1990 STRATEGY PAPER
The Role of EPA in Construction Grants
Program Evaluation Division
Office of Planning and Management
June 5, 1930
**DRAFT* *
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CHAPTER 1
THE QUESTION OF ROLES
In support of EPA's need to explore new directions in
the treatment of municipal wastewater in the 1980's, this
paper examines several alternative roles which EPA might
play during that period. In partnership with other principal
actors in the Nation's effort to clean up "municipal effluant-
the States, the localities and the U.S. Amy of Corps of
Engineers—EPA finds itself at a turning point. At issue is
whether the Agency should continue to stress its direction
and control of the Construction Grants program, even as the
States assume more and more responsibility for day to day
operations, or move into more broadly defined environmental
protection functions, aimed at improving our Nation's ability
.to construct, operate, maintain, and replace a national sewag
treatment system over time.
Both objectives are worthy, but one cannot be fully
addressed except at the expense of the other. This is
especially true in light of the trend to reduce Federal
spending across broad areas of the President's budget, a
development which might well affect the Clean Water Act
profoundly. An era of unstable, or even gradually reduced
appropriations forces EPA into a clearer choice than it might
otherwise make between traditional programs and new direction
We offer this paper as a touchstone for the debate which
is certain to characterize our work together over the next,
several months. In it we outline three major alternative
program models which we believe cover many of the possible
features oi! a fully developed or revised Construction Grants
Program in the age of delegation. V7e have portrayed these
models as "ideal types," that is, as portraits of the program
as it might be designed ideally to reflect a given role which
EPA might adopt. In practice> of course, features of one
model might appropriately fit with those of another model to
forift a composite which is more attractive than either of its
parents.
We have also included in these models a sampling of
potential innovations to the current program structure.
We have placed each feature in the model where it seems
to fit most naturally, but a number stand apart from any
single role as potentially better, or at least different,
ways of doing business which we suggest might make fuller
use of EPA's strengths, while also emphasizing the special
roles of the States, the localities, and the Corps. The
appendix provides brief, individual descriptions of a fuller
range of ideas.
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In preparing this paper we have drawn on the experience
and opinions of scores of water program experts at all levels.
Based on their familiarity with the program, coupled with
their deep concern about its current and future effectiveness,
they have suggested many of the major ideas included here.
ASSUMPTIONS-
In considering the future of the Construction Grants
Program we have been guided by several operating assumptions.
Objective. We assume that the main objective of the
program will remain to ensure the efficient, timely construction
of high quality, maintainable municipal wastewater treatment
facilities.
EPA's Responsibility. We assume that even though individual
functions may vary as to performer or priority, the Administrator
of EPA will remain responsible for the ultimate fiscal and environ-
mental quality of the program.
Delegation To Be Stable Policy. We assume that delegation
is a stable, continuous, long term policy for the Construction
Grants Program, and that our challenge is to design the most
efficient and effective division of labor under delegation.
Freedom to Change. We assume, for the purposes of this
review, that the Agency is willing to consider and propose
whatever change may be necessary to promote the most effective
and efficient program model. We recognize that some of the
program features discussed here will be controversial; we have
put them forth in order to help spark the constructive debate
which will allow consideration of full range of program direc-
tion options, and the ultimate best choice.
FUNCTIONS OF THE AGENCY
In maintaining responsibility for the final achievement
of the Construction Grants Program, EPA must ensure that
certain basic functions of program formulation, management,
and revision take place appropriately. Depending upon which
model we consider, EPA may take a greater or lesser part in
carrying out or supervising these functions. We have built
our discussion of EPA's role around several key functions,
displayed in Table 1.
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TABLE 1
MAJOR PROGRAM FUNCTIONS
Interpret
Objectives
Determine the will of Congress,
based on legislative history-
Design
The Program
Determine the essential functions and
action logic by which the program will
pursue its'objectives
Set Policy
Guide management decisions at all levels of
the program. In Construction Grnats, use
regulations, guidelines, program requirement
memoranda, program operations memoranda
Plan
The Program
Set budget and staffing levels, and set
achievement targets over time
Manage
The Program
Apply resources day to day to achieve
results planned for program
Evaluate
The Program
Measure program performance against
its objectives, and determine changes
needed in program design, policy,
planning, or management
Revise
The Program
Prepare legislative initiatives and imple-
ment needed changes in program
MAJOR PROGRAM SUPPORT FUNCTION
Lead - Develop technology, financing, and methods
The Field of administration to improve state of the
program art
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In considering how EPA's functions might change under
different conceptions of its role, there is little variation in
the need for the Agency to interpret legislative objectives,
design the program, or plan and budget for program outcomes.
Further, EPA must continue to set policy, although, under
different designations of State and Corps authority, the Agency
might refrain from some of the detailed operational guidance
which characterizes its policy making in the current program.
Two other functions which will remain generally unaffected
are to evaluate the success of the program in meeting its
stated objectives, and to propose modifications, either in
legislation, policy, or resources. We reserve discussion of
a program evaluation strategy for another paper.
The major functions which are likely to vary substantially
under differing models of the Construction Grants Program, are
program management and leadership in the field.
Whether in the mode of direct operations or delegation,
EPA must set management priorities and determine how best to
achieve them. Whatever EPA's approach to delegation, the basic
integrity of the program must be a decisive consideration.
Whether to emphasise environmental vs. fiscal objectives, and
how strongly to insist upon administrative procedures designed
to reinforce either end, are matters which we may appropriately
debate. Whether, where, and with how much vigor EPA should
oversee or intervene in State or local decisions on project
selection, sizing, design, or construction quality are likewise
key areas which we may review in light of alternative roles.
Much of the body of this paper is concerned, therefore, with
drawing out the principles of EPA management and oversight
tactics implied by each of the major role alternatives.
Leadership in the field of municipal facility design and
construction is a technology stimulation function. In it,
all those associated with the program, both public and private,
attempt to push forward the state of the art in technical,
financial, and administrative areas. This function is in
essence a research and development enterprise, conceiving,
^testing, and introducing to the field new and better ways of
doing business. Alth.ough EPA maintains a major responsibility
in the development and transfer of technology under any
conception of its role, the Agency will place more or less
emphasis on this function depending upon the extent of its
investment in detailed program management.
ROLES OF EPA
As stated earlier, we will be treating EPA's roles as
"ideal types" in this paper. The term "role" is difficult
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4 -
to pin down. The dictionary defines it as one's "expected
behavior in a social situation." For the purposes of our
analysis we have arrived at specified roles from two opposing
directions. One approach is by way of the organizing concept, .
the simple descriptive title which summarizes the Agency's
image of itself as its acts within the program.
Stated according to this method, the three major roles
we shall discuss ares EPA the Supervisor; EPA the Franchiser;
and EPA the Regulator.
In the Supervisor role, EPA continues .to follow its
current program course, delegating gradually and carefully,
while conducting strict oversight of State activities. In
this model, EPA emphasizes State adherence not only to program
objectives, but also to consistent procedures laid out by EPA
to ensure uniformity from State to State.
In the Franchiser role, EPA encourages States to manage
the program as their own investment. EPA ensures that State
procedures are adequate to achieve program success, but
encourages variation among State systems.. Meanwhile, EPA
concentrates on developing new and better ways of engineering,
financing and administering the program.
