Office of Inspector General
REPORT OF REVIEW
NORTH DAKOTA BLOCK GRANT
DECREASED ADMINISTRATIVE COSTS
AND DISCLOSED POTENTIAL BARRIERS
EPA
350/
1996.10
El FMG6-08-0019-6400069
July 24, 1996
j£&£o£ai
-------
Inspector General Division
Conducting the Audit:
Region 8 Program Offices
Involved:
Central Audit Division
Kansas City. Kansas
Office of Technical and
Management Services
Office of Pollution Prevention,
State and Tribal Assistance
-------
•' '.rfrtO s*h
/ •> n /
I if
4
u
e
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
CENTRAL DIVISION
726 MINNESOTA AVENUE
KANSAS CITY, KANSAS 66101
(913) S51-7876
FAX (913; 551-783T
July 24,1996
MEMORANDUM
SUBJECT:
FROM:
North Dakota Demonstration Block Grant
Decreased Administrative Costs and Disclosed
Potential Barriers
Report No. E1FMG6-08-001 9-6400069
Bennie S. Salem
Acting Divisional Inspector General
for Audit
TO:
Jack W. McGraw
Acting Regional Administrator
Region 8
Attached is our special review report entitled North Dakota Demonstration Block Grant
Decreased Administrative Costs and Disclosed Potential Barriers. We found that the North
Dakota demonstration block grant successfully demonstrated administrative efficiencies and
illustrated barriers to increasing resource flexibility and improving environmental performance.
The report contains recommendations on jointly developing and agreeing on State environmental
priorities, encouraging States to shift resources towards those priorities, and educating States on
the benefits of developing outcome-based performance measures and assisting States in
developing these measures. We summarized comments to the draft report and included the
complete Region 8 and North Dakota Department of Health responses as Appendices I and II,
respectively. We hope that our review results will assist you in building a successful
performance partnership grant (PPG) program.
ACTION REQUIRED
In accordance with EPA Order 2750, you, as the action official, are required to provide us
a written response to this special review report within 90 days of the final audit report date. For
corrective actions planned but not completed by the response date, reference to specific
milestone dates will assist us in deciding whether to close this report.
This special review report contains findings that describe issues the Office of Inspector
Genera] (OIG) has identified and corrective actions OIG recommends. This report represents the
RECYCLED
-------
opinion of OIG, and the findings contained in this report do not necessarily represent the final
EPA position. Final determinations on matters in this report will be made by EPA managers in
accordance with established EPA audit resolution procedures.
We have no objections to the release of this report to any member of the public. This
report contains no confidential business or proprietary information that cannot be released to the
public.
Should you or your staff have any questions regarding this report, please contact me at
(913)551 -7831 or Jeff Hart, Audit Manager hi our Denver office, at (303) 312-6872. Please
refer to the report number on all related correspondence.
Attachment
-------
EXECUTIVE SUMMARY
PURPOSE
Region 8 awarded the North Dakota Department of
Health (North Dakota) a 3-year demonstration block
grant (block grant) in 1995 as part of an initiative to
increase State flexibility, improve intergovernmental
.partnerships, and streamline processes. In 1996, the
Environmental Protection Agency (EPA) sought
authority to award performance partnership grants (PPG),
similar to block grants, that would provide States and
Indian Tribes the opportunity to combine funds, reduce
administrative burdens and costs, strengthen EPA
partnerships with States and Indian Tribes, and focus on
environmental results. EPA obtained authority to award
PPGs on April 25,1996. North Dakota's block grant
experience provided an opportunity to learn how States
could effectively implement PPGs.
The purpose of our audit was to identify lessons learned
from the North Dakota block grant that would assist EPA
in building a strong PPG program. Our specific
objectives were to determine whether:
the block grant accomplished its intended
purpose;
grant performance measures were based on
measurable, time-specific outcomes; and
the Region had established oversight procedures
for the block grant and for PPGs that allowed
States a relatively high degree of autonomy to
manage their environmental programs while
providing adequate assurance that Federal funds
were used efficiently and effectively.
E1FMG6-08-0019-6400069
-------
BACKGROUND
North Dakota's fiscal 1995 block grant combined funding
for nine environmental programs into one overall grant
and totalled over $2 million (Federal share). In fiscal
1996, the North Dakota block grant totalled about $1.6
million (Federal share) as of February 21,1996, and
combined 10 environmental programs—the same 9
programs included in the 1995 grant award plus the
drinking water program. The block grant was to provide
North Dakota flexibility in how it managed and
implemented environmental protection programs. Under
the block grant, EPA reprogrammed State program grant
funds-shifted money between programs funded in the
Abatement Control and Compliance appropriations
account~for North Dakota. North Dakota remained
responsible for existing statutory, regulatory, and court-
ordered requirements.
RESULTS IN BRIEF
North Dakota's block grant successfully demonstrated
administrative efficiencies and illustrated barriers to
increasing resource flexibility. North Dakota
accomplished administrative savings under the block
grant and used a conservative approach to obtain
Regional and State staff confidence in the block grant
and the PPG concept. The North Dakota block grant
disclosed Regional internal turf battles and statutory
restrictions as barriers to moving resources to address
priority environmental problems. In addition, North
Dakota staff continued to use traditional activity-based
performance measures due to a lack of EPA guidance.
Further, North Dakota staff did not see any benefit to
developing outcome-based performance measures.
EPA's new PPG interim guidance incorporated many of
the lessons learned from the North Dakota block grant
and provided steps to overcome some of the barriers to
increasing State flexibility.
11
E1FMG6-08-0019-6400069
-------
PRINCIPAL FINDINGS
Grant Demonstrated
Administrative Efficiencies
North Dakota's block grant successfully accomplished its
purpose of demonstrating administrative efficiencies.
North Dakota and the Region agreed to take a
conservative approach with the block grant and focus on
achieving administrative savings and a more streamlined
grant process. North Dakota's conservative approach
slowly increased State and Region 8 staff confidence in
the block grant and the PPG concept. North Dakota
experienced administrative savings under the block grant
and a more streamlined grant process. EPA's December
1995 PPG interim guidance appropriately included
administrative flexibility and savings as one option that
States could implement using a PPG.
Grant Disclosed Barriers To
Increasing Resource
Flexibility and Improving
Environmental Results
The North Dakota block grant disclosed several barriers
to increasing resource flexibility and improving
environmental results. Regional internal turf battles and
statutory restrictions limited North Dakota's ability to
shift resources to its highest priority environmental
problems. North Dakota and Region 8 did not agree on
environmental priorities and Regional program staff did
not want to relinquish their program funds for other
programs. Also, Regional program staff disapproved
some elements of North Dakota's strategy to shift funds
due to statutory restrictions. In addition, lack of EPA
guidance and incentives caused North Dakota staff to
continue using traditional activity-based performance
measures that resulted in traditional resource allocations
and environmental results. EPA's PPG interim guidance
included guidelines that would help address some of the
barriers that limited North Dakota's resource flexibility.
