The National Environmental Performance Partnership System
A Review of Implementation Practices
United States
Environmental Protection
Agency
Office of the Administrator
EPA 140-R-13-001
May 2013
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Table of Contents
I. Introduction 2
II. Background.
A. The EPA-State Relationship and NEPPS 3
B. External Reports Evaluating NEPPS 8
III. Progress and Challenges 9
A. NEPPS Process and Tools 9
B. Performance Measurement and Flexibility 14
C. State Oversight 17
D. Resource and Budget Issues 19
IV. Recommendations 22
V. References 26
Appendix A: PPG Eligible Grants Not Included in Original STAG Appropriations
Earmarks 30
Appendix B: Examples of Flexibility in PPGs 31
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I. INTRODUCTION
EPA and the states have more than fifteen years of experience implementing the National
Environmental Performance Partnership System (NEPPS) to organize the federal-state
relationship in terms of setting priorities, deploying resources, and measuring progress. The
EPA-state partnership to protect human health and the environment has matured and improved
substantially during that period.
This review assesses how and to what extent NEPPS implementation has helped to realize the
goals for strengthening the EPA-state partnership, articulated below, characterizing both the
progress NEPPS has made since 1995 and the challenges the program faces going forward. The
review concludes with recommendations on addressing obstacles facing NEPPS while building
upon its past successes. The findings and recommendations in this report reflect EPA's
perspective on and views of NEPPS; it does not represent the states' current views or thinking on
this topic. EPA recognizes that it is essential to work with the states to prioritize the
recommendations for implementation, with the goal of further improving the EPA-state shared
governance framework and promoting a greater mutual consensus on priorities, planning and
accountability.
This review is supported by input from various sources including reports, briefings, surveys, and
other documents:
• Government Accountability Office (GAO) and Office of the Inspector General (OIG)
reports on NEPPS-related topics
• NEPPS Program Implementation Data
• Office of Congressional and Intergovernmental Affairs (OCIR) issue papers and
briefing materials
• NEPPS National Guidance (FY 2005-2013)
• Interviews with the Deputy Regional Administrators (DRAs) on NEPPS and the
EPA-State Partnership, Fall 2011 and Winter 2012
• EPA-State Strategic Planning Pilots (March 2005 and December 2009)
• White Paper on Meeting the Challenges of Environmental Protection Together:
Building Strong EPA-State Partnerships, EPA, October 2010
The original NEPPS Agreement, the Joint Commitment to Reform Oversight and Create a
National Environmental Performance Partnership System, (hereinafter 1995 NEPPS Agreement)
outlined criteria by which the program is to be periodically evaluated: effectiveness, public
credibility, fiscal soundness, and program accountability. This analysis supports three goals
articulated in the FY 2011-2015 EPA Strategic Plan Cross-cutting Fundamental Strategy for
Strengthening State, Tribal and International Partnerships.
1. Improve implementation and consistent delivery of national environmental programs
through closer consultation and transparency.
2. Work with states to seek efficient use of resources through worksharing, joint
planning using data analysis and targeting to address priorities, and other approaches.
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3. Play a stronger management role to facilitate the exchange of data with states to
improve program effectiveness and efficiency.
II. BACKGROUND
A. The EPA-State Relationship and NEPPS
The EPA-state relationship has long been complex, due in part to the intricate division of roles
and responsibilities under the various federal environmental statutes. Primary responsibility for
37 programs under 8 statutes can be delegated to states. These laws assign to EPA responsibility
to promulgate regulations, develop policy and guidance, oversee permitting and enforcement,
collect data from the states, measure performance, and report to Congress. States are often
charged with carrying out most of the implementation work, including issuing permits, providing
compliance assistance, inspecting regulated facilities, and initiating enforcement actions.
Prior to the creation of EPA in 1970, states provided the majority of environmental management
controls—permits, discharge standards, as well as public health and natural resource regulations.
Subsequent to the establishment of EPA, the federal government became an integral partner with
states and localities in managing, promoting and regulating environmental protection activities.
By the 1990s, states had increased their environmental management capacities and were
maintaining core program activities. Growing interest in performance-based management and
increasing recognition that remaining environmental problems required innovative solutions set
the stage for the 1993 Task Force on Enhancing State Capacity.
In its report, the Task Force set forth a number of recommendations including establishing: a
new framework and policy for EPA-state relations; a joint process for strategic planning and
integration of priorities; and a mechanism to institutionalize state capacity. The Task Force also
recommended further strengthening state management capacity and infrastructure; streamlining
the grants assistance process; pursuing alternative financing mechanisms; and encouraging
legislative action to accomplish various ends (e.g., proposing language for legislative initiatives
to make state-capacity building a primary mission for EPA; proposing legislative changes to the
Administrative Procedures Act (APA)1 and the Federal Advisory Committee Act (FACA)2;
seeking amendments during reauthorization of EPA's statutes to clarify the roles and
responsibilities of the states and EPA.
The Task Force gave rise to the State/EPA Capacity Steering Committee which was charged
with implementing the Task Force's recommendations. The Committee produced the 1995
NEPPS Agreement which outlined the following guiding principles:
1 The Task Force recommended: "Articulate the current limits and opportunities under the APA for including states
in the rule-making process, and propose specific legislative changes to the APA that would address EPA and state
needs."
2 The Task Force recommended: "Offer guidelines on how EPA can currently work with the states under the
FACA. Propose specific changes to FACA that would recognize the right of states, as delegated managers of EPA
programs, to be consulted on matters of policy and management of national environmental programs without the
need to charter formal advisory committees."
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1. Continuous environmental improvements are desirable and achievable throughout the
country.
2. A core level of environmental protection should be maintained for all citizens.
3. National environmental progress should be reported using indicators that are
reflective of environmental conditions, trends, and results.
4. Joint EPA/state planning should be based on environmental goals that are adaptable
to local conditions while respecting the need for a "level playing field" across the
country.
5. EPA/state activity plans and commitments should allocate federal and state resources
to the highest priority problems across all media, and should seek pollution-
prevention approaches before management, treatment, disposal, and cleanup.
6. A differential approach to oversight should provide an incentive for state programs to
perform well, rewarding strong state programs and freeing up federal resources to
address problems where state programs need assistance.
As states have improved their management capacity, the number of eligible programs delegated
to states has increased. From 1992 to 2007 eligible program delegation to states has increased
from 40 to 96%. Now states conduct over 90% of core program activities, including permitting,
compliance enforcement, data entry, first response, and developing non-regulatory tools. On
average, 25% of state environmental budgets are funded by federal grants; however, states have
assumed an increasing share of implementation costs.3
The EPA-state relationship has evolved considerably since the inception of NEPPS. While states
once had minimum influence in goal and priority setting, and state commitments were
determined through cumbersome memoranda of agreement (MOAs)4 between EPA headquarters
and the regions, states now have opportunities to influence priorities, strategies, and annual
performance commitments. They are more involved with budget development and most
negotiate Performance Partnership Agreements (PPAs) and Performance Partnership Grants
(PPGs), the primary tools to establish priorities and deploy resources. PPGs allow states to
combine categorical grants for greater spending flexibility on state priorities. PPAs are
negotiated strategic plans that articulate joint goals and priorities, key activities and roles and
responsibilities.5
Beginning with the original 1995 NEPPS Agreement, and affirmed over time in various vision
statements, operating principles and Environmental Council of States (ECOS) resolutions, states
have consistently expressed their support for NEPPS. For example, in March 2011, ECOS
3 Data source: Environmental Council of States. See:
http://www.ecos.org/content/search7search querv=program+delegation.
4 MO As were replaced by EPA's Annual Commitment System (ACS) in 2004.
5 For more information about PPAs and PPGs, see: http://www.epa.gov/ocir/nepps/index.htm.
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passed a resolution that affirmed "NEPPS overall as an important and positive step in the right
direction," and its role in providing benefits for many states through the use of PPAs and PPGs,
"including increased administrative flexibility, the ability to direct grant resources to cross-
cutting and multi-media projects under Part 35 grant rules, and increased support for innovative
projects."6
Further, the resolution reaffirmed support for the principles embodied in the original 1995
NEPPS Agreement and for the gains realized through NEPPS, including those achieved through
the use of PPAs and PPGs, and recognized that NEPPS has served to assist EPA in meeting the
goals of the Government Performance Results Act (GPRA). It also acknowledged that there are
opportunities to realize even greater nationwide benefits from the existing NEPPS model, and
that doing so is more important than ever given current, and most likely future, federal and state
budget challenges.
Tracking the progress and performance of states using PPAs and PPGs has been an important
feature of NEPPS since its inception in 1995. Figure 1 illustrates a slow but steady increase in
the state environmental agency participation in NEPPS (via the use of PPAs and PPGs) for fiscal
years 1997-2012. In FY 2012, 33 states and territories were using PPAs and 42 were using
PPGs.