In the Regulator role, EPA cedes to the States responsi-
bility for managing the construction program. Under new
legislation, EPA sets production targets and encourage States
to meet them by spending current 201 funds within a very
broad range of sewage management activities,including construe-,
tion, rehabilitation, enforcement, emergency maintenance,
and others. EPA would allot funds on the basis of performance
and need but would not interfere with State management of
its internal allotment.
The other approach to roles is to consider each as the
sum of the functions'which make it up. Although in each role
EPA participates in all standard program functions (described
in Table. 1 earlier), as EPA's management becomes less direct,
the participation of its partners in the program—States,
localities, and the Corps—becomes more so. In general, as
EPA gives up concentration on the specific procedures to be
followed within each of the management functions, it becomes
more invested in fitting construction grants into a larger
system of municipal wastewater treatment and water quality ,
management both now and in the future. The range of options
moves us from detailed concern with the design and construction
of individual plants in the first case, to a more general
concern in the last with production standards for the develop-
ment and operation of sewage treatment for improved stream
quality for the nation, a system in which POTW construction
is but one component.
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ROLES AND THE PROSPECTS FOR CHANGS
The succeeding sections of this paper - present portraits
of the role models we have developed for consideration at
this point in the development of the 1990 Strategy.
In each chapter, we describe a role and its differences
from the current program; its policy function; its management
function; the role of Headquarters vs. that of the Regions;
the roles of the States and the Corps; and, finally, the types
of staff which will be necessary to enact it. An appendix
to this paper describes a number of opportunities for change
which have arisen during the course of preparing this paper.
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CHAPTER 2
EPA'S ROLEs THE SUPERVISOR
I
In this role EPA views itself as the direct manager of
the Construction Grants Program# with the responsibility to
delegate tasks to the States and to supervise their performance
of those, tasks. The Corps perforins in the role of a colleague
who, because of special expertise, acts as a surrogate manager
for the construction portions of the program. Since management
has been defined as "getting things done through others," EPA
gradually increases the independence and responsibility of the
States in performing their functions, but takes care that the
State can successfully perform the work assigned to it before
completely delegating responsibility for.a given function, and
in any case requires that States adhere to a set of uniform
procedures.
In this role, EPA concerns itself not only with final pro-
ducts, but with the quality and efficiency of the process which
States perform to achieve their results. In this role, too,
EPA retains the supervisor's prerogative to select out certain
high priority projects for special review or even co-management
by Agency personnel.
How This Alternative Differs from the Current Program?
In essence, this alternative entails little change from
the current direction of the program, in that it (1) assigns an
increased role in the administrative processing of construction
grants to States, (2) assigns to the States much of the job of
managing and overseeing the fiscal and environmental integrity
of grant projects under close EPA supervision, and 3) sets aside
a class of "super-projects" which for technical or administrative
reasons justify the day-to-day involvement of EPA in Step 1 pro-
ject management.
This role leaves open the possibility of change in the division
of labor between States and grantees, but only under conditions pre-
scribed in advance by EPA. Such major changes as certification by
grantees and State administration of grants to small locality could
be incorporated into this model.
Policy Focus -
In this role EPA's policy function would focus on providing
detailed guidance to the States on program operations. Under this
option, EPA would concern itself with major issues, such as estab-
lishment of eligibility standards (AWT, sewer rehabilitation, etc.),
but would also continue to issue PRM's and POM's on lesser matters,
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such as the criteria for initiating value engineering. The
Agency could become increasingly flexibile in these requirements
over time, but need not provide such flexibility now. In line with
with the States' increasing prominence in the program, EPA would
negotiate most major policy issuances with the States, which will
implement them. The purpose of EPA's maintenance of detailed
policy responsibilities are: to maintain comparability and ac-
countability among State programs, to ensure ease of correction
should problems emerge in State program management, and to guaran-
tee to EPA the means to account to the Congress for the environ-
mental and fiscal integrity of all aspects of the program's
operation.
Management Focus
Under this role, EPA would continue to delegate to the
States operational responsibility for processing construction
grants, but would proceed cautiously. As now, either the Corps
or willing States would oversee Step 3 operations. States
would take over most Step 2 activities as early as possible.
Step 1, the most environmentally and fiscally influential
activity, would be delegated last, and only to those States
which demonstrate substantial investment in managing the
program according to EPA standards. Emphasizing the close
involvement of EPA in program operations,- the Agency would
also retain the right to participate in direct project manage-
ment for certain Step 1 projects which present particularly
complex environmental or jurisdictional problems on which the
State needs more than routine support. An example of this
approach exists in Region I where a senior engineer has been
assigned to participate in the management of the extremely
complicated Boston Harbor clean-up.
In this role, EPA would conduct substantial oversight of
State operations, but would target its review to achieve the
greatest environmental, financial, and management effect. EPA
would continue to exercise close scrutiny over the Environmental
Assessment/EIS process" to maintain its leadership role in NEPA
implementation, and also ensure that other general Federal require-
ments (such as MBE) are respected. The Agency would continue to
sample State actions with respect to such major factors as plant
site and size, collector and interceptor eligibility, sewer re-
habilitation decisions based on SSES findings, and soon, to detect
trends in State application of EPA eligibility standards. EPA
would also review State actions on such items as user charge
systems and plans of operation to assess the State's dedication
to encouraging A/E's to design efficient, functional plants.
As a given State demonstrated that it could and would operate
under EPA guidelines, the need to oversee State operations would
diminish, and EPA could divert resources to reviewing programs
of other States or to technical support areas. However, when the
Agency issued a substantial policy change, it would monitor State
adoption of the policy for a reasonable period to ensure successful
.ransfer.
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For the most part, EPA's interest in project reviews would be
designed to detect correctible trends in State programs, not to
prompt EPA action to overturn State decisions on a given project.
EPA would move to invalidate a given State action only if the
State had violated the law or regulations governing that decision.
It would be the function of EPA's Regional Water Management to
discourage technical staff from "second-guessing" States on judg-
mental grounds." On the basis of trends found in accumulated
individual project reviews, EPA would seek to adjust State program
management in periodic meetings to review State performance. In
order to ensure that our largest, most visible, and most politically
and technically complicated projects received an extra measure of
careful design, however, SPA would assign a senior engineer to
participate with the State in the review and approval of a small
number of "super projects."
As staff was saved due to State programs coming on line, EPA
could then begin to manage at two levels: oversight of State
programs and program components which have been delegated, and
management of,direct operations where components have not been
delegated. As more and more of the program was delegated, there
would be less need to maintain a critical mass of technical per-
sonnel for direct operations in each Region. Rather, a few .Regions
might manage project functions for all States not yet managing the
program under delegation. Some of the resources saved through
delegation could also be used to set up small consulting staffs
in several Regions to specialize in developing and testing new
program methods and to consult on difficult or uncommon problems
at the request of State or Regional operations staffs.
Because EPA retains a deep commitment in this role to promot-
ing uniform State management of the program, there would be little
opportunity to experiment broadly with technical, financial, or
administrative innovation as a major priority. Instead, technical
innovation would continue to be fostered by some form of the I/A
incentive, while financial and administrative change would come
about on the basis of analysis and enactment across the entire
program, rather than through careful and varied experiments in a
number of States and projects.
