www.epa/oigearth
^ , Report No. 2001-P-00013
® A t, Office of Inspector General August 2001
* —v— 4
* Audit Report
Water Enforcement:
State Enforcement of
Clean Water Act Dischargers
Can Be More Effective
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Inspector General Divisions
Conducting the Audit:
Program Office and Regions
Involved:
Western Audit Division, San Francisco, CA
Southern Audit Division, Atlanta, GA
Central Audit Division, Kansas City, KS
Office of Enforcement and Compliance Assurance
EPA Regions 4, 8, and 9
Cover Photo: Wastewater discharge from a California facility into Suisun Bay
(Photo by Dan Cox, EPA OIG)
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j»' Tj UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
S i OFFICE OF THE INSPECTOR GENERAL FOR AUDIT
WESTERN DIVISION
75 HAWTHORNE STREET
PftOT5
MAIL CODE IGA-1, 7™ FLOOR
SAN FRANCISCO, CA 94105-3901
August 14, 2001
MEMORANDUM
SUBJECT: Final Report No. 2001-P-00013
State Enforcement of Clean Water Act Dischargers Can Be More Effective
FROM: Charles McCollum /s/
Divisional Inspector General for Audit
Western Division
T O: Sylvia Lowrance
Acting Assistant Administrator for
Enforcement and Compliance Assurance
Attached is our final report, "State Enforcement of Clean Water Act Dischargers Can Be More
Effective " The purpose of the audit was to determine whether EPA-authorized state enforcement
programs protect the environment and human health. Our audit included your office, three regions, and
one state within each region. We also took into account the results from a National State Auditors'
Association joint review of state water programs.
This audit report contains findings that describe problems we have identified and corrective actions we
recommend. This report represents the opinion of the OIG; the findings in this report do not necessarily
represent the final EPA position. Final determinations on matters in this report will be made by EPA
managers according to EPA audit resolution procedures.
ACTION REQUIRED
According to EPA Order 2750, you (as the action official) are required to provide this office with a
written response to this report within 90 days of its issuance. For corrective actions planned but not
completed by the response date, please provide the specific milestone dates for completing these
actions.
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If you or your staff have any questions, please contact me at (415) 744-2445, or Katherine Thompson,
Team Leader, at (916) 498-6535. Additional copies of this report may be obtained from us or our
website, www.epa.gov/oigearth/.
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Executive Summary
Objective The objective of the audit was to determine whether state enforcement
of Clean Water Act discharge programs protect human health and the
environment. This audit resulted from concerns over the effectiveness of
state enforcement programs.
Forty-four states play a major role in implementing the Clean Water
Act's National Pollutant Discharge Elimination System program. These
states have EPA approval to issue and enforce permits that set limits on
pollutants that can be discharged into our nation's surface waters. We
evaluated state enforcement of discharge programs in three regions;
within each region, we evaluated one EPA-approved state program.
We also took into account information from five state audits.
Results in Brief We believe that state enforcement programs could be much more
effective in deterring noncompliance with discharge permits and,
ultimately, improving the quality of the nation's water. EPA and the
states have been successful in reducing point source pollution since the
Clean Water Act passed in 1972. However, despite tremendous
progress, nearly 40 percent of the nation's assessed waters are not
meeting the standards states have set for them.
Strategies Need The state enforcement strategies we evaluated needed to be modified to
Reconsideration better address environmental risks, including contaminated runoff.
Contaminated runoff, including agricultural and urban runoff, was widely
accepted as causing the majority of the nation's remaining water quality
problems. Although many sources of contaminated runoff were
regulated, some were not.
EPA's Office of Enforcement and Compliance Assurance had set
national enforcement priorities for urban and agricultural runoff, including
storm water dischargers, sewer overflows, and concentrated animal
feeding operations. However, its core program and monitoring systems
have emphasized major industrial facilities and larger sewage treatment
plants. State strategies were also inhibited by:
Inadequate water quality data.
Incomplete permit data.
EPA-state relationships.
State concerns over regulating small and economically vital
businesses and industries.
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Compliance and
Enforcement Systems
Deficient
One critical missing
component of the
Permit Compliance
System was
electronic
transmission of self-
monitoring reports.
Without electronic
reporting by
dischargers, it was
virtually impossible for
states to monitor
compliance with all
permits.
The states we evaluated did not have
sufficient information on dischargers to
effectively implement their programs. A
major barrier to state program management
was the lack of information about hundreds of
thousands of dischargers that contributed to
water quality problems.
EPA's Permit Compliance System—its
national permitting and enforcement
system—was incomplete, inaccurate and
obsolete. The growth, variety and complexity
of the regulated community had greatly
outstripped the system capabilities.
Hundreds of thousands of dischargers were
not monitored by the system. Although many
states were developing their own systems,
they did not fill the information void.
States also had weaknesses in their
compliance monitoring and enforcement
systems, including not reporting serious,
significant violations. The states we evaluated
did not implement effective storm water
compliance monitoring programs to detect
and correct noncompliance in higher risk areas. Moreover, states
needed to improve their enforcement response to significant violations to
prevent further violations. Most of the enforcement actions we reviewed
did not meet EPA's criteria for timeliness and often did not recover the
economic benefit gained by violators.
State Enforcement
Program Deficiencies
• Compliance systems lacked
data for hundreds of
thousands of smaller
dischargers
• Serious toxicity violations
and other violations were not
reported
• Strategies for identifying
unpermitted storm water
dischargers were
incomplete
• Enforcement actions were
issued a year or more after
violation
• Penalties failed to recover
economic benefit of
noncompliance
• Proactive strategies to avoid
serious violations needed
further development
Si
Finally, to ensure fair and effective enforcement of the Clean Water Act,
EPA regions need to improve their in-depth program evaluations and
annual performance evaluations of state performance. These evaluations
need to be consistent, continue toward a goal of measuring the
effectiveness of performance, and be made easily accessible to the
public.
Other Matters In determining the status of EPA's plan to modernize its Permit
Compliance System, we found that the Office of Enforcement and
Compliance Assurance had not successfully collaborated with the Office
of Water and the states in the design of the new system requirements.
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Recommendations
"A modernized
[Permit
Compliance]
system should
fulfill many
programmatic
needs and
contribute to the
demonstration of
environmental
outcomes and
results."
-EPA Office of Water
We are recommending that the Office of Enforcement and Compliance
Assurance, in partnership with the Office of Water and EPA regions,
collaborate with states to develop risk-based enforcement priorities.
EPA also should make modernizing its Permit Compliance System a high
priority. Teaming with EPA's Office of Water and the states, the Office
of Enforcement and Compliance Assurance should ensure that the new
system will meet both federal and state needs.
We are also recommending that the Office of Enforcement and
Compliance Assurance revise its enforcement guidance to better define
significant violations for toxicity test failures, minor facilities, and storm
water dischargers.
Lastly, the Office of Enforcement and Compliance Assurance should
routinely determine whether states are fulfilling their obligations to
monitor and enforce discharge programs. To do so, the Office should
develop consistent criteria for in-depth program evaluations of state
programs. These evaluations, along with state performance measures,
should be accessible to the public.
Agency The Office of Enforcement and Compliance Assurance agreed with
Comments several of the conclusions in the report, including that states need to
implement risk-based approaches to water enforcement and that it
would be useful to have a process for periodic evaluation of the Clean
Water Act program in each state. It agreed that modernizing the Permit
Compliance System should be a high priority.
However, the Office expressed concern about the way some of the
issues, as well as EPA's role, were characterized in the report, and
claimed that many of the findings were based on "anecdotal
information." The Office stated the draft report did not recognize that
(1) it had an exhaustive process for setting national enforcement
priorities, (2) states should be responsible for setting watershed-specific
enforcement priorities, and (3) permit program requirements had
flexibility that supported state enforcement strategies. The Office also
believed the issues related to the Permit Compliance System were
oversimplified.
The Office of Enforcement and Compliance Assurance believed that
existing national enforcement guidance had the necessary flexibility to
address toxicity, minors, and storm water violations. It agreed to work
with EPA regions to ensure that the states were aware of the guidance.
The Office agreed to consider the OIG's specific recommendations
in
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when guidance is updated in the future. The Office also agreed that
elements of state compliance and enforcement programs need to be
periodically evaluated.
OIG Position The Office of Enforcement and Compliance Assurance either specifically
agreed with the vast majority of our conclusions or did not dispute them.
However, in many cases it did not agree to a specific course of action to
correct the problem. Instead, the Office defended existing guidance,
processes, and systems. It agreed to reassess some of its guidance, but
did not state when. It proposed alternative recommendations, but did
not agree to take them.
In short, the Office was reluctant to change its current way of conducting
business. However, the current way of conducting business was
marginally effective.
We agree that states have helped develop national priorities and that
they are responsible for developing risk-based strategies. However,
states cannot be fully effective until the Office of Enforcement and
Compliance Assurance allows states more latitude in the redirection of
their resources.
Also, EPA had taken too long to modernize the Permit Compliance
System, leaving huge information gaps for minor and storm water
dischargers that rendered the system inadequate. Further, the existing
guidance and processes for ensuring the prevention or correction of
significant toxicity, minor discharger, and storm water violations were not
working - thousands of toxicity violations occurred nationally and
numerous facilities had recurring violations. The guidance needs
updating.
Although the Office of Enforcement and Compliance Assurance asserted
our conclusions in this report were based on "anecdotal" evidence, we
disagree. Anecdotal information was only used to provide examples.
As discussed with the Office, our audit was based on extensive data
analysis, document reviews, interviews, surveys, and observations.
Details on our scope and methodology are in Exhibit 1, page 65.
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Table of Contents
Page
Executive Summary i
Part I: Introduction 1
Chapter 1: Objective, Background, and Scope and Methodology 1
Part II: Strategies Need Reconsideration 5
Chapter 2: State Enforcement Strategies Need to Be Modified 5
Part III: Compliance Monitoring and Enforcement Systems Deficient 17
Chapter 3: Permit and Other Information Systems Inadequate 19
Chapter 4: Storm Water Compliance Systems Have Deficiencies 35
Chapter 5: Enforcement Actions Late and Penalties Insufficient 43
Chapter 6: Improved Performance Evaluation and Measurement Needed 53
Exhibits
1 - Details on Scope and Methodology 65
2 - Other Matters: Key Management Decisions Needed for the Permit Compliance System 69
3 - Report Contributors 75
4 - Report Distribution 77
Appendix: Agency Response 79
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Part I
Introduction
Chapter 1
Objective, Background, and Scope and Methodology
Objective The objective of the audit was to determine whether state enforcement of
Clean Water Act discharge programs protects human health and the
environment.
The purpose of the Clean Water Act's discharge permit program is to
protect human health and the environment by setting limits on pollutants that
can be discharged into our nation's surface waters. The goal of the Clean
Water Act is for all rivers, lakes, and estuaries to be swimmable and
fishable.
Citizens, industries, states, local governments, and the federal government
have done much to improve the quality of our nation's waters in the last 30
years:
More than a trillion dollars, much of it authorized under the Clean
Water Act, was spent to build, upgrade, and expand wastewater
treatment facilities.
EPA and the states have written and enforced over 70,000 permits
to limit pollutants.
Controlling point sources has removed billions of pounds of pollutants from
our waters and doubled the number of waters safe for drinking and
swimming. Much of this success can be credited to the Clean Water Act,
which was enacted in 1972.
Despite the successes of the Act, EPA reports that a majority of Americans
live within 10 miles of a polluted river, lake, stream or coastal area.
Although there is not an accurate portrayal of water quality conditions
nationwide, the 1998 National Water Quality Inventory found that nearly
40 percent of the nation's assessed waters were not meeting the standards
states have set for them.
Background
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Discharge System
Much of the States with EPA Approval to
Clean Water —- Issue Discharge Permits
Act's
improvements
can be attributed
to the National
Pollutant
Discharge
Elimination
System, a
program to
control
discharges from
"point sources"
of pollution. Point sources are discrete conveyances, such as pipes or man-
made ditches.
EPA Approval
No EPA Approval
Forty-four states play a major role in implementing the Clean Water Act's
discharge program. These states have EPA approval to issue and enforce
permits that set limits on pollutants that can be discharged into our nation's
surface waters. EPA regions issue permits in the remaining states.
Several categories of discharges are covered under the permit program,
including municipal waste water and industrial process waste water. These
facilities are generally classified as major or minor, depending on size and
nature of the discharges. For example, a major municipal treatment plant
typically discharges one million gallons or more per day.
Runoff Permits
In 1987, Congress added provisions to the Clean Water Act that called
attention to another source of problems
that was believed to be responsible for
continuing water quality problems:
contaminated runoff from agriculture,
airborne pollution, forestry, and urban
development.
Amendments to the Clean Water Act and
subsequent regulations require permits for
storm water runoff from industrial activity,
large and medium municipal storm water
systems, and construction activities. Also,
certain concentrated animal feeding
operations, primarily those with over 1,000
,, , . animals and those discharging into waters,
Idaho mrnrn jeeamg operation nmojj clrams into a snake River ** a
tributary
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are subject to permit requirements. By law, most irrigated agricultural
discharges have been excluded from permit requirements.
State Enforcement
Systems
Self-Monitoring
Reports
Self-monitoring
reports prepared
by facility
Reports entered into Permit
Compliance System
0
System creates quarterly
noncompliance report
Quarterly non-
compliance report sent
to EPA
In order for states to have effective enforcement systems, they need sound
enforcement strategies and compliance monitoring systems. They also need
to take prompt and appropriate enforcement actions that deter future
noncompliance not only at the facility, but at other facilities. EPA has
developed an enforcement management system which sets criteria for
identifying and reporting significant violations. In addition to enforcement
guidance, the Office of Enforcement and Compliance Assurance issues the
Memorandum of Agreement Guidance that establishes national priorities
for enforcement programs.
States monitor facility compliance through inspections and self-monitoring
reports. EPA recommends that states inspect major facilities annually.
Also, facilities are required to regularly analyze their discharge and report the
results on self-monitoring reports. States compare self-monitoring reports to
permit limits to determine compliance. In addition, major dischargers are
required to report significant violations to states within 24 hours.
States report significant violations to EPA in a quarterly noncompliance
report. This report identifies major dischargers with significant violations, the
nature of the violation, and the type of enforcement actions taken in
response to those violations. EPA has defined violations of a sufficient
magnitude or duration as "significant" in order to target those violations for a
high enforcement priority.
