U.S. ENVIRONMENTAL PROTECTION AGENCY
Fiscal Year
f
"
Performance and
Accountability Report
HIGHLIGHTS
ENVIRONMENTAL AND FINANCIAL PROGRESS
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CONTENTS
Message From the Administrator I
Message From the Chief Financial Officer 2
Introduction 3
About EPA 4
What We Do 4
Who We Are 5
How We Work 5
Program Performance 8
Status of Performance Measures 8
Improvements in Performance Measures and Performance Management . .10
Strategic Goal I: Clean Air and Global Climate Change II
Strategic Goal 2: Clean and Safe Water 15
Strategic Goal 3: Land Preservation and Restoration 18
Strategic Goal 4: Healthy Communities and Ecosystems 22
Strategic Goal 5: Compliance and Environmental Stewardship 27
Financial Performance 31
Audit Results 31
Restatements . ..31
Overview of Financial Position
Improving Management and Results
The President's
Management Agenda
The Program Assessment
Rating Tool
EPA Holds Itself Accountable
Management Integrity
Management Controls
Management Assurances
EPA-I90-R-08-OOI
January 2008
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Message From the Administrator
I am pleased to present the "Highlights" of the U.S. Environmental Protection Agency's Fiscal Year 2007
Performance and Accountability Report (PAR). The PAR meets the requirements of the Government
Performance and Results Act and other management-related statutes. It also demonstrates EPA's com-
mitment to be accountable for achieving results, measured against the performance goals we established in
our annual plan and budget.
Our FY 2007 report reveals the considerable progress that EPA has made toward protecting human
health and the environment with the help of our state, local, and tribal partners. We intend to learn from
our experience this year to adjust our approaches and build on our accomplishments. We will continue to
rely on collaborative efforts, innovative programs, and sound science to promote human health and envi-
ronmental protection values and to establish a culture of environmental stewardship.
EPA is proud of the results we and our partners achieved in FY 2007 to improve the quality of our
air and water and to protect our land. We will continue to meet our responsibilities for enforcing the
nation's environmental laws and regulations and to work in collaboration with our partners to address the
environmental challenges that lie ahead. We look forward to working with all Americans—businesses,
communities, organizations, and individuals—to shift our nation to a greener culture and assist us in
passing down a cleaner, healthier world to future generations.
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Stephen L. Johnson
EPA Administrator
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Chief Financial Officer
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The Environmental Protection Agency's FY 2007 Performance and Accountability Report (PAR),
which was submitted to the President and the Congress in November 2007, provides information on
the Agency's accomplishments and challenges in protecting human health and the environment, our
use of the financial resources entrusted to us, and our progress in addressing key challenges in managing
the day-to-day work of the Agency. The pages that follow offer a "snapshot" of key performance and
financial information presented in the formal PAR report. I hope that readers will use the links provided
to pursue additional areas of interest about EPA's management accomplishments, challenges, and policies.
EPA is streamlining its financial workflow, improving financial reporting, and further integrating pro-
gram, performance, and financial information into a new and comprehensive financial management
system. We will continue to work to meet the financial management standards that demonstrate our com-
mitment to financial excellence and to ensure that we use taxpayers' dollars wisely and effectively in
fulfilling our mission to protect human health and the environment. We look forward to continuing our
collaboration with our partners and stakeholders and the American public and to developing innovative,
cost-effective strategies to help meet the challenges ahead.
Lyons Gray
Chief Financial Officer
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•
Introduction
Since it was established in
1970, the U.S. Environmental
Protection Agency (EPA) has
worked to achieve a cleaner,
healthier environment for all
Americans. From regulating
vehicle emissions to banning the
use of the pesticide DDT, from
cleaning up toxic waste to pro-
tecting the ozone layer, and from
promoting recycling and resource
conservation to revitalizing inner
city brownfield sites, EPA and its
partners and stakeholders have
made enormous strides in pro-
tecting human health and the
environment.
Although the Agency and its
partners have achieved a great
deal over the past several
decades, much work remains.
The environmental problems the
country faces today are more
complex than those of years past,
and implementing solutions—
nationally and globally—is more
challenging. Population growth
and its associated resource con-
sumption, climate change,
threats to homeland security, and
the spread of disease through
global travel, for example, pose
important new concerns.
Scientific advances and emerging
technologies, such as nanotech-
nology or bioengineering, offer
new opportunities for protecting
human health and the environ-
ment but also pose new risks and
challenges.
EPA and its partners work to
address these and other issues.
The Agency's FY 2007
Performance and Accountability
Report (PAR) summarizes the
results we achieved during
FY 2007 and the advances
we made toward our long-
term strategic goals for
protecting human health
and the environ-
ment. It fulfills
requirements
of the
Government Performance and
Results Act and other legislation
for reporting on environmental
and financial performance,
demonstrating results, and pro-
viding information on our
financial performance and our
overall management.1 This
"Highlights" document summa-
rizes some of the key information
provided in EPA's full FY 2007
PAR, which is available on our
Web site at: www.epa.gov/ocfo/
par/2007par.
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The Federal Managers' Financial Integrity Act, the Inspector General Act Amendments, the
Government Management Reform Act, the Chief Financial Officers Act, and the Reports
Consolidation Act.
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About EPA
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Working With States
EPA collaborates closely with
the Environmental Council of
the States (ECOS). We work
with the ECOS Planning
Committee and participate on
its ECOS-EPA Partnership and
Performance Work Group, a
senior-level oversight body gov-
erning ongoing efforts to
strengthen the state-ERA part-
nership. EPA's National Program
Managers consult with various
ECOS committees to develop
program strategies and
approaches for addressing a
variety of environmental issues.
In FY 2007, EPA and ECOS
developed a state grant meas-
ures template to strengthen
consistency and transparency in
reporting results under certain
types of grants. ECOS and EPA
also worked together to identify
priorities, reduce the paperwork
burden on states, and improve
the timeliness of grant awards.
What We Do
EPA's mission is to protect human health and the environment.
The Agency leads the nation's environmental science, research,
education, and assessment efforts. To accomplish our mission, EPA:
• Develops regulations that implement environmental laws enacted
by Congress. We evaluate environmental and pollutant data to set
national standards for a variety of environmental programs and del-
egate to states and tribes the responsibility for issuing permits and
monitoring and enforcing compliance.
• Enforces environmental laws, regulations, and standards by taking
legal action. EPA also offers assistance to states, tribes, and the regu-
lated community in understanding and complying with environ-
mental requirements to reach desired levels of environmental quality.
• Provides grants to states, nonprofit organizations, and educational
institutions to support program implementation and high-quality
research that will improve the scientific basis for decisions on
national environmental and human health issues and help the
Agency achieve its goals.
• Performs environmental research at laboratories across the country.
• Sponsors voluntary partnerships and programs with more than
10,000 industries, businesses, nonprofit organizations, and state and
local governments on more than 40 pollution prevention programs
and energy conservation efforts.
• Advances educational efforts to develop an environmentally con-
scious and responsible public and inspires personal responsibility in
caring for the environment.
Provides publications and other information on its public Web site.
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Who We Are
EPA employs 17,072 people
across the country, in our head-
quarters offices in Washington,
DC, 10 regional offices, and
more than a dozen laboratories
and field sites. The Agency's
staff is highly educated and
technically trained—more than
half are engineers, scientists,
and policy analysts. In addi-
tion, EPA employs legal, public
How We Work
PARTNERSHIPS
An essential component of
how EPA works to address
today's increasingly complex
environmental challenges is
the Agency's partnerships with
other federal agencies, states,
affairs, financial, informa-
tion management, and
computer specialists. EPA
Administrator Stephen L.
Johnson is the first career
executive and the first
career scientist to lead the
Agency. For more infor-
mation, visit EPA's Web
site at: www.epa.gov.
tribes, local governments, and
foreign countries. We believe
that it is only through our col-
laborative efforts with our
partners, as well as the partici-
nonprofit organizations, envi-
ronmental groups, and the
American public, that we can
achieve results and meet our
goals for a cleaner, safer envi-
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pation of business and industry, ronment.
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Working With Tribes
In FY 2007, EPA continued to work in partnership with tribes in a government-to-government relation-
ship to improve compliance in Indian Country, focusing particularly on issues concerning drinking water
systems, schools, and proper management of solid waste. Among other initiatives, EPA launched a Web-
based Tribal Compliance Assistance Center (www.epa.gov/tribalcompliance) to increase tribes' access to
information on federal environmental requirements and to improve environmental compliance and man-
agement in Indian Country.The center offers compliance assistance and pollution prevention
information for regulated activities in Indian Country and enables tribes and tribal members to report
environmental violations directly to EPA.The Agency also launched the first-of-its-kind portal Web site
to help the tribal community, its supporters, and the public find tribal environmental information and
data on all media through a single Web-based access point.The new Web site allows EPA to consolidate
and share environmental information reflecting the tribal community's perspective and needs in an easy-
to-navigate structure.Visit the Tribal Portal at: www.epa.gov/tribalportal.
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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
Assistant Administrator
for Prevention. Pesticides.
and Toxic Substances
Assistant Administrator
for Research and
Development
Region I
Boston, MA
Region 2
New York, NY
Region 5
Chicago, IL
Region 6
Dallas, TX
Assistant Administrator
for Enforcement and
Compliance Assurance
Assistant Administrator
for Environmental
Information
Assistant Administrator
for Solid Waste and
Emergency Response
Region 3
Philadelphia, PA
Region 4
Atlanta, GA
Region 7
Kansas City, KS
Region 8
Denver, CO
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Region 9
San Francisco, CA
Region 10
Seattle, WA
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PLANNING, BUDGETING, AND ACCOUNTABILITY
To carry out our mission to
protect human health and the
environment, EPA established
five broad, long-term strategic
goals:
1. Clean Air and Global
Climate Change
2. Clean and Safe Water
3. Land Preservation and
Restoration
4. Healthy Communities and
Ecosystems
5. Compliance and
Environmental Stewardship
These five goals, their 20
supporting objectives, and
numerous strategic targets are
described fully in EPA's 2006-
201 i Strategic Plan.2 Each year,
based on this Strategic Plan,
EPA commits to annual goals
and measures that support the
achievement of our strategic
targets. We present these annu-
al goals and measures in our
Annual Performance Plan and
Budget,3 and we are account-
able for using our resources
efficiently and effectively to
achieve results against them.