Headquarters vs. Regional Role
In this role, the Headquarters unit would retain most of its
current functions; interpretation of Congressional objectives,
policy formulation, program planning and budgeting. It might
take on the added function of devising training materials with
national application which might then be used by Regional tech-
nical support centers.
Regional Offices would manage non-delegated program elements,
review EIS and MBS compliance, oversee and adjust State program
management, provide technical support to other Regional staff and
States, and participate in the direct management of major inter-
jurisdictional Step 1 grants. "
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Role of the States and the Corps
Under this option, the role of the States and the COE would
change little. The States would gradually take over direct
management of the program, but with the close supervision and
consultation of EPA. States with neither the interest nor the
current capacity might never undertake more than token program
activity. The Corps of Engineer's would maintain its current
functions in Step 3 and in biddability/constructabiliiy review in
Step 2, where States agree to forego these functions. In certain
cases States might wish the Corps to take over still more" of Step
2 functions, but they would have to clear such a proposal through
EPA and the Corps, and reference the current Interagency Agreement.
Resources Needed
In this role, EPA staff mix would change somewhat, emphasizing
administrative, financial, and environmental science skills, as
well as engineering skills. A major difference would be that, for
the most part, those engineers who now review projects for technical
quality would have to learn a set of management skills which would
make State program management the subject of their review, rather
than individual engineering decisions. Those engineers who would
retain concern with technical decisions on a given project would
be among the-most senior members of a Region's engineering staff.
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CHAPTER 3
EPA'S ROLE: THE FRANCHISER
In this role, EPA takes a giant step away from direct
participation in day to day program operations. States
become more clearly the immediate managers of the program,
under guidelines laid out by EPA. As a sign of the States'
responsibility in this program model, they become immediately
responsible, at a minimum, for management of Steps 2 and 3,
as well as Step 1 in those States capable of immediate assump-
tion. All States would take over Step 1 within a limited nationa
transition period. States would be encouraged to design
procedures to manage the program within their boundaries, and
adequacy—not uniformity—would be the basis of EPA's approval
of each State's management system.
The Corps of Engineers would continue to conduct its work
in Step 3, and would also be available, at the State's option,
to manage work in Step 2. "Step 1, however, would remain- first
EPA's, and subsequently the State's non-assignable management
responsibility.
As resources are saved through accelerated delegation and
reduced oversight, EPA would expand its leadership rola in
developing and transferring new program and project management
techniques. EPA would be figuratively a "franchiser," setting
conditions on the priorities and options available for new
projects, setting up and reviewing standards for State program
quality and performance, providing new technology to improve the
efficiency of the system, and taking broad-based corrective
action, but refraining from intervening in individual program
transactions after the decision to award a Step 1 grant.
How This Option^Differs From the Current Program
Under this role, EPA's work would be substantially
different from that in the current program. Direct project
management would quickly stop, and the Agency's principal
functions would be to set policy and standards for the program
and to create new technical resources to improve State perfor-
mance. Oversight would be oriented to ensuring the quality
of program management procedures designed by each State.
States could become "laboratories", experimenting with manage-
ment methods appropriate to its situation and potentially
applicable to States, with similar grants. EPA's principal
'environmental intervention would take place prior to origination
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of a Step 1 grant, rather than during the planning, design,
and construction process. EPA's principal fiscal interventions
would take place before the fact, through analysis of municipal
financing needs, and after the fact, through more efficient
financial auditing.
Policy Focus:
Under this role, EPA would retain responsibility for making
and enforcing major strategic choices about the program. By the
issuance of guidelines and regulations, EPA would control the
major directions, categories, and criteria for program choices,
while leaving to the States the authority to apply those criteria
in empirical conditions. Because this role will afford substan-
tially greater latitude to States than now exists, the States
would tend to be substantially more persuasive in the policy-
making process than they are now. This increased participation,
coupled with EPA's withdrawal from detailed review of State
decisions, will have the effect of raising EPA's policy making
to broader levels of guidance and definition than now. Detailed
procedural guidances will become less frequent. For example,
EPA's policy guidance might encourage or prohibit awards
for certain categories of projects, but not lay out mandatory
procedures for their management, such as Value Engineering or
Plan of Study Review.
Management Focus:
Under this option, the pace of delegation v/ould be substan-
tially quickened. In fact, if a legal means can be found to
accomplish it, all States would be required to manage Steps 2
and 3 immediately, and to sign an agreement accepting responsi-
bility for Step 1 within a short period, say, 2 years. In this
way the program would become clearly and irretrievably a State
function, defined and conditioned by EPA, but managed in all
essential respects by the States. With EPA assistance, the
State would prepare a management plan for each Step, using
the Corps of Engineers or State staff funded under 2 05(g),
at the State's discretion. If a State chose not to file
such a plan acceptable to EPA, the Agency would temporarily
reallocate 201 funds to other States cooperating with this
policy.
Under the direction of EPA guidance, each State would
negotiate a set of procedures in a new delegation agreement
which would govern its work in the program. For fully dele-
gated States, EPA would encourage multi-track procedures,
based on the complexity of different project types, so that,
the State could dramatically speed up the term of a given
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project from inception to completion. EPA would review and •
approve State program procedures for compliance with EPA
guidelines, and the State would then operate those portions
for the program for which it has accepted responsibility.
Every two years (or other appropriate period), the State
would renegotiate program procedures through a revised dele-
gation agreement with EPA. Virtually all program operations
except those which we are expressly forbidden to delegate
,(e .g., EIS, .MBE, audit) would be within the State's province.
In this role, the Agency would undertake some limited pro-
cess oversight, but only to ensure that States were adhering to
their own management plans. Rather, EPA would invest the bulk
of its staff resources in such a way as to optimize the
environmental effect of our involvement. For example, we
would emphasize review of municipal needs before a grant was
awarded.
There is substantial reason for concern that many plants
now being designed may be beyond the capability of. their
communities to maintain and operate into the future. Since
many of EPA's review activities in the current program may
be viewed as "too little, too late," EPA could invest in
technical support which adequately assesses a community's
treatment needs and ability to pay long 'before their number
comes up on the priority list. With certain treatments
prescribed, or endorsed as within the range of approval, and
the community educated as to its needs and fiscal capabilities,
EPA would improve its ability to affect the longterm environ-
mental and fiscal quality of the program.
One other oversight feature would be strenghtened in this
role: audits. Although we rely on the States to manage a self-
selected process, approved by EPA, we need greater assurance- of
the fiscal integrity of such fully decentralized management.
Strengthening and expanding our audit resources would be a
prime means of providing this assurance. Although we may not
formally delegate audit responsibility to States,.EPA might
expand our capacity to audit grantees by emphasizing, more
than we do now, standardization and training of CPA and State
auditors in those procedures. We could then allow States to
carry out or supervise, and certify the completeness and
quality of audit staff work assigned to the State. EPA would
exercise quality control through a system of random detailed
follow-up audits, modelled after IRS's tax audit approach.
EPA would respond to State requests for consultation and
support in projects where the State has need of external exper-
tise to strengthen its position. Other than that,, and those
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situations turned up by way of audits, EPA would not intervene
in State management of projects.