During the same time frame, participation by state agriculture agencies in NEPPS (Figure 2)
shows a decline in PPA use (from a high of 8 in FY 2000 to a low of 2 in FY 2008), but an
increase in PPG use (from a low of 16 in FY 1997 to a high of 29 in FY 2003 and 2004). Many
state agriculture agencies are responsible for implementing three EPA pesticides grants:
Pesticides Program Implementation (FIFRA 23(a)(l)); Pesticides Cooperative Enforcement
(FIFRA 23(a)(l)); and Pesticide Applicator Certification and Training (FIFRA 23(a)(2)). These
state agriculture agencies combined their pesticide grants into PPGs by taking advantage of the
administrative benefits and flexibility afforded by this tool.7
6 ECOS Resolution Number 8-10, Revised March 30, 2011: Continued State Commitment to NEPPS and
Strengthening the State-EPA Partnership.
1 In addition, eight state environmental agencies responsible for implementing pesticide grants manage them in
PPGs.
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Figure 1: State Environmental Agencies
• PPAs
DPPGs
1997 2000 2003 2004 2006 2008 2010 2012
Figure 2: State Agriculture Agencies
• PPAs
DPPGs
1997 2000 2003 2004 2006 2008 2010 2012
A review of PPAs used by the states in EPA's 10 regions in FY 2012 reveals that there are three
prevailing types with the following characteristics:
• Type A: comprehensive, strategic and operational and covers all major program areas;
often linked to grant resources, provides for administrative and/or programmatic
flexibility; and serves as the PPG and/or categorical grant workplan.
• Type B: broad in scope, enumerates the state's strategic priorities, and may be linked to
grant resources; may serve as the PPG workplan; may include a description of
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environmental conditions and strategies for addressing priorities, roles and
responsibilities; and may include compliance and enforcement provisions.
• Type C: high-level strategic agreement; generally not linked to grant resources and does
not serve as a PPG workplan; includes the state's strategic priorities and may include
compliance and enforcement provisions.
In recent years, slightly over half of all the PPAs have been Type A (comprehensive and
operational), while the balance typically comprised Types B (broad) and C (high-level and
strategic) PPAs. Figure 3 shows the distribution of PPA types by region.8
Figure 3: Types of PPAs
• Type A
• Type B
DTypeC
Figure 4 illustrates the rate of growth in the amount of eligible State and Tribal Assistance Grant
(STAG) funds that are managed in PPGs. In FY 2012, 38 % of eligible funds were included in
PPGs.
Total number of states/territories in each region: Rl(6 states); R2 (2 states/2 territories); R3 (6 states); R4 (8
states); R5 (6 states); R6 (5 states); R7 (4 states); R8 (6 states); R9 (4 states/2 territories); RIO (4 states).
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Figure 4: Total PPG-Eligible Funding and Funds Awarded in PPGs
1400
1200
1000
o 800
600
FY FY FY FY FY FY FY FY FY FY FY FY FY FY
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Total PPG-Eligible Funding
Funds Awarded in PPGs
B. External Reports Evaluating NEPPS
During the past decade, the OIG, GAO, the National Academy of Public Administration
(NAP A), ECOS and others have evaluated various aspects of NEPPS. These early reports
revealed certain recurring themes and many were quite critical. For example, GAO noted that
NEPPS had not been well integrated into EPA; that states indicated their investment in NEPPS
outweighed the benefits received; OIG concluded that EPA leadership did not provide clear
direction and set expectations with regard to NEPPS; that a lack of training of EPA staff had
hindered effective implementation of NEPPS; ECOS noted that the PPA/PPG experience yielded
mixed results; NAPA stated that top EPA officials gave inconsistent support to NEPPS.
The reports concluded with recommendations for improvements and changes, most of which
EPA has since adopted or addressed. The recommendations cited in the early reports from GAO
and OIG included concepts and ideas that were later developed and ultimately codified in the
PPG regulations at 40 CFR Part 35 in 2001. A 2007 GAO report noted that EPA has made
substantial progress in improving priority setting and enforcement planning with states through
its system for setting national enforcement priorities and NEPPS, thereby fostering a more
cooperative relationship. Also, EPA and states have made progress in using NEPPS for joint
planning and resource allocation.9
9 GAO-07-883, July 2007: EPA-State Enforcement Partnership Has Improved but EPA 's Oversight Needs Further
Enhancement.
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Despite the obstacles and challenges noted in this review, there has been significant progress in
advancing NEPPS principles and the EPA-state relationship/partnership. Ongoing trends reveal
that NEPPS is on a solid footing but challenges to fully realizing its benefits nevertheless persist.
However, there are opportunities for further improvement which are discussed in this review.
Although there is some variation in the degree of support among the National Program Managers
(NPMs), regions and even the states, overall, leadership support for NEPPS currently is quite
strong at both the state and EPA levels (including the regions and NPMs). There is a strong
commitment on the part of EPA headquarters and the regions to implement PPGs effectively by
providing guidance (e.g., annual NEPPS national guidance; Tribal and State PPG Best Practices
Guides). Self-assessments and joint evaluations continue to play an important role in supporting
priority setting and documenting accomplishments in meeting goals, objectives, outcomes and
outputs.
III. PROGRESS AND CHALLENGES
This section describes observations, challenges, benefits and lessons learned stemming primarily
from two key sources that provide a holistic viewpoint of NEPPS: the EPA-funded state
planning pilots conducted from 2003 to 2009, and OCIR's interviews of the ten DRAs.
Collectively, the results of all these inputs provide historical insight as well as an up-to-date and
comprehensive regional-state perspective on how well NEPPS is working.
ECOS selected a number of pilot states and conducted three rounds of pilots between 2003 and
2009 to test new approaches to state and federal planning and priority setting.10 In particular, the
pilots focused on developing state strategic plans and state/regional priorities; internal alignment
and improvements in joint planning and priority setting; state engagement in EPA's national and
regional planning processes; and developing or improving PPAs/PPGs.11
During the fall of 2011 and early 2012, OCIR interviewed the DRAs about the NEPPS process in
particular and the EPA-state relationship in general. During the interviews, the DRAs offered
observations, described challenges and provided recommendations on a range of topics,
including how well NEPPS is implemented in the regions, the use of PPAs/PPGs as tools, the
planning process, approaches to improving effectiveness and flexibility, differential oversight,
and resource/budget issues.
A. NEPPS Process and Tools
Results ofECOS-EPA Strategic Planning Pilots
Following the first round of pilots, ECOS reported an increase in efforts and opportunities to:
better engage the states in joint planning and national strategic planning and priority setting;
10 The following states participated in ECOS pilots, either individually or as part of a multi-state effort (breakdown
is by region). Region 1: Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island, Vermont; Region 3:
Delaware, Maryland, Pennsylvania, Virginia, West Virginia; Region 4: Kentucky, Tennessee, South Carolina;
Region 5: Indiana, Illinois, Minnesota, Wisconsin; Region 6: Texas; Region 8: Colorado, Montana, North Dakota,
South Dakota, Utah, Wyoming; Region 10: Idaho, Oregon, Washington.
11 Reports of the Strategic Planning Pilots, published by ECOS, March 2005 and December 2009.
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identify states' individual priorities; overcome the disconnects between strategic and operational
planning; work more effectively with EPA to address the most important issues and
environmental problems; and share the benefits of the pilots with the regions and other states.
States reported specific benefits in the second round of pilots, including: developing frameworks
for improving alignment and integration of planning processes and priorities which were
supported at both staff and commissioner levels; increased satisfaction with the identification of
state priorities, joint strategies and EPA commitments in PPAs/PPGs or workplans; increased
ability to negotiate investments, disinvestments and alternative strategies with EPA; increased
communication, trust and cross-program collaboration (internally across state media programs,
between states in a region, with EPA regional offices, and/or with external stakeholders).
In round three of the pilots, states reported specific benefits which included improved PPAs and
PPGs that promote state/regional priorities due to the direct engagement of regional offices in
joint planning (and for some states, senior management's involvement made all the difference in
the pilots' successes). Echoing the results in rounds 1 and 2, the states reported that progress had
been made in improving relationships between states and EPA, in EPA's planning process, and
in enhancing opportunities for EPA/state joint planning. The states made it clear that EPA's
continued leadership had created opportunities for more focus on state priorities and state
engagement in EPA planning. In at least one pilot, it was reported that engaging interstate media
associations helped increase communication and collaboration across programs. The states in
several of the pilots actively engaged their staff and/or the public in priority setting or strategic
planning.
The lessons learned and observations that emerged from these pilots include:
Sustained Leadership Support Drives Action and Success
• Senior leadership commitment at both the state and EPA levels, e.g., commissioner,
Regional Administrator (RA) and DRA, can greatly influence the effectiveness of the
PPA/PPG, joint planning and priority setting processes.
• An EPA regional champion is critical to moving a state's interest in alternate compliance
monitoring strategies, and states considering pursuing such strategies could benefit from
other states' experience in this arena.
• Visible and public affirmation of NEPPS by ECOS and EPA provided the needed support
for state and EPA regional efforts to develop PPAs and PPGs.
Strategic Planning/Joint Priority Setting Makes a Difference
• Strategic planning/priority setting can break down internal barriers and help identify
cross-media opportunities. However, allegiances to and protection of media programs at
EPA and in the states are strong forces that affect efforts to promote strategic thinking,
priority setting and alignment of planning processes.