Issues Impacting
Enforcement
Effectiveness
EPA has established standards for taking enforcement actions on significant
violations. Generally, if a major facility has two significant violations in two
consecutive quarters, a state is expected to take a formal enforcement action
before the end of the following quarter. EPA also recommends assessing
penalties that recover the economic benefit of noncompliance gained by the
violator.
Nationally, there are two important issues that impact the effectiveness of
permit enforcement in protecting human health and the environment.
• The backlog of expired discharge permits.
• The implementation of the Total Maximum Daily Load Program.
Expired Permits
A backlog of expired permits is an ongoing, national problem that impairs
enforcement. In fiscal 2000, about 25 percent of discharger permits for
major facilities nationwide were expired. Federal law requires permits to be
updated every five years. Permits are updated and reissued in order to
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conform with changing state and federal laws, pollution control technology,
and water quality conditions. Outdated permits may not reflect new
technology or water quality objectives, thereby impairing enforcement
effectiveness.
Total Maximum
Daily Load
Program
In the future, permit compliance will take on more importance in meeting
water quality standards because of the Clean Water Act's Total Maximum
Daily Load Program. A total maximum daily load is a calculation of the
maximum amount of a pollutant that a water body can receive and still meet
water quality standards, and an allocation of that amount to the pollutant's
sources.
Total maximum
daily load = sum of
non-point sources
+sum of point
sources + margin
of safety
States are required to:
Identify water bodies not meeting water quality standards;
Set priorities for calculating total maximum daily load;
Develop a total maximum daily load for each pollutant in each listed
waterway; and,
Allocate loadings to both permitted dischargers and to non-point
sources.
States have just begun to implement this program for water bodies identified
as impaired. It is likely that permit limits for some pollutants will be more
stringent after total maximum daily load calculations are completed. And, if
limits are exceeded, it may prevent the water body from meeting water
quality standards.
Scope and
Methodology
This audit resulted from concerns over the effectiveness of state enforcement
programs. We focused on the Clean Water Act discharge program because
of a lack of recent audit coverage in this area.
In addition to evaluating national data, we evaluated three EPA regions: 4, 8,
and 9. In each region, we evaluated one state with EPA approval to issue
discharge permits: California (Region 9), North Carolina (Region 4), and
Utah (Region 8). We also took into account recent audit reports from the
following states: Arkansas, Colorado, Louisiana, Maryland, and Oregon.
Our scope and methodology are further discussed in Exhibit 1, page 65.
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Part II
Strategies Need Reconsideration
Chapter 2
State Enforcement Strategies Need to Be Modified
State enforcement strategies and systems needed to be modified to meet the
goals of the Clean Water Act and to better protect human health and the
environment. In the three states we reviewed, there were opportunities to
better align enforcement strategies and resources with water quality
impairments.
"...nearly 40 percent of
the nation's assessed
waters are not meeting
the standards states
have set for them."
. -Office of Water, May 2000
EPA and the states have been successful in reducing point source pollution
since the Clean Water Act passed in 1972. However, despite tremendous
progress, nearly 40 percent of the nation's assessed waters are not meeting
the standards states have set for them. Contaminated runoff, both regulated
and unregulated, is widely accepted as causing the majority of the nation's
remaining water quality problems.
In the past, EPA and the states have focused their efforts on major
dischargers because they were relatively few in number but discharged large
quantities of pollutants. We believe enforcement strategies should be
environmentally risk-based and better address:
The relative risks presented by contaminated runoff, such as storm
water and concentrated animal feeding operations.
A rapidly growing number of smaller dischargers.
Unique problems causing impairments in individual watersheds.
EPA's Office of Enforcement and Compliance Assurance had set national
enforcement priorities and developed strategies for addressing runoff,
including storm water dischargers, sewer overflows, and concentrated
animal feeding operations. However, its core program and monitoring
systems emphasized major industrial facilities and larger sewage treatment
plants. State strategies were also inhibited by:
Inadequate water quality data.
Incomplete permit data.
EPA-state relationships.
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State concerns over regulating small and economically vital
businesses and industries.
EPA's Strategic
Plan
EPA's Strategic Plan lays out the Agency's 10 long-term goals for
protecting human health and safeguarding the environment. In addition to
long-term goals for achieving clean air, clean water, and safe food, one of
EPA's 10 goals is to ensure full compliance with laws intended to protect
human health and the environment.
EPA cannot achieve its goals without partnerships with states. States play a
major role in implementing the Clean Water Act's discharge program.
Forty-four states have EPA approval to issue and enforce Clean Water Act
discharge permits. EPA regions issue discharge permits in the remaining
states. States write more than 90 percent of all federal environmental
permits and take over 75 percent of enforcement actions.
Need for New 'n the past, EPA and the states have focused their efforts on major
Strategies
dischargers because they were relatively few in number but discharged large
quantities of pollutants. We believe enforcement strategies should be
environmentally risk-based and better address:
Changing sources of pollution;
An increasing universe of permit holders; and
Watershed approaches to improving water quality.
Changing Sources of
Pollution
!¦
Contaminated runoff, such as agricultural and urban runoff, was widely
accepted as causing the majority of the nation's remaining water quality
problems. Agricultural runoff (crops and
animal husbandry) was ranked as the number
one cause of impaired rivers, streams, and
lakes. Some of these sources have been
regulated; others, such as irrigation runoff,
have not.
i
Swimmers frolic in Southern California waters often posted as
unsafe due to urban runoff. (Photograph by Chas Mativier,
Orange County Register.)
EPA issued regulations in 1976 to permit
discharges from concentrated animal feeding
operations; since that time, the livestock
industry substantially increased both the
number and size of these large animal feeding
operations. Combined releases of more than
30 million gallons of animal waste to surface
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water in a number of states have highlighted the adverse environmental
impacts of concentrated animal feeding operations. By law, agricultural
storm water discharges and return flows from irrigated agriculture have been
excluded from permit requirements.
In order to address urban runoff, the Clean Water Act was amended in
1987 to regulate municipal and industrial storm water discharges. Phase II
of these
regulations was
added in 1999,
thereby regulating
a large number of
smaller facilities.
Storm water is a
continuing
concern; it was
the largest source
of water pollution
in urban areas,
such as Los
Angeles.
In response to
changing
regulations and
sources of water impairments, the Office of Enforcement and Compliance
Assurance has suggested enforcement strategies for storm water dischargers
and concentrated animal feeding operations. These strategies are accessible
by states.
Increasing Permit The addition of storm water regulations more than tripled the regulated
Universe universe. The ballooning regulated universe, along with other issues, such as
the backlog of out-of-date permits and the lack of data systems, has made it
virtually impossible for states to fully permit, monitor, and enforce the
regulated universe.
Watershed Strategies The watershed approach to
solving water quality problems
calls for individual strategies
tailored to each watershed
rather than a focus on major
dischargers or types of
agricultural or urban runoff.
Clean Water Act Permits
(Includes Phase II Storm Water Permits)
Major
Minor
104,001
20.3%
Storm Water
385,900
75.4%
CAFO is concentrated animal feeding operation
Source: EPA Office of Water
"To achieve the nation's clean and
safe water goals, EPA will implement
the watershed approach...."
-EPA's Fiscal 2001 Annual Plan
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EPA's annual plan calls for a watershed approach to fulfill the goal of the
Clean Water Act. EPA regions have partnered with states, local
governments, private industry, and environmental organizations to create
some effective watershed strategies.
States Can
Improve
Effectiveness
The states we reviewed continued to
emphasize inspecting and monitoring major
dischargers, although contaminated runoff,
including storm water runoff, was widely
accepted as causing the majority of the
nation's remaining water quality problems.
EPA and the states could improve the
effectiveness of state enforcement programs
by developing risk-based enforcement strategies. EPA has a role in
evaluating the effectiveness of state strategies and supplementing them, when
necessary and feasible.
Contaminated runoff is
widely accepted as
causing the majority of
the nation's water quality
problems.
In the three states we reviewed, there were opportunities to better align
enforcement strategies and resources with water quality impairments.
California
r
"The polluted runoff
problem is the number
one water pollution
problem in California."
-California Resources
Secretary
California identified storm water as its most serious water quality problem.
However, it had invested relatively little resources in inspecting and
monitoring storm water. Meanwhile, storm water runoff continued to cause
water impairments and beach closures. At the same time, the state had a
relatively significant investment in monitoring and enforcing its major
dischargers, although the state reported a relatively high compliance rate. In
fiscal 2000, the state increased its storm water staffing; however, it needed
to further evaluate whether its enforcement resources would yield a better
return by monitoring other sources.
North Carolina
North Carolina had not developed a strategy for monitoring compliance with
storm water permits, although storm water was a significant contributor to its
water quality impairments. As discussed in Chapter 6 (page 53), North
Carolina was taking actions to better measure the effectiveness of its
enforcement strategies.
Utah
We found indicators that Utah could more effectively use its enforcement
resources to address the risks that agricultural and urban runoff presented to
Utah's water quality. Specifically, agricultural practices, land development,
and urban runoff were listed as sources of impairments of surface waters or
ground water. However, we found that monitoring strategies were not fully
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developed for either its storm water or concentrated animal feeding
operation dischargers.
Reasons for
Emphasis on
Major Dischargers
We believe the emphasis on major dischargers was typical of many states
because EPA's implementation of the Clean Water Act focused on major
dischargers. Due to limited resources, EPA and the states had decided
many years ago to focus on major dischargers because they were relatively
few in number but discharged large quantities of waste water. Subsequently,
EPA and state management systems were well developed for major
dischargers but not for other sources, such as storm water, which had new
types of permit limits.
States needed more latitude in the redirection of their resources. The state
programs we reviewed did not have the resources and systems to permit,
monitor, and fully regulate smaller dischargers, such as storm water. States
did not have mechanisms to evaluate tradeoffs in different enforcement
strategies. Also, states were not encouraged to divest in major dischargers.
Implementation Much of the Clean Water Act's implementation over the last quarter of a
Focuses on Major century focused on addressing point sources, particularly major dischargers:
Dischargers
EPA and many of the EPA regions emphasized inspecting, monitoring,
and enforcing major discharger permits in program guidance,
performance measures, and oversight reviews.
The Code of Federal Regulations required states to have the capability
to inspect all major dischargers annually. EPA and its regions stressed
and monitored the annual inspection of all major dischargers. Utah cited
EPA's 100 percent inspection requirement of major dischargers as one
reason it was difficult to shift to other priorities.
EPA's Permit Compliance System included little data for nonmajor
dischargers. Because of states' concerns over the cost of data entry
requirements, EPA policy did not require data from other dischargers to
be entered into the system.
• National standards were set for taking action on significant violations by
major dischargers but standards were unclear for other dischargers.
Contaminated Runoff The state programs we reviewed did not have the resources and information
Not Easily Regulated systems to permit, monitor, and fully enforce regulated runoff, such as storm
water. As discussed more fully in Chapter 4 (page 35), the states we
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reviewed had minimal coverage of storm water dischargers. The addition of
storm water regulations greatly increased the size of the regulated universe
without a commensurate increase in resources or information systems. Thus,
states were limited in their ability to implement, monitor, and enforce storm
water regulations. Further, as one EPA region noted, states were expected
to fully implement the "core" program before moving onto programs to
regulate contaminated runoff.
Mechanisms for The states we evaluated did not have mechanisms in place to weigh the
Evaluating Tradeoffs relative merits of divesting in major discharger enforcement in order to more
Not in Place heavily invest enforcement resources in minor dischargers, agricultural
feeding operations, storm water dischargers, industrial sectors, or
watersheds. Although the Office of Enforcement and Compliance
Assurance's program guidance allowed states to change their enforcement
priorities, it did not encourage divesting in major dischargers.
Best Practice: Strategy
Evaluation Process
One notable "best practice"
we found was in Region 10's
process for evaluating the
impacts of different state
enforcement strategies. Region 10
issued the Clean Water Act
discharge permits for Idaho and
Alaska.
Region 10 Best Practice:
Strategy Evaluation Process
Evaluated shifting resources
between monitoring different types
of permits.
Changed enforcement priorities.
Quantified improvements to water
quality resulting from shifting
resources.
The Region had established a
process to evaluate the
effectiveness of investing resources
in monitoring and enforcement of
all categories of permit holders, including minor facilities and concentrated
animal feeding operations.
As a result of its evaluation, the Region changed its enforcement priorities
and ultimately caused improvements in water quality. The Region moved
some of its resources from monitoring major dischargers to other sources,
such as storm water. It also created a cost-effective system to monitor
minor dischargers. As a result, the Region:
Realized substantial reductions of pollutant loadings.
Significantly increased compliance rates.
Provided an impetus for municipality infrastructure investments that
were necessary for long-term improvements in water quality.
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State Enforcement
Priorities Need
Development
EPA, its regions and the states need to jointly develop priorities that address
each state's risks to water quality and maximize the effectiveness of
enforcement resources.
"Section 106 grants continue to support the
compliance and enforcement efforts undertaken
at the State level to protect surface water
quality."
-EPA Office of Water
EPA impacts state
enforcement priorities
in several ways. First,
EPA must approve
state enforcement
programs before they
can operate. EPA also
provides states with Clean Water Act water pollution control grants and
negotiates related grant agreements. For fiscal 2001, Congress
appropriated about $170 million for states, territories, and Indian tribes for
administering water pollution control programs. Further, the Office of
Enforcement and Compliance Assurance sets national priorities in its
program guidance; regions use this guidance to develop enforcement
priorities with states.
In its program guidance, the Office of
Enforcement and Compliance Assurance set
national priorities for enforcing "wet weather"
dischargers, including sewer overflows,
concentrated animal feeding operations, and
storm water. It also identified two industrial
sectors as priorities: petroleum refineries and
metal electroplating.
The Office of Enforcement and Compliance
Assurance consulted with states (and EPA
regions and Office of Water) in setting these
priorities. It also considered public health and
environmental risk as reported by states and the
Office of Water. As a result of its process, wet weather issues, such as
sewer overflows and contaminated urban and agricultural runoff, along with
storm water, were identified as national enforcement priorities for fiscal years
2000 and 2001.