In this role, EPA would substantially expand its technical
support function to maintain and advance the state of the art of
management by States, and technical and fiscal planning by
grantees. As a franchiser, the Agency defines the business,
sets up expectations and productivity goals, and guides the
selection of efficient procedures, while encouraging initiative
and creativity by individual States. What the Agency can do,
which the States cannot, is to amass sufficient specialized
resources to develop the "science" of wastewater facility
construction. What a State or grantee might shun as a risky
adventure, EPA might adopt and support as a worthwhile iexperi-
ment in which new procedures (engineering, financial, admini-
strative) are tried, evaluated, replicated, and then adopted
through a technology transfer process. In this role, EPA
would see itself as in part an R&D and technology transfer
Agency, setting aside funds to underwrite novel approaches
through the experimental stage, and combining available
innovative procedures with appropriate, incentives to encourage
their, adoption where appropriate.
If a State or grantee chose to try something quite
different from standard practice, but with promise of wider
application for improved program efficiency, EPA might provide
100% funding of the effort by considering it R&D, and also
indemnify the State or grantee against the most harmful
consequences of failure. In this way the Agency would make
use of the "natural laboratories" provided by the more ambitious
and innovative participants in the program.
In line with this, EPA would support teams of technology
transfer experts, packaging information on alternative engi-
neering, financing, and administration so that busy practitioners
would know their options and find ready help in determining
whether and how to apply them. As a beginning strategy, EPA
might target a number of States and grantees experiencing sub-
stantial difficulty in managing the program and work with
them to "lift the bottom level" of program performance.
Average and good State programs would thereby achieve greater
independence, while EPA strove to improve poor programs at
least to the level of the average performers. Promoting
success through novel approaches, where traditional approaches
have failed, may well be the quickest and most effective way
(in terms of overall program outcomes) to promote the adoption
of improved wastewater treatment management.
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Headquarters vs. Regional Role;
In this role, Headquarters staffs would set policy and
procedural guidelines for State programs, and conduct the
traditional head office functions of program planning and
budgeting. In addition, Headquarters would become deeply-
invested in setting the R&D agenda, analyzing experimental
results, and formulating and packaging technical and pro-
fessional development tools for use by technology transfer "
teams, and for dissemination to target audiences by means of .
journals or information sheets. .
Regional functions would include project consultation,
negotiation of State management plans, and periodic evaluation
and renegotiation of State program procedures. Regions would
also house specialized technology transfer teams to provide
the States with detailed technical, fiscal, and administrative
guidance and training in techniques developed through Rf«D.
Each Region would specialize in one or two areas as experts
for all of EPA.
Role of States and COS;
As indicated above,' the States, would become immediate
program managers for Steps 2 and 3, with the possibility of
negotiating with the Corps of Engineers for services under
Step 3, or Steps 2 and 3. Many" States would also become
managers of Step 1, and all States would take this on within
a short time..
The Corps retains its role of master engineer, available
to serve in Step 2 and 3, but. would not be a participant in
Step 1, where the most significant environmental and fiscal
decisions would be made by the parties which must finally
live with the results of the project after the Corps has
completed its work.
Resources Needed:
Once again, the types of personnel required in this
role are different from current, staffing. In this role the
change is more dramatic in the direction of managers, financial
analysts, researchers, and auditors. ' There is substantially
less need for numerous engineers in this option, but the
seniority and expertise of those engineers employed must be
greater than in the current staffing mix. Fewer EPA staff
would be required under this role than under the first role,
EPA as Supervisor.
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CHAPTER 4
EPA'S ROLE: THE REGULATOR
In this chapter we present two distinct alternatives indicat-
ing how EPA might remove itself almost entirely from day to day
operation of the construction grants program. In each of the
two alternatives, we describe how EPA might reasonably delegate
virtually all administrative responsibilities to the States and
yet hold States accountable for the results of their actions.
In Alternative A, which could be implemented fairly readily
in the near term, each State would be held accountable for the
annual increase in available wastewater treatment capacity. At
the same time, localities would be held accountable for meeting
discharge limits specified in their permits.
In Alternative 3, which could evolve from Alternative A over
a period of 10 to 1 5 years, the State would become accountable
for observable improvement in water quality. It would be up to
each State to use construction grants, together with the other
fiscal 'support and regulatory tools available to it, to bring
targeted streams, lakes and coastal waters into compliance with
water quality standards in accordance with a mutually agreed-upon
schedule for achieving them.
ALTERNATIVE A: A Possible Model For The Near Future
EPA's Role: The Regulator, Managing For Improved
Wastewater Treatment
In this role EPA would relinquish concern with either the
State's specific decision-making on individual projects or with
the process through which the State manages the program. Instead,
EPA would focus solely on results: was the State making effective
use of grant funds to add to available treatment capacity? Further-
more, EPA would insist that all completed plants comply with the
discharge limits in their permits. Either the State or.EPA would
go to court to force appropriate remedial action when a POTW is
out of compliance and the operator is unwilling or unable to cor-
rect the underlying problem.
How This Alternative Differs From the Current Program?
This option would require new legislation designating the
construction grant funds going to each State as a block grant for
POTW construction. EPA's oversight would be limited to negotiating
with each State a schedule showing for each of the subsequent 5 to
10 years the amount of new treatment capacity at each level
(i.e., secondary, advanced secondary, advanced) to be brought on
line in each year. It would then be up to the State to marshal
15
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its staff and financial resources (including the allocate! block
grant funds) to ensure that objectives are met. EPA would "enforce
the negotiated completion schedule for new treatment capacity by
exercising fiscal sanctions against non-performing States. At the
same time EPA would provide technical support to the State to help
it overcome whatever deficiencies in its program led to the short-
fall.
Policy Focus;
EPA would be involved in setting policy only at the most gen-
eral level— by establishing clearly the role of POTW's in helping
to meet the Nation's water quality goals and, possibly, by estab-
lishing a series of five year milestones indicating how much of an
increase in treatment capacity EPA would expect to come on line
at that time.
Within such general policy guidance, each State would be free
to establish its own priorities and plan of action, subject to EPA
concurrence that the proposed State schedule of accomplishments is
consistent with what might reasonably be expected of a State
conducting a vigorous POTW construction program. At the same time
EPA would establish the clear policy that all completed POTW's must
comply with the discharge limits specified in their permits.
Management Focus
Within this framework, the State would bear full responsi-.
bility for construction program management and would not be
answerable to EPA for specific actions or decisions or even for
its management process or systems. The State would instead be
accountable only for the results achieved.
In the event that the targeted accomplishments were not
achieved, the State would risk that its block grant for the next
year would be reduced according to the extent of the performance
shortfall. Experience over time would increase the reliability,
with which the State and EPA could predict the likely results
from the application of a given level of resources. EPA could
in any case make allowances for unforeseeable and uncontrollable
circumstances that night artificially detract from or enhance
the State's apparent level of accomplishment.
While the State would bear full responsibility for managing
POTW construction, EPA would retain responsibility for reinforcing
State programs to ensure that completed POTWs comply with permit
conditions. EPA would do so by ensuring that up States use suffi-
cient 205(g) or 106 funds to support careful compliance monitoring,
followed by corrective action when noncompliance is detected.