EPA reports on its performance
compared to these goals and
measures in our annual PAR.
EPA's FY 2007 net cost of
operations to fulfill the require-
ments of the Agency's five
strategic goals was $8.7 billion.
How Funds Were Used: Net Program Costs
[Dollars in Thousands)
$778,686
T]
n
Clean Air and Global Climate Change
Clean and Safe Water
Land Preservation and Restoration
Healthy Communities and Ecosystems
Compliance and Environmental Stewardship
The figure above shows how
funds were used across each
strategic goal.
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Planning, Budgeting, and Accountability for Results
Annual Plan & Budget
Identifies priorities and resources for
the year, including the Agency's annual
performance goals and measures.
Strategic Plan
Establishes EPA's overall plan for the
next five years, including goals, objectives,
sub-objectives, and strategic targets.
Annual Performance
& Accountability
Performance and Accountability Report (PAR)
Presents EPA's performance results measured
against its annual measures and commitments.
^ Demonstrates accountability and serves as a
feedback loop to inform adjustments to
priorities, strategies, and measures.
i
Quarterly Management Report (QMR)
Provides timely performance data for a number
of the Agency's important work areas.
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www.epa.gov/ocfo/plan/plan.htm
http://www.epa.gov/ocfo/budget/index.htm
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Program Performance
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8
Status of Performance Measures
PERFORMANCE
MEASURES MET
AND MISSED
In its FY 2007 Annual Plan,
EPA committed to 167 annual
performance measures (PMs). In
FY 2007, the Agency met 100 of
these PMs, 86 percent of which
had data available at the time
the PAR was published.
EPA significantly exceeded its
targets for a number of its FY
2007 PMs. In some cases, a par-
ticularly strong collaborative
effort or application of an innova-
tive new approach allowed the
Agency to accomplish more than
it had planned. For example, EPA
exceeded its targets for closing
open dumps in Indian Country or
on other tribal lands because sev-
eral regions, notably Region 6
(Dallas) and 9 (San Francisco),
were particularly successful in
leveraging General Assistance
Program grants to accomplish this
work. Including these cleanups in
RCRA Supplemental
Environmental Projects also
increased regional results. In
other cases, the Agency exceeded
its target for a new PM because,
lacking the experience and trend
data we needed to determine an
ambitious yet realistic target, we
set our FY 2007 target conserva-
tively.
Despite our best efforts, how-
ever, we and our partners were
unable to meet 16 of the 116 FY
2007 PMs for which performance
data were available. There are a
number of reasons for missing
these targets:
• Unexpected demands or com-
peting priorities sometimes
diverted resources needed for
meeting FY 2007 targets.
• In our commitment to develop
meaningful goals and measures
that evidence environmental
outcomes, in some cases we
may have overestimated our
ability to achieve annual
EPA's FY 2007 Performance Results
Goal Met
lOOPMs
Goal Not Met
16 PMs
Data Available After
November 15,2007
51 PMs
results. For example, EPA set
an ambitious target for restor-
ing valuable underwater grasses
in the Chesapeake Bay.
However, population growth,
land use, and other factors
have affected progress in
reducing nitrogen, phospho-
rous, and sediment pollution
loads entering the bay. Despite
the efforts of EPA, states, and
others, pollution reduction
strategies have not improved
water quality conditions or
permitted restoration of aquat-
ic vegetation to the extent
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envisioned by Chesapeake
Bay Program partners.
• Factors affecting the activi-
ties of the Agency's federal,
state, and local government
partners, who collaborate
closely with EPA, also had
an impact on annual per-
formance results.
EPA is carefully considering
the various causes for these
FY 2007 shortfalls as we adjust
our program strategies and
establish annual targets for
FY 2008 and beyond. As part
of our annual planning process,
EPA will continue to work
closely with our partners to
address challenges and ensure
progress toward our environ-
mental and human health
objectives.
DATA UNAVAILABLE
Because final end-of-year
data were not available, our
FY 2007 PAR did not report
on 51 of our 167 PMs. This
delay in reporting can be large-
ly attributed to the Agency's
sharpened focus on longer-term
environmental and human
health outcomes rather than
activity-based outputs.
Environmental outcome results
might not become apparent
within a fiscal year, and
assessing environmental
improvements often requires
multi-year information. Many
variables are involved in evalu-
ating progress toward an
outcome-oriented goal, and it
takes time to understand and
assess such factors as exposure
and the resulting impact on
human health.
EPA relies heavily on per-
formance data obtained from
local, state, and tribal agencies,
all of which require time to
collect the information and
review it for quality. Often,
EPA is unable to obtain com-
plete end-of-year information
from all sources in time to
meet the deadline for this
report. We are reducing such
delays in reporting, however,
by capitalizing on new infor-
mation technologies to
exchange and integrate elec-
tronic data and information,
improve data quality and relia-
bility, and reduce the burden
on our partners.
In many cases, reporting
cycles—including some that
are legislatively mandated—do
not correspond with the federal
fiscal year on which this report
is based. Data reported bienni-
ally or on a calendar-year basis,
for example, are not available
for this report but will be pro-
vided in subsequent reports.
Extensive quality assurance/
quality control (QA/QC)
processes to ensure the reliabil-
ity of performance data can
also delay reporting. In some
cases, such as for certain com-
pliance and enforcement
information, the Agency
adjusted data collection and
QA/QC processes to meet the
November 15, 2007,
Congressional deadline for sub-
mitting this report. In other
cases, EPA presents the most
current data available and will
provide complete data in a
future report.
DATA NOW AVAILABLE
EPA is now able to report
data from previous years that
became available in FY 2007.
Final performance results data
became available for 46 of the
FY 2006 PMs that the Agency
did not cover in its FY 2006
PAR. Of these 46 FY 2006
PMs, EPA met 39. For exam-
ple, the Agency exceeded its
FY 2006 target for 1,000 envi-
ronmental assessments of
brownfields properties by
assessing 2,139 properties. EPA
can now report achieving 133
(76 percent) of the 174 FY
2006 PMs for which it has
data.
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Improvements in Performance Measures and Performance Management
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During FY 2007, EPA devel-
oped and implemented a series
of key initiatives designed to
improve the quality and consis-
tency of its performance
information and help the
Agency's senior leaders "use
measures to manage."
EPA is also creating tools to
improve its access to and use of
performance measures. In
2007, the Agency began a
concerted effort to centralize
its performance information
in its automated Annual
Commitment System (ACS),
creating a "Measures Central"
that consolidates measures and
measures information. For
example, ACS now tracks state
grant performance information
annually. The Agency has also
updated its reporting and busi-
ness intelligence tool system to
simplify access to performance
information.
EPA has continued to
improve and refine the
Quarterly Management Report
(QMR) it initiated in FY 2006.
The QMR provides timely per-
formance data for 60 of the
Agency's priority work areas. It
complements other budget,
performance, and financial
management tools that support
the Agency's performance
management system.
Originally, the QMR was used
exclusively as an internal man-
agement tool, but in FY 2007,
the Agency made the report
available to the public to
increase transparency and
encourage a constructive dia-
logue on how EPA can use
performance measures better to
protect the environment. By
looking at fresh data on a quar-
terly basis, EPA is using
performance measures to "learn
and do" rather than simply to
"report." The QMR is available
on EPA's Web site at:
www.epa.gov/ocfo/qmr/.
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Air pollution is a problem for
all of us. The average adult
breathes more than 3,000
gallons of air every day, and chil-
dren breathe even more air per
pound of body weight. Air pollu-
tants, such as those that form
urban smog, may remain in the
environment for long periods of
time and can be carried by the
wind hundreds of miles from
their origin. Millions of people
live in areas where urban smog,
very small particles, and toxic
pollutants pose serious health
concerns. People exposed to cer-
tain air pollutants may
experience burning in their eyes,
an irritated throat, or breathing
difficulties. Long-term exposure
to certain air pollutants may
cause cancer and may damage
the immune, neurological, repro-
ductive, and respiratory systems.
EPA implements the Clean
Air Act Amendments of 1990
and other environmental laws
and uses innovative approaches,
such as emissions trading, to
reduce and prevent the harmful
emissions from power plants and
other large sources, motor vehi-
cles, and fuels that contribute to
outdoor air pollution. The Clean
Air Act Amendments authorize
EPA to set limits on how much
of a pollutant can be in the air
anywhere in the United States,
ensuring that all Americans have
the same basic health and envi-
ronmental protection. While the
law allows individual states to
establish stronger pollution con-
trols, no state is allowed to have
weaker pollution controls than
those set for the country as a
whole. It makes sense for states
to take the lead in carrying out
the Clean Air Act, because pol-
lution control problems often
require a particular understand-
ing of factors such as local
industries, geography, and hous-
ing patterns. The U.S.
government, through EPA, assists
states by providing scientific
research, expert studies, engi-
Qoal 1 FY 2007
Performance Measures
Met=l
Not Met = 0
Data Available After
November 15, 2007 = 25
(Total Performance
Measures = 26)
neering designs, and money to
support state clean air programs.