EPA's Wet Weather
Enforcement Priorities
Combined sewer
overflow policy
Sanitary sewer overflow
enforcement system
Concentrated animal
feeding operations
sector strategy
Storm water regulations
-Fiscal 2000/2001 guidance
However, these enforcement priorities did not necessarily reflect a state's or
region's watershed-specific impairment problems. For example, some
watersheds were impacted by surface mining. Also, wet weather priorities
encompassed a large universe of dischargers that could not be easily
11
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addressed by states without finding new resources or divesting in other
areas. Divesting in major dischargers was somewhat difficult because EPA
grant work plans continued to contain requirements for inspecting major
dischargers, a resource-intensive requirement.
Finally, agreed-upon state enforcement priorities were not necessarily
followed. For example, for fiscal 1999, Utah agreed that three industrial
sectors would be given priority: refineries, mineral mining, and steel making.
We were unable to substantiate that the state took any priority actions for
these sectors, which included some minor permit holders. The state's year-
end report stated that the mineral mining and steel making sectors ended the
year with zero and 50 percent compliance rates, respectively.
EPA and the states have been hampered by a number of significant barriers
to developing and evaluating the effectiveness of enforcement strategies.
They include:
Water Quality Data
Gaps. The General
Accounting Office's
(GAO) survey of all 50
states found that their
abilities to identify and
"Only six states reported that they
have a majority of the data they need
to assess whether their waters meet
water quality standards."
-GAO, March 2000J
\
set priorities among water quality problems were impacted by
(1) a lack of water quality assessments and (2) data limitations
on causes and sources of water impairments. These data gaps
were particularly serious in the case of diffuse non-point sources,
which were widely accepted as contributing to the majority of
the nation's water quality problems.
Incomplete Compliance Data. Due to limited resources,
EPA's Permit Compliance System and state systems had
incomplete data on smaller dischargers, concentrated animal
feeding operations, and storm water dischargers. There were
serious data gaps on the amounts and types of pollutant
discharges, the number of facilities without required permits, and
compliance rates. These gaps hampered the development of
risk-based strategies. (This issue is discussed further in Chapter
3, page 19.)
Compliance Standards Not Established EPA and the states
we reviewed had not set compliance standards for types of
12
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dischargers, sectors, watersheds, or other specific categories.
Without some standard, there was no objective basis for making
decisions to invest or divest in certain sectors, areas, or
programs.
• Environmental Outcomes Difficult to Measure. GAO
found environmental outcomes were inherently difficult to
measure for a number of reasons: the absence of baseline data,
the inherent difficulty and expense involved in quantifying the
outcomes, and the difficulty in establishing causal links that
isolate the effect of a particular strategy.
Reluctance to Address Certain Sectors. EPA enforcement
officials told us some states were reluctant to address small
businesses and economically vital industries.
We recognize these impediments impact EPA's and the states' abilities to
set priorities and improve the effectiveness of enforcement investments.
Nonetheless, as evidenced by the actions taken by Region 10, there is much
that can be done to improve the effectiveness of enforcement with some
relatively minor system changes and resource realignments. Further, the
establishment of compliance standards would greatly aid the decision-
making process.
State Partnerships
Need
Strengthening
EPA, its regions, and states needed to
forge strong partnerships in order to
improve the effectiveness of
enforcement and help solve
environmental problems. State
enforcement priorities were sometimes
not made in a partnership fashion.
"It is of great importance to the states
and to the nation that our partnership
[with EPA] be strengthened,"
-Environmenlal Council of the States J
\
As pointed out by the National Academy of Public Administration, there are
many impediments to a performance-based EPA-state relationship.
Certainly, the lack of data is a major impediment. The Academy concluded
that other impediments were EPA's state oversight role and a concern that
states will weaken environmental protection.
However, actions by Region 10 and some states show that enforcement
effectiveness can be greatly improved. We believe EPA-state collaboration
is essential to maximize the effectiveness of limited enforcement resources, to
13
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reach EPA's goal of compliance with environmental laws, and to improve
our nation's waters.
Recommendations We recommend that the Assistant Administrator for Enforcement and
Compliance Assurance:
3 - 1. In partnership with the Office of Water and EPA regions,
collaborate with states to develop risk-based enforcement priorities.
Encourage states to develop mechanisms to evaluate tradeoffs in
enforcement investments.
3- 2. Provide states more latitude in the redirection of their resources. In
this respect, eliminate the goal to inspect all major dischargers
annually.
Agency Response 2-/. Risk-Based Priorities. The Office of Enforcement and
and OIG Position Compliance Assurance explained that it already has a consultation
process in place in which EPA regions, states, EPA 's Office of Water,
and other stakeholders are extensively consulted in determining the
national water enforcement priorities for each 2-year cycle. A major
factor in identifying the candidates for priorities is the element of risk.
This consultation process was being used to shape the 2002/2003
Memorandum of Agreement guidance. The Office believed the OIG
should recognize state involvement in identifying national priorities and
recommend that the Office of Enforcement and Compliance Assurance
develop a process to ensure states are implementing its risk-based
strategies.
The Office of Enforcement and Compliance Assurance asserted that its
actions are not keeping the states from implementing a risk-based
approach or from addressing watershed priorities. Its guidance and
strategies provide states with the flexible framework they need to
implement a risk-based program. While EPA regions can and do
recommend that states participate in national water priorities, suggest
where states might focus their resources, and meet with states to
conduct joint work planning, the Office stated that, ultimately, it is a
state's decision as to the priorities it will set. The Office stated that a
"constructive " recommendation would be that EPA should place more
emphasis on program reviews and improve its efforts to share best
practices with the states.
14
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The Office disagreed with the finding that the "core "permit program
inhibits the development of state strategies. The Office's guidance
allows regions and states flexibility in shifting a portion of their total
inspection resources from major to minor facilities, particularly in
priority watersheds, where those minor facilities represent a significant
risk. The Office also defended the Agency goal to inspect 100 percent
of all major point sources annually because:
• Major point sources generate the majority of effluent flow and
toxic pollutant loadings which can significantly affect water
quality in receiving waters.
• Significant environmental benefits associated with higher levels
of compliance among majors would be lost if "we were to allow
a total shift to minors. "
OIG Position: The Office's response partially addresses our
recommendations. We recognize that states have been involved in setting
national priorities. We agree that EPA should evaluate state enforcement
strategies and share best practices. However, the Office of Enforcement
and Compliance Assurance needs to further collaborate with EPA's Office
of Water, regions, and states so that each state has an effective, risk-based
enforcement strategy that addresses its unique risks to water quality.
Further, the Office should foster the development of tools that states can use
to evaluate tradeoffs in enforcement investments.
States have not been allowed total flexibility in deciding how to best invest
their enforcement resources. EPA does, to some extent, control state
enforcement programs. It authorizes states to operate these programs and
sets rules, regulations, and goals for permitting, inspecting, monitoring, and
enforcing discharge permits, especially those for major facilities. EPA state
grants were typically contingent upon work plans which required states to
perform a certain number of inspections of major and minor dischargers and
perform other actions.
2-2. Inspections. The Office of Enforcement and Compliance
Assurance believed that state programs needed to have the ability to
inspect all major dischargers annually. It cited several reasons,
including:
• States should have minimum, quantifiable standards for
procedures and resources.
• Major dischargers were high risk because they generate the
majority of the effluent flow and toxic pollutant loadings.
15
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• Numerous noncompliance problems existed with major
dischargers.
The Office of Enforcement and Compliance Assurance also pointed out
that it has issued guidance that allows minor facility inspections to be
tradedfor major facilities at a 2:1 ratio, using risk-based rationale.
The Office believed an appropriate alternative recommendation would
be to ensure that any state that does not commit to inspect 100percent
of its major facilities develops and implements an inspection plan that
targets an appropriate mixture of high risk dischargers (i.e., majors
and minors) in priority areas such as impaired watersheds.
OIG Position: The Office of Enforcement and Compliance Assurance's
response illustrates its reluctance to commit to a risk-based approach. We
believe it is the impact state resources have on compliance and, ultimately,
water quality, that should be used to determine the adequacy of a state's
resource investment in major inspections and other activities.
16
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Part III
Compliance Monitoring and Enforcement
Systems Deficient
The states we evaluated did not have sufficient information on dischargers to
effectively implement their enforcement programs. One reason was that EPA's
Permit Compliance System was incomplete, inaccurate and obsolete. The
growth, variety and complexity of the regulated community had greatly
outstripped the system capabilities. Compliance data for hundreds of
thousands of dischargers were not monitored by the system because it was too
costly to enter the data. Although many states were developing their own
systems, they did not fill the information void.
States had other weaknesses in their compliance monitoring and enforcement
systems, including not reporting serious, significant violations. The states we
evaluated had not implemented effective storm water compliance monitoring
programs to detect
and correct
noncompliance in
higher risk areas.
Moreover, states
needed to improve
their enforcement
response to
significant violations
to prevent further
violations. Although
EPA's goal was full
compliance, only 10
states reported a
compliance rate of
90 percent or better during fiscal 2000. Twenty states reported that less than
75 percent of their major dischargers were in compliance during the year. A
discharger was defined as out of compliance with its permit when it had two
significant, repeated violations of its permit within two consecutive quarters.
We recognize the compliance rate was not completely accurate because of
deficiencies in EPA's Permit Compliance System. However, it provided an
Percentage of Major Dischargers
In Compliance
Fiscal 2000
Source: Permit Compliance System
~~ 90-100% compliance
Hill 75-89% compliance
HB 0-74% compliance
17
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indicator of the states' compliance status. National compliance rates were not
available for other sources such as minor facilities and storm water dischargers.
As detailed later in this section, EPA and the states estimated a very large
number of storm water dischargers were not in compliance because they had
not obtained permits.
18
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Chapter 3
Permit and Other Information Systems Inadequate
The states we evaluated did not have sufficient information on regulated
dischargers to determine the effectiveness of their enforcement programs.
Without electronic
reporting by
dischargers, it will
be virtually
impossible for
states to monitor
compliance with
permits.
A major barrier in state program management was the lack of information about
hundreds of thousands of smaller dischargers that contributed to water quality
problems. EPA's Permit Compliance System—its national permitting and
enforcement system—was incomplete, inaccurate and obsolete. The system
lacked data from these smaller dischargers. Although many states were
developing their own systems, they did not fill the information void. As a result,
states could not effectively implement the discharge program.
One critical missing component of the Permit Compliance System was
electronic transmission of self-monitoring reports. Without electronic reporting
by dischargers, it will be virtually impossible for states to monitor compliance
with all permits.
Further, serious toxicity violations were not classified as "significant," thereby
overstating the national compliance rate. The states we evaluated had other
weaknesses in their procedures for identifying significant violations.
Permit Compliance
System Had
Serious Problems
Without sound compliance monitoring systems, significant permit violations that
adversely impact water quality went uncorrected. At two of the three states,
toxic discharges were released into impaired water bodies.
EPA's Permit Compliance
System Data
Pollutant discharges
Permit limits
Permit violations
Enforcement actions
EPA's permitting and enforcement information
system— the Permit Compliance
System—was incomplete, inaccurate and
difficult to use. Compliance data from
hundreds of thousands of smaller dischargers
was not captured by the system and
information in the system had serious
limitations. Some states had created their own
systems and, to some extent, duplicated the Agency's system. EPA was aware
of these problems and, in 1999, identified the system as an Agency weakness.
Until the system is upgraded, expanded, and reasonably accurate, its usefulness
as a management and program evaluation tool will be seriously limited. As
V.
19
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such, the system should continue to be reported as an Agency weakness until
these problems are corrected.
EPA and state permitting and enforcement
programs rely on EPA's compliance system; of
the 44 states approved to issue permits, 39
states enter data into the system. EPA uses the
system for program management and oversight
purposes, including assisting in targeting
enforcement activity to the areas experiencing
compliance and environmental problems. The
data are analyzed to help determine the quality of
the nation's water bodies and will serve as the
source of data for reporting purposes on EPA's
progress in reducing pollutant loadings.
System Capabilities The growth, variety, and complexity of the
Exclude Many regulated community had greatly outstripped the
Dischargers system's capabilities. Dischargers not
monitored by the system included:
Storm water,
Concentrated animal feeding operations,
and
Sewer overflows.
State Enforcement
Program Deficiencies
\
Compliance system
excluded data for smaller
dischargers
Serious toxicity violations
and other violations not
reported
Strategies for identifying
unpermitted storm water
dischargers needed
development
Many enforcement
actions issued a year or
more after violations
Penalties failed to
recover economic benefit
of noncompliance
Proactive strategies
needed to avoid serious
violations
Permits Have The system was not designed for these type of
Different permits, which had different permit requirements than the more traditional major
Requirements and minor discharger permits. Generally, states were not entering discharge
information on minor and storm water dischargers, concentrated animal feeding
operations, and sewer overflows because EPA did not require it.
The lack of a sound
monitoring system was
particularly evident for
storm water dischargers.
The system was not
designed to track storm
water compliance data,
and states did not maintain
their own complete and
Number of Permits in EPA's
Permit Compliance System
Type of Permit
Estimated
Number of
Permits
Number in
System
Storm water
400,000
16,417
Concentrated animal
feeding operations
15,000
5,608
20
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consistent data systems
for tracking and monitoring storm water compliance activities.
Thousands of
Permits Need Data
Entry
Best Practice:
Electronic Reporting
System Inaccurate for
Major Dischargers
Another reason data was excluded for smaller permits was because data entry
was time-consuming. The Office of Water estimated there were about
400,000 storm water and 100,000 minor discharger permits. Compared to
7,000 major discharger permits, these permits represented a substantial
workload. As such, EPA and the states had agreed that data only for major
dischargers was required to be in the system.
In order for states to effectively monitor the myriad of smaller dischargers and
others, electronic self-monitoring reports are critical. As noted later in this
report, storm water and minor permit violations went undetected and
uncorrected largely due to a lack of monitoring. Also, EPA had not yet been
successful in its efforts to introduce electronic self-reporting. To effectively
monitor all sources, EPA should set a high priority for implementing electronic
reporting for all dischargers nationwide.
California was testing electronic
submission of self-monitoring reports
and reported successful results. In
addition to providing necessary
environmental decision-making
information, electronic self-reporting
eliminates costs associated with preparing
paper reports and repeat data entry by
states and EPA. It also helps eliminate
the failure of facilities and states to
accurately report and categorize
violations.