RECOMMENDATIONS
The North Dakota block grant demonstrated lessons that
would help build a strong PPG program. The Acting
Regional Administrator needs to educate States
interested in PPGs on the benefits of taking a
conservative approach to obtain staff buy-in and on the
options available for implementing PPGs. The Acting
Regional Administrator needs to require Regional and
111
E1FMG6-08-0019-6400069
-------
State staff to jointly develop and agree on State
environmental priorities, encourage States to shift
resources towards those priorities, and assist States in
identifying statutory restrictions and appropriate
alternatives to address States' highest priorities. In
addition, the Acting Regional Administrator needs to
educate States on the benefits of developing outcome-
based performance measures and assist States in
developing these measures.
AUDITEE COMMENTS
AND OIG EVALUATION
Region 8 and North Dakota agreed with our findings and
recommendations. Both the Region and the State offered
comments to clarify some issues and the Region offered
comments to modify some recommendations. We
modified the report as appropriate. The Region stated
that the report was thorough and clear and reflected the
commitments required for successful PPG
implementation.
IV
E1FMG6-08-0019-6400069
-------
TABLE OF CONTENTS
Page
EXECUTIVE SUMMARY i
CHAPTERS
1 INTRODUCTION 1
PURPOSE 1
BACKGROUND 2
SCOPE AND METHODOLOGY 4
PRIOR AUDIT COVERAGE 5
2 GRANT DEMONSTRATED ADMINISTRATIVE EFFICIENCIES 7
INITIAL EXPECTATIONS CHANGED TO FOCUS ON
ADMINISTRATIVE EFFICIENCIES 7
GRANT ACCOMPLISHED ADMINISTRATIVE SAVINGS AND
STREAMLINED THE GRANT PROCESS 9
PPG GUIDANCE INCORPORATED LESSONS LEARNED
FROM THE BLOCK GRANT 10
CONCLUSION 11
RECOMMENDATIONS 12
AUDITEE COMMENTS AND OIG EVALUATION 13
3 GRANT DISCLOSED BARRIERS TO INCREASING RESOURCE
FLEXIBILITY AND IMPROVING ENVIRONMENTAL RESULTS 14
TURF BATTLES RESTRICTED RESOURCE FLEXIBILITY 14
STATUTORY RESTRICTIONS LIMITED RESOURCE
FLEXIBILITY 17
E1FMG6-08-0019-6400069
-------
LACK OF EPA GUIDANCE AND INCENTIVES RESULTED IN
MINIMAL CHANGES 18
NEW GUIDANCE MAY ELIMINATE BARRIERS
IF IMPLEMENTED
21
CONCLUSION 23
RECOMMENDATIONS 24
AUDITEE COMMENTS AND OIG EVALUATION 25
APPENDICES
APPENDIX I:
APPENDIX II:
APPENDIX III:
APPENDIX IV:
EPA COMMENTS 26
STATE COMMENTS 28
ABBREVIATIONS 29
DISTRIBUTION 30
-------
Chapter 1
INTRODUCTION
PURPOSE
The Environmental Protection Agency (EPA) has spent
considerable effort exploring options that would provide States
more flexibility in targeting their resources to better meet
•complex environmental problems. Region 8 awarded the
North Dakota Department of Health (North Dakota) a 3-year
demonstration block grant (block grant) in 1995 as part of an
initiative to increase State flexibility, improve intergovern-
mental partnerships, and streamline processes. In 1996, EPA
sought authority to award performance partnership grants
(PPG), similar to block grants, that would provide States and
Indian Tribes the opportunity to combine funds, reduce
administrative burdens and costs, strengthen EPA partnerships
with States and Indian Tribes, and focus on environmental
results. EPA obtained authority to award PPGs on April 25,
1996. North Dakota's block grant experience provided an
opportunity to learn how States could effectively implement
PPGs.
The purpose of our audit was to identify lessons learned from
the North Dakota block grant that would assist EPA in
building a strong PPG program. Our specific objectives were
to determine whether:
the block grant accomplished its intended purpose;
grant performance measures were based on measurable,
time-specific outcomes; and
the Region had established oversight procedures for the
block grant and for PPGs that allowed States a
relatively high degree of autonomy to manage their
environmental programs while providing adequate
assurance that Federal funds were used efficiently and
effectively.
E1FMG6-08-0019-6400069
-------
BACKGROUND
In response to the recommendations from the National
Performance Review and the State Capacity Task Force, EPA
started a Grants Flexibility Initiative in 1994 to develop
demonstration grants to provide States flexibility in how they
managed and implemented EPA programs. The Initiative's
intent was to facilitate more coordinated and integrated
pollution control and prevention activities at the State level
and improve State environmental protection program
performance. Under the Grant Flexibility Initiative, the
demonstration grants were to test whether and how increased
flexibility in States' program implementation could improve
environmental performance.
Region 8 awarded North Dakota an EPA demonstration block
grant on January 24,1995. North Dakota's fiscal 1995 block
grant combined funding for nine environmental programs into
one overall grant and totalled over $2 million (Federal share).
The grant combined funding for air, radon, hazardous waste,
water pollution control, groundwater, pollution prevention,
underground storage tanks, underground injection control, and
toxic substances compliance monitoring. In fiscal 1996, the
North Dakota block grant totalled about $1.6 million (Federal
share) as of February 21,1996, and combined 10
environmental programs-the same 9 programs included in the
1995 grant plus the drinking water program. North Dakota
continued to develop workplans for the block grant on a
program-specific basis and Region 8 program project officers
were responsible for reviewing and ensuring that North Dakota
developed an acceptable workplan.
Under the North Dakota block grant, EPA reprogrammed State
program grant funds-shifted money between programs funded
in the Abatement Control and Compliance appropriations
account. North Dakota remained responsible for existing
statutory, regulatory, and court-ordered requirements. The
grant was expected to run 2-3 years and reprogrammings were
needed for each year.
EPA conducted the demonstration grants under existing
authority. However, this authority was somewhat limited and
could not be expanded to cover the full range of State
environmental protection needs. For example, EPA had to
obtain Congressional approval to reprogram the specific
2 E1FMG6-08-0019-6400069
-------
program funds into the block grants. In an attempt to further
empower States and Indian Tribes to protect human health and
the environment, EPA began to seek authority to award PPGs
in fiscal 1996- to States and Federally recognized Indian Tribes.
EPA continued with its demonstration grants in fiscal 1996 as
it was continuing to develop a PPG program. The PPG
concept supported EPA's common sense approach to working
with its intergovernmental partners and focused more on what
States and Indian Tribes accomplished and less on how they
accomplished it.
A PPG would be a single grant made to a State or IndianTribe
from grant funds allocated and otherwise available for existing
categorical grant programs. PPGs would be voluntary and
provide States and Indian Tribes with the option to combine
funds from two or more categorical grants into one or more
PPGs. PPGs were expected to promote partnerships, increase
flexibility with appropriate accountability, and improve
environmental outcomes through common sense approaches.