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• In addition to planning, renewed focus should be placed on assessing progress and
evaluating results.
• States want reduced transaction costs in promoting their priorities or strategies, whether
for alternative compliance monitoring or cross-media approaches.
• A clear set of internal priorities helps states in their negotiations with EPA regarding
grant workplan commitments, PPAs and PPGs.
• User-friendly and flexible PPAs/PPGs are the most successful in establishing and
maintaining long-term participation in NEPPS.
Collaborative Learning Builds Awareness and Reduces Uncertainty
• Tools such as webinars, workshops and ongoing EPA-ECOS workgroups are useful for
sharing best practices, successes, lessons learned, and developing actions to improve the
EPA-state relationship.
Although the states in these pilots commented on certain aspects of the EPA-state relationship,
there were sufficient positive reactions to conclude that NEPPS as originally envisioned is
continuing to evolve and improve. It is important to note that over a decade ago, states exercised
minimal influence in setting goals, priorities and performance commitments, and NPM guidance
was issued by program offices on different schedules making comprehensive planning difficult.
Today, by contrast, revamped and retooled processes provide ongoing opportunities for states to
influence priorities, strategies, annual performance commitments and budget development. Most
states now negotiate PPAs and PPGs as part of their joint planning efforts.
When NEPPS was established in 1995, states had limited flexibility to address alternative state
priorities or approaches. Categorical grant funds could be used only for a defined set of
activities and it was difficult to fund cross-cutting projects. Now, joint planning and priority
setting provide opportunities for states to propose alternative priorities, strategies, and
approaches to achieving environmental goals. The completely revised Part 35 grant rule
provides for a range of flexibility in how state grant funds can be used.
NEPPS and PPAs/PPGs
The DRAs, during the interviews about NEPPS implementation practices, generally lauded the
positive and beneficial aspects of the NEPPS process remarking on how well it works, how
efficient, effective and flexible it is, and how ultimately it provides benefits and value to the
regions and the states. In particular, some DRAs noted that the process drives more frequent
dialogue at all levels which results in marked improvements in communications, performance
measures, the sharing of results, and joint strategic planning around significant and meaningful
issues. Further, it provides the regions, states, and tribes the ability to adjust PPAs to meet
individual (local) needs and requirements, and commit to activities that align with EPA's
national priorities.
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As for states experiencing budget problems, NEPPS provides the means to identify areas
requiring attention and how/where to focus their resources. Another salient observation about
the NEPPS process is that it provides a good platform for a discussion on redesigning the role of
the regions in relation to oversight, direct execution of programs, and implementation of
priorities. Finally, it was noted that the NEPPS process provides a structure and vehicle for a
policy-level relationship between EPA and states.
The DRAs also commented on PPAs and PPGs, two popular and widely used NEPPS tools.
They noted that PPAs increasingly reflect the true joint priorities of EPA and the states; that
PPAs/PPGs are useful tools for rallying around local issues which add credibility and value to
them as strategic operating agreements. Broad scale PPAs allow states to provide in-depth
assessments or descriptions of their environmental conditions.
The Annual Commitment System (ACS), according to the DRAs, provides a good starting point
for PPA/PPG negotiations, and is an effective and transparent process for negotiating state
commitments. The DRAs reported that the NPMs are generally receptive to regional/state push-
back on specific measures or commitments which can result in a successful re-negotiation. They
also stressed the fact that the relationship between state and EPA staff is the most important
component of a region's work with its states. Even when the work is difficult and disagreements
occur, everyone works to ensure that productive relationships are maintained.
One region is undertaking an evaluation/assessment of its current state of affairs which will
include a three-year profile of state staffing; regional staffing and STAG funds; the Priorities and
Commitments List12 (P&C List) and ACS measures; and the status of the region's negotiations
with its states. This information will be analyzed in the context of the PPA/PPG process and the
results could potentially serve as a best practice approach which can be applied more broadly
across the regions.
In terms of challenges to overcome, the DRAs reflected on the issue of differing state and federal
fiscal years creating difficulties in aligning state and regional planning processes and getting the
states to focus on the regional priorities. Since state planning cycles are different, EPA has
found it challenging to accommodate the differences. Also, this longstanding planning
alignment issue can cause other funding complications and delays which are further compounded
by continuing resolutions.
Finally, it was noted that NEPPS is more difficult to implement in states (e.g., California) that
are governed by many different districts headed by decision-making boards that have
independent authority. This fragmenting of environmental responsibility makes broad strategic
planning and PPG workplan negotiations more difficult.
12 This list is used to communicate overall annual PPA workplan expectations to the region's states. It is customized
on a state-by-state basis to reflect what the region believes are the most important elements that each state should
focus on in the grant year.
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Other PPA and PPG Challenges
NEPPS is first and foremost a system of principles and tools to drive performance, efficiency and
flexibility in the EPA-state relationship. However, Performance Partnerships are often equated
with PPAs and PPGs, and not with NEPPS' broader strategic vision and goals. Nevertheless,
misperceptions about PPGs in some quarters regarding accountability continue to persist.
Increasing requirements for more performance measurement and reporting create additional
tension between accountability and flexibility.
Further, PPGs are somewhat limited in their leveraging ability because approximately two-thirds
of EPA's state grants are not eligible to be incorporated into PPGs. While most of these PPG-
ineligible grant funds are those that fund large water and wastewater infrastructure projects not
directly linked to state program work, i.e., state revolving funds for Clean Water Act (CWA) and
Safe Drinking Water Act (SDWA), there are other ineligible grants that do indeed contribute to
state program implementation such as those listed in Appendix A. Also, states receive funds
from other federal agencies and/or departments (e.g., U.S. Department of Agriculture,
Department of Energy) to accomplish similar environmental goals.
Under 40 CFR Part 35, the Administrator has the authority to add, delete, or change the
programs eligible for inclusion in a PPG in guidance or in a regulation. If a new grant program
is authorized in the State and Tribal Assistance Grants (STAG) appropriations account, the
Administrator can include that new program in the list of PPG-eligible programs.
Even though significant progress has been made towards achievement of NEPPS goals, a few
key obstacles and shortcomings remain. The use of NEPPS tools—PPAs and PPGs—remains
solid and robust in states and regions that favor them. Despite longstanding and proven track
records, PPA usage has leveled off in recent years and some regions have reported not much new
interest in PPAs13 as a tool, but much interest in PPGs.
Expanding PPA/PPG usage, however, by increasing the level of state participation may prove to
be somewhat challenging. First impressions can also play an important role in whether or not a
state seeks to negotiate a partnership agreement. In addition, early in the history of NEPPS,
some states that chose to participate initially decided not to continue participating citing high
transaction costs. Recent examples14 of why states chose not to continue participating include:
• One state was not convinced that PPAs and PPGs provide the desired flexibility.
• The federal share was a small part of the state's budget and transaction costs were too
high.
• The early PPAs were too cumbersome and bureaucratic, and once negotiated, they were
not used as management tools.
• Changes in political leadership can impact decisions about PPA/PPG use.
13 One region noted that it is difficult to convince its states to engage in discussions on PPAs. Part of the reason
appears to be that state directors never saw much value in comprehensive planning, as those plans would become
completely overwhelmed by the sheer number of natural disasters that are prevalent in the South: hurricanes,
tornadoes, floods, etc.
14 Source: Performance Partnership Participation and Historical Perspective Table, FY 2012.
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• One state was unable to resolve an issue with its region which resulted in non-renewal of
its PPA.
• One state's PPA has not been renegotiated since 2007 because, as a strategic document, it
did not provide the opportunity to change commitments to address the state's priorities.
• One state believes it can achieve needed flexibility with categorical grants.
• One state used a PPG for the first time in 2005 but requested early termination at the end
of FY 2008 because it did not believe that any savings, including administrative, were
being realized by combining grants in a PPG. This was due in part to the state
decentralizing financial and administrative management functions.
Another challenge involves countering a perception about regional differences in how NEPPS
tools are used. ECOS made a specific recommendation (in the context of formal comments on
OCIR's past NEPPS national guidance) that "EPA address regional offices' differences in their
views and practices relating to PPAs/PPGs." Regional support for PPAs/PPGs, by definition,
tends to be varied given the disparate and unique needs of individual states. Although EPA
strives for national consistency and a level playing field in its relationship with the states,
regional variation in NEPPS implementation practices is prevalent. As NPM for NEPPS, OCIR
recognizes these differences, and through guidance, encourages the regions to work with their
states to use the NEPPS process and tools in the most effective way possible.
Over time, as NEPPS became increasingly institutionalized within EPA and the states, interest in
quantifying its overall benefits grew correspondingly. In 2010, as part of another evaluation,
OIG staff developed a preliminary framework and methodology to estimate the monetary
benefits of annual strategic planning based on the number of states that use PPAs and PPGs.
OCIR is interested in this approach and its potential application to NEPPS in particular. OCIR
held meetings with OIG staff to better understand the methodology employed, and plans to
further explore the feasibility of developing an estimate of the monetary benefits of
implementing NEPPS with the OIG and other EPA program evaluation experts.