In addition to excluding a large number of
dischargers, the Permit Compliance
System was inaccurate for a number of
other reasons. For example:
I-
Best Practice:
Electronic Self-Reporting
Eliminates costs associated
with preparing and reviewing
paper reports
Minimizes repeat data entry
by EPA and the states
Helps eliminate inaccurate
reporting by facilities and
states
Facilitates the prompt review
of discharge reports
Allows large volumes of
discharge data to be
included in state and national
data bases efficiently
California Data Not Entered Beginning in fiscal 2000, the Office of
Enforcement and Compliance Assurance had agreed to allow only about
30 percent of California's major facility compliance data to be entered into
the system. These facilities represented the greatest amount of municipal
flow and the industries of greatest concern.
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Utah's Noncompliance Rate Overstated. A compliance system report
showed that 65 percent of Utah's major facilities were in significant
noncompliance for fiscal 1999. This rate was substantially overstated
because the state had not entered self-monitoring reports into the system on
time. The system did not have the capability to correct this error.
Report Unusable in Maryland. A recent Maryland state audit report
found the system generated many violations that did not represent actual
violations.
Toxicity Violations Excluded As detailed later in this chapter, whole
effluent toxicity violations were not classified as significant violations and, in
many cases, overstated the compliance rate.
As shown, it was questionable whether the compliance system fairly
represented the compliance status of major facilities nationwide. It did not
reflect the national compliance rate of other facilities. Without complete and
accurate information, it was difficult to evaluate the effectiveness of permitting,
compliance, and enforcement strategies.
System Obsolete EPA readily acknowledged its compliance system was obsolete, resource
intensive, and difficult to use. In spite of these factors, the system had not had
any major redesigns in nearly 20 years.
The Permit Compliance System was first developed in 1974 and its last
modernization effort was in 1982, nearly 20 years ago. Further, the system
was:
Hard to use. Due to the age and inflexibility of the system, it was not user
friendly. The system was dependent on user coding and some users only
saw the large quantity of data that was entered.
Resource Intensive. The system required the manual entry of all data
including facility self-monitoring reports. As a result, data entry was very
labor intensive.
For example, the
state of Colorado
estimated the cost
to enter data was
about $70,000
per year. Further,
the system was
costly for EPA to
State Data Systems
California
North
Carolina
Utah
Uses its own system
~
~
Enters data into Permit
Compliance System
~
~
»/ = Condition occurs
22
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maintain.
States Create Their
Own Systems
The lack of an effective compliance system resulted in the development of
unique state systems. Unique systems have created problems for EPA and the
states. Some state systems did not interface with the Permit Compliance
System. As a result, either states or regions had to reenter state data into the
Permit Compliance System. To remedy this problem of duplicate data entry,
EPA has proposed an Interim Data Exchange Format to overcome the data
transfer difficulties. However, this system has not been fielded.
Further, the Office of Enforcement and Compliance Assurance had not
addressed the risk that new state systems would not include the data elements
required by the modernized Permit Compliance System. To illustrate,
California was designing a new enforcement system to meet its own needs;
however, Region 9 was not involved with the development to ensure all data
elements needed for the new Permit Compliance System were included. In
order to do this, the Office of Enforcement and Compliance Assurance and
Office of Water need to complete the policy statement for mandatory data
elements.
Compliance System
Modernization Project
The Office of Enforcement and Compliance Assurance had three major
initiatives underway for its Permit Compliance System which were intended to
address system problems and improve its usefulness as a management tool:
Other Aspects of
Compliance
Systems Need
Improvement
1. System modernization,
2. State interim data exchange format, and
3. Electronic reporting.
In determining the status of EPA's plan to modernize its
Permit Compliance System, we found that the Office of
Enforcement and Compliance Assurance had not
successfully collaborated with EPA's Office of Water and
the states in the design of the new system requirements.
This issue is discussed in more detail in Exhibit 2, Other
Matters, found on page 69.
We found other fundamental weaknesses in EPA and state
compliance monitoring systems for major and minor
facilities. Our review of three states, along with results
from recent state audits, found:
A wastewater
treatment plant in
North Carolina
failed 27 out of 36
toxicity tests since
1996. None of
these violations
were designated as
significant and,
therefore, the state
did not include
them on quarterly
non-compliance
reports to EPA.
23
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Many serious toxicity violations were not classified as "significant" and thus
were not subject to corrective or enforcement actions.
• Numerous other major and minor facility violations went unreported.
State inspection procedures for major facilities needed some improvements.
Without sound compliance monitoring systems, significant permit violations that
adversely impact water quality go undetected. For example, we found serious
toxicity violations in two states that went uncorrected; they were not reported
to EPA as significant violations. In at least one case, the toxic discharge was
released into an impaired water body. Further, when violations are not
identified, enforcement actions that penalize noncompliance cannot be taken.
Serious Toxicity
Violations Not
Identified as
Significant
"In addition, the
[toxicity] test itself is
intended to measure
the direct potential
for impairment of
fish and aquatic life
communities related
to substances
present in effluents
at toxic
concentrations.
Thus, any failure of
the effluent limitation
should be
considered class I
[serious] and
appropriate action
taken."
-Wisconsin Department
of Natural Resources
Serious toxicity violations, found through whole effluent toxicity tests, were not
categorized as significant violations. The states we evaluated told us they were
not aware toxicity test failures met EPA's criteria for a "significant" violation.
Also, Office of Enforcement and Compliance Assurance guidance (a 1995
memorandum) did not clearly identify toxicity text violations as significant
violations. As a result, facilities continued to discharge toxic waste water into
water bodies.
Whole effluent toxicity tests are one of the most important measures of
assessing the impact of wastewater discharges. Toxicity tests expose aquatic
organisms and fish to discharges for a specific time period, in order to predict at
what levels the discharges may cause harm to the organisms. When a toxicity
violation occurs, it shows the discharge is toxic enough to harm or kill fish and
organisms.
Our sample of nine facilities in California and our review of North Carolina's
data base identified three facilities in California and four facilities in North
Carolina that had toxicity violations. The seven California and North Carolina
facilities did not categorize their toxicity violations as significant. If EPA had
been aware of the toxicity violations, it could have worked with state officials,
obtained enforcement orders,
and resolved the toxic
problems.
Utah did not report any toxicity
violations in the sample of facilities
we reviewed. Region 8 told us that
Utah had a policy in place to take
actions on whole effluent toxicity
test violations.
P
Best Practice:
Utah's Toxicity Violation Policy
Violations must be reported within
24 hours
Accelerated testing is required
Investigation of the cause of toxicity
is required for patterns of toxicity
24
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There was a large number of toxic violations nationwide that went unreported
as significant violations. EPA's Permit Compliance System reported 6,552
toxicity violations nationwide between October 1, 1998 and December 31,
1999. We estimate that less than 10 percent of these violations were
designated as significant and, thus, were not subject to the requirements for
taking enforcement actions.
Although EPA guidance categorized effluent violations that may cause
environmental harm as significant, it did not specifically designate whole effluent
toxicity violations as significant. EPA officials told us this stemmed from
industry opposition years earlier based on concerns over the reliability of
toxicity tests. However, EPA officials confirmed that toxicity tests were very
reliable. Also, they noted that toxicity tests allowed dischargers to eliminate
other tests of specific chemicals. As such, EPA needs to require dischargers to
categorize toxicity test failures as significant violations.
Violations by Major Significant
Dischargers Not violations by major
Identified dischargers were
not always
identified and
reported. In
California, the
state's manual
reviews of
monitoring reports
missed significant
violations at three
of the nine facilities
we reviewed. As
a result, none of these violations were identified and reported. Many of these
problems could be eliminated by having dischargers submit monitoring reports
electronically.
A 1999 California study also found
that violations were not identified
and reported. The study found
many self-monitoring reports were
not received, and many that were
received were not reviewed in
sufficient detail to identify violations.
Refinerv in Northern California, a major discharger
Because it did not identify daily and weekly
violations, North Carolina delayed 15
months in issuing an enforcement action
for mercury violations. The violator, a
town's waste water treatment plant, was the
cause of pollution of an environmentally-
impaired stream with designated poor
water quality, non-supporting of its intended
uses.
25
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Significant Violations
Not Identified for
Minor Facilities
In North Carolina, permits contained daily or weekly limits which were
sometimes violated but not identified or reported. In at least one case we
reviewed, the violations of mercury limits were directly attributable to impairing
a stream. As a result of our audit, North Carolina developed a separate
software system to detect violations of daily maximum limits in permits.
State audit reports identified problems with the accurate identification of
violations. For example, Arkansas's Legislative Auditor found discrepancies
between the violations reported on the self-monitoring reports and those
reported on in-house summary reports.
Significant violations were not identified for minor facilities. There were two
main reasons for this condition:
States were not tracking compliance at minor facilities and entering
information into EPA's system.
EPA had not explicitly defined a'
dischargers.
significant" violation for minor
Minor dischargers have been
implicated as causes of water
impairments in some water bodies.
A recent Region 10 initiative to monitor
compliance at minor facilities found high
noncompliance rates. After the region
developed an oversight system and
began enforcing permit limits, pollutant
discharges dropped dramatically.
Region 10 Best Practice
Minor Permit Compliance System
• Created oversight system for
minor facility dischargers
• Identified violations with minimal
effort
• Identified when an enforcement
action should be taken
EPA's Permit Compliance System identifies violations based on data entered
from permits and discharger self-monitoring reports. As discussed previously,
generally states only enter data for major facilities. Even this limited data entry
process is time-consuming and expensive; however, the system calculates
discharge violations.
Generally, states were not reporting information on minor facility compliance to
EPA. Although North Carolina was reviewing minor facility violations, we
found:
Data Not Entered into EPA System. None of the three states we
evaluated were consistently entering minor facility data into the Agency's
compliance system. Thus, minor discharger violations weren't reported to
EPA.
26
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Inspections of Major
Facilities Need
Improvements
Annual Reports Missing. Many states did not submit annual reports
describing compliance and enforcement activities at minor facilities, as
required by federal regulation. None of the states we reviewed submitted
this report and only two of the ten states in Regions 8 and 9 submitted this
report.
States Were Not Evaluating Compliance. Two of the three states we
evaluated did not have a state system for evaluating minor facility
compliance.
Conditions Noted in Other Reports. These conditions were noted in
state audit reports. For example, Louisiana auditors found 21 percent of
the required self-monitoring reports for minor facilities in their sample had
not been submitted. Also, the state was not reviewing the monitoring
reports that were submitted.
Without these annual reports on the compliance status of minor dischargers,
EPA was unaware of compliance problems and was unable to take unilateral
action or assist the states in helping permit-violating facilities come back into
compliance.
Further, EPA had not established criteria for significant violations at minor
facilities or significant minor facilities. EPA guidance stated that the inventory
data for "significant minors" should be entered directly into the Permit
Compliance System, but significant minors was not defined. At a minimum,
minors that adversely impact impaired watersheds should be identified as
significant. Also, nonsubmission of discharge monitoring reports should be
identified as a significant violation. If this criteria were established, states,
regions and EPA would have better data to evaluate compliance by minor
facilities.
States needed to improve the quality of their
inspections to ensure facilities were accurately
reporting monitoring data. Self-monitoring reports
are the backbone of the Clean Water Act's
compliance monitoring system; major facilities
must submit them monthly. States rely on facilities
to promptly and accurately report their violations
to regulators. Facilities are required to report
significant violations to states within 24 hours.
Changes Needed to State
Inspection Procedures
• Inspections need to be
unannounced
• Inspections need to
evaluate the accuracy
and reliability of self-
monitoring reports
N.
27
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r
California performed
cursory inspections of a
sugar refinery, missing
violations of chlorine
limits. When the state
analyzed reporting
documentation in
August 1999, it found
several years of
unreported violations of
chlorine limits. The
chlorine was discharged
into an impaired
waterway.
Two of the three states we reviewed needed to
improve their inspection procedures. For the sites we reviewed, neither
California nor Utah performed unannounced inspections and California did not
uniformly verify the accuracy and reliability of self-monitoring reports during site
visits. As a result, California missed unreported significant violations by at least
one facility. This facility discharged chlorine into an impaired waterway.
Other reports found inspection quality issues in state
programs. For example, the Environmental Working Group
reported in July 2000 that 42 percent of all Clean Water Act
inspections were a brief visual inspection of a facility. Visual
inspections typically do not evaluate the accuracy of self-monitoring reports.
Although most state audit reports did not
evaluate the quality of inspections, a recent xx
Oregon audit report found that the Department
of Environmental Quality was not ensuring self-
monitoring reports were accurate.
Wk
In California, inspections were not thorough
because inspections were deemed lower
priority than issuing permits and taking
enforcement actions. The goal of inspecting all
major facilities annually took precedence over
a thorough inspection. States did not perform
unannounced inspections because staff were
concerned no one would be available at the
facility and time would be wasted.
Oregon Department of
Environmental Quality
"...was unaware of
numerous instances of
falsified reporting
occurring over a 5-year
period at one permitted
facility..."
-Oregon Audits Division
Co n CIU S i 0 n EPA's Permit Compliance System was ob solete and insufficient to evaluate the
effectiveness of state enforcement programs. The system lacked data from
thousands of smaller dischargers. Although many states were developing their
own systems, these systems did not fill the information void.
One critical missing component of the Permit Compliance System was
electronic transmission of self-monitoring reports. Without electronic reporting
by dischargers, it will be virtually impossible for states to monitor compliance
with all permits.
We also found many states were not classifying thousands of serious toxicity
violations as "significant." Without this designation, states were not subject to
EPA requirements for taking enforcement and corrective actions. Moreover, in
some states, toxic effluent continued to be discharged into impaired waterways.
28
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Other aspects of discharge compliance were not being addressed by states.
Two of the three states we reviewed were not evaluating compliance by minor
dischargers. We also found procedures for conducting inspections and
reviewing self-monitoring data was insufficient at two states. Since self-
monitoring reports are the cornerstone of the discharge system, these
procedural weaknesses are serious.
Recommendations We recommend that the Assistant Administrator for Enforcement and
Compliance Assurance:
3- 1. Make modernizing the Permit Compliance System a high priority.
Further, ensure that future systems:
Require electronic submission and evaluation of self-monitoring
reports for all dischargers, including minor facilities and storm water.