States and Indian Tribes could apply for these grants for any
period after enactment of statutory authority for the PPG
program. EPA obtained authorizing legislation to award PPGs
for fiscal 1996 on April 25,1996.
The PPG concept was one of several EPA initiatives
developed during fiscal 1995 to further the Grants Flexibility
Initiative and promote a better partnership between EPA and
States. On May 17,1995, State and EPA leaders signed a
Joint Commitment to Reform Oversight and Create a National
Environmental Performance Partnership System (NEPPS).
The agreement's objective was to accelerate the transition to a
new working relationship between EPA and States—one which
reflected the advancement made in environmental protection
over the preceding two decades by EPA and States. NEPPS
and PPGs shared many of the same key goals.
Both NEPPS and PPGs were part of the new "Performance
Partnerships" that were to be implemented throughout the
Federal Government beginning in fiscal 1996 to better work
with States in achieving shared goals. Performance
partnerships were an opportunity for the Federal Government
and States to exchange funding restrictions for a new,
incentive-based focus on performance and outcomes. These
3 E1FMG6-08-0019-6400069
-------
partnerships would consolidate funding sources and eliminate
overlapping authorities, create incentives to reward desirable
results, and reduce micro-management and wasteful
paperwork. TFhe partnership concept sought to empower
communities to make their own decisions about how to
address their needs, and to be held accountable for results.
SCOPE AND
METHODOLOGY
We conducted our fieldwork from November 1995 to April
1996. We evaluated the North Dakota block grant to
determine what lessons could be learned from the grant that
could be applied to PPGs. We conducted our work in Region
8's Denver, Colorado program offices and the North Dakota
Department of Health in Bismarck, North Dakota.
To determine whether the block grant accomplished its
intended purpose, we reviewed fiscal 1995 and 1996 grant
agreement documents and fiscal 1995 grant evaluation results,
and interviewed Region 8 and North Dakota program staff.
We evaluated fiscal 1994-1997 program workplans to
determine whether grant performance measures were based on
measurable, time-specific outcomes. We reviewed fiscal 1995
mid-year and end-of-year program reports and discussed
workplan activities with Regional and North Dakota program
staff to determine whether North Dakota accomplished its
workplan goals.
To determine whether the Region established oversight
procedures for the block grant and PPGs, we reviewed the
Regional guidance used to develop the block grant and EPA's
December 1995 PPG interim guidance. We reviewed the PPG
interim guidance to determine whether it appropriately defined
States' and Regions' roles and responsibilities under the PPG
program. We interviewed North Dakota and Region 8 staff on
the Region's oversight activities and discussed barriers or
limitations that prevented North Dakota from increasing block
grant benefits. Our purpose was to determine whether the
Region's oversight provided States a relatively high degree of
autonomy to manage their environmental programs while
providing adequate assurance that Federal funds were used
efficiently and effectively.
E1FMG6-08-0019-6400069
-------
Throughout our review of Region 8's grant and project officer
files and discussions with Regional and North Dakota program
staff, we assessed whether lessons could be learned from the
North Dakota-block grant. Specifically, we reviewed the
Region's 1995 mid-year grant evaluations and interviewed
program staff to determine whether program staff encountered
problems with the block grant. We compared problems
experienced during the block grant period with the proposed
PPG concept to determine if these same problems might exist
under the PPG program. We evaluated EPA's December 1995
PPG interim guidance to determine whether it adequately
addressed problems and barriers encountered with the block
grant. We also worked with Regional and North Dakota staff
to identify how to overcome these barriers and develop an
effective PPG program.
Our review was more limited in scope than an audit, and as
such, did not necessarily encompass all generally accepted
government auditing standards. Alternatively, we performed
our review in accordance with provisions of the Office of
Inspector General (OIG) Manual Chapter 150, Reports of
Review. Other than the issues discussed below, no other
significant issues came to our attention that warranted
expanding our audit scope.
PRIOR AUDIT
COVERAGE
Neither OIG nor the General Accounting Office (GAO) has
issued a prior audit report specifically addressing the North
Dakota block grant. However, GAO has issued many reports
on block grants. For example, a September 1995 GAO report
entitled, BLOCK GRANTS: Issues in Designing Accountability
Provisions, summarized nearly 2 decades of reports,
evaluations, testimony, and other GAO correspondence on
accountability issues related to intergovernmental programs.
The report stated that building accountability into block grants
was an important, but difficult, task requiring trade-offs
between Federal and State control over program finances,
activities, and administration. Also, the report stated that the
presence of too many requirements and conditions could
inhibit States from realizing the kinds of efficiencies promised
by the block grant mechanism. Overly prescriptive Federal
requirements could limit States' abilities to integrate related
5 E1FMG6-08-0019-6400069
-------
Federal and State programs in new and more efficient ways. A
February 1995 GAO report entitled, BLOCK GRANTS:
Characteristics, Experience, and Lessons Learned, reported
that a principal lesson learned from the Federal Government's
experience with earlier block grants was the need to focus on
accountability. In addition, the report stated that State
flexibility was reduced as funding constraints were added to
block grants over time.
E1FMG6-08-0019-6400069
-------
Chapter 2
GRANT DEMONSTRATED
ADMINISTRATIVE EFFICIENCIES
North Dakota's block grant successfully accomplished its
purpose of demonstrating administrative efficiencies. North
Dakota's and EPA's initial expectations for the block grant
were very high and included making significant changes and
substantially increasing resource flexibility. However, EPA
Headquarters and Regional staff had concerns regarding how
much flexibility to provide North Dakota and how to ensure
State accountability. As a result, North Dakota and the
Region agreed to take a more conservative approach with the
block grant and focus on achieving administrative savings
and a more streamlined grant process. North Dakota's
conservative approach slowly increased State and Region 8
staff confidence in the block grant and the PPG concept.
North Dakota experienced administrative savings under the
block grant and a more streamlined grant process. EPA's
December 1995 PPG interim guidance appropriately
included a PPG option focusing on streamlining and
administrative efficiencies.
INITIAL
EXPECTATIONS
CHANGED TO
FOCUS ON
ADMINISTRATIVE
EFFICIENCIES -.
EPA Headquarters and Region 8 had high expectations at the
initial stages of the block grant. At a broad level, the North
Dakota block grant was intended to enhance the effectiveness
of EPA's working relations with State, local, and Tribal
governments and improve the performance of environmental
protection programs by increasing flexibility in how they
were implemented. The Region expected the block grant to
provide an opportunity to focus on program performance and
environmental results and away from prescribing State
activities and levels of effort. The Region had planned to
develop environmental indicators and outcome-based
performance measures for the block grant. However, North
Dakota and Region 8 staff stated that concerns regarding the
E1FMG6-08-0019-6400069
-------
block grant caused the State and the Region to focus on
administrative efficiencies.