Since most people spend much
of their lives indoors, the quality
of indoor air is another major
area of concern for EPA. Sources
of indoor air pollution include
oil, gas, kerosene, coal, wood,
and tobacco products and build-
ing materials and furnishings,
such as asbestos-containing insu-
lation, damp carpets, household
cleaning products, and lead-based
paints. Often, the people who
may be exposed to indoor air pol-
lutants for the longest periods of
time are also those most suscepti-
ble to the effects of indoor air
pollution: the young, the elderly,
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and the chronically ill, espe-
cially those suffering from
respiratory or cardiovascular
disease. EPA provides hotlines,
publications, outreach and
other initiatives to improve the
quality of air in our homes,
schools, and offices.
EPA also works to address
climate change. Since the
beginning of the industrial rev-
olution, concentrations of
several greenhouse gases
(including carbon dioxide,
methane, and nitrous oxide)
have increased substantially,
contributing to climate change.
Important questions remain
about how much warming will
occur, how fast it will occur,
and how the warming will
affect the rest of the climate
system. To help answer these
questions, the President's cli-
mate change program is
focused on furthering under-
standing of the science of
climate change and developing
new technologies to reduce
emissions. EPA's voluntary and
incentive-based programs to
reduce emissions of greenhouse
gases, such as ENERGY STAR,
Climate Leaders, and the
Landfill Methane Outreach
program, are a critical part of
the President's plan to reduce
greenhouse gas emissions.
Under the stratospheric ozone
layer protection program, EPA
coordinates numerous regulato-
ry programs designed to protect
and restore the ozone layer and
continues to participate active-
ly in developing international
ozone protection policies.
Significant Accomplishments Under Goal 1
ACHIEVING HEALTHIER OUTDOOR AIR
Ozone levels have dropped
21 percent nationwide since
1980 as EPA, states, and
local governments have
worked together to continue
to improve the nation's air.
In June 2007, EPA proposed
to strengthen the nation's air
quality standards for ground-
level ozone, revising the
standards for the first time
ACHIEVING HEALTHIER INDOOR AIR
In 2006, the Agency held
symposia and worked with
grantees to train more than
3,000 health professionals on
asthma and environmental
trigger management. As a
result of the award-winning
Asthma Goldfish Public
Service Campaign, national
awareness of asthma triggers
has increased to an all-time
high of 33 percent among
the general public.
• Through 2006, the Agency
worked with approximately
36,000 schools to help
implement an effective
indoor air quality plan based
on criteria set by EPA. Poor
since 1997. The proposal is
based on the most recent
scientific evidence about the
health effects of ozone, the
primary component of smog.
EPA projects that health
benefits of the proposed
ozone standard could be in
the billions of dollars.4 The
Agency will issue final stan-
dards by March 2008.
ventilation in elementary
and secondary schools con-
tributes to unsatisfactory
indoor air quality, putting
children, a vulnerable seg-
ment of the population who
are more susceptible to pol-
lutants and spend long hours
in school facilities, at partic-
ular risk.
12
U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, 2007, Regulatory Impact
Analyses: Proposed Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone.
www.epa.gov/ttn/ecas/ria.htm/ria2007.
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• Radon is the second leading
cause of lung cancer in
America and is associated
with about 20,000 lung can-
cer deaths every year.5 EPA
estimates that in FY 2005
(the most recent year for
which we have complete
data), the combination of
homes with radon mitigation
systems and homes built with
radon-resistant techniques—
voluntary public actions that
EPA promoted—saved
approximately 575 lives.
PROTECTING THE OZONE LAYER
2007 marked the 20th
anniversary of the signing of
the Montreal Protocol.
Since signing in 1987, the
United States has achieved a
90-percent reduction in the
production and consumption
of ozone-depleting sub-
stances, ending the
production and import of
more than 1.7 billion pounds
of these chemicals per year.
The faster the ozone layer is
healed, the greater the pre-
vention of human health
damages caused by excess
UV radiation, including skin
cancer.
In 2005 (the last year for
which data are available),
the United States reduced
annual emissions of ozone-
depleting substances by more
than 1,200 tons.
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MONITORING AND RESPONDING TO RADIATION
• In FY 2007, EPA participat-
ed in several major
radiological emergency
response exercises, including
exercises that simulated the
detonation of a defined-area
radiological dispersal device
(dirty bomb), simulated the
detonation of an improvised
nuclear device, and tested
EPA's Incident Command
System during a response to
a radiological incident origi-
nating on foreign soil.
The Agency developed
RadMap, an interactive
desktop tool featuring a
Geographic Information
System map and quick
access to information on
long-term radiation monitor-
ing locations across the
country. RadMap is designed
for use by emergency respon-
ders and provides access to
key information on 500
monitors and the areas sur-
rounding them.
REDUCING GREENHOUSE GAS INTENSITY
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• EPA achieved significant
greenhouse gas reductions in
2006 (the latest year for
which data are available)
through its climate protection
partnership programs and is
on track to contribute about
70 percent of the reductions
necessary to achieve the
President's 2012 greenhouse
gas intensity goal.6
• EPA partnered with more
than 11,000 organizations
nationwide to improve ener-
gy efficiency. The
partnerships are working to
increase the supply of clean
energy across the building,
industrial, and transporta-
tion sectors by breaking
down the market barriers
that prevent investments in
cost-effective, climate-
friendly technologies and
practices. EPA currently esti-
mates that its partners
reduced greenhouse gas
emissions by about 100 mil-
lion metric tons of carbon
equivalent (MMTCE)
through measures in place in
2006.
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Risks from Radon in Homes, EPA402-R-03-003.
13
For the President's goal, see: www.whitehouse.gov/news/releases/2002/02/climatechange.html-*
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• Through ENERGY STAR,
consumers saved more than
$14 billion on their energy
bills by purchasing more
than 300 million labeled
products, constructing
almost 200,000 ENERGY
STAR new homes, using
EPA's energy performance
rating system to track and
improve the energy use of
over 30,000 commercial
buildings, and reducing ener-
gy use at hundreds of
industrial facilities.
• More than 650 organizations
committed to purchasing
almost 7 billion kilowatt-hours
of green power, and 200 organ-
izations installed more than
3,500 megawatts of new com-
bined heat and power capacity.
• More than 600 freight carriers
and shippers, covering
361,000 heavy duty diesel
trucks, are now participating
in EPA's Smart Way Transport
Partnership Program. These
partners account for approxi-
mately 12 percent of the
ENHANCING SCIENCE AND RESEARCH
• EPA's Clean Air Research
Program completed 100 per-
cent of its planned actions
toward the long-term goal of
reducing uncertainty in the
science that supports stan-
dards setting and air quality
management decisions. As a
result of research conducted
under this program, EPA has
Addressing Challenges Under Goal 1
14
Of the six tracked air pollu-
tants, ground-level ozone and
particulate matter are the most
widespread. We must integrate
our toxics and climate pro-
grams with our more
traditional criteria pollutant
programs and emphasize
strategies that result in more
reductions in air toxics,
increased energy efficiency,
and cleaner fuels. EPA pro-
grams need to work together
so that we minimize the bur-
den on the regulated
community while maximizing
pollution reduction across all
titles of the Clean Air Act.
At a September 21, 2007,
meeting in Montreal that
recognized the 20th anniver-
sary of the Montreal
Protocol, the 191 parties to
the Protocol reached a mile-
stone agreement to accelerate
recovery of the Earth's
stratospheric ozone layer and,
at the same time, prevent
large quantities of greenhouse
gas emissions. Parties agreed
to speed up by a decade the
phase-out of hydrochlorofluo-
rocarbons (HCFCs). Because
HCFCs are also greenhouse
gases, the agreement to accel-
erate their phase-out also
provides benefits for the cli-
mate system. EPA faces a
challenge in identifying
acceptable substitutes to
ozone-depleting substances.
EPA's latest annual report on
greenhouse gas emissions,
Inventory of U.S. Greenhouse
Gas Emissions and Sinks:
1990-2005 (April 2007),
industry's greenhouse gas
emissions. Smart Way partners
are implementing fuel effi-
ciency measures that will
reduce greenhouse gas emis-
sions by more than 1.9
MMTCE per year, with annu-
al fuel savings of $1.7 billion.
proposed to strengthen the
nation's air quality standards
for ground-level ozone, revis-
ing the standards for the first
time since 1997.
which it prepared for the
United Nations Framework
on Climate Change, is a study
in challenges.7 The report
shows that the United States
is making progress in reducing
the emissions of some critical
gases as it works toward cut-
ting U.S. greenhouse gas
intensity by 18 percent by
2012. However, strong eco-
nomic growth starting in
2005 and an increase in the
demand for electricity during
warmer summer conditions
are expected to keep carbon
dioxide emissions high. EPA
is targeting its climate protec-
tion partnership programs to
address this growing electrici-
ty demand in the residential,
commercial, and industrial
sectors.
U.S. Environmental Protection Agency, April 2006, The Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1994-
2004, EPA430-R-06-002.
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Highlights of Strategic Goal 2:
and
Safe Water
Ensure drinking water is safe. Restore and maintain oceans, watersheds, and
their aquatic ecosystems to protect human health; support economic and recre^
ational activities; and provide healthy habitat for fish, plants, and wildlife.
EPA, in coordination with its
partners, protects and
improves the quality of the
nation's drinking and surface
waters. To ensure that tap water
is safe to drink, we set limits for
drinking water contaminants;
help to sustain the network of
pipes and treatment facilities that
constitute the nation's water
infrastructure; and work with
water systems to plan for,
prevent, detect, and respond to
terrorist or other threats to our
drinking water supplies. To
ensure safe ground water supplies,
EPA works with our state and
local partners to implement
source water protection plans for
the area surrounding drinking
water sources. Also, the
Underground Injection Control
program regulates the subsurface
injections of hazardous and non-
hazardous substances in wells. In
addition, EPA monitors surface
water quality and works with state
partners to strengthen water quality
standards, develop and/or approve
discharge permits, and reduce
pollution from diffuse or non-
point sources. EPA is
restoring polluted waters
across the country by
implementing cleanups
and promoting inno-
vative, cost-effective
practices, such
as water quality
trading and per-
mitting on a
watershed basis.