-------
{This would require legislative change to readjust formula allot-
ments to allocate 205(g) funds more in line with State by State
needs.) EPA would increase its own enforcement staff to support
and complement.State compliance efforts. In cases of significant
noncompliance, which the POTW operator was unable or unwilling to
.correct# the State (or EPA) would obtain a court order requiring
an independent consultant to determine the reason for non-compli-
ance. If the cause were a mechanical problem or a design defect,
the locality would be required to correct it. (The locality could
sue its contractors or suppliers for compensation if the problem
is due to defective design, workmanship or materials, or, failing
that, petition the State for emergency 2 01 support for redesign
where practical.) If the cause were inadequate C&M, EPA would
seek a court order requiring localities to devote the necessary
resources to O&M, and would provide technical assistance to clear
up OocM problems unrelated to funding.
For common State needs, EPA would continue to conduct R&D and
to provide technical consultation on program matters. As States
become more expert, however, SPA would do more "peer match" arrange-
ments than direct technical assistance..
EPA would also continue to place strong emphasis on improving
the technical basis for State water quality standards and adjusting
them as appropriate, and on research and development to improve the
state-of-the-art in water quality modelling. The purpose of these
activities would be to make it possible for States, at their option,
to change the nature of the results toward which they must manage
their municipal construction block grant. A State so choosing
might, on an experimental basis, establish as its annual objective
the improvement of water quality on specified stream segments or
lakes (rather than putting in place a specified amount of treat-
ment capacity). To compensate for the additional risk of failure
associated with managing toward these "environmental results,"
which are one step further removed from the administrative actions
the State directly controls, a State choosing this option might
be given increased flexibility in disbursing its block grant funds.
For example, EPA might initially make 5%, 10% or 15% of these funds
available for water quality improvement activities other than POTW
construction (e.g.: measurement and control of non-point sources).
If over time an increasing number of States were to apply this
approach successfully, the EPA role would gradually evolve to that
described below as Alternative 3. .
Headquarters vs. Recional Role
EPA Headquarters (OWPO) would hava the general responsibility
for establishing program policy and would normally do so after
extensive consultation with the Office of Water Planning and
Standards and the Regions.
17
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The Regions, in turn, would be responsible each year for rene-
gotiating with the States their proposed schedule of accomplishments
for the next year, for determining in consultation with each State
whether the specified objectives have been met during the previous
year, and for determining, for States with significant shortfalls,
the appropriate degree of reallocation of the next year's funds.
The Regions would also be responsible for backing up the States
in monitoring the compliance of POTW's with permit conditions,
seeking corrective actions from localities with non-complying
POTW's, and going to court to obtain the corrective actions de-
scribed above in the case of recalcitrant localities. The Regions
would also provide technical support to the States on construction
program operations.
Roles of States and COE
States would quickly assume total responsibility for program
direction and management subject to only the most general policy
guidance from HQ/EPA and subject to their ability to convince
the EPA Region that the proposed accomplishments are consistent
with vigorous application of the available staff and financial
resources.
The Corps would continue to be available to support States
wishing to make use of it, and a large portion of the States would
probably do so.
Resources Required
HQ/EPA {0V7P0) would take on a much stronger policy-oriented -
focus. Policy-oriented staffing would increase substantially,
as would technical staff devoted to developing water quality
modelling techniques. Most operational activities v/ould wind
down.
The Regions generally would focus on negotiating accomplish-
ment targets with the States with regard to treatment capacity to
be brought on line as well as MBE and other similar targets.
Regional enforcement staffs would be increased. Most other
operational activities would wind down and staff would become
available for other water quality activities.
Those Regions with States that choose to manage against water
quality objectives would begin to oversee those States' program
plans and accomplishments in terms of projected and achieved
changes in water quality. The Regions construction grant staffs
would therefore take on more of a water-quality monitoring focus
and would work much more closely with the water quality monitoring
staffs in the States and with the Regions' Surveillance and Analysis
18
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Divisions. Again, most operational activities would wind down
and the staff previously engaged in such activities would become
available for other Water Program activities.
A SECOND ALTERNATIVE
Over time, as the number of States sfetting objectives in
terms of^improved water quality increased; the alternative des-
cribed above could gradually evolve into a second alternative.
Alternative B: A Possible Model For The 1990 EPA
Role: The Regulator, Managing For Improved Water Quality
As in Alternative A, in this option EPA would also focus
solely on results. The difference wuld be in the type of results
to be obtained: was the State making effective use of grant
funds in combination with regulatory mechanisms to ensure attainment
and maintenance of good water quality?
How This Alternative Differs From Alternative A
In this option block grant funds would be available at the
State's option {subject to upper limits set by EPA) for any legi-
timate water quality related investments or activities, including
construction, maintenance, or enforcement of wastewater treatment,
as well as control of non-point source pollution. Even so, we
should expect that States will find that the greatest water quality
benefit will come from devoting a substantial majority of such funds
to the construction of POTW's.
EPA's oversight would be limited to negotiating with each State
a schedule showing for each of the subsequent 5 to 10 years the spe- .
cific stream segments, lakes, estuaries or coastal waters to be
targeted for improvement and the degree of improvement to be achieved
on each. It would then be up to the State to marshal its staff and
financial resources (including the allocated block grant funds)' to
ensure that the agreed upon objectives are met. As in Option A EPA
would "enforce" the negotiated schedule of improvements by reallocat-
ing from a future year's funds a portion of the block grant related
to the shortfall in meeting the previous year's objectives.
Policy Focus:
EPA would again be involved in setting policy only at a general
level, this time by establishing clearly the ultimate water quality
goals and objectives for the Nation and possibly by establishing
five year milestones along the way. EPA might also express its
sense of the relative priority among the possible benefits to be
19
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achieved by improving water quality. For example, EPA night indicate
that the mitigation of significant health related problems should, in
general, take priority over the improvement of recreational or aesthe-
tic values.
Futhermore, to help ensure an orderly transition from the POTW-
limited block grant program described in Alternative A to a general
water quality block grant, EPA might establish its own five year
schedule, gradually increasing the upper limits on the percentage
of the block grant which may be used for water quality activities
other than POTW planning, design and construction. (For example,
EPA might specify that 5% may be used for other purposes in.the
first year, 10% in the second year, 15% in the third year, and so
on, with the allowed amount increasing to a final upper limit of,
say, 20% or 30%.)
But within such general policy guidance, the States would be
free to establish their own priorities and plan of action to pur-
sue a vigorous water quality improvement program.
Management Focus
EPA would manage this option much as it would Alternative A.
As the block grant program matures, EPA should anticipate
considerable experimentation by States with innovative mechanisms,
for achieving the targeted water quality improvements.
Such innovations might includes
o increased State involvement, in oversight (and
possibly funding) of the operation and maintenance
of POTV/'s.
o new inspection and enforcement procedures to
increase POTW compliance with permit conditions.
o increased State concern with the relative contri-
bution of non-point sources to water quality problems
and greater focus on the required use of best manage-
ment practices (3MPs) by non-point sources, especially
in urban areas.
o increased State emphasis on pretreatment.