The block grant's original purpose was to demonstrate
whether and how flexibility of block grants could help a
State manage and implement more effective environmental
protection programs. Specifically, the Region wanted the
North Dakota block grant to demonstrate the efficacy of
providing block grant funds for the purposes of gaining
administrative efficiencies, improving environmental results
and partnerships, and facilitating multi-media geographic,
ecosystem, and pollution prevention approaches to
environmental protection.
Regional and North Dakota staff were reluctant and
apprehensive about the block grant, its effect on program
activities, and the shifting of funds from one program to
another. In an attempt to minimize staff concerns, North
Dakota and Region 8 agreed that the block grant would move
slowly and be more predictable. Further, North Dakota
wanted to take a conservative approach to allow Regional
and North Dakota staff the opportunity to become
comfortable with changes in the grant process and buy-in to
the block grant concept. As a result, North Dakota and the
Region focused on streamlining the grant process and
gaining administrative efficiencies. A North Dakota official
stated that North Dakota was also working towards
improving partnerships, and facilitating multi-media
geographic, ecosystem, and pollution prevention approaches
to environmental protection.
North Dakota's conservative approach to implementing the
block grant increased State staffs confidence in the block
grant and PPG concept. North Dakota staff stated that
implementing the block grant slowly had given them the
opportunity to build trust with Regional staff and alleviated
their initial concerns. North Dakota staff stated that they felt
comfortable with the block grant and would likely enter into
a PPG. North Dakota staff also stated that taking the block
grant slowly appeared to have increased Region 8 staff
confidence with the block grant and North Dakota's ability to
effectively implement a PPG.
E1FMG6-08-0019-6400069
-------
GRANT
ACCOMPLISHED
ADMINISTRATIVE
SAVINGS AND
STREAMLINED
THE GRANT PROCESS
North Dakota experienced administrative savings under the
block grant and a more streamlined grant process. The block
grant assisted North Dakota and Regional staff in simplifying
and streamlining the administrative paperwork involved in
the grant process. Further, Regional and North Dakota staff
demonstrated the importance of coordination when changing
and streamlining the grant process. Although North Dakota
staff could not quantify the cost savings, they believed that
their expectations for the block grant had been met by the
significant reduction in administrative, paperwork and staff
time spent on administrative activities.
North Dakota's block grant provided administrative savings
by combining nine programs under one grant and reducing
the amount of required paperwork. North Dakota staff
prepared only one grant application rather than nine separate
grant applications, and one financial status report rather than
nine separate reports. North Dakota staff drew grant funds
from one grant and kept track of one matching account rather
than nine separate accounts. North Dakota staff charged one
payroll account rather than splitting it among nine various
grants. In addition, the staff charged common equipment
expenses against one grant rather than dividing it among the
various grants. The block grant also reduced Region 8's
administrative activities. For example, Regional staff were
required to review, process, and track only one grant award
rather than nine separate awards.
Changing the grant process and effectively streamlining the
new process to gain administrative cost savings required
significant Regional and State coordination. Regional and
North Dakota staff effectively coordinated block grant
activities by establishing a central point of contact. Region 8
established a central project officer to be the primary point of
contact for the North Dakota block grant. The central project
officer coordinated programmatic and technical aspects of
the block grant among various Region 8 and Headquarters
staff. Additionally, North Dakota established a central State
project officer who coordinated activities among State
project managers and Regional staff. Both Regional and
North Dakota staff stressed the importance of designating
these individuals to coordinate the block grant's financial and
programmatic activities.
E1FMG6-08-0019-6400069
-------
Although North Dakota did not document cost savings
associated with the block grant, it estimated an 80-90 percent
savings in budget and grant application preparation and grant
award accounting and tracking. In its fiscal 1995 end-of-year
evaluation of the block grant, North Dakota reported it did
not have actual documented cost savings available since it
had never documented the costs associated with previous
years' grant applications and workplans. As a result, North
Dakota did not have prior year costs to compare savings
experienced with the block grant. According to North
Dakota staff, approximately the same amount of time was
spent on workplan development as in past years. However,
North Dakota staff expected that future workplan
development would require less time since the State
developed a two-year workplan for fiscal 1996 and 1997.
North Dakota's State Legislature contributed to North
Dakota's success in realizing administrative savings. The
North Dakota State Legislature did not require North Dakota
to continue reporting Federal grant expenses and resources as
it would under the nine separate program grants. The
Legislature allowed North Dakota staff to report the same
information to its legislature regarding the block grant as was
reported to EPA.
PPG GUIDANCE
INCORPORATED
LESSONS
LEARNED FROM THE
BLOCK GRANT
The December 1995 PPG interim guidance incorporated
many of the lessons learned from the North Dakota block
grant. The interim guidance provided four implementation
options for States with PPGs. One PPG option focused only
on streamlining the grant process and achieving
administrative efficiencies. In addition, the PPG interim
guidance effectively defined EPA and State roles in the PPG
program and the importance of coordination.
EPA's PPG interim guidance provided four options or levels
for States to choose when implementing PPGs. One option,
or Level 1, included implementing the grant similar to the
way North Dakota implemented its block grant; i.e., focusing
on streamlining the grant process and achieving
administrative efficiencies. The second option, or Level II,
provided for administrative and program flexibility. Level
10
E1FMG6-08-0019-6400069
-------
Ill provided for administrative and program flexibility based
on a Performance Partnership Agreement that replaced
categorical workplans. Level IV provided for a PPG
application under any of the three previous options and
piloting NEPPS. Providing States with this type of
flexibility~to determine the type of administrative and
programmatic changes that were most appropriate—allowed
States and Regional staff to develop confidence in the PPG
process. Additionally, providing a variety of options allowed
States that were not ready to implement the other options to
take advantage of the administrative streamlining available
through PPGs.
The North Dakota block grant demonstrated that States may
not yet be convinced that the other PPG options provide any
benefit at this time. For example, North Dakota staff
explained that their current block grant could qualify as a
Level I PPG or with a little more work a Level II PPG.
However, they were uncertain what benefits a Level III or IV
PPG would provide. State staff believed that the Level III or
IV options would require a great deal more work for the
same amount of grant funds and no guarantee of reduced
oversight.
The PPG interim guidance effectively defined EPA and State
roles in the PPG program and stressed the importance of
coordination. The PPG interim guidance required Regional
Administrators to designate a single point of contact to serve
as the regional PPG project officer. As the North Dakota
block grant demonstrated, the central project officer would
be the primary point of contact for a State and would be
responsible for coordinating all programmatic and technical
aspects of the PPG. The PPG interim guidance also
encouraged States to designate a single point of contact for
PPGs to serve as the counterpart to the Region's central
project officer.
CONCLUSION
The North Dakota block grant successfully achieved
administrative efficiencies and a more streamlined grant
process. North Dakota's conservative approach to
implementing the block grant demonstrated the importance
11
E1FMG6-08-0019-6400069
-------
of implementing PPGs slowly and establishing State and
Regional confidence and buy-in to the process. Without
State and Regional staff support and buy-in to the PPG
program, States might not see any benefit to implementing
this new grant program. The block grant assisted North
Dakota and Regional staff in simplifying and streamlining
the administrative paperwork involved in the grant process.
