audits within 1 year after the management
decision. Because of the complexity of the
issues, it often takes Agency management
more than 1 year after management decisions
are reached with the 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
receivable until the Agency issues a decision
on the appeal. In FY 2003, 61 audits were in
administrative appeal.
For more information, visit
http://www.epa.gov/ocfo/finstatement/2003ar/
2003ar.htm.
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SECTION I . OVERVIEW AND ANALYSIS—SUSTAINED PROGRESS IN ADDRESSING MANAGEMENT ISSUES
DISALLOWED COSTS & FUNDS PUT TO BETTER USE
October I, 2002 - September 30, 2003
Category
A. Audits with management decisions but
without final action at the beginning of
FY 2003.
B. Audits for which management decisions
were made during FY 2003.
(i) Management decisions with
disallowed costs. (14)
(ii) Management decisions with no
disallowed costs. (83)
C. Total audits pending final action during
FY 2003. {A + B}
D. Final action taken during FY 2003:
(i) Recoveries
a) Offsets
b) Collection
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 2003. {C - D}
Disallowed Costs
(Financial Audits)
Number Value
91 $ 149,435, 120
97 $8,718,387
188 $158,153,507
97 $43,683,647
$8,806,994
$ ,963,726
$0
$1,240,050
$526,821
$31,146,056
91 $114,469,860
Better Use
(Performance Audits)
Number Value
25 $0
20 $0
45 $0
18 $0
$0
$0
27 $0
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
OIG Key Management
Challenges Requiring
Sustained Agency Attention
(Prepared by EPA's Office of the Inspector General)
EPA made progress in addressing the top
10 management challenges identified by the
that OIG over the past 3 years. These efforts
included issuing new standards and policies,
providing training, and beginning the imple-
mentation of cross-cutting strategies in the
Agency's 2003 Strategic Plan. Nonetheless,
EPA has not taken all actions necessary to
address the challenges and ensure that the
actions taken have been effective. If EPA
does not take sufficient actions, the chal-
lenges will continue to impede the Agency's
ability to meet its goals. For example, despite
the Agency issuing new standards and policies
to improve its management of assistance
agreements, the OIG continues to find
instances where EPA is not adequately
overseeing these agreements. To address the
issue, EPA needs to allocate sufficient resources,
hold management and staff accountable for
complying with policies, establish success
measures, and monitor progress.
EPA's 10 management challenges
identified by the OIG for FY 2001-FY 2003
are presented in the following table. Many of
these issues are long-standing problems that
existed for many years. The table shows the
year in which the OIG noted the problems
and describes the relationship to EPA's
strategic goals and the President's
Management Agenda. For more information,
visit http://www.epa.gov/ocfo/finstatement/
2003ar/2003ar.htm.
EPA's TOP MANAGEMENT
CHALLENGES REPORTED BY THE
OFFICE OF INSPECTOR GENERAL
200135 200236 20033
LINK TO EPA's
STRATEGIC
GOAL
LINK TO
PRESIDENT'S
MANAGEMENT
AGENDA
Linking Mission and Management:
Developing more outcome-based
targets.
Information Resources Management
and Data Quality: Improving the
quality of data used.
Human Capital Management:
Implementing a strategy to develop staff
EPA's Use of Assistance Agreements
to Accomplish Its Mission: Improving
management of the billions of dollars
of grants awarded by EPA.
•
•
•
•
•
•
•
•
•
•
•
•
Cross-Goal
Cross-Goal
Cross-Goal
Cross-Goal
Budget and
Performance
ntegration
Expanded E-
Government
Human Capital
Improved
Financial
Performance
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SECTION I . OVERVIEW AND ANALYSIS—OIG KEY MANAGEMENT CHALLENGES REQUIRING SUSTAINED AGENCY ATTENTION
EPA's TOP MANAGEMENT
CHALLENGES REPORTED BY THE
OFFICE OF INSPECTOR GENERAL
200236 20033
LINK TO EPA's
STRATEGIC
GOAL
LINK TO
PRESIDENT'S
MANAGEMENT
AGENDA
Protecting Critical Infrastructure
from Non-Traditional Attacks:
Protecting physical and cyber-based
infrastructures, such as in water sector.
Challenges in Addressing Air Toxics
Program Phase 1 & Phase 2 Goals:
Reducing air toxic emissions by
improving approach and measures.
EPA's Working Relationships
with States: Improving structure for
working with States.
Information Security: Protecting infor-
mation systems by preventing intrusion
and abuse.
Backlog of National Pollutant
Discharge Elimination System
Permits: Addressing permit renewal
backlog for water discharges.
Management of Biosolids: Improving
sewage sludge management to suffi-
ciently protect the public.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Cross-Goal
Goal
Cross-Goal
Cross-Goal
Goal 2
Goal 2
Expanded
E-Government
NOTES
1. EPA's 2003 Strategic Plan available at http://www.epa.gov/ocfopage.
2. Information available at http://www.epa.gov/otaq/equip-hd.htm, http://www.epa.gov/otaq/diesel.htm, and
http://www.epa.gov/otaq/nonroad.htm.
3. US EPA, Office of Pollution Prevention and Toxics, Voluntary Children's Chemicals Evaluation Program
(VCCEP) Commitment Tracking System.
4. 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.
5. Organophosphates are a class of widely used, older pesticides of concern for adverse effects.
6. Due to the grantee reporting cycle, the Brownfields Program can only report data on the first two quarters
of FY 2003. Data are from the Brownfields Management System. More information at http://www.epa.gov/
brownfields/.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
7. 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."
8. Information on the Submerged Aquatic Vegetation measure available at http://www.chesapeakebay.net/status.
9. Information about EPA's National Coastal Assessment available at http://www.epa.gov/emap/nca/index.html.
10. Performance and Cost of Mercury and Multipollutant Emission Control Technology Applications on Electric Utility
Boilers (EPA-600/R-03/110).
11. Additional information is available at http://www.epa.gov/epaoswer/hazwaste/minimize/chemlist.htm.
12. Additional information about the President's Management Agenda can be found in Chapter 6 and at
http://www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf.
13. EPA's PART evaluation information available at http://www.whitehouse.gov/omb/budget/fy2004/pma.html.
14. Appendix A contains a complete list of program evaluations conducted in FY 2003.
15. For complete information on the quality of the data contained in the Performance Data Charts in Section II —
Performance Results, please see EPA's FY 2004 Final Annual Plan at the following website:
http://www.epa.gov/ocfopage/budget/budget.htm. See also
http://www.epa.gov/ocfo/finstatement/2003ar/2003ar.htm.
16. Section III, FY 2003 Statement of Budgetary Resources.
17. Section III, FY 2003 Statement of Net Costs.
18. US EPA, Office of the Chief Financial Officer, EPA's FY 2003 Budget Automation System.
19. US Department of the Treasury, FY 2003 Superfund Trust Fund Financial Statements.
20. US EPA Office of Water, The Clean Watersheds Needs Survey 2000 Report to Congress, EPA-832-R-03-001,
Washington, D.C., September, 2003, http://www.epa.gov/owm/mtb/cwns/index.htm.
21. US EPA Office of Water, Drinking Water Infrastructure Needs Survey Second Report to Congress, EPA816-R-01-
004, Washington, D.C., February, 2001, http://www.epa.gov/safewater/needs.html.
22. US EPA, Office of Water, Clean Water State Revolving Fund National Information Management System,
http://www.epa.gov/r5water/cwsrf.
23. US EPA, Office of Ground Water and Drinking Water's Drinking Water National Information Management
System, http://www.epa.gov/OGWDW/dwsrf/dwnims.html.
24. EFIN is available at http://www.epa.gov/efinpage.
25. Reports Consolidation Act of 2000, Public Law 106-531 (January 24, 2000).
26. Federal Managers Financial Integrity Act of 1982, Public Law 97-255 (September 8, 1982).
27. Executive Office of the President, Office of Management and Budget, Federal Management: The President's
Management Agenda available at http://www.whitehouse.gov/omb/budintegration/pma_index.html.
28. US EPA, National Ambient Air Quality Standards available at http://www.epa.gov/air/criteria.html.
29. Ibid.
30. US EPA, Office of Water, National Pollutant Discharge Elimination System (NPDES), Backlog Reduction
available at http://cfpub.epa.gov/npdes/permitissuance/backlog.cfm.
31. Federal Register, April 9, 2003, at 68 FR 17379—17395.
32. US EPA, EPA Grants Information and Control System (GIGS) database.
33. Available at http://www.epa.gov/epaoswer/hazwaste/data/index.htm-2rcra-info.
34. Inspector General Act of 1978, as amended, Public Law 95-452, October 12, 1978.
35. OIG Memorandum of December 17, 2001 to EPA Administrator, "EPA's Key Management Challenges".
36. OIG Memorandum of September 6, 2002 to EPA Administrator, "EPA's Key Management Challenges".
37. OIG Memorandum of May 22, 2003 to EPA Administrator, "EPA's Key Management Challenges".
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Performance
CONTENTS
Goal I: Clean Air and 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: Support for Environmental Results
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Goal I: -
Clean Air and Global C limate Change
Protect and improve the air so it is healthy to breathe and risks to human
health and the environment are reduced. Reduce greenhouse gas intensity by
enhancing partnerships with businesses and other sectors.
Progress Toward the Strategic Goal and Objectives
EPA and its partners and stakeholders have made
steady progress toward clean air during a period of
economic growth. Since 1970, their combined efforts have
reduced by 48 percent1 the aggregate emissions of the six
principal pollutants covered by National Ambient Air
Quality Standards (NAAQS) set to pro-
tect human health and the environment.
During the same period, the U.S. gross
domestic product has increased by 164
percent; vehicle miles traveled, by 155
percent; energy consumption, by 42
percent; and population by 38 percent
(see Figure l-l).2
Six PRINCIPAL
POLLUTANTS
Ozone (O3)
articulate Matter (PM)
In reducing emissions, EPA has
focused on programs that have broad
nation-wide or global impact for protect-
ing human health and the environment.
Recent examples include:
Carbon Monoxide (CO)
Nitrogen Dioxide (NO2)
Sulfur Dioxide (SO-,}
Lead (Pb)
• EPA's regulatory programs for highway and non-
road mobile sources and fuels have contributed
significantly to cleaner air. For example, in
FY 2000, EPA issued the second round of auto-
mobile and light truck standards called for by
the Clean Air Act (CAA). Tier 2 standards for
automobiles and light trucks will reduce nitrogen
oxide (NOX) emissions by 74 percent. And in
FY 2001, EPA issued new engine and fuel
standards that will make highway diesel trucks
and buses 90 percent cleaner than current models.
When fully implemented, these standards will
result in a daily reduction of about 30 premature
deaths, 20 cases of chronic bronchitis, and 5,600
lost workdays.3
• Agency rules for stationary sources,
vehicles, fuels, and engines have reduced
toxic air pollutants by close to 35 percent
from a 1993 baseline of 6 million tons.
EPA estimates that annual emissions of
toxic air pollutants from stationary
sources were nearly 1.5 million tons less
in FY 2002 than in 1993 as a result of
implementing Maximum Achievable
Control Technology (MACT) standards,
and 500,000 tons less than in 1993 as a
result of implementing federal mobile
source rules.4
• EPA's Acid Rain Program continues on course to
meet its FY 2010 objective. The market-based
program permanently caps nation-wide power
plant emissions of sulfur dioxide (SO2) and limits
the rate of NOX emissions. As a result of efforts by
utilities covered under this program, SO2
emissions continued to decline from 17.5 million
tons in 1980 (baseline) to 10.2 million tons
through 2002, while NOX emissions were reduced
by 33 percent from 1990 emissions levels.5
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SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
This progress toward cleaner air has been
significant, not only because of the tons of
pollution reduced or prevented, but also
because the results have been achieved cost-
effectively, with the monetized benefits
outweighing the economic impacts. The
extent of the public health benefits is
particularly striking. On a daily basis, the
results of programs established under the 1990
amendments to the CAA, in combination
with the results of the 1977 amendments,
have prevented an estimated 600 premature
deaths, 2,000 chronic illnesses, and 75,000
lost workdays.6 In a September 2003 report to
the Congress, the Office of Management and
Budget (OMB) reported the results of a
review of the costs and benefits of 107 major
federal rulemakings completed during the last
decade. OMB found that the overall benefits
of the rulemakings are four to five times their
costs, and that "the majority of the
quantifiable benefits are attributable to a
handful of clean-air rules issued by EPA."7
In spite of the successes of EPA and its
partners, utility, industry, transportation, and
other sources still emit more than 160 million
tons of pollution into the air each year in the
United States. About 146 million Americans
live in counties where monitored air quality
in 2002 was at times unhealthy because of
high levels of at least one of the six principal
pollutants for which EPA has set NAAQS.
The vast majority of areas that experienced
unhealthy air did so because of one or both
of two pollutants—tropospheric ozone and
particulate matter (PM).8
EPA's strategy to address the most
persistent remaining challenges posed by air
pollution in the 21st century includes a com-
bination of regulatory, market-based, and
voluntary programs. EPA will carry out those
components of the strategy that address
emissions from entire industries or from
major source categories, such as power plants
or motor vehicles, while state, tribal, and
local partners will focus on more area-specific
problems. In implementing the strategy, EPA
will set priorities among activities based on
health and environmental risk and will seek
cost-effective, flexible solutions to reduce
risks. Using information from peer-reviewed
research, regulatory impact assessments, and
program evaluations EPA determines pro-
gram risk and sets priorities based on that
risk. EPA addresses those areas such as PM,
ozone, and toxics that have a high health risk
first and then addresses the lower risk areas.
In developing these solutions, EPA will use
an active consultative process that allows the
Agency to identify the solutions that best
meet the collective needs of its partners
and stakeholders.
Figure I -1: Comparison of Growth
Areas and Emission Trends
200,
ISO.
£100.
0)
u
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
w.epa.gov/airnow
Air Quality
Index Levels
of Health
Concerns
Numerical
Value
Air quality is acceptable; however
for some pollutants there may be
a moderate health concern for a
very small number of people who
are unusually sensitive to air
pollution.
by 2020, Americans would experience
14,100 fewer premature deaths, 8,800
fewer cases of chronic bronchitis, and
30,000 fewer hospital and emergency
room visits for cardiovascular and
respiratory symptoms. The monetized
health benefits from Clear Skies would
total about $110 billion. Early human
health benefits are expected to be
significant, including $54 billion in
annual benefits by 2010, and 7,900 fewer
premature deaths. Visibility benefits in
national parks and wilderness areas are
projected to be $3 billion annually.11
EPA also implements strategies for
improving indoor air quality, restoring
the stratospheric ozone layer, and
addressing global climate change. Indoor
air can be more polluted than outdoor air
in the largest and most industrialized cities.
EPA develops and implements voluntary
outreach and partnership programs that
inform and educate the public about
indoor air quality and actions that they
can take to reduce potential health risks
in homes, schools, and workplaces. In
carrying out these programs, EPA places a
high priority on reducing the exposure of a
particularly vulnerable population—
children with asthma—to indoor environ-
mental triggers and secondhand smoke.12
Increased levels of ultraviolet (UV)
radiation due to depletion of stratospheric
ozone can lead to increased exposure to
UV radiation and result in skin cancer,
cataracts, and other illnesses. The United
States have met all the requirements for
addressing ozone depletion in the CAA
and the Montreal Protocol on Substances
That Deplete the Ozone Layer. Scientists
believe that recovery of the ozone layer is
under way, but that full recovery will not
occur until the middle of this century at
the earliest. EPA will continue its educa-
tion and outreach efforts to encourage
behavioral changes that will reduce UV-
related health risks.
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SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
In February 2002, President Bush
committed America to a global climate
change strategy that will cut greenhouse
gas intensity by 18 percent by 2012. EPA's
voluntary climate programs reduce greenhouse
gas intensity by working in partnership with
businesses and other sectors through programs
that deliver multiple benefits—from cleaner
air to lower energy bills—while improving
overall scientific understanding of climate
change and its potential consequences.
Overall, EPA's climate protection programs
are on track to prevent 185 million metric
tons of carbon equivalent (MMTCE)
annually by FY 2012, up from 65 MMTCE
in FY 2001.
FY 2003 Performance
Working with its state, local, and
tribal partners, along with industry, small
businesses, and other federal agencies, EPA
made significant progress in FY 2003 toward
achieving the annual goals for Clean Air
and Global Climate Change.
CLEAN AIR
While EPA implemented the market-
based Acid Rain Program and federal
regulations for stationary sources, mobile
sources, and fuels, its state, tribal, and local
partners carried out local programs to help
achieve or maintain the NAAQS and reduce
exposure to toxic air pollutants. In FY 2003,
state and local efforts contributed to helping
additional areas with a combined population
of 6.8 million people meet the NAAQS.
States also have prepared and submitted to
EPA requests to formally designate another
16 areas as having met the NAAQS.
EPA's partners also identify and
implement innovative ways to help achieve
cleaner air faster. In FY 2003, 34 communities
around the country pledged to reduce air
pollution ahead of deadlines in the CAA,
thereby bringing substantial and sustainable
health and environmental improvements to
their residents much sooner.
Also during FY 2003, EPA began
certifying motor vehicles to meet the Tier 2
light-duty vehicle standards. The Tier 2
Program, a comprehensive regulatory
initiative established in 2000, treats vehicles
and fuels as a system, combining requirements
for much lower-emitting vehicles with
requirements for much lower levels of sulfur
in gasoline. The implementation of the
standards is expected to significantly reduce
emissions from new passenger cars and light
trucks, including pickup trucks, vans, mini-
vans, and sport-utility vehicles (SUVs). For
the first time, light-duty trucks must meet the
same emission standards as cars. Once the
entire automotive fleet is in full compliance
with Tier 2 standards (in 2030), tailpipe
levels of NOX will be reduced by about 74 per-
cent, and the sulfur content of gasoline will
be reduced by about 90 percent from
current levels. These reductions will result
in cleaner air and greater public health
protection, primarily by reducing tropospheric
ozone and particulate matter.
EPA proposed standards for heavy-duty,
non-road diesel sources in FY 2003, including
construction, mining, industrial, agricultural,
and airport equipment. The resultant
reduction in pollution will provide important
health benefits and emission reductions
similar to those of the recent on-highway,
heavy-duty diesel rule. Also in FY 2003, EPA
began certifying heavy-duty engines that meet
the 2004 engine standards. These engines—
from all manufacturers—were certified early
in response to the requirements of the Heavy-
duty Engine Consent Decree, and are
approximately 30 to 45 percent cleaner than
previous engines of the same model.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
In addition, EPA completed emission
standards for new marine diesel engines that
will be installed in vessels flagged or registered
in the United States. These standards are
equivalent to the internationally negotiated
emission limits for NOX adopted by the
International Maritime Organization13 and
will help to reduce the approximately 1
million tons of hydrocarbons, NOX, and
30,000 tons of PM emitted from marine diesel
engines in the United States every year.
In FY 2003, EPA's PM research program
provided updated data on sources of PM
emissions, the costs and performance of PM
control technologies, and PM air quality
models. When complete and fully analyzed,
this information will help states, tribes, and
others target the sources that are contributing
to fine particulate (PM25) concentrations,
and thus, meet the NAAQS. The data
will also allow regulators and the regulated
community to better estimate the costs of
controlling PM2 5 emissions using alternative
methods, leading to the most cost-effective
PM control strategy for a given location.14
Results available in FY 2003 from
long-term measurements and studies on acid
deposition and surface water acidity provide
demonstrable evidence of positive environ-
mental outcomes attributable to emission
reductions under the Acid Rain Program.
A comparison of maps of average annual wet
sulfate deposition for 1989-1991 and for 1999-
2001 (see Figure 1-2) shows that reductions of
up to 30 percent have occurred over a large
area of the eastern United States. EPA's report
Response of Surface Water Chemistry to the
Clean Air Act Amendments of 1990, released
in January 2003, concludes that measurable
improvements in surface water chemistry
(lower sulfate concentrations and decreases in
acidity) have resulted from reductions in
emissions and wet sulfate deposition under
the Acid Rain Program. Results indicate that
in three of five geographic areas studied, one-
quarter to one-third of the lakes and streams
previously affected by acid rain are no longer
acidic, although they remain highly sensitive
to future changes in deposition. In the other
two areas, signs of recovery are not yet evident,
suggesting that further reductions, such as
Figure 1-2: Trends in Sulfur: Average Yearly Sulfate Concentrations
?-!99l vs. 1999-2001*
Sulfa&e Concentralkm
* Note: Data are presented for the eastern United States only because there are not enough CASTNet monitoring sites in the West
to support this type of analysis. Map colors represent relative concentrations and do not imply ecological or human health status.
-------
SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
those proposed in the Clear Skies Act, are
needed for ecosystem recovery.15
EPA has made significant progress in
meeting statutory deadlines for its air toxics
regulatory/residual risk program. The Agency
is on target to complete all of its 10-year
MACT standards by February 21, 200416
(refer to Sustained Progress in Addressing
Management Issues available at
http://www.epa.gov/ocfo/finstatement/2003ar/
2003ar.htm for further discussion). When all
the MACT standards are fully implemented,
emissions of toxic air pollutants from large
industrial facilities will decrease by 1.7
million tons per year, or 63 percent from 1993
baseline levels (see Figure 1-3). This
reduction does not include the results of
additional efforts by states and industry.
EPA has developed a comprehensive,
integrated air toxics program that better
meets long-term goals by addressing risks
from all sources of toxic air pollutants—
major, area, mobile, and indoor sources. The
Agency continues to shift the emphasis of its
air toxics program to a risk-based approach
that addresses specific needs of the various
categories of residual risk and their special
handling in the CAA. EPA is evaluating
ways to allow a facility to demonstrate
whether the health risks it poses to the
surrounding community are low enough to
comply with the residual risk standards. The
Agency also is continuing to analyze the risks
presented by the remaining 2-year, 4-year,
and 7-year MACT source categories.
To further reduce toxic air emissions
and health risks, EPA has begun to focus
increasingly on related community-specific
problems, working with partners and stake-
holders to identify and address the risk
reductions that are most important to local
citizens. The National Air Toxics Assessment,
published by EPA in FY 2002, provides
information on population exposure to
guide efforts on community-based risk
reduction activities.17
Figure 1-3: Maximum Achievable Control Technology
(MACT) Issuance and Emission Reductions
to
25-,
20-
10-
tj
Z 54
Air Toxic Emissions
MACT Standards
Promulgated
LJU
Z
_&>
o'
.3
.2.5
.2 ^ ^
1C3 C
. 1.5 u> -,
•5" 8
ro
. I E| ^
.0.5
0
o
3
in
1990-1993 1994-1996 1997-1999 2000-2003
Years
EPA has been working with state
and local agencies in a joint Air Toxics
Monitoring Steering Committee to design
a national network for monitoring toxic air
emissions. The National Air Toxic Trend Site
network, launched in early 2003, will help
provide population exposure information for
EPA and communities as they develop risk
reduction strategies and programs. The
Science Advisory Board has expressed clear
support for the Agency's approach to the
design, which includes pilot monitoring
studies and analysis of existing monitoring
data. EPA completed the initial data analysis
and a 10-city air toxics monitoring pilot
project in mid-2003,18 and is using the data
from this effort to help complete the design
of a network by early calendar year 2004.
In FY 2003, EPA initiated the Clean
School Bus USA Program—an outgrowth
of EPA's Voluntary Diesel Retrofit Program.
The program's goal is to reduce both
children's exposure to diesel exhaust and the
amount of air pollution created by diesel
school buses. Toward this end, EPA ran a
competitive nation-wide process to award
$5 million to school districts around the
country. The Agency announced the
selected areas in early FY 2004. School
districts will use the funds to retrofit buses
with improved emission controls; to fuel
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
RESPONDING TO HURRICANE ISABEL
After a hurricane, failure to remove contaminated materials and to reduce moisture and humidity can
present serious long-term health risks. Standing water and wet materials are a breeding ground for
microorganisms, such as viruses, bacteria, and mold. They can cause disease, trigger allergic reactions,
and continue to damage materials long after the flood, n the aftermath of Hurricane Isabel, EPA
released a fact sheet discussing steps to lessen the effects of water damage on long-term indoor air
quality in residential buildings.
__
ERA's fact sheet provided timely advice to the public on the
• Preparing for cleanup.
• Avoiding problems from microbial growth.
Removing standing water.
—Removing wet materials.
Avoiding problems from the use of cleaner
Avoiding carbon monoxide poisoning.
Avoiding problems from airborne asbestos and lead dust
buses with cleaner fuels; and to replace
the oldest buses with new, less polluting
buses. Since 2000, when EPA launched
the Voluntary Diesel Retrofit Program
addressing older vehicles on the road,
more than 130,000 vehicles and engines have
been retrofitted.
In FY 2003, EPA and the Advertising
Council launched an aggressive nation-wide
English and Spanish language media
campaign to heighten awareness of asthma as
a chronic disease afflicting about 20 million
people, including 6.3 million children.19 In
2000, there were nearly 2 million emergency
room visits and nearly half a million hospital-
izations of children and adults due to asthma,
at a cost of almost $2 billion and 14 million
missed school days.20 For the next 3 years, this
public service campaign will continue to
educate the public about indoor
environmental triggers of asthma attacks,
such as mold and secondhand smoke, and
how to prevent them.
Children who are exposed to environmental
tobacco smoke (ETS) are at an increased risk
for a number of adverse health outcomes,
including lower respiratory tract infections,
bronchitis, pneumonia, fluid in the middle
ear, and sudden infant death syndrome
(SIDS). ETS can also play a role in the
development and exacerbation of asthma,
particularly for children under 6 years old.
Cotinine, which is a breakdown product of
nicotine in blood, can be measured as a
marker for exposure of children to ETS in
their homes or in places where people are
allowed to smoke, such as some restaurants.
In 1999-2000, median (50th percentile)
levels of cotinine measured in children were
56 percent lower than they were in 1988-
1991. Cotinine values at the 90th percentile,
representing the most highly exposed 10
percent of children, declined by 18 percent
between 1988-1991 and 1999-2000.21 In 2003,
EPA, the Consumer Federation of America,
and the American Medical Association
launched the third wave of the My Mom's
My Hero media campaign, designed to help
protect the more than 5 million children ages
6 and under exposed to secondhand smoke in
the home.22
-------
SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
The latest quadrennial assessment of the state of the
protective stratospheric ozone layer indicates that
restraints on production of ozone-destroying chemicals,
such as chlorofluorocarbons, are having the intended
effect. The concentration of the prime offender, chlorine,
is at or near its peak in the stratosphere. An improved sci-
entific understanding of stratospheric ozone indicates that
the worst ozone loss has already occurred, with improve-
ments predicted for the future. Sustained efforts by the
United States and other parties to carry out the Montreal
Protocol will restore the stratospheric ozone layer to pre-
Antarctic hole levels by the middle of the 21st century.
EPA is making steady progress to reduce UV exposure,
particularly among children, through the voluntary
SunWise School Program. In FY 2003, EPA directly
reached 388,000 students in 7,746 schools, an increase of
61 percent since 2002. Understanding the risks of UV
radiation overexposure is important; major health prob-
lems linked to such increased exposure include skin
cancer, premature aging of the skin, cataracts, and
suppression of the immune system.
EPA has developed a multi-year plan to upgrade the
Environmental Radiation Ambient Monitoring System
(ERAMS). EPA has operated ERAMS for more than
30 years. The current system covers about 24 percent
of the total U.S. population. EPA plans to upgrade
ERAMS to a real-time system covering 70 percent of
the U.S. population. In FY 2003, EPA purchased and
deployed four prototype real-time radiation monitors as
the first step of its multi-year plan. The prototypes are
located in New York City; Washington, DC; Las Vegas;
and Montgomery, Alabama.
GLOBAL CLIMATE CHANGE
The core of EPA's climate protection efforts is
voluntary partnership programs designed to capitalize on
the opportunities that consumers, businesses, and organi-
zations have for making sound investments in efficient
equipment, better policies and practices, and sound trans-
portation choices. A 2003 analysis of actions that EPA's
partners have taken through the end of 200223 showed the
following results:
• Prevented greenhouse gas emissions of 71
MMTCE—equivalent to eliminating emissions
from more than 28 million cars.
BEST WORKPLACES FOR
COMMUTERSSM—A VOLUNTARY
CLIMATE PROTECTIONS
PARTNERSHIP PROGRAM
In FY 2003, more than 1,200 partner
organizations representing I. million
employees nation-wide have become
Best Workplaces for Commuters5".
EPA created Best Workplaces for
Commuters5" (formerly known as
the Commuter Choice Leadership
Initiative) to encourage and provide
incentives to employers to offer their
employees outstanding commuting
benefits that can help ease local traffic
congestion, c ean the air, and reduce
greenhouse gas emissions, while
reducing employee stress and helping
employees save on fuel costs. These
benefits also help employers attract
and retain the best employees, solve
parking challenges and allow employ-
ers to enjoy tax and cost savings.
Best Workplaces for Commuters5"
represent a broad range of business
sectors and sizes, including small busi-
nesses and Fortune 1000 companies.
Since 2001, employers in the
Best Workplaces for Commuters5"
Program and their employees
have been reducing miles driven by
more than 3 million people per day,
saving more than 35 million gallons
of gasoline per year, and preventing
the release of more than 150,000
tons of greenhouse gas emissions per
year. For more information, see
http://www.bwc.gov
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
• Prevented NOX emissions of about
150,000 tons.
• Reduced energy consumption by
more than 100 billion kilowatt hours,
providing more than $70 billion in
savings to consumers and businesses
on their energy bills.
• Offset more than 15,000 megawatts
of peak power—the amount of
energy required to power more than
15 million homes.
• Are forecasted to prevent greenhouse
gas emissions by more than 100
MMTCE through 2012.
EPA's Clean Automotive Technology
(CAT) Program supports the development of
technology that satisfies stringent emission
requirements and that achieves up to twice
the fuel efficiency of personal vehicles, such
as SUVs, pickups, and urban delivery
vehicles, while simultaneously meeting
the more demanding size, performance,
durability, and power requirements of these
vehicles. For a large SUV with a baseline
fuel economy of 17 miles per gallon (mpg),
the resulting potential fuel economy levels
would be 25.5-28.9 mpg in 2006 and up to
34 mpg by 2010. Expanding this technology
to 50 percent of new light trucks by 2020
would generate annual fuel savings of 8
billion gallons, while tailpipe carbon
emissions would fall by 20 MMTCE.
Assessment of Impacts of FY 2003
Performance on FY 2004 Annual Plan
Based on the results of FY 2003 performance,
some modifications will be made to the
FY 2004 performance measure targets for the
NAAQS. Specifically, one carbon monoxide
and one SO2 area planned for redesignation in
FY 2003 will move to FY 2004. Two PMIC
areas and one 1 -hour ozone area will also
move from FY 2003 to FY 2004. Based on
Department of Energy (DOE) performance
between 1998 and 2002, EPA is re-evaluating
its goals for the Waste Isolation Pilot Plant
Program and will revise the targets for 2004
and beyond based on updated projections from
DOE. No other changes to FY 2004 annual
performance goals are expected based on the
results of FY 2003 performance.
-------
SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
Annual Performance Goals
(APG) and Measures
GOAL I: CLEAN AIR AND GLOBAL
CLIMATE CHANGE
SUMMARY OF RESULTS—GOAL
Number of Goals Met: 2
Number of Goals Not Met: 3
Number with Data Lag:
APG I Reduce Ozone and Ozone Precursors
FY 2003 Maintain healthy air quality for approximately 42 million
people living in monitored areas attaining the ozone stan-
dard; certify 7 areas of the remaining 54 nonattainment
areas have attained the I -hour NAAQS for ozone, thus
increasing the number of people living in areas with healthy
air by 5.1 million. Goal Not Met.
Performance Measures
—Cumulative percent increase in the number of people
who live in areas with ambient I -hour ozone concentra-
tions 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.
—Tons of VOCs reduced from mobile sources.
—Tons of NOX reduced from mobile sources.
Planned Actual
42 M
7 areas
5.1 M
19%
31%
1.9 M
1.4 M
47.8 M
5 areas
5.8 M
data
available
in 2004
data
available
in 2004
1.9 M
1.4 M
FY 2002 Same goal, different targets. Goal Not Met.
Performance Measures
—Tons of VOCs reduced from mobile sources.
—Tons of NOV reduced from mobile sources.
41.7 M
10 areas
2.5 M
1.8 M
1.3 M
41.7 M
I area
326,000
1.8 M
1.3 M
FY 2001
Same goal, different targets. Goal Not Met.
35.1 M
5 areas
1.9 M
38.2 M
3 areas
3.5 M
FY 2000 Maintain healthy air quality for 33.4 million people living in
43 areas attaining the ozone standard. Goal Met,
33.4 M
33.4 M
FY 2003 Result: EPA maintained healthy air quality for 41.7 million people living in areas designated as attaining the
I -hour ozone standard and certified that five of the remaining non-attainment areas have attained the I -hour
NAAQS for ozone, thereby increasing the number of people living in areas with healthy air by 5.8 million. In FY
2004, EPA will make attainment designations for areas for the 8-hour standards. Many areas are awaiting the 8-hour
designation decisions to develop clean air plans to meet attainment These same measures will also help areas meet
the I-hour standard. In the last quarter of 2004, EPA will have information to determine how many areas are
monitoring clean air under the I -hour ozone standard. Areas may monitor for clean air but not meet the
procedural requirements for formal redesignation to attainment of I-hour Completion of the air quality monitoring
data review, in 2004, will provide more information on percentage of people who live in areas and the number of
areas that meet the I -hour ozone standard and thus allow EPA to have a more complete picture of air quality
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 2 Reduce CO, SO7) NO7) Lead
FY 2003 Maintain healthy air quality for 53 million people living in
monitored areas attaining the carbon monoxide (CO),
sulfur dioxide (SO2), nitrogen dioxide (NO2), and lead
standards; increase by I.I million the number of people
living in areas with healthy air quality that have newly
attained the standard. Goal Not Met.
Planned Actual
53.0 M
I.I M
53.7 M
.74 M
FY
FY
FY
2002
2001
2000
Same
Same
Same
goal, different tar^
goal, different tar^
goal, different tar^
;ets. Goal
;ets. Goal
;ets. Goal
Met,
Not Met.
Met,
36.7
16.0
31.1
13.2
277
I.I
M
M
M
M
M
M
36.7
36.3
0.4
277
M
M
M
M
FY 2003 Result: EPA maintained healthy air quality for 53 million people living in monitored areas attaining the
CO, SO2, NO2, and lead standards and certified that 4 of the 35 remaining non-attainment areas have attained the
NAAQS. EPA increased the number of people living in areas with healthy air by 740,000 but missed the target of
I.I million. This occurred because one area each for CO and SO2 did not meet the requirements for attainment in
FY 2003 and thus delayed the redesignation to attainment request to the last quarter of 2004. EPA is working with
these areas to ensure that these requests are complete and submitted to EPA in a timely way in FY 2004.
APG 3
FY 2003
FY 2002
Reduce Particulate Matter
Maintain healthy air quality for 6. 1 million people living in
monitored areas attaining the particulate matter (PM)
standards; increase by 81 thousand the number of people
living in areas with healthy air quality that have newly
attained the standard. Goal Met.
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.
— Areas redesignated to attainment.
— Tons of PM|0 reduced from mobile sources.
— Tons of NOX reduced from mobile sources.
Same goal, different targets. Goal Not Met.
Performance Measures
— Areas redesignated to attainment.
— Tons of PM|0 reduced from mobile sources.
— Tons of NOX reduced from mobile sources.
Planned
6.1 M
81,000
10%
45%
8 areas
25,000
18,000
3.4 M
3.7 M
6 areas
23,000
17250
Actual
6.2 M
228,000
data
available
in 2004
data
available
in 2004
3 areas
25,000
18,000
3.4 M
2.7 M
4 areas
23,000
17250
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SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
APG 3 Reduce Particulate Matter (continued)
FY 2001 Same goal, different targets. Goal Met,
Planned Actual
1.276 M
60,000
1.189 M
2.249 M
FY 2000 Same goal, different targets. Goal Met,
1.2 M
60,000
1.2 M
75,800
FY 2003 Result: EPA maintained healthy air quality for 6.1 million people living in areas designated as attaining the
PM 10 standard and certified that 3 of the 59 remaining non-attainment areas have attained the NAAQS thereby
increasing the number of people living in areas with healthy air by 228,000. In the last quarter of 2004, EPA will
have information to determine how many areas are monitoring clean air under the PM standard. Areas may
monitor for clean air but not meet the procedural requirements for formal redesignation to attainment.
Completion of the air quality monitoring data review, in 2004, will provide more information on percentage of
people who live in areas and the number of areas that meet the PM standard and thus allow EPA to have a more
complete picture of air quality
APG 4 Reduce SO9 Emissions
Planned Actual
FY 2003 Maintain or increase annual SO2 emission reduction of
approximately 5 million tons from the 1980 baseline. Keep
annual emissions below level authorized by allowance hold-
ings and make progress toward achievement of Year 2010
SO2 emissions cap for utilities. Data Lag.
5M
data
available
in 2004
FY 2002
Same goal. Goal Met,
5M
7M
FY 2001
Same goal. Goal Met,
5M
6.7 M
FY 2000 Five million tons of S02 emissions from utility sources will be
reduced from the 1980 baseline. Goal Met,
5M
6.3 M
FY 2003 Result: End of year 2003 data will be available in the last quarter of 2004 to verify that annual emissions
reduction of approximately 5 million tons from utility sources were maintained or increased during 2003.
FY 2002 Result Available in FY 2003: SO2 emissions were reduced by 35% from the 1990 level of 15.9 million
tons, and approximately 40% from the I960 level of 175 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
ERA's website at www.epa.gov/airmarkets.
APG 5 Reduce Nitrogen Oxide (NOJ Emissions Planned
FY 2003
FY 2002
FY 2001
Two million tons of NOX from coal-fired utility sources will 2 M
be reduced from levels that would have been emitted with-
out implementation of Title IV of the Clean Air Act
Amendments. Data Lag.
Same goal. Goal Met. 2 M
Same goal. Goal Met. 2 M
Actual
data
available
in 2004
3.5 M
3.4 M*
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 5 Reduce Nitrogen Oxide (NOx) Emissions (continued)
Planned Actual
FY 2000 Two million tons of NOX emissions from coal-fired utility
sources will be reduced from the levels before implemen-
tation of Title IV of the Clean Air Act Amendments.
Goal Met
2M
2.0 M
FY 2003 Result: End of year 2003 data will be available in Summer 2004 to verify that the Agency has achieved the
annual emission reduction goal.
FY 2002 Result Available in FY 2003: EPA achieved its goal of reducing annual NOX emissions from coal-fired
utility sources by 3.5 million tons from the modeled projection of NOX emissions that would have been emitted in
2000 without implementation of Title IV of the Clean Air Act Amendments. NOX emissions have been reduced
from 1990 levels by 27% from NOX program affected sources and by 33% for all acid rain affected sources.
Reductions since 1999 are due in part to implementation of the Ozone Transport Commission NOX Budget
Trading Program and in anticipation of the NOX SIP call.
* NOTE: Based on reviews of prior year estimates, EPA revised its FY 2001 emission reductions to 3.4 million tons.
APG 6 Increase Tribal Air Capacity
FY 2003 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 Actual
42 tribes*
64%
71%
39 tribes
66%
68%
FY 2003 Result: EPA is currently working with 39 tribes on monitoring for clean air. The tribes work with state and
local air managers to jointly solve local air quality problems. In FY 2003, 15 tribes monitored their air sheds for
ozone, 10 of which recorded clean air. Thirty seven tribes monitored for PM, 25 of which recorded clean air. The
Agency will continue to work with tribes to increase the number of tribes that monitor for air quality
*NOTE: Based on a review of tribal information, the targeted number of tribes was revised to 41.
APG 7 Reduce Air Toxic Emissions
FY 2003 Air toxics emissions nationwide from stationary and
mobile sources combined will be reduced by an additional
I % of the updated 1993 baseline of 6.0 million tons for a
cumulative reduction of 35%. Data Lag.
Planned Actual
5%
data
available
in 2009
FY 2002 Air toxics emissions nationwide from stationary and mobile
sources combined will be reduced by 5% from 2001 (for a
cumulative reduction of 40% from the 1993 level of 4.3
million tons per year.) Data Lag,
5%
data
available
in 2006
FY 2001 Air toxics emissions nationwide from stationary and mobile
sources combined will be reduced by 5% from 2000 (for a
cumulative reduction of 35% from the 1993 level of 4.3
million tons per year). Data Lag,
5%
data
available
in 2006
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SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
APG 7 Reduce Air Toxic Emissions (continued)
FY 2000 Air toxic emissions nationwide from both stationary and
mobile sources combined will be reduced by 3% from 1999
(for a cumulative reduction of 30% from the 1993 levels of
4.3 million tons). Data Lag,
Planned Actual
data
available
in 2006
FY 1999 Reduce air toxic emissions by 12% in FY 1999, resulting
cumulative reduction of 25% from 1993 levels. Data La
in
12%
data
available
in 2004*
FY 2003 Result: The National Toxics Inventory (NTI) is scheduled to be completed every 3 years. The Agency is
currently working on the updated NTI and expects to have FY 2003 results in the last quarter of 2009 and FY 2000,
2001, and 2002 results in the last quarter of FY 2006.
* NOTE: The Agency is currently working on the updated NTI and expects to have the results in early calendar
year 2004 which will provide data for FY 1999.
APG 8 Healthier Indoor Air in Schools
Planned Actual
FY 2003 1,050,000 students, faculty and staff will experience
improved indoor air quality (IAQ) in their schools.
Data Lag.
1.05 M
data
available
in 2004
FY 2002 1,228,500 students, faculty and staff will experience improved
indoor air quality in their schools. Goal Met,
1.2 M
1.2 M
FY 2001
Same goal, different targets. Goal Met,
1.9 M
1.9 M
FY 2000
Same goal, different targets. Goal Met,
2.5 M
2.6 M
FY 2003 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 2000 schools with an average of approximately 525 students/staff per school will adopt an indoor
air quality management plans. EPA is currently reviewing this preliminary data and expects to have final FY 2003
results in late 2004.
FY 2002 Result Available in FY 2003: Based on information gathered on the number of schools and school
systems/districts that receive TfS kits, EPA met the goal of approximately an additional 1.2 million students, faculty,
staff experienced improved indoor air quality
APG 9 Healthier Residential Indoor Air
FY 2003 834,400 additional people will be living in healthier
residential indoor environments. Data Lag.
Planned Actual
834,400
data
available
in 2004
FY 2002 834,400 additional people will be living in healthier
residential indoor environments. Goal Met,
834,400
834,400
FY 2001
Same goal, different targets. Goal Met,
890,000
890,000
FY 2000
Same goal. Goal Met,
890,000
1.03 M
FY 2003 Result: EPA gathers information from an annual National Association of Home Builders Survey, the number
of sales of radon fans, estimates of the annual number of kids not exposed to ETS, and estimates of the number of
people made aware of EPA's outreach efforts via direct outreach, grant awards, public service announcements, and
partnerships efforts. EPA is currently analyzing the results of this data and expects to have final FY 2003 results in late
2004.
FY 2002 Result Available in FY 2003: Based on information gathered from homebuilders and manufacturers and
outreach efforts, EPA met the goal of 834,400 additional people living in healthier residential indoor air environments.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 10 Reduce Greenhouse Gas Emissions
FY 2003 Greenhouse gas (GHG) emissions will be reduced from
projected levels by approximately 72.2 million metric tons
of carbon equivalent (MMTCE) per year through EPA part-
nerships with businesses, schools, state and local
governments, and other organizations. Data Lag.
Performance Measures
—Annual GHG Reductions—All EPA Programs.
—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 Actual
72.2 M
19.2 M
6.7 M
17.0 M
24.9 M
2.4 M
2.0 M
data
available
in 2004
FY 2002 GHG emissions will be reduced from projected levels by
approximately 65.8 MMTCE per year through EPA partner-
ships with businesses, schools, state and local governments,
and other organizations thereby offsetting growth in GHG
above 1990 levels by about 20%. Goal Met.
65.8 M
71 M
FY 2001 GHG emissions will be reduced from projected levels by
approximately 66 MMTCE per year through EPA partner-
ships with businesses, schools, state and local governments,
and other organizations thereby offsetting growth in GHG
above 1990 levels by about 20%. Goal Met.
66 M
65 M
FY 2000 GHG emissions will be reduced from projected levels by
more than 58 MMTCE per year through EPA partnerships
with businesses, schools, state and local governments, and
other organizations thereby offsetting growth in GHG
emissions above 1990 levels by about 20%. Goal Met,
58 M
59.3 M
FY 2003 Result: Final data for this performance goal will be available in mid-2004. 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 shipments of efficient products, and engineering measurements of equipment
power levels and usage patterns. The information collected is then converted to GHG emissions reduced.
FY 2002 Result Available in FY 2003: EPA's Climate Change programs reduced GHG emissions by 71 MMTCE in
2002 which is the equivalent of eliminating emissions from more than 28 million cars.
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SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
APG II Reduce Energy Consumption
Planned Actual
FY 2003 Reduce energy consumption from projected levels by more
than 95 billion kilowatt-hours (kWh), contributing to over
$6.5 billion (B) in energy savings to consumers and
businesses. Data Lag.
95 B
data
available
in 2004
FY 2002 Reduce energy consumption from projected levels by
more than 85 billion kilowatt-hours, contributing to over
$10 billion in energy savings to consumers and businesses.
Goal Met.
85 B
100
FY 2001
Same goal, different targets. Goal Met,
75 B
FY 2000
Same goal, different targets. Goal Met,
60
74 B
FY 2003 Result: Final data for this performance goal will be available in mid-2004. Data collected by EPA's
voluntary programs include partner reports on facility specific improvements (e.g. space upgraded, kWh reduced),
national market data on shipments of efficient products, and engineering measurements of equipment power levels
and usage patterns. The information collected is then converted to energy and related cost savings.
FY 2002 Result Available in FY 2003: Through the end of 2002, EPA's Climate Change Programs reduced energy
use by 100 billion kWh hours. 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 $70 billion
through 2012 (net of investment in energy-efficient technologies).
APG 12 Restrict Domestic Consumption of Class II HCFCs
FY 2003 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. Data Lag.
Planned
<9,906
< 10,000
Actual
data
available
in 2004
FY 2002 Restrict domestic consumption of class II HCFCs below
15,240 ozone depletion potential-weighted metric tons and
restrict domestic exempted production and import of newly
produced class I CFCs and halons below 60,000 OOP MTs.
Data Lag,
< 15,240
<60,000
data
available
in 2004*
FY 2001
FY 2000
Same goal. Goal Met,
Same goal. Goal Met,
< 15,240
<60,000
< 15,240
<60,000
12,807
3,062
13,180
462
FY 2003 Result: Data for this performance goal will be available in the last quarter of 2004 to verify restriction
of domestic consumption of HCFCs. 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.
* NOTE: FY 2002 data will be available in the last quarter of 2004 to verify restriction of domestic consumption
of HCFCs.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 13 Ensure WIPP Safety
FY 2003 Certify that 12,000 55-gallon drums of radioactive waste
(containing approximately 36,000 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 Actual
12,000
36,041
FY 2002
Same goal, different targets. Goal Met,
6,000
22,800
FY 2003 Result: EPA substantially exceeded the goal of ensuring the safe characterization and disposal of drums of
transuranic waste because the DOE increased their shipment rate to reduce the risk associated with temporarily
storing transuranic radioactive waste above ground. Based on DOE performance between 1998 (beginning) and
2002, EPA is re-evaluating its goals for the WIPP program and will revise the targets for 2004 and beyond based
on updated projections from DOE.
FY 2002 Annual Performance Goals
(No Longer Reported for FY 2003)
Provide data on the health effects and exposure to particulate matter (PM) and provide
methods for assessing the exposure and toxicity of PM in healthy and potentially susceptible
subpopulations to strengthen the scientific basis for reassessment of the NAAQS for PM.