EPA would continue to support such innovations directly
through research and development into technical questions and
indirectly by gradually making an increasing portion of the
block grant funds available for activities other than construction
of POTW's. -
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Headquarters vs. Regional Role
Under this alternative the functions of the HQ OWPO and OWPS
would gradually merge, as water quality standards became more than
ever the fulcrum for EPA's leverage on the program. The Regions
would be responsible each year for re-negotiating the proposed
schedule of accomplishments with the States; for determining
in consultation with each State whether the specified objectives
have been met; for determining the appropriate degree of realloca-
tion in the case of States with significant shortfalls; and for
assistance to States, at their request, in correcting the underlying
program deficiencies that lead to performance shortfalls.
Roles of States and COE
- States would quickly assume total responsibility for program
direction and management, similar to that outlined under Alternative
A. Many States will probably choose to continue to make use of
the Corps in construction projects.
Resources Required
Resources in this Alternative would also be similar to those
outlined under Alternative A, with an even heavier emphasis on
modelling and monitoring staff, and with monitoring extended to
include water quality as well as POTW compliance.
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APPENDIX
OPPORTUNITIES FOR CHANGE
This paper is designed to lay out clearly defined roles
which EPA might adopt between now and 1990. A change in role
implies changes in functions and in the specific tasks which
make up those functions. Although there is much thinking and
debating to do before the Agency chooses a new plan of action
for the 80's and beyond, many participants and observers of
the Construction Grants program have been formulating ideas
as to how the program must change if it is to be finally
successful.
This appendix presents, in a loose compilation,' summaries
of a number of suggestions for modifying how we now think of
and manage the Construction Grants program. Few of the
ideas have yet received serious analytic attention as to
practicality or cost, either financial or political. But
they represent thinking culled from numerous conversations
with EPA, State, and municipal personnel close to the program.
Although an individual reader might find grounds for debate
in any of these ideas or their implications, it is important
that we consider them openly and carefully so that our final
choice is made wisely, with reference to all the options
available to us.
For convenience, we have grouped the ideas loosely into
three categories. In the first category we have placed ideas
which, however fundamentally they might modify "business as
usual," do not substantially change EPA's role in the program.
Group II calles for moderate change in EPA's role; Group III,
substantial change.
While these categories relate generally to the three
role concepts presented later in the body of this paper,
the relationship is by no means congruent. Ideas in one
group might well be combined with ideas in another to form
what is pragmatically a more satisfying set of EPA or State
functions. '
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GROUP I
EPA A PARTNER IN PROJECT MANAGEMENT
Although. States and major grantees can normally manage
projects through Steps 2 and 3 without direct EPA involve-
ment, Step 1 presents a more complex challenge, since this
is where the most politically, environmental, and fiscally
sensitive issues get raised and resolved. In some cases
other EPA program elements besides 2 01 are directly affected
(as in cases where sludge disposal requires land application
or incineration). Occasionally there are project decisions
to make which will affect multi-State water pollution control
efforts. In still others there may be political pressures
on a municipality which push it toward inappropriate solutions,
and the State agency may lack sufficient authority to resist
these pressures on its own. Each of these factors takes on
an added dimension of sensitivity when the project involved
is large, expensive, highly visible, and central to clean-up
efforts for a major stream segment or other water body.
Such situations suggest grounds for direct EPA involvement
in project management, or, more precisely, for EPA participation
in environmental decision-making within the context of a given
project. In such situations, EPA could assign a senior environ-
mentalist to coordinate all relevant EPA programs, to represent
the Administrator in interpreting Agency regulations and guide-
lines, and to ensure that the State and grantee agree on an
environmentally sound treatment plan, whatever external pressure
there might be. Although examples of this work exist* we should
should care carefully explore our obligation to intervene in such
a way routinely in certain categories of projects.
MULTI-REGIONAL DIRECT OPERATION TEAMS .
As staff is saved due to State programs coming on line through
delegation, EPA could begin to manage at two distinct levels: over-
sight of delegated State programs and program components and conduct
of direct operations where components have not been delegated. As
more and more of the program is delegated, there would be less need
to maintain a critical mass of administrative and technical personnel
to manage direct operations for one or two States in each Region.
Rather, the Agency could achieve economies of scale by massing re-
sources to manage undelegated functions for all States at a single
location, or for many States at a few strategic locations. For
*For example, the Boston Harbor Project is a complex web, in-
volving EPA's water, air, and solid and hazardous waste disposal
programs. In 1ight of this complexity, and the centrality of the
project, Region I has assigned a senior engineer to work with the
State, the City, and the Metropolitan District Commission.
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example, we might create a Western projects office in Denver or
San Francisco which would take over management of Step 2 functions
for all Western states lacking Step 2 delegation. In one option,
the prime (current) Region could approve the Facility Plan, then
transfer the project to a Multi-Region Center. In another option,
a Multi-Region Center would manage all undelegated program functions,
including Step 1.
' TECHNICAL SUPPORT CENTERS
EPA could create technical support centers to centralize and
focus expertise now scattered throughout, or unavailable to EPA
Regions, States and grantees. Each Region could specialise in two
or three technical or financial skills to manage research and ex-
perimentation to develop new technical knowledge and skills, and
to serve as a unique source of consultation to other Regional
staff, the States or Grantees.
Currently, each Region attempts to maintain a staff of broadly
skilled engineers and administrators whose backgrounds and training
fit them to deal with most of the challenges posed in project review.
However, the need to maintain these general skills ensures that there
is little that EPA review can add to the work of competent State
staff, whose credentials are often similar to those of EPA personnel.
Technical support centers would allow EPA staff to concentrate on
detailed problem solving in skill areas not normally available in
the current facility planning and review process.
FISCAL ASSESSMENT '
Sound fiscal assessment is fundamental to achieving'and main-
taining clean water in a tight economy. A community must have the
ability to fund the capital expense of a POTW, including bond
servicing, and the community must be able to pay for the operation
and maintenance of a particular treatment alternative over time.
It is also desirable for a community to be in a posture to totally
•fund future expansion of a. POTW to meet growth needs. To accom-
plish this, local communities should carry out a fiscal assessment
of total anticipated costs for water quality improvement, based upon
a range of available treatment alternatives.
This will accomplish a number of goals. First, it will help
the community recognize the best treatment choice from a fiscal
perspective. Second it will be a strong indicator of the real
costs of O&M and will help tie user charges more closely to O&M
costs. Third it will force communities to look at pretreatment
as an option vital to their economic self-interest. Lastly, it
will point out the revenue needs for future expansion of a POTW
brought on by forseeable community.growth.
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The fiscal analysis would fit into the Step 1 stage in the
current process. Each grantee would plan- a balanced annual sewage
treatment budget, with an adequate capital" program, and an annual
rate structure based, for example, on the following:
o Total annual revenue should equal or exceed operating
and capital expenses;
o The revenue for capital expenditures, excluding interest,
should equal or exceed the annual depreciation of the
total capital plant;
o Plant replacement costs would be a budgeted item, paid
for from either user charges or a special bond account.
ANALYSIS TO SOLVE PROCESS PROBLEMS
A number of Regions have reported unsolved problems with
operational activities such as delays in payments processing,
delay and confusion in grantee audits, a suspected net of loss
due to'inflation overwhelming presumed savings Value Engineering,
and others. Regional Water Division staff, in some cases, feel
unable to resolve such problems because of staffing and organisa-
tional constraints — payments, for example, are ordinarily
processed by a separate grants administration branch, while
audits are performed by an entirely separate group which is not
even located in the Regional Office.