Qoal 2 FY 2007
Performance Measures
Met = 20
Not Met = 5
Data Available After
November 15, 2007 = 7
(Total Performance
Measures = 32)
While EPA continues to make
progress toward safe and secure
drinking water, challenges
remain. Drinking water systems
are increasingly stressed due to
aging infrastructure and expand-
ing populations. In the pages that
follow, we report on our accom-
plishments and challenges in
addressing water quality issues—
strengthening and improving
drinking water standards, main-
taining safe water quality at
public beaches, restoring polluted
water bodies, and improving the
health of coastal waters.
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Significant Accomplishments Under Goal 2
PROTECTING HUMAN HEALTH
• In FY 2007, 91.5 percent of
the population served by
community water systems
received drinking water that
met all applicable health-
based drinking water
standards (slightly short of
EPA's target of 94 percent).
PROTECTING WATER QUALITY
16
• EPA is making strong progress
in addressing impaired waters:
In FY 2007, a cumulative 15
percent (against the FY 2007
target of 14.1 percent) of
waters listed as impaired in
2000 are now fully attaining
water quality standards.
• Under EPA's National
Pollutant Discharge
Elimination System, permits
implementing standards for
industrial sources, municipal
treatment plants, and
stormwater prevented dis-
charge of 37 billion pounds
of pollutants into waterways.
• EPA released the Wadeable
Stream Assessment, the first
statistically valid assessment
of national stream condition.
The assessment found that
28 percent of the nation's
streams are in good condi-
tion (25 to 30 percent of
streams across the United
States were estimated to
have high levels of nutrients
or excess sedimentation).
Data now available in FY
2007 show that
annual load
reductions for
non-point sources
of pollution
exceeded the
Agency's FY 2006
targets. EPA's
partners reduced
phosphorus by
11.8 million
pounds, nitrogen
by 14.5 million
pounds, and sedi-
ment by 1.2
million tons.
In FY 2007, the
Clean Water
• EPA met its FY 2007 goal
by keeping coastal and
Great Lakes beaches open
95 percent of beach season
days during the past year's
swimming season (calendar
year 2006).
• EPA completed freshwater
epidemiology studies that
tested a rapid indicator for
pollutants in swimming
waters. These results will
help local governments make
decisions on beach closures
and health advisory notices
quickly and more efficiently.
Indian Set-Aside Program
funded 65 wastewater infra-
structure projects in Indian
Country, covering over 7,200
homes out of a base of
26,777 homes lacking access
to basic sanitation.
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ENHANCING SCIENCE AND RESEARCH
In FY 2007, methods, mod-
els, and tools produced by
EPA's Office of Research and
Development contributed, in
part, to risk assessments that
resulted in EPA's preliminary
determinations not to regu-
late 11 chemical
contaminants from the
Contaminant Candidate List
(CCL2). In this science-
based decision, EPA helped
reduce the economic and
technical burden on water
utilities by allowing them to
focus on protecting public
health through controlling
the high-priority contami-
nants that are currently
regulated.
Through the Salmon 2100
Project, EPA developed a set
of policy options for restor-
ing salmon runs to
Addressing Challenges Under Goal 2
The nation's drinking water
infrastructure is aging. Water
utilities face the challenge of
substantial reinvestment in
water infrastructure to sus-
tain current levels of service
and to meet increasing
future public health protec-
tion needs. Drinking Water
State Revolving Funds
(DWSRFs) offer low-interest
loans and other assistance to
water systems to help pro-
vide safe, reliable water
service on a sustainable
basis. EPA and the states
must manage the DWSRF
program to maximize public
health protection with avail-
able funds.
• Progress in addressing
impaired waters will likely
slow as listings of water bod-
ies become more accurate
and "easy" restorations are
completed. Many remaining
problems, such as urban wet
weather impairments and
persistent legacy pollutants,
are complex and may take
many years to solve (e.g.,
restoring stream bank trees
to address temperature
problems).
significant, sustainable levels
in California, Oregon,
Washington, Idaho, and
southern British Columbia.
Developed "message
maps"—science-based risk
communication tools that
enable quick and concise
delivery of pertinent infor-
mation during emergencies
affecting drinking water sys-
tems.
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Highlights of Strategic Goal 3
Land Preservation
and Restoration
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EPA's land preservation and
restoration goal presents our
strategic vision for managing
waste, conserving and recovering
the value of wastes, preventing
releases, responding to emergencies,
and cleaning up contaminated
land. Uncontrolled wastes can
cause acute illness or chronic dis-
ease and can threaten healthy
ecosystems. Cleanup almost always
costs more than prevention, and
contaminated land can be a hairier
to bringing jobs and revitalization
to a community. Disposed wastes
also represent a loss of important
material and energy values.
EPA employs a hierarchy of
approaches to protect the land,
including reducing waste at its
source, recycling waste for mate-
rials or energy values, managing
waste effectively to prevent spills
and releases of toxic materials,
and cleaning up contaminated
properties. EPA works to ensure
that hazardous and solid wastes
are managed safely at industrial
facilities. Working with states,
tribes, local governments and
responsible parties, we clean up
uncontrolled or hazardous waste
sites and return land to produc-
tive use. Similarly, we work to
address risks associated with leak-
ing underground storage tanks
and wastes managed at industrial
facilities.
We are helping develop public-
private partnerships to conserve
resources in key areas. We collabo-
rate with our partners in
innovative, non-regulatory efforts
to minimize the amount of waste
generated and promote recycling
to recover materials and energy.
Through programs like our
Resource Conservation Challenge,
we promote opportunities for con-
verting waste to economically
viable products, thereby conserv-
ing resources.
Qoal 3 FY 2007
Performance Measures
Met = 22
Not Met = 4
Data Available After
November 15, 2007 = 3
(Total Performance
Measures = 29)
We also work closely with
other government agencies to
ensure that we are ready to
respond in the event of an emer-
gency which could affect human
health or the environment. We
strive to improve our prepared-
ness and response capabilities,
particularly in the area of home-
land security.
Finally, we conduct and apply
scientific research to develop
cost-effective methods for manag-
ing wastes, assessing risks, and
cleaning up hazardous waste sites.
18
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Significant Accomplishments Under Goal 3
PRESERVING LAND
• Through EPA-sponsored
efforts, the national municipal
solid waste (MSW) recycling
rate has reached 32 percent of
the waste stream (based on
the most current data from FY
2005). EPA reduced 49.92
million metric tons of carbon
equivalent (MMTCE), which
translates into removing 39.6
million cars from the road.
The MSW recycling rate also
reflects a savings of 1.4
quadrillion British thermal
units (Btu), which is equiva-
lent to 11.3 billion gallons of
gas or 14 percent of U.S. resi-
dential energy demand.
• The number of hazardous
waste management facilities
with approved controls in
RESTORING LAND
• Controlling human expo-
sures is a top priority for
EPA's Superfund Remedial
Program. In FY 2007, the
program controlled all iden-
tified unacceptable human
exposures from site contami-
nation for current land
and/or ground water use con-
ditions at 13 sites, exceeding
our target of 10, for a cumu-
lative total of 1,282
(approximately 83 percent)
of 1,543 sites where human
exposures are a problem.
• Because ground water can be
a vehicle for spreading con-
tamination, EPA strives to
control the migration of
place to prevent dangerous
releases to air, soil, and ground
water increased to 71 (2.8 per-
cent of the baseline), meeting
EPA's FY 2007 target.
Pursuant to the Resource
Conservation and Recovery
Act (RCRA), EPA's hazardous
waste management program is
on track to bring 95 percent
of facilities under approved
controls by FY 2008.
• States made significant
progress in renewing permits
for hazardous waste manage-
ment facilities, renewing 96
permits during FY 2007 and
enabling the RCRA pro-
gram to meet its FY 2008
goal of 150 permit renewals
a year early.
contaminated ground water
through engineered remedies
or natural processes. In FY
2007, the Superfund pro-
gram accomplished this goal
at 19 of these sites, exceed-
ing its target of 10, and
reaching a cumulative total
of 977, or approximately 71
percent of the 1,381 sites
where ground water migra-
tion is a problem.
Through its Superfund pro-
gram, EPA met its target by
completing the construction
phase of cleanup at 24 sites
across the country for a
cumulative total of 1,030, or
65 percent of the sites on
Teamwork With
Partners
Working together, EPA Region
3, Lehigh Valley Industrial Park,
Inc., HDR Engineering, Inc., and
the Pennsylvania Department
of the Environment won a
2006 Brownfields Phoenix
Award for in transformin,
1,000 acres of the former
Bethlehem Steel plant into the
Bethlehem Commerce Center,
located in Bethlehem,
Pennsylvania.
Formed in 2000, the "Beth
Steel" team's purpose was to
provide rapid evaluation and
cleanup of the environmental
threats on the Bethlehem Steel
property.The property was
widely polluted with the rem-
nants of 140 years of steel
manufacturing (e.g., buried
building foundation, abandoned
infrastructure lines, and con-
taminated soil and ground
water) when the company
closed its doors.
The Bethlehem Commerce
Center project is an innovative
community and partnership
effort and that will turn this
closed steel mill into a flourish-
ing home for businesses and
provide employment. As of
September 2007, eight new
businesses with 1,600 jobs
now call the center home.At
full build-out, the center will
generate more than $ 1.5 bil-
lion in new investment and add
6,000 new jobs to the Lehigh
Valley, with an annual payroll of
$210 million.
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the National Priorities List
(NPL). In addition, EPA
determined that 64
Superfund sites were ready
for reuse in their entirety,
exceeding the target of 30.
EPA exceeded its FY 2007
targets by addressing 1,968
high-priority facilities requir-
ing RCRA corrective action.