Track storm water permits, inspections, compliance rates, and
enforcement actions.
3- 2. Accelerate the development of the Interim Data Exchange Format for
the Permit Compliance System. Also, before proceeding further into
design and development, work with the Office of Water to ensure there
is an up-to-date policy statement for water system criteria.
3- 3. Have regions work with states to help ensure data elements needed for
the new Permit Compliance System are included in state systems being
developed.
3- 4. Continue to report the Permit Compliance System as an Agency-level
weakness until the modernization project is implemented and the system
data is reasonably accurate and complete.
3- 5. Revise guidance to specify that whole effluent toxicity violations are
significant violations. Revise regulations to require whole effluent toxicity
violations to be reported on quarterly noncompliance reports.
3- 6. Establish a definition of significant violations for minor facilities, including
storm water dischargers. At a minimum, include nonsubmission of self-
monitoring reports in this definition. Also, define "significant" minor
facilities. Include facilities impacting impaired waterways in this
definition.
Additional suggestions for modernizing the Permit Compliance System can be
found at Exhibit 2, page 69.
29
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Agency Response
and OIG Position
OIG Position: While the Office asserted that the Permit Compliance System
was a high priority, the system has been obsolete for over 10 years and the new
system schedule has continually slipped. Further, the Office has not yet
identified the data elements the system will include. These facts indicate that the
system has not been a high priority.
3-2. State Data Transfer System. The Office of Enforcement and
Compliance Assurance said it and the EPA Office of Environmental
Information had worked closely with their state partners in implementing
the Interim Data Exchange Format over the last year.
The EPA Office of Environmental Information is the leadfor
implementing the Exchange Format project, has developed the schedule
for project implementation, and must address acceleration. Currently, the
Exchange Format is scheduledfor full implementation by March 2002.
While Office of Enforcement and Compliance Assurance agreed that there
was a need to update the Policy Statement to address new data
requirements, it did not agree that this must occur before design and
software development. Broad capacity will be built into the system as
indicated in the response to 3-1. Only a subset of that capacity is likely to
be federally required. Therefore, the Policy Statement can be updated
during system design and development.
OIG Position: The Agency's response does not fully address our conclusions
and recommendations. According to the Office of Enforcement and
Compliance Assurance's Fiscal 2000 Integrity Act Annual Assurance Letter,
the Exchange Format was scheduled to be implemented in the third quarter of
fiscal 2001. Thus, the Exchange Format system has been delayed nearly a year
since the letter was prepared in October 2000. Further, the Office needs to
work with the Office of Environmental Information to accelerate the Exchange
3-1. System Modernization. The Office of Enforcement and Compliance
Assurance stated that modernizing the Permit Compliance System was,
and will continue to be, a high priority. The modernized system will allow
for entry of data element fields needed to track all dischargers, including
minor facilities and storm water facilities. Information trackedfor those
dischargers will include permit limits, inspections, compliance and
enforcement action data. System modernization is scheduledfor
implementation by the end of2003.
30
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Format system, since the Office of Enforcement and Compliance Assurance is
responsible for the system.
The Policy Statement is obsolete and needs to be updated immediately. This
critical Agency document excludes federal information requirements for storm
water permits, which now compromise the largest number of permits. Further,
changes to the Policy Statement should be completed before software design,
so that the changes can be incorporated into the modernized system. Data
entry requirements are essential for determining system requirements.
3-3. State Systems. The Office of Enforcement and Compliance
Assurance explained that it was finalizing the overall data requirements
for the modernized Permit Compliance System. It stated it will continue
to work closely with the states in developing detailed data requirements.
Until those requirements are finalized, those states modernizing their
systems should include in their modernized system the data entry
requirements specified in the current Policy Statement.
For the most part, states do not coordinate or consult with the Office of
Enforcement and Compliance Assurance when modernizing their systems,
as these systems are built primarily to accommodate state needs.
However, the Office agreed to request of regions that they make a special
effort to discuss state modernization plans during their program status
meetings. Additionally, it hoped that extensive involvement of state
representatives in the modernization process will have a spill over effect in
getting states to include the necessary data elements in their systems.
OIG Position: We do not agree an updated policy statement is unnecessary at
this time. EPA regions need an updated policy statement to engage in
constructive discussions with states about which state data is needed at the
national level. Existing data requirements are insufficient.
3-4. Agency Control Weakness. The Office of Enforcement and
Compliance Assurance agreed to continue to report the Permit
Compliance System as an Agency-level weakness until all milestones were
met. One of the milestones was the completion of modernization which is
scheduled to occur by the end of2003.
OIG Position: The response only partially addresses our recommendation.
The system should continue to be reported as an Agency weakness until the
data is reasonably accurate and complete.
31
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3-5. Toxicity Violations. The Office of Enforcement and Compliance
Assurance pointed out that, in many ways, whole effluent toxicity is
treated like any other parameter in the permit program; i.e., the permittee
reports self-monitoring data on its discharge report, results are entered
into the permit compliance system and tracked, and violations should be
reviewed and are subject to a range of enforcement responses. The major
exception is that toxicity violations are not automatically flagged as
significant noncompliance. Because of the variability in permit
requirements and in the frequency of compliance monitoring required,
toxicity violations do not neatly fit under existing "significant
noncompliance " criteria.
However, EPA 's existing regulations and guidance provide EPA regions
and states with the flexibility to identify toxicity violations as significant:
• 40 CFR Part 123.45(a) provides states with the flexibility to report
any violation of substantial concern on quarterly noncompliance
reports.
• EPA 's "Whole Effluent Toxicity Permitting Principles and
Enforcement Strategy "prescribes review of toxicity limit violations.
• EPA 's enforcement response guide recommends responses to toxicity
violations.
The Office of Enforcement and Compliance Assurance agreed to
reconsider the applicability of significant noncompliance to whole effluent
toxicity violations when it revises the definition of significant
noncompliance.
OIG Position: There is no reason to delay categorizing whole effluent toxicity
violations as significant violations. The current process is not working. While
states have had the flexibility to identify whole effluent toxicity violations as
"significanf' violations, they generally have not. According to the Permit
Compliance System, only 5.6 percent of the fiscal 2000 toxicity violations were
identified as significant violations. Facilities nationwide had large numbers of
recurring toxicity violations that were not designated as significant. For
example:
• One facility in Massachusetts had 16 toxicity violations; none were
categorized as significant.
• One facility in New Jersey had nine toxicity violations; none were
categorized as significant.
• One facility in Florida had 19 toxicity violations; none were labeled as
significant.
By not labeling toxic violations as "significant," states obfuscate EPA oversight
of the appropriateness and effectiveness of state enforcement actions.
32
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3-6. Other Significant Violations. The Office of Enforcement and
Compliance Assurance noted that a state has the discretion to designate
any facility with violations of concern as a "major" discharger thereby
subjecting the facility to "significant" noncompliance criteria. 40 CFR
Part 123.45(a) provides a state with the discretion to report any violation
of "substantial concern " on a quarterly noncompliance report.
The Office of Enforcement and Compliance Assurance committed to
consider developing guidance on when a minor discharger should be
designated as a major discharger and to include factors such as non-
submission of discharge monitoring reports and impact of the discharge
on impaired waterways.
OIG Position: The Office's response does not address our recommendation
to establish a definition of significant violations for minor facilities, including
storm water dischargers, and to define "significant" minor facilities. We are
recommending that EPA establish a uniform definition for significant violations at
all minor dischargers, including storm water. Designating minor dischargers as
major dischargers does not address our recommendation or the problems that
exist.
33
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34
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Chapter 4
Storm Water Compliance Systems Have Deficiencies
"Urban runoff from seven
south Orange County
[California] cities is so
noxious that it exceeds
safe-swimming water
standards at all but three
of 35 sites-and by 100-
fold at four..."
-Orange County Register
Storm water pollution posed significant water quality problems and health
risks—in 1999, more than 6,000 beaches were closed or had health advisories
issued due to polluted waters caused mainly by storm water runoff.
The states we evaluated were not effectively monitoring compliance by storm
water dischargers, resulting in violations going undetected and unaddressed. We
found:
California estimated there could be
as many as 19,000 facilities
operating without proper storm
water permits.
State strategies were needed for
identifying storm water non-filers.
States estimated thousands of facilities
had not obtained storm water permits.
Risk-based inspection programs
were lacking. The thousands of
relatively small dischargers in this
program dictated a risk-based approach that had not been well developed.
Processes were needed to monitor discharge reports. States did not
maintain adequate processes or systems for reviewing self-monitoring
reports, identifying major violations, and taking appropriate action.
Tracking systems for citizen complaints were insufficient. Although
citizen complaints were a primary means of identifying violations, complaint
tracking systems were not implemented.
The main impediments to effective storm water monitoring systems were a lack
of resources and information. Although the storm water program involved nearly
400,000 dischargers nationwide, state resources were not significantly increased
to implement this program. Further, EPA's Permit Compliance System and
state systems did not track storm water permit compliance data, resulting in
significant data gaps. As a result, the states we reviewed did not have effective
storm water compliance monitoring programs to detect and correct
noncompliance in higher risk areas.
Numerous Storm The states we evaluated did not have adequate strategies for identifying storm
Water Non filers water dischargers that had failed to file for a proper permit. Although some
"non-filers" were identified through citizen complaints, states did not have
systematic processes to search for and identify non-filers because of inadequate
resources and data.
35
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The number of unpermitted dischargers was substantial. For example, Utah
estimated it had about 500 unpermitted facilities subject to storm water
regulations. California estimated that at least 19,000 facilities might be subject to
storm water regulations, but had yet to apply for a permit. Because the
identification of non-filers continued to be a challenge in the state, the state was
investigating the feasibility of accessing other state agency databases to assist in
identifying non-filers.
Inadequate
Inspection
Programs
The states we evaluated were not employing sound, risk-based inspection
programs of storm water dischargers:
Storm Water Inspection Programs
California
(Los Angeles)
Utah
North Carolina
Number of permitted facilities
16,641
(3,304)
690
6,227
Estimated annual rate of
facilities inspected
12%
ft
s©
0s-
CM
Construction-100%;
others unknown
Risk-based inspection
schedule developed
No
No
No
Inspections documented
Yes
Sometimes
Yes
Inspection results tracked and
violations followed up
No
No
No, except
construction sites
* Number of inspections performed could not be substantiated.
Inspection Statistics State-reported inspection statistics were generally overstated or unsubstantiated
Unreliable at the states we reviewed. For example, California's Los Angeles region
included searches for non-filers in its tally. Fortunately, the Los Angeles region
had recently increased its inspection field presence from previous years. Utah's
reported inspections could not be fully substantiated; the state did not
consistently document or track inspection results.
Although most state audit reports did not evaluate storm water inspections, the
Louisiana Legislative Auditor reported in January 2001 that most of the
uninspected facilities were storm water dischargers.
States Need Strategies We recognize that it is not realistic to inspect hundreds or thousands of storm
water dischargers every year with limited resources. Therefore, states should
develop risk-based strategies to target inspections that provide maximum benefit
to improving total water quality.
36
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Best Practice: Risk-
Based Inspection
Strategy
States Need to Follow
Up on Inspection
Results
Self-Monitoring
System Not
Identifying Major
Violations
California was developing a risk-
based inspection plan: the Los
Angeles region's work plan for
fiscal year 2000/2001 showed that
it intended to start targeting
industrial and construction
inspections at the highest risk
dischargers using specific criteria,
such as administrative or technical
non-compliance, high-risk industries, large construction sites, and complaints.
Other criteria states could use to focus inspection resources are impaired waters
or high priority watersheds, and repeat violators.
The states we evaluated were not consistently tracking or following up on
\
California Best Practice:
Risk-Based Inspection Plan
Focuses limited resources on
highest risk dischargers
Uses criteria to identify highest risk
dischargers
\
'The heart of a general
permit is the pollution
prevention plan..."
- EPA Region 9
inspection results. Four of eleven inspection
reports reviewed in California and Utah detected
violations that were not tracked or acted upon.
Therefore, facilities with major violations, such as
failure to prepare a storm water pollution
prevention plan or implement storm water best
management practices, did not come into
compliance promptly, if at all. And there was no evidence to determine if or
when compliance was achieved.
The states we evaluated were not reviewing
reports for compliance with permits and
regulations. In California, one of four
monitoring reports we reviewed did not
meet regulatory requirements. The Los
Angeles region acknowledged that in the
past they have had to focus limited
resources on requiring dischargers to
submit reports, as opposed to addressing
noncompliance items in reports.
Utah did not track which facilities were
required to submit self-monitoring
reports; thus, the state could not ensure
all required reports were received.
self-monitoring
Significant Storm Water
Violations Found: California
Missing sampling analysis
during the required test period
Missing descriptions of best
management practices
implemented at the facility
Reporting results which were not
based on storm events
Not submitting monitoring
reports
'
37
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EPA and state systems did
not facilitate a review of self-
monitoring reports. The
Permit Compliance System
was not designed to track
storm water compliance
data. State data systems did
not fill this gap, either.
However, storm water data
was critical, not only for
determining compliance, but
for evaluating the
effectiveness of the storm
water program.
Control of sediment into storm drain
Due to the large volume of storm water self-monitoring reports, states need an
electronic scoring process that cost-effectively identifies significant violations and
other important information. Several low-cost viable options need to be seriously
considered including scan sheets (commonly used for electronic scoring of tests)
and web-based reporting. This would make efficient use of limited resources, as
well as provide assurance that required reports are submitted and
noncompliance is detected.
The states we reviewed did not maintain
adequate or consistent tracking systems
for citizen complaints. Complaints were
an important source of violation
information. Without consistently tracking
when and how citizen complaints were
resolved, there was no evidence that the
states addressed the complaints or
provided a formal or informal response
addressing citizen concerns.
Deficiencies in the state storm water
programs occurred primarily because of
incomplete and inconsistent data systems
for tracking storm water activities and
inadequate resources. Also, states were
reluctant to place additional burdens on
small and economically vital business.
38
ls^
"a
Fed by urban runoff, Munger Creek in
Orange County, California, had an
increasedfecal-coliform count. (Photo by
Orange County Register.)
-------
Inadequate Data
Systems
Inadequate Resources
' >
"...the Los Angeles
Regional Board
inexplicably devotes
the least amount of
resources to its worst
water quality problem:
polluted runoff."