The work of OWWM is highly segregated by reference to indi-
vidual paragraphs of the Clean Water Act. That is, there is a
staff for 201, 208, 402, and so on. The pressure of operational
work has limited the ability of the Agency to amass analytic
resources to solve problems within and across "paragraph," and
even program lines. Headquarters should consider where and how
to place staff dedicated to analyzing and solving such nettlesome
problems.
STATE ADMINISTRATION OF SMALL GRANTS
Many grantees represent small communities with scant exper-
ience or expertise to manage a project as large and as complex,
both technically and administratively, as a Construction Grant.
Much time and energy must be spent by the conscientious grantee,
inching up the learning curve to acquire and apply knowledge and
skills which may never be needed again. Still other grantees
succumb to- the perceived futility of mastering their role in the
program, and allow their consultants to make decisions almost
independently. A substantial amount of State and EPA review
25
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time must be spent correcting errors which creep into project
administration under these conditions, and the cost, in terms
of project delays inflation, disallowed expenses and politically
significant grantee resentment, is heavy.
Under current law, the grants must be awarded to'the juris-
diction which will ultimately manage and maintain the facility;
therefore, a locality must remain the grantee in most cases.
Yet it makes sense to charge.the State with many of the details
of grant administration, and to remove from the locality the
burden of all but those functions for which the grantee is best
fitted by means of placement, skill, and experience to perform.
Under such a system the State would be a party to, not simply a
reviewer of, contract negotiations and technical decisions; and
State staff could maintain auditable accounts for a number of
small grantees simultaneously. Because this notion will be more
or less controversial, given the political relationship between
localities and States in different areas, EPA would have to re-
quire such a procedure to ensure its widespread adoption.
MUNICIPAL CERTIFICATION IN STEPS 2 AND 3
Many grantees are equipped by means of competent staff and
prior experience to conduct design and construction work in the
absence of careful oversight by either EPA or the State. Yet
these grantees are subject to review which creates substantial
delays and consequent costs due to inflation. EPA could set
guidelines and, with the State, identify grantees who could
manage Step 2 and 3 functions without routine overview. Depend-
ing on the qualifications and experience of the grantee, more or
less latitude could be granted in an individual "Certification
Agreement." Since more and more of our 2 01 funds will go into
major municipal areas in the coming years, this proposal may
serve to speed completion of a substantial portion of our biggest
investment projects.*
O&M START UP
Operations and maintenance after plant start-up is now left
entirely to grantees. If an exceptionally good job of design,
construction, and start-up of the POTW is carried out, and if an
unusually useful operations and maintenance manual is developed,
no major problems should be anticipated when the treatment
*For a more detailed explanation of this concept, see Steve
Allbee's paper, dated January 28, 1980.
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facility begins to function. Unfortunately, this is not the pre-
valent situation. It seems that there is usually a shakedown
period for the treatment systems to go through before proper
operation is achieved. This usually involves minor adjustments
as re-engineering parts of the system. The effect can be to
require changes to the O&.M manual, retraining of plant operators,
equipment changes, replacing inventories of back-up parts, etc.
A way to approach this problem would be to require the
A&E firm that designs the POTW to actually participate in
operating it for a minimum amount of time before it is turned
over completely to a municipality. During this time the
following would occur:
1) The O&H manual would be written in final (draft
submitted before start-up) after actual plant
operating experience is incorporated into the manual.
The operator would participate in designing the manual
according to a format and content he or she finds suit-
able for daily use.
2} The plant superintendant (chief operator) and his staff
could be trained to most efficiently run the facility.
3) The system bugs could be worked out by the design
engineers.
4) The plant would have to meet permit guidelines for a
specified period of time before the design engineers
would be released from responsibility to work on
the system.
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GROUP II
PRIOR APPROVAL OP PROCESS
Under this proposal, EPA sets general policy regarding
program outputs and operations, but does not insist on pro-
cedural symmetry among the States. The Agency, instead,
limits its guidance to requiring that the State institute
procedures of its own choice to achieve project quality and
efficiency at least as high as in the currently prescribed
system. EPA would review and approve a State process, much
as we approve State Implementation Plans in the Air Program.
EPA would then periodically (e.g., once every two years)
review a State's overall process. If EPA finds this process
results in systematic defects or biases in decision-making,
EPA will then negotiate needed changes' in the process. Never-
theless, no individual project decisions will be overturned
unless actual violatins of law or regulation are involved.
REDUCE MONITORING TO COVER ONLY THOSE ITEMS IN WHICH EPA
CAN HAVE A DEMONSTRABLE £NVIRONMEHTAL OR FISCAL IMPACT
Some observers claim that much current EPA effort is
expended on activities that have rarely if ever resulted in
substantive modification of prior State or local decisions.
Among such monitoring activities, which we might reduce or
eliminate are:
\
o Review of State Priority Lists
o Review of User Charge Plan
o Review of O&M Plans
o Review of Change Orders
This is not to say that EPA should abandon concern with
the program function which these reviews are intended to
ensure. Rather, since the reviews themselves appear to have
proven largely inconsequential, the Agency should turn itself
to alternate methods of promoting these program features.
STATE.CONTROL OF PAYMENTS AND AUDITS
One option for handling payments and audits would be for
EPA to allot a State's entire construction grants share to the
responsible State agency for projects to be administered almost
completely by the State. The State would then be responsible
for handling all payment requests for grantees, ensuring that a
28
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applicable requirements for payments are met, auditing grantees
to see if payments were properly used and applied to eligible.
costs, and recovering any excess funds awarded to a grantee. EPA
would then focus its principal audit on State agencies, to ensure
that construction grants funds went to POTW construction and were
not systematically diverted into other areas. To provide addi-
tional safety, EPA could conduct its own detailed project audits
on a sample (say 20%), rather than the universe of projects, in
order to ensure that national standards of probity and good
management are in effect.
STATE CERTIFICATION OF PONSI/EIS/MBE
NEPA and M5E requirements for construction grants projects
are not generally considered delegable since they are imposed
by legislation other than the Clean Water Act. However, in
both areas, EPA could shift a substantial portion of the work
to the States now, even if final authority remained with EPA.
States could recommend which projects need a full-blown EIS;
oversee the preparation of and review environmental assess-
ments? and prepare draft FONSI1 s and circulate them for
public comment. Following the decision to prepare an EIS, a
State could oversee its preparation, review, and submission
for public comment, as well as ensure that projects respond
to the concerns by the EIS. Cn M3E, a Regional office could
choose to certify a State MBE program as adequate, concentrat-
ing its effort on reviewing the results produced by the state
program rather than on reviewing individual projects.
PRE-APPLICATION MARKETING '
The Agency could invest construction grants resources
heavily at the front end of the process for early environmental
influence in the program. In doing so we v/ould try to affect
the planning of potential grantees while they are still on
the priority list and before funding. We would spend agency
resources investigating problems to condition the_ subsequent
consideration of treatment alternatives in Step 1. Progressive
States could participate in this analysis, and, over time, re-
sponsibility for this work could be cautiously delegated.