Of this total, current human
exposures are now under con-
trol at 93 percent of facilities,
and the migration of contam-
inated ground water is under
control at 78 percent of facil-
ities. Final remedies have
been constructed for 28 per-
cent of these facilities.
• Leaking underground storage
tanks (USTs) at gas stations
and other locations release
petroleum and other
hazardous substances into
the environment and are
consistently ranked by states
as a leading source of ground
water contamination. EPA's
state and tribal partners met
and exceeded the Agency's
target of 13,000 cleanups of
leaking USTs, including 30
cleanups in Indian Country,
with a total of 13,862
cleanups, including 54
cleanups in Indian Country.
Since the beginning of the
Agency's leaking UST pro-
gram, EPA has cleaned up
more than 77 percent (or
365,361) of all reported
releases. In FY 2007, we
continued to work with our
state and tribal partners to
address the backlog of
108,766 leaking UST
cleanups not yet completed.
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ENHANCING SCIENCE AND RESEARCH
20
• EPA scientists provided policy-
makers and land managers with
100 percent of planned research
products to support managing
land resources and waste and mit-
igating contaminated sites.
• Agency scientific and research
staff also developed new models
addressing characteristics of
gasoline that contribute to pollu-
tants in drinking water drawn
from ground water. These models
support a statutorily mandated
report on the health effects of
alternatives to the gasoline addi-
tive methyl tert-butyl ether
(MTBE), due to the Congress in
August 2008.
-------
Addressing Challenges Under Goal 3
Some facilities pose more of
a permitting challenge than
others. While the remaining
workload represents a small
percentage of facilities, it
involves more complex per-
mit actions, such as
addressing large and com-
plex federal facilities or unit
types that pose their own
unique challenges.
EPA's Superfund program
faces several challenges. At
private sites, it must balance
ongoing work at as many
sites as possible while main-
taining a cost-effective rate
of remediation at each site.
At both private and federal
sites, it must maintain a high
rate of construction comple-
tions. Current NPL
sites—particularly vast feder-
al facilities that contain a
wide variety of contami-
nants—are far more complex
than the sites that have
already been completed. The
program also strives to keep
remedies up-to-date in the
face of continuing improve-
ments in applicable science
and/or technology and the
discovery of emerging con-
taminants. Finally, the pro-
gram must ensure that
necessary institutional con-
trols are implemented at
remediated Superfund sites,
given that state and/or local
governments and other fed-
eral agencies (not EPA) are
the responsible authorities.
• Similarly, meeting RCRA
Corrective Action Program
targets for human exposure
under control and ground
water migration under con-
trol will be more difficult in
FY 2008, because only the
most complex sites remain.
Furthermore, the program
has begun to emphasize the
construction of final reme-
dies, addressing the most
complicated of the high-pri-
ority sites. Looking ahead, in
FY 2009 the universe of
facilities believed to need
corrective action will nearly
double to 3,746 sites,
because we are now han-
dling low- and
medium-priority National
Corrective Action Priority
facilities. In the past,
emphasis was on high-priori-
ty facilities. EPA's challenge
will be to accelerate correc-
tive action to address these
sites by 2020, the end of the
planning horizon.
• Addressing the science and
technology needs of deci-
sion-makers—and
successfully transferring
research products to users to
provide better science or
HAZARDOUS,^
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reduce costs—is a significant
challenge. Among other spe-
cific issues, EPA is working
to establish federal agency
leadership for the fate and
transport nanotechnology
research program; focusing
scientific activities to have a
significant impact on materi-
al reuse and brownfields; and
developing technologies to
remediate Superfund mega-
sites more cost-effectively.
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Highlights of Strategic Goal 4
Healthy Communities
and Ecosystems
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To protect, sustain, and restore
our nation's communities and
ecosystems, EPA uses a mix
of regulatory programs, partner-
ship efforts, and incentive-based
approaches. EPA programs ensure
that pesticides and other chemi-
cals entering the market meet
health and safety standards, that
pesticides and chemicals already
in commerce do not harm our
health or environment, and that
action is taken to reduce risks
from pesticides and chemicals of
greatest concern.
Many of our programs to
achieve and sustain healthy com-
munities are designed to bring
tools, resources, and approaches
to bear at the local level. We
encourage community redevelop-
ment by providing funds to
identify, assess, and clean up the
estimated hundreds of thousands
of properties that lie abandoned
or unused due to previous pollu-
tion. We help promote public
involvement and establish a
sense of environmental steward-
ship to sustain environmental
improvements by forging partner-
ships with communities to
address local pollution problems.
We also collaborate with other
federal agencies, states, tribes,
local governments and many
nongovernmental organizations
on geographically based efforts to
protect America's wetlands and
major estuaries. Working with
our partners and stakeholders, we
have established special programs
to protect and restore our natural
resources.
Some threats to Americans'
health and to our environment
originate outside our borders.
Many pollutants can easily travel
across borders via rivers, air and
ocean currents, and migrating
wildlife. EPA employs a range of
strategies to help mitigate some
of these risks, including partici-
pating in bilateral programs,
Qoal 4 FY 2007
Performance Measures
Met = 33
Not Met = 4
Data Available After
November 15, 2007 = 13
(Total Performance
Measures = 50)
cooperating with multinational
organizations, and contributing
to a set of measurable environ-
mental and health end points.
Sound science guides us in
identifying and addressing emerg-
ing issues and advances our
understanding of long-standing
human health and environmen-
tal challenges. Our cutting edge
research helps us better charac-
terize risks and benefits, furthers
our ability to measure and
describe environmental condi-
tions, and encourages
stewardship and sustainable solu-
tions to environmental problems.
22
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Significant Accomplishments Under Goal 4
ADDRESSING CHEMICAL, ORGANISM, AND PESTICIDE RISKS
• An August 2007 report by
the Centers for Disease
Control and Prevention
(CDC) indicated that
actions EPA took in 2002 to
discontinue the industrial
production of perflurooctyl
sulfonates (PFOS) and per-
fluorooctanoic acid (PFOA)
led to a reduction in human
blood levels of 32 percent
for PFOS and 25 percent
reduction for PFOA from
1999/2000 through 2003.
• EPA conducted a significant
study of lead dust levels in
renovation, repair, and
repainting, laying the
groundwork for the final
FY 2008 rule establishing
safe practices for the activi-
ties. This is part of a
government-wide strategy to
eliminate childhood lead
poisoning by 2010.
• EPA produced ecological
risk assessments and deter-
minations of potential risk
to certain endangered
species; consulted with the
U.S. Fish and Wildlife
Service and National
Marine Fisheries Service;
and completed rigorous
Endangered Species Act
assessments to meet tight
court-monitored schedules
related to three lawsuits.
• EPA promulgated priority
data requirement rulemak-
ings for conventional,
microbial, and biochemical
pesticides that will strength-
en technical and scientific
information supporting pes-
ticide registration programs
and decisions.
In cooperation with the
Canadian Pest Management
Regulatory Agency, EPA
• EPA completed validating
three Endocrine Disrupters
Screening Program (EDSP)
test assays and issued Federal
Register notices for a draft
list of 73 chemicals for ini-
tial screening and peer
approved two harmonized
NAFTA labels for pesticide
products. This action will
allow pesticide products that
meet the regulatory require-
ments of all participating
countries to move across
borders and help prevent to
prevent non-complying
products from entering the
United States.
In August 2007, EPA was
part of the delegation that
reached a landmark agree-
ment with Canada and
Mexico under the Security
and Prosperity Partnership
for North America to ensure
the safe manufacture and use
of industrial chemicals.
review, both long-awaited
first steps toward initiating
the testing phase of the
EDSP.
EPA proposed Acute
Exposure Guidelines
(AEGLs) for 33 chemicals,
exceeding the Agency's FY
2007 target of 24 and bring-
ing to 218 the cumulative
total of AEGLs developed
since 1996. AEGLs provide
short-term exposure limits
applicable to a wide range of
extremely hazardous sub-
stances and are used by first
responders in dealing with
chemical emergencies,
including threats of chemi-
cal terrorism.
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PROTECTING COMMUNITIES
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Grants to
Communities
In FY 2007, the Community
Action for a Renewed
Environment (CARE) pro-
gram provided cooperative
agreement grants and direct
technical assistance to 29
geographically diverse com-
munities and awarded 22 new
cooperative agreement
grants. EPA works in partner-
ship with CARE community
leaders to build local capacity
and identify and reduce risk
from toxics. For example, in
FY 2007, EPA awarded New
Haven, Connecticut, a diesel
retrofit grant to install con-
trols on construction
equipment operating at
schools.The CARE program
in St. Louis, Missouri, created
the first "no idling zone" in
the city, requiring that buses
turn off their engines after 10
minutes, reducing S16 tons of
carbon dioxide a year. Other
programs work to reduce
chemical waste and remediate
lead and reduced pests from
the indoor environment.
EPA's U.S.- Mexico Border
program:
—Provided new drinking
water connections to
1,276 homes and
connected 73,475 homes
to first-time wastewater
service.
—Certified 11 water infra-
structure projects for
construction, which
should benefit more than
30,000 people when com-
pleted.
—Removed approximately
1 million tires from the
U.S.-Mexico border
region and used them
for fuel or in highway
paving projects. Of 9 mil-
lion tires, more than 3
million have been
removed to date.
—Supported Mexico's
switch to ultra-low sulfur
fuel (less than 15 ppm
sulfur) along the U.S.-
Mexico Border. This
change is expected to
reduce emissions along the
border, affecting a popula-
tion of 12 million people,
and to improve availabili-
ty of ultra-low sulfur diesel
fuel for U.S. trucks cross-
ing into Mexico.
EPA's Brownfields and Land
Revitalization Program
assessed 2,139 properties,
cleaned up 91 properties,
leveraged 5,504 jobs and
$1.4 billion in cleanup and
redevelopment funding, and
made 1,269 acres ready for
reuse through site assessment
or property cleanup. (These
are FY 2006 results, which
became available in FY 2007
and are the most current
data.)