- Natural Resources
Defense Council
As previously discussed in Chapter 3, one major impediment to storm water
self-monitoring systems was data systems. Storm water data was critical, not
only for determining compliance, but for evaluating the effectiveness of the storm
water program. We found EPA's Permit Compliance System:
Included only about 16,500 of an estimated 400,000 storm water permits.
Did not require states to enter storm water permit data. This was due to
concerns over the increased state and federal data entry workload.
Was not designed to track storm water compliance data.
State data systems did not fill this gap, either. The states we evaluated did not
maintain their own complete and consistent data systems for tracking and
monitoring storm water compliance activities. All three state data systems were
not tracking one or more pieces of critical storm water data.
For example, Utah did not track critical compliance data and could not support
an internal report citing 100 percent compliance. Utah also did not maintain an
information system on its current construction site permits. Our sample included
an instance where a construction facility was operating with an expired permit
until a complaint was lodged.
The promulgation of the Phase I storm water regulations in November 1990
substantially increased the universe of permit holders under the Clean Water
Act. Implementation of the Phase II regulations beginning in 2000 further
increases the universe. However, minimum resources have been dedicated to
carry out storm water activities. In addition, permit fees were generally
inadequate to help fund storm water programs.
Staff Years Dedicated to Storm Water
Fiscal 1999
For example, at the time
of our audit, California's
Los Angeles region only
had 2.5 staff years to
monitor more than 3,300
storm water permit
holders and conduct
searches for as many as
10,000 unpermitted
facilities that were subject
to regulation. The
program was grossly underfunded and as a result, was identified as not meeting
federal standards for controlling pollution caused by storm water runoff. This
was a serious concern because storm water runoff was the largest single source
State
Storm Water
Permits
Staff
Years
California
(Los Angeles Region)
3,304
2.5
North Carolina
6,227
7
Utah
690
1+
39
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of water pollution in this region. To help address this concern, the Los Angeles
region requested and received a substantial increase in its 2000/2001 storm
water budget, which enabled it to hire additional storm water staff.
Risk-Based Strategies
States Taking
Enforcement
Actions
Because of limited resources and the large number of storm water dischargers,
states should engage in risk-based strategies to focus their resources on the most
significant water quality issues. Urban runoff, including storm sewers, is one of
the top three sources of pollutants in rivers, lakes, and estuaries. Storm water
dischargers now make up about 75 percent of the number of discharge permits.
However, as further discussed in Chapter 2, state water programs have
generally given higher priority to major "point source" dischargers, such as
municipal waste water treatment plants and industrial facilities.
Storm Water Enforcement Actions
Fiscal Year 1999
The three states in our review
took some substantial storm
water enforcement actions. The
three states assessed penalties
of over $500,000. North
Carolina took one enforcement
action for $50,975.
Number of
Enforcement
Actions
Penalties
California (Los
Angeles Region)
28
$256,100
North Carolina
12
$248,741
Utah
2
$ 86,609
Recommendations We recommend that the Assistant Administrator for Enforcement and
Compliance Assurance:
4-1. Work with EPA regions in assisting states to:
• Develop mechanisms to better balance their limited resources between
all categories of dischargers, as indicated by the states' analysis of risks
to water quality.
• Create effective strategies for identifying storm water non-filers.
• Develop sound storm water inspection programs which include risk-
based inspection schedules and tracking and follow-up of inspection
results.
• Establish tracking systems for citizen complaints.
4-2. Facilitate the development of a system which allows self-monitoring
reports to be electronically scored for compliance. Consider low-cost
options such as scan sheets (commonly used for electronic scoring of
tests) and web-based reporting.
40
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Agency Response State Strategies and Systems. The Office of Enforcement and
and OIG Position Compliance Assurance agreed to continue to work with the EPA regions
and states to implement risk-based approaches to water enforcement. It
noted that the Office's Memorandum guidance and national strategies
provide flexibility to address majors as well as minors. The 2000 Storm
Water Enforcement Strategy outlines a recommended "sweep " approach
of targeting a priority watershed or geographic area, then focusing storm
water inspections and enforcement actions on a category of non-filers (e.g.,
a priority industrial sector or large construction sites) in that area.
The Office noted that while EPA can assist the states by providing
direction, guidance, training, and work-sharing, states must take
responsibility to develop appropriate planning mechanisms to develop and
implement risk-based strategies (which should include a sound inspection
program and a system to track citizen complaints), and balance their
limited resources.
OIG Position: The Office's Memorandum Guidance does not address our
recommendation. While the guidance allowed "trading" major inspections for
minor inspections at a 2:1 ratio, the guidance did not address trading major
inspections for storm water inspections. Nor did it address the other aspects of
our recommendation. Moreover the storm water enforcement strategy was
developed for EPA regions, not states.
We agree that states are responsible for their enforcement strategies. However,
we do not agree there is sufficient flexibility in the existing system. EPA-driven
requirements for major facility inspections, oversight, and enforcement actions
focus state programs on major dischargers. Instead of setting rules for divesting
in major facility oversight, it would be more useful if EPA used its national
perspective and expertise to help states develop and fine-tune risk-based
enforcement strategies, including those for monitoring storm water permits.
4-2. Electronic Submission of Storm Water Reports. The current Permit
Compliance System already determines compliance based on electronic
review of the discharge monitoring reports, though some improvements are
needed in the system. The modernized system will certainly have this
capability. Additionally, the modernized system will provide the capability
for facilities and states to electronically report information using the
Agency's Central Data Exchange portal and the National Environmental
Information Exchange Network for the transfer ofpermit data.
OIG Position: The Permit Compliance System does not determine compliance
for storm water permits because it does not have the capability to accept storm
41
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water compliance data. Further, for various reasons, the system does not
accept compliance data electronically. As a result, states must enter compliance
data manually. Manual data entry is a huge obstacle, especially for the hundreds
of thousands of storm water and minor permits.
One obvious solution to the data entry problem is to have permit holders submit
their reports electronically. Low-cost, common platform options are electronic
score sheets (used for testing) and web-based reporting. We have no evidence
the new system will address these issues; however, in meetings with the Office, it
indicated it would explore these options.
42
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Chapter 5
Enforcement Actions Late and Penalties Insufficient
"Regulations are not self-
implementing; they have
impact only when
regulated parties decide
to comply or agencies
force them to do so."
-National Academy of Public
Administration
Requiring
penalties to
include recovery
of the economic
benefit of
noncompliance.
Using minimum
penalties.
Publicizing violations and responses.
Source: Permit Compliance System
States could further improve the effectiveness of enforcement actions by taking
actions promptly and improving proactive strategies that help avoid violations.
Delayed
Enforcement
Actions
The three states we evaluated were oftentimes taking a year or more to
respond to significant violations at major facilities:
recurrence
Although the states we evaluated generally took enforcement actions on
significant violations, we found these actions were often taken a year or more
after the violation occurred. Further, penalties were sometimes insufficient to
prevent further violations and were not always collected. This may have
contributed to a large number of recurring violations. Over one-third of the
states reported that over half of their major facilities with significant violations in
1999 also had recurring significant violations in fiscal 2000. (Data was not
available for non-
major facilities.)
Some states were
taking actions to
improve the
effectiveness of their
enforcement
programs by:
Major Facilities with Recurring Violations
Facilities With Significant Violations Recurring in 2000
25-49% recurrence
50-100% recurrence
43
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Enforcement Actions Delayed Over 1 Year
State
Percentage of
Late Actions
Months Late
(Violation to Action)
California
(San Francisco
Region)
50%
15
North Carolina
100%
26 to 41
Utah
100%
12 to 41
[We evaluated 15% and 67% of the formal enforcement actions taken
on major dischargers in North Carolina and Utah, respectively. In
California, we evaluated 67% of the actions on major dischargers taken
by the San Francisco Region.]
There was evidence
this problem
extended to other
states. For
example, the
Louisiana
Legislative Auditor
found the state took
over a year to issue
nearly 40 percent of
its actions.
Not taking prompt
enforcement action
increases water n. , r ,, ,.f , ,
Discharge from a Northern California facility
pollution as
violations go unchecked. States must take swift action not only to bring
violators into compliance quickly, but also to establish credible enforcement
programs. For example, a California municipality failed to meet its deadline to
replace its obsolete treatment plant by 1997. Although the state issued a cease
and desist order in 1993, at the time of our audit, no penalties were assessed.
Delays continued and the plant continued to pollute the Pacific coast until the
new plant demonstrated full compliance in January 2001.
44
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There were a number of reasons states enforcement actions were delayed:
Enforcement Process. Enforcement actions generally had to be
approved by higher management levels and, in California, Governor-
appointed boards. These approval processes delayed actions. Also,
states negotiated enforcement orders or penalty amounts with
dischargers, which was a time-consuming process. Further, in order to
compute penalties, states needed to obtain cost data from the
discharger, further delaying actions.
Reluctance. States were reluctant to take immediate action on
violations, especially when violators were making efforts to comply.
Staff tended to work closely with the discharger, developing a working
relationship they believed would be threatened by a formal enforcement
action. Also, North Carolina and Utah negotiated formal orders or
penalty amounts due to concerns over litigation; negotiations caused
further time delays.
• Consequences. There were limited adverse consequences associated
with delayed enforcement actions. The Office of Enforcement and
Compliance Assurance told us that states not taking actions on repeat
violators received phone calls from EPA; generally, EPA took no other
actions. The most obvious adverse consequence of delay enforcement
was the continued discharge of pollutants in excess of permit limits.
However, this consequence usually had no immediate impact on a state.
Another factor may have been the lack of time standards for taking
enforcement actions. The states we evaluated had not set standards for taking
enforcement actions. EPA's standard was variable and not embraced by the
states we evaluated.
EPA's Enforcement Response Guide
set a variable time standard for taking
enforcement actions. It
required a formal enforcement action
when there was a repeated, significant
violation in the same or a consecutive
quarter. A state was expected to
complete a formal action before the
end of the quarter following the
second violation. Thus, the timing of
the second violation determined how long a state had to take a "timely
response." For example, if the repeat violation occurred April 1, the state had
"The Enforcement Response
Guide... addresses timely
responses to... violations...Even
though some of the language can
be seen as ambiguous..."
- EPA Office of Enforcement and
Compliance Assurance-
45
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6 months to complete the action; if it occurred on June 30, the state had only 3
months to complete the action. Three months may not be enough time to issue
an enforcement action. We recommend that EPA set a clear and consistent
time standard for taking enforcement actions.
Timeline for Taking Enforcement Actions
Two or More In
the First
\ arter? y
Two or More In
\First and Second
^sDuartersV*^
Yos
Similar
Significant
Violations
Formal
Enforcement Action
Required by the
End of Second
Quarter
Formal
Enforcement Action
Required by the
End of the Third
Quarter
Two or More In
the First
Two or More In
First and
Penalties Did Not
Recover Economic
Benefit
Two of the three states were not calculating or
recovering the economic benefit of
noncompliance, although both states had recently
instituted changes to do so. The failure of states
(and EPA) to recover the economic benefit of
noncompliance has been a long-standing problem.
EPA oversight should continue to evaluate the
effectiveness of penalties, including the recovery
of economic benefit.
Adverse Impacts of
Insufficient Penalties
Financial gain
realized when
economic benefit of
violation not recovered
Violator implicitly
rewarded for each
violation
Violator gains an
economic advantage
over compliers
46
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"EPA expects states to
make a reasonable effort to
calculate economic benefit
and encourages states to
recover this amount in
negotiations and litigation."
-EPA's 1986 Oversight Framework
Frequently, violators have economic gains from postponing compliance actions.
These savings can come from:
• Delaying or avoiding purchase of equipment.
• Delaying the construction of new facilities.
• Avoiding annually recurring costs of operating and maintaining equipment
over the period of noncompliance.
To ensure everyone is thus treated fairly and consistently, economic benefit
should be recovered for all significant violations.
At the time of our review, neither California nor North Carolina required or
prescribed the recovery of economic benefit. Also, they had not developed
procedures for calculating economic benefit:
(&}
Recovery of
Economic Benefit
L-_Sj®rxr //
California
North Carolina
Utah
State law requires recovery of
economic benefit?
No*
No
No
Policy requires recovery of
economic benefit?
Yes
Yes
Yes
Policy prescribes methods to
compute economic benefit?
No
No
Yes
Economic benefit recovered?
No
No
Yes
*California passed a law effective January 1,2000 requiring the recovery of economic
benefit. It did not impact the actions we reviewed.
Although recent state audit reports did not address recovery of economic
benefit, EPA Region 9's evaluation of Nevada's program and a 1997 Virginia
audit found that these states were not recovering economic benefit.
When states did not recover economic benefit, violators could realize
substantial financial gains and be implicitly rewarded for noncompliance. To
illustrate, a California municipality's waste water treatment plant was not
completed by the deadline required by the state's cease-and-desist order.
However, a penalty was not assessed. The municipality saved at least $1.5
million by delaying construction of the $50 million plant.
47
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Besides the lack of a
requirement and methodology,
there were other reasons states
did not recover economic
benefit. One of the main
reasons economic benefit was
not calculated was because
obtaining necessary cost data
was cumbersome and time
consuming. Minimum penalties
also sometimes prevented the
recovery of economic benefit.
For example, a North Carolina treatment plant was fined repeatedly for failing
to meet its permit limits. The state's environmental specialist concluded paying
minimum penalties was less costly than complying with permit requirements.
Economic Benefit Recently, both California and North Carolina had recognized the importance of
Recognized As recovering economic benefit in improving compliance. California passed a law
Deterrent requiring the recovery of economic benefit. North Carolina issued its
Principles of Enforcement which call for the cost of noncompliance to be
greater than the cost of compliance. North Carolina stated that it was
committed to incorporate economic benefit into penalties for serious violations
and chronic repeat violations.
Penalties were not consistent nationwide or within states. In order to maintain a
level playing field, penalties should recoup the economic benefit the violator
gained through noncompliance. As GAO concluded, a key difference among
state enforcement authorities is the recovery of economic benefit. Economic
benefit tends to be a large portion of computed penalties. When it is not
computed, it can lead to smaller penalties and an unfair economic advantage to
the violator. To make enforcement consistent nationally, economic benefit
should be recovered in state penalties.