Provide assistance to at least 60 developing countries to facilitate emissions reductions and
toward achieving the requirements of the Montreal Protocol.
Produce a report on trends in acid deposition and the acidity of lakes and streams to assess
progress toward reducing the impacts of acid rain.
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SECTION 2. PERFORMANCE RESULTS—GOAL I . CLEAN AIR AND GLOBAL CLIMATE CHANGE
NOTES
1. US EPA, Latest Findings on National Air Quality: 2002 Status and Trends Report, 454/K-03-001 (August 2003),
available at http://www.epa.gov/airtrends/.
2. Ibid.
3. US EPA, Tier 2 I Gasoline Sulfur Final Rulemaldng, EPA-420-R-99-023 (February 10, 2000). US EPA,
Regulatory Impact Analysis, "Chapter VII: Benefit-Cost Analysis," EPA 420-R-99-023 (December 22, 1999),
available at http://www.epa.gov/otaq/regs/ld-hwy/tier-2/frm/ria/chvii.pdf. See also US EPA, Heavy-Duty Engine
and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements (December 21, 2000) and US EPA,
Regulatory Impact Analysis, "Chapter VII: Benefit-Cost Analysis," EPA-420-R-00-026 (December 2000),
available at http://www.epa.gov/otaq/regs/hd2007/frm/ria-vii.pdf. Based on current rates of fleet turnover, all
vehicles will meet the new standards by about 2030.
4. US EPA, Latest Findings on National Air Quality: 2002 Status and Trends Report, 454/K-03-001 (August 2003),
available at http://www.epa.gov/airtrends/.
5. Ibid.
6. US EPA, Office of Air and Radiation, Office of Policy, Planning and Evaluation, The Benefits and Costs of the
Clean Air Act: 1970 to 1990 EPA Report Congress, EPA-410-R-97-002 (October 1997). See also US EPA,
Office of Air and Radiation, Office of Policy, The Benefits and Costs of the Clean Air Act: 1990 to 2010; EPA
Report to Congress, EPA-410-R-99-001 (November 1999).
7. Office of Management and Budget, Final 2003 Report to Congress on the Costs and Benefits of Federal Regulations
and Unfunded Mandates on State, Local and Tribal Entities (September 2003).
8. Ibid. Also, ozone is a naturally occurring gas that is found in two layers in the atmosphere. In the layer
surrounding the Earth's surface, the troposphere ground-level or bad ozone is an air pollutant that is the key
ingredient to urban smog. The troposphere extends up to the stratosphere, which is where good ozone protects
life on Earth by absorbing some of the sun's UV rays. Stratospheric ozone is most concentrated between 6 and
30 miles above the Earth's surface.
9. The White House Office of the Press Secretary, "President Announces Clear Skies & Global Climate Change
Initiatives" (February 14, 2002), available at http://www.whitehouse.gov/news/releases/2002/02/
20020214-5.html.
10. Senate and House of Representatives, Clear Skies Legislation Act of 2002, S. 2815 (July 29, 2002) and H.R.
5266 (July 26, 2002), available at http://www.epa.gov/clearskies/bill.pdf.
11. US EPA, Human Health and Environmental Benefits Achieved by the Clear Skies Initiative (July 1, 2003),
available at http://www.epa.gov/clearskies/03technical_package_sectionb.pdf, p.B3. US EPA, Technical
Addendum: Methodologies for the Benefit Analysis of the Clear Sides Initiative (July 2003), available at
http://www.epa.gov/air/clearskies/tech_addendum.pdf. Additional information about Clear Skies, including
legislative language and region-specific information about air quality and health benefits is available at
http://www.epa.gov/air/clearskies.
12. Institute of Medicine, Clearing the Air: Asthma and Indoor Air Exposures (Washington, DC: The National
Academy Press, 2000). Available at http://books.nap.edu/books/0309064961/html/Rl.html.
13. US EPA, Emission Standards Adoptedfor New Marine Diesel Engines, 420-F-03-001, January 2003. Available at
http://www.epa.gov/otaq/regs/nonroad/marine/ci/f03001.pdf.
14. Fine Particulate Matter Control: A review of the Cost and Performance of Conventional and Emerging
Technology", EPA# 600R-03/098. Plane Integrated Open-Path Fourier Transform Infrared Spectrometry Long
Term Hog Farm Lagoon Cover Performance", submitted to Applied Engineering in Agriculture in the 4th
quarter (not yet in print). Source Sampling Fine Particulate Matter: A Kraft Process Recovery Boiler at a Pulp
and Paper Facility, EPA #600R-03/099; Source Sampling Fine Particulate Matter: A Kraft Process Hogged Fuel
Boiler at a Pulp and Paper Facility, EPA#600R-03/100; Source Sampling Fine Particulate Matter: Smelt
Dissolving Tank Vent at a Pulp and Paper Facility, EPA #600R-03/101.
15. More information available at http://www.epa.gov/ord/htm/CAAA-2002-report-2col-rev-4.pdf.
16. US EPA, National Emission Standards for Hazardous Air Pollutants available at http://www.epa.gov/ttn/oarpg/
t3pfpr.html.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
17. US EPA, National Air Toxics Assessment (May 31, 2000), http://www.epa.gov/ttn/atw/nata. Scientific Peer
Review of the National-Scale Assessment available at http://www.epa.gov/ttn/atw/nata/peer.html.
18. Technology Transfer Website available at http://www.epa.gov/ttn/amtic/.
19. National Institutes of Health, Centers for Disease Control, Morbidity and Mortality Weekly Report, Surveillance
Summaries, Surveillance for Asthma 1980-1999, (March 29, 2002).
20. Ibid.
21. America's Children and the Environment: Measures of Contaminants, Body Burdens, and Illnesses. Second Edition,
February 2003. Available at http://www.epa.gov/envirohealth/children/ace_2003.pdf and http://www.epa.gov/
envirohealth/children/body_burden/b5.htm.
22. National Institutes of Health, Centers for Disease Control, National Center for Health Statistics, Summary
Health Statistics for the U.S. Adults: National Health Inventory Survey, 1998, Series 10, No. 209 (December
2002). Available at http://www.cdc.gov/nchs/data/series/sr_10/srlO_209.pdf.
23. US EPA, Climate Protection Partnerships Division, Change for the Better: Energy Star and Other Voluntary
Programs, in progress.
-------
Goal 2:
Clean and S.
Progress Toward the Strategic Goal and Objectives
Over the nearly 30 years since enactment of the
Clean Water and Safe Drinking Water Acts, EPA, states,
tribes, and localities have worked together to make
remarkable progress in improving the quality of surface
waters and drinking water. EPA believes that it has sus-
tained that progress in FY 2003. However, despite
measurable improvements in the quality of water, serious
water pollution and drinking water problems remain.
EPA and its partners protect human health by
reducing exposure to contaminants in drinking water, in
fish and shellfish, and in recreational waters. Although
final FY 2003 drinking water data will not be available
until January 2004, EPA expects that the gains made over
the past decade will be maintained. Data reported by
states to EPA to date show that the percentage of the
population served by community water systems that meet
all health-based drinking water standards increased from
79 percent in 1993 to 94 percent in 2002.
Due to improvements in the geo-referencing
capabilities of the National Listing of Fish and Wildlife
Advisories (NLFWA), for the first time, 13 states were
able to identify specific waters where all fish are safe to
eat1. State and local agencies also reported that beaches
were open 95 percent of the beach days (the number of
days in a specific beach's recreational season) during
calendar year 2002. Voluntary reporting of beach
monitoring information and public notification
also increased to protect the public from bacterial
contamination. In FY 2002, 227 agencies reported on
2,823 beaches, a substantial increase from the 159
agencies that reported on 1,021 beaches in 1997.2
EPA and states continue to use a watershed approach
to protect and improve water quality nation-wide,
including coastal waters. In FY 2002, more comprehen-
sive state reporting enabled the Agency to report on
1,980 of the nation's 2,262 watersheds, an increase of
90 watersheds since the 2000 reporting cycle. State data
reported in FY 2002 indicate that 453 watersheds had
between 80 percent and 100 percent of their assessed
waters meeting water quality standards, fewer than the
510 watersheds in like
condition reported by
states in FY 20013.
EPA believes that the
reported degree of
attainment of water
quality standards
within a watershed is
subject to a range of
variables and that the
circumstances of each
watershed are different. For example, states and tribes
have adopted new water quality standards since FY 2000
for pollutants, such as mercury, and monitoring for these
newly covered pollutants may result in additional waters
not attaining standards. States are also implementing the
47
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
FY 2003 EPA guidance addressing assessment
/reporting methodologies. Compliance with
this new guidance may have resulted in
different conclusions concerning attainment
of standards, even where old and new data
are comparable. Additionally, some state
monitoring resources may have declined
since FY 2000, leading a state to focus its
more recent monitoring efforts on waters
known to be impaired, thus reducing the
FY 2003 Performance
percentage of waters in a watershed known
to be attaining standards. In some water-
sheds, the new data may represent increased
pollution loadings, resulting in additional
waters not attaining standards. These factors
along with others may affect the results. EPA
is more closely assessing the situation in each
watershed to better understand the FY 2002
monitoring data.
Providing drinking water that meets safe
standards often requires an investment in the
construction or maintenance of infrastruc-
ture. The Drinking Water State Revolving
Fund (DWSRF) provides water systems with
low-interest loans to make infrastructure
improvements.
In FY 2003, the DWSRF
program achieved its
performance targets by
completing a cumulative
total of more than 3,000
infrastructure assistance
agreements from states
to water systems, while
systems completed more
than 1,600 infrastructure
improvement projects.4
In combination
with maintaining a core
program approach,
drinking water protec-
tion increasingly relies
on multiple barriers of protection, including
preventing contamination in source waters.
In FY 2003, EPA worked extensively with
states and national organizations to produce
a joint framework for a national vision of
source water protection. The framework
includes prevention program accountability
and tracking measures that will help both to
manage the program and evaluate results.
Although FY 2003 data will not be available
until January 2004, states continued working
to complete high-quality baseline source
water assessments for 54,000 community
water systems nation-wide by identifying
actual and potential sources of contamina-
tion and determining the susceptibility of
drinking water sources to contamination.
EPA and states have
begun to use these
assessments to drive
risk management
protection activities
at the local level.
To further protect
underground sources
of drinking water,
EPA and its state
partners continued
to implement the
underground
injection control
program to ensure
that waste fluids are
disposed of safely.
In FY 2003, EPA
and its state partners continued to return
Class I, II, and III underground injection
control wells to compliance and to imple-
ment new regulations controlling certain
types of Class V wells.
The core water programs work together
in stages to achieve the dual goals of
protecting human health and improving
water quality on a watershed basis. For every
water body, the building blocks necessary to
-------
SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
achieve water quality goals are the same:
setting appropriate standards, monitoring,
assessment, planning, implementation, and
re-evaluation through more monitoring.
During FY 2003, EPA reviewed and approved
new or revised water quality standards for 28
states and promulgated federal standards for
another state. By the end of FY 2003, a total
of 23 tribes had EPA-approved water quality
standards. Although the target of 30 tribes
was not met, there was an improvement over
last year. During the year, EPA assisted states
and tribes in strengthening the scientific
basis of watershed-based water quality
standards by continuing to support state and
tribal biological and nutrient criteria
development. These criteria enable states and
tribes to adopt better water quality standards
that more fully protect aquatic life and
protect their waters from excess nutrient
levels, one of the four leading causes of water
quality impairments.
To restore the nation's impaired surface
waters, EPA is working with states to develop
Total Maximum Daily Loads (TMDLs),
which set pollutant limits for the impaired
water segment. During FY 2003, 2,376
TMDLs were developed by states and 172 by
EPA, bringing total TMDL output to 9,252
since 1999. While the Agency's FY 2003
performance is short of its originally
projected goal of 3,400 TMDLs (state and
EPA-developed), this represents an adequate
pace of TMDL completion, reflecting actual
state schedules for TMDL production.5
The National Pollutant Discharge
Elimination System (NPDES) is a key
mechanism to protect and restore watersheds
by controlling pollutant discharges from
point sources. For FY 2003, EPA and the
states met the target of 84 percent of minor
point sources covered by current permits. In
FY 2003, EPA and states reached 84 percent
of major source permittees with current
permits, which continues to fall short of
meeting the Agency's goal of 90 percent.6
The principal reason for the continuing
challenge of permit issuance is that states
continue to face competing state priorities and
the increasing complexity of permitting in a
watershed context. Recognizing this ongoing
challenge, in FY 2003, EPA developed and
piloted the Permitting for Environmental
Results initiative to address the permit back-
log and focus resources on attaining the most
significant environmental results (refer to
Sustained Progress in Addressing Management
Issues available at http://www.epa.gov/
ocfo/finstatement/2003ar/2003ar.htm for
further discussion). This effort will enable the
states and EPA to achieve an environmental
focus in permit
issuance and develop
efficiencies to meet
the goals in light of
limited resources.
Also in FY 2003,
NPDES permits
implementing effluent
guidelines prevented
the discharge of
approximately 235
million pounds of
pollutants into the nation's waters, which
represents a cumulative total of 2.2 billion
pounds since 1999, but does not meet the
commitment of 2.5 billion pounds7. This is
due to a delay in issuing a key permit.
Water quality improvements frequently
rely upon direct investment in maintaining
or expanding infrastructure. Clean Water
State Revolving Funds provide low-interest
loans to help finance wastewater treatment
facilities and other water quality projects.
More than 10,000 projects have now been
initiated since the program began in 1987,
exceeding the FY 2003 cumulative target of
9,540. Through this program, funding in the
amount of $115 million was also provided to
help manage nonpoint-source pollution.8
In FY 2003, EPA established new
wastewater regulations to protect surface
water from animal waste generated by the
15,000 concentrated animal feeding
operations in the nation. As a result, the
amount of phosphorus released into
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
America's environment is expected to be
reduced by about 50 million pounds annually,
while nitrogen releases are expected to be
reduced by more than 100 million pounds per
year. This represents a 25 percent reduction
over current levels for phosphorus and
nitrogen. In addition, EPA expects that more
than 2 billion pounds of sediments and about
1 million pounds of metals per year will be
prevented from being discharged to the
nation's waters. Other expected benefits of
the new rules include fewer fish kills, fewer
contaminated drinking wells, and reduced
disease among livestock.9
EPA has taken the lead in encouraging
states to establish State Water Quality
Monitoring Councils, so that all monitoring
groups in the state can more effectively plan
and share their monitoring data. A number
of water quality databases are being linked to
the new Watershed Assessment, Tracking
and Environmental Results System
(WATERS) to allow the public to map water
quality information for specific geographic
areas. This will facilitate comparison and
understanding of differences among state
standards, monitoring activities, and assess-
ment results; assist in management decisions
on the local, state, and national levels; and
give the public a more complete picture of
the quality of the nation's waters.
Figure 2-1. Percentage of Lake Acres and
River Miles Under Advisory, 1993-2002
35 _.
30-
25_
20.
15-
10 _
5
0_
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Year
Water quality trading is a market-based
approach, based on voluntary partnerships at
the local level, to achieve greater efficiencies
to improve water quality within watersheds.
Trading allows one source to meet its regulatory
obligation by using pollutant reductions
created by another source that has lower pollu-
tion control costs. Trading may only take place
when a source reduces pollution beyond levels
required by federal or state regulations. In
FY 2003, EPA further promoted the use of
trading by issuing the Water Quality Trading
Policy.10 The policy strengthens and broadens
EPA's support for water quality trading by
encouraging states and tribes to adopt trading
programs, providing guidance for successful
trading programs, and recommending how
trading can be accomplished under the Clean
Water Act and current implementing
regulations. Currently 10 pilot projects are
under way that will demonstrate how trading
can work, explore different opportunities to
implement trading, and demonstrate the
environmental and economic results of trading
and applied research for multiple markets for
environmental benefit.
Some toxic contaminants that enter the
water can move up the food chain and build
to levels that make fish unsafe to eat. EPA
provides guidance to states and tribes on
monitoring and fish sampling and technical
training to help them assess fish safety.11
EPA recommends that states use a risk-based
approach in issuing their advisories. In May
2003, 45 states reported that they now use
EPA's risk-based guidance or methodologies to
develop fish consumption advisories, which is
a sharp increase from the level of state
involvement (15) in 1999. In calendar year
2002, 15 percent of river miles and 33 percent
of lake acres were under one or more
advisories not only for risks to the general
population but also to recreational and
subsistence fishers and specific vulnerable sub-
populations, such as pregnant women, nursing
mothers, and children (see Figure 2-1 for
information on advisories from 1993-2000).
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SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
EPA's BEACH Program supports public
health and environmental protection for
beach-goers and provides the public with
information about the quality of their beach
water. During 2003, EPA developed eBeaches
to provide state and local governments a fast,
easy, and secure tool to trans-
mit information about beach
water quality. Information
submitted to EPA via
eBeaches will then be posted
on EPA's BeachWatch web-
site, thus improving public
access to information about
beach conditions and health risks associated
with swimming in polluted waters.
Research activities played an important
role in assisting EPA to achieve objectives
under this Goal in FY 2003. For example,
EPA published information that illustrates
approaches and requirements for two major
issues related to impaired water bodies:
(1) the primary factors that contribute to the
likelihood of impairment; and (2) the causes
of impairment. This information will assist
states in deciding which water bodies to
identify as impaired and in establishing
approximately 42,000 TMDLs.12 EPA's
drinking water research
program provided
information that it needs
to make scientifically sound
decisions on unregulated
drinking water contaminants
of potential public health
concern. Specifically, EPA
developed improved methods for detecting
the occurrence in drinking water of several
pathogens on the Contaminant Candidate
List and assessments of the risks associated
with exposure to three waterborne pathogens
of public health concern (Calicivirus,
Mycobacterium avium complex, and
Coxsackievirus).13
Assessment of Impacts of FY 2003
Performance on FY 2004 Annual Plan
The assessment of the reliability of the
data underlying two measures may have an
impact on the FY 2004 annual plan. The first
measure is the percentage of population served
by community drinking water systems that
meet health-based standards. EPA and the
states face a significant challenge in ensuring
that the data in the Safe Drinking Water
Information System (SDWIS) are accurate,
timely, reliable, and complete. The Agency is
currently conducting an analysis, and engaging
in discussions with states, to more accurately
quantify the impact of data quality problems
on the estimate of the national population
served by drinking water systems in
compliance with health-based drinking water
standards. Ongoing EPA and state efforts to
improve data quality in the SDWIS already
have resulted in significant improvements in
data accuracy and completeness. Even as these
improvements are made, SDWIS serves as the
best source of national information on
compliance with SDWA requirements and is a
critical database for program management, the
development of drinking water regulations,
trends analyses, and public information.
The second measure is the number of
assessed watersheds that meet water quality
standards. The current compilation of surface
water quality data submitted by states as
required by the Clean Water Act section
305(b), which includes improved data analysis,
shows that while the number of watersheds
with adequate monitoring information
increased, fewer watersheds than previously
reported meet water quality standards. There
are a variety of possible reasons for this result.
Based on current assessments, EPA has revised
its target to 600 watersheds meeting water
quality standards in at least 80 percent of the
assessed water segments by FY 2008.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF RESULTS—GOAL 2
Number of Goals Met:
Number of Goals Not Met: I
Number with Data Lag:
Annual Performance Goals
(APG) and Measures
GOAL 2: CLEAN AND SAFE WATER
APG 14 Source Water Protection
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. Data Lag.
Planned Actual
10%
2,600
data
available
in 2004
FY 2003 Result: Agency results will be available in January 2004. The data EPA uses is new information collected
from states as part of a pilot effort; data are expected by the end of November 2003. The Agency will need the
intervening time to consolidate and evaluate the quality of the data.
APG 15 Safe Drinking Water
FY 2003 85% of the population served by community water systems
will receive drinking water meeting health-based standards
promulgated in 1998. Data Lag.
Planned Actual
85%
data
available
in 2004
FY 2002 Same goal. Data Lag,
85%
data
available
in 2004*
FY 2003 Result: Agency results for FY 2003 will be available in January 2004. States have a 3 month (one quarter)
lag in reporting end-of-fiscal-year data (i.e., by December) which the Agency compiles and evaluates in roughly I
additional month.
* NOTE: Data for FY 2002 will not be available until EPA updates the data system to accept state reported data
for the more recently promulgated rules accounted for in this measure (in January 2004).
APG 16 Safe Drinking Water
FY 2003 92% of the population served by community water systems
will receive drinking water meeting all health-based
standards, up from 83% in 1994. Data Lag.
Planned Actual
92%
data
available
in 2004
FY 2002
Same goal, different targets. Goal Met,
91!
94%*
FY 2001 Same goal, different targets. Goal Met,
Performance Measures
—Population served by community drinking water systems
with no violations during the year of any federally
enforceable health-based standards that were in place
by 1994.
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SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
APG 16 Safe Drinking Water (continued)
FY 2001 Population served by non-community, non-transient drinking
(continued) water systems with no violations during the year of any
federally enforceable health-based standards that were in
place by 1994.
Planned Actual
96%
92%
FY 2000
Same goal. Goal Met,
91!
FY 2003 Result: Agency results for FY 2003 will be available in January 2004. States have a 3 month (one quarter)
lag in reporting end-of-fiscal-year data (i.e., by December) which the Agency compiles and evaluates in roughly I
additional month.
* NOTE: EPA corrected the percent of population served by community water systems reported by states to
have received drinking water meeting all health based standards in FY 2002 from 91 % to 94%. This correction was
based on the reporting of a violation in a single large metropolitan water system that did not actually occur in the
FY 2002 reporting period. The revised number has subsequently been reported in EPA's Draft Report on the
Environment.
APG 17 River/Lake Assessments for Fish Consumption
FY 2003 Reduce consumption of contaminated fish by increasing the
information available to states, tribes, local governments,
citizens, and decision-makers. Goal Met.
Performance Measures
—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 consump-
tion advisory methodologies (cumulative).
Planned Actual
29%
15%
33%
FY 2003 Result: Each year, states continue to increase the monitoring and assessments of their waters and make
determinations on the need for fish consumption advice. Voluntarily, states submit this information to EPA. All 50
states, territories, and 3 tribes provide advisory information to EPA's National Listing of Fish and Wildlife Advisories
(NLFWA) database. 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. EPA also sponsored a national forum for state, tribal, and federal agencies on risk assessments and risk
communications.
APG 18 Increase Information on Beaches
FY 2003 Reduce human exposure to contaminated recreation
waters by increasing the information available to the public
and decision-makers. Goal Met.
Performance Measures
—Beaches for which monitoring and closure data are avail-
able to the public at http://www.epa.gov/OST/beaches/
(cumulative).
Planned Actual
2,550
2,823
FY 2002
Same goal, different target. Goal Met,
2,354
2,445
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 18 Increase Information on Beaches (continued)
FY 2001
Same goal, different target. Goal Met,
Planned
2,200
Actual
2,200
FY 2000 Same goal, different target. Goal Met,
Performance Measures
—Cumulative number of beaches for which monitoring and
closure data are available at "beaches" web-page.
—Number of digitized maps on the web-page.
ISO
1,981
FY 2003 Result: Grants authorized by the Beaches Environmental Assessment and Coastal Health Act of 2000
(BEACHES Act, PL 106-284), which are awarded to eligible Great Lakes and coastal states, increased funding for
monitoring of coastal waters and public notification of closings or advisories. The public's exposure to contaminated
recreational waters in FY 2003 was reduced as a result of the use of monitoring and closure data on 2,823 beaches
by 227 state agencies. By 2008, better water quality standards and more information should further improve the
public's ability to make informed decisions on beaches to visit.
APG 19 Clean Water State Revolving Fund: Annual Assistance
FY 2003 900 projects funded by the Clean Water State Revolving
Fund (CWSRF) will initiate operations, including 515
projects providing secondary treatment, advanced
treatment, Combined Sewer Overflow (CSO) correction
(treatment), and/or storm water (SW) treatment.
Cumulatively, 9,540 CWSRF funded projects will have
initiated operations since program inception. Goal Met.
Planned
9,540
Actual
10,085
FY 2002
Same goal, different targets. Goal Met,
7900
3,642
FY 2001
Same goal, different targets. Goal Met,
7200
7452
FY 2000 Another 2 million people will receive the benefits of
secondary treatment of wastewater, for a total of 181
million people. Goal Met,
2M
2M
FY 2003 Result: In FY 2003, 1,443 projects were initiated to reach the cumulative target of 10,085 projects. These
projects facilitated pollution control by providing secondary treatment, advanced treatment, combined sewer
overflow correction (treatment), and/or stormwater treatment.
APG 20 State/Tribal Water Quality Standards
FY 2003 Assure that states and tribes have effective, up-to-date
water quality standards programs adopted in accordance
with the Water Quality Standards (WQSs) 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 water quality standards adopted and
approved (cumulative).
Planned Actual
20
30
23
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SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
APG 20 State/Tribal Water Quality Standards (continued;
FY 2002 Same goal, different targets. Goal Met,
Planned Actual
20 states
27 tribes
25 states
22 tribes
FY 2001 Same goal, different targets. Goal Not Met.
30 states
27 tribes
21 states
19 tribes
FY 2000
Same goal, different targets. Goal Not Met.
15 states
22 tribes
35 states
16 tribes
FY 2003 Result: WQSs established under the Clean Water Act establish specific environmental goals for the
nation's waters. Having current, protective WQSs in place is an essential element of the national water program's
water quality protection efforts. States continue to do significant work in this area. During FY 2003, EPA reviewed
and approved new or revised water quality standards for 28 States and promulgated federal standards for another
state. By the end of FY 2003, a total of 23 tribes had EPA-approved water quality standards. The tribal target was
not met primarily because a Supreme Court decision resulted in EPA revising its tribal program authorization
process, which delayed approval of new tribal standards. 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.
APG 21 Watershed Protection
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
water quality standards (WQSs), up from 500 watersheds
in 1998. Data Lag.
Planned Actual
600
data
available
in 2005
FY 2002
Same goal, different targets. Goal Not Met.
600
453
FY 2001
Same goal, different targets. Goal Not Met.
550
510
FY 2000 Environmental improvement projects will be underway in
350 high priority watersheds as a result of implementing
activities under the Clean Water Action Plan (CWAP).
Goal Not Met.
350
324
FY 2003 Result: This measure relies on states' biennial reporting under Clean Water Act Section 305(b), and is
not intended to be reported until the FY 2005 reporting cycle.
FY 2002 Result Available in FY 2003: FY 2002 results are reported in FY 2003 because time is needed to collect
and analyze data from states' water quality assessments under 305(b) (see above). The target was not met for a
variety of reasons, but among the most critical was better, more representative monitoring and assessment by
many states that have established new integrated methodologies in accordance with EPA guidance. EPA's and
states' abilities to achieve the expected results have been complicated by the incorporation of new WQSs for
mercury and additional pollutants, and the difficulties in using applicable prior data under new assessment
procedures in EPA guidance.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 22 NPDES Permit Requirements
FY 2003 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 storm water, combined sewer overflow (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%
84%
2,500 M
84%
84%
2,200 M
FY 2002 Same goal, different targets. Goal Not Met.
Performance Measures
—Major point sources are covered by current
permits.
—Minor point sources are covered by current
permits.
90%
73%
83%
74.4%
FY 2001 Same goal, different targets. Goal Not Met.
Performance Measures
—Major point sources are covered by current
permits.
—Minor point sources are covered by current
permits.
89%
66%
75%
75%
FY 2003 Result: While EPA and states met the goal for issuing minor 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, designed to address the
permit backlog and focus resources on attaining the most significant environmental results. The pollutant loading
reductions measure was not met because there was a delay in issuing a key permit in FY 2003. This permit will be
issued in 2004.
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SECTION 2. PERFORMANCE RESULTS—GOAL 2. CLEAN AND SAFE WATER
APG 23 Wastewater Treatment Facility Compliance
FY 2003 Enhance public health and environmental protection by
securing the nation's critical wastewater infrastructure
through support for homeland security preparedness,
including vulnerability assessments, emergency operations
planning, and system operator training. Goal Met.
Performance Measures
—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 homeland security preparedness.
Planned Actual
65%
5,000
65%
5,000
FY 2003 Result: In FY 2003, 5,000 large and medium-sized POTWs took a variety of actions for homeland security
preparedness, including work by state operator training centers and a series of EPA-funded training seminars and
workshops. Training activities targeted the nation's largest wastewater utilities (serving 10,001 population or more.)
EPA grantees, who provided the training, reported the numbers of utilities trained. EPA then used the Clean
Watersheds Needs Survey and the Permits Compliance System databases to determine and report the population
served by each utility.
APG 24 Homeland Security
FY 2003 Enhance public health protection by securing the Nation's
critical water infrastructures through support for counter-
terrorism preparedness. Data Lag.
Performance Measures
—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.
Planned Actual
IOO%/463
data
available
in 2004
FY 2003 Result: As stated in Public Health Security and Bioterrorism Preparedness and Response Act of 2002, large
community water systems must certify the completion of their emergency response plan (ERP) within six months after
submitting their vulnerability assessment to EPA. Since 464 of 466 large CWSs have submitted vulnerability assessments,
EPA expects that these 464 systems will submit the certification of their ERPs within the mandated 6 month period.
Prior Year Annual Performance Goals
Without Corresponding FY 2003 Goals
(Actual Performance Data Available in FY 2003 and Beyond)
FY 1999 By 2003: Deliver support tools, such as watershed models,
enabling resource planners to select consistent, appropriate
watershed management solutions and alternative, less costly
wet-weather flow control technologies. Goal Met,
Target year is
FY 2003
FY 2003
FY 1999 Result Available in FY 2003: EPA developed support tools to enable resource planners to select consistent
and appropriate watershed management solutions, and alternative, less costly wet-weather flow technologies. Specifically
EPA released beta software to link the urban Stormwater Management Model (SWMM) to a Geographic Information
System, and additional software linking SWMM to the Office of Water's Better Assessment Science Integrating Point and
Nonpoint Sources (BASINS) model, the primary EPA model supporting Total Maximum Daily Load calculations.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
NOTES
1. National Listing of Fish and Wildlife Advisories. Factsheet available at
http://www.epa.gov/waterscience/fish/advisories/factsheet.pdf. NLFWA available at http://mapl.epa.gov/.
2. National Health Protection Survey of Beaches Information Management System available at
http://www.epa.gov/waterscience/beaches/; http://www.epa.gov/waterscience/beaches/grants/2003/index.html.
Data for calendar year 2002 is reported for FY 2003.
3. Watershed Assessment Tracking Environmental Results System (WATERS). US EPA, Office of Water,
Watershed Assessment, Tracking and Environmental Results (WATERS) Washington, DC: US EPA).
Available at http://www.epa.gov/waters.
4. The EPA Office of Ground Water and Drinking Water's Drinking Water National Information Management
System (DWNIMS) is accessible only on the Internet at http://www.epa.gov/safewater/dwsrf/dwnims.html.
5. For national-level information on TMDLs completed to date, see the National Section 303(d) List Fact Sheet,
with information compiled by state and by region, on the EPA Total Maximum Daily Loads web page at
http://oaspub.epa.gov/waters/national_rept.control. Annual TMDL production numbers are available
through EPA's Assessment and Watershed Protection Division.
6. Permit Compliance System (PCS). US EPA, Office of Enforcement and Compliance Assurance, Permit
Compliance System (database).
7. This measure is calculated using a spreadsheet maintained by the Office of Science and Technology. US EPA,
Office of Science and Technology, Loadings Reduction Spread Sheet for Direct Discharges from Point Sources
Subject to Effluent Guidelines (unpublished Lotus 1-2-3 spread sheet) (Washington, DC: US EPA, updated
2003)
8. Clean Water State Revolving Fund National Information Management System. US EPA, Office of Water,
National Information Management System Reports: Clean Water States Revolving Fund (CWSRF).
Washington, DC. Available at http://www.epa.gov/r5water/cwsrf/pdf.
9. Concentrated Animal Feeding Operations 68 FR 7176 (Feb., 12, 2003). Available at
http://www.epa.gov/npdes/regulations/cafo_toc_fedrgstr.pdf.
10. US EPA, Office of Water, 2003 Water Quality Trading Policy, available at
http://www.epa.gov/owow/watershed/trading/tradingpolicy.html.
11. US EPA. Office of Water. "Fish Sampling and Analysis." Volume 1 of "Guidance for Assessing Chemical
Contaminant Data for Use in Fish Advisories. 3rd ed. EPA-823-B-00-007. Washington, DC: EPA, 2000.
Available at http://www.epa.gov/waterscience/fishadvice/volumel.
12. Detenbeck NE, Elonen CM, Taylor, DL, Anderson, LE, Jicha, TM, and Batterman SL. 2003. Effects of
hydrogeomorphic region, watershed storage and mature forest on baseflow and snowmelt stream water quality
in second-order Lake Superior Basin tributaries. Freshwater Biology 48(5):911-27. Detenbeck NE, D. Cincotta,
J.M. Denver, S.K. Greenlee, and A.R. Olsen. 2003. Watershed-based survey designs. Submitted to
Environmental Monitoring and Assessment (special issue). Detenbeck, N.E., L.A. Jagger, S.L. Stark, and M.A.
Starry. 2003. WV REMAP Final Report: Watershed Classification Framework for the State of West Virginia.
US EPA Report, National Health and Environmental Effects Laboratory, Mid-Continent Ecology Division,
Duluth, MN. (In review).
13. Smiley JR, AE Hoyt, M Traven, H Tsunemitsu and L] Saif, 2003. Reverse transcription-PCR assays for
detection of bovine enteric caliciviruses (BEG) and analysis of the genetic relationships among BEG and
human caliciviruses. ]. CUn. Microbiol. 41(7):3089-99. Flanigan, D and M Rodgers, 2003. A method to detect
viable HeUcobacter pylori bacteria in groundwater. Acta Hydrochim. Hydrobio., 31(1): 45-48.
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Goal 3:
Preservation and Restoration
d cleaning up contaminated properties to reduce risks
posed by releases of harmful substances.
Progress Toward the Strategic Goal and Objectives
EPA and its state, tribal, and local partners have
made significant progress toward achieving the goal of
preserving and restoring land. To protect land, the
Agency and its partners use a hierarchy of approaches for
managing wastes effectively, including reducing waste at
its source, recycling waste, and regulating to prevent spills
and releases of harmful materials. The Agency also works
with its partners and the regulated community to clean
up land that has already been contaminated by wastes
and restore it to productive use.
PRESERVING LAND
As authorized by the Resource
Conservation and Recovery Act
(RCRA), EPA and its partners are
on track to achieve the objective
of mitigating the adverse effects to
land by reducing waste generation,
increasing recycling, and ensuring
proper management of waste and
petroleum products at facilities in
ways that prevent releases. Data for 2000, the latest year
for which information is available, indicate that the
nation recycled 30 percent of its municipal solid waste
(MSW), an annual increase of about 2 percent. MSW
generation for 2000 remained similar to prior years'
generation at 4.5 pounds per person per day.1 Through
various voluntary mechanisms, including the Agency's
Resource Conservation Challenge (RCC),2 EPA
continues working with businesses, manufacturers, and
government agencies to reduce waste and to encourage
additional recycling and the purchase of goods made from
recycled materials. (Additional information regarding the
RCC is presented in Goal 5).
Under the RCRA hazardous waste treatment,
storage, and disposal facility permitting program, EPA
works effectively in partnership with state, local, and
tribal governments and other
stakeholders. Based on preliminary
results for FY 2003, EPA, in
cooperation with its partners, has
already met its 80 percent objec-
tive for FY 2005—83.2 percent of
the approximately 2,750 hazardous
waste management facilities have
permits or other approved controls
in place to prevent dangerous
releases to air, soil, and ground-
water.3 This accomplishment
resulted mainly through the efforts of the states that are
authorized to run the hazardous waste permitting
program, although some permitting responsibility still
resides with the EPA regions. Having already met its
FY 2005 goal of 80 percent, EPA has set a more
challenging goal of having 95 percent of facilities under
approved controls by the end of FY 2008.
9
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
In addition, through the end of March
2003, the Underground Storage Tank (UST)
Program, in partnership with the states, has
ensured that more than 212,000 facilities4
(81 percent) of the 262,719 active facilities5
are in compliance with spill, overfill, and
corrosion protection requirements,
substantially reducing the threat of a release
to the environment and the associated human
health and environmental exposure. EPA
continues to work with the states to reduce
the number of releases that exceed state-set
health and environmental standards.
RESTORING LAND
Through Superfund, EPA and its partners,
including other federal agencies, states, local
and tribal governments, as well as potentially
responsible parties
(PRPs), continue to
make strides in
restoring land and
reducing risks to
human health and
the environment
posed by dangerous
contaminants in the
air, soil, and water.6
Through August
2003, the Agency's
emergency response
program or PRPs
under EPA's over-
sight initiated 380
emergency or time-
critical removal
actions.7 Since
1980, EPA has
initiated more than
7,800 removals of
hazardous sub-
stances at more
than 5,500 sites8
that pose immediate
public health and
environmental
threats. To date,
the Agency and its partners have also made
final assessment decisions at 38,586 sites—
an important indication of progress being
made to reduce the risks from contaminated
sites and to minimize the length of time
for actual or potential human health or
environmental exposures.
Remedial cleanup construction activities
have been completed at 886 sites—58
percent of the sites on the Superfund
National Priorities List (NPL) since 1980.
Protective controls are in place at 82 percent
of NPL sites where humans may be exposed
to hazardous substances. For the 65 percent
of NPL sites with contaminated groundwater,
protective controls are in place to control its
further migration.9 This progress has allowed
EPA to substantially reduce the actual public
SUPERFUNI
ENVIRONMENTAL CONTAMINATION
Since its inception in I960, EPA's Superfund program has:
• Provided alternative drinking water supplies to nearly 6I3,(
people at NPL and non-NPL sites to protect them from
contaminated ground and surface water.
• Treated or removed 951 million cubic yards of hazardous
solid waste.
• Addressed (treated, contained, or disposed of) 379 billion
gallons of hazardous liquid waste (including contaminated
groundwater).
• Relocated more than 33,000 people at NPL and non-NP
sites in instances where contamination posed the most
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SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
Figure 3-1: Over $22 Billion in PRP
Commitments for Cleanup and Cost
Recovery since I960
$25,
(§ $15-
•s
$io.|
g
3
• Cost Recovery Cleanup
$5.
Years
health and/or environmental threats posed
by potential or actual exposure to hazardous
substances at Superfund sites.
An important element of managing the
Superfund program is to ensure that PRPs
clean up contaminated sites or pay their fair
share of cleanup costs, thereby leveraging
Superfund Trust Fund resources and reducing
the cleanup burden paid by taxpayers.
Through FY 2003, EPA has achieved total
private party commitments for cleanup and
cost recovery valued at more than $22 billion
(more than $18.1 billion in response settle-
ments, and approximately $3.9 billion in cost
recovery settlements), resulting in more than
$8 in private party commitments for cleanup
and cost recovery for every $1 spent on
Superfund enforcement.10 (See Figure 3-1 for
PRP commitments.)
Superfund's Base Realignment and
Closure" (BRAC) Program has also helped
to accelerate cleanup at 107 military
installations to date. EPA's technical and legal
advice from dedicated senior-level project
managers, who participate on the base closure
teams, and joint EPA/state decision making
have led to faster regulatory reviews,
accelerating cleanups by an estimated 443
project years. As part of the Agency's
agreement with the Department of Defense, a
project manager may be assigned to work
I on these sites full-time in order to provide
expedited oversight and/or review of
documents, which has hastened cleanup by
an average of 4 years per base closure, and
achieved an estimated cost savings of
approximately $356 million for the life of
EPA's involvement in the BRAC Program.
This has resulted in more than 253,000
BRAC acres being made available for lease
or transfer.
EPA is on target to achieve its FY 2005
intermediate environmental indicator clean-
up goals for the RCRA Corrective Action
Program. Those goals are to have adequate
controls in place for pathways of human
exposure at 95 percent of 1,714 facilities, and
adequate controls in place for controlling
migration of contaminated groundwater at 70
percent of these facilities. Through FY 2003,
adequate controls are in place to prevent
human exposure to hazardous substances at
73 percent (1,246) of the 1,714 high-priority
RCRA facilities where the potential for
human exposure exists, and migration of
contaminated groundwater is under control
at 61 percent (1,049) of the 1,714 high-
priority RCRA facilities.12 This progress
reflects strong partnerships among the
regions and states, and has resulted in a
substantial reduction in human exposures.
EPA and its partners have also made
substantial progress toward protecting human
health and the environment by performing,
supporting, and overseeing cleanup at
facilities that have experienced releases from
underground storage tanks (USTs). Since
1987, the UST Program has initiated or
completed cleanup action at more than
400,000" UST facilities that will have met a
health- or environmental-based standard
after cleanup is completed.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
FY 2003 Performance
PRESERVING LAND
Under its goal of preserving land and
the effort to manage wastes effectively and
prevent spills and releases of harmful materi-
als, the Agency and its partners have ensured
that more than 100 additional hazardous
waste management facilities nation-wide have
permits or other controls in place.14 In 2003,
EPA also moved to a new system of mutual
performance agreements to confirm state and
regional commitments and projections toward
FY 2004 RCRA permitting goals and to
describe the method to achieve those goals.
EPA does not expect to meet its FY 2003
target of having 85 percent of UST facilities
in compliance with the spill, overfill, and
corrosion protection requirements (the mid-
year compliance rate was 81 percent), nor
does it expect to meet its target of 80 percent
for facility compliance with the leak-
detection requirements (the mid-year
compliance rate was 72 percent). Although
the Agency has been working with the states
to improve their reporting of both
compliance measures, the compliance
rates for both measures have been steady
or declining. State inspectors are currently
reviewing whether UST facilities are in
compliance with these requirements.
RESTORING LAND
In FY 2003, the Agency also focused
on increasing its readiness to respond to
accidental or intentional releases of harmful
substances, particularly its ability to respond
to simultaneous events and to communicate
effectively and securely with other federal,
state and local responders. During FY 2003,
EPA completed baseline core emergency
response evaluations in each region, for the
Environmental Response Team (ERT), and
at EPA headquarters against a defined set of
criteria for assessing core emergency response
capabilities.15 The average score was 823 (out
of a possible 1,000 points). In future years,
EPA will conduct annual reviews of its
emergency response readiness to assess
progress toward annual targets.
Major accomplishments in FY 2003 for
EPA's Superfund emergency response program
included participating in several large-scale
cleanups, including providing support to the
U.S. Postal Service in designing and carrying
out extensive cleanup plans for anthrax
decontamination at the Brentwood mail sort-
ing and distribution center in Washington
DC, and the collection, tracking and testing
of the potentially hazardous debris from the
Space Shuttle Columbia disaster for environ-
mental contamination. EPA worked closely
with state environmental agencies, the
National Aeronautics and Space
Administration (NASA), and the U.S. Forest
Service during the latter effort. As a result of
EPA's demonstrated leadership and expertise,
the Agency was asked to continue as the lead
for the collection of the remainder of the
shuttle debris, even after it was determined
that the debris posed no imminent human
health or environmental threat.
In addition to conducting emergency
response actions at sites posing immediate
threats, EPA recorded a net increase of 917
final assessment decisions16 in FY 2003 at sites
that may pose a threat, significantly exceed-
ing its target of 475 decisions. The dramatic
increase in final assessment decisions was due,
in part, to the Comprehensive Environmental
Response, Compensation, and Liability
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SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
Information System (CERCLIS)
enhancements, which provide a more
detailed level of tracking, and to EPA's
issuance of additional guidance, which
clarifies when final assessment decisions
can be made on existing sites.
In FY 2003, EPA met its target for
completing construction at an additional
40 NPL sites, 3 of which were carried out in
conjunction with the Agency's partners at
federal facilities. While the cumulative total
of federal facilities that have completed
construction is now 40, hundreds of federal
facilities nation-wide (e.g., abandoned mines,
nuclear weapons production plants, fuel
distribution areas, and landfills) remain
contaminated with hazardous waste,
unexploded ordnance, radioactive waste, fuels,
and various other toxic contaminants.
The size and complexity of Superfund
cleanups at federal facilities, which require
varied remedies and take considerable time to
address, will continue to be a future challenge
for the Agency.
In FY 2003, PRPs continued to make
substantial contributions toward Superfund
cleanup by initiating more than 87 percent of
new long-term clean-up actions at non-
federal facility Superfund sites, exceeding the
70 percent target. EPA also secured private
party commitments for clean up and cost
recovery that exceeded $1.1 billion. Of this
amount, PRPs agreed to conduct more than
$904 million in future clean-up work and to
reimburse EPA for more than $225 million in
past costs.17
EPA also measures its ability to eliminate
human health and environmental risks at
NPL sites and high-priority RCRA treat-
ment, storage and disposal facilities that
require corrective action. In FY 2003, in a
manner similar to that historically used for
the RCRA Corrective Action Program, EPA
started setting targets for two new environ-
mental indicators at appropriate Superfund
sites, signifying whether adequate controls
are in place at these sites to prevent any
unacceptable human exposures or migration
of contaminated groundwater. The deter-
mination made (under control, not under
control, or insufficient data) is based on the
most recent data available to site project
managers. This characteristic of the under-
lying data makes these measures dynamic,
and the determination for a site may change
during any given year, based on new data
that reflect a better understanding of site
conditions. The FY 2003 target for each
indicator was 10.
In FY 2003, EPA recorded a net increase
of 28 NPL sites where current actual or
potential human exposures are under control,
and a net increase of 54 sites where migration
of contaminated groundwater is under
control. Cumulatively, 82 percent (1,227 out
of 1,494) of eligible NPL sites now have
human exposures under control and 65
percent (826 out of 1,275) of eligible sites
have groundwater migration controlled.18
In FY 2003, EPA met its environmental
indicator goals for the RCRA Corrective
Action Program. An additional 230 out of a
total of 1,714 high-priority facilities controlled
human exposures to acceptable levels, and an
additional 175 of the 1,714 facilities
controlled migration of contaminated ground-
water.19 During FY 2003, EPA and the states
initiated several activities that contributed to
these accomplishments, including holding
specialized technical training for corrective
action project managers; using a specialized
team to work with and accelerate progress at a
number of federally-owned sites; and giving
special recognition to RCRA partners.
During FY 2003,
EPA continued to
work with tribal waste
program managers
to develop waste
program expertise in
tribes and address the
most pressing needs in
Indian Country. EPA
provided $760,000 as
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
part of an interagency grant program totaling
about $1.8 million for closing municipal solid
waste open dumps in Indian Country.
Cumulatively, since 1999, the Interagency
Workgroup has provided 85 tribes more than
$8.9 million that has resulted in the cleanup
of 27 open dumps and other activities to
prevent future dumping of wastes in Indian
Country. EPA also provided $432,000 in tribal
grants for RCRA hazardous waste activities
and developed an initial inventory of RCRA
hazardous waste facilities in Indian Country.
The inventory identified 10 treatment, storage
and disposal facilities and nearly 100 large-
quantity generator facilities in Indian Country.
Cumulatively, since 1999, the Hazardous
Waste Management Grant Program for
Tribes has provided more than 25 tribes
approximately $3 million for household
hazardous waste collection, used oil manage-
ment systems, public education, and hazardous
waste identification projects.
In FY 2003, EPA completed a draft
FY 2002 report to Congress on the Superfund
Innovative Technology Evaluation (SITE)
Program. The SITE report describes results
of full-scale demonstrations of innovative
remediation processes on priority
contaminated sites, including MTBE and oil
contamination, and contaminated sediments
and groundwater. Federal agencies, states, and
local governments use these results in
clean-up decisions to remediate sites more
effectively and less expensively. The report
details the costs of innovative technologies
tested under the SITE Program and compares
these costs to those of conventional
technologies. This information about ongoing
and completed demonstration projects
stimulates applications of new technology
through resulting performance and cost
savings in clean-up projects and an improved
market for technology developers.