Regional and North Dakota staff effectively coordinated
block grant activities by establishing a'central point of
contact. In addition, North Dakota's State Legislature
contributed to the State's success in achieving administrative
savings because the Legislature allowed North Dakota staff
to streamline the State's reporting requirements.
EPA's PPG interim guidance included activities that North
Dakota successfully demonstrated with its block grant. The
interim guidance offered several options for States to
implement including North Dakota's successful approach to
focus on streamlining the grant process and achieving
administrative efficiencies. The interim guidance also
emphasized the importance of designating Regional and
State coordinators for the PPGs.
RECOMMENDATIONS We recommend the Acting Regional Administrator:
1. Educate other States interested in PPGs on the
benefits of taking a conservative approach to PPGs in
order to obtain staff buy-in to the PPG program.
2. Assist States interested in PPGs in identifying
whether their State legislature may inhibit
opportunities to streamline their grant process.
3. Distribute the PPG interim guidance to all States and
ensure that States interested in PPGs fully understand
the available options for implementing PPGs.
4. Emphasize to Regional and State staff the importance
of designating coordinators described in the PPG
interim guidance.
12
E1FMG6-08-0019-6400069
-------
AUDITEE COMMENTS
ANDOIG
EVALUATION
Region 8 and North Dakota agreed with our findings and
recommendations. Both the Region and the State offered
comments to clarify some issues and the Region offered
comments to modify the recommendations. We modified the
report as appropriate.
13
E1FMG6-08-0019-6400069
-------
Chapter 3
GRANT DISCLOSED BARRIERS TO INCREASING
RESOURCE FLEXIBILITY AND IMPROVING
ENVIRONMENTAL RESULTS
The North Dakota block grant disclosed several barriers to
increasing resource flexibility and improving environmental
results. The block grant's main purposes included giving
North Dakota the resource flexibility to tailor resources and
programs to specific needs, increasing the use of program
performance measures that focused on outcomes, and
improving environmental results. However, Regional
internal turf battles and statutory restrictions limited North
Dakota's ability to shift resources to its highest priority
environmental problems. North Dakota and Region 8 did not
agree on environmental priorities and Regional program staff
did not want to relinquish their program funds for other
programs. Also, Regional program staff disapproved some
elements of North Dakota's strategy to shift funds due to
statutory restrictions. In addition, lack of EPA guidance and
incentives caused North Dakota staff to continue using
traditional activity-based performance measures that resulted
in traditional resource allocations and environmental results.
EPA's PPG interim guidance included guidelines that would
help address some of the barriers that limited North Dakota's
resource flexibility.
TURF BATTLES
RESTRICTED
RESOURCE
FLEXIBILITY
North Dakota and Region 8 did not agree on environmental
priorities and allocation of resources to address those
priorities. Individual Regional program staff viewed their
programs as high priority and did not agree that resources
should be shifted from their program to another program.
Although Regional staff recognized the importance of
providing North Dakota resource flexibility, when North
Dakota proposed to shift funds among programs, program
managers resisted and stated that their program priorities
could not afford disinvestments. North Dakota's proposal for
14
E1FMG6-08-0019-6400069
-------
disinvesting in some programs and media areas caused
apprehension and concern among Regional program
managers regarding losing their program funds.
North Dakota developed an investment and disinvestment
strategy for its block grant based on North Dakota's
assessment of its highest priorities. The strategy proposed
shifting resources among programs to better address North
Dakota's environmental priorities. North Dakota's
investment and disinvestment strategy proposed shifting
funds from its air and hazardous waste programs to its water
programs. North Dakota identified groundwater and
drinking water as its highest priority and proposed
disinvesting in the indoor radon and hazardous waste
management programs.
Regional staff did not agree with North Dakota's
environmental priorities and strategy for shifting funds. The
Region discouraged three of the four proposed
disinvestments. For example, North Dakota proposed
decreasing survey and monitoring work in its indoor radon
program, enabling the transfer of approximately $50,000 in
funds to another program. The Region did not agree that a
disinvestment in the indoor radon program was reasonable
since the program was "one of the higher risk categories."
The Region cited recent discussions between Regional and
North Dakota program staff where they had tentatively
agreed to increase activities in the radon program and
incorporate these activities as increased investments in the
State-EPA Agreement (SEA). The Region also disagreed
with North Dakota's proposal to put all of its pollution
prevention funds (approximately $50,000) into groundwater
and non-point source pollution programs. The Region stated
that although this proposal may promote pollution prevention
for groundwater and non-point sources, the proposal did not
deal "holistically" with preventing pollution from hazardous
waste, water point sources, or air sources.
North Dakota staff stated that they had difficulty reconciling
State and EPA priorities. Many EPA Headquarters
initiatives did not always correspond with a State's priorities
and sometimes individual Regional personnel seemed to
distrust the State's ability to set appropriate priorities,
15
E1FMG6-08-0019-6400069
-------
according to a State staff person. He added that the Region
and North Dakota should jointly establish and agree on
priorities. North Dakota would be better able to focus on its
priorities once it had the flexibility to shift funds.
Many EPA staff, including National and Regional program
managers and project officers, expressed concern regarding
shifting resources among programs. Regional staff were
unsure of what to expect from shifting resources and the
impact it would have on individual programs. A Region 8
program manager stated that Regional staff had difficulty
accepting the concept of moving funds from one program to
another. He stated that Regional staff may have intimidated
North Dakota into not shifting resources and could possibly
intimidate other States with PPGs.
A North Dakota staff person stated that the resistance from
Regional staff and turf battles over funds early in the
planning process had the potential of holding up the initial
block grant award. North Dakota did not want disputes over
its investment and disinvestment strategy to delay awarding
the block grant. As a result, North Dakota did not dispute
the Region's response to its proposal and did not shift funds.
North Dakota representatives explained that their two main
priorities were maintaining the State's program delegations--
receiving sufficient funding to accomplish the required
activities to maintain delegation—and having staff become
comfortable with the new block grant concept. In addition,
North Dakota did not want to jeopardize its good working
relationship with the Region.
After the first year of the block grant, North Dakota believed
that Regional and North Dakota staff were more comfortable
with the block grant concept. A Senior Regional manager
stated that the Region's reorganization (effective October
1995) may also help program staff overcome their turf battles
and eliminate their reluctance to give up funds for another
program. The Region's new organization was focused to
promote multi-media problem solving and cross-program
integration. However, the new organization still had some
media units and Regional staff may still want to maintain
maximum funds for their own program priorities rather than
give up their funds for other programs. North Dakota staff
16
E1FMG6-08-0019-6400069
-------
have not proposed a new investment and disinvestment
strategy to shift funds in the second and third year of the
block grant. North Dakota staff cited that by maintaining the
same program resource allocations they minimized Regional
staff resistance and expedited the whole grant process.