In FY 2007, EPA awarded 10
Collaborative Problem-
Solving (CPS) agreements
to assist community-based
organizations in addressing a
range of environmental
health benefits—from reduc-
ing indoor exposure to toxic
chemicals to reducing expo-
sure to chemicals in well
water.
In FY 2007, EPA provided
alternative dispute resolu-
tion and environmental law
training to more than 70
environmental justice grass-
roots organizations and tribal
government representatives.
These actions resulted in the
signing of an agreement by
the Navajo Nation EPA and
Navajo environmental jus-
tice grassroots organizations
aimed at increasing tribal
awareness of and participa-
tion in environmental
decision-making on the
Navajo reservation.
24
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PROTECTING ECOSYSTEMS
• Under the President's 2004
Earth Day Initiative, EPA
restored and enhanced
61,856 acres of wetlands,
exceeding its FY 2007 cumu-
lative target of 12,000 acres.
These acres include those
supported by Wetland 5 Star
Restoration Grants, the
National Estuary Program,
and Clean Water Act
Section 319 Nonpoint
Source grants.
• EPA issued the National
Estuary Program (NEP)
Coastal Condition Report,
the first assessment of over-
all ecological condition of
the 28 NEP estuaries.
Nationally, 32 percent of
NEP estuaries are in good
condition, 29 percent are in
fair condition, 3 7 percent
are in poor condition, and 2
percent lack data on condi-
tion status.
• In collaboration with its
partners, EPA made progress
restoring and protecting the
Great Lakes Ecosystem,
remediating more than
440,000 cubic yards of con-
taminated sediments in two
Legacy Act projects.
• At measured sites in the
Great Lakes, average concen-
trations of polychlorinated
biphenyls (PCBs) in whole
lake trout and walleye sam-
ples continued to decline by
5 percent, and the average
concentrations of PCBs in
the air continued to decline
by 7 percent.
• EPA's Chesapeake Bay
Program reported a decrease
in nitrogen and phosphorus
discharged in the wastewater
from municipal and industri-
al facilities that flows into
the bay, accounting for a
large portion of the estimat-
ed nutrient reductions in the
Chesapeake Bay watershed
to date. (These accomplish-
ments reflect the FY 2007
mid-year results, which are
the most accurate.)
• Toward a 2011 goal of
20,000 acres, EPA restored,
protected, or enhanced a
ENHANCING SCIENCE AND RESEARCH
EPA research programs sup-
ported decision-making for
healthy communities and
ecosystems, achieving 95
percent of research mile-
stones on time.
EPA's Human Health
Research Program discov-
ered a biomarker that can
predict the severity of an
asthmatic response in sus-
ceptible people, resulting in
new protocols for improving
indoor air quality and pro-
viding the scientific basis for
public education policies
and risk management strate-
gies involving exposure to
molds.
• EPA's Global Change
Research Program completed
75 percent of a framework
cumulative 18,660 acres of
coastal and marine habitat
for the Gulf of Mexico,
exceeding its FY 2007 goal
of 15,800 acres.
EPA reduced the number of
impaired waterbody listings
in the 13 priority areas of
the Gulf of Mexico to 62,
exceeding the target of 56.
linking global change to air
quality. By applying an air
quality model under various
climate scenarios,
researchers can study the
effect of climate change on
air quality.
EPA's Human Health Risk
Assessment program com-
pleted the Lead Air Quality
Criteria Document (AQCD)
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on time—68 days prior to
publication of EPA's draft
Staff Paper. As a result, EPA
remains on schedule to
complete, by 2010, 100 per-
cent of the Integrated
Science Assessments
(ISAs—formerly known as
AQCDs) necessary to
inform National Ambient
Air Quality Standards regu-
latory decision-making.
Addressing Challenges Under Goal 4
• To comply with the
Endangered Species Act,
EPA must assess the risks of
more than 19,000 pesticide
products-each with multiple
uses-covering more than
1,200 listed species.
Completing the risk assess-
ments under the 15-year
review cycle schedule estab-
lished under the Pesticide
Registration Improvement
Renewal Act of 2007 (PRIA
2) Pesticide Registration
Improvement Act of 2003
(PRIA) is complicated by
EPA's need to comply with
separate court-ordered
schedules requiring addition-
al assessments of potential
risks of particular pesticides
to particular species.
• Chesapeake Bay-wide acreage
of valuable underwater bay
grasses decreased by 25 per-
cent in 2006. This decline
was largely due to higher
than normal water tempera-
tures in the mid- and lower
bay and poor water clarity
throughout the Chesapeake
Bay, due to excessive
amounts of nitrogen, phos-
phorus, and sediment. EPA's
Chesapeake Bay Program is
working to decrease pollu-
tants from runoff and other
sources to improve condi-
tions in the bay.
• All research agencies and
organizations face challenges
in measuring and improving
the efficiency of research. In
FY 2007, EPA made progress
in this area by developing
new measures that track
research cost and perform-
ance. Because implementing
these measures in a meaning-
ful way remains a challenge,
EPA engaged the National
Academy of Sciences (NAS)
and other agencies, including
the Department of Energy,
the National Science
Foundation, and the
National Institutes of
Health, in a dialogue about
how best to measure the effi-
ciency of research. NAS
expects to report its findings,
conclusions, and recommen-
dations by early 2008.
26
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Highlights of Strategic Goal 5:
Compliance and
Environmental Stewardship
Improve environmental performance through compliance with environmental
requirements, preventing pollution, and promoting environmental stewardship. Protect
human health and the environment by encouraging innovation and providing incentives
for governments, businesses, and the public that promote environmental stewardship.
I
EPA ensures that government,
business, and the public
comply with federal laws and
regulations by monitoring com-
pliance and taking enforcement
actions that result in reduced
pollution and improved environ-
mental management practices.
To accelerate the nation's envi-
ronmental protection efforts,
EPA works to prevent pollution
at the source, to encourage other
forms of environmental steward-
ship, and to promote the tools of
innovation and collaboration.
Effective compliance assistance
and strong, consistent enforce-
ment are critical to achieving the
human health and environmen-
tal benefits expected from our
environmental laws. EPA moni-
tors compliance patterns and
trends and focuses on priority
problem areas identified in con-
sultation with states, tribes, and
other partners. The Agency sup-
ports the regulated community by
assisting regulated entities in
understanding environmental
requirements, helping them iden-
tify cost-effective compliance
options and strategies, and pro-
viding incentives for compliance.
EPA promotes the principles
of responsible environmental
stewardship, sustainability, and
accountability to achieve its
strategic goals. Collaborating
closely with other federal agen-
cies, states, and tribes, the Agency
identifies and promotes innova-
tions that assist businesses and
communities in improving their
environmental performance. EPA
works to improve and encourage
pollution prevention and sustain-
able practices, helping businesses
and communities move beyond
compliance and become partners
in protecting our national
resources and improving the envi-
ronment and our citizens' health.
It works with businesses to
increase energy efficiency, find
environmentally preferable substi-
tutes for chemicals of concern,
and change processes to reduce
toxic waste. EPA promotes
improved communication through
data sharing and collaboration
and conducts research on pollu-
tion prevention, new and
Qoal 5 FY 2007
Performance Measures
Met =11
Not Met = 3
Data Available After
November 15, 2007 = 3
(Total Performance
Measures = 17)
developing technologies, social
and economic issues, and decision
making to help promote environ-
mental stewardship. EPA also
works with other nations as they
develop their own environmental
protection programs, leading to
lower levels of pollution in the
United States and worldwide.
Ensuring compliance and
promoting environmental steward-
ship is an important component of
the Agency's efforts to protect
human health and the environ-
ment in Indian country. EPA
continues to provide resources to
support federally recognized tribes
and inter-tribal consortia in assess-
ing environmental conditions on
their lands and building environ-
mental programs tailored to their
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needs. Tribes, the first stewards
of America's environment, pro-
vide an invaluable perspective
on environmental protection
that benefits and strengthens all
of our stewardship programs.
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Significant Accomplishments Under Goal 5
ACHIEVING ENVIRONMENTAL PROTECTION THROUGH IMPROVED COMPLIANCE
In FY 2007, EPA achieved
an estimated 890 million
pounds of reduced, treated,
or eliminated pollutants.
This is the same amount as
last year and represents a sig-
nificant contribution to
environmental protection.8
The 12 most significant
enforcement actions taken in
FY 2007 will result in an esti-
mated 507 million pounds
of reduced, treated, or elimi-
nated sulfur oxides (SOX),
nitrogen oxides (NOX), and
particulate matter (PM), with
an estimated $3.8 billion
human health benefit from
emissions reductions that will
result in fewer premature
deaths, non-fatal heart
attacks, and reduced inci-
dence of bronchitis and asth-
ma attacks.9
• In FY 2007, EPA required
regulated entities to invest
$10.6 billion in pollution
control and abatement
equipment and technology
to improve environmental
performance or environmen-
tal management practices.
• Compliance assistance dra-
matically increased since FY
2006, increasing the number
of regulated entities reached
from 1.7 million in FY 2006
to 3.1 million in FY 2007.10
IMPROVING ENVIRONMENTAL PERFORMANCE THROUGH POLLUTION
PREVENTION AND OTHER STEWARDSHIP PRACTICES
In FY 2006, working through
its Federal Electronics
Challenge Program—a volun-
tary partnership of 18 federal
agencies committed to the
environmentally sound acqui-
sition, use, and disposal of
electronic products govern-
ment-wide—EPA decreased
federal use of hazardous mate-
rials by at least 2.8 million
pounds, conserved 452 billion
Btu of energy, and saved
$11.4 million (data substan-
tially finalized in FY 2007).