Assessment of Impacts of FY 2003
Performance on FY 2004 Annual Plan
The target for final site assessment
decisions under Superfund for FY 2004 has
been increased from 475 to 500 to account for
an additional 25 "Other Clean-up Activity"
sites, such as Sites Deferred to States that
were not previously accounted for as final site
assessment decisions. For the most part, 917
final assessment decisions (FADs) account for
a one-time effort in FY 2003 to capture an
existing universe of NPL-eligible sites being
addressed under other authorities, primarily
state clean-up programs. Prior to FY 2003,
these sites were not captured as FADs, even
though Superfund assessment work was
complete. Beginning in FY 2004, EPA expects
that these types of FADs will occur at an
additional 25 sites per year, bringing the total
number of expected FADs to 500 per year.
EPA has also developed a new FY 2004
measure for the Superfund enforcement
program based on the Agency's "Enforcement
First" policy. The measure specifies that
EPA will reach a settlement or take an
enforcement action by the time of the start
of remedial action at 90 percent of those
Superfund sites having known non-federal,
viable, liable parties (and where the
remedial actions start during the fiscal year).
This measure will describe more accurately
the accomplishments of the Superfund
enforcement program because the measure
is no longer dependent upon the number
of remedial actions started using trust
fund resources.
Finally, EPA has also developed a new
FY 2004 measure that reflects the number of
confirmed UST releases nationally. States
already report information for this measure
and a baseline already exists.
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SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
Annual Performance Goals
(APG) and Measures
GOAL 3: LAND PRESERVATION AND
RESTORATION
SUMMARY OF RESULTS—GOAL 3
Number of Goals Met:
Number of Goals Not Met: I
Number with Data Lag:
APG 2S Municipal Solid Waste Source Reduction
FY 2003 Divert an additional 1 % (for a cumulative total of 32% or
74 million tons) of municipal solid waste from land filling
and combustion, and maintain per capita generation of
Resource Conservation and Recovery Act (RCRA)
municipal solid waste at 4.5 pounds per day. Data Lag.
FY 2002 Same goal, different target. Data Lag,
FY 2001 Same goal, different target. Data Lag,
FY 2000 Same goal, different target. Goal Met,
Planned
74 M
4.5 Ibs
69 M
4.5 Ibs
67 M
4.3 Ibs
64 M
4.3 Ibs
Actual
data
available
Dec. 2005
data
available
Dec. 2004*
data
available
Dec. 2003*
4.5 Ibs
FY 2003 Result: FY 2003 results for this goal will be available in early 2006. Data for 2000, the latest year for which
information is available, indicate that the nation recycled 30% of its municipal solid waste (MSW), an annual
increase of about 2%. MSW generation for 2000 continued stable at 4.5 pounds per person per day
* NOTE: Data availability dates are updated for FYs 2001 and 2002.
APG 26 Facility Standards and Compliance
FY 2003 Increase the number of waste and petroleum facilities with
acceptable or approved controls in place to prevent
releases to the environment. Data Lag.
Performance Measures
—Percent of RCRA hazardous waste management facilities
with permits or other approved controls.
—Increase in LIST facilities in significant operational
compliance with leak detection requirements.
—Increase in LIST facilities in significant operational
compliance with spill, overfill and corrosion protection
regulations.
Planned Actual
77.2%
3%
3%
83.2%
data
available
Dec. 2003
data
available
Dec. 2003
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 26 Facility Standards and Compliance (continued)
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,
Planned Actual
75.8%
79.0%
FY 2001
Same goal, different targets. Goal Met,
68%
74%
FY 2000
Same goal, different targets. Goal Met,
67%
67%
FY 2003 Result: Although EPA met the target for one of the three performance measures in this goal, final data for
the remaining two measures are not expected until December 2003. For the first measure, EPA met the target for
FY 2003 by having 83.2% of approximately 2,750 hazardous waste management facilities with permits or other
approved controls in place to prevent dangerous releases to air, soil, and groundwater. For the remaining measures,
EPA does not expect to increase the UST facilities in significant operational compliance with leak detection
requirements by 3% to 80% or with spill, overfill and corrosion protection requirements by 3% to 85% in FY 2003.
At mid-year, the compliance rates for leak detection requirements and spill, overfill and corrosion protection
requirements were 72% and 81 %, respectively. 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. There is some
variability in reporting by states because some states have more stringent requirements, while other states have
targeted non-compliant UST facilities so the facilities that are inspected are not representative of all facilities in the
state.
APG 27 Assess Contaminated Land
FY 2003 Assess waste sites. Goal Met.
Performance Measures
—Number of Superfund final site assessment decisions.
—Number of Superfund removal response actions initiated.
Planned Actual
475
275
380
FY 2003 Result: EPA significantly exceeded its target of 475 site assessment decisions by completing 917 The large
number of final assessment decisions was due, in part, to CERCLIS system enhancements, that provide a more
detailed level of tracking, and to EPA's issuance of additional guidance, which clarifies when final assessment decisions
can be made on existing sites. It also represents a one-time effort in FY 2003 to capture an existing universe of NPL-
eligible sites being addressed under other authorities, primarily state cleanup programs. EPA also substantially
exceeded its target for Superfund removal action starts, primarily due to the large number (110) of removals initiated
by potentially responsible parties (PRPs) voluntarily for which no enforcement instrument was in place. Such
removals are difficult to predict and are not taken into consideration in developing planning estimates.
APG 28 Clean Up and Re-use Contaminated Land
FY 2003 Clean up and reduce risk at waste sites. Data Lag.
Performance Measures
—Number of Superfund construction completions.
—Number of Superfund hazardous waste sites with human
exposures controlled.
—Number of Superfund hazardous waste sites with
groundwater migration controlled.
Planned Actual
40
10
10
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SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
APG 28 Clean Up and Re-use Contaminated Land (continued)
Planned Actual
FY 2003
(continued)
Performance Measures (continued)
—Number of high priority RCRA facilities with human
exposures to toxins controlled.
—Number of high priority RCRA facilities with toxic
releases to groundwater controlled.
—Number of leaking underground storage tank cleanups
completed.
197
158
21,000
230
data
available
Dec. 2003
(Superfund Cleanup)
FY 2002 EPA and its partners will complete 40 Superfund cleanups
(construction completions). Forty-seven construction
completions were completed in FY 2001. Goal Met,
40
42
FY 2001
Same goal, different targets. Goal Not Met.
75
47
FY 2000
Same goal, different targets. Goal Met,
85
87
(RCRA Corrective Actions)
FY 2002 172 (for a cumulative total of 995 or 58%) of high priority
RCRA facilities will have human exposures (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.
172 HE
172 GWR
171 GWR
FY 2001
Same goal, different targets. Goal Not Met.
172 HE
172 GWR
FY 2000
Same goal, different targets. Goal Met,
172 HE
172 GWR
179 HE
154 GWR
191 HE
168 GWR
(Leaking Underground Storage Tank Cleanups)
FY 2002 EPA and its partners will complete 22,000 Leaking
Underground Storage Tank (LUST) cleanups for a
cumulative total of approximately 290,000 cleanups since
1987 Goal Not Met.
22,000
15,769
FY 2001
Same goal, different targets. Goal Not Met.
21,000
19,074
FY 2000
Same goal, different targets. Goal Met,
21,000
20,834
FY 2003 Result: In FY 2003, EPA met the majority of its performance measures for cleaning up and reducing risk at
waste sites. Data for one performance measure (relating to leaking underground storage tank (UST) cleanups) will
not be available until December 2003. EPA met the target for completing construction at an additional 40 National
Priority List (NPL) sites for a cumulative total of 886 sites over the life of the Superfund program. Of the 40 sites, 3
were carried out in conjunction with the Agency's partners at federal facilities. Also, EPA significantly exceeded its
targets by recording an additional 28 NPL sites where current actual or potential human exposures are under control,
and an additional 54 sites where migration of contaminated groundwater is under control. These targets were
exceeded because FY 2003 is the first year that targets have been set for these two new environmental indicators at
appropriate Superfund sites. Cumulatively, 82% (1,227 out of 1,494) of eligible NPL sites now have human exposures
under control and 65% (826 out of 1,275) of eligible sites have groundwater migration controlled. In the RCRA
corrective action program, EPA and its partners recorded an additional 230 high-priority RCRA facilities with human
exposure to toxins under control, and an additional 175 facilities with groundwater migration under control, thereby
exceeding the targets for both of these environmental indicators. Cumulatively, 1,248 high-priority RCRA facilities have
human exposures controlled and 1,051 facilities have groundwater migration controlled. According to the FY 2003
mid-year activity report for the UST program, more than half of the cleanups expected by year end had been
completed by EPA and its partners (12,369).
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 29 Superfund Potentially Responsible Party Participation Planned Actual
FY 2003 Maximize all aspects of potentially responsible party (PRP)
participation which includes maintaining PRP work at 70%
of the new remedial construction starts at non-Federal
Facility Superfund sites, and emphasize fairness in the
settlement process. Goal Met.
70%
87%
FY 2002
Same goal. Goal Met,
70%
71!
FY 2001 Same goal. Goal Not Met. 70%
Performance Measures
—Ensure fairness by making orphan share offers at 100% of 100%
all eligible settlement negotiations for response work.
—Provide finality for small contributors by entering into de
minimis settlements and report the number of settlers.
673%
100%
15
FY 2000
Same goal. Goal Not Met.
70%
100% (orphan)
20 (de minimis)
68%
100%
FY 2003 Result: In FY 2003, PRPs continue to make substantial contributions toward Superfund cleanup by initiating
more than 87% of new long-term cleanup actions at non-federal facility Superfund sites, exceeding the 70% target
The PRP participation percentage is determined by two factors, the number of PRP-lead remedial action starts
and the number of Fund-lead starts. Shifts in both of these factors influenced this year's increased percentage—the
87% participation rate resulted from the combination of having additional PRP-lead starts and fewer Fund-lead than
in previous years. EPA also secured private party commitments for cleanup and cost recovery that exceeded
$1.1 billion. This amount includes $ 125 million for an innovative settlement with ASARCO (a metals smelting and
refining company), providing funds to partially fulfill ASARCO's obligations under numerous prior federal and state
consent decrees and administrative orders for work at CERCLA and non-CERCLA sites, work conducted for or by
other non-ERA federal agencies, and work conducted or overseen by state agencies. Of the $1.1 billion, PRPs agreed
to conduct more than $895 million in future cleanup work and to reimburse EPA for more than $226 million in
past costs.
APG 30 Superfund Cost Recovery
FY 2003 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 Actual
100%
100%
FY 2002
Same goal. Goal Met,
100%
100%
FY 2001
Same goal. Goal Not Met.
100%
978%
FY 2000
Same goal. Goal Not Met.
100%
3.5%
FY 2003 Result: In FY 2003, EPA continued to ensure trust fund stewardship by recovering costs from PRPs when
EPA expends trust fund monies. Using enforcement, settlement or compromise/write-off EPA achieved its goal of
addressing 100% of the pending cost recovery cases with outstanding unaddressed past costs greater than $200,000
and pending statute of limitations (SOL) concerns. EPA addressed 216 cost recovery actions at 201 NPL and non-
NPL sites, of which 87 had total past costs greater than or equal to $200,000 and potential SOL concerns, meeting
the target for this activity.
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SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
APG 31 Prevent and Prepare for Accidental or Intentional Releases Planned Actual
FY 2003 Improve homeland security response readiness and continue
assessment of critical facility vulnerability. Goal Not Met.
Performance Measures
—Develop baseline data for response readiness, Baseline 823
incorporation of Homeland Security into community data (Baseline)
contingency plans, and critical facilities requiring
vulnerability assessments.
—Number of oil facilities in compliance with spill 600 525
prevention, control and countermeasure provisions
of oil pollution prevention regulations.
FY 2003 Results: In FY 2003, EPA did not meet its overall goal to improve the Agency's emergency readiness for
response to accidental or intentional releases of harmful substances. During the year, EPA achieved its goal of
establishing baseline data for response readiness, a significant accomplishment. EPA completed evaluations of core
emergency response capabilities in each region, for the Environmental Response Team (ERT), and at EPA
headquarters to determine a baseline from which to assess future improvements in those capabilities. Each entity
was evaluated using a defined set of criteria, where the highest possible score is 1,000 points. The average score
from these evaluations was 823, so this score will be used as the baseline for subsequent annual reviews of the
Agency's emergency response readiness. EPA did not meet its target for the Agency's Spill Prevention, Control, and
Countermeasures (SPCC) Program, which involves working with several hundred thousand oil storage facilities to
prevent the discharge of all kinds of oil into the waters of the United States. In July 2002, EPA issued a final rule
amending the Oil Pollution Prevention regulation that included requirements for SPCC plans, which are prepared by
owners or operators of certain oil storage facilities and describes the facility's spill prevention and control measures.
Several lawsuits were filed in November 2002 challenging various aspects of the rule, which resulted in a decision by
EPA in April 2003 to extend by 18 months the deadlines by which facilities must amend (or, for new facilities,
prepare) and implement their SPCC plans. As a result of the prevailing uncertainty, there were 75 fewer SPCC
inspections nationally than anticipated.
APG 32 Oil Spill Response
FY 2003 Respond to or monitor 300 significant oil spills in the
inland zone. Goal Met.
Planned Actual
300
FY 2003 Result: Although many oil spills are contained and cleaned up by the party responsible for the spill, some
spills require assistance from local and state agencies, and occasionally, the federal government. Under the National
Contingency Plan, EPA is the lead federal response agency for oil spills occurring in inland waters. In FY 2003, EPA
exceeded its goal by responding to or monitoring 322 oil spills in the inland zone.
APG 33 Scientifically Defensible Decisions for Site Clean-up
FY 2003 To ensure cost-effective and technically sound site
clean-up, deliver state-of-the-science reports and
methods to EPA and other stakeholders for risk man-
agement of fuel oxygenates; organic and inorganic
contamination of sediments, ground water 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.
Planned Actual
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 33 Scientifically Defensible Decisions for Site Clean-up (continued) Planned Actual
FY 2002 Provide at least 6 innovative approaches that reduce human
health and ecosystem exposures from dense non-aqueous
phase liquids (DNAPLs) and methyl-tertiary butyl ether in
soils and groundwater, and from oil and persistent organics
in aquatic systems. Goal Met,
Performance Measures
—Deliver the Annual Superfund Innovation Technology
Evaluation (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.
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 Measures
—Deliver the Annual SITE Program Report to Congress.
FY 2000 Enhance scientifically defensible decisions for site cleanup by
providing targeted research and
technical support. Goal Not Met.
Performance Measures
—Report of natural attenuation case studies of MTBE. I 0
—Deliver the SITE report to Congress. 9/30/00 1/30/01
—Report of key research on methods, models and factors 9/30/00 12/31/00
relating to risk evaluation of dermal route of exposure.
—Review 20 soil contaminants and develop screening levels. 9/30/00 9/30/00
FY 2003 Result: EPA prepared state-of-the-science reports and methods for risk management of fuel oxygenates;
organic and inorganic contamination of sediments, ground water and/or soils; and oil spills. The completed draft of
the FY 2002 SITE Program Annual Report to Congress details the cost of innovative technologies tested under the
SITE Program and provides a comparison of these costs to those of conventional technologies. This information assists
decision makers in choosing technologies based on cost and performance.
FY 2002 Annual Performance Goals
(No Longer Reported for FY 2003)
• Within 18 months after final listing on the NPL, EPA will make a final offer for an interagency
agreement that is consistent with Agency policy and guidance at 100% of Federal facility
Superfund sites.
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SECTION 2. PERFORMANCE RESULTS—GOAL 3. LAND PRESERVATION AND RESTORATION
NOTES
1. US EPA, June 2002. Characterization of Municipal Solid Waste in the United States—2000 Update. Washington,
DC: Government Printing Office. Available at http://www.epa.gov/epaoswer/non-hw/muncpl/msw99.htm. Last
updated October 29, 2002.
2. US EPA, Office of Solid Waste. Available at http://www.epa.gov/epaoswer/osw/conserve/index.htm. Last
updated August 20, 2003.
3. US EPA, Resource Conservation and Recovery Act Information System (RCRAlnfo). Available at
http://www.epa.gov/epaoswer/hazwaste/permit/charts/charts.pdf. Last updated July 1, 2003.
4. US EPA, Office of Underground Storage Tanks, FY 2003 Semi-Annual (Mid-Year) Activity Report, June 19, 2003.
Available at http://www.epa.gov/oust/cat/ca_03 l_2.pdf.
5. While this number is not in the FY 2002 End-of-Year Activity Report for the Office of Underground Storage
Tanks (note 2 above), it is derived from data primarily found in that report and is based on the following
calculations: There were 696,205 active tanks as of March 31, 2003. A facility number can be derived from the
tank number by dividing 696,205 by 2.65, which is the average number of tanks per facility. Thus, there were
262,719 facilities at the end of March 2003. Then, the number of facilities can be multiplied by the compliance
rate of 81 percent, which results in the estimate of 213,000 facilities in compliance with spill, overfill, and
corrosion protection requirements.
6. US EPA, Superfund Information Systems, CERCLIS database.
7. Ibid.
8. Ibid.
9. Ibid.
10. Ibid.
11. US EPA Federal Facilities Restoration and Reuse web page topics available at: http://cfpub.epa.gov/fdrl/.
12. US EPA, RCRAlnfo database, Corrective Action, Facility Information. Available at
http://www.epa.gov/epaoswer/hazwaste/ca/facility.htm. Facility information is updated monthly at
http://www.epa.gov/epaoswer/hazwaste/ca/facility/stofcra.htm.
13. US EPA, Office of Underground Storage Tanks, FY 2003 Semi-annual (Mid-Year) Activity Report, June 19, 2003.
Available at http://www.epa.gov/oust/cat/ca_03 l_2.pdf.
14. US EPA, Resource Conservation and Recovery Act Information System (RCRAlnfo). Available at
http://www.epa.gov/epaoswer/hazwaste/permit/charts/charts.pdf. Last updated July 1, 2003.
15. The FY 2003 OSWER Core Emergency Response baseline will be reported in the FY 2003 Core Emergency
Response National Report, which is expected to be issued during the first quarter of FY 2004.
16. US EPA, Superfund Information Systems, CERCLIS database.
17. Ibid.
18. Ibid.
19. US EPA, RCRAlnfo database, Corrective Action, Facility Information. Available at
http://www.epa.gov/epaoswer/hazwaste/ca/facility.htm. Facility information is updated monthly at
http://www.epa.gov/epaoswer/hazwaste/ca/facility/stofcra.htm.
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Goal 4:
Healthy Communities and Ecosy
Protect, sustain, or restore the health of people, communities, and ecosystems
using integrated and comprehensive approaches and partnerships.
Progress Toward the Strategic Goal and Objectives
EPA is on track to meet its strategic goal of protecting,
sustaining, and restoring the health of people,
communities, and ecosystems. Significant progress was
made in FY 2003 toward meeting each of the objectives
supporting this goal by bringing together a variety of pro-
grams, tools, approaches, and resources; creating strong
partnerships with federal, state, tribal, and local govern-
ment agencies; and enlisting the
support of many stakeholders.
A key component of this goal is
protecting human health and the
environment by identifying, assessing,
and reducing the potential risks
presented by the thousands of
chemicals on which our society and
economy have come to depend. These
include the pesticides we use to meet
national and global demands for food, the industrial and
commercial chemicals found throughout our homes and
workplaces, and in the products we use.
EPA works to prevent or reduce risks from chemicals,
microorganisms, and pesticides by identifying and
assessing potential risks, and then developing strategies to
address them. For example in FY 2003, EPA continued to
make progress toward its goal of evaluating the potential
risk of 20 chemicals to which children have a high
likelihood of exposure.1 EPA and other federal partner
actions have also made significant progress toward the
national goal of eliminating childhood lead poisoning by
2010. Specifically, the incidence of children 1 to 5 years
old with elevated blood lead levels has been reduced
approximately by half during the last decade.2 Recently
released Centers for Disease Control and Prevention data
for 1999 and 2000 show the number of children younger
than 6 years old with elevated blood lead levels has fallen
to approximately 400,000, down from
an estimated 900,000 for the period
1991 through 1994.
EPA has reduced children's
exposures to organophosphates (OPs)
by approximately 60 percent by
eliminating many uses of OP insecti-
cides in and around the home.3 These
risk reduction programs, along with
routine reviews of new industrial
chemicals and pesticides, and ongoing work to integrate
emerging scientific developments into Agency assess-
ments,4 are contributing to steady progress in identifying
potential human and ecological hazards and risks.5
Sharing information and building a community's
capability to make decisions that positively affect the
environment are at the heart of the community-centered
work under this Goal. EPA's efforts to share information
and build community capacity offer the public the tools
needed in considering the many aspects of planned
development or re-development. For example, EPA's
72.
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
Brownfields Program provides states, tribes,
local governments, and other stakeholders
with the tools and financial assistance they
need to assess, clean up, and promote the
redevelopment of brownfield properties.
Since 1995, EPA has assessed a total of
4,300 brownfield properties. Property
assessment and cleanup completed under the
Brownfields Program are the first steps
towards reuse and redevelopment. The
cleanup and redevelopment of these
properties enables the leveraging of
$5.1 billion in public and private investments,
as well as the leveraging of 25,000 jobs.6
EPA is also building capacity in
international communities to make effective
environmental decisions. Since 1999, the
number of residents along the Mexican border
who were protected against health risks, beach
pollution, and damaged ecosystems as a result
of improved water and wastewater sanitation
systems has increased from 50,000 to a cumula-
tive total of approximately 872,000 residents.
This represents a continued upward trend over
the past several years. Also, in cooperation with
the New Independent States (NIS) of the former
USSR, EPA and its partners have eliminated
Russia's production of ozone-depleting
substances; have helped prevent the deteriora-
tion of drinking water supplies for 700,000
people in the NIS; and have established, within
the Russian government, an environmental
revolving account, which in FY 2003 has a port-
folio of 7 projects and $90 million.
EPA's ecosystem protection programs
encompass a wide range of approaches that
address specific at-risk regional areas, along
with larger categories of threatened systems,
such as estuaries and wetlands. Locally
generated pollution, combined with pollution
carried by rivers and streams and through air
deposition, can collect in these closed and
semi-closed ecosystems, degrading them over
time. EPA continues to make progress toward
its 2008 goal of protecting and restoring
250,000 acres of estuarine habitat with more
than 118,000 acres protected and/or restored
in FY 2003.7
EPA has also made progress in ecosystems
in the Gulf of Mexico, the Great Lakes, and
Chesapeake Bay. A total of 6,662 acres of
coastal and marine habitat has been restored
or protected in the Gulf of Mexico, exceeding
the target for FY 2003 and contributing
toward a 10-year goal of 20,000 acres. Levels
of the most critical, persistent pollutants
around the Great Lakes (including mercury,
polychlorinated biphenyls (PCB), dioxin,
benzo(a)pyrene, and hexachlorobenzene)
continue to decrease, as part of a downward
trend in toxic substances in the Great Lakes
over the last 15 years. In Chesapeake Bay,
more than 89,500 acres of submerged aquatic
vegetation (SAV), an important habitat for
aquatic life and an
indicator of the
health of the bay,
have been measured.
This represents a
strong recovery of
SAV in the middle
bay, and significant
progress toward the
goal of restoring
185,000 acres
by 2010.8
All of EPA's activities rely on the latest
scientific information. Sound science must be
the basis of standard-setting and guide the
Agency in identifying and addressing
emerging issues, as well as updating and
advancing EPA's understanding of long-
standing human health and environmental
challenges. As an example, in FY 2003, EPA
completed a draft report on the condition of
the nation's estuaries that will provide the
first scientifically defensible baseline from
which to measure trends in the health and
status of these vital ecosystems.9 This assess-
ment of ecological condition over time will
provide evidence of whether the Clean Water
Act and its amendments, as well as national,
regional, and state policies and programs,
have been effective in improving the quality
of U.S. estuaries. In addition, in FY 2003 EPA
reported on the performance and cost of
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
technologies for reducing emissions from
coal-fired utility boilers, which are among the
most significant contributors of mercury to
the air. This information will support the
development of regulations that will cost-
effectively reduce human health and
environmental risks from mercury.10
8
FY 2003 Performance
In FY 2003, EPA reviewed and registered
19 new active ingredients qualifying as
reduced risk pesticides, including 5 conven-
tional reduced risk pesticides (1 of which is
an organophosphate alternative) and 14
biopesticides. Additionally, EPA registered
425 new uses, including 3 organophosphate
alternatives and 1 methyl bromide alterna-
tive. The increased availability of lower-risk
pesticides, combined with public demand for
safe food, encourages pesticide users to shift
to reduced-risk alternatives. Pesticides
considered "reduced risk"11 constituted an
estimated 3.6 percent of all agricultural pesti-
cide acre treatments in 1998. Continued
implementation of improvements in Section
18 processing through a pilot within the
pesticides program will help improve program
performance by providing faster responses to
problematic pest outbreaks. Another major
accomplishment in FY 2003 was the imple-
mentation of EPA's Office of Pesticide
Programs Information Network, which tracks
Figure 4-1. Tolerance Reassessment Status
(as of July 2003)
100-
75-
50.
25-
Organophosphates | Organochlorines | Others
Carbamates Carcinogens
Chemical Class
The graph shows the status of EPA's tolerance reassessment
program by chemical class. As of July 2003, EPA had reassessed
6,519 tolerances (68 percent out of a total of 9,721).
regulatory data and studies submitted by
registrants (pesticide manufacturers and
producers) in support of a registration
application for a pesticide, among other
functions. This system integrates 19 legacy
systems, decreases data entry, and improves
access to critical documents and EPA's
analysis of information.
When pesticides do not meet health and
environmental standards, EPA determines
what changes are needed, including
canceling or limiting use, under the tolerance
reassessment and reregistration programs. In
FY 2003, the Agency reassessed a cumulative
68 percent of the tolerances requiring
reassessment under the Food Quality
Protection Act (FQPA). (See Figure 4-1.)
These FY 2003 accomplishments included
66.3 percent of organophosphates and
carcinogens, which are among those that
present the highest risk. Additionally, the
Agency issued 12 Reregistration Eligibility
Decisions (REDs), a cumulative 75 percent of
the 612 active ingredient cases requiring
reregistration under the Federal Insecticide,
Fungicide, and Rodenticide Act. EPA is on
track to meet its 2006 statutory deadline for
completing tolerance reassessments. EPA is
also on schedule to meet its goal of
protecting human health and reducing
dietary risks to children.
To identify potential risks from industrial
chemicals, EPA screened new chemicals as
they were submitted, meeting its zero-
tolerance standard for the introduction into
commerce of chemicals that pose unreason-
able risk. EPA's efforts to make screening
level human health and environmental
effects data about chemicals already in
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
commerce available on the high production
volume (HPV) chemicals website kept pace
with the large volume of data from industry
participants.12 At the end of September 2003,
screening level human health and environ-
mental effects data on 1,633 chemicals were
made available to the public. EPA's Acute
Exposure Guidelines Levels (AEGL) Program
provides information to first responders on
the adverse effects of chemical exposures at
emergency or accident sites. In FY 2003, the
values for 13 chemicals were finalized. The
final AEGL values include nerve agents and
mustard gas, and are being used for
emergency planning by the military and state
agencies as the military begins to destroy
stockpiled chemical warfare agents.
To reduce the risks of industrial
chemicals, EPA took regulatory action,
provided training and technical assistance,
and worked in partnership with all
stakeholders. EPA and the Agency for Toxic
Substances and Disease Registry collaborated
in issuing guidance to homeowners who may
have vermiculite attic insulation, informing
them about best practices for reducing
exposure." EPA took regulatory action to
restrict the return to the U.S. marketplace of
88 perfluorooctyl sulfonate (PFOS)14 chemi-
cals that had been voluntarily phased out by
the U.S. producer. EPA had received data
indicating that PFOS is a PBT chemical,
meaning that it is persistent in the environ-
ment, bioaccumulative in fish (an unexpected
finding), and toxic. Data also showed that
PFOS had been found in low concentrations
in the blood of the general population and in
wildlife around the world. Because the EPA
regulations apply to key chemicals essential to
produce PFOS, EPA's action effectively
restricts the manufacture of all PFOS
chemicals in the United States.
EPA continues to make progress in the
U.S.-Mexico Border Region. In FY 2003, an
additional 152,000 residents along the
Mexican border received protection from
health risks, beach pollution, and damaged
ecosystems as a result of improved water and
AEGL 13 FINAL CHEMICALS
• Hydrogen Cyanide
• Phosgene
• , , ,2-Tetrafluoroethane
(HFC I34a)—replacement for fully
halogenated chlorofluorcarbons
(HCFC 141 b)—replacement for fully
halogenated chlorofluorcarbons
Propylene glycol dinitrate
Nerve Agent GA (Tabun)
Nerve Agent GB (Sarin)
Nerve Agent GD (Soman)
Nerve Agent GF
Nerve Agent VX
Sulfur mustard
Diborane
Methyl Isocyan
wastewater sanitation systems. On April 4,
2003, the representatives of the U.S. EPA,
the Secretariat of Environment and Natural
Resources,15 10 border states, and 26 U.S.
tribes met to recognize the completion of the
Border 2012: U.S.-Mexico Environmental
Program. This marks the beginning of a
10-year joint effort to work with municipali-
ties, non-governmental organizations,
educational institutions, and border residents
to improve public health and the environ-
ment along the U.S.-Mexico Border.16 EPA
continues to evaluate environmental health
needs and to facilitate the construction of
environmental infrastructure with the Border
Environment Cooperation Commission
(BECC) and the North American
Development Bank.17
In FY 2003, EPA's Brownfields Program
awarded more than $69 million in
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
brownfields grants including 115 Assessment
Grants, 28 Revolving Loan Fund Grants,
10 Job Training Grants, and 50 newly
authorized Cleanup Grants. These grants
allow local governments, nonprofits, states,
tribes, and other eligible entities to assess,
clean up, and promote the redevelopment of
brownfields properties, leveraging jobs and
investments in communities. In FY 2003,
EPA's Brownfields Program also distributed
$49.6 million among all 50 states, 30 tribes,
the District of Columbia, and the Virgin
Islands. This is the first year that funding was
distributed under the authorities of the Small
Business Liability Relief and Brownfields
Revitalization Act.18 This funding will enable
states and tribes to develop or enhance their
response programs' infrastructure and capabil-
ities. For some recipients, the funding will
provide an opportunity to create new
response programs to address contaminated
properties. States and tribes also can use the
new funding to capitalize a revolving fund for
cleanup, purchase environmental insurance,
or develop other insurance mechanisms to
provide financing for clean-up activities. The
funds can also be used to establish or main-
tain the statutorily required public record and
to oversee cleanups.19
Levels of the most critical, persistent
pollutants around the Great Lakes continued
to decrease in 2002, according to information
reported in FY 2003. Success in reducing these
pollutants has been due to a combination of
Figure 4-2. Healthy Bay Grasses
Restoration Goal (185,000 acres by 2010)
Year
stronger regulations and voluntary actions.
Although EPA and state partners have made
progress in removing contaminants from the
Great Lakes ecosystem,20 concentrations of
certain contaminants in Lake Erie and Lake
Superior fish are no longer decreasing. Some
contaminants, such as polybrominated
diphenyl ethers—used as flame retardants in
products such as textiles, polyurethane foam,
and plastics—have been detected in Great
Lakes fish at increasing concentrations.21 Other
significant challenges to the Great Lakes that
EPA and partners are attempting to address
include an apparent increase of phosphorus
levels in Lake Erie and continuing entry of
non-native species. To address these chal-
lenges, EPA is promoting: chemical integrity
by reducing toxic substances; physical integrity
for the health of diverse communities of plants,
fish, and other aquatic life and wildlife; and
biological integrity to restore and maintain
self-sustaining populations of predominantly
native fish and aquatic life, wildlife, and plants.
In addition, EPA is developing positive
working relationships with the environmental
community to establish effective programs,
coordinate authorities and resources, report on
progress, and hold forums for information
exchange and collective decision making.
These steps will ensure the protection of the
Great Lakes and the achievement of the
objectives of the Great Lakes Water
Quality Agreement.
EPA's measure of SAV represents the
cumulative number of acres of habitat,
important for sustaining aquatic life in
Chesapeake Bay, measured during the year.
(See Figure 4-2.) By the end of FY 2003,
more than 89,500 acres of SAV have been
measured, exceeding the target of 86,000
acres. EPA also exceeded its commitment to
restore riparian forest buffers, which play an
important role in providing habitat and
reducing pollutant loads from nonpoint
sources to local waterways and the Bay.22
In FY 2003, EPA protected and restored
more than 118,000 acres of estuarine habitat.
The actual number of acres protected and
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
restored exceeded the National Estuary
Program's goal of 86,000 habitat acres due to
a number of factors, including unanticipated
changes in federal funding levels for habitat
protection and restoration at the state and
local levels, growth in community interest
and involvement in protection and
restoration, and the enhanced capacity of EPA
and its partners to collect and report on data
depicting protection and restoration
achievements. EPA assisted Gulf states in
implementing actions to restore beneficial uses
in 97 coastal river and estuary segments in
FY 2003, exceeding the yearly target of 14 seg-
ments, to achieve 20 percent restored quality
in impaired segments in 12 priority areas of
the Gulf. A total of 6,662 acres of coastal and
marine habitats were restored or protected in
the Gulf of Mexico, exceeding the FY 2003
target of 2,400 acres.
Also in FY 2003, EPA released for peer
review a draft of the first full assessment of the
nation's estuaries with regard to water quality,
sediment quality, and aquatic living resources.
This is the second in a series of coastal condi-
tion reports, but represents the first set of
completely consistent monitoring data for
coastal systems across the United States.23 The
first report, released in 2001, reflected avail-
able monitoring data from 1990 through 1996
and had little or no information for New
England, the West Coast, Alaska, Hawaii, or
Puerto Rico. The draft report completed in
FY 2003 characterizes conditions from 1999
through 2000 for all of the coastal resources of
the lower 48 states (21 coastal states) and
Puerto Rico, and describes surveys completed
for Alaska and Hawaii (for which results are
not yet available). Overall U.S. condition was
rated as fair, a slight numeric improvement
from the same "fair" baseline condition that
existed in the early 1990s.24 For this report,
EPA and its partners (all 23 coastal states and
Puerto Rico) collected estuarine and coastal
data at approximately 1,500 stations along the
coasts of the United States (excluding the
Great Lakes). An additional installment is
planned for FY 2005.
In June 2003, the Agency released the
Toxics Release Inventory (TRI) annual public
data release report that contains information
on toxic chemical releases and other waste
management activities by certain covered
industries as well as by federal facilities
reporting in calendar year 2001. The TRI data,
in conjunction with other information, can be
used as a starting point in evaluating exposures
from these toxic chemicals, and assist
communities in making informed decisions
about protecting their environment. In
FY 2003, EPA reduced TRI reporting burden
on industry, while improving TRI data quality
by continuing to promote and distribute its new
software data collection tool, "TRI Made-Easy
(TRI-ME)". As of August 29, 2003, 19,539 of
the 21,196 facilities that have reported for
Reporting Year 2002 used TRI-ME to complete
their submissions. TRI-ME allowed 26 percent
of the facilities to use EPA's Central Data
Exchange (CDX) to submit forms and certifi-
cation statements via the Internet, compared
to 7 percent last year—a trend expected to
continue.25 The Agency expects to further
increase the percentage of TRI reporting forms
that are submitted in electronic format, thereby
increasing the quality of the data and allowing
for an earlier public release of the data.
Through electronic tools, such as the TRI
Explorer, EPA encourages more user-friendly
access to important facility data, which informs
environmental decision making.26 More infor-
mation on TRI can be found in Goal 5.
Assessment of Impacts of FY 2003
Performance on FY 2004 Annual Plan
There are no changes to FY 2004 APGs based on results of FY 2003 performance.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF RESULTS—GOAL 4
Number of Goals Met:
Number of Goals Not Met: 3
Number with Data Lag:
Annual Performance Goals
(APG) and Measures
GOAL 4: HEALTHY COMMUNITIES
AND ECOSYSTEMS
APG 34 Review Pesticide Active Ingredients
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 environ-
ment. 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.
Planned Actual
350 actions
76%
68%
75%
306
75%
68%
65.6%
FY 2002 Same goal, different target. Goal Not Met.
Performance Measures
—Product Reregistration.
—Reregistration Eligibility Decision (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 over 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 target. Goal Not Met.
40%
46%
40%
44%
FY 2000 EPA will reassess 20% of the existing 9,721 tolerances to ensure
that they meet the statutory standard of "reasonable certainty
of no harm." Goal Not Met.
1,250
121
FY 2003 Result: The Agency did not meet its FY 2003 requirements for product reregistration or REDs. Product
reregistrations are based on the REDs completed in previous years, of which EPA did not meet the target, therefore
affecting product reregistration targets. For FY 2003, 12 REDs were completed. The Agency is on track to complete
all 612 REDs by August 2006, and all product reregistrations by 2008. Eighty-seven percent of the tolerance
reassessments for the top 20 foods eaten by children were completed, which substantially met its target. Children's
tolerances are a small subset of the broader category of tolerances.
The Agency met its FY 2003 goal for the broader category of tolerance reassessment and is on track to meet its
statutory target and deadline for reassessing 9,721 pesticide tolerances by August 2006. Meeting these goals will help
ensure that human health and the environment are protected from harmful effects of pesticides, and that food is safe
for consumption. The relationship of REDs to product registration is that one RED can result in any number of
product registrations (from one to many). Fewer REDs completed will result in fewer future product registrations.
Product reregistrations are generally completed 2 years after the RED is done.
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 35 Agricultural Partnership
Planned Actual
FY 2003 Reduce public and ecosystem risk from pesticides.
Goal Not Met.
Performance Measures
—Number of incidents and mortalities to terrestrial and 20%
aquatic wildlife caused by the 15 pesticides responsible
for the greatest mortality to such wildlife.
9%
FY 2002 Implementation of 10-15 additional model agricultural
partnership projects that demonstrate and facilitate the
adoption of farm management decisions and practices
that provide growers with a "reasonable transition" away
from the highest risk pesticides. Goal Met,
10-15
12
FY 2003 Result: Data being reported in FY 2003 covers the average for 3 years (1999-2001). Avian mortalities have
increased by 30.9% from the 1995 baseline. This is primarily due to increased kills resulting from West Nile Virus,
and not pesticide use. As a result, the Agency reports that the goal is not met for the Bird Kills. For Fish Kills, the
change from the baseline is -58.3%, which indicates that EPA has greatly exceeded its goal, however this change is
greatly due to circumstances other than pesticide use, including less reporting by states and a change in the FIFRA
6(a)2 rule which allows for aggregate reporting which cannot be entered in the database and therefore is not
counted.
APG 36 Decrease Risk from Agricultural Pesticides
FY 2003 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. Data Lag.
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.
Planned Actual
118
67
350
8.1%
20
425
data
available
in 2004
FY 2002 Same goal, different target. Goal Met,
Performance Measures
—Register safer chemicals and biopesticides (cumulative).
105
107
FY 2002 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.
15%
20%
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 36 Decrease Risk from Agricultural Pesticides (continued) Planned Actual
FY 2002 At least \% of acre-treatments will use applications of
reduced risk pesticides. Goal Met,
75%
FY 2001 Same goal, different target. Goal Not Met.
Performance Measures
- Register safer chemicals and biopesticides (cumulative).
96
92
FY 2000 Decrease adverse risk from agricultural uses from 1995
levels and assure that new pesticides are safe by such
actions as registering 6 new chemicals, 2,200 amendments,
600 me-toos, 200 new uses, 45 inerts, 375 special registra-
tions, 225 tolerances and 13 reduced risk chemicals/
biopesticides. Goal Met,
6
2,200
600
200
45
375
225
13
3,069
1,106
FY 2003 Result: Data will be available for two of the five measures in FY 2004. EPA exceeded its targets for the
three measures for which final results data are available. For example, EPA exceeded its FY 2003 targets for
registering safer chemicals and biopesticides. Cumulatively (since 1996), EPA has registered 124 reduced risk
pesticides (19 in FY 2003) and 72 new conventional pesticides (II in FY 2003), which help to ensure that growers
have an adequate number of pest control options available to them. In FY 2003, EPA completed 425 new use
actions.
FY 2002 Result Available in FY 2003: Data reported in FY 2003, for the FY 2002 reporting period, exceeded the
target for decreasing the residues of carcinogenic and cholinesterase inhibiting neurotoxic pesticides on foods eaten
by children from 15% to 20% (cumulative) from their average 1994 to 1996 levels.
APG 37 Lead Certification and Training of Lead Abatement
FY 2003 Reduce lead exposure in housing units and in the deleading
of bridges and structures. Goal Met.
Performance Measures
—Certified nationally (federally-administered and
state-administered program).
Planned Actual
5,000
5,561
FY 2002 Implement certification and training of lead abatement
professionals. Goal Met,
Performance Measures
—Certified nationally (federally-administered and
state-administered program).
4,000
4,574
FY 2003 Result: In FY 2003, 5,561 people were certified in lead paint abatement techniques by state and federally
administered programs. There is continued response by lead-based paint abatement professionals to the Agency's
and states' efforts to train and certify proficiency in this area.
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 38 Process and Disseminate TRI Information
FY 2003 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 Actual
8,000
25%
8,561
25%
FY 2002 EPA will reduce reporting burden, improve data quality,
lower program costs, and speed data publication by increas-
ing the amount of Toxics Release Inventory (TRI) electronic
reporting from 70% to 85%. Goal Met.
85%
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
10,000
report
120,000
FY 2000 Same goal as FY 2001, different targets. Goal Met,
Performance Measures
—TRI public data release.
—Form Rs processed.
—TRIS database complete and report issued.
I
10,000
Feb. 2001
19,000
Apr. 2001
FY 2003 Result: In FY 2003, EPA published a total of 95,513 reports from approximately 24,986 facilities. Of these
reports, 8,561 were for lead and lead compounds. This represents the first reports for lead and lead compounds as
persistent, bioaccumulative and toxic (PBT) chemicals which has a lower reporting threshold than non-PBT
chemicals. Lead and lead compounds are part of the original list of chemicals under the Emergency Planing and
Community Right-to-Know Act of 1986.
As a result of the FY 2003 accomplishment, the public will have greater access to information about lead and lead
compounds' releases into the environment Facilities took advantage of the new, paperless, electronic signature
certification features of TRI-ME to submit forms and certifications via the Internet through the Central Data
Exchange (CDX). This represents an improvement over FY 2002 when facilities submitting via CDX had to print,
sign, and mail a hard copy certification statement, and continues to make the reporting process significantly easier,
faster, and more accurate.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 39 New Chemicals and Microorganisms Review
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 commercial 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 Actual
1,800
1,633*
FY 2002
Same goal. Goal Met,
1,800
1,943
FY 2001
Same goal. Goal Met,
1,800
1,770*
FY 2000
Same goal. Goal Met,
1,800
FY 2003 Result: EPA reviewed 1,633 Section 5 notices received during FY 2003 (735 of these Section 5 notices were
valid Pre-Manufacturing Notices (PMNs). At the end of FY 2003, 22.4 % of all chemicals in commerce had been
assessed for risks. Many of these chemicals also may be "green" alternatives to existing chemicals in commerce.
"Green" chemicals reduce the impact on human health and the environment.
* NOTE: While the actual number of chemicals for which PMNs were reviewed is lower than the target, the target
was set to reflect EPA's commitment to comply with statutorily-mandated 90-day reviews of all PMNs submitted in
2001 and 2003, which it did. Under the Toxic Substances Control Act, EPA does not control the pace at which
companies submit PMNs for review, but it does control the pace at which it completes such reviews. Accordingly,
the Agency has determined this performance goal to have been met.
APG 40 Chemical Right to Know Initiative
FY 2003 Provide information and analytical tools to the public for
accessing the risk posed by toxic chemicals. Data Lag.
Performance. Measures
—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.
Planned
Actual
1,200
data
available
in 2004
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 Measures
—Through chemical testing program, obtain test data for
high production volume chemicals on master testing list.
724
chemicals*
FY 2003 Result: The FY 2003 target was set to reflect EPA's commitment to make publicly available all test data that
it received from companies in calendar year 2003. Therefore, there is a data lag for reporting until January 2004.
Under the HPV Challenge, EPA does not control the pace at which companies submit their test data, but it does
control the pace at which such data are made public. Accordingly, EPA expects to meet this performance goal since
as of August 2003, 1,068 chemicals have data available and an end of year surge is expected.
* NOTE: While the actual number of chemicals for which test data were obtained was lower than the target, the
target was set to reflect EPA's commitment to make publically available all test data that it received from companies
in 2001, which it did. Under the HPV Challenge voluntary program, EPA does not control the pace at which
companies submit their test data, but it does control the pace at which such data are made public. Accordingly, the
Agency determined this performance goal to have been met.
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 41 Revitalized Brownfields Properties
FY 2003 Leverage of general $0.9 billion through revitalization
efforts. Data Lag.
Performance Measures
—Amount of cleanup and redevelopment funds
leveraged at Brownfields sites.
—Number of Brownfield properties assessed.
Planned Actual
$0.9 B
1,000
data
available
in 2004
FY 2002 EPA will provide additional site assessment funding to 38 3,100
new communities, and to 38 existing communities, 19,300
resulting in a cumulative total of 3,100 properties $4.0 B
assessed, the generation of 19,300 jobs, and the
leveraging of $4.0 billion in cleanup and redevelopment
funds since 1995. Goal Met.
3,807
21,737
$4.8 B
FY 2001 Same goal, different targets. Goal Met,
FY 2000 Same goal, different targets. Goal Met,
2,500
12,000
$3.1 B
1,900
4,900
$1.7 B
2,754 (properties)
17307 (jobs)
2,024 (properties)
7,446 (jobs)
$2.8 B
FY 2003 Result: Two quarters of performance data were available at the time of report publication. Complete
FY 2003 performance data will be available in April 2004 as a result of the grantee reporting cycle.
Based on second quarter data, EPA believes the Brownfields Program is on track to meet its performance goals
of assessing 1,000 brownfields properties and leveraging of $0.9 billion in cleanup and redevelopment funding. At
mid-year, 369 brownfields properties had been assessed and $0.2 billion in cleanup and redevelopment funding had
been leveraged. The program expects a surge in the second half of FY 2003. Since 1995, a total of more than 4,300
properties have been assessed and Brownfields activities have resulted in the leveraging of over $5.1 billion in
cleanup and redevelopment funding.
APG 42 Brownfield Site Assessment Grants
FY 2003 Create jobs through revitalization efforts. Data Lag.
Performance Measures
—Number of jobs generated from Brownfields activities.
—Percentage of Brownfields job training.
Planned Actual
2,000
65%
data
available
in 2004
FY 2003 Result: Two quarters of performance data were available at the time of report publication. Complete
FY 2003 performance data will be available in April 2004 as a result of the grantee reporting cycle. Based on second
quarter data, EPA believes the Brownfields Program is on track to meet its performance goals of leveraging 2,000
jobs and achieving a 65% placement rate for Brownfields Job Training Program participants. At mid-year, 1,070 jobs
had been leveraged and 62% of Brownfields Job Training Program participants had been placed. Since 1995,
Brownfields activities have resulted in the leveraging of 25,000 jobs. (See APG 41 for trend information due to prior
year performance measures being presented in the Revitalized Brownfields Properties goal.)
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 43 U.S.-Mexico Border Water/Wastewater Infrastructure Planned Actual
FY 2003 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 infrastructure by providing improved
water and wastewater service. Goal Not Met.
Performance Measures
—Number of additional people in Mexico border area
protected from health risks because of adequate water 900,000 872,000
and wastewater sanitation systems funded through
Border Environmental Infrastructure Fund.