B. Performance Measurement and Flexibility
Performance Measures and Reporting
Traditionally, nearly all performance reporting had been based on activity or output measures.
However, over a decade ago, with support from the states and EPA using the NEPPS process,
Core Performance Measures (CPMs) were developed under the operating principle that reporting
measures should make environmental indicators and program outcome measures a priority.
CPMs were a limited set of national measures designed to help gauge progress towards
protection of the environment and public health, and they were an important step in refining
reporting measures.
In 1997, the states and EPA issued a joint statement15 reaffirming their commitment to use core
performance measures as tools to track progress in achieving environmental results. In 2001, the
15Joint Statement on Measuring Progress Under the National Environmental Performance Partnership System,
August 14, 1997.
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PPG regulations at 40 CFR Part 35 mandated performance reporting and joint evaluation of
progress. However, in recent years, the CPM effort has been superseded by EPA's broader
implementation of GPRA and now the Government Performance and Results Act Modernization
Act of 2010 (GPRAMA). Under GPRA, EPA must set out strategic goals and objectives and
measures that will be used to assess progress towards meeting them.
In addition to GPRA, EPA has been working with the states for many years to promote more
transparent and consistent reporting of state grants and the results from these grants. For
example, EPA also recently issued a grants policy on "State Grant Workplans and Progress
Reports," which applies only to the fourteen state categorical grant programs, and requires that
workplans and associated progress reports prominently display three Essential Elements: the
EPA Strategic Plan Goal; the EPA Strategic Plan Objective; and Workplan Commitments plus
time frame. This approach provides regions and states flexibility in negotiating workplans and
workplan formats, but at the same time, promotes accountability, Strategic Plan alignment and
consistent performance reporting. To further transparency, the policy established the State Grant
Information Technology (IT) Application (SGITA) to electronically store workplans and
progress reports.
In response to Congressional scrutiny of EPA's grant unobligated balances and grantee
unexpended appropriations, as well as state concerns over delays in receiving grant awards, EPA
recently issued a grants policy on the "Timely Obligation, Award and Expenditure of EPA Grant
Funds." This policy, which is intended to streamline grant processes and improve grant outlay
rates, addresses issues relating to delays in obligating grant funds in the first year of availability;
delays in awarding grant funds after the passage of a full appropriation; grantee accumulation of
unexpended appropriations in awarded grants; and the need to accelerate grant outlays.
Another goal that EPA has been pursuing is reducing states' reporting burdens through actions to
increase transparency and direct more attention to the regions' and states' environmental
priorities. The EPA-ECOS Reporting Burden Reduction Initiative, which began in 2006 and
concluded in 2011, was intended to reduce states' low-value, high-burden reporting requirements
for various media (e.g., air, water), thus conserving both states' and EPA's valuable resources
while maintaining a commitment to protecting human health and the environment. A substantial
number of the priority areas identified by the states have been resolved at the regional and
headquarters levels thus resulting in significant reductions in reporting burden, increased
transparency, clarity and open communication. This is a significant accomplishment which not
only advances NEPPS principles and strengthens the EPA-state relationship in general, but also
ensures efficiency by creating tools for incorporating burden reduction into EPA's standard
operating procedures.
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Today's challenge is to continue to streamline and improve performance measures and reporting,
as well as data quality and data systems in order to provide a complete and accurate picture of
environmental performance and accomplishments.16
Flexibility
From a regional perspective, most of the DRAs interviewed affirmed that PPGs are very helpful;
their flexibility highly valued, and in the future will be even more useful as regions and states
increasingly face tighter fiscal constraints. States appreciate the additional funding flexibility
available through PPGs because it allows them to focus more on higher priorities with multi-year
PPGs. PPGs also provide a central point for coordination, especially for meeting match
requirements.
Administrative flexibility is the one characteristic most often cited and touted when describing
the comprehensive benefits of PPGs. Many DRAs described PPGs as strong, streamlined
structures with administrative flexibility and efficiency. The benefits include streamlined
accounting and reporting, and the composite cost-share feature eliminates the need to monitor
and track the required state match. In addition, states have the ability to pool resources to
address priority work (e.g., emergency environmental and public health issues), support special
projects, purchase equipment, fund staff, and meet cost-share requirements. See Appendix B for
specific examples of flexibility in PPGs.
However, the DRAs noted that the use of programmatic flexibility available through PPGs has
been limited. Numerous reasons were offered for the persistence of barriers to greater flexibility
in PPGs. Many DRAs noted that flexibility using NEPPS as a vehicle is not occurring because
of resource constraints. States and regions are forced to choose from among the statutory
mandates by trying to identify and eliminate those causing the least harm and presenting the least
risk. Programmatic shifts do not occur within PPGs because of stovepipes and fiscal constraints.
In fact, programmatic flexibility is the exception rather than the rule because states rarely ask to
shift work between programs. In addition, programmatic flexibility in PPGs is constrained
because of the large number of measures and other requirements in NPM guidance, as well as the
large number of Program Results Codes (PRCs).17
Other roadblocks to PPG flexibility were cited. Sometimes issues that are internal to a state—fee
structures, technical or legal constraints, planning and accounting processes, inability to co-
mingle funds—can limit its ability to take advantage of available flexibilities. In other instances,
16 EPA began a collaborative effort with the states in 2012 called E-Enterprise. It is a transformative concept
intended to make the national environmental system more accessible, effective and efficient by enabling state and
federal regulators, regulated entities and the public to take advantage of advances in monitoring, reporting and
information technology. For example, information that is now housed in separate databases (or file cabinets) will be
electronically integrated and accessible. EPA and the states will have common data to allow collaborative
management of the national environmental program.
17 PRCs were established to account for and relate resources to the Agency's Strategic Plan goals and objectives,
national program offices and responsibilities, and governmental functions. PRCs are created when the annual EPA
budget is submitted to Congress each February and then formally established in the Integrated Financial
Management System (IFMS) with the enactment of EPA's appropriation act. PRCs may be updated at any time.
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states would have to change their business practices to make NEPPS work better for them. In
certain cases, the region itself becomes the stumbling block. It was observed that some project
officers have a difficult time understanding the PPG concept that grant money loses its identity
when it becomes part of a PPG. This has been challenging for one region especially with the
Brownfields program and managing carryover funds in particular. Also, EPA policy can be an
obstacle. For example, the unliquidated obligations (ULO) grant policy may sometimes conflict
with PPG flexibility. The policy requires that ULOs be managed within a specified time frame.
A state requesting an extension for an expiring project period in a PPG that exceeds the ULO
policy's time frame would require a waiver which is typically not granted except under exigent
circumstances.18
C. State Oversight
The differential oversight concept, originally proposed in the 1995 NEPPS Agreement, has not
been implemented. The Agreement envisioned EPA focusing on program-wide, limited, after-
the-fact reviews rather than on a case-by-case intervention. The Agreement stated that
differential oversight would serve as an incentive for strong state performance, thus enabling
EPA to focus resources on state programs that need more assistance to perform well.
Eight years ago, a DRA put forth a proposal which was primarily intended to emphasize
environmental results and revitalize the differential oversight component of the 1995 NEPPS
Agreement. Its key operational feature involved accreditation of state environmental programs
that demonstrated satisfactory performance. The primary vehicle for implementing this proposal
would be a 3-year PPA as the single definitive agreement that clearly documented the state's
responsibilities to meet federal requirements, including performance measures and expectations.
Benefits include the ability of EPA to assist states by greatly reducing the real-time oversight of
state permits, inspections, enforcement actions and other state decisions. The proposal was
tabled because the author was unable to build sufficient support across the regions to improve
and refine his proposal.
Several DRAs acknowledged that differential oversight has never been implemented due to the
difficulty in developing appropriate benchmark metrics to assess state/regional performance.
Another reason, one DRA noted, was because of the close hold that media programs have on
their activities. Tailored or variable oversight is generally avoided in another region because it's
too complicated. For example, since state performance varies over time, it would be difficult for
a region to determine the level of performance at any given time, and whether/when it changes.
In yet another region, differential oversight is implemented on a case-by-case, program-by-
program basis. One region emphasized that striking a balance between after-the-fact oversight
18EPA's ULO policy (GPI-11-01) limits the project period for PPGs to 5 years but does not address situations in
which activities are funded during the final year of a 5-year PPG, thus requiring additional time for completion. For
example, one state has some older grants with contracts that take longer than 5 years to complete. Seeking
additional time requires a waiver, which Senior Resource Officials may request under this policy, but only under
limited circumstances—national security concerns, circumstances of unusual or compelling urgency, unique
programmatic considerations or the public interest. This also affects "high-risk" grantees since they have a tendency
to not complete workplan activities in a timely manner.
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(e.g., the State Review Framework (SRF)) and ongoing, real-time reviews (e.g., Permit Quality
Reviews (PQR)) appears to be the most optimal approach.
