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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   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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    www.epa.gov/radon/healthrisks.html, and U.S. Environmental Protection Agency, June 2003, EPA Assessment of
    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.

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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
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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.
 LU
                     • 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.
IV)
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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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34

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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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