FY 2002 Same goal, different target. Goal Not Met.
Performance Measures
—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 Fund.
790,000
720,000
FY 2001
Same goal, different targets. Goal Met,
600,000
576,405
FY 2000 Five additional water/wastewater projects along the Mexican
border will be certified for design-construction for a
cumulative total of 30 projects. Goal Met,
FY 2003 Result: In FY 2003, an additional 152,000 people in the Mexico border area were protected from health
risks because of adequate water and wastewater sanitation systems funded through the Border Environmental
Infrastructure Fund. To date 872,000 people, or 96.9% of the target of 900,000 people, have realized this benefit
This effort requires considerable coordination among six Mexican and four U.S. states, municipalities with varying
capacity, as well as two international organizations that certify the projects and issue subgrants for individual projects.
APG 44 Protecting and Enhancing Estuaries
FY 2003 Restore and protect estuaries through the implementation
of Comprehensive Conservation and Management Plans
(CCMPs). Goal Met.
Performance Measures
—Acres of habitat restored and protected nationwide as
part of the National Estuary Program (annual).
Planned
Actual
86,000
118,171
FY 2002
Same goal, different targets. Goal Met,
50,000
137710
FY 2001 Same goal, different targets. Goal Met,
Performance Measures
—Acres of habitat preserved, restored and/or created
nationwide as part of the National Estuary Program
(cumulative).
50,000
70,000
FY 2003 Result: EPA's National Estuary Program exceeded this year's goal of recovering and protecting 86,000 acres
of habitat due to several factors including growth in 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.
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 45 Great Lakes: Ecosystem Assessment
FY 2003 Great Lakes ecosystem components will improve, including
progress on fish contaminants, beach closures, air toxics,
and trophic status. Data Lag.
Performance Measures
—Long-term concentration trends of toxics (PCBs) in
Great Lakes top predator fish.
—Long-term concentration trends of toxic chemicals in
the air.
—Total phosphorus concentrations (long-term, Ug/l) in
the Lake Erie Central Basin.
Planned Actual
5%
7%
10
data
available
in FY 2004
18.4
FY 2002 Same goal, different targets. Goal Not Met.
Performance Measures
—Long-term concentration trends of toxics (PCBs) in Great declining declining
Lakes top predator fish.
—Long-term concentration trends of toxic chemicals in the air. declining declining
—Total phosphorus concentrations (long-term, Ug/l) in the improving mixed
Lake Erie Central Basin.
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.
declining uncertain
declining
improving
declining
improving
FY 2000 Measurable improvements in Great Lakes ecosystem
components. Goal Met,
Performance Measures
—Indicator indices.
—Model predictions for toxics reductions.
FY 2003 Result: The data for the measures regarding toxics concentrations in fish and air will not be available until
the second quarter of FY 2004. The Lake Erie phosphorus problem is linked to the increased "dead zone," the
subject of an ongoing EPA-led study EPA expects the final report will be ready by the end of calendar year 2004.
Causes and management implications are still being determined; however, invasive species, especially zebra and
quagga mussels, appear to be a factor. For further information on Great Lakes indicators see
www.epa.gov/glnpo/glindicators/. EPA scientists are meeting in mid-November to begin to develop strategies for
managing the Lake Erie phosphorous issues.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 46 Chesapeake Bay Habitat
FY 2003 Improve habitat in the Chesapeake Bay. Goal Met.
Performance Measures
—Acres of submerged aquatic vegetation (SAV) present in
the Chesapeake Bay (cumulative).
Planned Actual
86,000
89,659
FY 2003 Results: EPA exceeded its target due to management actions to reduce nutrient loads, coupled with
reduced runoff due to dry weather. Current efforts to develop state standards for water clarity are expected to
result in increased efforts to reduce nutrient and sediment pollution and achievement of the long-term goal of
185,000 acres of submerged aquatic vegetation (SAV). In 1984, 38,000 acres were measured as a baseline. The
increase in the number of acres measured, 89,659 acres in FY 2003, is an indication that water quality is being
improved.
APG 47 Gulf of Mexico
FY 2003 Assist the Gulf States in implementing watershed
restoration actions in 14 priority impaired coastal river and
estuary segments. Goal Met.
Planned Actual
14
FY 2003 Result: In FY 2003, EPA assisted Gulf States in implementing restoration actions to improve water quality
in 97 coastal river and estuary segments listed as impaired under section 303(d) of the Clean Water Act. This
result is due to the increasing effectiveness of interagency coordination and focus on correcting water quality
impairments that impede economic sustainability of coastal communities. The reason for exceeding this year's
target by such a large amount is due to the choices made the states receiving EPA grants to undertake Gulf of
Mexico restoration work. The grantees selected for FY 2003 concentrated their efforts on II estuaries that
resulted in improving 97 segments. It was not well understood when the target was established that the grantees
would end up selecting this amount of work.
APG 48 Enhanced Institutional Capabilities
FY 2003 Enhance environmental management and institutional
capabilities in priority countries. Goal Met.
Performance Measures
— Assist in the development or implementation of
improved environmental laws or regulations in priority
countries.
— Increase the transfer of environmental best practices
among the United States and its partner countries and
build the capacity of developing countries to collect,
analyze, or disseminate environmental data.
— Increase the capacity of programs in Africa or Latin
America to address safe drinking water quality issues.
Planned Actual
I country I country
3 countries 3 countries
I country I country
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
APG 48 Enhanced Institutional Capabilities (continued)
FY 2002 Same goal, different targets. Goal Met,
Performance Measures
—Assist in the development or implementation of improved
environmental laws or regulations in priority countries.
—Increase the transfer of environmental best practices
among the United States and its partner countries and
build the capacity of developing countries to collect,
analyze, or disseminate environmental data.
—Increase the capacity of programs in Africa or Latin
America to address safe drinking water quality issues.
Planned Actual
2 countries 2 countries
3 countries 3 countries
3 countries 3 countries
FY 2001 Same goal, different targets. Goal Met,
Performance Measures
—Number of countries or localities (3) that have adopted 3
new or strengthened environmental laws and policies.
—Number of organizations (3) that have increased environ- 3
mental planning, analysis, and enforcement capabilities.
—Number of organizations (3) that have increased 3
capabilities to generate and analyze environmental data
and other information.
—Number of organizations (3) that have increased public 3
outreach and participation.
—Number of targeted sectors (3) that have adopted 3
cleaner production practices.
—Number of cities (3) that have reduced mobile-source 3
based ambient air pollution concentrations.
FY 2000 Deliver 30 international training modules; implement 6
technical assistance/technology dissemination projects;
implement 5 cooperative policy development projects; and
disseminate information products on U.S. environmental
technologies and techniques to 2,500 foreign customers.
Goal Met.
30
6
5
2,500
12
3,100
FY 2003 Result: FY 2003 efforts included providing Chemicals Information and Exchange Network training to all
7 Central American countries which resulted in more than 100 chemicals managers being trained in accessing
chemical information via the Internet, and in networking with regional and global counterparts. EPA also helped
introduce energy-efficient building codes in approximately half of the 89 regions in Russia, which reduces
CO2-equivalent emissions and conventional air pollutants and leads to cost savings to the Russian economy of
approximately $50 million per year. The Water for Africa program activities resulted in increased health awareness,
increased community empowerment, and increased institutional capacity
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 49 Protecting and Enhancing Estuaries
FY 2003 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. Goal Met.
Performance Measures
—Report on the condition of nation's estuaries based on a
statistically valid sampling design so that data is compa-
rable across the nation.
Planned Actual
I report I report
FY 2003 Result: EPA developed a reliable and statistically valid baseline for the condition of the nation's estuaries
against which to measure the success of ecosystem protection and risk management practices. EPA completed a
draft of the second National Coastal Condition Report, a comprehensive and consistent assessment of the
ecological condition of the estuarine resources of the United States and Puerto Rico (excepting Alaska and Hawaii).
The report uses five indicators to assess overall condition for five regions of the country and for the United States
overall. Overall, the U.S. condition was rated as fair, a slight improvement from the baseline condition that existed in
the early 1990s. This approach allows comparison to conditions described in an earlier report (covering 1990 to
1996), and this comparison permits a measure of the success of ecosystem protection and risk management
practices. The report will be available for public comment in November 2003.
Prior Year Annual Performance Goals
Without Corresponding FY 2003 Goals
(Actual Performance Data Available in FY 2003 and Beyond)
FY 2000
FY 1999
FY 1999
Administer federal programs and oversee state implementation of
programs for lead-based paint abatement certification and training in
50 states, to reduce exposure to lead-based paint and ensure
significant decreases in children's blood levels by 2005.
Complete the building of a lead-based paint abatement certification and
training in 50 states, to ensure significant decreases in children's blood
levels by 2005 through year is reduced exposure to lead-based paint.
Develop an verify innovative methods and models for assessing the
susceptibilities of population to environmental agents, aimed at
enhancing risk assessment and management strategies and guidelines.
Target year is
FY 2005
Target year is
FY 2005
Target year is
FY 2008
FY 2002 Annual Performance Goals
(No Longer Reported for FY 2003)
• Provide information and analytical tools to the public for accessing the risk posed by toxic
chemicals.
• Ensure that EPA's policies, programs and activities address disproportionately exposed and
under-represented population issues so that no segment suffers disproportionately from
adverse health and environmental effects.
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SECTION 2. PERFORMANCE RESULTS—GOAL A. HEALTHY COMMUNITIES AND ECOSYSTEMS
NOTES
1. US EPA, Office of Pollution Prevention and Toxics, Voluntary Children's Chemicals Evaluation Program
(VCCEP) Commitment Tracking System.
2. 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.
3. Organophosphates are a class of widely used, older pesticides of concern for their adverse effects on the
functioning of the nervous system.
4. Examples of emerging scientific development include decontamination techniques for Homeland Security
Operations, targeted risk profiles for sensitive populations (tribes, children), special ecological cases
(endangered species), and chemicals of concern (endocrine disrupters).
5. US EPA, Office of Science Coordination and Policy, Endocrine Disruptor Screening and Testing Program.
Available at http://www.epa.gov/scipoly/oscpendo/.
6. Due to the grantee reporting cycle, the Brownfields Program can only report on the first two quarters of FY
2003. Data are from the Brownfields Management System (BMS). For more information, visit
http ://www. epa.gov/brownfie Ids/.
7. 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."
8. Information on the submerged aquatic vegetation measure is available at
http://www.chesapeakebay.net/status.cfm?sid=88&subjectarea=.
9. For more information about EPA's National Coastal Assessment, please visit
http://www.epa.gov/emap/nca/index.html.
10. Performance and Cost of Mercury and Multipollutant Emission Control Technology Applications on Electric Utility
Boilers (EPA-600/R-03/110).
11. Reduced-risk or "safer" pesticides are those that meet certain criteria and are registered through the Reduced-
Risk Initiative and biopesticides PRN 97-3 of Sept. 4, 1997, entitled Guidelines for Expedited Review of
Conventional Pesticides under the Reduced-Risk Initiative and for Biological Pesticides, available at
http://www.epa.gov/PR_Notices/.
12. US EPA, Office of Pollution Prevention and Toxics, High Production Volume Challenge Program, HPV
Commitment Tracking System. Available at http://www.epa.gov/chemrtk/viewsrch.htm.
13. US EPA, Office of Pollution Prevention and Toxics and U.S. Health and Human Services Agency for Toxic
Substances and Disease Registry. Current Best Practice for Vermiculite Attic Insulation. EPA 747-F-03-001. May
2003. Washington D.C.
14. Perfluorooctyl sulfonate had been widely used in soil and stain repellency and other applications. Two final
rules issued in the U.S. Federal Register: (1) 67 FR 11008, FRL-6823-6, March 11, 2002, and (2) 67 FR 72854,
FRL-7279-1, December 9, 2002.
15. Mexico's equivalent to the U.S. Environmental Protection Agency.
16. US EPA, Border 2012: U.S.-Mexico Environmental Program, EPA 160/D-02/001. Washington, DC: EPA
September 2002. More information on the Border 2012 program available at http://www.epa.gov/
usmexicoborder/.
17. The United States and Mexico established the BECC and the North American Development Bank in 1993 to
help develop and finance environmental infrastructure projects within 100 km of either side of the U.S.-
Mexico border. The BECC works with the border states and local communities to develop and certify projects,
and the bank arranges financing for these projects.
18. Public Law 107-118, "Small Business Liability Relief and Brownfields Revitalization Act," 2002.
19. The Brownfields Program can only report data on the first two quarters of FY 2003, due to the grantee
reporting cycle. Data are from the Brownfields Management System (BMS) More information available at
http ://www. epa.gov/brownfie Ids/.
20. In 2002, 180,000 cubic yards of contaminated sediment containing more than 430 tons of toxic chemicals were
remediated.
21. Environment Canada and US EPA, 2002 Great Lakes Binational Toxics Strategy Annual Progress Report,
March 2003. Information available at http://binational.net/bns/2002/index.html.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
22. Additional information available at http://www.chesapeakebay.net/status.cfm?sid=83&subjectarea=.
23. More information about EPA's National Coastal assessment available at
http://www.epa.gov/emap/nca/index.html.
24. Five primary indicators are used to rate coastal conditions in this report: coastal wetland loss, eutrophic
condition, sediment contamination, benthic index, and fish tissue contaminants. The five indicators were
assigned a score of good, fair, or poor for each coastal area of the United States. The indicator scores were then
averaged to create an indicator score for the overall condition of each coastal region. The national score was
determined as a weighted average based on the areal extent of estuaries in each region. In 2000, the national
score was 2.6 on a scale from 1 (poor) to 5 (good), while the score in the early 1990s was 2.4 percent.
25. See http://www.epa.gov/enviro/html/toxic_releases.html.
26. See http://www.epa.gov/triexplorer/.
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Compliance and Environ,
:ewardship
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.
Progress Toward the Strategic Goal and Objectives
A vital part of EPA's mission is to improve the
environment and protect human health by ensuring
compliance with our nation's environmental laws,
preventing pollution at its source, fostering innovative
solutions to environmental problems, and advancing an
ethic of environmental stewardship among businesses,
governments, and the public. EPA is making substantial
progress toward attaining its environmental objectives
under this goal for FY 2008 through the use of integrated
strategies of compliance assistance and incentives,
monitoring and data analysis, innovative approaches,
and civil and criminal enforcement.
EPA employs "a smart enforcement" framework to
achieve the best possible environmental results. Smart
enforcement is the use of the most appropriate enforce-
ment or compliance tools to address the most significant
problems to achieve the greatest impact for environ-
mental protection.1 Working in partnership with state
and tribal governments, local communities, and other
federal agencies, EPA identifies and addresses the most
significant environmental and public health problems
and strategically targets its resources to achieve the
highest possible levels of performance in its pollutant
reductions. Through enforcement settlements, the
Agency cumulatively reduced nearly 1.6 billion pounds
of pollutants in FY 2001-2003.2
INTEGRATING COMPLIANCE AND
STEWARDSHIP FOR IMPROVED RESULTS
• Nearly .6 billion pounds of pollutants reduced
i,269 facilities voluntarily self-disclosed and
corrected violations through audits since 2000.
3.9 billion pounds of TRI wastes prevented since
1.1 mmBTU of energy conserved, 908 tons of
hazardous materials reduced, and 10,823 tons
materials recycled, and reused by Performance
Track members collectively since 2000.
91
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
CD
Figure 5-1. TRI Total Waste Trend,
FY 1995-2001: 1995 Core Chemicals,
Original Industries
30-,
25-
20-
15-
10-
5-
0.
-*- Actual Production-Adjusted (Normalized)
1995 1996
1997 1998
Years
1999 2000
2001
Source: Toxics Release Inventory (TRI) Explorer maintained by the U.S. EPA Office
of Environmental Information. Data accessed at http://www.epa.gov/triexplorer on
August 14, 2003.
Substantial progress has also been made
toward this goal's objective to improve envi-
ronmental protection and enhance natural
resource conservation by reducing pollution
at the source. Since 1995, wastes reported
by manufacturers to EPA's Toxic Release
Inventory (TRI) have declined by 27.3
percent.3 (See Figure 5-1.)
In FY 2003, the National Pollution
Prevention Roundtable released a report that
showed that states operating under EPA
pollution prevention grants have prevented
more than 167 billion pounds of pollution,
conserved more than 215 million kilowatt
hours (kWh) of energy and 4.1 billion
gallons of water, and saved industry more
than $666 million for the period from 1990
to 2000.4 (See Figure 5-2.)
The Resource Conservation Challenge
(RCC) is a national program designed to find
a flexible, yet more protective way to
conserve valuable natural resources through
pollution prevention, waste reduction, and
energy recovery. EPA is working with
business and industry groups, governments at
all levels, tribes, and non-governmental
organizations to reduce waste generation,
increase recycling, and recover energy
through voluntary partnerships, outreach,
and demonstrations. During 2003, RCC
Program efforts began to focus on targeted
waste commodities such as priority chemi-
cals; paper; electronics; debris from the
construction and demolition sector; and
products used and waste produced by hospi-
tals, schools, and industrial waste generators.
EPA has also significantly reduced
priority chemicals in hazardous wastes by
approximately 42 percent compared to 1991
releases.5 Through EPA's Waste Minimization
Partnership Program, voluntary partners have
pledged to eliminate an additional 70,000
Figure 5-2. An Ounce of Pollution Prevention is Worth Over 167 Billion Pounds of Cure:
A Decade of Pollution Prevention Results, 1990-2000
Waste
80 Billion Pounds
Air
65 Billion Pounds
Water
22 Billion Pounds
Resources Conserved:
215 million kWh of energy • 4.1 billion gallons of water
$666 million in cost savings
Source: National Pollution Prevention Roundtable. An Ounce of Pollution Prevention Is Worth Over 167 Billion Pounds of Cure:
A Decade of Pollution Prevention Results 1990-2000. National Pollution Prevention Roundtable: Washington, DC, 2003.
Information available at http://www.p2.org/p2results/PressRelease.cfm.
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
pounds of priority chemicals during FY 2003,
and an average of approximately 40,000
pounds of waste minimization priority chemi-
cals in wastes annually through FY 2005.6
Working under the leadership of a newly
created National Center for Environmental
Innovation and benefitting from a cross-
Agency innovation strategy, EPA continued
to invest in innovative approaches to achieve
better environmental results. In FY 2003,
EPA's most comprehensive program for
rewarding and recognizing environmental
leadership—the National Environmental
Performance Track Program—added 62 new
members, bringing the total membership to
309 facilities. The latest program results
showed that members collectively conserved
1.1 megamillion British Thermal Units
(mmBTU) of energy, reduced use of
hazardous materials by 908 tons, and
increased use of recycled and reused materials
by 10,823 tons during calendar year 2001.7
EPA also partnered with 10 states to develop
new approaches and promote adoption of those
approaches that have proven successful. For
example, EPA continued working with
Massachusetts to promote its highly successful
Environmental Results Program (ERP) for
improving environmental performance in small
business sectors. ERP uses self-certification
procedures, compliance assistance, and
performance measures to improve account-
ability and track results. Massachusetts
estimates that its work with dry cleaners
resulted in reduced emissions of
perchloroethylene by more than 22 tons
between 1997 and 1999, an amount that would
equal the emissions from about 60 major
hazardous air pollution sources.8 Similarly,
printers in Massachusetts reduced emissions
of volatile organic compounds by 4 tons
between 1998 and 2000.9 Based on ERP's
success, other states are now moving to create
similar programs.
EPA is also making progress toward its
objective to protect human health and the
environment in Indian Country by exploring
additional ways to build tribal capacity in
environmental management. As part of that
effort, EPA received authorization for 1 year
to enter into cooperative agreements with
tribes to help build tribal capacity in imple-
menting environmental programs while also
assisting EPA staff with environmental
inspections, ordinances, and monitoring. In
FY 2003, EPA staff worked with the tribes
through tribal cooperative agreements to
conduct joint inspections, develop and
implement smoke ordinances to protect local
air quality, and address pollution from
underground storage tanks.
FY 2003 Performance
MAXIMIZING RESULTS THROUGH
SMART ENFORCEMENT
EPA's enforcement and compliance
assurance program focuses on reducing
pollution and achieving other results that
protect human health and the environment.
In addition to the prevention or reduction
of emissions or discharges by an estimated
600 million pounds of pollutants to be reduced,
63 percent of concluded enforcement
settlements required an action that resulted in
pollutant reductions and/or changes in facility
management or information practices.10
In addition to pollutant reductions, the
Agency exceeded its FY 2003 performance
targets in conducting 18,880 inspections, and
344 civil and 471 criminal investigations.11
EPA and 14 states concluded a major Clean
Air Act settlement with grain industry giant
Archer, Daniels, Midland (ADM), covering
52 of its plants in 16 states. This joint federal
and state enforcement action requires ADM
to implement, over 10 years, sweeping envi-
ronmental improvements at its plants
nation-wide and is anticipated to result in an
estimated annual reduction of 63,000 tons of
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
air pollution. These air pollution reductions
include a decrease in nitrogen oxides, carbon
monoxide, particulate matter, sulfur dioxide,
volatile organic compounds (VOCs), and
hazardous air pollutants (HAPs).12
Compliance assistance provided through
EPA's Compliance Assistance Centers and
Compliance Assistance Clearinghouse is an
integral part of smart enforcement strategies.
In FY 2003, EPA provided a wide range of
new compliance assistance information tools
and services for regulated facilities, industry
sectors, trade associations,
environmental assistance J^*^
providers, and the public to
help increase understanding of
environmental requirements,
improve facility practices, and
reduce facility emissions.
The Clearinghouse launched
Centers for three new sectors
—the construction and auto
salvage industries and U.S.-
Mexico Border compliance. In
FY 2003, survey respondents
who use the Centers stated
that 87 percent had improved
their understanding of environmental
requirements, 75 percent reported that they
had taken an action as a result of the Centers;
and 81 percent of those respondents indicated
that they had realized an environmental
benefit as a result of the actions taken. In
addition, EPA-supported Compliance
Assistance Centers reached more than
869,000 entities."
The Agency promotes facility self-
policing and improvement through
incentives, such as EPA's Audit Policy, by
encouraging identification and correction of
violations, and by requiring facilities to
implement environmental management
systems as part of enforcement settlements.
In FY 2003, more than 509 companies used
the EPA Audit Policy to report and resolve
violations at 848 facilities. For example, more
than 350 facilities in 250 municipalities
across New England are participating in the
Department of Public Works (DPW) Audit
Initiative to improve their environmental
performance. Facilities are reporting and
correcting violations involving improper
handling, disposal, and storage of hazardous
waste and petroleum products; inadequate
emergency procedures; unpermitted
discharge of wastewater to ponds, streams,
and wetlands; and improper use of floor
drains to contain wastes. Because these
violations are corrected sooner than they
otherwise would be, a
significant environmental
benefit is achieved. This
voluntary program was
developed in partnership
with the New England
Chapter of the American
Public Works Association
and was offered to DPWs
in New England following
a number of significant
enforcement actions
against municipal highway
garages.14
PREVENTING POLLUTION AND
CONSERVING RESOURCES
EPA uses the Toxic Release Inventory
(TRI) as one method to measure national
progress in preventing pollution. The TRI
tracks toxic chemical releases and the gener-
ation of hazardous wastes by major industrial
facilities. The 2001 TRI data report released
in 2003 shows large reductions in both wastes
generated and releases to the environment.
For example, in 2001, U.S. manufacturers
reduced total waste reported to TRI by 18.5
percent, or 4.2 billion pounds (compared to
2000 levels), when normalized to account for
changes in production. Additionally, manu-
facturers reduced their actual environmental
releases of toxic chemicals by 14.4 percent,
or 600 million pounds, from 2000 levels. This
represents the largest aggregate annual reduc-
tion since the number of chemicals required
to be reported to TRI was doubled in 1995,
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
and significant progress in the collaborative
effort of industry and EPA.15 More informa-
tion on TRI can be found in Goal 4.
EPA's Design for the Environment (DfE),
Hospitals for a Healthy Environment (H2E),
and Green Chemistry Challenge Award
programs promote the adoption of less
polluting practices through pollution
prevention outreach. DfE's Formulator
Initiative partners with manufacturers of
industrial and institutional detergents,
cleaners, and other products. As a result
of DfE partnership with 6 product manufac-
turers, more than 15 new eco-friendly
formulations entered the marketplace in
FY 2003. Since 1997, the Formulator
Initiative has involved partnerships with 19
companies and has recognized more than 30
eco-friendly products.16 Annual benefits
(assuming 2.6 million loads using 2-ounce
detergent doses for a 50-pound institutional
washer) from the use of just 1 DfE-recognized
laundry detergent include eliminating more
than 300,000 pounds of toxic chemicals and
conserving more than 100 million gallons of
laundry water and the energy that would
have been needed to heat the water.17
Nearly 1,900 hospitals and healthcare
facilities across the country are participating
in EPA's H2E, an innovative program
designed to voluntarily eliminate mercury use
and reduce hospital waste by 50 percent.18 In
2003, several major healthcare networks
joined the ranks of H2E, including the
Veterans Health Administration with 162
healthcare facilities; the Catholic Healthcare
Association, with a membership of more than
700 facilities; and Columbia/HCA, with more
than 200 facilities.19 H2E does not compro-
mise necessary medical uses of mercury.
The Green Chemistry Challenge Award
Program uses Presidential recognition as an
incentive for chemical designers to prevent
pollution and conserve water and energy
use.20 During FY 2003, Green Chemistry
Challenge Award-winning technologies pre-
vented more than 126 million pounds of
hazardous chemicals and solvents from being
used or released and saved 55 million gallons
of water. Since its inception (FY 1996)
through FY 2003, the program has cumula-
tively eliminated more than 326 million
pounds of hazardous chemicals and solvents.21
EPA promotes the adoption of effective
technologies that protect the public and the
environment from high-risk pollutants. In
FY 2003, EPA verified the performance of
environmental technologies to help industry,
states, and consumers choose more effective
technologies. Through the Environmental
DESIGN FOR THE ENVIRONMEN"
Bactain is the first and only marine sector
holding tank treatment product to be
)esign for the Environment"
endorsement by the United States
Environmental Protection Agency.
Owners and crew of vessels who treat
their holding tanks with Bactain will be
participants in an important national
effort to protect our country's aquatic life,
seashores, and coastlines and help safeguar
human health and the environment.
Complete Holding
For product information visit
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Technology Verification (ETV) Program, in
FY 2003 EPA tested the performance charac-
teristics of 40 environmental technologies to
provide credible information to technology
purchasers, permitters, vendors, and
developers, with an intent to speed the
implementation and adoption of innovative
technologies that will prevent or reduce
pollution. Vendors can use the peer-reviewed
data on technology performance to sell their
products, while purchasers and permitters can
use this information to guide their purchasing
decisions. In addition, the program verified
three diesel retrofit technologies for consider-
ation as pollution
control technologies in
EPA's voluntary diesel
retrofit program, which
encourages owners to
install pollution-reducing
devices on their vehicles
and use cleaner-burning
diesel fuel to reduce
the release of harmful
emissions.22
INNOVATIVE APPROACHES
In FY 2003, EPA invested in innovative
approaches aimed at improving the efficiency
and effectiveness of environmental programs
and enhancing environmental performance
among businesses, communities, and other
organizations that manage environmental
responsibilities. EPA focused much of its
attention on supporting innovation in
individual states. Under the Joint Agreement
on Regulatory Innovation, EPA worked with
states on a number of innovative projects that
address state environmental priorities. For
example, EPA and Michigan collaborated on
a novel approach for reducing storm water
contamination to local water bodies. As a
result, 48 Michigan municipalities began
managing municipal storm water several years
before Agency regulations would have applied.
The innovative watershed permitting
approach allowed for targeting storm water
management practices among municipalities,
within watersheds, to achieve the greatest
impacts on water quality. The early and
coordinated implementation of the storm
water management practices are expected to
have substantially reduced nutrient and
sediment pollution, and also to have alleviated
problems caused by the increased volume and
velocity of flow associated with wet weather.23
In the Rouge River watershed alone, where 25
municipalities are participating in the pilot
program, dissolved oxygen readings indicate
non-attainment has dropped from 61 percent
to 4 percent, and frog and toad survey results
have demonstrated ecological improvements.24
Some projects have been pursued because
of their potential for revealing ways to improve
environmental protection on a national scale.
EPA and Arizona have worked with Intel
Corporation in Arizona on an innovative air
permit that caps overall emissions and elimi-
nates the need for multiple air permits. As part
of the agreement, Intel committed to make
specific environmental improvements. FY 2003
results show a 981 ton reduction in solid waste,
and 375 ton and 911 ton increases in the
amounts of nonhazardous and hazardous wastes
recycled, respectively. Likewise, a project with
Crompton Corporation in West Virginia that
is testing a more cost-effective approach for
controlling hazardous air pollutants continued
to rack up environmental benefits in FY 2003.
Air emissions and wastewater sludge were
reduced by 211,000 pounds and 680,000
pounds, respectively, while 430,000 pounds of
methanol were reused.25
EPA also fostered environmental
stewardship through innovative programs with
business and industry. Performance Track26
recognizes and rewards facilities that demon-
strate strong environmental performance.
Sixty-two new members joined the program in
FY 2003, and achievements of all 309 partici-
pating facilities are noted at the beginning
of this chapter. As membership has grown,
EPA has continued developing additional
incentives that will encourage more facilities
to seek membership by demonstrating strong
environmental performance.
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
EPA works with a variety of organizations
to improve the environmental performance of
small businesses. In FY 2003, EPA worked
with Maine, Rhode Island, Delaware,
Maryland, Tennessee, New Jersey, Florida,
and the District of Columbia to set up ERP
programs for priority small business sectors,
and with Vermont, New Hampshire,
Michigan, and New Jersey to initiate
planning. EPA supported organizations that
provide environmental assistance to more
than 1 million small businesses a year, and
maintained its toll-free hotline to provide
small businesses, trade associations, and others
convenient, confidential assistance.27
In FY 2003, EPA also expanded its Sector
Strategies Program,28 establishing sector points-
of-contact to address performance improvement
barriers and stewardship opportunities. The 12
sectors in the program represent approximately
22 percent of the U.S. manufacturing gross
domestic product, 700,000 facilities, and more
than $8.55 billion spent annually on pollution
control.29 Figure 5-3 shows energy and water
conservation, and reductions in waste
generation, water effluent, and air emissions
achieved by the metal finishing sector through
this partnership approach.30
In FY 2003, EPA continued its support
of improved compliance and stewardship
by fostering consideration of alternative
approaches, such as voluntary programs,
innovative compliance tools, and flexible,
market-based solutions. EPA also made
progress toward creating an Ecological Benefits
Strategic Plan that will provide a unified
framework to better apply existing ecological
and economic methods and data to valuing the
ecological impacts of policies and regulations,
and will establish a research agenda to fully
account for ecological goods and services in
Figure 5-3. Metal Finishing Strategic
Goals Program Progress 2003
-20-
rj
U -40.
-60.
-80
Sludge
Production _ 23%
Slu
Shipped Offerte
Water
Use
-62% -62%
Organic Metals to
Emissions Water
Percentage reductions by participating SGP facilities from 1992 baseline;
reductions normalized by $ of sales using most current available data.
economic analysis. The information from these
efforts will help decision makers identify
priorities and efficiently use the scarce societal
resources available to achieve desired environ-
mental goals and objectives.
The Agency also continued research in
FY 2003 on environmental health issues in
an effort to improve risk assessment data used
in economic analyses and aid in the evalua-
tion and design of environmental programs.
EPA released its report on indicators of
children's environmental health, which
documents national measures of contaminants,
body burdens, and illnesses to children. This
report serves as an important benchmark that
EPA will use to guide its future actions and
measure progress.31
In FY 2003, under the Indian General
Assistance Program, EPA provided $57.1
million in grants to tribal governments and
intertribal consortia for developing the
capacity to administer environmental
protection programs and conduct assessments
of the conditions of their lands.
Assessment of Impacts of FY 2003
Performance on FY 2004 Annual Plan
There are no changes to FY 2004 APGs based on results of FY 2003 performance.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
SUMMARY OF RESULT
Number of Goals Met: 7
Number of Goals Not Met: I
Number with Data Lag: 2
Annual Performance Goals
(APG) and Measures
GOAL 5: COMPLIANCE AND
ENVIRONMENTAL STEWARDSHIP
APG 50 Regulated Communities
FY 2003 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 Measures
—Facilities, states, technical assistance providers or other
entities reached through targeted compliance assistance.
Planned Actual
475,000
721,000
FY 2003 Result: EPA's targeted compliance assistance program continues to increase the regulated community's
understanding of compliance with environmental requirements and improve facility environmental management
practices by providing web-based compliance assistance. The increase in results reflects the EPA's regional offices use
of a more integrated, strategic, and performance based approach to incorporating compliance assistance into their
strategies for addressing environmental problems. EPA has also provided compliance assistance measurement training
to emphasize the measurement of activities and outcomes.
APG 51 Compliance Incentives
FY 2003 Increase opportunities through new targeted sector
initiatives for industries to voluntarily self-disclose and
correct violations on a corporate-wide basis. Goal Met.
Performance Measures
—Facilities voluntarily self-disclose and correct violations
with reduced or no penalty as a result of EPA self-
disclosure policies.
Planned Actual
500
848
FY 2002 Same Goal. Goal Met,
Performance Measures
—Facilities voluntarily self-disclose and correct violations with
reduced or no penalty as a result of EPA self-disclosure
policies.
500
1,467
FY 2001
Same Goal. Goal Met,
500
1,754
FY 2000 Increase entities self-policing and self-correction of
environmental problems through use of EPA incentive
policies: small business, small community and audit policies
over FY 1997 levels. Goal Met.
Performance Measures
—Number of facilities that self-disclose potential violations.
346
2,200
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 51 Compliance Incentives (continued)
FY 2003 Result: EPA's incentive programs continue to encourage regulated entities to review their operations, and
disclose and correct violations of environmental requirements with reduced or waived penalties. On-going tailored
compliance incentive programs include the following sectors: Bakers, Colleges and Universities, Wood Treaters, Grain
Processing, Prisons, and Stormwater/Commercial Development. This approach has worked very well, in FY 2003, 848
facilities self-disclosed and corrected violations, exceeding the target of 500 self audits.
APG 52 Inspections/Investigations
FY 2003 EPA will conduct inspections, criminal investigations, and
civil investigations targeted to areas that pose risks to
human health or the environment, display patterns of
non-compliance, or include disproportionately exposed
populations. Goal Met.
Performance Measures
—Number of EPA inspections conducted.
—Number of criminal investigations.
—Number of civil investigations.
Planned Actual
14,000
400
ISO
18,880
344
FY 2002 Same goal, different targets. Goal Met,
Performance Measures
—Number of EPA inspections conducted.
—Number of criminal investigations.
—Number of civil investigations.
15,500
400
200
17,668
484*
FY 2001 Same goal, different targets. Goal Met,
Performance Measures
—Number of Inspections.
—Number of criminal investigations.
—Number of civil investigations.
17000
450
250
17,812
482
FY 2000 Same goal, different targets. Goal Not Met.
Performance Measures
—Number of EPA inspections.
—Number of civil investigations.
—Number of criminal investigations.
—Percent of inspections and investigations (civil and criminal'
conducted at priority areas.
13,500
ISO
500
50%
20,123
660
477
15%
FY 2003 Result: The Agency significantly exceeded FY 2003 performance targets for environmental compliance
inspections, criminal investigations, and civil investigations. This is due, in part, to improved analysis of environmental
data, providing better targeting information for inspections and investigations. This increase also reflects work done to
address unique regional priorities such as local watershed issues. EPA achieved its target of 180 civil investigations,
performing 344 investigations. The number of investigations conducted in a given year depends on a wide variety of
factors that are difficult to predict, including facility compliance with applicable environmental regulations, identification
of a specific environmental problem, observed environmental problems, or repeated complaints regarding a specific
facility or facilities. It represents a rough prediction based upon past experience in reporting and conducting
investigations. As a result of increasing EPA compliance inspections and investigations, the Agency provides an effective
deterrent against violations of environmental laws.
* NOTE: Historically, the target for criminal investigations has applied only to investigations of environmental crimes.
In FY 2002, the Agency incorrectly added 190 homeland security investigations to the number of environmental crimes
investigations for a total of 674 criminal investigations. The total number of criminal investigations for FY 2002 should
have been only 484, which represents the number of environmental crimes investigations initiated.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 53 Non-Compliance Reduction
FY 2003 EPA will direct enforcement actions to maximize
compliance and address environmental and human health
problems. Goal Not Met.
Performance Measures
—75% of concluded enforcement actions require physical
action that result in pollutant reductions 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%
300 M
63%
600 M
5 populations 5 populations
FY 2002 EPA will direct enforcement actions to maximize compliance
and address environmental and human health problems; 75%
of concluded enforcement actions will require environmental
or human health improvements such as pollutant reductions
and/or changes in practices at facilities. Goal Not Met.
Performance Measures
—75% of concluded enforcement actions require physical 75%
action that result in pollutant reductions and/or changes in
facility management or information practices.
—Millions of pounds of pollutants required to be reduced 300 M 261 M
through enforcement actions settled this fiscal year.
—Develop and use valid compliance rates or other 5 populations 5 populati<
indicators of compliance for selected populations.
—Reduce by 2 percentage points overall the level of 2% 1.6%
significant noncompliance Recidivism among CAA, CWA,
and RCRA programs from FY 2001 levels.
—Increase by 2% over FY 2001 levels the proportion of 2% -3.8%
significant 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 I
enforcement actions initiated and concluded.
FY 2001 Same goal, different targets. Goal Met,
Performance Measures
—75% of concluded enforcement actions require pollutant 75%
reductions and/or changes in facility management or
information practices.
—Estimated pounds of pollutants reduced. 350 M
—Increase or maintain existing compliance rates or other
indicators of compliance for populations with established
baselines, or develop additional rates for newly selected
populations.
—Reduce by 2 percentage points overall the level 2%
of significant non-compliance recidivism among the CAA,
CWA, and RCRA programs from FY 2000 levels.
660 M
5 populations 6 populations
2.4%
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 53 Non-Compliance Reduction (continued)
FY 2001 —Increase by 2% over FY 2000 levels the proportion of
(continued) significant non-complier facilities under CAA, CWA, and
R.CRA which returned to compliance in less than 2 years.
—Produce a report on the number of civil and criminal
enforcement actions initiated and concluded.
Planned Actual
1%
1.33%
FY 2000 Same goal, different targets. Goal Met.
Performance Measures
—Percent of actions which require pollutant reductions.
—Estimated pounds of pollutants reduced (aggregate).
—Establish statistically valid noncompliance rates or other
indicators for selected environmental problems.
—Establish a baseline to measure percentage of significant
violators with reoccurring significant violations within 2
years of returning to compliance.
—Establish a baseline to measure average length of time for
significant violators to return to compliance or enter
enforceable plans/agreements.
—Produce report on the number of civil and criminal
enforcement actions initiated and concluded.
35%
300 M
5
I
13.6
714 M
FY 2003 Result: EPA went well beyond the FY 2003 target of 300 million pounds of pollutants reduced. This occasionally happens
because it is impossible to exactly predict the numbers of enforcement cases which will be filed or the numbers of cases which will
settle in a year EPA establishes its annual targets by studying previous performance. In FY 2003, several cases with enormous
anticipated pollutant reductions were settled: the Joe Ivie hog farm case is estimated to prevent 98 million pounds of oil and grease
from being released into the water; the Archer Daniels Midland case will reduce an estimated 126 million pounds of air pollutants a
year; and a settlement with ALCOA is anticipated to reduce the company's emissions of sulfur dioxide and nitrogen oxides to the air
by more than 136 million pounds per year. The percentage of concluded enforcement actions requiring a pollutant reduction and/or
change in facility management practices was lower than the target of 75%. This missed target occurred due to a reporting problem.
While there was an increase in the percentage of concluded enforcement actions that were able to quantify pounds of pollutants
reduced, there was also a reduction in the reporting of non-physical complying actions (non-physical actions include items such as
record keeping, reporting, and auditing). Because of this reduction in reporting certain types of actions, the overall percentage went
down. EPA plans to address this problem by ensuring more accurate reporting in FY 2004. However, the overall level of pounds of
pollutants reduced was more than double the pounds of pollutants target, which indicates that the overall environmental benefit was
achieved despite falling short of the target for enforcement actions requiring pollutant reductions or change in facility management
practices. In FY 2003, EPA calculated statistically valid compliance rates for self-reported Clean Water Act data for five populations:
(I) Biological Oxygen Demand (BOD), (2) Total Suspended Solids (TSS) for municipal wastewatertreatment facilities, (3) zinc (4) lead
for iron and steel facilities, and (5) ammonia-N for petroleum refineries.
FY 2002 Performance Measure Result Available in FY 2003: Recidivism rates measure the number of facilities that return to significant
non-compliance with Clean Water, Clean Air, and Resource Conservation and Recovery Acts, with 2 years of having corrected their
previous compliance problems. EPA did not meet its goal of reducing by 2% the number of facilities returning to significant
non-compliance with 2 years. A +1.6 percentage point increase in the noncompliance recidivism rate indicates a 1.6% increase in the
number of regulated facilities that went back into significant non-compliance with 2 years. This represents a missed target in that the
target was a decrease of 2%. Facilities with violations under RCRA and CWA showed an increase in their recidivism rates, accounting
for this overall increase. In FY 2002, EPA did not meet its goal to increase the proportion of facilities that return to compliance with
environmental regulations within 2 years of having been in significant non-compliance. The average return to compliance within 2 years
for significant noncompliers (SNCs) decreased by 3.8%, falling short of the 2% target increase; this indicates that a higher number of
facilities required more than 2 years to resolve their compliance problems. This was largely due to a significant drop in the percentage
of RCRA SNC's returning to compliance within 2 years. However, it should be noted that data quality improvement efforts for RCRA
data in 2002 contributed heavily to this effect; EPA removed a number of facilities that were incorrectly categorized as SNCs from the
database used to record recidivism rate results. This decreased the size of the universe of SNC facilities and increased the percentage.
This data quality effort should bring about less variability and greater accuracy in future years.
* NOTE: FY 2001 Result has been updated to reflect information received after the FY 2001 Annual Report was published.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 54 Quality Assurance
FY 2003 Identify noncompliance and focus enforcement and
compliance assurance on human health and environmental
problems, by maintaining and improving quality and
accuracy of data. 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 Phase II stage of Phase II of ICIS
(modernization of the Permit Compliance System (PCS))
by September 2003.
Planned
Actual
95%
95%
FY 2002 Maintain and improve quality and accuracy of EPA's enforce-
ment 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%
FY 2001 Same goal, different targets. Goal Met,
Performance Measures
—Continue operation and maintenance/user support of 14 95%
information systems housing national enforcement and
compliance assurance data with a minimum of 95%
operational efficiency.
—Complete Phase I of ICIS development (programming) Phase I Phase
and begin design of Phase II.
—Complete Quality Management Plan (QMP) project for
additional data systems. 3 0
—Complete detailed design (development of screens, proto-
types) including a pilot NPDES permitting desk model for I
Permit Compliance System (PCS) system modernization.
—Conduct four data analyses of environmental problems in
Indian Country using the American Indian Lands 4 12
Environmental Support Project (AILESP) and the baseline
assessment survey.
FY 2003 Result: In FY 2003, the Agency continued its efforts in the phased implementation of the Integrated
Compliance Information System (ICIS) by completing a detailed design document for ICIS Phase II: the Agency's
modernization of the Permit Compliance System, which serves the permitting, enforcement, and compliance program
needs of the Clean Water Act, National Pollutant Discharge Elimination System (CWA NPDES) program. The
Agency also maintained 95% operational efficiency for the enforcement and compliance data systems. Such efficiency
allows EPA users and the public to obtain data more efficiently and with less time lags and enables the Agency to
perform integrated data analysis across a number of environmental statutes.
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 55 Capacity Building
FY 2003 Improve capacity of states, localities and tribes to conduct
enforcement and compliance assurance programs. EPA will
provide training as well as assistance with state and tribal
inspections to build capacity. Goal Met.
Performance Measures
—Conduct EPA-assisted inspections to help build state
program capacity.
Planned Actual
250
1,027
FY 2002 Same goal, different targets. Goal Met,
Performance Measures
—Number of EPA training classes/seminars delivered to
states, localities and tribes to build capacity.
—Conduct EPA-assisted inspections to help build state
program capacity.
—Provide tribal governments with 50 computer-based
training (CBT) modules.
—Total number of state and local students trained.
—Train tribal personnel.
200
400
50
4,900
95
1,081
116
6,631
FY 2001 Same goal, different targets. Goal Met.
Performance Measures
—Number of EPA training classes/seminars delivered to 220 128
states, localities and tribes to build capacity.
—Conduct EPA-assisted inspections to build capacity. ISO
—The National Enforcement Training Institute will provide 50
tribal governments with 50 CBT modules.
—Total number of state and local students trained. 4,900 4,727
—The National Enforcement Training Institute will train tribal 105
personnel.
FY 2000 Same goal, different targets. Goal Met,
Performance Measures
—Number of EPA-assisted inspections to build capacity.
—Number of EPA training classes/seminars delivered to
states/localities and tribes to build capacity.
100
200
154
FY 2003 Result: EPA builds capacity with the state and tribal partners by conducting EPA-assisted inspections and by
providing training to partner inspectors. Through EPA-assisted inspections, the states gain a better understanding of
environmental requirements and inspection techniques, which improves the consistency of enforcement and
compliance work. The number of EPA's assisted inspections for FY 2003 was consistent with FY 2002's result Capacity
building activities assist EPA in meeting annual performance targets each year due to the delegation of many of the
statutory requirements to state and tribal entities.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 56 Reducing Persistent Bioaccumulative Toxics (PBTs) in
Hazardous Waste Streams
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. Data Lag.
Performance Measures
—Percentage reduction in generation of priority list
chemicals from 1991 levels.
Planned
Actual
3%
data
available
in 2004
FY 2003 Result: Data will be available by December 2004.
APG 57 Toxics Release Inventory (TRI) Pollutants Released
FY 2003 The quantity of TRI pollutants released, disposed of, treated
or combusted for energy recovery in 2002 (normalized for
changes in industrial production) will be reduced by 200
million pounds, or 2%, from 2002. Data Lag.
Planned Actual
-200 M
data
available
in FY 2005
FY 2002 The quantity of TRI pollutants released, disposed of, treated
or combusted for energy recovery in 2002 (normalized for
changes in industrial production) will be reduced by 200
million pounds, or 2%, from 2001. Data Lag,
-200 M
data
available
in 2004
FY 2001 The quantity of TRI pollutants released, disposed of, treated
or combusted 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
FY 2000 The quantity of TRI pollutants released, disposed of, treated
or combusted for energy recovery, (normalized for changes
in industrial production) will be reduced by 200 million
pounds, or 2%, from 1999 reporting levels. Goal Met,
-200 M
-405 M
FY 2003 Result: Data will be available in September 2005 due to a 2-year lag in the reporting cycle for TRI data.
(Facilities report to EPA 6 months after the end of the reporting year; EPA processing and quality assurance require
an additional 9-12 months prior to public release).
FY 2001 Result Available in FY 2003: For FY 2001, EPA exceeded its target of a reduction of 200 million pounds of
TRI non-recycled wastes: production-adjusted (normalized) waste amounts were reduced by over 464 million
pounds from 2000 levels (6.3% reduction) in part due to correction of reporting anomalies experienced in FY 2000,
and in part due to greater than expected source reduction success by industry
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
APG 58 Tribal Environmental Baseline/Environmental Priority
FY 2003
FY 2002
FY 2001
FY 2000
In 2003, the American Indian Environmental Office (AIEO)
will evaluate non-Federal sources of environmental data
pertaining to conditions in Indian Country to enrich the
Tribal Baseline Assessment Project. Goal Met.