Oversight Reform and EPA Initiatives
While state concerns over redundancies, excessive reporting requirements, unnecessary EPA
interventions and uneven oversight, as well as EPA concerns with accountability and leveling the
playing field persist, a number of national oversight reforms have been implemented. Some
states and regions have even further improved their oversight relationships. EPA has developed
several initiatives that lay the groundwork for further oversight reform.
• The State Review Framework was instituted to insure consistent oversight of all states
for enforcement and compliance assurance regarding the Clean Air Act (CAA),
CWA, and the Resource Conservation and Recovery Act (RCRA). The SRF created
a more predictable baseline oversight approach and increased transparency of the
effectiveness of delegated programs.
• The CWA Action Plan reforms oversight to address high noncompliance, low
enforcement rates, and absence of data for the National Pollutant Discharge
Elimination System (NPDES) program. The Action Plan focuses enforcement on the
most serious water pollution problems, strengthens and makes more consistent
oversight of states and tribes, and improves public accountability through increased
transparency.
• State Performance Dashboards and comparative maps provide the public with
information about the performance of state and EPA enforcement and compliance
programs across the country. The dashboards help ensure a minimum level of state
performance and a level playing field for regulated entities across states. Information is
currently available for CWA (NPDES), RCRA, and CAA programs. The dashboards will
be expanded to include SDWA and the Federal Insecticide, Rodenticide, and Fungicide
(FIFRA).
• The Permitting for Environment Results (PER) initiative is a multi-year effort by EPA
and the states to improve the overall integrity and performance of the NPDES
program. Since most states are authorized to implement the NPDES program, the
PER initiative is based on a strong partnership between the states and EPA. The
program prioritizes permits by environmental significance, identifies best practices
for increasing permitting process efficiency, and regularly assesses the effectiveness
of NPDES programs. The PER effort assures the consistent implementation of
NPDES.
• Permit Quality Reviews is a process EPA uses to assess whether NPDES permits are
developed in a manner that is consistent with applicable requirements in the CWA
and environmental regulations. During each PQR, EPA reviews a representative
sample of states' NPDES permits and evaluates permit language, fact sheets,
calculations, and any supporting documents in the permit files. Through this review
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mechanism, EPA can promote national consistency and identify successes in
implementation of the NPDES program, as well as opportunities for improvement in
the development of NPDES permits.
• Oversight of State Delegations Key Performance Indicator (KPI) pertains to state
oversight and is an area of concern for the EPA-state partnership despite the progress
of national reforms. The OIG first identified state oversight as an Agency
Management Challenge in FY 2008. An internal look into this issue revealed that
many EPA programs utilize a variety of formal and informal oversight processes that
may be inconsistent across regions and states. Also, there is not a clear connection
between state oversight and other aspects of the EPA-state relationship, such as third-
party petitions to withdraw program delegations and key opportunities to broadly
address the relationship through PPAs/PPGs, or other joint operating agreements.
Rather than allowing this to become an Agency Level Weakness, the Deputy
Administrator has made state oversight an EPA priority and requested a KPI be
developed and included in the for the Cross-Cutting Fundamental Strategy for the FY
2012 and FY 2013 Action Plans for Strengthening State, Tribal, and International
Partnerships.19
Interestingly, one DRA did note that the Office of Enforcement and Compliance Assurance's
(OECA) SRF and the CWA Action Plan may be creating a framework for implementing some
degree of differential oversight in the future. The SRF could serve as a way to implement
differential oversight because it establishes consistent baselines for performance. Although the
SRF has the potential to reduce uneven oversight, it increases the need for continued
improvement in the completeness and accuracy of data and the efficiency of data systems.
One region put forth an interesting suggestion involving PPAs which could serve as a potential
best practice example with broader appeal. In this region, PPAs contain program review
protocols wherein the states and the region agree to use the protocols to determine which
program reviews to undertake. This allows the region to coordinate scheduling reviews so they
do not all occur at once and overwhelm the state.
D. Resource and Budget Issues
The State Budget Crisis
Both EPA and the states fulfill critical roles in protecting and improving human health and the
environment. Although the recession ended three years ago, and there are signs of improvement,
the recovery has been slow and uneven across the nation. According to the Summer 2012
19 KPI for Oversight of State Delegations: "Through an Agency-wide workgroup (National Program Managers,
Regions, and headquarters support offices), plan and implement an Agency-wide effort to collect available
information to define, describe, and assess EPA's processes, practices, and tools for overseeing state delegations and
authorizations. By September 2013, the workgroup will report its findings to the Deputy Administrator and propose
options for next steps as needed to ensure the Agency is carrying out its oversight responsibilities in a coordinated,
transparent and accountable manner." FY 2012 and FY 2013 Action Plans: Strengthening State, Tribal, and
International Partnerships.
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National Conference of State Legislatures (NCSL) State Budget Update, state budgets still face
considerable challenges. Nonetheless, state budgets today are better positioned to handle these
challenges. State year-end closing balances are rising, revenue performance is improving and
the states are beginning to return to their pre-recession general fund levels. New budget gaps are
rare and confined to a few states and state spending has remained within budgeted amounts. For
FY 2013, the prevailing economic outlook is one of continued growth but at a slow to moderate
pace in most states. Despite these positive developments, there still remains uncertainty over
state budgets with concerns about unemployment levels, federal deficit reduction actions,
funding for Medicaid, concern about implementing the federal Affordable Care Act, and other
external events (e.g., the European debt crisis) contributing to a cautious state budget outlook.
Since states and their respective state environmental agencies operate the majority of federally
delegated programs, having sufficient funds to carry out this responsibility is a significant
concern for states. A September 2012 ECOS Green Report, Status of State Environmental
Agency Budgets, 2011-2013, notes that state environmental agency budgets, despite a modest
increase in contributions from state general funds in FY 2012, declined overall in FY 2011 and
FY 2012 and budget projections for FY 2013 indicate a similar trend. For FY 2013, most of the
states expect increased permit fees and contributions from the state general fund but a reduction
in federal funding. States receive most of the funds for their environmental agencies from state-
imposed fees, a lesser contribution from the federal government and the smallest contribution
from state general funds. The growing significance of federal grant money in state
environmental agency budgets, combined with decreasing EPA budgets, strains the ability of
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states to implement environmental programs. A 2010 EPA White Paper reports that costs of
state program activities are rising, exacerbating the budget crisis, and making flexible and
effective partnerships more important than ever for accomplishing shared environmental goals.
The issue of regional-state resource and budget constraints generated considerable discussion
and concern among the DRAs. States continue to struggle with budgets that in most cases are
not expected to improve in the near future. Programmatic demands are increasing while
resources are decreasing thus making tradeoffs among core program activities difficult. Some
regions are concerned that some states may actually begin to give programs back to EPA. With
smaller budgets, state agencies cannot accomplish the same amount of work, and it is becoming
more difficult to meet present and future EPA national commitments/targets. Yet, despite this,
many states continue to commit to EPA's national commitments/targets in their workplans. On
the regional front, there is some concern that if there are staff cutbacks due to possible EPA
budget reductions, the regions are less likely to absorb work that the states are unable to
accomplish.
Commendably, regions have tried to help states address resource issues through a variety of
worksharing approaches: one region is engaging effectively in worksharing through PPAs/PPGs
(e.g., since EPA has primacy for clean water implementation in two states, the region coordinates
extensively with both to avoid duplication of effort). Another region has engaged in
20 White Paper on Meeting the Challenges of Environmental Protection Together: Building Strong EPA-State
Partnerships, EPA, October 2010.
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worksharing with its states on an informal basis by undertaking certain commitments to meet
national targets (e.g., if 30 permits are required of a state, the state might do 20, while the region
agrees to complete the other 10). A third region has entered into a worksharing agreement with
one of its states to do underground storage tank (UST) inspections because of state budget
shortfalls. A fourth region has used intergovernmental personnel assignments (IPAs) to bring
state staff to EPA in order to keep them working and maintain their expertise while the state was
undergoing a reduction in force (RIF).
One DRA described a higher level management hurdle that needs to be overcome. It involves a
culture where the region's staff and managers attempt to do everything possible to meet
commitments despite limited resources. Although laudable as a goal, it is not a sustainable long-
term path and the problem will become exacerbated in the coming years due to state and EPA
resource constraints. Another DRA felt that improving final funding allocations is a key issue
that should be improved. More often than not, due to continuing resolutions, the region doesn't
receive its final funding allocation until well into a state's fiscal year (and many states have
differing fiscal years). Until that happens, the region must work with a draft allocation, which of
course differs from the final version, and realigning the two when the funding allocation
becomes final is time consuming and labor intensive.
Recent Developments in Worksharing
The principles and processes embodied in the original NEPPS Agreement are designed to foster
flexible and effective worksharing arrangements between EPA and the states. Budget constraints
caused by the economic downturn and slow recovery have generated more interest and attention
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on worksharing as a tool to help states and EPA implement programs more efficiently.
The EPA-State Worksharing Task Force which was formed in 2011 and published a report in
2012 on worksharing prohibitions and areas of caution. The prohibitions identified were
selection of a Superfund site remedy and preparation of a state's competitive grant application.