STATUTORY
RESTRICTIONS
LIMITED
RESOURCE
FLEXIBILITY
Region 8 staff appropriately disapproved some elements of
North Dakota's investment and disinvestment strategy due to
statutory restrictions! However, Regional staff did not assist
North Dakota in identifying appropriate options to overcome
these statutory restrictions. Several statutes restricted North
Dakota from shifting funds from one program to another
program. For example, the Region found that North
Dakota's proposal to direct hazardous waste funds to its solid
waste program was prohibited by statute. The use of statute-
authorized Subtitle C funds for Subtitle D solid waste
activities was specifically prohibited by statute. North
Dakota had also proposed to reduce the frequency of water
quality standards reviews from once every 3 years to once
every 5 years. The Region cited that the Clean Water Act
required that standards be reviewed every 3 years. Thus,
North Dakota had to continue reviewing the standards every
3 years.
The North Dakota Department of Health's Chief of
Environmental Health Section (Chief) stated that Region 8
should have helped his staff identify other appropriate
options to overcome some of the statutory restrictions. For
example, although the statutes prohibited North Dakota from
using hazardous waste funds for solid waste, the Region did
not offer any information on whether other media funds (e.g.,
air or water) could possibly be used for the solid waste
program. He explained that this type of information would
have helped provide North Dakota the flexibility to work on
its highest environmental priorities. A State staff person
added that the Region's assistance in identifying statutory
restrictions and appropriate alternatives to overcome them
should be made prior to the State developing an investment
and disinvestment strategy that may not be feasible.
17
E1FMG6-08-0019-6400069
-------
LACK OF EPA
GUIDANCE AND
INCENTIVES
RESULTED IN
MINIMAL
CHANGES
Traditional Activity-
Based Performance
Measures Were Used to
Evaluate
Performance
North Dakota and Region 8 staff used the traditional SEA
process to define and measure environmental performance.
North Dakota's performance results did not differ
significantly from prior years' results. One of the block
grant's purposes was to increase North Dakota's use of
program performance measures that focused on outcomes to
achieve improved environmental results. However, lack of
EPA guidance and incentives influenced North Dakota staff
to continue using activity-based performance measures,
according to North Dakota staff. North Dakota allocated its
resources the same as in prior years in order to meet its
traditional activity-based performance measures. North
Dakota met its workplan commitments and its performance
did not change significantly from prior years.
North Dakota and Region 8 used the traditional SEA process,
related workplans, and program evaluations to define and
measure environmental program performance. North Dakota
continued to use traditional activity-based measures for the
block grant. North Dakota staff stated that they had
difficulty developing environmental indicators and outcome-
based performance measures because EPA had provided
limited guidance and North Dakota staff did not see any
benefit to new measures. Although North Dakota took steps
to facilitate multi-media approaches to environmental
protection, it did not attempt to develop new performance
measures beyond the traditional activity-based measures.
Region 8 initially planned on trying to develop outcome-
based performance measures for the block grant. In the
Region's guidance for the North Dakota block grant, the
Region emphasized that EPA and North Dakota project
officers were to be pushed to develop outcome measures in
workplans and deemphasize input measures. However,
Region 8 project officers did not require North Dakota staff
to change performance measures and North Dakota staff did
not initiate any changes.
The Region and North Dakota used the SEA process to
negotiate program activities and goals as they had in the past
with categorical grants. The SEA defined the scope of
environmental program responsibilities and commitments.
The agreement coordinated and integrated the planning,
18
E1FMG6-08-0019-6400069
-------
management, prioritization, implementation, evaluation, and
funding of programs and program activities under various
Federal program laws. The SEA included program-specific
workplans that defined North Dakota's activities and
milestones for each of its environmental programs including
those in the block grant. The program activities were the
same as they had been in prior years for individual
categorical grants.
Regional oversight of North Dakota's environmental
programs did not change under the block grant. Region 8
staff used traditional mid-year and end-of-year reviews to
evaluate North Dakota's progress in meeting its workplan
goals. The Region had reduced its level of oversight of
North Dakota programs several years ago due to North
Dakota's continued good performance in meeting program
requirements.
North Dakota did not attempt to develop environmental
indicators or outcome-based performance measures. A North
Dakota program director stated that North Dakota chose to
continue with its "bean-counting" measures because the staff
would have had a difficult time developing new
environmental indicators. The Chief stated that North
Dakota staff (and other States) would have difficulty
developing environmental indicators and outcome-based
performance measures because EPA had no guidance on
developing measures. A North Dakota program director
explained that he had no problem with identifying the
number of inspections and permits needed for his programs
(traditional activity-based measures). He believed that these
types of measures were easier to develop and provided more
flexibility than would new environmental indicators.
North Dakota staff stated they would have difficulty
developing and implementing environmental indicators
because they were not easily measurable or definable and
required a lot more work to develop without any additional
funding. It appeared that any kind of environmental
indicator would be generic and something that would be
based on several years of work (e.g., reducing air pollution
by 10 percent by a certain future date), according to a State
program director. The Chief stated that North Dakota would
19
E1FMG6-08-0019-6400069
-------
Resource Allocation and
Workplan
Accomplishment
Remained the
Same Under the Grant
be required to do the same activities it always had for each
program and that it appeared these activities would still
provide a basis for whether environmental problems were
being managed. Another North Dakota staff person added
that these types of new initiatives required a lot more work,
did not really change what North Dakota was required to do,
and North Dakota did not receive any additional funds to
implement new initiatives.
North Dakota was moving forward with trying to implement
multi-media activities under the block grant, according to the
Chief. He explained that they had started working on how
activities could take a multi-media approach and cited as an
example the work they had recently done on a watershed
approach. He stated that implementing this approach was
possible because the block grant allowed State staff from
various programs to work together on a project without
categorized grant limitations. To further its attempts to
evaluate where multi-media activities could be developed,
North Dakota prepared a 2-year SEA for fiscal 1996 and
1997. The SEA included multi-media priorities which,
according to a North Dakota staff person, were more in line
with EPA's policy to move away from specific media-based
measures. For example, the SEA stated that one of North
Dakota's priorities that were incorporated into the workplans
was to develop a comprehensive water management plan for
the Red River Basin. However, the majority of the workplan
activities were still media-specific with activity-based
measures.
North Dakota allocated resources similar to prior years and
North Dakota's performance results were generally the same
as they had been under categorical grants. North Dakota
staff stated that the limited grant resources were only
sufficient to implement the traditional SEA activities and did
not provide excess funds to shift to other environmental
problems. Region 8 staff found that North Dakota staff
appropriately met the SEA program workplan commitments
and that generally accomplishments were the same as hi
previous years.