Baseline environmental information will be collected for 38%
of tribes (covering 50% of Indian Country). Goal Met,
Performance Measures
— Environmental assessments for tribes (cumulative).
Same goal, different targets. Goal Met,
16% of tribal environmental baseline information will be
collected and 12 additional tribes (cumulative total of 57)
will have tribal/EPA environmental agreements or identified
environmental priorities. Goal Not Met.
Planned
20
217
tribes
193
16%
12
Actual
331
207
16%
4
FY 2003 Result: Under federal environmental statutes, EPA is responsible for ensuring human health and
environmental protection in Indian Country By the end of FY 2003, EPA met its goal for assessing 20 non-Federal
sources of environmental data to integrate existing data, develop partnerships, improve communication, and establish
tribal environmental priorities in a coordinated, multi-media, and interagency way.
APG 59 New Technologies
FY 2003 Develop 10 testing protocols and complete 40 technology
verifications for a cumulative Environmental Technology
Verification (ETV) program total of 230 to aid industry,
states, and consumers in choosing effective technologies to
protect the public and environment from high risk pollu-
tants. Goal Met.
Planned Actual
10
40
FY 2002 Formalize generic testing protocols for technology performance
verification, and provide additional performance verifications of
pollution prevention, control and monitoring technologies in all
environmental media. Goal Met
Performance Measures
—Complete 20 stakeholder approved and peer-reviewed
test protocols in all environmental technology categories
under Environmental Technology Verification (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 sectors. Emphasis will be placed on preventive
approaches for industries and communities having difficulty
meeting control/emission/effluent standards. Goal Not Met.
Performance Measures
—Deliver a Report to Congress on the status and
effectiveness of the ETV Program during its first 5 years.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 59 New Technologies (continued)
FY 2000 Complete development of one or more computer-based
tools which simulate product, process, or system design
changes, and complete proof-of-process structure for one or
more generic technologies (applicable to more than one
environmental problem) to prevent or reduce pollution in
chemicals and industrial processes. Goal Met,
Performance Measures
—Complete development of PARIS II Software tool to
design environmentally benign solvents, and development
and integration of Waste Reduction (WAR) Algorithm
into commercially available chemical process simulator.
—Complete Beta testing of a decision support tool for life-
cycle analyses of municipal waste management options.
Planned Actual
9/30/00
9/30/00
9/30/00
9/30/00
FY 2003 Result: EPA met the new technologies goal to develop 10 testing protocols and complete 40 technology
verifications to protect the public and the environment from high risk pollutants. EPA completed 10 stakeholder-
approved and peer-reviewed testing protocols for commercial-ready environmental technologies in the following
areas: air pollution control, drinking water, air monitoring, source water protection and wet weather flows, and
pollution prevention technologies. In addition, EPA also completed 40 verifications of commercial-ready air pollution
control, drinking water treatment, air, water, and soil/surface monitoring, water quality protection, greenhouse gas
reduction, and pollution prevention environmental technologies. These protocols and verifications cumulatively
provide environmental technology purchasers, permitters, and vendors information on 230 environmental
technologies that enhance understanding of a wide variety of environmental technologies and improve decision
making regarding future environmental technology purchases.
FY 2002 Annual Performance Goals
(No Longer Reported for FY 2003)
• Ensure compliance with legal requirements for proper handling of hazardous waste imports
and exports.
• Promote the use of Environmental Management Systems (EMS) to address known
compliance and performance problems.
• Improve public access to compliance and enforcement documents and data through
multimedia data integration projects and other studies, analyses and communication/outreach
activities.
• Improve P2 tools for the industrial sector and other sectors by providing updated/new
methods and approaches to help users simulate product, process or system redesign and
evaluate resulting pollution levels, impacts and costs.
• EPA will provide direct investigative, forensic, and technical support to the Office of
Homeland Defense, FBI, and/or other federal, state, and local law enforcement agencies to
help protect and prevent, or respond to, terrorist-related environmental, biological, or
chemical incidents.
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SECTION 2. PERFORMANCE RESULTS—GOAL 5. COMPLIANCE AND ENVIRONMENTAL STEWARDSHIP
NOTES
1. Additional information on smart enforcement, available at
http://www.epa.gov/compliance/resources/publications/planning/direction/smartenfjpmemo.pdf.
2. US EPA, Office of Enforcement and Compliance Assurance. Case Conclusion Data Sheets (CCDS). Accessed:
October 30, 2003. Available at http://www.epa.gov/Compliance/planning/results/tools.html.
3. US EPA, Office of Environmental Information,"Toxics Release Inventory (TRI) Waste (Waste Quantity Trends
Report on 1995 Core List for all chemicals and manufacturing sector throughout the U.S.)." TRI Explorer
database. Accessed: August 14, 2003. Available at http://www.epa.gov/triexplorer/. EPA's Office of Pollution
Prevention and Toxics performed analyses to generate the production-adjusted (normalized) data. The
production index used was the Bureau of Economic Analysis' Chain Type Quantity Index for the
manufacturing sector. The annual index was extracted from the Internet at
http://www.bea.gov/bea/regional/gsp/, maintained by the Bureau of Economic Analysis (Site accessed
August 14, 2003).
4. These pollution prevention results are cumulative data achieved over multiple years; however, these results do
not represent recurring savings and reductions that continue each year. Note: not all states/programs answered
the survey. National Pollution Prevention Roundtable, An Ounce of Pollution Prevention Is Worth Over 167
Billion Pounds of Cure: A Decade of Pollution Prevention Results 1990-2000. National Pollution Prevention
Roundtable: Washington, DC, 2003. Available at http://www.p2.org/p2results/PressRelease.cfm, 16.
5. US EPA, Waste Minimization Priority Chemicals Trends Report. Washington, DC: US EPA. Accessed: October
30, 2003. Available at http://www.epa.gov/epaoswer/hazwaste/minimize/trfull.pdf, 3.
6. US EPA, Waste Minimization Partnership Program Commitments database. Version 1. Internal database. Version
1 October 2003.
7. US EPA. Performance Track Progress Report. Top Performers. Solid Results. EPA400-R-03-004. US EPA:
Washington, DC. April 2003. Available at http://www.epa.gov/performancetrack, 7-14.
8. Liss, Lauren et al. "The Massachusetts Environmental Results Program—Improving Environmental
Performance on an Industry Sector Basis." ECOSTATES. July 2001: 13.
9. Presentation. Stephen DeGabriele, Director, Business Compliance Division, Massachusetts Department of
Environmental Protection. Quarterly Florida Department of'Environmental Protection District Directors Meeting
with Deputy Secretary Alan BedweR. Orlando, EL, November 26, 2001.
10. US EPA, Office of Enforcement and Compliance Assurance, Case Conclusion Data Sheets (CCDS). Accessed:
October 30, 2003. Available at http://www.epa.gov/Compliance/planning/results/tools.html.
11. More information on settled cases and the environmental benefits achieved, including pounds of pollutants
reduced, available at http://www.epa.gov/compliance/resources/cases/civil; US EPA, "Goal 9: A Credible
Deterrent to Pollution and Greater Compliance with the Law." FY 2003 Annual Performance Plan. US EPA:
Washington, DC, 2001, IX-6.
12. US EPA, Archer, Daniels, Midland Clean Air Act Settlement. Accessed: October 30, 2003. Available at
http://www.epa.gov/compliance/resources/cases/civil/caa/.
13. This information was collected through exit surveys completed by users of the National Compliance Assistance
Centers, US EPA, Office of Enforcement and Compliance Assurance. Compliance Assistance Results. Accessed:
October 1, 2003. Available at http://www.assistancecenters.net/results.
14. More information on the self audit policy available at http://www.epa.gov/compliance/incentives/auditing.
15. US EPA, Office of Environmental Information, "Toxics Release Inventory (TRI) Waste (Waste Quantity
Trends Report on 1995 Core List for all chemicals and manufacturing sector throughout the U.S.)." TRI
Explorer database. Accessed: August 14, 2003. Available at http://www.epa.gov/triexplorer/. EPA's Office of
Pollution Prevention and Toxics performed analyses to generate the production-adjusted (normalized) data.
The production index used was the Bureau of Economic Analysis' Chain Type Quantity Index for the
manufacturing sector. The annual index was extracted from the Internet at
http://www.bea.gov/bea/regional/gsp/, maintained by the Bureau of Economic Analysis (Site accessed August
14, 2003).
16. US EPA, Office of Pollution Prevention and Toxics, DfE Formulator Partners. Accessed October 1, 2003.
Available at http://www.epa.gov/dfe/projects/formulat/formpart.htm.
17. Electronic communication from Noramtech Corporation to EPA Design for Environment (DfE) staff.
November 20, 2002.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
18. American Hospital Association; US EPA; Health Care Without Harm; American Nurses Association, About
H2E: H2E Overview. Accessed: October 30, 2003. Available at http://www.h2e'Online.org/about/overview.htm.
19. US EPA, Hospitals for a Healthy Environment. Accessed September 23, 2003.
Available at http://www.h2e'Online.org/.
20. US EPA, Office of Pollution Prevention and Toxics. Green Chemistry Challenge. Accessed October 1, 2003.
Available at http://www.epa.gov/greenchemistry/index.html.
21. US EPA, Office of Pollution Prevention and Toxics, Green Chemistry Tracking System. Internal database.
Continually updated.
22. See http://www.epa.gov/etv.
23. Wayne County, Michigan. "Stormwater Factsheet." Rouge River National Wet Weather Demonstration Project.
Accessed: November 4, 2003. Available at http://www.rougeriver.com/stormwater/.
24. US EPA, Office of Wastewater Management. "Fact Sheet 3—Michigan General NPDES Storm Water Permit."
Watershed-based NPDES Permitting Case Studies: Final Permit. Accessed: November 4, 2003. Available at
http://www.epa.gov/npdes/pubs/wq_casestudy_factsht3.pdf, 2.
25. Dailey, Fred E. Project XL Fifth Annual Project Report. Crompton Corporation OSi Group. July 31, 2003, 4'5.
26. See http://www.epa.gov/performancetrack.
27. See http://www.epa.gov/sbo.
28. See http://www.epa.gov/sectors.
29. US Census Bureau. Statistics for Industry Groups and Industries. M01(AS)'l. US Government Printing Office:
Washington, DC, 2001; US Census Bureau. Pollution Abatement Costs and Expenditures. MA200(99). US
Government Printing Office: Washington, DC, 1999.
30. National Center for Manufacturing Sciences, National Metal Finishing Resource Center. Accessed: September
15, 2003. Available at http://www.nmfrc.org.
31. US EPA, Office of Policy, Economics, and Innovation, America's Children and the Environment: Measures of
Contaminants, Body Burdens and Illnesses, EPA 240-R-03-001, US EPA Washington, DC, 2003. Accessed:
September 15, 2003. Available at http://www.epa.gov/envirohealth/children/.
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Chapter 6c«'i,
Support for Environmental Results
EPA's priority for strengthening
its management practices is inte-
gral to accomplishing the Agency's
environmental and human health
goals. EPA is acknowledged as a
leader among federal agencies in
linking resources to performance
and using this information in day-
to-day decision making. Similarly,
Agency efforts to improve the
quality and availability of environ-
mental and human health data
have strengthened program
management and priority setting
at federal, state, and local levels,
and have enhanced information
sharing and understanding of the
state of the environment by the
public. Agency-wide human
capital initiatives, such as
inclusion of a human capital
cross-cutting strategy in the
Agency's 2003 Strategic Plan,
provided the beginning
framework for aligning workforce
planning, recruitment, and staff
development efforts to meet new
challenges and achieve the
environmental and health results
that the public expects. In
FY 2003, EPA made considerable
progress in managing for results
and in achieving the President's
Management Agenda1
(PMA) reforms.
109
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Strengthening Results-Based Management
IMPROVING MEASUREMENT OF
PERFORMANCE AND PROGRESS
EPA continues to make progress in
managing for results by integrating perform-
ance and financial information and improving
performance measurement to support more
effective program management and Agency
decision making. In FY 2003, EPA issued a
new, streamlined 2003-2008 Strategic Plan2 that
sharpened the Agency's focus on achieving
measurable environ-
mental results. The
Agency's five new
outcome-oriented
strategic goals and
supporting objectives
and sub-objectives
emphasize environ-
mental results and
reflect the work of
states, tribes, and
other environmental
partners. EPA also
worked to develop
Regional Plans that
will include regional
strategies—informed
by state priorities—to accomplish the Agency's
national strategic goals. And EPA continued
to work closely with the Environmental
Council of the States to strengthen the
alignment of Agency and state planning,
budgeting, and accountability processes to
support each other's priorities, obtain better
results, and reduce the transaction costs of
planning and reporting.
EPA also developed fewer, more
out come-oriented annual performance goals
that better measure progress toward environ-
mental and human health results. Agency
efforts in FY 2003 increased the percentage
of the Agency's annual goals and measures that
focus on environmental outcomes.3 In
addition, EPA increased reliance on perform-
ance and results data as key decision factors in
formulating the Agency's FY 2005 budget
request. To complement the Agency's
outcome-based performance measures, EPA
also began developing efficiency measures to
better assess how program results relate to the
resources invested or time spent to achieve
those results.
EPA's Environmental Indicators Initiative
seeks to develop better indicators and baselines
for measuring and tracking the state of the
environment and to identify and fill data gaps
for more effectively managing the Agency's
environmental programs. In FY 2003, EPA
published the Draft Report on the Environment
2003,4 presenting EPA's first-ever national
picture of the U.S. environment. The report
describes what EPA does and does not know
about the current state of the environment at
the national level, highlights the progress the
United States has made in protecting its
resources, and describes the measures that can
be used to track the status of human health
and the environment.
LINKING RESOURCES WITH RESULTS
EPA's sustained focus on improving how it
manages for results and uses financial and
performance information in its daily program
management and decision making has resulted
in government-wide recognition under the
PMA. In FY 2003, the Office of Management
and Budget (OMB) recognized EPA as one of
three government agencies to earn a "green"
status score for Financial Performance, signaling
sound financial management practices,
evidenced by unqualified (or clean) audit
opinions of EPA's financial statements and
demonstrated use by program managers of
financial and performance information in day-
to-day decision making.5 OMB also has
acknowledged EPA's significant accomplishments
in Budget and Performance Integration by
providing the Agency with progress scores of
"green" for each quarter of FY 2003, while
noting that EPA must develop efficiency
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SECTION 2. PERFORMANCE RESULTS-
CHAPTER 6. SUPPORT FOR ENVIRONMENTAL RESULTS
measures and demonstrate outcome results for
its programs evaluated by the PART and
improve PART ratings.6
In FY 2003, EPA aligned its
performance-based budget with its five new
strategic goals to ensure sound fiscal and
program management by creating a direct link
between the achievement of environmental
results and the resources used to achieve them.
EPA also enhanced its planning, budgeting,
and accounting capabilities by developing a
new financial architecture that allows the
Agency to track resources across its five new
goals at a finer level of detail (e.g., resources
used to accomplish a specific aspect of a
program). In addition, the Agency completed
Phase One of its development of ORBIT,
which is its financial, administrative, and
operations reporting tool. By providing real-
time access to information in four key areas
(finance, budget, payroll, and grants) ORBIT
will enhance the capability of EPA's programs
to monitor Agency operating activities,
conduct trend analysis, and develop and
improve program management strategies. By
modernizing its financial architecture, EPA
intends to increase its capacity for linking
resources to results (refer to Sustained Progress
in Addressing Management Issues available at
http://www.epa.gov/ocfo/finstatement/2003ar/
2003ar.htm for further discussion).
To optimize the use of its resources, EPA
also continues to improve its oversight for the
award and administration of assistance
agreements. In FY 2003, EPA developed its first
long-term Grants Management Plan,7 which
will streamline the management of grants,
improve competition in the award of grants,
strengthen grant oversight, and link grant work
plans to environmental outcomes. The plan also
includes specific performance targets to measure
progress (see sidebar at right).* EPA also
* In response to the General Accounting Office's report,
entitled Grants Management: EPA Needs to Strengthen
Efforts to Address Persistent Challenges, the Agency agreed
to report on its accomplishments in meeting the goals
and objectives of the Grants Management Plan,
beginning with EPA's FY 2003 Annual Report.
Performance Measures
Planned
Targets
Actual
Results
Percentage of grants
managed by certified
project officer.
Percentage of new grants to
non-profit recipients subject
to the competition order
that are competed.
Percentage of active
recipients who receive
advanced monitorin
Percentage of eligible
closed out.
rants 99%
in 2001
95.7%
in 2001
80.6%
in 2002
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
expanded its training programs to focus on
the core competencies of its project officers
and grants specialists. Of particular note,
EPA increased the percentage of grants
awarded to non-profit recipients subject to
the Agency's grants competition policy by
threefold in FY 2003—to 75.4 percent, as
compared to 24 percent during FY 20028
(refer to Sustained Progress in Addressing
Management Issues available at
http://www.epa.gov/ocfo/finstatement/
2003ar/2003ar.htm for further discussion).
Improving Access to and the Security of
Environmental Information
EPA's work in electronic government
and information security also supports the
achievement of environmental results by
improving federal, state, and public access to
quality environmental information. Working
with its partners in FY 2003, EPA provided
enhanced analytical tools, expanded efforts to
integrate environmental information,
implemented new requirements for information
investment accountability, and strengthened
information security to address new challenges
to effective management of information
resources (refer to Sustained Progress in
Addressing Management Issues available at
http://www.epa.gov/ocfo/finstatement/
2003ar/2003ar.htm for further discussion).
These efforts supported the PMA's electronic
government (e-Gov) initiative to improve
WHERE You LIVE:
EPA EXPANDS ACCESS TO
LOCAL ENVIRONMENTAL
INFORMATION
In FY 2003, EPA, in partnership
with federal, state, and local
government, and other organiza-
tions, expanded availability of
Window To My Environment (WME)
to communities nation-wide. WME,
available from EPA's Internet
homepage (http://www.epa.gov/
enviro/wme/), provides information by town or zip code <
and water as well as local environmental protection efforl
anecting air,
Below are other databases of local environmental information that are available through
EPA's Where You Live Internet page: http://www.epa.gov/epahome/whereyoulive.htm.
• Surf Your Watershed: Environmental conditions and activities in U.S. watersheds.
UV Index: Daily forecast of the expected intensity of ultraviolet radiation from the sui
AIRNOW: Provides ozone maps to learn more about air quality and air pollution.
Envirojustice Mapper: EPA permitted facilities and their surrounding communities.
Toxic Release Inventory: Toxic chemicals that are being used, manufactured, treated,
transported, or released into the environment.
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SECTION 2. PERFORMANCE RESULTS-
CHAPTER 6. SUPPORT FOR ENVIRONMENTAL RESULTS
services to citizens through better external
and internal use of information technology.
EPA actively participates in 14 of the 25
projects from 3 of the 4 categories included
in the PMA e-Gov initiative.9 In FY 2003,
EPA's work as the lead federal agency for
e-Rulemaking culminated in the launching of
Regulations.gov,10 which provides the public
on-line access to regulatory documents and
the opportunity to comment on federal rule-
makings. In FY 2003, EPA also expanded
state access to the Environmental
Information Exchange Network,11 a unified
network that integrates access to high-quality
and integrated air, water, and waste informa-
tion systems. Currently, 49 states are
reporting data electronically through EPA's
network portal, reducing their reporting
burden while increasing the timeliness and
accuracy of their reported data.
The Agency's ability to achieve these
innovative successes in e-Gov was supported
by its overall progress toward ensuring careful
investment in information technology and
continuous monitoring of information
security. In FY 2003, EPA successfully
implemented an information technology
capital planning process that ensures the wise
investment of information technology dollars
and effective and efficient, "behind-the
scenes" Agency operations. EPA had 100
percent of its Capital Planning Investment
Control business cases approved by OMB as
part of the FY 2004 budget development.
In addition, EPA successfully implemented
a comprehensive strategy for addressing
evolving challenges in information security
and providing timely, effective information
access in response to environmental and
homeland security emergencies. The
Agency's system-wide actions to correct
security weaknesses and prevent incidents
included meeting all OMB security criteria;
in-depth testing and analyses of security
plans; and regular risk assessment, testing,
and monitoring. EPA has established security
as a primary criterion in ongoing efforts to
ensure that the Agency has the technology
necessary to provide efficient service and
effective information-sharing capabilities.
Revamping Human Capital Strategy to Meet
New Challenges
EPA's success depends on its ability to
develop and sustain a diverse, highly skilled,
results-oriented workforce that seeks creative
solutions to environmental problems and is
committed to excellence. By aligning its human
capital planning activities with its strategic
planning and budgeting processes, the Agency
has made significant progress toward developing
a workforce with the right mix of technical
expertise, experience, and leadership capabilities
to achieve its goals (see Figure 6-1). In FY 2003,
EPA began drafting a revised Investing in Our
People II, EPA's Strategy for Human Capital:
2003 -2008,n to strengthen human capital
strategies already in place. EPA's draft human
capital strategy updates the 2000 version, and is
Figure 6-1. EPA's Workforce—Major
Occupations (as of 9/20/03)
Attorneys
6%
Environmental
Protection Specialist
16%
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Figure 6-2. EPA Has a Highly Educated
Workforce (current as of 9/20/03)
Juris Doctor/
Bachelor of Laws
High School 6%
Graduate & Below
"A
Some College
10% ^^
Doctorates
8%
aligned with the Agency's 2003 Strategic Plan,
which includes a human capital cross-goal
strategy (refer to Sustained Progress in
Addressing Management Issues available at
http://www.epa.gov/ocfo/finstatement/2003ar/
2003ar.htm for further discussion).
In FY 2003, the Agency pilot-tested its
National Strategic Workforce Planning System
(NSWPS), which will enable managers to
inventory the skills and competencies of EPA's
workforce, project the skills and competencies
required for the future, and identify and close
any gaps between the two (See Figure 6-2).
Agency-wide deployment of the NSWPS
will begin in January 2004, and final
implementation is targeted for the fall of 2004.
The NSWPS supports the implementation
of EPA's Workforce Development Strategy
(WDS), a comprehensive approach for
addressing the workforce development needs of
all Agency employees, from administrative
personnel to executive leadership. In FY 2003,
EPA continued deploying its Senior Executive
Service (SES) Candidate Development
Program, a rigorous, 18-month program
consisting of rotations, leadership training, and
close mentorship. Of the 51 candidates
selected to participate in this program, EPA
has placed 4 candidates into SES positions,
and 7 more have completed their training and
await certification by the Office of Personnel
Management (OPM). The Agency also hired
39 interns, as part of the sixth EPA Intern
Program class. Since its inception in 1998, the
Intern Program has facilitated the hiring of 191
highly qualified and diverse interns to add to
EPA's ranks of potential future leaders.
EPA has initiated a series of program
evaluations to assess the effectiveness of its
WDS programs, and will enhance its
programs as recommended by these
evaluations. The FY 2003 evaluation of EPA's
Intern Program found that the program is
effective in recruiting and growing a diverse
group of high-potential employees. The
evaluation provided findings and
recommendations on all phases of the
program, including recruitment and hiring;
activities during the 2-year development
program (training, rotations, development);
and retention after the program is complete.
In addition, EPA also initiated an evaluation
of the SES Candidate Development Program
in FY 2003. These evaluations will serve as a
"test bed" for an evaluation methodology
that will be applied to other EPA human
capital initiatives.
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SECTION 2. PERFORMANCE RESULTS-
CHAPTER 6. SUPPORT FOR ENVIRONMENTAL RESULTS
Using Competition to Ensure Efficient
Use of Agency Resources
Appropriately aligning resources, people
and dollars, to achieve its environmental and
health goals is essential to EPA's success.
Competitive sourcing is a tool to assess
resource placement within the Agency and to
test the cost effectiveness of continued
government performance of activities identi-
fied as "commercial" against performance by
the private sector. Through competition the
Agency can be assured that its resources are
being used to achieve maximum performance
in the most cost-effective manner.
During FY 2003, EPA took significant
steps to ensure strategic use of competitive
sourcing to strengthen the Agency's ability
to achieve desired environmental results in the
most effective manner. By aligning competitive
sourcing with strategic planning and
budgeting, as well as human capital planning,
the EPA has positioned itself for success. In
acknowledgment of the critical link between
the Agency's human capital strategy and com-
petitive sourcing decisions, the same Agency
official is designated the Human Capital
Officer and Competitive Sourcing Official.
To determine where public-private competi-
tions offer the greatest potential for benefit,
the EPA established a cross-Agency senior
management-level group as its decision making
body. EPA also established a Competitive
Sourcing Office to implement the program.
Through competitive sourcing EPA expects to
advance its Strategic Plan by improving the
quality of services provided by the Agency and
making resources available for investment in
priority areas.
Over the last year, EPA completed three
competitions, which demonstrated the cost
effectiveness of continued government
performance of certain risk assessment
activities in the Office of Pollution Prevention
and Toxic Substances. Over the next 5 years,
actual performance of the Agency will be
measured against desired performance
standards to ensure continued effectiveness
of the services provided.
Assessing Management and Program Operations
EPA's Office of the Inspector General
(OIG) supported the Agency by assessing the
effectiveness of program management and
results, developing recommendations for
improvement, and ensuring Agency resources
are used as intended. OIG's audits, evaluations
and investigations are intended to examine
systemic issues and recommend ways for
strengthening the Agency's environmental
protection efforts. The following examples are
illustrative of the OIG's achievements in
helping EPA operate more efficiently
and effectively:13
• An OIG report on how EPA
communicated with the public on the
risks posed by air quality following
the collapse of the World Trade
Center recommended ways that the
Agency can improve its emergency
response capabilities, risk assessment
and characterization, and risk
communication.
Working jointly with the Nuclear
Regulatory Commission, OIG found
that a major government contractor
billed government contracts in excess
of actual costs incurred. This resulted
in a settlement agreement of $391
million for EPA and the 17 other
federal agencies overcharged.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
As a result of an OIG
audit of EPA oversight
of federally delegated
programs in the state of
Louisiana, an effort is
underway to strengthen
communication, mutual
goal-setting and
accountability of
several states' roles in
programs such as
National Pollutant
Discharge Elimination
System, Resources
Conservation and
Recovery Act, and Title
V Air Permit Program.
OIG PROFILE OF PERFORMANCE
• Questioned Costs/Savings (millions^
• Fines, Recoveries, and Settlements
Criminal, Civil, Administrative Actio
Environmental Program Action
Improvements & Risks Reduced
Management Operational Action
Improvements
Recommendations
(Environmental & Management)
;e) are terms used by the President's Council c
d Efficiency. See http://ignet.gov/randp/fyOlaprp
3tion of these terms. Fines, recoveries, and
are amounts imposed by a court, legal or
Assessment of Impacts of FY 2003
Performance on FY 2004 Annual Plan
There are no changes to FY 2004 APGs based on results of FY 2003 performance.
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SECTION 2. PERFORMANCE RESULTS-
CHAPTER 6. SUPPORT FOR ENVIRONMENTAL RESULTS
Annual Performance Goals
(APG) and Measures
CHAPTER 6: SUPPORT FOR
ENVIRONMENTAL RESULTS
SUMMARY OF RESULTS—SUPPORT
FOR ENVIRONMENTAL RESULTS
Number of Goals Met:
Number of Goals Not Met: 2
Number with Data Lag:
APG 60 Information Exchange Network
FY 2003 Decision makers have access to the environmental data that
EPA collects and manages to make sound environmental
decisions while minimizing the reporting burden on data
providers. Goal Not Met.
Performance Measures
—States using the Central Data Exchange (CDX) to send
data to EPA.
—In preparation for increasing the exchange of information
through CDX, implement four data standards in 13 major
systems and develop four additional standards in 2003.
Planned Actual
46
8
7
FY 2002 The Central Data Exchange, 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
FY 2003 Result: To improve data access used in decision making while reducing barriers to sharing information, EPA
continued to build the Environmental Information Exchange Network in collaboration with states, tribes, and industry
Forty-nine states have registered to submit data through CDX, a component of the Network. In FY 2003 the total
number of registered users (states, tribes, industry) increased by 113% (from 7,647 at the end of FY 2002 to 16,335 in
FY 2003). In FY 2003, EPA met its target of developing 4 additional standards, but only implemented 3 of the 4 data
standards in 13 major systems, missing its FY 2003 target
APG 61 Audit and Advisory Services
FY 2003 Improve environmental quality and human health by
identifying 80 environmental recommendations, risks, and
best practices; contributing to the reduction of 20
environmental risks, and 60 actions influencing positive
environmental or health impacts. Goal Met.
Planned Actual
80
20
60
FY 2002
Same goal, different targets. Goal Met,
50
15
15
100
FY 2001 Office of Audit provides independent audits, evaluations, and
advisory services, responsive to customers and clients, leading
to improved economy, efficiency and effectiveness in Agency
business practices and attainment of its environment goals.
Goal Met.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
APG 61 Audit and Advisory Services (continued)
Planned Actual
FY 2001
("continued)
Performance Measures
—Potential monetary value of recommendations, questioned
costs, savings and recoveries.
—Examples of Office of Inspector General (OIG)
recommendations/advice or actions taken to improve the
economy, efficiency, and effectiveness of business practices
and environmental programs.
—Overall customer and stakeholder satisfaction with audit
products and services (timeliness, relevancy, usefulness, and
responsiveness).
40 M
55
77%
$672 M
80%
FY 2000
Same Goal as FY200I, different targets. Goal Met,
64 M
63 78
recommendations
75% satisfaction 76%
FY 2003 Result: The OIG exceeded the targets for this goal by including measures of results in promoting economy
and efficiency and preventing and detecting fraud, waste, and abuse in EPA programs and operations in addition to
measures of environmental recommendations and improvement The OIG issued its first Multi-Year Plan for
improved environmental outcomes by linking audits, evaluations, and investigations within EPA media and operational
lines to produce recommendations that address long standing, or systemic program problems. During FY 2003, the
OIG reported $4 I million in potential return from savings, questioned costs, recoveries, and fines (over eight times
the annual appropriation for the OIG). In addition, the OIG conducted investigations resulting in 83 criminal, civil, or
administrative actions preventing the loss of resources.
APG 62 Information Security
FY 2003 OMB reports that all EPA information systems
meet/exceed established standards for security. Goal Met.
Performance Measures
—Percent compliance with 13 criteria used by OMB to assess
Agency security programs reported annually to OMB under
the Government Information Security Reform Act.
—Percent of intrusion detection monitoring sensors
installed and operational.
Planned Actual
75
75
FY 2002 Complete risk assessments on the Agency's critical
infrastructure systems, critical financial systems, and mission
critical environmental systems. Goal Met,
Performance Measures
—Critical infrastructure systems risk assessment findings will be
formally 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 nsk assessment findings
will be formally documented and transmitted to system
owners and managers in a formal Risk Assessment document.
12
12
FY 2003 Result: EPA's continued progress in improving information security included meeting all OMB criteria, such as
assessing risk, testing and evaluating controls, and establishing contingency plans. EPA also achieved 100% operation of
intrusion detection monitoring sensors. The sensors deterred 2.7 million attempts to breach EPA's perimeter defenses
against outside attacks.
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SECTION 2. PERFORMANCE RESULTS-
CHAPTER 6. SUPPORT FOR ENVIRONMENTAL RESULTS
APG 63 GPRA Implementation
Planned Actual
FY 2001
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
I
FY 2002 EPA strengthens goal-based decision making by developing
and issuing timely 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 opinion and provide information that is useful
and relevant to the Agency and external parties.
3/01/02
2/27/02
Same goal. Goal Met,
3/01/01
(timelines)
I (opinion)
3/01/01
(timelines)
(opinion)
FY 2000 100% of EPA's Government Performance Results Act (GPRA)
implementation components (planning, budgeting, financial
management, accountability, and program analysis) are
completed on time and meet customer needs. Goal Not Met.
100%
85%
FY 2003 Result: The Workforce Planning Model was used in five of the Agency's offices to assess the skills of the
current workforce in order to plan for the future. The Agency increased its percentage of total eligible service
contracting dollars obligated as performance-based awards from 17% in FY 2002 to 19% in FY 2003. While the target
of 30% was not achieved, EPA will issue a policy in FY 2004 that all new contracts will be performance-based unless
there is justification for another type of contract The policy will support EPA meeting OMB's goal of 50%
performance-based contracts in FY 2005. In addition, EPA's FY 2003 financial statements received a clean audit opinion
from the Office of the Inspector General (OIG).
APG 64 Data Quality
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 Measures
—Window-to-My-Environment nationally deployed and
provides citizens across the country with Federal, state,
and local environmental information specific to an area
of their choice.
Planned Actual
Nationally
Deployed
Nationally
Deployed
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
^^^H APG 64 Data Quality (continued) Planned
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%
Actual
100%
FY 2003 Result: An estimated 60,000 users visit Window-to-My-Environment each month. In FY 2003, EPA completed
national deployment of Window-to-My-Environment, which is now available to communities nationwide.
FY 2002 Annual Performance Goals
(No Longer Reported for FY 2003)
• ERA continues improving how it measures progress in achieving its strategic objectives and
annual goals by increasing external performance goals and measures characterized as
outcomes by 1% in the FY 2003 Annual Performance Plan and Congressional Justification
compared to FY 2002.
• EPA will ensure personnel are relocated to new space as scheduled.
• EPA will ensure that all new and ongoing construction projects are progressing and
completed as scheduled.
• EPA will initiate a demonstration fuel cell at Ft. Meade Laboratory.
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. US EPA 2003-2008 Strategic Plan, Direction for the Future. Available at http://www.epa.gov/ocfo/plan/plan.htm.
3. US EPA Final Annual Plan available at http://www.epa.gov/ocfo.
4. US EPA Draft Report on the Environment, 2003. EPA-260-R-02-006, June 2003. Available at
http://www.epa.gov/indicators/roe/index.htm.
5. Ibid.
6. Office of Management and Budget President's Management Agenda EPA scorecards. Available at
http://www.whitehouse.gov/omb .
7. US EPA, EPA Grants Management Plan. EPA-216-R-03-001, April 2003. Available at
http://www.epa.gov/ogd/EO/finalreport.pdf.
8. US EPA, Integrated Grants Management System (IGMS). Internal database.
9. US EPA e-Gov Update. May 2, 2003.
10. Regulations.gov. Available at http://www.regulations.gov.
11. Environmental Information Exchange Network. Available at http://www.exchangenetwork.net.
12. US EPA Investing in Our People II, EPA's Strategy for Human Capital: 2003-2008 (draft). Will be available
on-line at: http://intranet.epa.gov/ohros/hrc/new.htm. (This document will be released pending endorsement by
either the incoming or acting Administrator. It will be available no later than December 31, 2003.)
13. US EPA Office of Inspector General Semiannual Reports to Congress for the periods October 1, 2002 to March 31,
2002; and April 1, 2003 to September 30, 2003. Available at http://www.epa.gov/oigearth/.
14. US EPA Office of Inspector General Performance Measurement and Results System (PMRS). Internal database.
-------
>ection
Annual Financial
Statements
J
CONTENTS
Chief Financial Officer's Analysis .
Principal Financial Statements
Summary of OIG's Audit Report
-------
Chief Financial Officer's Analysis of
EPA's Fiscal Year 2003 and 2002
Financial Statements
Summary \uditon Opinions
The Environmental Protection Agency (EPA) prepared the following Fiscal Year (FY) 2003 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 10
Strategic Goals.
The Office of Inspector General (OIG) stated: "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 obliga
tions, and custodial activity of the U.S. Environmental Protection Agency and its subsidiary funds, the
Superfund Trust Fund and all other Appropriated Funds, as of and for the years ended September 30, 2003
and 2002, in accordance with accounting principles generally accepted in the United States of America."
Report on Internal Controls
The OIG Audit Report on the EPA's Fiscal 2003 and
2002 Financial Statements did not identify any material
weaknesses.1 However, the report cited eight reportable
conditions. These reportable conditions are summarized
below, along with a short statement of the Agency's posi
tion with respect to each of those items.
Documentation and Approval of Standard Vouchers,
The OIG noted that the Agency did not always adequately
document standard vouchers for transfer requests from
Treasury to EPA Trust Fund accounts (Superfund and
Leaking Underground Storage Tank funds) prior to the
transactions being entered into the Integrated Financial
Management System (IFMS). The OIG indicated that
establishing written procedures to calculate the monthly
transfer process would reduce the potential for errors. The
Office of the Chief Financial Officer (OCFO) will issue
procedures in support of this process.
Improvement Needed in EPA's Interagency Agreement
Invoice Approval Process. The OIG noted that EPA
project officers did not always fulfill their
oversight duties related to reviewing and approving
Interagency Agreement (IAG) invoices. EPA agrees that
improvement is needed. The Grants Administration
Division will provide more in-depth training for project
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.
22
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—CFO's ANALYSIS OF FY 2OO3 AND 2OO2 FINANCIAL STATEMENTS
officers on IAG core competencies and
emphasize the importance of collecting and
reviewing invoice documentation to substan
tiate costs.
Improvement Needed in Reconciling State
Superfund Contracts Unearned Revenue,
The OIG recommended that EPA reconcile
the unearned revenue from State Superfund
Contracts (SSC) to the general ledger bal
ance. EPA agrees to analyze and reconcile
SSC expenditures annually.
EPA Did Not Promptly Record Marketable
Securities Received in Fiscal Year 2003. The
OIG noted two instances where marketable
securities received in FY 2003 in the settle
ment of debts were not promptly recorded.
The OCFO will issue policy and procedures
to standardize the process for recording
marketable securities within the Agency.
Automated Application Processing Controls
for the Integrated Financial Management
System Could Not be Assessed. The OIG
was unable to assess automated application
processes and controls for the IFMS. The OIG
made no recommendations in this area. The
OCFO has a planned target date of 2006 for
replacing IFMS. A commercial-off-the-shelf
package will be delivered with applicable
documentation.
Integrated Financial Management System
(IFMS) Suspense File Needs to be
Reconciled to the General Ledger. The
OIG recommends that the OCFO establish
and test a formal reconciliation process that
includes total dollars and record counts for
the data processed from the IFMS suspense
file to the general ledger accounts. OCFO
agrees with the OIG's recommendation. An
automated reconciliation is currently in the
testing and validation phase. Further, a policy
is in place that establishes the policies and
procedures for reconciling the IFMS suspense
file to the general ledger.
Further Improvements Needed in
Managing EPA's Accounts Receivable,
The OIG noted two issues that impact
EPA's accounting for accounts receivable:
(1) untimely recording of receivables by some
Financial Management Offices (FMO) due to
late submission of supporting documentation
from the Department of Justice, Regional
Counsel, or the program offices, and (2) one
region's improper allowance for doubtful
accounts calculation, which was subsequently
properly adjusted. The OCFO will develop
necessary policies and procedures to ensure
legal documents are promptly forwarded.
OCFO has implemented procedures to:
(1) verify that year-end or period-end
transactions are processed, and (2) review the
allowance for doubtful accounts and update
percentages based on collection experience
from prior years. The OCFO will continue to
work with the FMOs to ensure that these
policies and procedures are understood and
properly followed.
Internal Controls for Correcting Errors
in the Integrated Financial Management
System Need Improvement. The OIG
recommends that the Agency use a
standardized approach when making systemic
corrections. The OCFO believes that
existing Agency policy documents the
procedures for processing financial
transactions. However, the OCFO is
currently in the process of updating related
Standard Operating Procedures to insure that
future transactions are processed using the
standard accounting protocol.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Compliance with Laws and Regulations
NONCOMPLIANCE ISSUES WITH
FEDERAL FINANCIAL MANAGEMENT
IMPROVEMENT ACT (FFMIA)
The OIG identified no substantial non-
compliance issues with FFMIA, however, four
other noncompliances were noted.
EPA Continues to Make Efforts to Improve
Its Cost Accounting Processes. The OIG
recommends that the OCFO continue to
improve Agency financial and cost accounting
systems, and educate users on the types of
information available from within those
systems. Further, the OIG would like the
Agency to reconsider the use of the Program
Results Code as a cost accounting output.
EPA has a cost information assessment
under way, designed to further educate users
on the benefit of cost information. The
assessment is designed to elicit from Agency
managers additional cost information needs
and assist them in identifying types of infor
mation currently available in OCFO systems.
OCFO will continue to work with Agency
managers and staff to identify their cost
information needs and incorporate those
requirements into the Agency's accounting
processes, where practical.
The Agency's cost accounting output will
continue to be the subobjective. Having the
Agency output as a subobjective does not
preclude the Agency from accounting for
discrete programs or projects below the
subobjective level. The revised accounting
structure for the new strategic plan will allow
the Agency to do just that. For example, the
Agency currently accounts for projects below
the subobjective level in the Superfund
Program. Phase II of the cost information
assessment will identify other projects and
activities that may be at a level lower than
subobjective or even below the Program/Project
level. If practical to do so, the Agency will
establish procedures to collect cost information
in the Agency's accounting system.
EPA Continues to Experience Difficulties
in Reconciling Intragovernmental
Transactions. The OIG referenced
government-wide difficulties in reconciling
intragovernmental transactions. The OIG
did not make any specific recommendations
at this time; however, the OIG did encourage
EPA to continue its efforts in reconciling the
Agency's intragovernmental transactions to
comply with Federal reporting requirements.
The OCFO will continue its efforts to recon
cile intragovernmental transactions and meet
the Federal reporting requirements.
EPA Needs to Revise and Resubmit
Federal Financial Management
Improvement Act Remediation Plan. The
OIG reported that the EPA had failed to
implement the personnel certification
program for granting access to non-Federal
personnel (e.g., contractors) as provided in
its 1999 Remediation Plan.
EPA's 1999 Remediation Plan has been
updated and submitted to the OMB. The
updated plan shows (1) that the Office of
Administration and Resources Management
is the party responsible for establishing a
security certification process for non-federal
workers, and (2) the estimated milestones for
issuing the security certification policy is July
2004 for contractor personnel, and July 2005
for grantee personnel. The revised
Remediation Plan was included in the
FY 2004 - FY 2009 Financial Management
Five Year Plan and provided to the Office of
Management and Budget in October 2003.
The OCFO has also taken steps to ensure
that a certification process for contractors
using EPA's IFMS is in place. This certifica
tion process is outlined in OCFO Policy
Announcement No. 98-08.
The audit report also stated that EPA's
Memorandums of Understanding (MOUs)
with other financial or mixed systems that
interface with IFMS do not stipulate clear
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—CFO's ANALYSIS OF FY 2OO3 AND 2OO2 FINANCIAL STATEMENTS
baseline security requirements for screening
contractor personnel with access to financial
data. EPA believes that IFMS MOUs clearly
reference the Interconnection Security
Agreement which requires compliance with
IFMS' Security Plan. Under the Security Plan,
background screening is required for contractor
personnel. Further, OCFO has surveyed its
interfacing system owners (i.e., EPAYS,
IDOTS, and CPS) and found that contractor
personnel do not have access to them.
EPA Not in Compliance Regarding
Preparation and Reconciliation of SF 224,
The OIG reported that EPA continues to
experience difficulties in completing the
required SF 224 "Statement of Transactions"
and reconciling transactions on the
Statement of Differences (FMS 6652) as
required by Agency policy and Treasury's
Financial Manual. The OCFO disagrees with
the OIG's assessment that the entire Agency
is not in compliance with Treasury's regula
tions since the majority of the FMOs comply
with the regulations. The OCFO has advised
the OIG that only one accounting point
continues to adjust amounts via the SF 224.
Also, the OCFO has provided the OIG with
an analysis indicating that any suspense
differences between IFMS and the SF 224
are insignificant.
Progress in Correcting Previously
Identified Problems
OCFO management believes that audit
follow-up is an integral part of good manage
ment and that corrective actions are essential
to improving the effectiveness and efficiency
of government operations. To resolve long-
standing audit recommendations, the OCFO
formed an Audit Follow-Up Council in July
2000 to review progress on audit findings,
discuss approaches to resolving audit issues,
and provide coordination and support across
the OCFO on audit related matters.
As a result of the Council's efforts, the
Agency has resolved several long-standing
issues. During the audit of the FY 2002
financial statements, the OIG noted
substantial progress in completing a number
of corrective actions from prior years. For
FY 2003, the Agency and the OIG are
currently working to resolve several
remaining issue areas from prior financial
statement audits. Those areas are as follows:
Automated Application Processing
Controls for IFMS. The OIG continues to
acknowledge that the Agency plans to
replace IFMS with a new automated
accounting system. Until the new system is
installed, the OIG will continue to mention
this area as a reportable condition. EPA is on
track to replace IFMS with a planned target
date of 2006.
Financial System Security Plans. The OIG
believes that the Agency has established a
personnel security policy for access to IFMS.
However, it is not clear what is required of
non-Federal personnel for access to other
financial and mixed-financial systems. The
OIG recommended that EPA revise the 1999
FFMIA Remediation Plan, establish a mile-
stone for completion, and submit the revised
Plan to OMB. The OCFO has updated the
EPA Remediation Plan and has submitted it
to the OMB. The milestones for issuing the
policy are July 2004 for contractor personnel
and July 2005 for grantee personnel.