The areas of caution primarily dealt with grants and appropriations law. The Task Force
published a second report on principles and best practices for worksharing in March 2013.23 It
provides a set of principles and best practices for several commonly employed worksharing
scenarios, plus two regional examples. The Task Force expects to publish another report in
calendar year 2013 addressing training opportunities for state staff.
21 EPA's recent commitment to worksharing is evidenced in the FY 2011- 2015 EPA Strategic Plan, which includes
a Cross-Cutting Fundamental Strategy that incorporates worksharing. The 2013 Action Plan, which implements the
cross-cutting strategy, includes a Key Performance Indicator for regions to develop implementation targets for
worksharing. See: http://epa.gov/planandbudget/annualplan/Strategv 4 FY 2013 Action Plan.pdf.
22 See: http://www.epa.gov/ocir/nepps/pdf/task force report_prohibitions areas caution.pdf.
23 See: http://www.epa.gov/ocir/nepps/pdf/task force reportbstpractices.3.26.13.pdf.
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The Task Force found:
• NPM support for worksharing efforts is critical to regions seeking to expand worksharing
opportunities with states;
• NPMs should strengthen their support for worksharing in their annual guidance;
• If worksharing is negotiated as part of the annual planning process between a region and
state, a PPA or PPG can be used as a tool to document the results of the negotiation;
• Worksharing agreements also can be negotiated on an as-needed basis to address unique
or unplanned situations that may arise in a state, such as a natural disaster.
In terms of challenges, future constraints on EPA's budget may hinder the regions' ability to take
on additional work through worksharing arrangements. The Task Force also noted that while
PPAs, PPGs, or other grant workplans provide one means for documenting worksharing,
currently there is no Agency-wide system to track implementation.
IV. RECOMMENDATIONS
The following recommendations stem from the various inputs in this review, mostly from the
DRA interviews and a few from the EPA-state planning pilots and other third-party evaluations,
and are grouped under these categories: the NEPPS process and tools; performance
measurement and flexibility; state oversight; resource and workload issues.
Overall, NEPPS is viewed as a valuable and beneficial process for advancing and strengthening
the EPA-state partnership and deemed worthy of continued federal/state revitalization efforts.
Senior leadership commitment (state and regional) is essential to break down internal barriers,
help to identify cross-programmatic opportunities, and improve strategic planning/priority
setting. However, it was also noted that allegiances to and protection of media programs at EPA
and in the states are strong forces that make broadening the use and scope of NEPPS difficult.
NEPPS Process and Tools
• Pilot projects between EPA and states to improve joint priority setting and strategic
planning have been effective in advancing Performance Partnerships. Consider
implementing a new series of EPA-state planning pilots to initiate new Performance
Partnerships or strengthen existing ones.
• To revitalize and reemphasize the value and benefits of NEPPS:
o Provide more visible senior leadership support and commitment among the states
and within EPA to: publicly and visibly affirm NEPPS; promote and advocate for
the use of PPAs/PPGs as tools for implementing environmental programs; and
provide the necessary support for state/regional efforts to use the NEPPS
approach to organize the EPA-state relationship.
o Increase the use of training and outreach to the states, the regions and
headquarters (e.g., via webinars, workshops, conference calls, PPG training
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modules, joint training on best practices and the reconciliation of tensions
between flexibility and accountability).
Develop an approach to quantify the joint planning benefits of NEPPS.
Build stronger ties between NEPPS and the tribes to ensure best practices and consistent
implementation of EPA policies and regulations.
Enhance the effectiveness of PPAs and PPGs:
o By seeking to achieve better integration of the Administrator's priorities (e.g., EJ,
children's health) into core program work.
o Through the broader application of EPA's policy on in-kind assistance to make
EPA contract vehicles available to the states via PPGs or categorical grants.24
o By distinguishing clearly in PPAs between activities funded by EPA (which
should be considered grant commitments) and those that are state funded.
Investigate opportunities to work with other government agencies and/or departments to
identify potential opportunities to apply the PPG model to interagency pooled funding for
similar environmental purposes.25
24 Regarding "in-kind assistance," EPA Order 5700.1 (3/22/94) states that in addition to transferring money, EPA
may use assistance agreements to transfer anything of value, such as equipment or services, to an authorized
assistance recipient. If it would be more efficient in terms of cost or time for EPA rather than the recipient to
purchase equipment or services, EPA may do so and provide the equipment or services to the recipient under the
assistance agreement. This approach would be appropriate, for example, where a piece of equipment necessary for a
grant-assisted project can be purchased at a considerably lower price or be delivered much earlier using an existing
EPA contract. Likewise, EPA may provide the services of an EPA contractor to an assistance recipient in lieu of
money, where appropriate.
25 During the summer of 2011, OCIR participated in an OMB workgroup formed to implement the Presidential
Memorandum on "Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal
Governments." The workgroup included 10 states, 10 federal agencies, and several associations. Its charge was to
seek out opportunities to improve financial management of federal funds, with a specific emphasis on ways to focus
more on performance and outcomes rather than redundant and overly prescriptive reporting on how funds are spent.
As part of the workgroup's deliberations, OCIR provided several briefings on NEPPS and PPGs which were well
received and generated a great deal of interest and discussion among workgroup members. The final report, which
was issued in the fall of 2011, included recommendations to develop pilot programs that would allow states to blend
federal funds from similar programs within the same agency or even multiple agencies. The PPG model was
referenced and the administrative benefits and flexibility of PPGs were cited as goals of the pilots. The
appropriations bill for Labor, HHS and Education (S. 3295), which passed the Senate Appropriations Committee,
allocated a maximum of $130,000,000 of discretionary funds to fund up to 13 Performance Partnership Pilots
provided that such pilots are targeted at programs serving disconnected youth. The bill defined a Performance
Partnership Pilot as a project designed to identify cost-effective strategies for providing services at the state,
regional, or local level. The Committee Report accompanying S. 3295 described Performance Partnerships as "a
new authority that will provide States and local communities with unprecedented flexibility to achieve defined
outcomes."
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• Update the PPG regulations at 40 CFR Part 35 to include all categorical grants that are
PPG eligible.26
Performance Measurement and Flexibility
• Value flexibility, especially in accountability systems by reducing the number of ACS
measures and PRCs, reducing reporting burden, and increasing the ability to focus on
regional and state needs.
• Continue to ensure the timely consideration of and decisions on state requests for
flexibility and innovation, and ensure that EPA regions support proposals for alternate
compliance monitoring strategies.27
State Oversight
• Develop a consistent approach that specifies the regional and state roles and
responsibilities for implementing the SRF or any other program review recommendations
during the PPA/PPG negotiation process.
• Allow for more flexibility to better align state environmental priorities with national
targets (e.g., by shifting emphasis from major to minor sources since the latter is of
greater concern to some states).
• Use Information Technology to improve accountability and streamline business
processes, from workplans to reporting, and automate the process to replace annual or
semi-annual visits/audits, particularly for states that perform well. This approach could
then serve as a kind of differential oversight.
Resource and Workload Issues
• NPMs should integrate into the strategic planning process a more explicit and systematic
approach for making investments and disinvestments, which will better enable the
regions and the states to address top priorities while maintaining core programs activities.
• Analyze past state performance to develop a baseline of state performance data to inform
the EPA budget and NPM ACS targets. Currently, there is little analysis or consideration
of state contributions in developing EPA's commitments in the Annual Performance
Plan.
26Appendix A lists all the grants that are not currently but can be made eligible for inclusion in PPGs. However,
only one of the grants listed in the Appendix is currently funded.
27 In February 2013, EPA approved Massachusetts' 3-year alternative compliance monitoring strategy for federally-
funded inspections for the air, RCRA and underground storage tank programs. EPA's approval authorizes the state
to implement a more effective compliance assurance program that tailors EPA's national compliance strategy to fit
actual conditions in the state and maximize limited resources.
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• Discuss worksharing when NPM guidance is being formulated. More explicit NPM
guidance on what work could/should be shared to achieve national or regional targets will
help in negotiating with the states and with internal regional work planning.
• Ensure that worksharing is part of the annual planning discussions between regions and
states. Document worksharing agreements in PPAs, PPGs, or other grant workplans, and
develop a means to track those that occur outside of annual planning discussions.
• Implement the recommendations of the EPA-State Worksharing Task Force and consult
its reports for guidance in developing worksharing agreements.
• Develop an approach to identify the scope and costs of core program work conducted by
EPA and the states in order to help regions understand the variation in state
implementation costs.
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V. REFERENCES
ECOS Resolution Number 8-10. Revised March 30, 2011. Continued State Commitment to
NEPPS and Strengthening the State-EPA Partnership.
ECOS Website (www.ecos.org). November 2010. Summary Data: Delegation by Environmental
Act.
ECOS-EPA Reports. March 2005 and December 2009. Strategic Planning Pilots Reports.
Elkins, Arthur A. Jr., March 2, 2011. Major Management Challenges at the Environmental
Protection Agency. Testimony of Arthur A. Elkins, Jr., EPA Inspector General, before
the Subcommittee on Interior, Environment, and Related Agencies Committee on
Appropriations, U.S. House of Representatives.