Internal studies by California and Arkansas had found problems with the
consistency of penalties. In 1999, California reported that there were
inconsistencies in enforcement actions amongst its regional boards. In 2000,
Arkansas reported that "the current formal enforcement structure allows for
inconsistencies in the initiation of formal enforcement actions and the levying of
fines."
Reasons States Did Not Recover
Economic Benefit in Penalties
Lack of methodology
Difficult and time-consuming to obtain
cost data
Time-consuming to compute penalties
Penalties generally higher; states
reluctant to assess higher penalties
Not required to by state law or policy
Minimum penalties used instead
J
Lack of Consistent
Penalties
48
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To ensure the regulated community is treated fairly, states should have uniform
penalty structures that have specific guidelines and equitable formulas.
Uncollected
Penalties
Penalties must be collected to establish credibility. We found some penalties
for storm water permit violations were not collected in California. There was
evidence penalty collection was problematic in other states. Louisiana's
Legislative Audit report showed the state had not collected $441,188 in
penalties for the years 1998 and 1999. A Maryland audit found the state did
not assess or collect penalties of $100 per day for not meeting consent order
milestones. In this last case, the discharger continued to violate its permit 13
times between October 1997 and March 2000 without paying assessed
penalties.
Proactive Actions
Could Prevent
Significant
Violations
The states we evaluated needed to
improve strategies to prevent violations
from occurring at overused facilities.
Many significant violations occurred
because waste water treatment facilities
were obsolete, worn out, or exceeding
capacity. Further, an expanding
population taxed existing systems beyond
capacity.
"Ifyou ignore the (sewage)
systems for 20 or 30 years, it's
going to come back and haunt
you."
-Orange County CoastKeeper,
environmental advocate
V a
We found states had vehicles available to address future discharges that would
violate permits. For example, California could issue a time schedule order for
threatened discharges of waste in violation of requirements.
We found numerous violations due to plant obsolescence and capacity limits.
For example:
• In North Carolina, one small city's waste water treatment plant capacity
had not kept pace with population growth, leading to pollution violations.
The treatment plant discharged pollutants into a stream which ran through a
residential area.
• In Northern California, one small city's population growth outstripped the
capacity of its sewage collection system. Sewage spills occurred because
the collection system lacked necessary capacity. Some of these spills
ended up in drinking water sources.
49
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Many of these violations could not be prevented without major capital
investments, including new plants, that required months or years to finance and
construct.
EPA should continue to work with states to establish proactive strategies, such
as time schedule orders, to hold dischargers accountable for compliance. As
one North Carolina official observed, when discharge rates reach 80 percent of
the limit, consideration should be given to expanding the plant. When
discharges approach 90 percent, plant expansion should have begun.
Best Practices:
Deterring
Noncompliance
States had several best management practices that were effective in improving
compliance. These practices included:
Best Practices:
Deterrence
Minimum penalties
Publicity of
enforcement
actions
Compliance report
card
Minimum Penalties. Both California and
North Carolina had instituted minimum
penalties for certain violations. They
followed the lead of New Jersey, which
reported improvements in water quality by
using minimum penalties for large sewage
spills and other water quality violations.
However, as found by North Carolina,
minimum penalties may not be effective for
more severe violations if they are too low.
Publicity of Enforcement Actions.
EPA's sector facility indexing project and
North Carolina's website provided some
measure of public accountability over
violators and regulator responses. By
accessing these Internet sites, the public can
identify violators, locations, and penalties
assessed. States can gain an additional
deterrent effect by publicizing their
enforcement responses widely, using
vehicles such as state websites and press
releases.
Minimum Penalties:
Pros and Cons
+ Penalties assessed for
normally unaddressed
minor violations
-^Relatively quick
consequence to violations
+Ensures consistent,
dependable response from
regulators
-Serious violations may
receive the same penalties
as minor violations
-Minimum penalty may be
substantially less than
recovering economic
benefit
Compliance Report Card. California planned to publicize the results of
its enforcement program to keep managers, policy makers, and the public
informed about violations and actions taken. Its planned compliance
report card would be produced annually, showing compliance rates,
enforcement actions taken, the use of penalty funds and supplemental
50
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environmental projects. Ongoing compliance rates of dischargers and the
report card would be placed on the Internet.
Recommendations We recommend that the Assistant Administrator for Enforcement and
Compliance Assurance:
5- 1. Establish a clear and consistent standard for measuring the promptness
of enforcement actions.
5- 2. Continue to work with the regions to assist states in establishing
proactive enforcement strategies to help facilities avoid long-term serious
violations due to plant or system obsolescence or capacity limits.
Chapter 6 also contains a recommendation for setting standards for
enforcement actions. See page 60.
Agency Response 5-/. Time Standard. The Office of Enforcement and Compliance
and OIG Position Assurance explained that the permit program already had a "timely and
appropriate " standard described in the Enforcement Management System.
It believed that a more appropriate recommendation would be for the
Office to review the consistency of its standard and ensure that the
regions and states are aware of it.
OIG Position: We agree with the Office's alternative recommendation and ask
it to address the recommendation's implementation.
5-2. Proactive Strategies. The Office of Enforcement and Compliance
Assurance stated that it, in conjunction with the EPA Office of Water, had
developed guidance documents and training workshops to assist the
regulated community in avoiding noncompliance due to plant or system
obsolescence or capacity problems. Some specific examples were
guidance for implementation of nine minimum controls and a long-term
control plan for combined sewer overflows, as well as guidance
documents and training workshops for municipal officials, system
operators, and consultants on procedures to eliminate and prevent
combined and sanitary sewer overflows.
The Office of Enforcement and Compliance Assurance said it was
involved in the development of the Guide for Evaluating Capacity
Management, Operation and Maintenance Programs at Sanitary Sewer
Collection Systems which describes management practices and operation
and maintenance techniques that have served municipalities best in the
51
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reduction and elimination of sanitary sewer overflows from their systems.
The audience for this guidance is state and EPA personnel who are
assisting municipalities to comply with sanitary sewer overflow
requirements. The guidance will also help municipalities make decisions
on the rehabilitation and repair of their collection systems and ways to
better operate those systems. The guidance was scheduledfor release as
an interim-final document early in fiscal 2002, and was planned to be
finalizedfollowing the final publication of the Sanitary Sewer Overflow
Rule.
The Guide for Evaluating Capacity Management, Operation and
Maintenance Programs at Wastewater Treatment Plants will assist
inspectors in determining whether a capacity management, operation and
maintenance program was adequate for a particular wastewater
treatment plant. The guidance will also be useful to municipalities for
determining whether their plants were following accepted practices and
for addressing any discrepancies as needed in order to improve or
maintain compliance. The guidance was scheduledfor release as an
interim-final document early in fiscal 2002.
OIG Position: The Office's reply partially addresses the issue and
recommendation. The guides are excellent references and will provide some
measure of compliance assistance to EPA regions and states. However, the
guides in and of themselves are not proactive enforcement strategies.
52
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Chapter 6
Improved Performance Evaluation and
Measurement Needed
To ensure fair and effective
enforcement of the Clean Water
Act, EPA regions need to continue
performing both periodic, in-depth
program evaluations and annual
performance evaluations of states'
performance. These evaluations
need to be consistent, continue
toward a goal of measuring the
effectiveness of performance, and
be made easily accessible to the
public.
\
"EPA must balance the new expectations
raised by the Government Performance
and Results Act, the [National
Environmental Performance]partnership
approach suggesting more flexibility in
state oversight, and the more traditional
measures used to assess performance of
state enforcement programs."
-EPA Office of Regulatory Enforcement
Oversight Tools
EPA had developed several tools to evaluate state enforcement performance:
Quarterly Non-Compliance Reports. States are required to report on
major facilities that have significant violations of their permits on a quarterly
basis, along with the enforcement actions the state has taken. Further, the
Office of Enforcement and
Compliance Assurance has developed
an automated system called "SNC
[Significant Noncompliance] Tracker"
which allows both states and regions
to evaluate compliance records of
major facilities at any time.
Policy Framework. In 1986, EPA
established a framework for evaluating
enforcement programs. In addition,
Clean Water Act-specific guidance
provides additional criteria.
Core Performance Measures.
Under the National Environmental
Performance Partnership System,
EPA and the Environmental Council
EPA's Oversight Criteria and
Measures
Clear identification of and priorities
for the regulated community
Clear and enforceable
requirements
Accurate and reliable compliance
monitoring
High or improving rates of
continuing compliance
Timely and appropriate
enforcement response
Appropriate use of civil, judicial, and
administrative penalty authorities
-EPA 1986 Policy Framework
53
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of the States have agreed upon seven "core" performance measures for
evaluating state enforcement and compliance performance.
Regions
Performed
Valuable
Evaluations
We found that at least eight regions were performing in-depth evaluations of
state programs. (We were unable to obtain information from two regions.) The
three regions we audited were performing in-depth evaluations that had
important findings that were used, or should have been used, to improve state
programs. To illustrate:
"While states and
local government
have primary
responsibility for
compliance and
enforcement
actions... EPA
retains the
responsibility for
ensuring fair and
effective
enforcement of
federal
requirements, and a
credible national
deterrence to
noncompliance."
-EPA's 1986 Policy
Framework for EPA-
State Enforcement
Agreements
In February 2000, Region 9 presented its findings on California's Clean
Water Act discharge program to a California joint legislative committee
hearing on water quality issues. Its findings included the lack of storm water
inspections and inadequate recovery of economic benefit in penalties. Both
of these issues were being addressed by revisions in California's
enforcement strategy and policy.
In June 1999, Region 4's issued its findings from a review of North
Carolina's Clean Water Act discharge program. These findings included
the lack of an effective storm water program and weaknesses in the state's
enforcement policy concerning identifying toxicity test failures as permit
violations.
Although regional evaluations found significant weaknesses with state programs,
they were inconsistent. The regions that responded to our survey had
developed their own evaluation programs; these programs evaluated many of
the same program elements but did not evaluate others.
The frequency of in-depth evaluations
also varied substantially. Region 4
performed in-depth evaluations every
8 years or so because of the large
number of states in the region. Region 6
told us it performed a detailed program
review on a semiannual basis.
EPA should develop and use consistent
criteria and measures for in-depth
program evaluations. At a minimum, all of
the oversight criteria and measures in
EPA's 1986 Policy Framework should be
included along with additional elements
54
Best Practice:
Region 8's Scoring
System
Nil
Performance measured
objectively and consistently
Clear expectations set for
performance
States challenged to
improve scores
Areas needing improvement
specifically identified
Region could focus
resources on areas where
state needed assistance
-------
Performance
Measures Need
Focus on
Effectiveness
included in the Clean Water Act discharge guidance, such as the adequacy of
pretreatment programs.
Further, to ensure consistent oversight, there should be a uniform, objective
scoring mechanism. In this regard, Region 8 used an objective scoring system
in 1999 for measuring state performance.
We also believe regional evaluations should be made easily accessible to the
public. Publicity apparently caused North Carolina to improve its storm water
program. Although EPA Region 4's evaluation of North Carolina's
enforcement program in 1999 found serious deficiencies in management of the
storm water program, the state did not agree to make investments in the
program until we reported these same problems a year later.
EPA regions needed to use core performance measures to consistently measure
the effectiveness of state enforcement programs. Under the National
Environmental Performance Partnership System, EPA and the Environmental
Council of the States had
agreed upon seven "core"
performance measures for
evaluating enforcement
programs.
While there was state
resistence to collecting and
reporting state data, EPA
should continue to press its
state partners, including the
Environmental Council of the
States, to use core
performance measures that
address the effectiveness of
enforcement programs.
Further, these measures should
be reported annually and be
easily accessible to the public.
Core Performance Measures
Number of major inspections and
percentage in priority areas
Number of enforcement actions
Number of facilities reached through
compliance assistance*
Rates of significant noncompliance*
Percentage of significant
noncompliers returned to compliance
Environmental or health benefits
achieved by enforcement activities*
Results of using alternative
compliance approaches*
*Optional
Core performance measures were not consistently used by regions or states to
evaluate performance. Core performance measures are a limited set of
measures designed to help gauge progress toward protection of the
environment and public health. Only part of one core measure, the number of
major facility inspections, was used to evaluate state performance by all seven
regions that responded to our survey.
55
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Core Performance Measures
Used by 7 Regions
7
6
5
4
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SNC=Major Facilities in Significant Noncompliance
We believe the core performance measures needed further evolution in order to
achieve their national objective of "managing for environmental results" for a
number of reasons:
• Bean Counts. Three of the measures counted activities, such as the
number of major facilities inspected. These "bean counts" would be more
meaningful if they were converted into rates, such as the percentage of the
targeted universe inspected.
"What is the relationship
between enforcement and
compliance, and how can
we use this information to
improve compliance and
meet other [North
Carolina] objectives?"
-North Carolina's Enforcement
Assessment 2000
Measuring Success. Rates, such as compliance rates, were not
evaluated against benchmarks, standards, industry averages or geographic
norms. It was unclear what a successful, average, or unsuccessful rate was.
Environmental Outcomes. The states we reviewed were not measuring
environmental outcomes from enforcement activities or assistance activities.
Correlation Analysis. Except for North Carolina, the states we evaluated
had not attempted to analyze correlations between monitoring activities,
enforcement actions and compliance rates. Analyzing such correlations
56
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would be useful in evaluating the effectiveness of inspections, monitoring,
notices of violations, and penalties.
"Many [states] were not enthusiastic about
the prospect of an EPA report with
comparable performance measures for all
50 states.,.."
-National Academy of Public Administration,
November 2000 i
\
As found by the National Academy
of Public Administration, there
were several reasons that the core
performance measures did not fully
shift the focus from "bean counting"
to environmental results. Four of
the most important core
performance measures were optional, such as environmental benefits achieved
through concluded enforcement activities. Further, states refused to collect and
report on many measures. They claimed the measures did not always address
their problems and added to their reporting burden.
EPA had its problems with core performance measures as well, the Academy
reported. EPA was unwilling to abandon its traditional practice of negotiating
agreements on activities states will conduct. Further, the core measures were
developed separately from the Agency's own goals and measures under the
Government Performance and Results Act. States believed there was a
significant disconnect between the Agency's own goals and core performance
measures.