-------
Principal Financial
Statements
Contents
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
Note 24. Custodial Revenues and Accounts Receivable
Note 25. Statement of Budgetary Resources
Note 26. Recoveries and Permanently Not Available,
Statement of Budgetary Resources
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. Hazardous Substance (Superfund) Trust Fund
Balances
SUPPLEMENTAL INFORMATION
REQUESTED BY OMB
Required Supplemental Information
I. Deferred Maintenance (Unaudited)
Intragovernmental Assets (Unaudited)
Intragovernmental Liabilities (Unaudited)
Intragovernmental Revenues and Costs (Unaudited)
2. Supplemental Statement of Budgetary Resources (Unaudited)
3. Working Capital Fund Supplemental Balance Sheet
(Unaudited)
4. Working Capital Fund Supplemental Statement of Net Cost
(Unaudited)
5. Working Capital Fund Supplemental Statement of Changes in
Net Position (Unaudited)
6. Working Capital Fund Supplemental Statement of Budgetary
Resources (Unaudited)
7 Working Capital Fund Supplemental Statement of Financing
(Unaudited)
Required Supplemental Stewardship Information
Annual Stewardship Information (Unaudited)
26
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
||
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
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
NET POSITION
Unexpended Appropriations (Note 16)
Cumulative Results of Operations
(Notes 17 and 36)
Total Net Position
Total Liabilities and Net Position
Superfund
Trust Fund
FY 2003
$ 26,448
2,516,147
34,665
7414
$ 2,584,674
0
428,486
0
45,855
680
$ 3,059,695
$ 145,631
0
0
30,600
$ 176,231
165,550
7937
0
279,092
0
31,039
49,809
$ 709,658
$ 0
2,350,037
2,350,037
$ 3,059,695
Superfund
Trust Fund
FY 2002
$ 32,229
3,309,975
33,309
4,520
$ 3,380,033
0
411,437
0
38,746
780
$ 3,830,996
$ 116,239
0
0
23,727
$ 139,966
145,805
7698
0
337 139
0
39, 136
45,515
$ 715,259
$ 0
3,115,737
3,115,737
$ 3,830,996
All Others
FY 2003
$ 11,758,357
2,114,684
119,941
3,827
$ 13,996,809
10
65,296
53,506
579,471
3,502
$ 14,698,594
$ 70, 156
21,189
78,776
21,611
$ 191,732
722,784
36, 159
8,880
0
18
142,791
53, 105
$ 1,155,469
$ 10,768,236
2,774,889
13,543, 125
$ 14,698,594
All Others
FY 2002
$ 11,688,934
1,952,052
72,298
4,578
$ 13,717862
10
49,398
64,646
551,336
4,937
$ 14,388,189
$ 43,983
24,290
69,706
26,381
$ 164,360
511,236
31,759
13,309
0
20
177,432
47,479
$ 945,595
$ 10,923,889
2,518,705
13,442,594
$ 14,388,189
FY 2003 ^^^^^^^^^^^^^1
$ 11,784,805
4,630,831
154,606
11,241
$ 16,581,483
10
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
The accompanying notes are an integral part of these statements.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Consolidating Balance Sheet (continued)
As of September 30, 2003 and 2002
(Dollars in Thousands)
Combined Intra-agency Intra-agency Consolidated Consolidated
Totals Elimination Elimination Totals Totals
FY2002 FY2003 FY 2002 FY 2003 FY 2002
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
(Notes 17 and 36)
Total Net Position
Total Liabilities and Net Position
11,721,163 $
5,262,027
105,607
9,098
17097,895 $
10
460,835
64,646
590,082
5,717
18,219,185 $
160,222 $
24,290
69,706
50, 108
304,326 $
657041
39,457
13,309
337 139
20
216,568
92,994
1,660,854 $
10,923,889 $
5,634,442
16,558,331
18,219,185 $
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) $
0 $
0
(47412)
(4,447)
(51,859) $
0
0
0
0
0
(51,859) $
(47480) $
0
0
(4,379)
(51,859) $
0
0
0
0
0
0
0
(51,859) $
0 $
0
0
(51,859) $
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 $
11,721,163
5,262,027
58, 195
4,651
17,046,036
10
460,835
64,646
590,082
5,717
18,167,326
112,742
24,290
69,706
45,729
252,467
657041
39,457
13,309
337 139
20
216,568
92,994
1,608,995
10,923,889
5,634,442
16,558,331
18,167,326
The accompanying notes are an integral part of these statements.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environmental Protection Agency
Consolidating Statement of Net Cost
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Superfund Superfund Combined
Trust Fund Trust Fund All Others All Others Totals
FY2003 FY2002 FY 2003 FY 2002 FY 2003
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
341,817 $
1,246,427
75,597
1,663,841 $
16,682
394,295
410,977
348,980
1,209,338
114,297
1,672,615
22,932
477768
500,700
816,624 $
6,427,497
(75,597)
124,233
31,304
155,537
782,110
5,678,789
(114,297)
7168,524 $ 6,346,602
104,318
24,927
129,245
1,158,441
7673,924
0
8,832,365
140,915
425,599
566,514
1,252,864 $
1,171,915 $ 7,012,987 $
6,217,357 $ 8,265,851
Environmental Protection Agency
Consolidating Statement of Net Cost
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
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
Combined Intra-agency Intra-agency Consolidated Consolidated
Totals Eliminations Eliminations Totals Totals
FY 2002
FY 2002
FY 2002
8,019,217 $
127,250
502,695
629,945
$ 7,389,272 $
(20,240)
(20,240)
(20,240)
0
(20,240)
0 $
(20,795)
0
1,138,201
7673,924
(20,795) $ 8,812,125
120,675
425,599
546,274 $
,110,295
:,I27
0
7,998,422
106,455
502,695
609, ISO
0 $ 8,265,851 $ 7,389,272
The accompanying notes are an integral part of these statements.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
COSTS
Intragovernmental
With the Public
Environmental Protection Agency
Consolidated Statement of Net Cost by Goal
For the Year Ended September 30, 2003
(Dollars in Thousands)
Less;
Earned Revenue, Federal
Earned Revenue, Non-Federal
Clean and Prevent Better Waste
Clean Air Safe Water Safe Food Pollution Management Global Risks
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
7270 $
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
COSTS
Intragovernmental
With the Public
Environmental Protection Agency
Consolidated Statement of Net Cost by Goal
For the Year Ended September 30, 2002
(Dollars in Thousands)
Less;
Earned Revenue, Federal
Earned Revenue, Non-Federal
Clean and Prevent Better Waste
Clean Air Safe Water Safe Food Pollution Management Global Risks
101,347
487,461
183,063 $
3,264,051
37022
91,795
55,734 $
253,462
440,640
1,488,511
3,447114 $
128,817
309,196 $
1,929,151
36,020
206,938
242,958
266
25
291
59,337
3,744
2,290
6,034 $
87,575
109
14,960
15,069
26,585
1,497
1,193
2,690 $
37863
92,691
473,739
566,430 $
143,513
4,081
586
4,667
16,636
NET COST OF
OPERATIONS
647,854 $ 3,528,655 $
140,333 $
344,369 $ 1,506,234 $
254,927
The accompanying notes are an integral part of these statements.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environmental Protection Agency
Consolidated Statement of Net Cost by Goal
For the Year Ended September 30, 2003
(Dollars in Thousands)
COSTS
I ntragovernmental
With the Public
Total Costs
Less;
Earned Revenue, Federal
Earned Revenue, Non-Federal
Environ.
Information
174,224
191,351
365,575
Sound Credible Effective Not Assigned Consolidated
Science Deterrent Management to Goals* Total
93,695
325,968
40,751 $
343,036
23,674
(10,888)
344,670 $
419,663
383,787 $
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
Environmental Protection Agency
Consolidated Statement of Net Cost by Goal
For the Year Ended September 30, 2002
(Dollars in Thousands)
Environ. Sound Credible Effective Not Assigned Consolidated
Information Science Deterrent Management to Goals* Total
COSTS
I ntragovernmental
With the Public
Total Costs
Less;
Earned Revenue, Federal
Earned Revenue, Non-Federal
60,624
193,241
253,865
62,030 $
263,592
106,374
281,171
23,393 $
366,798
387545
390, 191 $
4,048
(8,893)
(4,845)
1,110,295
6,888,127
7,998,422
130,237
154
130,391
28,089
800
84
884 $
30,408
234
914
1,148
81,910
(125,025)
3,300
(121,725) $
(511,916)
(2,179)
5,450
3,271 $
0
106,455
502,695
609, ISO
0
NET COST OF
OPERATIONS
151,563 $
355, 146 $
468,307 $
(8,116) $ 7,389,272
* See Note 30.
The accompanying notes are an integral part of these statements.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Consolidating Statement of Changes in Net Position
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Cumulative Cumulative Cumulative
Results of Results of Cumulative Cumulative Results of
Operations Operations Results of Results of Operations
Superfund Superfund Operations Operations Consolidated
Trust Fund Trust Fund All Others All Others Totals
FY 2003
FY 2002
FY 2003
FY 2002
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
3,115,737
0
0
0
0
0
(49,692)
(191,131)
632,307
75,597
467081
84
19,999
20,083 $
(1,252,864)
2,350,037 $
3,477,720 $
0
3,477,720 $
108,038
(103,448)
676,292
114,297
795,179 $
47
14,706
14,753 $
(1,171,915)
3,115,737 $
2,518,705 $
0
2,518,705 $
0
0
0
7,496,463
260,515
111,614
(632,307)
(75,597)
7 160,688 $
287
108, 196
108,483 $
(7012,987)
2,774,889 $
2,335, 136
0
2,335, 136
0
0
0
6,784,295
260,111
63,672
(676,292)
(114,297)
6,317489
398
83,039
83,437
(6,217357)
2,518,705
FY 2003*
$ 5,634,442
0
$ 5,634,442
0
0
0
7,496,463
210,823
(79,517)
0
0
$ 7627769
371
128,195
$ 128,566
(8,265,851)
$ 5,124,926
* This statement does not have any intra-agency eliminations for FY 2003 or 2002.
The accompanying notes are an integral part of these statements.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environmental Protection Agency
Consolidating Statement of Changes in Net Position
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Cumulative
Results of Unexpended
Operations Unexpended Appropriations Consolidated Consolidated
Totals Appropriations All Others Totals Totals
FY2002* All Others FY 2002 FY 2003* FY 2002*
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
5,812,856 $ 10,923,889
0 0
10,358,961
0
$ 16,558,331
5,812,856 $ 10,923,889
10,358,961 $ 16,558,331
7,112,668 $ (155,653)
564,928 $
7472,116
16,171,817
0
16,171,817
0
0
0
6,784,295
368, 149
(39,776)
0
0
7408, 126
4,550
(71,866)
(7496,463)
0
0
0
0
7,356,085
28,598
(35,460)
(6,784,295)
0
0
0
0
7408, 126
4,550
(71,866)
0
210,823
(79,517)
0
0
7,356,085
28,598
(35,460)
0
368, 149
(39,776)
0
0
7677,596
445
97,745
98, 190 $
(7389,272)
0
0
0 $
0
0
0
0 $
0
371
128,195
128,566 $
(8,265,851)
445
97,745
98, 190
(7389,272)
$ 5,634,442 $ 10,768,236 $ 10,923,889 $ 15,893,162 $ 16,558,331
This statement does not have any intra-agency eliminations for FY 2003 or 2002.
The accompanying notes are an integral part of these statements.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Combined Statement of Budgetary Resources
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
BUDGETARY RESOURCES
Budgetary Authority:
Appropriations Received
Borrowing Authority
Net Transfers
Other
Unobligated Balances:
Beginning of Period
Net Transfers, Actual
Anticipated Transfers Balance
Spending Authority from Offsetting Collections:
Earned and Collected
Receivable from Federal Sources
Change in Unfilled Customer Orders
Advance Received
Without Advance from Federal Sources
Anticipated for Rest of Year
Transfers from Trust Funds
Total Spending Authority from Collections
Recoveries of Prior Year Obligations (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)
Exempt from Apportionment
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 2003 FY 2002 FY 2003
0 $
0
1,286,342
0
750,994
0
0
211,066
(1,728)
(41,608)
5,259
0
(9,642)
163,347 $
124,797
(8,274)
0 $
0
1,329,490
0
714,321
0
0
193,835
3,523
(22,548)
1,749
0
0
176,559 $
230,628
(2,000)
7424,350
0
76,863
0
2,045,248
0
0
273,703
5,074
(20,362)
(28,473)
0
96, 135
326,077
114,437
(76, 182)
2,317,206 $ 2,448,998 $
1,373,144 $
177257
1,548,650
149,354
1,550,401 $ 1,698,004
766,786
0
19
726,589
0
24,405
2,317,206 $ 2,448,998 $
1,262,257 $
2,021,759
1,965
71,707
(1,612,994)
(299,181)
1,445,513 $
1,605,329 $
(159,816)
(146,502)
1,290,817 $
2,108,696
3,694
66,448
(1,831,268)
(260,633)
1,377,754 $
1,549,041 $
(171,287)
(248,252)
9,910,793
7811,921
2,011,471
0
87,401
9,910,793
7,371,407
9,608,652
118,037
224,874
(9,077,583)
(847544)
7,397,843
7,706,933
(309,090)
(643,956)
1,299,011 $
1,129,502 $ 6,753,887
The accompanying notes are an integral part of these statements.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
Environmentj_Agency ^^^H
Combined Statement of Budgetary Resources ^^^^^^^^^|
For the Years Ended September 30,
(Dollars in Thousands)
BUDGETARY RESOURCES
Budgetary Authority:
Appropriations Received
Borrowing Authority
Net Transfers
Other
Unobligated Balances:
Beginning of Period
Net Transfers, Actual
Anticipated Transfers Balance
Spending Authority from Offsetting Collections:
Earned and Collected
Receivable from Federal Sources
Change in Unfilled Customer Orders
Advance Received
Without Advance from Federal Sources
Anticipated for Rest of Year
Transfers from Trust Funds
Total Spending Authority from Collections
Recoveries of Prior Year Obligations (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)
Exempt from Apportionment
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
2003 and 2002
All Others
FY 2002
$ 7,371,085
0
101,010
0
1,911,304
500
0
262,102
1,410
2,133
62,549
0
48,671
$ 376,865
89,440
(42,292)
$ 9,807,912
$ 7,514,054
248,610
$ 7762,664
1,917637
0
12761 1
$ 9,807,912
$ 7,296,359
9,324,855
72,577
253,348
(9,277925)
(656,652)
$ 7,012,562
$ 7,323,740
(311,178)
(687,650)
$ 6,324,912
Combined
Totals
FY 2003
$ 7424,350
0
1,363,205
0
2,796,242
0
0
484,769
3,346
(61,970)
(23,214)
0
86,493
$ 489,424
239,234
(84,456)
$ 12,227,999
$ 8,912,739
449,583
$ 9,362,322
2,778,257
0
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
Combined
Totals ^^^^^^^^^^^^1
FY 2002 ^^^^^^^^^^^^^1
$ 7,371,085
0
1,430,500
0
2,625,625
500
0
455,937
4,933
0
(20,415)
64,298
0
48,671
$ 553,424
320,068
(44,292)
$ 12,256,910
$ 9,062,704
397,964
$ 9,460,668
2,644,226
0
152,016
$ 12,256,910
$ 8,587,176
11,433,551
76,271
319,796
(11,109,193)
(917285)
$ 8,390,316
$ 8,872,781
(482,465)
(935,902)
$ 7,454,414
The accompanying notes are an integral part of these statements.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Consolidating Statement of Financing
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Superfund Superfund
Trust Fund Trust Fund All Others
FY 2003 FY 2002 FY 2003
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
1,550,401 $
(288, 144)
1,262,257 $
(146,502)
1,698,004 $
(407 187)
1,290,817 $
(248,252)
7811,921
(440,514)
7371,407
(643,956)
1,115,755 $
1,042,565
6,727451
84 $
19,999
75,597
95,680 $
1,211,435 $
47 $
14,706
114,297
129,050 $
1,171,615 $
(84)
108, 196
(75,597)
32,515
6,759,966
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
Total Resources Used to Finance Items Not Part of the Net Cost of Operations
179,096 $
0
64,738
(1,590)
165,667
0
0
146,502
(16,287)
( 105,777)
203,534 $
0
248,252
(6,587)
(48,758)
256,055 $
4,980
11,649
(66,321)
96, 135
212,110
Total Resources Used to Finance the Net Cost of Operations
$ 1,414,969 $
1,427,670 $ 6,972,076
The accompanying notes are an integral part of these statements.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environmental Protection Agency
Consolidating Statement of Financing
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Superfund Superfund
Trust Fund Trust Fund All Others
FY 2003 FY 2002 FY 2003
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 29)
Increase in Environmental and Disposal Liability (Note 29)
Up/Downward Reestimates of Subsidy Expense
Increase in Public Exchange Revenue Receivable
Increase in Workers Compensation Costs (Note 29)
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
(205,844)
246
8,915
42,405 $
(162,105)
(204,510) $ (305,035)
7,854
0
41,426
49,280
(255,755)
5,647
(3,276)
170
(1,706)
4,591
5,426
36,289
0
(804)
35,485
40,911
1,252,864 $ 1,171,915 $
7,012,987
The accompanying notes are an integral part of these statements.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Consolidating Statement of Financing
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Consolidated Consolidated
All Others Totals* Totals*
FY 2002 FY 2003 FY 2002
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
7762,664 $
(466,305)
7,296,359 $
(687,650)
9,362,322 $
(728,658)
8,633,664 $
(790,458)
9,460,668
(873,492)
8,587, 176
(935,902)
6,608,709 $ 7,843,206
7651,274
(47) $
83,039
(114,297)
(31,305) $
6,577,404 $_
0 $
128, 195
0
128,195 $
7,971,401 $_
0
97,745
0
97745
7,749,019
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
344,763
0
(357,555)
(1,989)
4,394
11,358
(53,692)
48,670
4,980
158,151
(82,608)
(9,642)
4,394
259,610
(60,279)
(88)
Total Resources Used to Finance Items Not Part of the Net Cost of Operations
(411,962) $ 415,644
Total Resources Used to Finance the Net Cost of Operations
$ 6,165,442 $ 8,387,045 $
7,593,112
This statement does not have any intra-agency eliminations for FY 2003 or 2002.
The accompanying notes are an integral part of these statements.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environmental Protection Agency
Consolidating Statement of Financing
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Consolidated Consolidated
All Others Totals* Totals*
FY 2002 FY 2003 FY 2002
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 29)
Increase in Environmental and Disposal Liability (Note 29)
Up/Downward Reestimates of Subsidy Expense
Increase in Public Exchange Revenue Receivable
Increase in Workers Compensation Costs (Note 29)
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 $
578
(371)
(2,422)
0
27022
0
27108
54,130 $
6,735
(3,276)
170
(207,550)
4,837
(2,215) $ (199,084)
45,204
0
32,686
77890
51,915 (121,194)
0
578
(371)
(307,457)
0
(307,250)
34,876
0
68,534
103,410
6,217,357 $ 8,265,851 $ 7,389,272
* This statement does not have any intra-agency eliminations for FY 2003 or 2002.
The accompanying notes are an integral part of these statements.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Consolidated Statement of Custodial Activity
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
Revenue Activity:
Sources of Collections
Fines and Penalties
Other
FY 2003
FY 2002
Total Custodial Revenue (Note 24)
161,544 $
5,793
167,337 $
7,172
174,509 $
94,237
9,322
103,559
(8,070)
95,489
Disposition of Collections:
Transferred to Others (General Fund)
Increases/Decreases in Amounts to be Transferred
Total Disposition of Collections
165,440 $
9,069
103,818
(8,329)
174,509 $
95,489
Net Custodial Revenue Activity (Note 24)
0 $
The accompanying notes are an integral part of these statements.
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SECTION 3. FY 2OO3 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 Environmental Protection Agency (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 for Agency Financial Statements," specified
by the Office of Management and Budget (OMB) in Bulletin 01 -09, and the Agency's accounting policies which
are summarized in this note. In addition to preparing the reports required by Bulletin 01 -09, Statement of Net
Cost has been prepared by the Agency's strategic goals (based on EPA's 2000 Strategic Plan).
B. REPORTING ENTITIES
The Environmental Protection Agency (EPA) was created in 1970 by executive reorganization from various
components of other federal agencies 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 2003 the reporting entities are grouped as the
Superfund Trust Fund and All Other Funds.
Superfund Trust Fund
In 1980, the Hazardous Substance Superfund, commonly referred to as the Superfund Trust Fund, 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 industry. The Agency allocates funds from its appropriation to other fed-
eral 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 Agency, private parties, or other federal
agencies. The Superfund Trust Fund includes the Department of the Treasury (Treasury) collections and
investment activity. The Superfund Trust Fund is accounted for under Treasury symbol number 8145.
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.
The Superfund Trust Fund is allocated to general support services costs (e.g., rent, communications, utilities,
and mail operations) that were initially charged to the Agency's Science and Technology (S&T) and
Environment Programs and Management (EPM) appropriations. During the year, these costs are allocated
from the S&T and EPM appropriations to the Superfund Trust Fund 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 per-
sonnel charged to these appropriations. Agency general support services cost charges to the Superfund
Trust Fund may not exceed the ceilings established in its appropriation. The related general support services
costs charged to the Superfund Trust Funds were $49.1 million for FY 2002 and $11.9 million for FY 2003.
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FISCAL YEAR 2OO3 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 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 implemented 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 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, and is accounted for under Treasury symbol number 8153.
The Oil Spill Response Trust Fund 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 directing, monitoring and providing technical assis-
tance for major inland oil spill response activities. This involves setting oil
prevention and response standards, 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 Oil
Spill Response Trust Fund is accounted for under Treasury symbol number 8221.
The State and Tribal Assistance Grants (STAG) appropriation 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. STAG is accounted for under Treasury symbol 0103.
The Science and Technology (S&T) appropriation finances salaries, travel, science, technology, research and
development activities including laboratory and center supplies, certain operating expenses, grants,
contracts, intergovernmental agreements, and purchases of scientific equipment. These activities provide the
scientific basis for the Agency's regulatory actions. In FY 2003, 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 S&T appropriation is accounted for
under Treasury symbol 0107
The Environmental Programs and Management (EPM) appropriation includes funds for salaries, travel,
contracts, grants, and cooperative agreements for pollution abatement, control, and compliance activities
and administrative activities of the Agency's operating programs. Areas supported from this appropriation
include: Clean Air; Clean and Safe Water; Preventing Pollution and Reducing Risk in Communities, Homes,
Workplaces, and Ecosystems; Better Waste Management, Restoration of Contaminated Waste Sites, and
Emergency Response; Reduction of Global and Cross Border Environmental Risks; Americans' Right to
Know About Their Environment; Sound Science; Improved Understanding of Environmental Risk; and
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Greater Innovation to Address Environmental Problems; Credible Deterrent to
Pollution and Greater Compliance with the Law; and Effective Management. The
EPM appropriation is accounted for under Treasury symbol 0108.
The Office of Inspector General appropriation provides funds for audit and
investigative functions to identify and recommend corrective actions on
management and administrative deficiencies that create the conditions for existing
or potential instances of fraud, waste and 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
Office of Inspector General appropriation is accounted for under Treasury
symbol 0112 and includes expenses incurred and reimbursed from the
appropriated trust funds accounted for under Treasury symbols 8145 and 8153.
The Buildings and Facilities (B&F) appropriation provides for the construction,
repair, improvement, extension, alteration, and purchase of fixed equipment or
facilities that are owned or used by the EPA. The B&F appropriation is accounted for under Treasury
symbol 0110.
The Payment to the Hazardous Substance Superfund appropriation authorizes appropriations from the
General Fund of the Treasury to finance activities conducted through the Hazardous Substance Superfund
Program. Payment to the Hazardous Substance Superfund appropriation is accounted for under Treasury
symbol 0250.
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 unsubsi-
dized 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 symbol 0118 for the subsidy
and administrative support; under Treasury symbol 4322 for loan disbursements, loans receivable and loan
collections on post FY 1991 loans; and under Treasury symbol 2917 for pre FY 1992 loans receivable and
loan collections.
The FIFRA Revolving Fund was authorized by the Federal Insecticide, Fungicide and Rodenticide Act
(FIFRA) of 1972 as amended in 1988 and as amended by the Food Quality Protection Act of 1996. Fees are
paid by industry to offset costs of accelerated reregistration, expedited processing of pesticides, and estab-
lishing tolerances for pesticide chemicals in or on food and animal feed. The FIFRA Revolving Fund is
accounted for under Treasury symbol number 4310.
The Tolerance Revolving Fund 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. Effective
January 2, 1997 fees collected are now being collected and deposited in the Reregistration and Expedited
Processing Revolving (FIFRA) Fund (4310). The fees collected prior to this date are accounted for under
Treasury symbol number 4311.
The Working Capital Fund (WCF) 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 WCF is accounted for under Treasury symbol 4565.
The Exxon Valdez Settlement Fund 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 Exxon Valdez Settlement fund is accounted for under Treasury symbol
number 5297
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Allocations and appropriations transferred to the Agency from other federal agencies include funds from:
(I) the Appalachian Regional Commission and the Department of Commerce, which provide economic
assistance to state and local developmental activities; (T) the Agency for International Development, which
provides assistance on environmental matters at international levels; and (3) the General Services
Administration which provides funds for rental of buildings and operations, repairs, and maintenance of
rental space. The transfer allocations are accounted for under Treasury symbols 0200, 1010, and 4542; 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 Intraagency
Payments and Collections (IRAC) Account. These are accounted for under Treasury symbols 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 symbols 6050, 6264, 6265,
6266, 6275 and 6500, respectively.
General Fund Receipt Accounts include: Hazardous Waste Permits; Miscellaneous Fines, Penalties and
Forfeitures; General Fund Interest; Interest from Credit Reform Financing Accounts; Fees and Other
Charges for Administrative and Professional Services; and Miscellaneous Recoveries and Refunds. These
accounts are accounted for under Treasury symbols 0895, 1099, 1435, 1499, 3200 and 3220, respectively.
The Environmental Services Receipt account 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.
Environmental Services are unavailable receipts accounted for under Treasury symbol 5295.
The Miscellaneous Contributed Funds Trust Fund includes gifts for pollution control 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. The Miscellaneous
Contributed Funds Trust Fund is accounted for under Treasury symbol 8741.
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 purposes 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 Office of the Inspector General to be
available for two fiscal years. When the appropriations for the General Funds are
enacted, Treasury issues a warrant to the respective appropriations. As the
Agency disburses obligated amounts, the balance of funds available to the appro-
priation is reduced at Treasury.
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
The Asbestos Loan Program is a commercial activity financed by a combination from two sources, one for
the long term costs of the loans and another for the remaining non-subsidized portion of the loans.
Congress adapted a one year appropriation, available for obligation in the fiscal year for which it was appro-
priated, 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 was financed under a 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.
Funding of the FIFRA and the Tolerance Revolving 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
apportionment 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 non expenditure 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 budget. The amounts are recorded to
the clearing and deposit accounts pending further disposition. Amounts recorded to the receipt accounts
capture amounts receivable to or collected for 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. All 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 Number Seven (SFFAS No. 7),
"Accounting for Revenues and Other Financing Sources," which was effective for accounting periods after
September 30, 1997
Superfund
The Superfund program receives most of its funding through appropriations that may be used, within
specific statutory limits, for operating and capital expenditures (primarily equipment). Additional financing
for the Superfund program is obtained through: reimbursements from other federal agencies under Inter-
Agency Agreements (lAGs), state cost share payments under Superfund State Contracts (SSCs), and
settlement proceeds from Potentially Responsible Parties, under CERCLA Section I22(b)(3), placed in
special accounts. Special accounts were previously limited to settlement amounts for future costs. However,
beginning in FY 2001, cost recovery amounts received under CERCLA Section I22(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" appropriations 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
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
appropriations to make new loans was 1993. The FIFRA and the
Tolerance Revolving Funds receive funding, which is now deposited with
the FIFRA Revolving Fund, through fees collected for services provided.
The FIFRA Revolving Fund also receives 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 state-
ments. The Exxon Valdez Settlement Fund received funding through
reimbursements.
Appropriated funds are recognized as Other Financing Sources when
earned, i.e., 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.
F. FUNDS WITH THE TREASURY
The Agency does not maintain cash in commercial bank accounts. Cash receipts and disbursements are
handled by Treasury. The funds maintained with Treasury are Appropriated Funds, Revolving Funds and
Trust Funds. These funds have balances available to pay current liabilities and finance authorized purchase
commitments. (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 potentially responsible parties
(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 Superfund State Contracts
(SSCs), cost sharing arrangements 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% or 50% 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
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
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 interest receivable for Asbestos and FIFRA activities.
K. ADVANCES AND PREPAYMENTS
Advances and prepayments represent funds advanced or prepaid to other entities both internal and
external to the Agency for which a budgetary expenditure has not yet occurred. (See Note 6)
L. LOANS RECEIVABLE
Loans are accounted for as receivables after funds have been disbursed. The amounts of Asbestos Loan
Program loans obligated but not disbursed is disclosed in Note 7 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 these Trust Funds to the
Office of Inspector General, 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)
Purchases of EPA-held and contractor-held personal property are capitalized if it is valued at $25 thousand
or more and has an estimated useful life of at least two years. Prior to implementing FAS, depreciation was
taken on a modified straight-line basis over a period of six years depreciating
10% the first and sixth year, and 20% in years two through five. 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 estimated useful life of five years. New acquisitions of EPA-
held personal property are depreciated using the straight-line method over the
specific asset's useful life, ranging from two to 15 years.
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 costs. Depreciation for real property is calculated using the
straight-line method over the specific asset's useful life, ranging from ten 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.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
In FY 1997 EPA's Working Capital Fund, a revenue generating activity, implemented requirements to
capitalize software if the purchase price was $100 thousand or more with an estimated useful life of two
years or more. In FY 2001 the Agency began capitalizing software for All Other Funds whose acquisition
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
useful life ranging from two to ten 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 collection of revenue for services provided. Liabilities for which
an appropriation has not been enacted are classified as unfunded liabilities and there is no certainty that the
appropriations will be enacted. 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
collections 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 2002 and FY 2003, 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," which was
effective for the FY 1997 financial statements, 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 recognize 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, 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 the Agency with the 'Cost Factors' to compute EPA's liability for each program.
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
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," which was effective for FY 2002. EPA will make prior period adjust-
ments for material errors as follows in accordance with SFFAS No. 21. Prior period adjustments will only be
made for material prior period errors to: (I) the current period financial statements and (2) the prior
period financial statements presented for comparison. Adjustments related to changes in accounting princi-
ples will only be made to the current period financial statements, but not to prior period financial
statements presented for comparison.
Note 2. Fund Balances with Treasury
Fund Balances with Treasury as of September 30, 2003 and 2002, consist of the following
FY 2003
Entity Non-Entity
Assets Assets
Trust Funds:
Superfund
LUST
Oil Spill
Revolving Funds:
FIFFWTolerance
Working Capital
Appropriated
Other Fund Types
$ 26,448 $
34,008
5,505
1,826
57,780
11,527765
111,225
0 $
0
0
0
0
0
20,248
Total
26,448 $
34,008
5,505
1,826
57,780
11,527765
131,473
FY 2002
Entity Non-Entity
Assets Assets
32,229 $
16,405
3,796
3,028
57,380
11,504,638
99,575
0 $
0
0
0
0
0
4,112
Total
32,229
16,405
3,796
3,028
57,380
11,504,638
103,687
Total
1,764,557 $
20,248 $
1,784,805
11,717,051
4,112 $
11,721,163
Entity fund balances, except for Other Fund Types, include balances that are available to pay current liabili-
ties and to finance authorized purchase commitments (see Status of Fund Balances below). Other Fund
Types are not presently subject to obligation.
Entity Assets for Other Fund Types consist of the Environmental Services Receipt account, which is a special
fund receipt account. Upon Congress appropriating the funds, EPA will use these special fund receipts in the
S&T and EPM appropriations. 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 accounting disposi-
tion or being held by EPA for other entities.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Status of Fund Balances:
^^^^^^^^^H FY 2003
^^
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
Superfund
$ 766,786
19
(2,579,726)
866
1,838,503
0
$ 26,448
All Others
$ 2,011,471
87,404
(66,574)
12,377
9,582,206
131,473
$ 11,758,357
FY 2002
Superfund
$ 726,589
24,417
(2,742,412)
1,876
2,021,759
0
$ 32,229
All Others
$ 1,917,637
127,611
(80,875)
12,232
9,608,642
103,687
$ 11,688,934
The funds available for obligation may be apportioned by the OMB for new obligations at the beginning of
the following FY. Funds unavailable for obligation are mostly balances in expired funds, which are available
only for upward adjustments of existing obligations.
For FY 2003, no differences existed between Treasury's accounts and EPA's statements for fund balances
with Treasury. For FY 2002, the amounts on the agency financial statements were $2,828 thousand less than
the balances on Treasury's records. These differences consist mainly of unrecorded transactions from the
last two months of FY 2002 that were recorded by the agency in FY 2003. The FY 2002 differences for
Superfund and All Other Funds are $1,301 thousand and $1,527 thousand, respectively.
Note 3. Cash
In All Others, as of September 30, 2003 and 2002, cash consisted of imprest funds totaling $ 10 thousand.
Note 4. Investments
As of September 30, 2003 and 2002, investments consisted of the following
Unamortized
(Premium) Interest Investments,
Cost Discount Receivable Net Market Value
Superfund
Intragovernmental Securities:
Non-Marketable
FY2003 $ 2,507,927 $ (8,183) $ 37 $ 2,516,147 $ 2,516,147
FY2002 $ 3,234,352 $ (62,650) $ 12,973 $ 3,309,975 $ 3,309,975
All Others
Intragovernmental Securities:
Non-Marketable
FY 2003
FY 2002
2,037,560 $
^^^^^^^^=
1,892,769 $
2,114,684 $ 2,114,684
1,952,052 $ 1,952,052
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
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
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.
Note 5. Accounts Receivable
The Accounts Receivable for September 30, 2003 and 2002, consist of the following:
FY 2003
FY 2002
Superfund All Others Superfund All Others
Intragovernmental Assets:
Accounts & Interest Receivable
Non-Federal Assets:
Unbilled Accounts Receivable
Accounts & Interest Receivable
Less: Allowance for Uncollectibles
Total
34,665 $
428,486 $
119,941 $
33,309 $
65,296 $
411,437 $
72,298
109,272 $
815,119
(495,905)
1,668 $
113,130
(49,502)
87443 $
783,279
(459,285)
2,210
101,392
(54,204)
49,398
The Allowance for Doubtful Accounts is determined on a specific identification basis as a result of a case-
by-case review of receivables, and a reserve on a percentage basis for those not specifically identified.
Note 6. Other Assets
Other Assets for September 30, 2003, consist of the following
Superfund Combined
Trust Fund All Others Totals
Intragovernmental Assets:
Advances to Federal Agencies
Advances to Working Capital Fund
Advances for Postage
Total Intragovernmental Assets
146
7,268
7,414 $
3,233
0
594
3,827 $
3,379
7268
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
731
(918) $
601
1,544
95
217
51
1,912
(969)
601
1,544
826
217
51
1,912
Total Non-Federal Assets
680 $
3,502 $
4,182
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Other Assets for September 30, 2002, consist of the following:
Superfund Combined
Trust Fund All Others Totals
Intragovernmental Assets:
Advances to Federal Agencies
Advances to Working Capital Fund
Advances for Postage
Total Intragovernmental Assets
Non-Federal Assets:
Travel Advances
Letter of Credit Advances
Grant Advances
Other Advances
Operating Materials and Supplies
Inventory for Sale
Total Non-Federal Assets
141 $
4,379
0
4,520 $
(13) $
0
0
793
0
0
780 $
4, 163 $
0
415
4,578 $
(911) $
2,388
3,054
148
216
42
4,937 $
4,304
4,379
415
9,098
(924)
2,388
3,054
941
216
42
5,717
Note 7 Loans Receivable, Net—Non-Federal
Asbestos Loan Program loans disbursed from obligations made prior to FY 1992 are net of an allowance for
estimated uncollectible loans, if an allowance was considered necessary. Loans disbursed from obligations
made after FY 1991 are governed by the Federal Credit Reform Act. The Act 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.
An analysis of loans receivable and the nature and amounts of the subsidy and administrative expenses
associated entirely with Asbestos Loan Program loans as of September 30, 2003 and 2002, is provided in
the following sections.
Direct Loans Obligated
Prior to FY 1992
Direct Loans Obligated
After FY 1991
Total
Value of
Loans Assets Loans
Receivable, Related to Receivable,
Gross Allowance* Direct Loans Gross
33,245
34,597
FY 2002
Value of
Assets
Related to
Allowance* Direct Loans
67,842 $
33,245 $
20,261
53,506 $
41,181 $
38,664
79,845 $
0 $
( 15, 199)
(15,199) $
41,181
23,465
64,646
* 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).
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Subsidy Expenses for Post Credit Reform Loans (reported on a cash basis):
Direct Loan Subsidy Expense—FY 2003
Downward Subsidy Reestimate—FY 2003
FY 2003 Totals
Direct Loan Subsidy Expense—FY 2002
Downward Subsidy Reestimate—FY 2002
FY 2002 Totals
Interest Rate Technical
Re-estimate Re-estimate Fee Offsets
528
(201)
207 $
115
(496)
327 $
157
(816)
0 $
905
(371)
534
^^_=
272
(1,312)
Note 8. Accounts Payable and Accrued Liabilities
The Accounts Payable and Accrued Liabilities, both Federal and Non-Federal, are current liabilities consist-
ing of the following amounts as of September 30, 2003:
Superfund All Other Combined
Trust Fund Funds Total
Federal:
Accounts Payable to other Federal Agencies
Liability for Allocation Transfers
Expenditure Transfers Payable to other EPA Funds
Accrued Liabilities, Federal
Total
Non-Federal:
Accounts Payable, Non-Federal
Advances Payable, Non-Federal
Interest Payable
Grant Liabilities
Other Accrued Liabilities, Non-Federal
$ 593 $ 618 $
20,017
86,087
38,934 69,538
$ 145,631 $ 70,156 $
$ 45,880 $ 71,160 $
3 13
553 2
21,714 545,872
97,400 105,737
1,211
20,017
86,087
108,472
215,787
—
117040
16
555
567586
203, 137
Total
165,550 $
722,784 $
888,334
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
The Accounts Payable and Accrued Liabilities,
amounts as of September 30, 2002:
^^m
Federal:
Accounts Payable to other Federal Agencies
Liability for Allocation Transfers
Expenditure Transfers Payable to other EPA Funds
Accrued Liabilities, Federal
Total
Non-Federal:
Accounts Payable, Non-Federal
Advances Payable, Non-Federal
Interest Payable
Grant Liabilities
Other Accrued Liabilities, Non-Federal
Total
both Federal and Non-Federal, consisted of the
Superfund All Other
Trust Fund Funds
$ 4,964 $ 620
20,017
45,701
45,557 43,363
$ 116,239 $ 43,983
$ 43,344 $ 74,260
14 3
333 1
14,590 348,474
87,524 88,498
$ 145,805 $ 511,236
following
Combined
Total
$ 5,584
20,017
45,701
88,920
$ 160,222
$ 117,604
17
334
363,064
176,022
$ 657,041
Note 9. General Plant, Property and Equipment
Superfund property, plant and equipment, consists of personal property items held by contractors and the
Agency. EPA also has property funded by various other Agency appropriations. The property funded by
these appropriations are presented in the aggregate under "All Others" and consists of software; real, EPA-
Held and Contractor-Held personal, and capitalized-leased property.
As of September 30, 2003, Plant, Property and Equipment consisted of the following:
Superfund
All Others
Acquisition Accumulated Net Book Acquisition Accumulated Net Book
Value Depreciation Value Value Depreciation Value
EPA-Held Equipment
Software
Contractor-Held Property:
Superfund Site-Specific
General
Land and Buildings
Capital Leases
$ 28,990 $ (15,664) $
3,649 (138)
40,505 ( 16,642)
7,607 (2,452)
13,326 $ 158,199 $
3,511 53,888
23,863
5,155 15,679
536,212
41,535
(97785) $
(4,397)
(6,429)
(100,826)
( 16,605)
60,414
49,491
9,250
435,386
24,930
Total
80,751 $
45,855 $
805,513
579,471
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
As of September 30, 2002,
EPA-Held Equipment
Software
Contractor-Held Property:
Superfund Site-Specific
General
Land and Buildings
Capital Leases
Total
Note 10. Debt
~T~U r^ u f -I-U
1 he Debt consisted of the
All Others
Other Debt:
Debt to Treasury
Plant, Property and Equipment consisted of the following:
Superfund
Acquisition Accumulated
Value Depreciation
$ 25,968 $ (15,245) $
961 (85)
32,472 (12,065)
10,407 (3,667)
$ 69,808 $ (31,062) }
-Til f C Of~l
following as of September 30
FY 2003
Beginning Net
Balance Borrowing
$ 24,290 $ (3,101) 5
All Others
Net Book Acquisition Accumulated
Value Value Depreciation
10,723 $ 148,693 $ (92,920)
876 26,358 (2,520)
20,407 0 0
6,740 18,412 (9,689)
521,515 (85,238)
41,614 (14,889)
38,746 $ 756,592 $ (205,256)
Of~\f~o ,-i ^r\r\~)
2003 and 2002:
FY 2002
Ending Beginning Net
Balance Balance Borrowing
21,189 $ 31,124 $ (6,834)
$ 55,773
23,838
0
8,723
436,277
26,725
$ 551,336
^^^^1 I
^^^^^^^^^^^^H >
n
m
B'alatc'e ^^^^H
i
$ 24,290
Classification of Debt:
Intragovernmental Debt
21,189
24,290
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.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Note 12. Other Liabilities
The Other Liabilities, both intragovernmental and Non-Federal, for September 30, 2003 are as follows:
Other Liabilities — Intrasovernmental
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
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
0
$ 29,153 $
$ 6,589 $
7,269
1,674
(515)
1
0
0
$ 15,018 $
$ 49,809 $
$ 5,044 $
12,261
0
$ 17,305 $
0 $
0
0
0
1,447
1,447 $
^^^^^^^^^ =
0 $
0
0
0
0
0
6,593
6,593 $
^^^^^^^^^ =
0 $
^^^^^^^^^ =
0 $
0
35,800
35,800 $
Total
1,379
1,811
25,016
947
1,447
30,600
~
6,589
7,269
1,674
(515)
1
0
6,593
21,611
^^^^^^^^^^=
49,809
^^^^^^^^^^=
5,044
12,261
35,800
53, 105
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
The Other Liabilities, both intragovernmental and Non-Federal,
Other Liabilities — Intrasovernmental
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
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
for September 30
Covered by
Budgetary
Resources
$ 3, 169
2,470
16,618
30
0
$ 22,287
$ 13,883
4,379
1,435
(91)
2
371
0
$ 19,979
$ 45,515
$ 6,569
4,181
0
$ 10,750
, 2002, are as
Mot Covered
by Budgetary
Resources
0
0
0
0
1,440
$ 1,440
$ 0
0
0
0
0
0
6,402
$ 6,402
0
$ 0
0
36,729
$ 36,729
follows:
^^^H
$ 3, 169
2,470
16,618
30
1,440
$ 23,727
^^H
2
371
H
6,402
$ 26,381
e
45,515
1
$ 6,569
4,181
E
36,729
$ 47,479
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Note 13. Leases
The Capital Leases as of September 30, 2003 and 2002, consist of the following
CAPITAL LEASES, ALL OTHER FUNDS:
Summary of Assets Under Capital Lease:
Real Property
Personal Property
Total
Accumulated Amortization
FY 2003 FY 2002
40,913
622
41,535 $_
16,605 $
41,614
1
14,889
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). EPA has
capital leases for seven shuttle buses terminating in FY 2007. The real property leases terminate in fiscal
years 2010, 2013, and 2025. The charges are expended out of the Environmental Programs and Management
(EPM) appropriation. The total future minimum lease payments of the capital leases are listed below.
Future Payments Due:
Fiscal Year
2004
2005
2006
2007
2008
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
6,439
6,439
6,439
6,331
6,295
77,309
109,252
(73,452)
35,800
35,800
OPERATING LEASES:
The General Services Administration (GSA) provides leased real property (land and buildings) as office
space for EPA employees. GSA charges a Standard Level Users Charge that approximates the commercial
rental rates for similar properties.
EPA has five direct operating leases for land and buildings housing scientific laboratories and/or computer
facilities during FY 2003. 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 (U.S.
Department of Labor). Two of these operating leases that were due to expire in FY 2002 were extended:
one until FY 2003 and the other on a monthly basis. Two others expire in fiscal years 2017 and 2020. The
fifth lease that expired in FY 2001 was extended until FY 2007 The charges are expended from the EPM
appropriation. The total minimum future costs of operating leases are listed below.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
Fiscal Year
2004
2005
2006
2007
2008
Beyond 2008
Total Future Minimum Lease Payments
Note 14. Pension and Other Actuarial
Superfund
$ 0
0
0
0
0
0
$ 0
Liabilities
Total Land & 1
All Others Buildings ^^^^^^^^^^^^|
$ 108 $ 108
87 87
87 87
81 81
74 74
772 772
$ 1,209 $ 1,209
FECA provides income and medical cost protection to covered 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 attributable to the entity. The liability is calculated to esti-
mate 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, 2003 and 2002, consisted of the following:
FY 2003
FY 2002
Superfund All Others Superfund All Others
FECA Actuarial Liability
7,937 $
36,159 $
7,698 $
31,759
The FY 2003 present value of these estimated outflows are calculated using a discount rate of 3.84 percent
in the first year, and 4.35 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 Potentially Responsible Party 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, 2003 and 2002, the Unexpended Appropriations consisted of the following for All
Other Funds:
Unexpended Appropriations:
Unobligated
Available
Unavailable
Undelivered Orders
Total
FY 2003 FY 2002
1,797410 $ 1,725,016
41,667 52,896
8,929,159 9,145,977
$ 10,768,236 $ 10,923,889
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Note 17 Amounts Held by Treasury
Amounts Held by Treasury for Future Appropriations consists of amounts held in trusteeship by Treasury in
the Superfund Trust Fund and the LUST Trust Fund.
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
supported by other taxes on crude 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 the U.S. Department of Treasury as of
September 30, 2003 and 2002. The amounts contained in these statements have been provided by the
Treasury and are audited. Outlays represent amounts received by EPAs Superfund Trust Fund; such funds
are eliminated on consolidation with the Superfund Trust Fund maintained by Treasury.
SUPERFUND FY2003
Undistributed Balances
Available for Investment
Total Undisbursed Balance
Interest Receivable
Investments, Net of Discounts
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/from EPA, Net
Transfers to CDC
Total Outlays
Net Income
Treasury Combined
$ 2,599,744 $
2,599,744 $
$ 2,599,744 $
$ 0 $
0
0
866
37
(83,634)
(82,731) $
(82,731) $
(82,731) $
(99,355) $
146,502
2,873
50,020
632,307
48,945
866
37
2,516,110
2,517,013
2,517013
2,517,013
(99,355)
146,502
2,873
50,020
632,307
48,945
1,278,068
1,278,068
731,272
—
(1,278,068)
(80,200)
(1,358,268)
731,272
(80,200)
651,072
-------
SECTION 3.
FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
SUPERFUND FY 2002 ^^^^^^
Undistributed Balances
Available for Investment
Total Undisbursed Balance
Interest Receivable
Investments, Net of Discounts
Total Assets
Liabilities & Equity
Equity (Note 36)
Total Liabilities and Equity
Receipts
Corporate Environmental
Cost Recoveries
Fines & Penalties
Appropriations Received
Interest Income
Total Receipts
Outlays
Transfers to EPA
Transfers to CDC
Total Outlays
Net Income
EPA
$ 0
0
0
2,762,430
$ 2,762,430
$ 2,762,430
$ 2,762,430
$ 0
0
0
0
0
0
1,329,490
0
1,329,490
$ 1,329,490
Treasury
$ 1,876
1,876
12,973
534,572
$ 549,421
$ 549,421
$ 549,421
$ 7466
248,252
1,444
676,292
110,577
1,044,031
(1,329,490)
(49,502)
( 1,378,992)
$ (334,961)
Combined ^^^^^^^^H
$ 1,876
1,876
12,973
3,297002
$ 3,311,851
$ 3,311,851
$ 3,311,851
$ 7466
248,252
1,444
8
>
676,292
110,577
1,044,031
0
(49,502)
(49,502)
$ 994,529
i
i
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
LUST (AuditedJ
LUST is supported primarily by a sales tax on motor fuels to clean up LUST waste sites. In FY 2003 and
2002 there were no fund receipts from cost recoveries. The following represents LUST Trust Fund as main-
tained by Treasury. The amounts contained in these statements 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.
LUST FY 2003
EPA Treasury Combined
Undistributed Balances
Available for Investment
Total Undisbursed Balance
Interest Receivable
Investments, Net of Discounts
Total Assets
Liabilities & Equity
Equity
Total Liabilities and Equity
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
Outlays
Transfers to/from EPA, Net
Total Outlays
Net Income
$ 0 $
0
0
66,574
$ 66,574 $
$ 66,574 $
$ 66,574 $
$ 0 $
0
0
0
0
0
0
0
0
71,843
71,843
$ 71,843 $
12,377 $
12,377
25,834
2,022,279
2,060,490 $
2,060,490 $
2,060,490 $
177340 $
12,241
448
(2,064)
(3,214)
(274)
184,477
64,447
248,924
(71,843)
(71,843)
177,081 $
12,377
12,377
25,834
2,088,853
2, 127,064
2, 127,064
2, 127,064
177340
12,241
448
(2,064)
(3,214)
(274)
184,477
64,447
248,924
0
0
248,924
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
LUSTFY2°°2 ™ ^ ^^^1
Undistributed Balances
Available for Investment
Total Undisbursed Balance
Interest Receivable
Investments, Net of Discounts
Total Assets
Liabilities & Equity
Equity
Total Liabilities and Equity
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
Outlays
Transfers to/from EPA, Net
Total Outlays
Net Income
$ 0 $
0
0
80,875
$ 80,875 $
$ 80,875 $
$ 80,875 $
$ 0 $
0
0
0
0
0
0
0
0
72,912
72,912
$ 72,912 $
12,232 $
12,232
22,531
1,848,646
1,883,409 $
1,883,409 $
1,883,409 $
173,351 $
13, 199
474
(2,167)
(3,357)
(310)
181,190
67,563
248,753
(72,912)
(72,912)
175,841 $
12,232
12,232
22,531
1,929,521
1,964,284
1,964,284
1,964,284
^^^•g
Hj^^^^^^^^^H y>
(2,167)
(3,357)
(310)
181,190
67,563
248,753
0
0
248,753
•
1
1
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.