EPA's Electronic Product
Environmental Assessment
Tool (EPEAT) program,
launched in 2006, developed
a standard to help institution-
al purchasers of electronics
select environmentally sound
personal computer products,
and it is developing standards
for four additional electronics
products. As a result of the
adoption of this standard, the
EPEAT program decreased
hazardous materials by 9.2
million pounds, conserved
1,457 billion Btu, and saved
$37 million.
In conjunction with indus-
try and non-governmental
organizations, EPA's Design
for the Environment (DfE)
Formulator Program
achieved annual reductions
in the use of approximately
80 million pounds of haz-
ardous chemicals. More
than 280 formulator prod-
ucts have received DfE
recognition through the
"ECO-options" label sold by
such major retailers as
Home Depot.
28
Integrated Compliance Information System (ICIS), ww.epa.gov/compliance/data/systems/modemization/index.html
Integrated Compliance Information System (ICIS), October 2007, www.epa.gov/compliance/data/systems/
modemization/index.html; Office of Air and Radiation. BenMAP model. For additional information on FY 2007
enforcement settlements, please visit: www.epa.gov/compliance/resources/cases/index.html.
U.S. Environmental Protection Agency, Integrated Compliance Information System, October 28, 2006 and online
usage reports. These measures are not calculated from a representative sample of the regulated entity universe. The
percentages are based, in part, on the number of regulated entities that answered affirmatively to these questions on
voluntary surveys. The percentages do not account for the number of regulated entities who chose not to answer
these questions or the majority of entities who chose not to answer the surveys.
-------
• EPA's National Partnership
for Environmental Priorities
(NPEP) eliminated about 1.3
million pounds of priority list
chemicals from being used or
released into the environ-
ment, exceeding the Agency's
FY 2007 target of 500,000
pounds. These partnerships
have been established with a
variety of public and private
companies and organizations
that generate wastes contain-
ing one or more of 31
"priority chemicals." As out-
lined in EPA's 2006-20 J J
Strategic Plan, NPEP's long-
term goal is to reduce 4
million pounds of priority
chemicals from domestic
waste streams between
FY 2007 and FY 2011.
In FY 2007, the first year
of the National Vehicle
Mercury Switch Recovery
Program, more than
5,900 participants (auto
dismantlers, scrap recyclers,
automakers, and steel recy-
clers) removed more than
680,000 mercury-containing
automobile switches, pre-
venting the potential
migration of 1,500 pounds of
highly toxic mercury into
the environment. Every state
now participates in a mercu-
ry switch recovery program.
• In FY 2007, EPA's National
Environmental Performance
Track (NEPT), a voluntary
program to recognize and
reward businesses and public
facilities demonstrating
strong environmental per-
formance beyond current
requirements, reported a
normalized reduction in
water use of 5.3 billion gal-
lons and a reduction in
materials use of 64,000 tons.
Twenty states have adopted
programs similar to the
national program, and five
others are currently follow-
ing suit.
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IMPROVING HUMAN HEALTH AND THE ENVIRONMENT IN INDIAN COUNTRY
In FY 2007, EPA's Indian
Environmental General
Assistance Program (GAP)
increased participation by
tribal governments and
inter-tribal consortia. This
action resulted in tribes
building infrastructure to
handle a variety of core
environmental issues helping
achieve EPA/tribal long-
term performance goals.
ENHANCING SOCIETY'S CAPACITY FOR SUSTAIN ABILITY THROUGH
SCIENCE AND RESEARCH
In April 2007, EPA's People,
Prosperity, and the Planet (P3)
Program held its fourth annual
student design competition for
sustainability on the National
Mall in Washington, DC.
More than 300 university stu-
dents from around the country
exhibited their designs for a
sustainable future. Projects
Addressing Challenges Under Goal 5
Better tracking of perform-
ance and results in Indian
Country continues to be a
challenge. EPA is improving
performance measures and
will be implementing a new
reporting system, which will
enable EPA to standardize,
centralize, and integrate EPA
regional data and assign
accountability for data quality.
• It is difficult to measure the
success of attempts to include
elements of sustainability in
decisions on human health
included green buildings, new
ideas for bringing clean drink-
ing water to underdeveloped
nations, and innovative fuel
cell technologies.
and the environment. EPA's
Science and Technology for
Sustainability Program will
assist the Agency in develop-
ing meaningful measures to
gauge annual and long-term
success in this effort.
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For the complete list of EPA's FY 2007 accomplishments and challenges, visit our Web site at:
www.epa.gov/ofco/par/2007par.
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> Accomplishments in Homeland Security and Emergency Response
z
a Strengthening homeland security and responding to environmental emergencies is a top priori-
ty for the Agency and the nation. EPA works with other federal agencies to protect human health
2 and the environment in the event of natural disasters and from intentional harm. The Agency
o plays a lead role in supporting the protection of critical water infrastructure and coordinating the
£ development of national capabilities and strategies to address chemical, biological, and radiologi-
£ cal contamination during a terrorist event. Among its important homeland security activities in
FY 2007, EPA:
z • Participated in several exercises to test the Agency's preparedness for responding to a seri-
| ous incident. One major exercise scenario involved a large-scale earthquake within the
£ New Madrid fault system, located within the Mississippi River Valley. An event of this
> magnitude would present numerous serious emergency response and recovery issues. EPA
u coordinated efforts with the U.S. Coast Guard and other agencies of the National
en Response Team/Regional Response Team, other national-level coordinating bodies, and
D affected state, local, and private sector jurisdictions. The exercise helped EPA evaluate our
™ ability to implement the National Incident Management System and National Response
* Plan and to test the effectiveness of interagency and private coordination, the viability of
-i all appropriate plans, and the availability and adequacy of government and private sector
° response resources.
i
i- • Made fully operational the first water security contamination warning system pilot to quickly
° detect and respond to contamination incidents and threats to drinking water distribution sys-
,£ terns.
h • Provided training and technical assistance to approximately 1,000 drinking water and
jjj wastewater utilities to enhance their preparedness capabilities and improve their emer-
* gency response coordination and communications plans.
z
o • Proposed Acute Exposure Guidelines (AEGLs) for 33 chemicals, exceeding the Agency's
o FY 2007 target of 24 and bringing to 218 the cumulative total of AEGLs developed since
1996. AEGLs provide short-term exposure limits applicable to a wide range of extremely
z hazardous substances and are used by first responders in dealing with chemical emergencies,
uj including threats of chemical terrorism.
< • Advanced the development of test methods needed to determine the efficacy of disinfec-
£ tant pesticides for decontamination of important pathogenic threats, including anthrax
£ spores, bubonic plague, and tularemia.
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• Collaborated with other federal agencies to co-develop guidelines and procedures for
o responding to and decontaminating bioterrorism attacks at major airports.
CM
£ • Developed "message maps"—science-based risk communication tools that enable quick and
w concise delivery of pertinent information during emergencies affecting drinking water sys-
tems.
0 • Prepared Version 3 of EPA's Standard Analytical Methods Manual, which provides meth-
LJ- ods for laboratories to use when measuring specific contaminants potentially associated
with a terrorist attack, evaluating the nature and extent of contamination, and assessing
decontamination efficacy.
30
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' 06^
Audit Results
For the eighth consecutive year, the Agency's
Office of Inspector General (OIG) issued an
unqualified opinion on EPA's financial state-
ments. However, the OIG identified three
material weaknesses—one related to our process
for determining the value of delinquent
receivables and two related to information
technology (IT) security issues. We correct-
ed the delinquent accounts receivable
material weakness and restated our FY
2006 financial statements to reflect the value
of these receivables. We have initiated corrective
actions to resolve the IT-security issues and will com
plete all actions by December 31, 2007.
Restatements
The FY 2006 restatement impacted all financial statements except the
Statement of Budgetary Resources. The FY 2007 and the restated FY 2006
financial statements are included in the full FY 2007 PAR. Additional infor-
mation on the effects of the restatement on the Agency's Financial
Statements is provided in Note 40 of the Annual Financial Statements
(Section III) of the report.
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Overview of Financial Position
ASSETS
The Agency had total assets
of $17.6 billion at the end of FY
2007. The decrease in the Fund
Balance with Treasury was partly
offset by an increase in
Investments. (See Notes 2 and
4, Section III of the FY 2007
PAR.) The FY 2006
Consolidated Balance Sheet was
restated to show an increase of
$247 million in total assets, fur-
ther contributing to the
difference between FY 2007 and
FY 2006. (See Note 40, Section
III of the FY 2007 PAR.) The
Agency's assets are summarized
in the following table.
LIABILITIES
The Agency had total liabil-
ities of $1.8 billion at the end
of FY 2007. The increase from
FY 2006 is primarily the result
of a significant increase in
Grant Liabilities. (See Note 8,
Section III of the FY 2007
PAR.)
BUDGETARY
RESOURCES
The Combined Statement of
Budgetary Resources provides
information on how resources
were made available to the
Agency and the status of those
resources at the end of the fis-
cal year. For FY 2007, the
Agency had total budgetary
resources of $13 billion.