GAO-10165T, October 15, 2009: Clean Water Act: Longstanding Issues Impact EPA 's and
States' Enforcement Efforts.
GAO-07-883, July 2007: EPA-State Enforcement Partnership Has Improved, but EPA 's
Oversight Needs Further Enhancement.
GAO-06-840T, June 2006: EPA's Effort to Improve and Make More Consistent Its Compliance
and Enforcement Activities.
GAO-06-625, May 2006: EPA has Made Progress in Grant Reforms but Needs to Address
Weaknesses in Implementation and Accountability.
GAO-05-52, November 2004: Better Coordination is Needed to Develop Environmental
Indicator Sets that Inform Decisions.
GAO-03-112, January 2003: Major Management Challenges and Program Risks:
Environmental Protection Agency.
GAO-03-846, August 2003: EPA Needs to Strengthen Efforts to Address Persistent Challenges.
GAO-01-257, January 2001: Major Management Challenges and Program Risks:
Environmental Protection Agency
GAO-01-774, June 2001: Environmental Protection Agency: Status of Achieving Key Outcomes
and Addressing Major Management Challenges.
GAO/RCED-00-108, June 2000: More Consistency Needed Among EPA Regions in Approach
to Enforcement.
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GAO/RCED-99-171, June, 1999: Collaborative EPA-State Effort Needed to Improve New
Performance Partnership System.
GAO/RCED-98-113, May 1998: EPA 's and States' Efforts to Focus State Enforcement
Programs on Results.
GAO/T-RCED-96-87, February 1996: Status of EPA's Initiatives to Create a New Partnership
with States.
GAO/RCED-96-41, February 1996: An Integrated Approach Could Reduce Pollution and
Increase Regulatory Efficiency.
Guerrero, Peter F. May 2, 2000. GAO/T-RCED-00-163: Collaborative EPA-State Effort Needed
to Improve Performance Partnership System. Testimony of Peter F. Guerrero, Director,
GAO, before the Committee on Environment and Public Works, United States Senate.
Mittal, AnuK. October 15, 2009. GAO-09-165T: Clean Water Act: Longstanding Issues
Impact EPA 's and States' Enforcement Efforts. Testimony ofAnu K. Mittal, Director,
GAO, before the Committee on Transportation and Infrastructure, U.S. House of
Representatives.
NAPA Report. April 2007. Taking Environmental Protection to the Next Level: An Assessment
of the U.S. Environmental Services Delivery System.
NAPA Report. November 2000. Transforming Environmental Protection for the 21st Century.
OIG Report No. 12-P-0113, December 2011: EPA Must Improve Oversight of State
Enforcement.
OIG Report No. 2000-P-00025, December 2011: North Carolina NPDES Enforcement and EPA
Region 4 Oversight.
OIG Report No. 11 -P-0315, July 2011: Agency-Wide Application of Region 7 NPDES Program
Process Improvements Could Increase EPA Efficiency.
OIG Report No. 10-P-0224, September 2010: EPA Should Revise Outdated or Inconsistent
EPA-State Clean Water Act Memoranda of Agreement.
OIG Report No. 08-P-0278, September 2008: EPA Has Initiated Strategic Planning for Priority
Enforcement Areas, but Key Elements Still Needed.
OIG Report No. 2006P-00006, December 2005: EPA Performance Measures Do Not Effectively
Track Compliance Outcomes.
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OIG Report No. 2003-P-00004, December 2002: EPA Needs to More Actively Promote State
Self Assessment of Environmental Programs.
OIG Report 2000-M-000828-000011, March 2000: EPA Needs Better Integration of the
National Environmental Performance Partnership System.
OIG Report No. 2000-P-00008, February 2000: Improving Region 5 's EnPPA/PPG Program.
OIG Report No. 1999-000209-R8-100302, September 1999: Region 8 Needs to Improve its
Performance Partnership Program to Ensure Accountability and Improved
Environmental Results.
OIG Report No. 1999-P00216, September 1999: Region 4's Implementation and Over sight of
Performance Partnership Grants.
OIG Report No. 1999-000208-R6-100282, September 1999: Region 6 Oversight of
Performance Partnership Grants.
Ross and Associates Report. November 1999. How Well is NEPPS Working? A Summary
Comparison of Several Recent Evaluations of the National Environmental Performance
Partnership System.
Stephenson, John B. March 3, 2004. GAO-04-510T: EPA Needs to Strengthen Efforts to
Address Management Challenges. Testimony of John B. Stephenson, Director, GAO,
before the Committee on Environment and Public Works, United States Senate.
Stephenson, John B. July 20, 2004. GAO-04-983T: EPA Continues to Have Problems Linking
Grants to Environmental Results. Testimony of John B. Stephenson, Director, GAO,
before the Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure, U.S. House of Representatives.
Stephenson, John B. October 1, 2003. GAO-04-122T: EPA Needs to Strengthen Oversight and
Enhance Accountability to Address Persistent Challenges. Testimony of John B.
Stephenson, Director, GAO, before the before the Subcommittee on Water Resources and
Environment, Committee on Transportation and Infrastructure, U.S. House of
Representatives.
Stephenson, JohnB. June 11, 2003. GAO-03-628T: Environmental Protection Agency:
Problems Persist in Effectively Managing Grants. Testimony of John B. Stephenson,
Director, GAO, before the Subcommittee on Water Resources and Environment,
Committee on Transportation and Infrastructure, U.S. House of Representatives.
Tinsley, Nikki. 2002. GAO-2001-P-00010: EPA's Top 10 Management Challenges. Testimony
ofNikki Tinsley, Inspector General, USEPA, before the Subcommittee on Energy Policy,
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Natural Resources and Regulatory Affairs, Committee on Government Reform, U.S.
House of Representatives.
U.S. EPA/OCIR. 2005-2013. NEPPSNational Guidance.
U.S. EPA. Fiscal Years 2011-2015 EPA Strategic Plan Cross-cutting Fundamental Strategy for
Strengthening State, Tribal and International Partnerships.
U.S. EPA. July 2012. Report of the EPA-State Worksharing Task Force: Prohibitions, Areas of
Caution and Recommendations to Enhance Worksharing Opportunities.
U.S. EPA. March 2013. Report of the EPA-State Worksharing Task Force: Principles and
best Practices for Worksharing.
U.S. EPA/OCIR. Fall 2011 and Winter 2012. Interviews of the Deputy Regional
Administrators on NEPPS and the EPA-State Partnership.
U.S. EPA. October 1, 2010. Grants Policy Issuance 11-01: Managing Unliquidated Obligations
and Ensuring Progress under EPA Assistance Agreements.
U.S. EPA. October 1, 2012. Grants Policy Issuance 11-03: State Grant Workplans and
Progress Reports.
U.S. EPA. October 2010. White Paper on Meeting the Challenges of Environmental
Protection Together: Building Strong EPA-State Partnerships.
U.S. EPA/OCIR. 2010 NEPPS Program Implementation Summary.
U.S. EPA/OCIR. 2010PPA-PPG Current Status-Historical Perspective Table.
U.S. EPA-State Alignment and Performance Partnership Agreement Workgroup Report.
January 2005. Overview of Alignment and Performance Partnership Process
Improvements.
U.S. EPA-State Joint Statement. August 14, 1997. Joint Statement on Measuring Progress
Under the National Environmental Performance Partnership System.
U.S. EPA-State NEPPS Agreement. May 17, 1995. Joint Commitment to Reform Oversight and
Create a National Environmental Performance Partnership System.
U.S. EPA. March 22, 1994. EPA Order 5700.1: Policy for Distinguishing Between Assistance
and Acquisition.
U.S. EPA. May 17, 1993. Task Force to Enhance State Capacity Report: Strengthening
Environmental Management in the United States.
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APPENDIX A
PPG Eligible Grants Not Included in Original STAG Appropriations Earmarks
Grant
Purpose
PPG Eligible?
Funding Status
Targeted
Watersheds
Provides resources to support
watershed organizations in their
efforts to expand and improve
existing water protection
Yes, but not yet added to the list of
programs authorized to be included in
PPGs.
$0.0
Last funded in FY 2011
measures.
Homeland
Security (Water
Security
Initiative)
Provides resources to assist with
critical water infrastructure
protection (e.g., through
technical assistance, training,
and communication activities).
Yes, but not yet added to the list of
programs authorized to be included in
PPGs.
$0.0 (FY 2012 Enacted
Budget and FY 2013 PB)
Last funded in FY 2009
when program was in
STAG; now funded under
Science and Technology.
Beaches
Protection
Funds the 35 states and
territories with Great Lakes or
coastal shorelines for protecting
public health at the nation's
beaches.
Yes, but not yet added to the list of
programs authorized to be included in
PPGs.
$9,864,000 (in FY 2012
Enacted Budget)
$0.0 (FY 2013 PB)
Delta: ($9,864,000)
Wastewater
Operator
Training (CWA
sec. 104(b)(3))
Training of operators at
wastewater treatment facilities.
Yes, but not yet added to the list of
programs authorized to be included in
PPGs.