Superfund
Under CER.CLA § I06(a), EPA issues administrative orders that require parties to clean up contaminated
sites. CER.CLA §!06(b) allows a party that has complied with such an order to petition EPA for reimburse-
ment from the Fund of its reasonable costs of responding to the order, plus interest. To be eligible for
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
reimbursement, the party must demonstrate either that it was not a liable party under CERCLA 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.
There are currently four CERCLA §!06(b) administrative claims. If the claimants are successful, the total
losses on the administrative and judicial claims could amount to approximately $55.4 million. The
Environmental Appeals Board has not yet issued final decisions on any of these administrative claims; there-
fore, 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
There are four 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 claim could amount to $89.5 million.
The largest claim (maximum amount $73.1 million) was filed with GSA and the parties currently are in
discovery. EPA is contesting the Federal Tort Claims Act action ($15.36 million) and awaiting final
Department of Labor decisions on two related claims (totaling $ 1.05 million). The claimants' chance of
success overall is characterized as reasonably possible.
Judgement Fund
In cases that are paid by the U.S. Treasury Judgement 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 judgement is
assessed and the Judgement 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 judgement, the liability will be reduced and an imputed financing source
recognized. See Interpretation of Federal Financial Accounting Standards No. ~L, Accounting for Treasury
Judgement Fund Transactions.
As of September 30, 2003, there are no material claims pending in the Treasury Judgement Fund.
Note 19. Exchange Revenues, Statement of Net Cost
Exchange revenues on the Statement of Net Cost include income from services provided, non-custodial
interest revenue (with the exception of interest earned on trust fund investments), and non-custodial
miscellaneous earned revenue.
Note 20. Environmental Cleanup Costs
As of September 30, 2003, the EPA has two sites that require clean up stemming from its activities. Costs
amounting to $18 thousand may be paid out of the Treasury Judgement Fund. (The $18 thousand repre-
sents the lower end of a range estimate, of which the maximum of the range will total $30 thousand.) The
claimants' chances of success are characterized as reasonably possible. As of September 30, 2002, EPA had
one site requiring clean up with costs amounting to $20 thousand that may have been paid out of the
Treasury Judgement Fund. (The $20 thousand represents the lower end of the range estimate, of which the
maximum was $200 thousand.) The claimant's chance of success was characterized as probable. EPA also
holds title to a site in Edison, New Jersey which was formerly an Army Depot. While EPA did not cause the
contamination, the Agency could potentially be liable for a portion of the cleanup costs. However, it is
expected that the Department of Defense and General Services Administration will bear all or most of the
cost of remediation.
Accrued Cleanup Cost
The EPA has 12 sites that will require future clean up associated with permanent closure and three sites with
clean up presently underway. The estimated costs will be approximately $9 million. Since the cleanup costs
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
associated with permanent closure are not primarily recovered through user fees, EPA has elected to recognize
the estimated total cleanup cost as a liability and record changes to the estimate in subsequent years.
The FY 2003 estimate for unfunded cleanup costs decreased by $3.3 million from the FY 2002 estimate.
This decrease is due in large part to the funding of the cleanup at several facilities in Denver and Research
Triangle Park (RTP) associated with the ongoing consolidation at the Denver Federal Center and RTP
Campus, respectively. Of the $9 million in estimated cleanup costs, approximately $2.7 million represents
the estimated expense to close the current RTP facility. These costs will be incurred within the next year.
The remaining amount represents the future decontamination and decommissioning costs of EPA's other
research facilities. There was a net decrease of approximately $1.2 million in funded cleanup costs from
FY 2002 to FY 2003. EPA could also be potentially liable for cleanup costs, at a GSA-leased site; however,
the amounts are not known.
Note 21. Superfund State Credits
Authorizing statutory language for Superfund and related Federal regulations require States to enter into
Superfund State Contracts (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 ten
percent cost share for remedial action costs incurred at privately owned or operated sites, and at least fifty
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 determined 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/remaining credit to another site when
approved by EPA. As of September 30, 2003, the total remaining state credits have been estimated at $9.6
million. The estimated ending credit balance on September 30, 2002, was $ 11.2 million.
Note 22. Superfund Preauthorized Mixed Funding Agreements
Under Superfund preauthorized mixed funding agreements, Potentially Responsible Parties (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 Section III (a)(2) of CERCLA. Under Section I22(b)(l) of CERCLA, as amended by SARA, a
PRP may assert a claim against the Superfund Trust Fund for a portion of the costs they incurred while con-
ducting a preauthorized response action agreed to under a mixed funding agreement. As of September 30,
2003, EPA had 13 outstanding preauthorized mixed funding agreements with obligations totaling $32.1 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 application, claim, and claims adjustment processes have been reviewed and approved by EPA.
Note 23. Income and Expenses from other Appropriations
The Statement of Net Cost reports program costs that include the full costs of the program outputs and
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.
During FY 2003 and 2002, EPA had one appropriation which funded a variety of programmatic and non-
programmatic activities across the Agency, subject to statutory requirements. The EPM appropriation was
created to fund personnel compensation and benefits, travel, procurement, and contract activities.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
All of the expenses from EPM were distributed among EPA's two Reporting Entities: Superfund and All
Others. 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 net effect of the Statement of Net Costs.
All Others
Superfund
All Others
Total
FY 2003
Income From Expenses From
Other Other
Appropriations Appropriations
75,597 $
(75,597)
0 $
(75,597) $
75,597
0 $
0 $
0
0 $
114,297
(114,297)
0
FY 2002
Income From Expenses From
Other Other
Appropriations Appropriations
(114,297)
114,297
0 $
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 responsible parties' willingness and ability to pay.
Fines, Penalties and Other Misc. Revenue (EPA)
174,509 $
95,489
Accounts Receivable for Fines, Penalties and Other Miscellaneous Receipts
Accounts Receivable
Less: Allowance for Doubtful Accounts
Total
117191
(40,311)
76,880 $
107,779
(39,383)
68,396
Note 25. Statement of Budgetary Resources
Reconciliations of budgetary resources, obligations incurred, and outlays, as presented in the audited
Statements of Budgetary Resources, to amounts included in the Budget of the United States Government
for the years ended September 30, 2003 and 2002, are as follows:
FY 2003
Superfund
Statement of Budgetary Resources
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Budget of the United States Government
All Other
Statement of Budgetary Resources
Less: Funds Reported by Other Federal Entities
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Budgetary Obligations
Resources Incurred Outlays
$ 2,317206 $
0
$ 2,317,206 $
$ 9,910,793 $
(353)
622
1,550,401 $
0
1,550,401 $
^^^^^^^^^^^= ^S
7,811,921 $
0
0
1,445,513
1,313
1,446,826
^^^^^^^^^^S
7397843
(36)
26
Budget of the United States Government
9,911,062 $
7,811,921 $
7,397,833
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
FY 2002
Superfund
Statement of Budgetary Resources
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Budget of the United States Government
All Other
Statement of Budgetary Resources
Less: Funds Reported by Other Federal Entities
Adjustments to Unliquidated Obligations, Unfilled Customer Orders and Other
Budget of the United States Government
Budgetary Obligations
Resources Incurred Outlays
2,448,998 $ 1,698,004
(17,463) (17,463)
9,807,912 $
(24,419)
1,377754
(1,313)
2,431,535 $ 1,680,541 $ 1,376,441
7,762,664 $ 7012,562
(24,066) (24,582)
(622) (261
9,783,493 $ 7,737,976 $ 6,987,954
Note 26. Recoveries and Permanently Not Available, Statement of
Budgetary Resources
Details of Recoveries of Prior Year Obligations and Permanently Not Available on the Statement of
Budgetary Resources are represented by the following categories:
Superfund
Recoveries of Prior Year Obligations
Less: Rescinded Authority
Total
All Others
Recoveries of Prior Year Obligations
Less: Payments to Treasury
Rescinded Authority
Canceled Authority
FY 2003
$ 124,797
(8,274)
$ 116,523
FY 2003
$ 114,437
(3,101)
(49,362)
(23,719)
FY 2002
$ 230,628
(2,000)
$ 228,628
FY 2002
$ 89,440
(6,834)
(1,588)
(33,870)
Total
38,255 $
47,148
Note 27 Unobligated Balances Available
Availability of unobligated balances are shown comparatively for FY 2003 and FY 2002. The unexpired
authority is available to be apportioned by the OMB for new obligations at the beginning of FY 2004.
Expired authority is available for upward adjustments of obligations incurred as of the end of the fiscal year.
Superfund
Unexpired Unobligated Balance
Authority Not Available for Apportionment
Expired Unobligated Balance
FY 2003
$ 766,786
0
19
FY 2002
$ 726,589
24,386
19
Total
766,805 $
750,994
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
All Others
Unexpired Unobligated Balance
Authority Not Available for Apportionment
Expired Unobligated Balance
Total
FY 2003
2,011,471
0
87401
FY 2002
1,917,637
1,150
126,461
2,098,872 $ 2,045,248
Note 28. Offsetting Receipts
Distributed offsetting receipts credited to the general fund, special fund or trust fund receipt accounts off-
set gross outlays. For FY 2003 and 2002, the following receipts were generated from these activities:
Superfund
Trust Fund Recoveries
Total
FY 2003
FY 2002
146,502
248,252
146,502 $ 248,252
All Others
Special Fund Environmental Service
Trust Fund Appropriation
Total
FY 2003
FY 2002
11,649
632,307
11,358
676,292
643,956 $
687,650
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
FY 2003 and 2002, the following line items are reconciled to the increases or decreases in those liabilities.
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
Total
Superfund All Other Combined
Trust Fund Funds Total
1,088
0
246
1,334 $
5,647
(3,276)
4,591
6,962 $
6,735
(3,276)
4,837
8,296
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
Negative subsidy entries
Subsidy re-estimate entries
1,088 $
0
7
239
0
0
0
0
5,888 $
(2)
191
4,400
(371)
(3,274)
201
(71)
6,976
(2)
198
4,639
(371)
(3,274)
201
(71)
Total
1,334 $
6,962 $
8,296
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Statement of Financing lines FY 2002:
Resources that fund expenses recognized in prior periods
Increases in environmental liabilities
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
Negative subsidy entries
Subsidy re-estimate entries
Total
Superfund All Other Combined
Trust Fund Funds Total
2,206
(3,778)
14
(32)
(399)
578
5,375
(6,000)
61
(143)
(942)
578
616
634
(1,989)
578
7581
(9,778)
75
(175)
(942)
578
616
634
Note 30. Costs Not Assigned to Goals
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 million in operating program expenses.
For FY 2002's Statement of Net Cost by Goal, -$4.8 million in gross costs were not assigned to goals. This
amount was comprised of decreases of $6 million in unfunded contingent liabilities and $2.5 million in bad
debt expenses; offset by increases of $2 million interest on borrowing, $0.6 million in environmental cleanup
costs, $0.6 million in undistributed Federal payroll-related costs, and $0.5 million in other interest costs.
Note 31. Transfers—In and Out, Statement of Changes in Net Position
Appropriation Transfers, In/Out:
For FY 2003 and 2002, the Appropriation Transfers under Budgetary Financing Sources on the Statement of
Changes in Net Position are comprised of nonexpenditure transfers which 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:
All Other All Other
Superfund Superfund Funds Funds
Fund/Type of Account
GSA Building Fund
EPM (from current year balances)
EPM (from prior year balances)
STAG
Total Appropriation Transfers
Net Transfers from Invested Funds*
Allocations Rescinded*
Total of Net Transfers on Statement of Budgetary Resources
FY 2003
$ 0 $
0
0
0
$ 0
1,278,068
8,274
$ 1,286,342
FY 2002 FY 2003 FY 2002
0
0
0
0
0
1,329,490
0
1,329,490
0 $
4,550
0
0
4,550
71,843
470
76,863 $
23,948
3,750
500
400
28,598
72,912
0
101,510
* Portion of transfers on Statement of Budgetary Resources that are not part of Appropriation Transfers on Statement
of Changes in Net Position.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Transfers In/Out Without Reimbursement, Budgetary:
For FY 2003 and 2002, Transfers In/Out under Budgetary Financing Sources on the Statement of Changes in
Net Position are comprised of transfers to or from other Federal agencies and between EPA funds. These
transfers affect Cumulative Results of Operations. A breakdown of the transfers-in and transfers-out, expen-
diture and nonexpenditure, follows:
All Other All Other
Type of Transfer/Funds
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
Superfund Superfund Funds Funds
FY2003 FY2002 FY 2003 FY 2002
$ (85,608) $
(12,659)
(5,155)
(9,642)
(80,200)
2,133
$_ (191,131) $_
(36,891) $
(11,867)
(5, 188)
(49,502)
(103,448) $
85,608 $
12,659
15,480
(2,133)
111,614 $
36,891
11,867
15,000
(86)
63,672
Transfers In/Out without Reimbursement, Other Financing Sources:
For FY 2003 and 2002, Transfers In/Out without Reimbursement under Other Financing Sources on the
Statement of Changes in Net Position are comprised of I) transfers of property, plant and equipment
between EPA funds and 2) 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
Transfer—out of prior year negative subsidy, to be paid in following year
Adjustment to transfer-out of prior year negative subsidy, paid out in
current year and adjusted to funded expenses
Total Transfers in (out) without Reimbursement, Budgetary
All Other All Other
Superfund Superfund Funds Funds
FY2003 FY2002 FY 2003 FY 2002
47
84 $
47 $
(84)
371
287 $
(47)
(371)
816
398
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 Office of Personnel
Management (OPM) trust funds. These amounts are recorded as imputed costs and imputed financing for
the 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 2003 were $178 million and $103.2 million for
Superfund and All Other Funds, respectively. For FY 2002, the estimates were $14.7 million and $83 million
for Superfund and All Other Funds, respectively.
In addition to the pension and retirement benefits described above, EPA also records imputed costs and
financing for Treasury Judgement 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 Judgement
Fund Transactions. For FY 2003 entries for Judgement Fund payments totaled $2.2 million and $5 million for
Superfund and All Other Funds, respectively. For FY 2002, no Judgement Fund payments were made on
EPA's behalf.
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Note 33. Payroll and Benefits Payable
The amounts that relate to payroll and benefits payable to EPA employees for the years ending September
30, 2003 and 2002, are detailed in the following tables.
FY 2003 Payroll and Benefits Payables
Superfund — Current
Accrued Funded Payroll and Benefits
Withholdings Payable
Employer Contributions Payable, non Federal (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, non Federal (TSP)
Other Post-employment Benefits Payable
Accrued Funded Leave, WCF
Accrued Unfunded Annual Leave
Total — All Other Funds — Current
FY 2002 Payroll and Benefits Payables
Superfund — Current
Accrued Funded Payroll and Benefits
Withholdings Payable
Employer Contributions Payable, non Federal (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, non Federal (TSP)
Other Post-employment Benefits Payable
Accrued Funded Leave, WCF
Accrued Unfunded Annual Leave
Covered by Not Covered
Budgetary by Budgetary
Resources Resources
$ 4,097 $ 0
3,007 0
197 0
3 0
23,735
$ 7,304 $ 23,735
$ 17,645 $ 0
14,366 0
940 0
33 0
320 0
109,487
$ 33,304 $ 109,487
Covered by Not Covered
Budgetary by Budgetary
Resources Resources
$ 9,146 $ 0
6,897 0
443 0
3 0
0 22,647
$ 16,489 $ 22,647
$ 41,309 $ 0
30,233 0
1,943 0
29 0
320 0
0 103,598
Total
$ 4,097
3,007
197
3
23,735
$ 3UB9
$ 17,645
14,366
940
33
320
109,487
$ 142,791
Total
$ 9, 146
6,897
443
3
22,647
$ 39,136
$ 41,309
30,233
1,943
29
320
103,598
Total—All Other Funds—Current
73,834 $
103,598
177,432
-------
FISCAL YEAR 2OO3 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
are comprised of rescissions to appropriated funds and cancellations of funds that expired five years earlier.
These amounts affected Unexpended Appropriations for All Other Funds for FY 2003 and 2002.
Rescissions to General Appropriations
Canceled General Authority
Total Other Adjustments
48,147
23,719
33,872
71,866 $
35,460
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
FY 2003 and 2002 are comprised of the following items:
Superfund All Other Combined
Trust Fund Funds Total
Interest on Trust Fund Investments
Tax Revenue, Net of Refunds*
Fines and Penalties Revenue
Special Receipt Fund Revenue
Total Nonexchange Revenue
48,945 $
(99,355)
718
0
64,447
184,477
0
11,591
113,392
85,122
718
11,591
210,823
FY 2002
Interest on Trust Fund Investments
Tax Revenue, Net of Refunds
Fines and Penalties Revenue**
Special Receipt Fund Revenue
Total Nonexchange Revenue
Superfund All Other Combined
Trust Fund Funds Total
108,038 $
67,563
181,190
0
11,358
260,1
178,140
188,656
(10,005)
11,358
368,149
* In FY 2003, the Superfund trust fund refunded $99,355 thousand in previously accrued corporate environmental taxes.
** FY 2002 fines and penalties revenue included the following negative items: a $9,664 thousand write-off and $1,339
thousand allowance for uncollectible accounts.
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Note 36. Hazardous Substance (Superfund) Trust Fund Balance
In FY 2003, the EPA received an appropriation for Superfund of $1.264 billion. The funding source for the
appropriation consisted of $632 million from the Superfund Trust Fund, and $632 million from Treasury's
general fund. Treasury's Bureau of Public Debt (BPD), the manager of 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. The Superfund Trust Fund has
a liability to EPA for previously appropriated funds as of September 30, 2003 and 2002 of $2.6 billion and
$3.3 billion, respectively. Unappropriated funds available for future appropriations as of September 30, 2003
and 2002 was $0 and $549 million, respectively.
During FY 2003, the Superfund Trust Fund revenue from cost recoveries and investment interest was less
than anticipated. In addition, the Internal Revenue Service issued approximately $99 million in corporate net
tax refunds that were previously deposited in the Trust Fund. Due to these circumstances, and when
combined with the FY 2003 Superfund appropriation, the amount appropriated to EPA for Superfund
activities exceeded the assets available for appropriation in the Trust Fund as of September 30, 2003 by
$82.7 million. The Agency expects the Trust Fund to continue to receive revenues from cost recoveries and
investment interest. Nevertheless, such revenue is not expected to be sufficient to cover the same level of
funding from the Trust Fund as in past years. In EPA's view, the shortfall for FY 2003 will be covered by the
collection of cost recoveries and receipt of interest income to the Trust Fund overtime.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Required Supplemental Information
As of September 30, 2003
(Dollars in Thousands)
(Unaudited)
Deferred Maintenance
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
survey 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.
Intragovernmental Assets
Intragovernmental amounts represent transactions between all federal departments and agencies and are
reported by trading partner (entities that EPA did business with during FY 2003).
Investments Accounts Receivable
Trading
Partner
Code
4
II
12
13
14
15
17
18
19
20
21
31
45
47
49
57
61
64
68
69
70
72
75
80
86
89
96
97
99
0
Total
Other
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 2,516,147 2,114,684
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 Other)
Department of Transportation
Department of Homeland Security
Agency for International Development
Department of Health and Human Services
National Aeronautics and Space
Administration
Department of Housing and Urban
Development
Department of Energy
US Army Corps of Engineers
US Department of Defense
Treasury General Fund
Unassigned
$2,516,147 $2,114,684
58
1
13,589
101
58
47
19
36
11,081
2
14
92
18
528
124
156
8,742
(1)
$34,665
3
127
36
49
758
(15)
321
(61)
130
159
1
64
20
36
(4)
3
6
89,789
7995
15,950
617
1,146
39
29
1,308
827
201
7
403
$119,941
: 68 $ 823
4 19
58
594
2,418
7,269
15 (27)
$7,414 $3,827
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS — PRINCIPAL FINANCIAL STATEMENTS
Intra
Trading
Partner
Code
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
73
75
80
86
89
93
95
96
97
99
0
Total
governmental Liabilities
Accounts Payable Accounts Receivable
Agency
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
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
Superfund All Other Superfund
$ 6
51
818
888 981
901 4,359
617 58 2,381
2,258 210
351 20
1
1
38
27
79
6
3
5
377 4,505
6
12
86,087 3,702
4,169
15,318 22
16 1,139
370
650 160 15,564
(351) 1 163
(38) 16 302
106,697 618 38,934
All Other
$ ISO
1,297
3
1,882
3,042
2,957
79
502
73
364
269
200
549
16
17
60
18
37,445
13
159
4,159
48
17
8,547
187
4,167
10
495
1,793
482
538
69,538
Other Liabilities ^^^^^^^
Superfund
(1)
(367)
2,170
49
570
1,447
873
14
143
2,334
1,004
10,767
2,386
1,490
7346
375
30,600
All Other I
$ 60
489
(1)
(18)
16
1,015
3,066
308
(117)
6,612
(319)
1
716
4
(17)
4,745
(57)
74
(68)
(20,885)
45
59
7,269
8,968
(420)
8,150
31
418
(335)
5
4
1,793
21,611
For All Other Funds' remaining intragovernmental liabilities, $21,189 thousand in Debt is assigned to the
Department of the Treasury (trading partner Code 20), and $78,776 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
Bureau of Public Debt, the Department of Labor, and the OPM. EPA has also been in contact with several
other Federal agencies to reconcile non-fiduciary intragovernmental balances for year-end as required.
Intragovernmental Revenues and Costs
EPAs intragovernmental earned revenues are not reported by trading partners because they are below
OMB's threshold of $500 million.
Superfund All Others
Intragovernmental Earned Revenue
Associated Costs to generate above Revenue (Budget Functional Classification 304)
16,682
16,682
124,233
124,233
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Required Supplemental Information
Supplemental Statement of Budgetary Resources
As of September 30, 2003
(Dollars in Thousands)
Environ-
mental
Programs & Science and
STAG Management Technology
Recoveries of Prior Year
Obligations
Permanently Not Available
Total Budgetary Resources
LUST
Trust Fund All Other
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
Anticipated for Rest of Year
Transfers from Trust Funds
3,859,994 $
1,365,927
2,111,604
4,550
354,150
720,821 $
225,477
376
0 $
72,313
3,227
731,931
96,091
Total All
Other
7424,350
0
76,863
2,045,248
0
4,853
4,853 $
97227
(25,090)
86,932
6,423
(1,470)
(54,402)
37483 $
11,437
(32,011)
5,526 22,838
1,247
807 216
194
83,475
91,249 $ 23,054 $
3,475 168
(10,675)
28 153,526
(2,596)
(19,915)
25,735
12,660
28 $ 169,410 $
231 1,899
(470) (7936)
273,703
5,074
(20,362)
(28,473)
96,135
326,077
114,437
(76, 182)
$ 5,302,911 $
2,487,213 $ 1,030,347 $ 23,598 $ 75,329 $ 991,395 $ 9,910,793
STATUS OF BUDGETARY RESOURCES
Obligations Incurred:
Direct
Reimbursable
Total Obligations Incurred
Unobligated Balances:
Apportioned
Exempt from Apportionment
Unobligated Balances Not Available
3,902,080 $
3,902,080 $
1,400,831
2,098,541 $
92,976
2,191,517 $
227577
68,119
731,821 $
4,292
736,113 $
277, 195
17,039
0 $
22,708
22,708 $
890
71,433 $
71,433 $
3,896
735,720 $
152,350
888,070 $
101,082
2,243
7539,595
272,326
7,811,921
2,011,471
0
87401
Total Status of Budgetary Resources $ 5,302,911 $ 2,487,213 $ 1,030,347 $ 23,598 $ 75,329 $ 991,395 $ 9,910,793
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environ-
mental
Programs & Science and
STAG Management Technology
LUST
Trust Fund All Other
RELATIONSHIP OF OBLIGATIONS TO
$ 3,800,000 $
Obligations Incurred, Net
Obligated Balances, Net
— Beginning
Accounts Receivable
Unfilled Customer Orders
—Federal Sources
Undelivered Orders
Accounts Payable
Total Outlays
Disbursements
Collections
Less: Offsetting Receipts
Net Outlays
8,236,011
(7,857036)
(495,044)
OUTLAYS
2,142,597 $
700,676
22,103
124,890
(583,687)
(203,829)
$ 3,683,931 $ 2,202,750 $
3,688,785 $
(4,854)
2,288,212
(85,462)
641,389 $
563,359
83,297
10,768
(475,383)
(93,556)
729,874 $
^—
779,435
(49,561)
(514)
2,621
24,258
(23,055)
71,174 $ 716,761
81,819 24,166
12,637
(76,421)
89,216
(85,205)
(46,176)
Total All
Other
7371,407
9,608,652
118,037
224,874
(9,077,583)
(847544)
1,203 $ 68,686 $ 711,399 $ 7,397,843
68,714
(28)
857529
(146,130)
(643,956)
7706,933
(309,090)
(643,956)
$ 3,683,931 $ 2,202,750 $
729,874 $
1,203 $ 68,686 $
67,443 $ 6,753,887
Environmental Protection Agency
Required Supplemental Information
Working Capital Fund Supplemental Balance Sheet
As of September 30, 2003
(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
Total Liabilities
NET POSITION
Cumulative Results of Operations
Total Net Position
Total Liabilities and Net Position
Unaudited
57780
23,869
_ 595
82,244
10,919
93,214
24,595
25,500
50,095
9,836
1,513
61,444
31,770
93,214
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Required Supplemental Information
Working Capital Fund Supplemental Statement of Net Cost
For the Year Ended September 30, 2003
(Dollars in Thousands)
COSTS
Intragovernmental
With the Public
Total Costs
Less:
Earned Revenues, Federal
Earned Revenues, Non Federal
Total Earned Revenues
NET COST OF OPERATIONS
Unaudited
70,863
61,351
132,214
130,499
1,715
Environmental Protection Agency
Required Supplemental Information
Working Capital Fund Supplemental Statement of Changes in Net Position
For the Year Ended September 30, 2003
(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
31,025
(III)
2,571
2,460
(1,715)
31,770
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environmental Protection Agency
Required Supplemental Information
Working Capital Fund Supplemental Statement of Budgetary Resources
For the Year Ended September 30, 2003
(Dollars in Thousands)
Unaudited
BUDGETARY RESOURCES
Budgetary Authority:
Appropriations Received
Borrowing Authority
Net Transfers
Other
Unobligated Balances:
Beginning of Period
Net Transfers, Actual
Anticipated Transfers Balance
Spending Authority from Offsetting Collections:
Earned and Collected
Receivable from Federal Sources
Change in Unfilled Customer Orders
Advance Received
Without Advance from Federal Sources
Anticipated for Rest of Year
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
Exempt from Apportionment
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
27162
130,506
0
(19,800)
22,408
133,114
239
160,515
138,191
22,324
160,515
4,838
30,218
114
26,083
(26,944)
(34,710)
110,305
(110,706)
Net Outlays
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Environmental Protection Agency
Required Supplemental Information
Working Capital Fund Supplemental Statement of Financing
For the Year Ended September 30, 2003
(Dollars in Thousands)
Unaudited
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
Less: Offsetting Receipts
Net Obligations
Other Resources
Transfers In/Out Without Reimbursement, Property
Imputed Financing Sources
Other (+/-)
Income from Other Appropriations
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
Credit Program Collections Increasing Loan Liabilities for Guarantees of Subsidy Allowances
Offsetting Receipts Not Affecting 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 Environmental and Disposal Liability
Upward/Downward Reestimates of Credit Subsidy Expense
Increase in Exchange Revenue Receivable from the Public
Increase in workers compensation costs
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
Net Cost of Operations
4,838
0
4,838
2,571
2,460
7298
(6,487)
(12,638)
(5,340)
6,089
6,969
7055
1,715
-------
SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—PRINCIPAL FINANCIAL STATEMENTS
Environmental Protection Agency
Required Supplemental Stewardship Information
For the Year Ended September 30, 2003
(Dollars in Thousands)
(Unaudited)
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 credibility 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 deci-
sions and challenges us to apply the best available science and technical analysis to our environmental
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 potential risks of unregulated contaminants in drinking water, the health effects of
air pollutants such as particulate matter, and the protection of the nation's ecosystems. For FY 2003, the full
cost of the Agency's Research and Development activities totaled over $700 million. Below is a breakout of
the expenses (dollars in thousands):
Programmatic Expenses
Allocated Expenses
FY 1999
543,777
58,728
FY 2000
541,117
59,523
FY 2001
555,794
90,039
FY 2002
559,218
123,307
FY 2003
593,295
106,971
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 infrastructure, 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
funded in 1990 and prior will continue until completion. Beyond 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
state revolving fund, the collections are used to finance new loans for new construction projects. The
capital is reused by the states and is not returned to the Federal Government.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
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
(dollars in thousands):
Construction Grants
Clean Water SRF
Safe Drinking Water SRF
Other Infrastructure Grants
Allocated Expenses
FY 1999
414,528
925,744
387429
245,606
213,117
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
367259
576,536
FY 2003
15,845
1,295,394
842,936
582,091
493,349
Stewardship Land
The Agency acquires title to certain land and land rights under the authorities provided in Section 104 (J)
CER.CLA 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, 2003 the Agency possesses the following land and land rights:
Superfund Sites with Easements
Beginning Balance
Additions
Withdrawals
Ending Balance
Superfund Sites with Land Acquired
Beginning Balance
Additions
Withdrawals
Ending Balance
24
2
25
Human Capital
Agencies are required to report expenses incurred to train the public with the intent of increasing or
maintaining 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
protecting public health and the environment, but the focus is on enhancing the nation's environmental, not
economic, capacity.
The Agency's expenses related to investments in the Human Capital are outlined below (dollars in thousands):
Training and Awareness Grants
Fellowships
Allocated Expenses
FY 1999
46,630
10,239
6,142
FY 2000
49,265
9,570
6,472
FY 2001
48,697
11,451
9,744
FY 2002
49,444
8,728
12,827
FY 2003
47,827
6,572
9,808
-------
Summary of OIG s Audit Report
Audit Report 2004-1 -00021, November 21, 2003
Full electronic version of complete audit report at: http://*w
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
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, the cur-
rent deficit of $82.7 million and future Superfund Trust Fund appropriations would have to be
covered 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
pertaining 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 the U.S. Environmental Protection Agency and its subsidiary
funds, the Superfund Trust Fund and All Other Appropriated Funds, as of and for the years
ended September 30, 2003 and 2002, 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 statements. However, our audit was not designed to express an opinion and, accord-
ingly, we do not express an opinion.
We did not identify any material inconsistencies between the information 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 intragovernmental assets and liabilities by Federal
trading partner. We did find EPA continues to experience 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).
EVALUATION OF INTERNAL CONTROLS
As defined by OMB, internal control, as it relates to the financial statements, is a process,
effected 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 principles; and assets are safeguarded against loss from unautho-
rized 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 prepara-
tion of performance information in accordance with criteria stated by management.
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—SUMMARY OF OIG's AUDIT REPORT
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, determined whether
internal controls had been placed in operation, assessed control risk, and performed 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
controls 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
conditions 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
material 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 non-
compliance may nevertheless occur and not be detected. We noted certain matters discussed
below involving the 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
understanding 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 2003 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.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
REPORTABLE CONDITIONS
Reportable conditions are internal control weakness matters coming to the auditor's
attention that, in the auditor's judgment, should be communicated because they represent signifi-
cant deficiencies 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 evalu-
ating the Agency's internal control structure, we identified eight reportable conditions, as follows:
Documentation and Approval of Standard Vouchers
EPA's Financial Reports and Analysis Branch did not always adequately document standard
vouchers for transfer requests from Treasury to EPA Trust Fund accounts (Superfund and
Leaking Underground Storage Tank Trust Funds) prior to the transactions being entered into
the Integrated Financial Management System (IFMS). The Branch uses a formula to deter-
mine the amount of the monthly transfer, but occasionally requests additional funds to be
transferred along with the calculated amount. Specifically, the Agency requested additional
funds in 10 transfers with no documentation to support the request. Establishing written proce-
dures to calculate the monthly transfer process would reduce the potential for errors occurring.
Improvement Needed in EPA's Interagency Agreement Invoice Approval Process
EPA project officers did not always fulfill their oversight duties related to reviewing and
approving interagency agreement invoices. We continued to find instances where project
officers at EPA did not receive supporting cost documentation to substantiate invoice amounts
and approve invoices for payment. We found instances in five program offices where project
officers regularly approved invoices without the detailed documentation to support costs.
Without proper identification of accounting information and a review of the cost documenta-
tion, transactions may be recorded in the accounting system with limited assurance that
invoices are valid, appropriate, and allowable under the terms and conditions of the intera-
gency agreement, and that costs are charged to the appropriate goal/objective. We recommend
that the Agency determine the root cause of the problem and develop effective procedures to
ensure that project officers properly manage the entire process.
Improvement Needed in Reconciling State Superfund Contracts Unearned Revenue
EPA did not reconcile the unearned revenue from State Superfund Contracts (SSC).
When EPA assumes the lead for a Superfund site remedial action in a State, the SSC clarifies
EPA's and the State's responsibilities to complete the remedial action. EPA records a liability
(unearned revenue), when billing a State for its share of the estimated site costs. EPA recog-
nizes earned revenue as costs are incurred on the site. We found that EPA did not reconcile the
unearned revenue from SSCs to the general ledger. Financial Management Division did not
prepare a reconciliation because they relied on an analysis of current year account activity. As
a result, EPA could not ensure the accuracy of the SSC unearned revenue accounts, which
totaled approximately $29 million.
EPA Did Not Promptly Record Marketable Securities Received in Fiscal 2003
EPA did not promptly record marketable securities received in fiscal 2003 from companies
in settlement of debts. As of September 30, 2003, stocks and warrants with an aggregate value
of $1,922,512 were not recorded in EPA's accounting system. The securities were not recorded
because the regional financial management offices receiving the securities either were waiting
on guidance from headquarters, or were awaiting receipt of a settlement agreement.
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—SUMMARY OF OIG's AUDIT REPORT
IFMS Suspense File Needs to Be Reconciled to Qeneral Ledger
For fiscal 2003, the IFMS suspense file was not in compliance with Joint Financial
Management Improvement Program (JFMIP) requirement TD-04 — that the Application
Program Interface provide internal controls, such as control totals and record counts, to ensure
integrity. Specifically, no formal process or written procedures existed for reconciling financial
data processed from the suspense file to the general ledger accounts. The suspense file is impor-
tant because it receives input of financial transactions from IFMS users and many other financial
and mixed systems, which are to be posted to the general ledger accounts. The IFMS contractor
created custom reports for analysis purposes, which represented the best available data, although
the contractor would not confirm that either the status or dollar amount were accurate. Our sub-
sequent analysis of the account did not indicate that the suspense file contained transactions that
were not posted to the proper accounting period. However, we are still concerned about the num-
ber of uncleared transactions that could remain in the suspense file due to the current lack of
automated controls. These incomplete, rejected, and held transactions could be incorrectly
processed in the wrong fiscal period, creating the potential to affect the Agency's financial data.
Automated Application Processing Controls for IFMS Could Not Be Assessed
We continue to be unable to assess the adequacy of the automated internal control structure
as it relates to automated input, processing, and output controls for IFMS. IFMS applications
have a direct and material impact on the Agency's financial statements. Therefore, an assess-
ment of each application's automated input, processing, and output controls, as well as
compensating manual controls, 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.
Further Improvements Needed in Managing EPA's Accounts Receivable
We noted two issues that negatively impact EPA's accounting for accounts receivable.
First, we noted numerous instances where the financial management offices did not timely
record receivables due to late submission of supporting documentation from Department of
Justice, Regional Counsel, or the program offices. Failure to record receivables promptly could
result in EPA not collecting monies due timely. Second, one regional financial management
office did not properly calculate its allowance for doubtful accounts as the region did not
prepare quarterly allowance calculations and update its percentage analysis formulas. As a
result, the allowance was overstated $35,772,165 and $8,052,967 for "Superfund" and "All
Other," respectively. The Agency subsequently properly adjusted the accounts.
Internal Controls for Correcting Errors in IFMS Need Improvement
EPA's Financial Systems Branch bypassed IFMS manual online data entry controls when
making a systemic correction of erroneous transactions. Rather than using the journal voucher
process to correct the errors, the Branch had a programmer reverse the transactions by processing
negative debits and positive credits. The correction resulted in 7,336 negative debit and positive
credit transactions totaling $222 million. As a result, the audit trail for these transactions was
hidden and basic evidence requirements for the transactions were circumvented.
Attachment 1 describes each of the above reportable conditions in more detail, and
contains 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
operation in separate position papers during the course of our audit. We will not be issuing a
separate management letter.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Comparison of EPA'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 reported
in the Agency's Federal Managers Financial Integrity Act (FMFIA, or Integrity Act) 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 reported on Integrity Act decisions in EPA's
Fiscal Year 2003 Annual Report. For a discussion on Agency-reported Integrity Act management
issues, please refer to EPA's Fiscal Year 2003 Annual Report, Section I, Overview and Analysis.
For reporting under FMFIA, material weaknesses are defined differently 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 perform-
ance measure or aggregation 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 any material weaknesses for fiscal 2003 as part of the Integrity
Act process. Our financial statement audit did not detect any material weaknesses that should
have been reported as part of the Integrity Act process.
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 statements
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 determi-
nation of financial statement amounts, and certain other laws and regulations 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, including the requirements referred to in the
Federal Financial Management Improvement Act (FFMIA) of 1996. We limited our tests of compli-
ance to these provisions and did not test compliance 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.
None of the noncompliances discussed below would result in material misstatements to the
audited financial statements.
Federal Financial Management Improvement Act Noncompliance
Under FFMIA, we are required to report whether the Agency's financial management
systems substantially comply with the Federal financial management systems requirements,
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SECTION 3. FY 2OO3 ANNUAL FINANCIAL STATEMENTS—SUMMARY OF OIG's AUDIT REPORT
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 memo-
randum 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 determining 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 requirement, we performed
tests of compliance with FFMIA section 803 (a) requirements and used the OMB guidance,
revised on January 4, 2001, for determining substantial noncompliance with FFMIA.
The results of our tests did not disclose any instances where the Agency's financial
management systems did not substantially comply with the applicable Federal accounting
standard, the United States Standard General Ledger at the transaction level, or the Federal
financial management system requirements.
We recognize improvements the Office of the Chief Financial Officer (OCFO) has made in
cost accounting and believe that while there are still noncompliance issues with cost accounting,
those noncompliances no longer 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 noncompliances, related to reconciliation of
intragovernmental transactions and completion of the fiscal 1999 FFMIA remediation plan.
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 SF 224 "Statement of Transactions."
Attachment 2 provides additional details, as well as our recommendations on actions that
should be taken on these matters. We have reported other less significant matters involving
compliance with laws and regulations in position papers during 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:
• Reconciliation and reporting intragovernmental transactions, 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 allocating indirect costs.
• Accounting for capitalized property.
• Recording accrued liabilities for grants.
• Interagency Agreement invoice approval process.
• Documenting EPA's IFMS.
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
• Complying with Federal financial management system security requirements.
• Accounting for payments for grants funded from multiple appropriations.
• Preparation and Reconciliation of Statements of Transactions
• Documentation and approval of journal vouchers.
• Timely repayment of Asbestos Loan Debt to Treasury.
• Assessing automated application processing controls for IFMS.
• Reconciling Unearned Revenue for State Superfund Contracts.
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 Follow-up Official, oversees EPA's
followup 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
financial statement audit issues. We also recognize that the issues we have reported are com-
plex, 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 Office of Chief Financial Officer in helping to
resolve all audit issues resulting from our financial statement audits.
AGENCY COMMENTS AND OIG EVALUATION
In a memorandum received November 10, 2003, OCFO responded to our draft report.
OCFO noted that it is continuing to make progress in enhancing managerial cost accounting.
Regarding our concerns related to the Superfund Trust Fund shortfall and the decline in cost
recoveries, OCFO indicated the Superfund program will continue to operate as long as
Congress continues to appropriate funds for it, and noted EPA's fiscal 2003 appropriation came
from Trust Fund assets and the general fund. Further, OCFO indicated it would like to work
with the OIG to allay concerns about suspense fund records.
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 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 Audits
Office of Inspector General
U.S. Environmental Protection Agency
November 16, 2003
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CONTENTS
Appendix A
Program Evaluations Completed in FY 2003
Appendix B
Acronyms and Abbreviations
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Appendix A
Program Evaluations
Completed in FY 2003
Evaluation Title
and Scope
Goal I, Objective I
Environmental
Protection: Federal
Planning Requirements
for Transportation and
Air Quality Protection
Could Potentially Be
More Efficient and
Better Linked
This report
determined: how
many areas with air
quality problems have
failed to demonstrate
conformity, why, what
corrective actions
they have taken, and
what issues trans-
portation planners
have had with the
conformity process,
and what solutions
are possible.
Findings of the Evaluation
GAO found that:
—Since 1997 56 of the 159
transportation planning areas
with air quality problems have
failed to demonstrate
conformity by a required
deadline at least once, but only
5 had to change their trans-
portation plans as a result.
—About half of the areas failed
because of resource, adminis-
trative, or technical problems,
such as a lack of time and staff
and resolved the problem in 6
months or less.
—About 1/3 of transportation
planners surveyed anticipate
having trouble demonstrating
conformity in the future,
especially in meeting limits on
ozone and fine particulate
matter resulting from vehicle
emissions.
A majority of transportation
planners who had trouble
demonstrating conformity or who
failed to do so by a deadline said
that the required frequency of
demonstrations robs them of
time and resources to solve other
issues, such as growing congestion.
Planned Response
EPA agrees with GAOs
recommendation that the current
3-year transportation plan and
conformity update requirements
need to be extended. The
Administration has submitted a
proposal for the reauthorization
of the Transportation Equity Act
for the 21 st Century (TEA-21)
that includes provisions to extend
the transportation plan update
and conformity frequency
requirements to 5 years.
GAO also recommends that
EPA, in coordination with DOT,
comprehensively assess the
advantages and disadvantages of
requiring regular updates of State
Implementation Plans' (SIPs')
motor vehicle emissions budgets.
EPA believes that the states have
the statutory flexibility they need
to decide whether new data or
models justify the costs of
updating SIPs. Given the amount
of federal, state and local
resources that a SIP revision
can require, EPA has always
supported the flexibility provided
by the current Clean Air Act on
this matter.
Public Access
General Accounting
Office
GAO-03-581
April 28, 2003
Available at:
http://www.gao .gov/
cgi-bin/getrpt?GAO-
03-581
Goal I, Objectives 3
&4
International
Environment U.S.
Actions to Fulfill Its
Commitments Under
Five Key Agreements
GAO found that:
—The U.S. is generally taking
actions to meet its commit-
ments under the five specified
agreements.
—Federal agencies established
domestic programs, reported
With regard to climate change,
EPA continues to implement
voluntary programs to reduce
emissions of greenhouse gases
cost-effectively EPAs programs
are expected to make a substan-
tial contribution to the Bush
Administration's goal of
General Accounting
Office
GAO-03-249
January 29, 2003
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APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
This report examined
U.S. actions to fulfill its
commitments under
five international agree-
ments; however only
two of these agree-
ments addressed Goal
—Montreal Protocol
on Substances That
Deplete the Ozone
Layer.
—United Nations
Framework
Convention on
Climate Change.
The report also exam-
ined the means used
to track these actions
and the results of oth-
ers' evaluations of
these actions for the
selected agreements.
Findings of the Evaluation
periodically on progress, and
provided funding to other
nations.
-The U.S. committed to stop
producing and importing
certain substances that deplete
the Earth's ozone layer by 1996
and did so.
-The U.S. did not make a treaty
commitment to reduce green-
house gas emissions, the
President set a goal in 1993 to
reduce emissions to their 1990
level by 2000 and the U.S.
spends over $ I billion a year to
do so. However, U.S. emissions
in 2001 exceeded the 1990 tar-
get level by about 12%.
-The U.S. provided less
assistance to other countries
than it pledged relating to two
agreements: the shortfall was
25% for the fund that finances
climate change and other envi-
ronmental projects, and 6% for
ozone depletion.
Planned Response
improving the intensity of green-
house gas emissions by 18% by 2012
(measured in terms of greenhouse
gas emissions per unit of GDP rela-
tive to the emissions per unit of
GDP in 2002).
—EPA is actively implementing the
five agreements, including the
Montreal Protocol and the UN
Framework Convention on
Climate Change.
—Under the Montreal Protocol,
the U.S. has successfully met the
phaseout deadlines for ozone-
depleting chemicals.
—EPA's achievements under
these voluntary climate
programs are extensively
documented in the 3rd U.S.
National Communication and
in EPA annual reports.
—EPA conducts ongoing analyses
of its voluntary programs to
evaluate their efficacy.
—EPA and the Department of
State are working to ensure
that the United States makes its
full contribution to the
Montreal Protocol.
Public Access
Available at:
http ://www.gao .gov/
cgi-bin/getrpt?GAO-03-
249
Goal I, Objective 3
Climate Change:
Information on Three
Air Pollutants' Climate
Effects and Emissions
Trends
This report examined:
—The extent of
agreement among
scientists regarding
the dimatological
effects of three air
pollutants - black
carbon (soot),
ground-level
ozone, and sulfate
aerosols.
—Seven countries'
(four economically
GAO reported:
—Scientists generally agree that
sulfate aerosols have a cooling
effect on climate, while ozone
in the lower atmosphere has a
warming effect.
—Black carbon tends to warm
the atmosphere but cool the
Earth's surface.
—Sulfate aerosols also affect
how much and where it rains.
—Considerable uncertainty
remains about the size of
these effects.
—All seven countries are taking
steps to reduce the amounts
of the three pollutants.
—The four economically
developed countries have
-EPA has an ongoing program
to monitor changes in ozone,
particulate matter, and sulfur
dioxides and to assess the
global impact of such gases,
particles, and related aerosols.
-Monitoring shows that long-
term trends in ambient air
quality have been downward
in the U.S. for the criteria
pollutants.
-EPA has begun assessing the
role that black carbon and
organic carbon play in climate
change.
-EPA is assessing the current
state of knowledge on science,
inventory, mitigation, and
modeling for black carbon and
organic carbon.
General Accounting
Office
GAO-03-25
April 28, 2003
Available at:
http://www.gao.gov/
eg i - b i n/get rpt? GAO -
03-25
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
developed and
three developing
countries) efforts
to control these
pollutants.
-Trends in these
substances in these
seven countries
over the past two
decades, and
estimates for the
next decade.
-The relationship
between economic
growth and environ-
mental pollution.
Findings of the Evaluation
well-established efforts
underway.
—The amounts of the three
substances generally declined
over the last two decades and
are expected to decline over
the next decade.
GAO also noted that the results
of research examining the possible
connection between economic
development and environmental
pollution are inconclusive.
Planned Response
-EPA is reviewing current
capabilities to quantify
emissions of black carbon in
the U.S., and potential
mitigation options in key
sectors, including how such
measures affect co-emitted
gases (PM, CO2, sulfate
aerosols).
-EPA is planning to meet with
key scientists and researchers
to better understand the
evolving atmospheric science,
and to improve its our ability
to inventory and model black
carbon for both air quality and
climate change issues.
Public Access
Goal I, Objective I
Aviation and the
Environment: Strategic
Framework Needed to
Address Challenges
Posed by Aircraft
Emissions
This report reviewed
efforts in the United
States and other
countries to reduce
emissions at airports,
and the effects of
improvements in
aircraft and engine
design on emissions.
GAO reported:
—Many airports have taken
measures to reduce emissions,
such as converting airport
ground vehicles from diesel or
gasoline to cleaner alternative
fuels.
—Some measures (such as
shifting to cleaner alternative
fuels) have the potential to
significantly reduce emissions,
such as nitrogen oxides.
—Other countries use many
of the same measures as the
U.S. to reduce emissions at
airports.