North Dakota staff believed that they had few, if any, excess
funds to address other priority environmental problems
20
E1FMG6-08-0019-6400069
-------
beyond the SEA activities given the limited amount of grant
funds they received. North Dakota did not want to
jeopardize losing its program delegations by shifting funds to
other environmental activities and leaving insufficient funds
to implement all of the SEA activities. A Regional project
officer stated that small States such as North Dakota did not
receive a lot of Federal funding and probably had very little,
if any, excess funding that the State did not need to meet
program delegation requirements. North Dakota's continued
use of the traditional activity-based performance measures
limited staffs performance to these specific activities and to
traditional allocation of resources.
The central Region 8 project officer received grant
performance evaluation feedback at the mid-year point that
workplan accomplishments were the "same" or "better" than
previous years, in terms of number of outputs, quality of
outputs, and timeliness of outputs. Regional project officers
reported that program performance did not change
significantly under the block grant. Regional program
project officers indicated that their experience with the block
grant was "business as usual" with little, if any, negative
impact. They reported that the State's overall progress in
fulfilling workplan commitments was acceptable. Also,
Region 8's end-of-year reviews reported that North Dakota
met its workplan commitments.
The Region's July 12,1996, written evaluation of North
Dakota's fiscal 1995 block grant included much of the same
information as provided in this report. In addition, the
evaluation stated that while North Dakota attributed multi-
media and pollution prevention activities to the block grant,
the Regional project officers did not attribute any increased
level of program activities directly to the block grant.
NEW GUIDANCE MAY
ELIMINATE
BARRIERS IF
IMPLEMENTED
EPA's PPG interim guidance included guidelines that would
help address some of the barriers that limited North Dakota's
resource flexibility. The PPG interim guidance encouraged
Regions and States to jointly develop and agree on priorities
and provided a process to address disagreements on those
priorities. In addition, the interim guidance emphasized that
flexibility was one of the PPG program's main purposes.
21
E1FMG6-08-0019-6400069
-------
However, in order to prevent States from being intimidated
and acquiescing to the Region on environmental priorities
and fund shifting, Regional staff needed to take a proactive
approach to-educate States on the PPG interim guidance and
the options available to increase resource and programmatic
flexibility.
The PPG interim guidance encouraged States and senior
Regional staff to negotiate a list of each State's most
significant environmental problems and related PPG goals.
The North Dakota block grant demonstrated the importance
of EPA and States negotiating environmental priorities and
goals to ensure that both parties agreed on a State's most
significant environmental problems. Jointly developing
priorities could alleviate some of the turf battles among
program staff and assist a State in developing its investment
and disinvestment strategy. Further, senior Regional
management needed to demonstrate its buy-in and
acceptance of PPG funding flexibility and provide States
with the maximum amount of flexibility possible. North
Dakota recognized in its investment and disinvestment
strategy that EPA's upper management needed to be involved
in establishing ground rules for determining program funding
shifts.
The PPG interim guidance briefly discussed that
disagreements between a State and EPA regarding PPG
program commitments, priorities, and/or related performance
indicators were to be resolved at the lowest level possible;
i.e., the project officer. After the project officer, a Dispute
Decision Official designated by the Regional Administrator
was the next level of appeal. North Dakota did not appeal
any of the Region's decisions on its initial investment and
disinvestment strategy.
Although the PPG interim guidance clearly stated that one of
the purposes of the PPGs was to provide States with the
flexibility to shift resources to their highest environmental
priorities, it did not emphasize that Regional staff should
take a proactive approach to encourage States to establish
priorities and shift funds as appropriate. North Dakota did
not contest the Region's response to its investment and
disinvestment strategy. North Dakota determined that it was
22 E1FMG6-08-0019-6400069
-------
more important to obtain the funds for program
implementation than it was to try to dispute the Region's
view on the State's priorities. As a result, North Dakota did
not shift funds under the block grant and did not demonstrate
whether shifting funds could improve environmental results.
CONCLUSION
Barriers prevented North Dakota from realizing resource
flexibility and improving environmental results. Region 8
needs to actively work with States to identify options to
overcome these barriers and to ensure that North Dakota and
other States with PPGs are fully benefitting from increased
resource flexibility. Regional and North Dakota staff did not
jointly develop and agree on environmental priorities,
evaluate where resources could be shifted to meet these
priorities, and assist each other in identifying opportunities to
move resources. Region 8 staff did not assist North Dakota
in finding appropriate ways to overcome statutory or
regulatory restrictions. The Region identified statutory
restrictions to shifting funds but did not provide suggestions
on other appropriate options to address environmental
priorities. Further, Regional staff did not encourage or assist
North Dakota staff in developing outcome-based
performance measures. North Dakota staff continued using
traditional activity-based performance measures that staff
stated required them to use traditional resource allocations.
Although North Dakota successfully accomplished its
workplan commitments, it did not obtain any significant
improvements in its environmental results in comparison to
prior years.
The PPG interim guidance provided an effective resource for
States interested in PPGs to build a strong PPG program that
provided flexibility and accountability. The interim
guidance emphasized the importance of jointly developing
priorities, developing a dispute process, and providing States
with the flexibility to shift resources to their highest
environmental priorities. However, unless North Dakota and
other States interested in PPGs are educated on the PPG
interim guidance, provided incentives to implement the
available options under PPGs, and encouraged to shift funds
to address their environmental priorities, States might be
23
E1FMG6-08-0019-6400069
-------
intimidated and acquiesce to EPA on environmental
priorities and fund shifting.
RECOMMENDATIONS We recommend the Acting Regional Administrator:
1. Require Region 8 and States' staff to jointly develop
and agree on State environmental priorities and
encourage States to shift resources, if needed,
towards their highest priorities.
2. Require Region 8 and States' staff to document
priorities and funding decisions in the SEA
workplans or Performance Partnership Agreements.
3. Assist States in identifying statutory provisions that
restrict resource flexibility prior to States submitting
proposals to shift resources and provide States with
other appropriate alternatives to address their highest
priorities.
4. Educate and inform States about changes in statutory
requirements and restrictions.
5. Obtain Regional staff buy-in early in the PPG
program to ensure States have maximum flexibility to
shift funds to address their highest priority
environmental problems.
6. Educate States on the benefits and importance of
developing environmental indicators and outcome-
based performance measures.
7. Assist States in revising current performance
measures by developing some standardized measures
or guidance for developing environmental indicators.
8. Negotiate environmental indicators and outcome-
based performance measures with each State.
9. Encourage States to assess the efficiency of their
current program operations, and assist States in
24
E1FMG6-08-0019-6400069
-------
streamlining and improving their operations to free
up additional resources that could be shifted to
address priority problems.
10. Educate Regional and State staff on, and encourage
the use of, the dispute process available for
disagreements between Regional and State staff
regarding program commitments, priorities, and
related performance measures..
11. Emphasize to Regional staff that they should take a
proactive approach to helping States establish
priorities and shift funds as appropriate.
AUDITEE COMMENTS Region 8 and North Dakota agreed with our findings and
AND OIG recommendations. Both the Region and the State offered
EVALUATION comments to clarify some issues and the Region offered
comments to modify the recommendations. We modified the
report as appropriate.