Grantee Education: EPA (or the State) could talk to potential
grantees about their plans and expectations as they near Step 1
funding on the priority lists. We should attempt to influence a
grantee decision invest in out a water quality improvement before
the application for Step 1 funding is made. We should inform
the grantee of treatment alternatives that are better suited to
a particular problem than traditional POTW construction, making
them aware of the costs and environmental consequences of different
29
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treatment alternatives. We should try to influence an increase
of environmental cleanup projects over typical interceptor
pipe, or drainage basin pump-over projects. Cur goal should
be to make a State's grantees very aware of the choices they
will be faced with, and the consequences of those choices,
before they reach the Step 1 point.
Problem Anticipation: The Agency should strengthen the
305(bl process, helping States survey the condition of a
State's surface water, identify major trouble spots, and try
to influence clean-up of those areas. We should try to
better anticipate where major problems will be emerging and
consider ways of combating them. An example would be to use
aerial survey techniques to identify water quality problems
from septic system failure such as the current Region V
effort. We should be developing strategies to deal with
anticipated problems which could then be brought under the
State-EPA Agreement process, for instance.
Early Environmental Assessments: Preliminary environmental
assessments should be carried out before Step 1. The Agency
could require that environmental assessments of first time
facility plan grants should be carried out while still on the
priority list but close to the fundable level. By requiring
early environmental assessments we bring the environmental
aspects of the construction grant program up front where the
environmental information can make a difference. The assess-
ment will be available 1 ) before preconceived ideas for treatment
alternatives have been formed; 2) before the EA and EIS process
can cause delay and add expense to a project; 3) and in time
to allow an A&E firm to better site an alternative treatment
facility at a,particular location.
The basic payoff is that with this information up front
the facility planning effort should go more smoothly, and be
developed in the context of an environmental data base.. The
EIS process, if it were determined to be necessary, could run
concurrently with the Step 1 process and everyone—EPA, the
State, the grantee—would know before Step 1 that an EIS is
needed. They could therefore adjust the facility planning
effort to include EIS recommendations. The EIS and Facility
plan would then represent a synthesis of concerns rather than
be at loggerheads with each other.
R&D AND TRAINING
EPA must reinforce its role in R&D in technical, financial,
and administrative areas. This becomes especially important as
EPA allows more and more latitude to States to manage the detailed
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construction as they ,see fit. Individual States are unlikely to
push forward the state of the art in these three key areas unless
there is a conscious and controlled encouragement of the entre-
preneurial spirit.
Technically, we have at least two historical models to pro-
mote innovation: the formal R&D program for POTW technology
which emphasized public sector development during PL 84-660 and
the early PL 92-500, and the feature of the 1977 Amendments to 92-
500 which provides a 10% incentive for private sector initiative
in proposing innovative technologies. While Federal policy has
identified responsibility for technical innovation, first with
EPA/ and then with the private sector, there is no such clear
leadership in the areas of financial or administrative procedures.-
The development of novel and increasingly efficient ways to finance
an intergovernmental effort to clean up municipal wastewater, and
to administer the planning, design, and construction of facilities
is not now a clear assignment to anyone. Rather, we bypass the
experimental stage and put into place financial and administrative
procedures on a nationwide basis, sink or swim. The 1990 effort
provides an opportunity for us to survey whether and where we might
afford to introduce testing and development of improved finan-
cial and administrative, as well as technical, approaches to
POTW construction.
In the area of technological improvement, R&D must be married
to incentives to promote the adoption of new technologies. The
current i/A bonus can meet this need if EPA takes the lead in de-
veloping and identifying innovative technologies which will be
eligible for the 10% bonus. Perhaps a better way would be to
eliminate "innovative" from the I/a set-aside, funding only
alternative treatment by means of this bonus. Truly innovative
engineering could then be considered R&D, and funded at 100%
during its experimental stage, and then under the 10% bonus when
it had proven out as a successful alternative to traditional
treatment.
The agency also needs to exert greater effort in devising
and testing innovative ways of identifying and planning for the
long-term financing of municipal facilities. EPA could reinforce
such a function, by setting aside sufficient staff, a budget, and
a set of incoming projects to which novel financing schemes could
be experimentally applied.
The States, provide laboratories for administrative innovation.
EPA might encourage, several peer leaders among the States to apply
new administrative models which could be tested and evaluated
for efficiency and effectiveness in managing the State program.
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Finally, EPA.could take the lead in discerning successful
approaches, packaging them for dissemination, and devising
strategies for appropriate adoption. In some cases this will
mean coordinating peer match programs, technical publications,
and training sessions.
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GROUP III
ENVIRONMENTAL PRODUCTION TARGETS
Until now, EPA's role in the Construction Grants program
has dealt almost exclusively with ensuring financial integrity,
planning, and process management. For a variety of reasons,
both technological and pragmatic, the Agency has emphasized
accountability for the quality of each major step in the
process of planning, design, and construction. But SPA has
not set explicit, accountable production standards for bringing
projects on line within a certain period. We have monitored
production, even issued report cards to our Regions to emphasize
the need for efficiency, but we have not moved to require the
achievement of a set amount of new treatment capacity as an
annual target.
One means to address this situation becomes more available
as one actor#EPA, removes itself from the review (and delay)
chain. EPA might set certain performance standards for State
programs, negotiating with the State a given amount of treatment
capacity to be brought on line within a given fiscal year. Top
priority projects could be weighted to provide an extra measure
of success to a State program as they are completed, and States
could be "scored" each year against annual performance targets.
States could then be rated on the basis of their performance,
matching their actual score versus their target, and funds for
-subsequent years could be apportioned, at least in part, on
.his basis. States failing to meet their target by a substan-
tial margin would be subject to a diagnosis of their administrative
process, with technical assistance provided, to improve their
capability, and to allow restoration of full funding for future
years...
This proposal suggests a way of emphasizing production,
rather than processing, as the basic means of determining State
program success, and suggests a simple but direct reward/sanction
system to reinforce the objective of completing projects in order
to realize their environmental benefits.
EPA REGULATOR - MUNICIPALITY PERMIT COMPLIANCE
The Agency posture on discharge permit standards would be to
vigorously enforce against violators. When violations are detected,
the State (or, if necessary, EPA) would notify the violator and re-
quest that the violator inform the State (or EPA) of the cause of
the' violation. If the violator is reluctant to provide the informa-
tion we would request a court order directing that the information
be provided.
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If it is determined that the violation was caused by a
minor problem or an accident, we would require immediate
corrective action and possibly impose a fine. However, if
the violation is determined to be from: (1) a treatment system
design defect; (2) too much influent; or (3) poor operation and.
maintenance causing poor quality effluent, then we would-ask
the courts to order the plant operator to take corrective
action. The corrective action could include the following:
Re-design =nd reconstruction of the treatment system.
Replacement of worn out treatment system equipment.
Expansion of plant capacity.
Change in operation and maintenance.
Training of municipal treatment personnel.
Changing the user charge system to more adequately
reflect true costs of operation and maintenance.
The Agency would be primarily' concerned that the discharge
permit standards were being met. Inadequacies in plant size,
system design, operation and maintenance procedures, and finan-
cing are all the responsibility of the operating municipality;
therefore corrective action would also be solely a municipal
responsibility.
1.
2.
3.
4.
5.
6.
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