—Although federal government
and the aircraft industry R&D
have improved fuel efficiency
and reduced many emissions
from aircraft, including hydro-
carbons and carbon monoxide,
they have increased emissions
of nitrogen oxides. As a result,
many new aircraft are emitting
more nitrogen oxides than the
older aircraft they are
replacing: new aircraft engines
average over 40 percent more
nitrogen oxides during landings
and takeoffs than the engines
used on older models.
—Since 1998 EPA and the Federal
Aviation Administration have
jointly chaired a national stake-
holder initiative whose goal
is to develop a voluntary
program to reduce pollutants
from aircraft and other aviation
sources that contribute to local
and regional air pollution.
The major stakeholders
participating in this initiative
include representatives of the
aviation industry (airlines and
engine manufacturers),
airports, state and local air
pollution control officials and
environmental organizations.
If this initiative is successful, an
agreement will be reached
among all the stakeholders on
a national voluntary aviation
emissions reduction program.
—EPA also plans to establish
more stringent aircraft engine
NOX standards. EPA will partic-
ipate in the next meeting of
the International Civil Aviation
Organization to establish more
stringent international consen-
sus emission standards, which is
scheduled for February 2004.
Such standards will likely be a
central consideration in a
future EPA regulation of
aircraft engine emissions.
General Accounting
Office
GAO-03-252
February 28, 2003
Available at:
http://www.gao .gov/
cgi-bin/getrpt?GAO-
03-252
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APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
Goal I, Objective I
A Breath of Fresh Air:
Reviving the New
Source Review
Program
This report examined:
—The evolution of
EPA's New Source
Review (NSR) and
Prevention of
Significant
Deterioration (PSD)
regulations; guidance,
and interpretation of
those regulations; as
well as the imple-
mentation of the
regulatory programs.
—The respective roles
of the states and
EPA in implementing
the NSR and PSD
programs.
—The evolution of
EPA's policies and
strategies for
enforcing the
programs.
—The impacts of
current program
administration on
industrial competi-
tiveness, capital
investment,
technological
innovation, pollution
prevention, and
environmental
quality
Findings of the Evaluation
NAPA found that:
—NSR is a critical tool for
protecting public health and
improving the nation's air quality.
—The complicated NSR program
has been effective in controlling
air pollution from newly built
industrial facilities and utilities,
but it has performed poorly in
reducing pollution from the
nation's oldest and dirtiest
factories and power plants.
—The program is unfair to facilities
that have invested in upgrading
their equipment to reduce
pollution, while others have
avoided controlling their
pollution.
—NSR's unpredictable and lengthy
permitting process is
detrimental to facilities that
must change operations quickly
to compete effectively
—NSR is not having the positive
effect on the health of
individuals, or on the quality of
the nation's air, that Congress
intended.
Planned Response
-The NAPA report made seven
recommendations for improving
NSR, five of which were
recommendations for Congress
to improve NSR through
legislative changes.
-EPA continues to vigorously
enforce the NSR program, as
recommended by the NAPA
report.
-NAPA recommended that EPA
establish clear requirements for
compliance. EPA has been
actively engaged in a more than
10-year effort to improve the
NSR rules. Part of the goal of
this effort has been to provide
more certainty about when and
how NSR applies.
-EPA recently finalized a set of
reforms that will provide more
certainty to industry and will
remove barriers to, and create
incentives for, environmentally
beneficial projects.
-Earlier this year, EPA
promulgated a rule addressing
routine maintenance.
Public Access
National Academy of
Public Administration
April 2003
Available at:
http://209.l83.l98.67
NAPA/NAPAPubs.nsf
Goal I, Objective I
Managing Carbon
Monoxide Pollution in
Meteorological and
Topographical Problem
Areas
This report addressed
episodes of high CO
NAS found that:
—Some areas are especially
vulnerable to violations of
the 8-hour NAAQS for CO
because of a number of
factors, including differences
in the topography and
temporal variability of local
-EPA is working with its state
and local partners to address
their individual needs. For
example, EPA has helped
Alaska, to implement unique
local measures (installing
electrical outlets for engine
block heaters) to control CO
emissions.
National Academy of
Sciences
ISBN: 0-309-08923-9
2003
Available at:
http://www.nap.edu/
books/0309089239/
html/index.html
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
concentrations in
meteorological and
topographical prob-
lem areas, and the
potential approaches
to predicting,
assessing, and
managing them. The
report focused on:
—Types of emission
sources and
operating
conditions that
contribute most to
episodes of high
ambient CO.
—Scientific bases of
current and
potential additional
approaches for
developing and
implementing
plans to manage
CO air quality,
including the
possibility of
new catalyst tech-
nology, alternative
fuels, and cold-
start technology.
—Control of station-
ary source contri-
butions to CO air
quality.
Findings of the Evaluation
meteorology and emissions
rates.
-In patients diagnosed with
coronary artery disease, CO
alone has been shown to
exacerbate exercise-induced
chest pain (angina) in
controlled laboratory
experiments.
-To reach attainment,
communities vulnerable to
exceeding the health-based
NAAQS for CO can
implement various local
measures to complement
federal vehicle emissions
standards.
-Federal new-vehicle emissions
standards have been effective
in reducing CO emissions,
including emissions from
vehicles operated in cold
climates.
-A relatively small number
of high-emitting vehicles
contribute disproportionately
to CO and other motor-
vehicle emissions.
-Oxygenated fuels program
benefits are declining in
effectiveness as more modern
vehicles enter the fleet.
-Although ambient CO
concentrations have dropped
considerably throughout the
country, the number of
monitors is inadequate to
characterize CO distribution
and identify all locations of
high CO concentrations.
Planned Response
-Separating the effects of CO
from its co-pollutants and
assessing the relationship of
CO to other pollutants has
been done to some extent in
the epidemiology studies cited
and reviewed in the 2000 CO
Criteria Document. Recently, the
Health Effects Institute has
conducted some toxicology
research on automobile and
diesel exhaust mixtures, focus-
ing mainly on co-pollutants.
-EPA will consider the testing
and analysis recommendations
as it designs programs to test
the in-use performance of
motor vehicles and will
evaluate Tier 2 vehicles for CO
as well as other emissions.
(More information on Tier 2
appears in the Goal I
narrative).
-EPA is developing a new
modeling system called MOVES
and will incorporate any new
data into this model. As EPA
develops the model, it will bear
in mind NAS's recommen-
dation to assess both the
manufacturer's sales strategy to
meet NOX limits and associat-
ed trading and banking
provisions. The new model is
designed to better support
fine scale modeling and
improve the
characterization of emissions
from certain vehicles and
off-road sources of CO.
-EPA supports allowing state
and local agencies to relocate
CO monitors to where they
provide more measurable
value for air program manage-
ment and protection of public
health.
-Under the Transportation
Conformity Act, areas that are
undertaking major highway
projects that affect vehicular
traffic and congestion perform
Public Access
-------
APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
Findings of the Evaluation
Planned Response
CO air quality modeling. Also,
some areas perform local
scale CO air quality modeling
for highway projects under the
National Environmental Policy
Act. Some urban areas have
performed area wide CO
modeling with the Urban
Airshed Model in the past for
CO attainment demonstra-
tions. This modeling
contributes to estimation of
the spatial distribution of CO
for certain episodes.
Public Access
Goal 2, Objective I
The Drinking Water
State Revolving Fund
Program: Financing
America's Drinking
Water from the Source
to the Tap—A Report
to Congress
This was a report
updating Congress
on the progress of
the Drinking Water
State Revolving Fund
(DWSRF) program
from its beginning in
1997 through June
2001, as required by
the Safe Drinking
Water Act (SDWA).
EPA reported:
—States provided public water
systems with approximately
1,800 loans totaling $3.8 billion
(72% of avail able funds).
—States far exceeded the
SDWA requirement to
provide a minimum of 15% of
their available funding to small
systems by providing 75%
or 1,330, of actual loan
agreements, to small systems,
totaling $1.5 billion.
—States have received 87% of
federal grants available to
them and have initiated
construction on projects for
89% of the executed loan
agreements.
—For every $ I in funds drawn
from the federal government,
states have disbursed $1.60 for
project construction.
—Both the program offices and
the drinking water industry
face present and future
implementation challenges.
EPA discussed the following for
congressional consideration:
—Permanently extend the
authority to transfer funds
between the DWSRF and
Clean Water SRF programs.
The SDWA provision sunset
on September 30, 2001.
U.S. Environmental
Protection Agency
EPA 9I8-R-03-009
May 2003
Available at:
http://www.epa.gov/
safewate r/dwsrf htm I
Goal 2, Objective I
Deep Injection Wells:
EPA Needs to Involve
Communities Earlier
and Ensure That
Financial Assurance
Requirements Are
Adequate
GAO reported:
—The opportunities EPA
provides for public comment
on proposed Class I deep
injection wells come late in
the process, after a draft
permit has been prepared.
GAO recommended that EPA
-EPA believes it provides for
ample public involvement.
GAO recognizes this, in a
sample chronology of events
for construction of deep-
injection wells included in
Appendix I of its report.
Under the SDWA, the Agency
General Accounting
Office
GAO-03-761
June 2003
Available at:
http://www.gao .gov/
cgi-bin/getrpt?GAO-
03-761
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FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
EPA and the states
grant permits to
operators of
commercial
hazardous Class I
deep-injection wells
to construct and
operate these wells,
and must obtain
public comments
on the permits.
Communities often
raise concerns about
the safety of these
wells and other
matters. The
objectives of the
investigation were to:
—Address these
community
concerns.
—Consider environ-
mental justice
issues.
—Ensure that
financial assurances
for Class I
commercial
hazardous injection
wells fully protect
the taxpayer if
bankruptcy occurs.
Findings of the Evaluation
involve the public earlier.
-EPA addresses environmental
justice issues in two basic
ways: (I) as part of its process
for deciding whether to issue
a permit for well construction,
and (2) in response to specific
civil rights complaints filed
with the Agency after permits
are issued. GAO did not make
any recommendations to
the Agency regarding
environmental justice.
-Current financial assurance
requirements may not ensure
that adequate resources
are available to close a
commercial deep injection
well in the event of a
bankruptcy or ceased
operations. GAO
recommended that EPA
review and, if warranted,
strengthen financial assurance
requirements for this
sub-well type.
Planned Response
follows the regulatory
requirements for public
participation at 40 CFR Part
124 (Procedures for Decision
Making) and the underground
injection control regulations at
40 CFR Parts 144 and 146 for
specific permitting authority.
The Agency disagrees with
GAO's finding on financial
assurance for the following
reasons:
—The finding is inconsistent with
the long history of the success
of financial assurance
provisions for Class I wells.
Since 1980, the EPA has had
no problems with any
company on financial
assurance.
—While Class I well financial
assurance regulations are
based on RCRA regulations,
they are not linked to those
regulations in any other way.
Public Access
Goal 2, Objective 2
Water Quality:
Improved EPA
Guidance and Support
Can Help States
Develop Standards
That Better Target
Cleanup Efforts
GAO examined the
extent to which:
—States are changing
designated uses
when necessary.
—EPA is assisting
states toward that
end.
GAO reported that EPA needs
to:
—Provide additional guidance
regarding use changes and
follow through on plans to
assess the feasibility of
establishing a clearinghouse of
approved use changes.
—Set a time frame for
developing and publishing
nationally recommended
sedimentation criteria.
—Develop alternative,
scientifically defensible
monitoring strategies that
states can use to determine if
water bodies are meeting
EPA is beginning to implement all
of GAO's recommendations,
many of which are included in
the Water Quality Standards and
Criteria Strategy being finalized.
The Final Strategy is available at:
http://epa.gov/waterscience/
standards/strategy/.
General Accounting
Office
GAO-03-88IT
June 19, 2003
Available at:
http ://www.gao .gov
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APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
-EPA is updating
the "criteria docu-
ments" states use
to develop the
pollutant limits
needed to
measure whether
designated uses are
being attained.
-EPA is assisting
states in
establishing criteria
that can be
compared with
reasonably
obtainable
monitoring data.
Findings of the Evaluation
their water quality criteria.
-Develop guidance and a
training strategy that will help
EPA regional staff determine
the scientific defensibility
of proposed criteria
modifications.
Planned Response
Public Access
Goal 2, Objective 2
Evaluation of State
and Regional Water
Quality Monitoring
Councils
This report:
—Evaluates the
effectiveness of
the regional
Water Quality
Monitoring
Councils in
achieving EPAs
objectives.
—Identified possible
ways that may help
current councils
and facilitate the
operation and
establishment of
additional councils.
—Examined council
successes and
barriers to success.
—Identified best
practices.
—Presented
recommendations
for effectively
obtaining the data
necessary for
The report found:
—The councils yield substantial
benefits to water monitoring
programs by unifying the
efforts of disparate agencies.
—The councils vary in design
and objectives.
—Effective councils have state
support and dedicated a staff
is invaluable.
—Councils have difficulty
keeping momentum, and can
benefit from EPA support.
EPA remains interested in
creating state and regional water
quality monitoring councils and
supporting them in its
monitoring program initiatives.
The report is
available at
www. e pa.gov/owow/
monitoring.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
critical Agency
decision-making.
The oldest state and
regional Water
Quality Monitoring
Councils (there are
about a dozen of
them) have been
operating for over
a decade; this report
evaluates their
effectiveness in
achieving EPA
objectives, and
identifies possible
lessons that may help
current Councils and
facilitate the
operation and
establishment of
additional Councils.
Additionally, this
report discusses
Council successes
and barriers to
success; identifies
best practices;
and develops
recommendations for
effectively obtaining
the data necessary
for critical Agency
decision making.
Findings of the Evaluation
Planned Response
Public Access
Goal 2, Objective 3
Livestock Agriculture:
Increased EPA
Oversight Will Improve
Environmental
Program for
Concentrated Animal
Feeding Operations
The purpose was to:
—Identify the key
shortcomings of
the Concentrated
Animal Feeding
Operations
(CAFO) program.
—Assess the
potential challenges
GAO recommend that the EPA:
—Develop and implement a
comprehensive tactical plan
that identifies how the Agency
will carry out its increased
oversight responsibilities under
the revised program.
Specifically, this plan should
address what steps the
Agency will take to ensure
that authorized states are
properly permitting and
inspecting CAFOs and are
taking appropriate enforce-
ment actions. The plan should
also identify what, if any,
additional resources will be
needed to carry out the plan
-The Office of Water (OW)
has produced a CAFO imple-
mentation plan for states and
EPA regions to achieve 100%
permit coverage by 2006. The
plan was distributed to the
regions on May 30, 2003. OW
is tracking regional progress.
-OW asked Regions for
resource needs, and is
providing them with assistance
and contractor support as
necessary.
-The regions are reporting to
OW their targets for state
implementation of both state
regulatory changes and
permitting, and EPA
Government
Accounting Office
(GAO)
GAO-03-285
January 2003
Available at:
http ://www.gao .gov/
cgi-bin/getrpt?GAO-
03-285
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APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
the states and EPA
may face when
implementing
revisions to the
CAFO regulations;
-Determine the
extent of the U.S.
Department of
Agriculture's
involvement in
developing the
proposed revisions
to EPA's
regulations.
Findings of the Evaluation
and how EPA will obtain these
resources.
-Work with authorized states
to develop and implement
their own plans that identify
how they intend to carry out
their increased permitting
inspection, and enforcement
responsibilities within specified
time frames. These plans
should also address what, if
any, additional resources states
will need to properly imple-
ment the program and how
they will obtain these
resources.
Planned Response
headquarters is tracking
progress
Public Access
Government
Accounting Office
(GAO)
GAO-03-285
January 2003
Available at:
http://www.gao.gov/
cgi-bin/getrpt?GAO-
03-285
Goal 3, Objective 3
Community
Involvement Survey,
Valleycrest Superfund
Site
The purpose was to
provide Superfund
staff at Valleycrest
site feedback on how
community members
perceive their
community
involvement. EPA
headquarters
conducts community
involvement surveys
for the regions if
requested. EPA
completed one
survey in FY 2003,
and two in FY 2002.
The report found that:
—87% of the respondents prefer
getting information about the
cleanup directly from EPA.
Only 59% say they have
received information directly
from EPA.
—57% are satisfied with
opportunities for involvement.
—61 % are satisfied with how
EPA explains it decisions.
—47% are satisfied with how
EPA uses the community
input.
—69% are satisfied with the
courtesy of EPA staff
Public meetings and a community
advisory committee are the two
most preferred ways for
community members to give
their input.
The regional community
involvement staff will use the
report's information to guide
future involvement efforts at
the site.
U.S. Environmental
Protection Agency
March 2003
The survey report
will be shared
with Valleycrest
community members
and placed in the
local information
repository for the
site [Main Library,
Dayton, Ohio].
A copy of the report
can be obtained
from Bruce
Engelbert,
OSWER/OSBTI
(tel.: 703-603-8711)
Goal 3, Objective 3
Contaminated
Sediments Technical
Advisory Group
(CSTAG)
The purpose of the
evaluation was to
help Remedial
Project Managers
appropriately investi-
gate and manage
Common findings among
include the need for:
sites
-Additional characterization of
potential sources, including
ground water, and the relative
contribution of flood plain
soils and in-water sediment to
risk.
-Additional characterization of
background, including anthro-
pogenic contaminants from
Common regional responses
include agreement to:
—Incorporate additional
characterization and
monitoring into site
management plans.
—Increase communication with
other EPA and state
regulatory programs, tribes,
and trustee agencies.
—Expand analysis of the relative
The CSTAG
has submitted
recommendations
on the Housatonic
River, (Pittsfield,
MA), Kalamazoo
River (Ml), Ashland/
Northern States
Power Lake front
(Ashland, Wl) and
Montrose/Palos
Verdes Shelf
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
their sites in accor-
dance with the II risk
management objec-
tives established in
OSWER Directive
9285.6-08, Principles
for Managing
Contaminated
Sediments Risks at
Hazardous Waste
Sites.
Findings of the Evaluation
outside the site.
-Additional consideration of
potential recontamination in
site management.
-Additional site-specific evalua-
tion of the physical stability of
sediment, which also considers
proposed future uses of the
water body.
-Additional evaluation of a
wider array of technologies.
-Development of more site-
specific remedial action
objectives.
-Suggestions to minimize the
adverse impacts of remedy
implementation on the public
and biota.
-Additional peer review of
models.
-Additional coordination across
regulatory programs that
relate to surface water.
Planned Response
contributions of various
sources, including land-based
sources, groundwater, flood
plains, and in-water sediment.
-Increase consideration of
source control prior to
sediment actions.
-Increase evaluation of in-situ
risk management approaches.
-Share lessons learned with
other site managers.
-Increased consideration of
pilot testing or phased
implementation of work.
Public Access
(San Pedro, CA)
sites and is drafting
recommendations on
the Portland Harbor
(OR) sites.
The recommendation
and the region's
responses are posted
on EPAs contaminated
sediments web page
at:
http://www.epa.gov/
superfund/resources/
sediment/cstag.htm
Goal 3, Objective 3
Pre-SARA sites:
Analysis of Why
Construction Is Not
Yet Complete at
Certain Sites
The purpose was to:
—Analyze pre-SARA
sites (sites placed
on the National
Priorities List prior
to the enactment
of the Superfund
Amendments and
Reauthorization
Action) whose
construction is not
yet construction
complete.
—Identify trends and
characteristics that
might explain why
these sites have
remained in earlier
The analysis found that:
—Pre-SARA "non construction
complete" (NCC) sites are
generally larger and more
complex than the pre-SARA
"construction complete"
(CC) sites.
—Pre-SARA NCC sites are
more likely to have issues
associated with contamination
of groundwater, sediments,
and ecological resources, and
less likely to be contaminated
with pesticides, dioxins, and
"other inorganics."
—Pre-SARA NCC sites are less
likely to have waste manage-
ment as the primary industrial
activity.
—In many pre-SARA NCC
cases, the community has
become more involved in
selecting and implementing
the remedy. While such active
community involvement will
In FY 2003, OSRTI began its
Pre-SARA First Generation
Initiative to encourage EPA
regions to work with states,
other federal agencies, and local
jurisdictions to identify obstacles
to site completion (e.g., site
access, cleanup standards,
technology, funding) and
formulate strategies necessary
to move all the pre-SARA sites
into the construction completion
category.
The draft report, issued in June
2003, is the first step in this
initiative, and will help interested
parties better understand why
some sites have taken longer
than others in the remedial
pipeline.
U.S. Environmental
Protection Agency
June 2003
The Executive
Summary to the June
2003 Draft Report
may be obtained
from William Ross,
OSWER/OSRTI
(tel.: 703-603-8798)
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APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
stages of the
remediation.
-Point the way to
further research
or new policy
initiatives.
Findings of the Evaluation
likely result in a better
remedy, it may have
contributed to delaying the
remedy's completion.
Planned Response
Public Access
Goal 3, Objective 3
Evaluation of the
Performance of the
Corps of Engineers in
Support of EPA's
Superfund Program
The purpose was to
formally evaluate how
well the Corps of
Engineers programs
at the district office
level support the
Superfund programs
in EPA regional
offices.
The evaluation found that:
-In general, the Corps does a
good job in assisting EPA to
manage the SF program;
essentially all the EPA Regions
are pleased with at least some
of the functions the Corps
performs.
-At least three regions cited
the following areas of concern:
the adequacy and/or timeli-
ness of monthly reporting;
sensitivity to cost control; the
quality and/or timeliness of
payment processing; and the
efficiency of funds manage-
ment, especially as related to
recovery of unneeded funds
on project completion.
-The regional offices that have
had the best experience with
the Corps have invested
heavily in communication,
coordination, training, and
oversight of the Corps'
activities.
The final report was issued in
August 2003 and copies of the
report were sent to EPA regions
soon thereafter. EPA manage-
ment has met with top Corps
management to discuss the
report's findings and appropriate
followup.
U.S. Environmental
Protection Agency
August 2003
Copies of the Report
may be obtained
from Ken Skahn,
OSWER/OSRTI
(tel.: 703-603-8801)
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
Goal 4, Objective 3
Great Lakes: An Overall
Strategy and Indicators
for Measuring Progress
Are Needed to Better
Achieve Restoration
Goals
The report:
—Addressed the
extent of progress
made in restoring
the Great Lakes
Basin.
—Identified federal
and state environ-
mental programs
in the basin and
their funding.
—Evaluated restora-
tion strategies and
their coordination.
—Assessed overall
environmental
progress made in
restoration.
Findings of the Evaluation
GAO found many federal and
state programs fund restoration
activities in the Great Lakes
basin. Different funding strategies,
lack of coordination, and limited
funding impede restoration
efforts.
GAO recommended that EPA:
—Ensure that the Great Lakes
National Program Office
(GLNPO) fulfills its coordina-
tion responsibilities and
develops an overarching Great
Lakes Strategy.
—Develop environmental indica-
tors and a monitoring system
for the Great Lakes basin that
can be used to measure
overall restoration progress.
Planned Response
EPA generally agrees that better
planning, coordination,
monitoring, and the develop-
ment of indicators are needed
and will undertake these
improvements. EPA is organizing
its efforts and will continue to
work with the U.S. Policy
Committee and the Binational
Executive Committee to address
concerns in the GAO report.
Public Access
General Accounting
Office
GAO-03-515
April 2003
Available at:
http://www.gao.gov
Goal 4, Objective 3
Status of Restoration
Activities in Great
Lakes Areas of
Concern: A Special
Report
This report informs
the public about
progress toward
restoring beneficial
uses in areas of
concern (AOCs)
and to presents
recommendations for
achieving further
progress.
The Commission found that:
—Although a significant level of
effort toward the Remedial
Action Plan implementation
has been observed in the
Great Lakes AOCs, much
more work remains to be
done.
—Challenges to implement
Remedial Action Plans include
securing resources, identifying
accountability and responsibility,
defining restoration targets,
setting priorities, and
monitoring recovery
The Commission recommended:
—Increasing documentation,
reporting, and accountability.
—Ensuring that monitoring and
related systems are in place.
—Defining AOC boundaries
and identifying sources of
dation.
EPA generally agrees with the
recommendations, which are
consistent with planned actions
under the Great Lakes Strategy
2002. However, there are
institutional and resource
limitations to immediate
implementation of all
recommendations.
International Joint
Commission
April, 2003
Available at:
http://www.ijc.org
-------
APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
Goal 4, Objective 3
State of the Great
Lakes 2003
This report fulfills the
reporting require-
ments of the Great
Lakes Water Quality
Agreement to assess
the Great Lakes
ecosystem, provide
assessments on 43
of approximately 80
indicators, and
identify management
challenges for
achieving results.
Findings of the Evaluation
This report found that:
—The status of the chemical,
physical, and biological
integrity of the Great Lakes
basin ecosystem is mixed,
based on lake by lake and
basin-wide assessments of the
43 indicators.
—Because only a portion of the
full suite of indicators was
used, a challenge is to work
cooperatively toward
monitoring, assessing, and
reporting on all indicators.
Management challenges include:
—Identifying land use decisions
that will sustain the ecosystem
over the long term, thereby
contributing to improved
water and land quality.
—Determining how essential
habitats can be protected and
restored to preserve the
species and the unique and
globally significant character of
the Great Lakes ecosystem.
—Determining what actions will
be needed to respond to
potential climate change
impacts.
—Determining how to address
the economic and practical
issues of continued removal of
toxic contamination from the
ecosystem.
Planned Response
Through the State of the Lakes
Ecosystem process, EPA will
participate in a two-part review
of the Great Lakes indicators.
The first part will consider the
process for selecting and
reviewing the indicators. The
second part will be a manage-
ment review of the indicators
and their effectiveness in
influencing management
decisions, including monitoring
programs.
Public Access
Environment
Canada and U.S.
Environmental
Protection Agency
ISBN 0-662-34798-6
EPA 905-R-03-004
Cat. NO. En40-ll/
35-2003E
August 2003
Available at:
http './/www. e pa.gov/
glnpo/
Goal 4, Objective 5
The Measure of STAR:
Review of the U.S.
Environmental
Protection Agency's
Science to Achieve
Results (STAR)
Research Grants
Program
This report assessed:
—The scientific merit
of EPAs STAR
program.
The National Research Council
reported that:
—EPAs competitive research
grants program has yielded
significant new findings and
knowledge critical for EPAs
decision-making process.
—The program has provided
EPA with independent analysis
and perspective that has
improved the agency's
scientific foundation.
The Agency has no planned
response.
National Research
Council of the
National Academies
2003
Available at:
http://www.nap.edu/
catalog/10701.html?
onpi_news-
docOSI22003
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
-Its demonstrated
or potential
impact on EPA's
policies and
decisions.
-Other program
benefits that are
relevant to EPA's
mission.
Findings of the Evaluation
-By attracting young
researchers, this program has
also expanded the nation's
environmental science
infrastructure.
-The STAR Fellowship
program, which funds research
by students pursuing advanced
degrees in environmental
sciences, should continue.
Planned Response
Public Access
GoalS
Evaluation of the
Environmental
Partnership
between the NFS
Intermountain Region
and the EPA Region 8
The purpose of the
evaluation was to:
—Determine which
components of
the EPA-National
Park Service
(NPS) partnership
have provided the
most and the least
value to the parks.
—Identify which
aspects of
implementing
environmental
projects were
most challenging.
—Assess the degree
of operational
behavioral and
management
changes resulting
from the
partnership.
—Determine the
partnership's
effectiveness in
meeting its goals.
—Identify lessons
learned and offer
guidance to other
agencies interested
The evaluation recommended
that the EPA-NPS partnership:
—Develop a comprehensive
communication strategy that
addresses its different
audiences.
—Clarify the role of each
partner and identify projects
focused on pollution
prevention (P2) and
compliance assistance.
—Seek broader institutional
support within each agency.
—Develop a performance
measure as it works with NPS
Environmental Management
System (EMS).
—Develop an evaluation to
allow for on-going assessment.
-As new projects develop, the
partnership will implement a
formal communication plan.
-The NPS and EPA are looking
at ways to formalize their
respective roles.
-EPA is seeking broader
support of this partnership
model through the Resource
Conservation Challenge
initiative.
-The NPS has not requested
any additional assistance from
EPA on its EMS development.
EPA will include performance
measurement as it works with
other partners.
-At this time, the NPS and EPA
have not addressed ongoing
assessment. As EPA enters
into future partnerships, it
will incorporate this
recommendation.
Industrial Economics,
Inc.
The report is being
promoted by the
Office of the Chief
Financial Officer
(OCFO) and the
EPA Region 8 P2
Team. It will be
presented at a
National Partnership
Conference and at
an evaluation
conference in
November 2004.
The report is
available on the EPA
Intranet and may be
posted on the EPA
Internet site.
-------
APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
Findings of the Evaluation
Planned Response
Public Access
in partnering
EPA.
• with
-Assess whether
this partnership
has improved
the NPS's
environmental
commitment and
performance.
-Determine
whether providing
environmental
services to federal
agencies involve
duplication of
efforts.
-Develop a model
that can be used
to evaluate other
partnership
efforts.
Goal 5, Objective I
NPDES Majors
Program Performance
Analysis
The purpose was to
provide senior
managers of the
enforcement and
compliance assurance
program with a tool
for managing the
National Pollutant
Discharge Elimination
System's (NPDES)
majors program and
improve EPAs ability
to focus resources
on the areas where
the potential for
environmental impact
is greatest.
The report found:
—Significant noncompliance
(SNC) rates have effectively
remained steady since 1994.
—Recidivism rates are improving
slightly but exceedances of
permit limits remain high.
—Due to shifts to wet weather
areas, EPA enforcement at
NPDES majors has declined
but state enforcement has
increased.
—The EPA regions do not
believe that majors are signifi-
cant contributors to water
impairment but little data exist.
—States are not currently
required to enter penalty data
into PCS which limits the
Agency's ability to draw
conclusions about the effect
of penalties on compliance
and deterrence. The scarce
penalty data available suggest
that escalation of performance
actions and penalties may not
be escalating.
—Federal facilities have had
higher SNC rates.
EPA will:
—Focus limited resources and
significant non-compliers who
pose the greatest risks.
—Further study pollutant load-
ings from majors to determine
their contribution to water
impairment.
—Accelerate the schedule for
states to submit penalty data
to EPA.
—Revisit enforcement response
policy (EMS) to emphasize
escalation and examine the
definition SNC to capture
facilities with the most
potential for environmental
degradation.
—Consult with Federal Facilities
Enforcement concerning SNC
rates.
U.S. Environmental
Protection Agency
This report is
internal and not
publicly available.
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
Goal 5, Objective 2
Evaluation of
Implementation
Experiences with
Innovative Air Permits:
Results of the U.S.
EPA Flexible Permit
Implementation
Review
The purpose was to
evaluate EPA's and
companies' imple-
mentation
experiences with
innovative flexible air
permits.
Findings of the Evaluation
The evaluation found that:
—The flexible permits facilitated
and encouraged emissions
reductions and pollution pre-
vention. Companies with
flexible permits significantly
reduced actual plant-wide
emissions and/or emissions
per unit of production.
Provisions allowing advanced
approval for certain changes
reduced administrative costs.
—The flexible permits worked as
intended, assuring appropriate
environmental protection
under all applicable require-
ments. The monitoring,
recordkeeping, and reporting
approaches established in the
permits were sufficient to
ensure compliance. Most of
the flexible permits provided
equivalent or more informa-
tion to the public when
compared to conventional
permits.
—In most cases, the flexible
permits enabled the companies
to respond to new market
opportunities and save several
hundred hours in staff time
needed to prepare individual
permit applications. State and
local permitting authorities
saved staff time associated with
processing case-by-case permit
applications.
Planned Response
The report's findings are being
used:
—To inform the New Source
Review Improvement
Rulemaking (the final evalua-
tion report was included as
part of the official docket and
was used in confirming that
the plant-wide applicability
limits PALs emissions caps are
workable).
—To inform an internal dialogue
about the development of the
Agency's Pollution Prevention
in Permitting Program (P4)
policy.
—As guidance for how the
Agency should operate and
improve existing and future
flexible permitting pilots.
—As a teaching tool for
permitting authorities about
flexible permits.
Public Access
U.S. Environmental
Protection Agency
Office of Air and
Radiation, and Office
of Policy, Economics
and Innovation
Available at:
http://www.epa.gov/
ttncaaal/t5/meta/
m24005.html
Also available by
request through the
Evaluation Support
Division
http://www.epa.gov/
evaluate/feedback.htm
Goal 5, Objective 2
Evaluation of the
Performance Track
Program in Region I
The purpose was to:
—Assess the progress
of participating
members toward
meeting their
commitments.
—Develop a
communication
The report found that:
—EPA New England
Performance Track members
have demonstrated environ-
mental gains in the first year
of reporting. Aggregate results
show large actual reductions
in the amount of solid and
hazardous waste handled,
water and energy used, and
volatile organic compounds
and other gases emitted into
the air.
The program will use the
evaluation's results to develop
more concrete, outcome-based,
environmental performance
measures.
EPA New England is exploring
the development of a
Communication of Results Plan.
U.S. Environmental
Protection Agency
EPA New England
(Region I)
The report will be
available on the
Evaluation Support
Division website in
the future.
http://www.epa.gov/
evaluate
-------
APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
model to illustrate
participants'
success.
-Provide recom-
mendations for
improving the
program.
Findings of the Evaluation
—Program members value EPA
their membership.
—The program would benefit
from better communication of
results and enhanced incen-
tives. It should develop a
communications strategy that
includes tailoring the commu-
nication of results to specific
audiences.
Planned Response
Public Access
Goal 5, Objective 2
Evaluation of EPA
New England's
Colleges and
University Initiative
The purpose was to:
—Determine if the
52 colleges and
universities
surveyed are
implementing
preferred environ-
mental practices as
a result of this
initiative.
—Identify the factors
that motivate or
discourage
participation in the
program.
—Consider the
approach's
applicability to
other EPA regions
or sectors of the
regulated
community.
The evaluation found that:
—Program incentives
encouraged participation.
—Participants addressed
violations identified in self
audits.
—Participants are implementing
long-term environmental
management changes;
including self-audits.
—Participants find EPA's
outreach tools useful.
—Many schools are implement-
ing or considering an environ-
mental management system
(EMS) because of the initiative.
However, most schools are in
an early stage of development
and/or implementation of
their EMSs and were not yet
able to identify specific
benefits yielded by them.
EPA New England is considering
recommendations for:
—Modifying outreach tools.
—Improving follow-up and
recognition for better
performance.
—Developing clearer
performance goals and
baseline data.
Industrial Economics,
Inc.
Available at:
http './/www. e pa.gov/
newengland/
assistance/univ/
eval-cui.html
Also available by
request through the
Evaluation Support
Division
http './/www. e pa.gov/
evaluate/feedback.htm
Goal 5, Objective 2
An Evaluation of a
Regional Clean Air
Incentives Market
(RECLAIM): Lessons
in Environmental
Markets & Innovation
The purpose was
to investigate causes
of increases in
The evaluation found that:
—Market-based programs
require significant planning,
preparation, and management
during their development and
throughout their lives.
—Market information is a key
factor affecting facility
decision-making.
The report recommended that:
The evaluation identified key
design features of the RECLAIM
program that, if designed
differently, might have addressed
the unexpected increase in the
price of RECLAIM emission
credits. Office of Air and
Radiation (OAR) staff are using
the lessons learned from the
evaluation as they monitor
existing programs and consider
U.S. Environmental
Protection Agency
EPA Region 9
http ://www. e pa.gov/
region09/air/redaim/
index.html
Also available by
request through the
Evaluation Support
Division
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
RECLAIM trading
credit prices and the
program's effective-
ness.
Findings of the Evaluation
—Regulators should strive to
create confidence and trust in
the market by making a full
commitment to the program
and ensuring consistency in
the market and their policies.
—Because unforeseen external
circumstances (like energy
deregulation) can have dra-
matic impacts on market-
based programs. Therefore,
these programs must be
designed to react quickly and
effectively to such external
factors.
—Periodic evaluation, revisiting
of program design
assumptions, and contingency
strategies are crucial to
keeping programs on track.
RECLAIM'S experience suggests
that a market-based approach
can work with the Clean Air
Act's New Source Review
program. This may be a function
of the types of sources included
in the review program or the
controls in place at many
facilities. Regulators need to have
a strong understanding of the
regulated facilities and the factors
affecting their decision-making.
Planned Response
the development of similar
emissions trading programs.
Public Access
http './/www. e pa.gov/
evaluate/feedback.htm
Goal 5, Objective 2
State Innovation Grant
Program: First-Round
Observations and
Recommendations
The purpose was to:
—Review the Grant
Program's
procedural
mechanics.
—Compare its first
round perform-
ance to its stated
objectives.
—Highlight how
ways in which EPA
can improve the
program.
The report found that:
—Overall the states and EPA
regions are pleased with the
grant program, the administra-
tion of its first round, and the
commitment that it shows to
innovation.
—The program generated
proposals that supplement
planned or existing state/EPA
innovation partnerships.
—The program did not
engender "new, bigger,
bolder" projects primarily
because of the limited time
and money available for
proposal development, the
amount of money available,
and limited collaboration
EPA plans to enhance its
consultation with states and with
EPA regions, and program offices
on future priority and focus
areas. Opportunities for
consultation and collaboration
may include existing forums, such
as ERA's Innovation Action
Council and the Environmental
Council of the States and may
also be found through more
case-by-case, ad-hoc interactions
with individual states.
U.S. Environmental
Protection Agency
EPA's Office of Policy,
Economics, and
Innovation
Available by request
through the
Evaluation Support
Division
http './/www. e pa.gov/
evaluate/feedback.htm
-------
APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
Findings of the Evaluation
between states and EPA on
proposal development.
—The Grant Program could
face increasing difficulty
engendering "new, bigger,
bolder" innovations and
strengthening state/EPA
partnerships if EPA and state
priorities are not well aligned
in the future.
Planned Response
Public Access
Supporting Program
Offices
Grants Management
Reviews
In FY 2001, the area
of "Improved
Management of
Assistance
Agreements" was
designated an Agency
weakness. And in
FY 2003, the Office
of Grants and
Debarment is
implementing a
comprehensive
approach to grants
management reviews
of EPA offices.
The reviews found that
although EPA headquarters
and regional offices have made
progress in improving grants
management, several areas
need improvement, including:
—Technical reviews of grant
applications.
—Cost reviews.
—Documentation of grants
competitions.
—Development of environ-
mental outcomes in grant
work plans, and more
comprehensive advanced
monitoring reports.
OGD has asked each office,
subject to a review, to submit
a corrective action plan within
90 days of the issuance of the
final Grant Management
review report. OGD will fol-
low-up on these corrective
action plans to ensure that all
weaknesses are corrected.
The Agency is planning to
conduct three types of grants
management reviews of EPA
offices: Comprehensive Grants
Management Reviews per-
formed by OGD; Grants
Management Self-Assessments
performed by program offices
based on OGD guidance; and
Grants Performance Measure
Reviews performed by OGD,
which involve statistical reports
from the Agency's grant data-
bases. These reviews will be
performed over a three-year
cycle, with the exception of
performance measure reviews,
which will be conducted every
year.
U.S. Environmental
Protection Agency
Office of Grants and
Debarment
Three grants
managements reviews
were completed in
FY 2003.
Information about
these reports can
be obtained by
contacting Richard
Kuhlman, Director,
Grants
Administration
Division
(tel.: 202-564-0696)
Supporting Program
Offices
Evaluation of EPA
Intern Program (EIP)
The evaluation asked
the following
questions:
—Is the EIP meeting
its the identified
goals and
objectives?
The evaluation found that:
—The EIP has done a
commendable job of meeting
its identified goals to recruit
and nurture diverse, high
potential employees to
become the next generation
of EPA leaders.
—EIP participants are more
highly educated and ethnically
diverse than Presidential
Management Interns, other
The Agency plans to:
—Share the evaluation results
with program stakeholders
and Agency managers for
additional feedback on
selected topics.
—Convene a program guidance
workgroup.
—Work with Agency disability
coordinators to improve
access for interns with
disabilities.
Industrial Economics,
Inc.
EPA posted the
results of this
program evaluation
on its Intranet site
which is available to
Agency Stakeholders.
EPA sent its results
to the Office of
Personnel
Management in
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Evaluation Title
and Scope
-What is the level
of satisfaction
among
participants?
-Are there lessons
learned or recom-
mendations for
improving the
program?
Findings of the Evaluation
recent outstanding scholars
and other new hires to the
Agency's workforce.
—EIP also hires more people
with disabilities and veterans
than other comparable,
entry-level programs.
—Managers generally believe
interns are better qualified
than other new hires.
—The rate of EIP resignations is
much lower than that of
employees in similar career
programs.
—Interns would overwhelmingly
recommend the program to a
friend or peer.
Areas identified for improvement
included the need for additional
program guidance on policies
and procedures, more support
for interns with disabilities, and
improved outreach for minority
applicants.
Planned Response
-Coordinate with national
recruiting efforts to improve
outreach to minority and
disabled students.
Public Access
conjunction with
EPAs Human Capital
Initiative.
EPA also expects
to send its results
to other federal
agencies for
benchmarking.
Supporting Program
Offices
Review ofEPA's Clean
Water and Drinking
Water State Revolving
Funds, with annual
payments totaling
$2.1 billion
EPA annual payments
to state Revolving
Funds total $2.1
billion. The purpose
of this evaluation was
to review the
processes and
controls over fund
disbursements and to
determine whether
any erroneous
payments had
occurred.
The review found that:
—Controls were effective and
based on audits and perform-
ance evaluation reviews.
—Only isolated instances of
erroneous payments have
occurred in the two State
Revolving Funds. For the
Clean Water State Revolving
Fund, the erroneous payment
rate was 0.13%; for the
Drinking Water State
Revolving Fund, the rate was
0.04%.
-Actions to correct erroneous
payments have been
completed, or are underway.
-Recommendations were
aimed toward ensuring that
erroneous payments are
properly monitored and the
erroneous payment rate
remains low.
-The Office of Water includes
reviews for erroneous pay-
ments as part of its annual
onsite reviews. It tracks any
erroneous payments found
and communicates this infor-
mation to the Office of the
Chief Financial Officer.
U.S. Environmental
Protection Agency
Office of the Chief
Financial Officer
October 2002
Information about
this review may be
obtained by
contacting Joe
Nemaragut
(tel.: 919-541 -3777)
-------
APPENDICES—APPENDIX A. PROGRAM EVALUATIONS COMPLETED IN FY 2OO3
Evaluation Title
and Scope
Supporting Program
Offices
EPA Contract
Payments
EPA makes
approximately
$1 billion in contract
payments annually.
The purpose of this
evaluation was to
determine if any
erroneous contract
payments had
occurred and to
monitor the
effectiveness of EPA's
controls in
preventing such
errors.
Findings of the Evaluation
The evaluation found minimal
erroneous payments.
—From January 2003, reports
show that EPA's rate of
proper contract payments has
remained consistent at well
over 99% each month, for
both numbers of payments
made and dollar amounts
disbursed.
—For the period January—July
2003, 99.88% of payments
(and dollars disbursed) were
found to be proper.
Planned Response
The Agency will continue
monitoring the status of contract
payments to ensure that
erroneous payments remain low.
EPA is also considering engaging
the services of a recovery
auditor to identify and recover
erroneous payments.
Public Access
U.S. Environmental
Protection Agency
Office of the Chief
Financial Officer
Information about
this review may be
obtained by
contacting
Milton Brown
(tel.: 202-564-0373)
-------
FISCAL YEAR 2OO3 ANNUAL REPORT, U.S. ENVIRONMENTAL PROTECTION AGENCY
Appendix B
Acronyms and Abbreviations
AEGL Acute Exposure Guidelines Levels
[Program]
APGs annual performance goal(s)
APWA American Public Works Association
ARC American Respiratory Care Foundation
ATSDR Agency for Toxic Substances and
Disease Registry
BEACH Beaches Environmental Assessment
and Costal Health
BECC Border Environment Cooperation
Commission
BEIF Border Environmental Infrastructure
Fund
BMS Brownfields Management System
BRAC Base Realignment and Closure
[Program]
CAA Clean Air Act
CAT Clean Automotive Technology
CCDS Case Conclusion Data Sheets
CDC Centers for Disease Control
CDX Central Data Exchange
CERCLA Comprehensive Environmental
Response, Compensation, and Liability
Act
CERCLIS Comprehensive Environmental
Response, Compensation, and Liability
Information System
CSO combined sewer overflow
CWA Clean Water Act
CWSRF Clean Water State Revolving Fund
DfE Design for the Environment
DPW Department of Public Works
DWSRF Drinking Water State Revolving Fund
ECOS Environmental Council of States
E-Gov electronic government
ERAMS Environmental Radiation Ambient
Monitoring System
ERP Environmental Results Program
ERT Environmental Response Team
ETV Environmental Technology Verification
FMFIA Federal Managers Financial Integrity
Act
FQPA Food Quality Protection Act
GAO General Accounting Office
GHG greenhouse gas
GPRA Government Performance and Results
Act
H2E Hospitals for a Healthy Environment
HE human exposure
HPV high production volume
kWh kilowatt hours
MACT maximum achievable control
technology
mmtce million metric tons of carbon
equivalent
MSW municipal solid waste
-------
APPENDICES—APPENDIX B. ACRONYMS AND ABBREVIATIONS
NAAQS National Ambient Air Quality
Standards
NEP National Estuary Program
NIS New Independent States
NLFWCA National Listing of Fish and Wildlife
Consumption Advisories
NPDES National Pollutant Discharge
Elimination System
NPL National Priorities List
NSWPS National Strategic Workforce Planning
System
OIG Office of the Inspector General
OMB Office of Management and Budget
OPM Office of Personnel Management
PART Program Assessment Rating Tool
PBT persistent bioaccumulative toxics
PCB polychlorinated biphenyls
PFOS perfluorooctyl sulfonate
PM particulate matter
PMA President's Management Agenda
PRPs potentially responsible parties
RCC Resource Conservation Challenge
RCRA Resource Conservation and Recovery
Act
SAV submerged aquatic vegetation
SDWIS Safe Drinking Water Information
System
SES Senior Executive Service
SIDS sudden infant death syndrome
SITE Superfund Innovative Technology
Evaluation [program]
SUV sport-utility vehicle
TMDL total maximum daily load
TRI Toxic Release Inventory
TRI-ME TRI Made-Easy
LIST Underground Storage Tank [Program]
UV ultraviolet
VCCEP Voluntary Children's Chemicals
Evaluation Program
WATERS Watershed Assessment, Tracking and
Environmental Results System
WDS Workforce Development Strategy
WIPP Waste Isolation Pilot Plant
WQS water quality standard
-------
PUBLIC ACCESS TO EPAs PROGRAMS; LOCAL, STATE, AND TRIBAL
NEWS; AND ENVIRONMENTAL INFORMATION
You're invited to access http://www.epa.gov to obtain the latest environmental
news, browse EPA topics, discover what's happening in your community, obtain
program ar
terest groups, researc
n how to get inform;
regulations, search specific
:ess ERA's historical database
WE WELCOME YOUR COMMENTS!
Thank you for your interest in the Environmental Protection Agency's FY 2003
Annual Report. We welcome your comments on how we can make this report ?
more informative document for our readers. We are particularly interested in
your comments on the usefulness of the information and the manner
in which it is presented. Please send your comments to:
)ffice of the C
ORDERING INFORMATION
This report is available on OCFO's
homepage at: http://www.epa.gov/
through ERA's National Service Cente
or bnvironment
itions at
1-800-490-9198, or by ordering online
at: http://www.epa.gov/ncepihom.
Environmental Protection Agency
:iscal Year 2003 Annual Report
November 21, 200:
-------
Office of the Chief Financial Officer
Office of Planning, Analysis, and
Accountability (2724A)
United States Environmental Protection Age
1200 Pennsylvania Avenue, NW
Washington, DC 20460
EPA-I90-R-03-00:
November 2003
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