$0.0
Grant ended in FY 2007
Underground
Storage Tanks
(UST) (SWDA
sec. 2007(f)(2));
LUST Trust Fund
To assist states, territories and
tribes in the development and
implementation of approved
underground storage tank release
detection, prevention and
correction programs.
No, but EPA policy for the LUST
grant program could be clarified
legislatively. LUST funds are not
eligible for inclusion in PPGs because
of a mandate in the Energy Policy
Act of 2005 which authorized the use
of appropriations from the LUST
Trust Fund for assistance agreements
to states for leak detection, prevention
and related enforcement. Prevention
activities are funded under a separate
statutory line item within the LUST
appropriation. The LUST prevention
appropriation is available for a
different purpose from the statutory
line item for LUST corrective action
and the funds are not interchangeable.
UST funds are PPG eligible under the
authority of SWDA sec. 2007(f)(2)
for basic programmatic functions not
otherwise authorized under LUST
program funding and provided to the
states through STAG funding.
$1,584,000 (FY2102
Enacted Budget)
$1,490,000 (FY 2013 PB)
Delta: ($58,000)
UST funding was $11-12
million pre-Energy Policy
Act; post statute funding
was $2.5 million annually
through FY 2011
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APPENDIX B
Examples of Flexibility in PPGs
Benefit
Example
Address emergency situations and changing
conditions
AL: Used a multi-year PPG to divert manpower to the BP
oil spill effort realizing that if certain grant commitments
were not achieved due to the shift in manpower, the state
could tap into the extra time frame built into the PPG.
MS: Used PPG flexibility to deal with issues stemming
from the 2011 tornado and flooding disasters. The ability to
move funds immediately for response and recovery work in
the affected areas was very helpful to the state.
IA: In August 2008, parts of Iowa experienced flooding
from substantial rainfalls. EPA Region 7 awarded
additional funds in the state's PPG to enable it to complete
water monitoring in twenty-five targeted areas where the
flooding was most severe. The funds awarded were PPG
carryover funds reprogrammed from another state's closed
out PPG.
IL: The PPG provides the state the ability to pool resources
to address priority work. For example, CWA Section 106
and 319 funds are pooled to develop TMDLs that address
both point and nonpoint sources of pollution. In addition,
the PPG allows the use of pooled resources to address
emergency environmental and public health issues such as
those caused by the 2011 flooding.
Address state-identified priority/support special
project
GA: Used its PPG to accomplish priority work on a specific
program (water). Since air, water (both 106 and drinking
water) and RCRA funding were in the PPG, GA was able to
combine small savings from each program to fund water
quality studies, water flow studies, and additional
monitoring to better document available drinking water
sources and assess the potential weather impacts on them.
GA: Also assisted the metropolitan public water system
suppliers in developing watershed management plans to
protect their drinking water supplies using funds deobligated
from previous year grants. GA would not have been able to
accomplish this without a PPG because the deobligated
funds from the water grant programs alone would not have
been sufficient to fund these additional efforts. Also, EPA
funding for the water grant programs was not sufficient to
cover the state's needs.
TX: Used its PPG to fund a special project involving
NPDES permitting and enforcement in all water pollution
control programs by continuing the development of the
Permitting and Registration Information System (PARIS)
database project. The project strengthened planning efforts
for implementing the CWA Action Plan and integrated data
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Benefit
Example
reporting. The project benefitted the state by providing for
business process and systems analysis documentation and
improved the state's ability to identify, collect and provide
timely, accurate and complete data for reporting to EPA's
ICIS-NPDES database. The project was funded from
savings realized from each of the programs in the PPG and
then awarded into the next year's grant.
CO: Used PPG flexibility to continue its long-standing
emphasis on Pollution Prevention (P2) as the pollution
control tool of choice and the incorporation of pollution
prevention into state regulations, compliance assistance,
enforcement and permitting activities. The P2 program
received supplemental funding from each program which
has integrated pollution prevention in its core work. The
supplemental funding provided staffing support, technical
assistance to recipients of both recycling and advanced
technology grant programs, and greater public outreach.
Meet cost share requirements
WA: Uses extra water match funds to help meet the CAA
105 maintenance of effort (MOE) contribution in its PPG.
UT: Uses PPG flexibility to ensure that the state can
provide sufficient match for all the programs in the PPG.
For various timing reasons regarding when federal funds are
spent and the availability of state funds for match, the state
uses available matching funds from one program to meet the
needs of another.
Redirection of carryover funds to purchase
equipment, fund staff
WA: In situations where there are carryover funds from a
closed grant, the state typically redirects them to another
program in the PPG (e.g., a water project).
UT: Redirected PPG funds, mainly from section 105, to
fund an FTE in Region 8's Office of Planning and Public
Affairs to work on public outreach and involvement in the
SIP for air quality. In the past, carryover funds were used to
finance partnership efforts in the Unita Basin and
southwestern parts of the state. Carryover funds also have
been used purchase lab equipment for testing samples from
various mediums.
ND: Purchased new lab equipment to replace existing
equipment using carryover funds.
Address state priority by shifting work from a
lower to higher priority program area
ME: With regional support, shifted resources from TMDL
development to TMDL implementation which gave it the
ability to reissue all the priority NPDES permits in the
Androscoggin River Basin with water-quality based permits
for nutrients and biochemical oxygen demand (BOD). This
allowed the state to focus its resources to remediate a long-
standing water quality problem.
VT: Shifted staff from lower priority programs to higher
priority ones thus allowing the state to efficiently utilize
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Benefit
Example
dwindling federal and state funding in the most effective
manner possible to obtain results.
VI: Would use its PPG to focus on higher priority programs
such as drinking water (PWSS program) or water quality
(CWA 106) in the event they are impacted by storms during
the hurricane season, and still comply with the rest of PPG
workplan commitments at the end of the project period.
Also, PPG flexibility makes it easier for VI to combine
projects/initiatives that deal with air pollution monitoring
and the effect of air pollution on the quality of water in
cisterns which is a critical water source for its citizens.
NJ: Revenues generated from environmental fees and fines
are reserved for specific purposes, and expenditures are
limited by the amount of revenue realized. Under its PPG,
NJ deposited many of these dedicated monies into the state's
General Fund. Such a shift allows NJ greater flexibility in
allocating resources to high priority environmental issues.
Fund cross-cutting projects/initiatives
CO: Funds a number of cross-cutting projects and
initiatives-one integrates air, water and waste inspections
and compliance assistance for animal feeding operations.
Others deal with permit and environmental impact reviews;
outreach to federal, state and local authorities dealing with
the state's rapidly expanding energy industries; information
management; the Environmental Leadership Program; and
the Pollution Prevention program.
MO: In FY 2006 and 2008, the state requested flexibility to
use PPG-eligible funds for a cross-media permit initiative.
As part of the permitting process, MO followed up on each
newly-issued permit, environmental concern received from a
citizen or other source, or facilities never before inspected
with an Environmental Assistance Visit (EAV). The
purpose of the EAV was to: 1) ensure that the responsible
parties understood the permit requirements; 2) verify the
conditions of the permit were being met; 3) investigate any
concerns with the permittee or other operation; 4) provide
assistance to help achieve compliance where needed; and 5)
follow up to ensure environmental performance is
satisfactory. These EAVs were conducted for permits
eligible under the water, air, and RCRA programs funded in
the PPG.
AZ: The PPG eases the administrative transactions and
costs for the state and EPA when funding cross-cutting
water projects and initiatives since the state's PPG includes
only water grants.
NJ: Uses PPG funds to provide current information on the
state's environmental conditions by maintaining and
updating its Environmental Trends Report. There are forty-
eight chapters and each chapter describes a specific area in
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Benefit
Example
which the state has been working to improve conditions, and
presents a specific environmental measure or category of
measurements meaningful in gauging the current status of
the environment in NJ. The Environmental Trends Report
includes chapters that address cross-cutting issues: Climate
Change, Greenhouse Gas Emissions, Energy Use, Mercury
Emission, and Pollution Prevention. There was an upgrade
to the state's data systems using multiple program funds
through the PPG. Working closely with Region 2' s
Information Systems Branch, discretionary funds were
added to the PPG for this project.
Reduce administrative burden, provide financial
flexibility
MN: Used PPG flexibility to improve the flow of funds
during periods of unpredictability, such as changing budget
amounts from year to year within some programs
(sometimes with very late notice even during the year);
changes in timing of receipt of funds due to continuing
resolutions and to differences in timing from program to
program; addressing seasonally-related cash-flow challenges
from program to program within the PPG generally. During
this time of diminishing resources, MN appreciates the
administrative burden reduction aspect of PPGs (especially
consolidated and simplified reporting).
CT: With state environmental budgets being reduced, the
flexibility provided by the PPA/PPG structure lowers
transaction costs and allows the state to use the smaller
amount of federal funding in the most effective manner
possible.
IL: Benefits greatly from the administrative efficiencies of
streamlined accounting and reporting provided by PPGs,
and the composite cost share feature eliminates the need to
constantly monitor and track match resources by specific
grant.
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