25 E1FMG6-08-0019-6400Q69
-------
UNITED STATES ENVIRONMENTAL PROTECTION
REGION VIII
"9 18th STREET - SUITE 50°
DENVER. COLORADO 80202-2466
APH-XuiX j.
°f 2
JUL 151896
OFFICE OF
Tu3 GENERAL
Ref: 8P2-SA
MEMORANDUM
JUL
1996
n
ECEIVE
CENTRAL AUDIT DIVISION
SUBJECT: -North Dakota Demonstration Block Grant
Changes to Draft Report No. E1FMF6-08-0019
FROM:
TO:
Jack "W. __
Acting Regional Administrator
Region VIII
-•Bennie S. Salem
Acting Divisional Inspector General
for Audit
Thank you for the opportunity to review the June 6, 1996
draft report: "North Dakota Block Grant Decreased Administrative
Costs and Disclosed Potential Barriers." In response to your
request for comments, several members of my staff met with Jeff
Hart and Kim Victor earlier this week to discuss the report.
One of the primary discussion points was the list of
recommendations on page 21 of the report. After our discussions,
we agreed that the recommendations would read as follows:
1. Require Region VIII staff and States to jointly develop and
agree on State environmental priorities and encourage States
to shift resources, if needed, towards their highest
priorities.
2. Require Region VIII staff and States to document the jointly
developed priorities and fund shifting decisions in the SEA
workplans or Performance Partnership Agreements.
3. Assist States in identifying statutory provisions that
restrict resource flexibility prior to States submitting
proposals to shift resources and provide States with other
alternatives to addressing States' priorities.
4. Educate and inform States about changes in statutory
requirements and restrictions.
5. Obtain Regional staff buy-in early in the PPG program to
ensure States have maximum flexibility to shift funds to
address their highest priority environmental problems.
Printed on Recycled Paper
-------
Page 2 of 2
6. ' Educate States on the benefits and importance of developing
environmental indicators and outcome-based performance
measures.
7. Assist States in revising current performance measures by
developing some standardized measures or guidance for
developing environmental indicators..
8. Negotiate environmental indicators and outcome-based
performance measures with each Statejar.
9. Encourage States to assess the efficiency of their current
program operations, and assist States in streamlining and
improving their operations to free up additional resources
that could be shifted to address priority problems.
10. Educate Regional and State staff on, and encourage the use
of, the dispute process available for disagreements between
Regional and State staff regarding program commitments,
priorities, and related performance measures.
11. Emphasize to Regional staff that they should take a
proactive approach to helping States establish priorities
and shift funds as appropriate.
We appreciate the thoroughness of the Inspector General's
Draft Report. It reflects very well on the OIG's positive role
in helping make the performance partnership agreement a success.
The report reflects a clear understanding of Performance
Partnership grants (PPGs), their purpose, and the State and EPA
commitments required for successful implementation of PPGs. We
look forward to a continued dialogue on these recommendations.
If you have any questions regarding the North Dakota Block
Grant audit, please contact Jack Bowles at 303/312-6315 or Sara
Summers at 303/312-6318.
cc: Fritz Schw-indt (N.D.)
Shelly Metzenbaum
Kerry Clough
Jack Bowles
Jeff Hart
Sara Summers
27
-------
NORTH DAKOTA
DEPARTMENT OF HEALTH
APPENDIX II
Page 1 of 1
ENVIRONMENTAL HEALTH SECTION
July 1. 1996
1200 Missouri Avenue
P.O. Box 5520
Bismarck, North Dakota 58506-5520
Fax *701 -328-5200
Mr. Bennie S. Salem
Acting Divisional Inspector General
Office of Inspector General, EPA
999 18th Street, Suite 500
Denver, CO 80202
Dear Mr. Salern:
Thank you for the opportunity to review the Draft North Dakota Demonstration Block Grant
Report No. E1FMF6-08-0019-XXXXXXX. We compliment and thank Kim Victor and Stacy
Schaefer on the professional review they conducted in Bismarck and on the report.
We concur with the Report's findings and recommendations as outlined in the Executive
Summary and on pages 21-22. We have only a few comments as to the report, as follows:
1. Our Department should be referred to as the North Dakota Department of Health on
page 1, page 1 in Chapter 1 and on page 24.
2. We suggest deleting the (following) last sentence in the first paragraph, page 7: "As a
result, North Dakota and the Region decided to narrow the block grant's purpose to
streamlining the grant process and gaining administrative efficiencies." We are still
implementing activities in accordance with the FY 95 and FY 96 block grant awards'
purposes: "improving partnerships, facilitating multi-media geographic, ecosystem and
pollution prevention approaches to environmental protection."
3. We have a suggested rewrite for page 9, last paragraph, as follows: The North Dakota
block grant demonstrated that States may not yet be convinced that the other PPG
options provide any benefit at this time. For example, North Dakota staff explained that
. their current grant could qualify as a Level I PPG (administrative flexibility) or with a
little more work a Level II PPG (administrative and program flexibility). However, they
are uncertain-what benefits a Level III or IV PPG would provide. They believe that the
Level III or IV options will require a great deal more work for the same amount of grant
funds and no guarantee in reduced oversight.
We appreciate your assistance and feel that your findings and recommendations will be very
important in the EPA/State PPG work. Thank you!
Sincer
Francis J. Schwindt, Chief
Environmental Health Section
Environmental Health Section
a^a Enforcement
701-328-5150
Environmental
Engineering
701-323-5188
Municipal
Facilities
701-328-5211
Printed on recycled paper.
28
Waste
Management
701-328-5166
Water
Quality
701-328-5210
-------
APPENDIX III
Block Grant
Chief
EPA
GAO
NEPPS
North Dakota
OIG
PPG
SEA
ABBREVIATIONS
North Dakota Demonstration Block Grant
North Dakota Department of Health's Chief of Environmental
Health Section
Environmental Protection Agency
General Accounting Office
National Environmental Performance Partnership System
North Dakota Department of Health
Office of Inspector General
Performance Partnership Grant
State-EPA Agreement
29
E1FMG6-08-0019-6400069
-------
APPENDIX IV
DISTRIBUTION
Office of Inspector General
Inspector General (2410)
Deputy Assistant Inspector General for
Internal and Performance Audits (2424)
Deputy Assistant Inspector General for
Acquisition and Assistance Audits (2421)
EPA Headquarters Office
Assistant Administrator for Administration
and Resources Management (3101)
Comptroller (3301)
Associate Administrator for Regional Operations and
State/Local Relations (1501)
Agency Audit Followup Coordinator (3304)
Agency Audit Followup Official (3101)
Director for Program and Policy Coordination
Office (3102)
Office of Congressional Liaison (1302)
Office of Public Affairs (1701)
Headquarters Library (3304)
EPA Region 8
Assistant Regional Administrator, Office
of Pollution Prevention, State and Tribal
Assistance-
Director of State Assistance Program
Regional Audit Liaison Coordinator
30
E1FMG6-08-0019-6400069
------- |