Assets, U.S. Environmental Protection Agency
(Dollars in Thousands)
, -r r,, ,,„„-, Restated Amount Percent
Asset by Type FY2007 .... __,,. , _, _,
FY 2006 of Change Change
Fund Balance with Treasury
Investments
Accounts Receivable, Net
Loans Receivable
Property Plant and
Equipment, Net
Other Assets
$10,466,600
5,753,061
416,341
23,161
809,873
85,653
$1 1,173,443
5,366,264
618,964
30,836
756,794
63,43 1
($706,843)
386,797
(202,623)
(7,675)
53,079
22,222
-6.3%
7.2%
-32.7%
-24.9%
7.0%
35.0%
Total Assets $17,554,689 $18,009,732 ($455,043) -2.5%
Liabilities, U.S. Environmental Protection Agency
(Dollars in Thousands)
Source of Funds
(Dollars in Thousands)
, -.- rv-inm Restated Amount Percent
Liabilities by Type FY2007 .... __,,. , _, _,
FY 2006 of Change Change
Account Payable and
Accrued Liabilities
Debt Due to Treasury
Custodial Liabilities
Cashout Advances, Superfund
Payroll and Benefits Payable
Pensions and Other Actuarial
Liabilities
Environmental Cleanup Costs
Commitments and
Contingencies
Other Liabilities
$ 1 ,034,207
16,156
39,369
1 90,269
205,198
39,786
18,214
-
212,099
$833,192
18,896
41,800
224,407
1 95,746
39,408
1 0,083
8
237,681
$201,015
(2,740)
(2,431)
(34,138)
9,452
378
8,131
(8)
(25,582)
24.1%
-14.5%
-5.8%
-15.2%
4.8%
1.00%
80.6%
-100%
-10.8%
Total Liabilities $1,755,298 $1,601,221 $154,077 9.6%
Unobligated Balance Brought Forward
Appropriations
Spending Authority from Offsetting Collections
Other
32
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Improving Management and Results
The President's Management Agenda
Over the past five years, the
President's Management Agenda
(PMA) has challenged federal
agencies to be "citizen-centered,
results-oriented, and market-based"
(see www.whitehouse.gov/results).
During FY 2007, EPA made
progress under each of the five
PMA initiatives for which it is
responsible: Strategic Management
of Human Capital, Competitive
Sourcing, Improved Financial
Performance, Expanded Electronic
Government, and Budget and
Performance Integration.
This year, EPA's fourth quarter
PMA scores show EPA as one of
the highest-perform ing agencies
in the federal government.11 We
are proud to demonstrate
The Office of Management and
Budget (OMB) regularly releases an
executive scorecard that rates each
federal agency's overall status and
progress in implementing the PMA
initiatives. The scorecard ratings
use a color-coded system based on
criteria determined by OMB.
EPA's FY 2007 Progress Under The President's Management Agenda
Initiative Status Progress
Human Capital
Fosters strong performance and results by increasing personal
accountability and linking job requirements to EPA's mission
and goals.
Competitive Sourcing
Having public-private competition enables the Agency to determine
the most economical mode of delivering services while ensuring the
highest quality of those services.
Expanded E-Government
Utilizes technology to better serve the United States and its people
including electronic information, online transactions, and new infor-
mation management capabilities.
Improved Financial Performance
Focuses on running environmental programs in a fiscally responsible
manner so citizens' dollars are used wisely and their health and envi-
ronment are protected.
Performance Improvement
Contributes to EPA's quest for better performance, increased
accountability better informed decision-making, and more transpar-
ent, comprehensive reporting of environmental results to the public.
Eliminating Improper Payments
Focuses on identifying, preventing, and eliminating erroneous
payments.
Yellow
•
Green
•
Green
•
Green
•
Green
•
Green
•
Green
•
Green
*
Yellow
•
Green
•
Green
•
Green
IV)
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OMB has assigned Yellow progress scores to all agencies and departments until
new Privacy and Security requirements embedded in OMB Memorandum 07-16
are fully met.
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continued excellence and
progress under our PMA initia-
tives and expect to continue
the trend in 2008.
In addition to tracking PMA
progress on a quarterly basis,
federal agencies establish yearly
goals for the point at which
they would be "Proud to Be" in
implementing PMA initiatives.
This past year, EPA achieved
its first green status rating for
the Performance Improvement
initiative since the PMA's
inception. In addition, EPA
maintained its green status and
progress scores throughout the
year in Competitive Sourcing,
Financial Performance,
The Program Assessment Rating Tool
The Office of Management
and Budget (OMB) developed
the Program Assessment
Rating Tool (PART) for federal
agencies to use to assess and
improve program performance
Distribution of PARTed Programs
Across EPA's Strategic Goals
Goal 5,
Compliance/
Stewardship:6
Enabling Support
Programs: I
so that they can achieve better
results. EPA uses these assess-
ments, along with program
evaluations, audits, and other
reviews, to identify program
strengths and weaknesses,
inform policymaking,
facilitate allocation of
resources, and improve
environmental outcomes
while ensuring the most
effective and efficient
use of taxpayer dollars.
As of the second quarter
of FY 2007, 100 percent
of EPA's programs
assessed under the
PART had an OMB-
Eliminating Improper
Payments and Expanded E-
Government. EPA maintained
green progress scores in Human
Capital and expects to achieve
a green status score later this
year. More information about
the Agency's PMA work is
available at: www.epa.gov/ocfo/
pma.htm.
approved efficiency measure.
By the end of FY 2007, 91 per-
cent of EPA's programs (48 of
53) rated adequate or better,
covering 96 percent of EPA's
resources. This year, as a result
of EPA's PART efforts, EPA
earned its first green status
score in the Performance
Improvement Initiative under
the President's Management
Agenda.
EPA's complete PART rat-
ings, as well as the ratings for
other federal programs that
have been assessed, are avail-
able to the public at:
www.Expectmore.gov.
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EPA Holds Itself Accountable
Management Integrity
EPA strives to manage taxpayer
dollars efficiently and effectively
and to ensure the integrity of our
programs and processes to deliver
the best results to the American
people. Our senior managers are
committed to maintaining effec-
tive and efficient internal controls
to ensure that program activities
are carried out in accordance with
applicable laws and sound man-
agement policy.
The Federal Managers'
Financial Integrity Act (FMFIA)
requires all federal agencies to
conduct annual evaluations of
their management controls and
financial systems and report
the results to the President and
Congress. Our annual evaluation
identified no material weaknesses.
However, this year's financial
statement audit identified
material weaknesses related
to 1) The Value of
Delinquent Receivables, 2)
Key Applications Need
Controls, and 3) Physical
Security of Critical IT
Assets. These weaknesses
were reported under Section
4 of FMFIA, and the two
systems-related weaknesses
were reported as non-
compliances under the
Federal Financial Management
Improvement Act (FFMIA).
The Agency corrected the
delinquent receivables
weakness and expects to
complete the remaining
IT corrective actions by
December 31, 2007.
No. of Material Weaknesses and Non-Conformances
Beginning Balance
0
New Findings
Ending Balance
EPA's Key Management
Challenges Reported
by the Office of
Inspector General
I. Data Gaps
2. Data Standards and Data
Quality
3. Information Technology
Systems Development and
Implementation
4. Managing for Results
5. Workforce Planning
6. Efforts in Support of
Homeland Security
7. Efficiently Managing Water
and Wastewater Resources
and Infrastructure
8. Emissions Factors for
Sources of Air Pollution
9. Privacy Programs
10. Voluntary Programs
For more information, see the
Office of Inspector General's
FY 2007 Key Management
Challenges in Section IV, page 12,
of EPA's FY 2007 Performance and
Accountability Report at:
www.epa.gov/ocfo/par/2007par.
IV)
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Management Controls
During FY 2007, EPA con-
ducted its annual assessment
on the effectiveness of internal
controls over financial report-
ing, as required by OMB
revised Circular No. A-123.
Through this process, we iden-
tified and documented 10
Management Assurances
financial management process-
es and tested 260 key controls.
As of June 30, 2007, EPA
found no material weaknesses.
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Fiscal Year 2007 Assurance Statement
The U.S. Environmental Protection Agency's (EPA's) management is responsible for establishing and
maintaining effective internal control and financial management systems that meet the objectives of the
Federal Managers' Financial Integrity Act (FMFIA). EPA conducted its assessment of the effectiveness of
internal control over the effectiveness and efficiency of operations and compliance with applicable laws
and regulations in accordance with OMB Circular A-123, Management's Responsibility for Internal
Control.
Based on the results of this evaluation, no material weaknesses were found in the design or operation
of the Agency's internal controls and no financial management system non-conformances were identi-
fied. Subsequently, the Agency's Inspector General identified two systems-related significant deficiencies,
which are required to be reported as material weaknesses and as non-compliances under the Federal
Financial Management Improvement Act (FFMIA).The Agency has initiated corrective actions to rectify
these weaknesses. Except for these weaknesses, I can provide reasonable assurance that as of
September 30, 2007, the Agency's internal controls were operating effectively and financial systems con-
form with government-wide requirements.
EPA conducted its assessment of the effectiveness of internal controls over financial reporting, which
includes safeguarding of assets and compliance with applicable laws and regulations, in accordance with
the requirements of AppendixA of OMB Circular A-123. Based on the results of this evaluation, no
material weaknesses were found in the design or operation of internal controls over financial reporting
as of June 30, 2007. Subsequently, the Agency's Inspector General identified the Agency's process for
determining the value of delinquent receivables as a material weakness. EPA has corrected this weak-
ness.As a result, I can provide reasonable assurance that except for two system-related weaknesses,
EPA internal controls were operating effectively as of September 30, 2007, and no other material weak-
nesses were found in the design or operation of the internal controls over financial reporting.
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Stephen L.Johnson
Administrator
November 1,2007
36
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'ELCOME YOUR COMMEN
lank you for your interest in the Environmental
rotection Agency's FY 2007 Performance and
ccountability Report Highlights. We welcome your
Dmments on how we can make this report a mr
iformative document for our readers. We are pz
cularly interested in your comments on the
sefulness of the information and the manner in
/hich it is presented. Please send your comment!
)ffice of the Chief Financial Officer/
)ffice of Planning, Analysis, and Accountability
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
3r ocfoinfort
Jepa.gov
To read the full FY 2007
Performance and Accountability
Report (PAR), please visit:
www.epa.gov/ocfo/par/2007par.
it'
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Office of the Chief Financial Officer
Office of Planning,Analysis, and
Accountability (2724A)
United States Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
www.epa.gov/ocfo
EPA-I90-R-08-OOI
January 2008
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