In spite of these weaknesses, core
performance measures can provide
an important measure of success
and public accountability. By
reporting on compliance rates and
environmental benefits, the core
performance measures provide
indicators of state program
accomplishments and success. The
National Academy of Public Administration has recommended that all states
compile core performance measures and EPA consolidate them and make them
publicly available. We agree. As California observed, state officials "must be
regularly informed as to how their actions, policies, and staff are affecting the
rate of compliance." States (and EPA) should be held accountable for their
results.
"All states should compile core
performance measures; EPA should
gather them and make them publicly
available."
\
-National Academy of Public Administration,
November 2000J
Developing core outcome performance measures will be more difficult. GAO
recently concluded that enforcement outcome measures have been difficult to
create because of:
57
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States' Efforts to
Develop
Performance
Measures
The frequent absence of baseline data needed to determine whether
compliance rates or environmental quality have improved under new
strategies.
The inherent greater difficulty and expense in quantifying outcomes as
compared to counting and reporting enforcement activities.
Difficulty in establishing causal links between enforcement strategies and
compliance rates or environmental quality.
While core performance measures
may not have addressed each state's
problems, the states we evaluated
had not made much progress in
developing more appropriate measures.
Utah and North Carolina were tracking
their compliance rates, although there
were some serious limitations. California
was not routinely evaluating its
compliance rates state wide. However,
states were making efforts to develop
better measures.
Best Practice:
Using Outcome Measures
"Florida was one of the few states
to have attempted to quantify
outcomes, noting that calculating
accurate industrywide compliance
rates was an important part of the
state's effort to focus programs on
results."
-GAO Testimony, June 1998
North Carolina had formed a work group
to develop performance measures to assess the effectiveness of its enforcement
programs, including water quality. The three performance measures developed
for enforcement were the (1) number of repeat violators, (2) compliance rate
per number of regulated facilities, and (3) compliance rate per inspections.
Utah and Region 8 had also partnered in an attempt to develop better
enforcement performance measures, including environmental improvement
measures. After much effort, the project came to a halt. The Region and state
decided not to proceed because the effort would not reduce reporting; instead,
it would increase data gathering.
California was in the midst of a
major initiative to improve its
compliance rates for water
dischargers. It recognized the
serious limits of its monitoring and
data systems and was in the process
of implementing new systems.
"... The attractiveness of performance
measures is exceeded only by the
difficulty of their design and
implementation."
-National Academy of Public Administration
58
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Only one of the seven regions that responded to our survey was aware of a
state that used outcome-based performance measures. As previously noted,
developing outcome-based measures was inherently difficult. The Office of
Enforcement and Compliance Assurance had issued grants to states to develop
better performance measures. The results of these studies should be used to
further refine the core performance measures.
Lack of Goals and Although it was EPA's goal to increase compliance, this goal had not been
Standards articulated into specific measures of success by EPA or the states we reviewed.
Both Utah and California had set some compliance goals; however, there were
not specific goals or standards for most aspects of the program. For example,
compliance goals were not established for watersheds, priority programs, high-
risk sources, or priority industrial sectors. None of the states we reviewed had
specific goals or objectives for increasing compliance, reducing recidivism, or
improving water quality by specific amounts or percentages.
The lack of standards and goals made it difficult for decision-makers to make
decisions on whether to invest or divest in certain strategies, target areas,
sectors, watersheds, or sources. Also, without goals or standards, it was
difficult to evaluate the relative success of programs.
Recommendations We recommend that the Assistant Administrator for Enforcement and
Compliance Assurance routinely determine whether states are fulfilling their
obligations to monitor and enforce discharge programs. Specifically:
6- 1. Develop consistent criteria and measures for in-depth program
evaluations of state programs:
a. At a minimum, all of the oversight criteria and measures in the 1986
Policy Framework should be included along with additional
elements included in the Clean Water Act discharge guidance.
Include the accuracy and completeness of data systems, the quality
of inspections, and the reliability of self-monitoring reports.
b. Evaluate all significant discharge programs including storm water,
minor dischargers, and concentrated animal feeding operations.
c. Use a uniform, objective scoring mechanism.
6- 2. Have regions perform in-depth evaluations of state enforcement
programs every two to three years. Make these evaluations available to
the public through publicity releases or the EPA website.
59
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6- 3. Continue to remind state partners, including the Environmental Council
of the States, of their obligation to use core performance measures that
address the effectiveness of enforcement programs.
6- 4. Have regions collect and use all core performance measures to
consistently measure the effectiveness of state enforcement programs on
an annual basis. Consolidate these measures nationwide and make them
public.
6- 5. Work with regions to assist states in setting specific goals and standards
for compliance, recidivism, the timeliness of enforcement actions and
other important measures.
Agency Response 6-/. Consistent Criteria and Measures. The Office of Enforcement and
and OIG Position Compliance Assurance agreed that a process for periodic evaluation of
the Clean Water Act discharge program in each state would be useful. It
stated that most regions conducted assessments of state water
enforcement programs, either annually or bi-annually, though the nature
of the assessment varied. Some variability in the assessment process was
necessary since priorities varied by state, as did work sharing with EPA
regions. The Office asserted that the review content of state performance
for any program, not just the Clean Water Act discharge program, must
be governed principally by the authorization agreements, grant work
plans and agreements and the performance partnership agreement
between a region and a state. Those policies and agreements should
define priorities, describe work sharing arrangements between a region
and a state, and define the evaluation process to be used, among other
things.
The Office of Enforcement and Compliance Assurance stated it had a
national evaluation process which focused on "program element reviews "
among programs. These reviews examine policy and implementation of a
particular program element in all EPA regions and a sample of states.
The Office noted it was responsible for working with EPA regions and
states to evaluate a wide scope of statutory programs, and while resources
did not permit a commitment to ensure a top to bottom evaluation of the
enforcement of the discharge program in every state, the Office agreed to
consider how best to concentrate on key concerns of the program.
The Office of Enforcement and Compliance Assurance noted that since
the program element reviews will each address a different program or
problem, there will not be a standing uniform scoring mechanism.
However, within each review, the questions used and the weight assigned
60
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to the answers will be the same. The Office agreed to continue to develop
a consistent set of criteria and measures as part of its design for each
program element review. All applicable policy is considered in designing
each review. For discharge permits, this will include criteria from the
1986 Policy Framework. However, the Office was not yet in a position to
identify what reviews will be undertaken in the future.
OIG Position: We laud the Office of Enforcement and Compliance
Assurance's efforts to develop a consistent set of criteria and measures for
"key concerns" of state enforcement programs. However, the plan to evaluate
a single element of a state enforcement program is less than optimal and merits
serious reconsideration. EPA should be aware of significant weaknesses in the
state programs it has authorized. A single program element review will not
evaluate all of the state's significant discharge programs. Morever, single
program element reviews fail to consider how resource constraints drive
program management.
As the Office noted, it has uniform criteria to evaluate state enforcement
programs: (1) EPA 1986 Policy Framework, and (2) core performance
measures developed by EPA and the Environmental Council of the States.
These criteria provide a sound foundation for consistently evaluating state
performance nationally.
Further, as detailed in this report, all of the regions that responded to our survey
indicated they were performing comprehensive state evaluations. Thus, lack of
resources does not seem to be a major issue.
6-2. In-Depth Evaluations. The Office of Enforcement and Compliance
Assurance pointed out that many regions performed in-depth evaluations
of state enforcement programs on a rotating basis, using the Performance
Partnership Agreement, grant agreement, and existing policy as a basis.
The Office agreed that it would be ideal to have these evaluations of
enforcement programs in all states every 2 or 3 years; however, resources
simply would not allow that in some EPA regions. The Office also agreed
that publicity can be an effective factor to ensure competent program
operations; however, active publication of all evaluations on a website
may exacerbate federal-state tensions and inhibit a frank, open review
process. The Office reserved to use the website as conditions dictate.
OIG Position: It appears EPA regions have adequate resources for evaluating
state programs; all of the regions that responded to our survey indicated they
were performing comprehensive evaluations of state programs. Further, the
Office of Enforcement and Compliance Assurance could team with the Office
61
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of Water to better leverage federal resources directed at evaluating state
performance.
One weakness in the existing state evaluation process was the lack of consistent
criteria and measures. For evaluations to be equitable, comparable, and
valuable, they need to be consistent, objective, continue toward a goal of
measuring the effectiveness of performance, and easily accessible to the public.
The public should be aware of serious deficiencies in a state's ability to protect
human health and the environment. While public information about state
performance may exacerbate federal-state tensions, it would provide an
important means for holding states accountable for their environmental
performance.
6-3. State Use of Core Performance Measures. The Office of
Enforcement and Compliance Assurance agreed to continue to remind
states of their obligation to use core performance measures, and
suggested that OIG encourage the states directly where possible to do so
as well. In fiscal 1999, $1.8 million was awarded to 11 states to develop
outcome measures, and, in fiscal 2000, another $1.2 million was awarded
to 10 states to develop outcome measures specifically for compliance
assistance. The Office was also discussing with states possibilities for
funding performance measurement work within the National
Environmental Performance Partnership System framework.
6-4. EPA Use of Core Performance Measures. The Office of
Enforcement and Compliance Assurance advised that states report on the
required core measures through national data systems. It is the optional
measures which the states have opted not to use. The Office agreed to
continue to promote the use of the optional measures through all means
available, including grants. The Office consolidates information on
required core measures of outputs nationally, and this information is used
by EPA regions in their performance discussions with their states and is
available to the public on request.
6-5. Compliance Measures. The Office of Enforcement and Compliance
Assurance noted that while measures for compliance, recidivism, and the
timeliness of enforcement actions were not "core measures" for states, it
had established performance standards for the timeliness of enforcement
actions which, for the most part, were derived directly from the 1986
Policy Framework. Regions have worked with states to have them adopt
these standards. In fact, the Office included state performance on this
standard in some of its program management reports.
62
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Since the measure for recidivism is new, the Office of Enforcement and
Compliance Assurance wanted to get some experience with the measure
before establishing performance goals. Likewise, it has not set
performance goals for compliance rates, recognizing that compliance
rates are the product of many factors, not just EPA activities. The Office
planned to work with the states through a grant to the Environmental
Council of the States to assist in developing a consistent approach to
determining compliance rates.
The Office of Enforcement and Compliance Assurance stated it monitored
and reported on recidivism and timeliness on a national basis. It was
considering setting a national target for recidivism for all programs, as
well as a national target for improving compliance.
OIG Position: The Office's response partially addressed recommendation 6-
5. The Office's efforts to set goals and standards for compliance, recidivism,
and timeliness are critical to evaluating the effectiveness of state (and EPA)
performance and should be continued. We are recommending, however, that
regions work with states to establish specific performance goals in these areas.
We look forward to the Agency's response to this recommendation in its reply
to this report.
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Exhibit 1
Details on Scope and Methodology
This audit resulted from concerns over the effectiveness of state enforcement
programs. We focused on the Clean Water Act discharge program because of
a lack of recent audit coverage in this area.
Forty-four states have EPA approval to issue, monitor, and enforce permits
under the Clean Water Act's National Pollutant Discharge Elimination System
program. EPA regions issue permits in the remaining states. The purpose of
the discharge program is to protect human health and the environment by
preventing the discharge of pollutants.
In addition to evaluating national data, we evaluated three EPA regions: 4, 8,
and 9. In each region, we evaluated one state authorized to issue discharge
permits. We selected states with a range of population, economy and sources
of water pollution: California, North Carolina, and Utah. These states
represent about 16 percent of the U.S. population.
We issued a separate report on North Carolina entitled "North Carolina's
NPDES Enforcement and EPA Region 4 Oversight" in September 2000.
This report addressed matters not included in this report, such as water testing
methodology. Issues pertaining to this audit are included in this report.
Additional details on the scope and methodology of our North Carolina
evaluation are discussed in the North Carolina report.
We considered the results from a National State Auditors' Association-
coordinated audit that included enforcement of the Clean Water Act. As of
April 1, 2001, five state audit reports had been issued that addressed Clean
Water Act enforcement to some degree: Arkansas, Colorado, Louisiana,
Oregon, and Maryland. We considered the results of these audits in this
report.
We performed our audit according to Government Auditing Standards issued
by the Comptroller General. Our field work was conducted from February
2000 to October 2000. The audit included management procedures in effect
as of fiscal 1999. We evaluated strategies, compliance monitoring systems, and
enforcement actions taken from October 1, 1998 to December 31, 1999.
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Methodology As part of our evaluation of management controls, we performed a risk
assessment. This risk assessment identified the potential threats to state water
enforcement and the management controls to address these threats.
Based on this risk assessment and interviews with EPA officials, we identified
critical management controls.
Management Controls In assessing management controls, we
also considered the Agency's own
assessment. EPA's Permit
Compliance System was identified in
1999 as an Agency weakness during
EPA's annual self-assessment
process. In EPA's fiscal 2000
Integrity Act Report to the Office of
Management and Budget, EPA
reported it had three major initiatives
underway, in conjunction with the
states, which were intended to
address the issues involved with the
Permit Compliance System and
improve the usefulness of the system
as a management tool: (1) system
modernization; (2) interim data
exchange format; and (3) electronic
reporting. The status of these
initiatives is discussed in Exhibit 2,
page 69.
The management control weaknesses
we found are described in this report,
along with recommendations for
corrective action. These weaknesses
were a significant contributing cause
to enforcement effectiveness
problems.
Analysis Techniques In evaluating state strategies, we
considered compliance monitoring
activities performed in high-risk areas.
To evaluate compliance monitoring and enforcement systems, we evaluated a
judgmental sample of facilities to see if violations were properly identified and
enforcement actions were appropriately taken. In California, we selected a
judgmental sample of nine major facilities in the San Francisco Bay Regional
S N
Management Controls Over State
Water Enforcement Programs
/
Clean Water Act and
amendments
/
EPA approval process for state
/
programs
40 CFR122 and 123
/
State laws, policies and guidance
/
EPA's Permit Compliance System
and state data systems
/
1986 Policy Framework for
State/EPA enforcement
agreements
/
EPA Memorandum Of
Agreement Guidance
/
EPA's Enforcement
Management System,
Enforcement Response Guide,
and enforcement policies
/
Regional performance
partnership grant agreements,
work plans, and evaluations
/
Regional audits and
evaluations of state programs
/
Regional memorandum of
/
agreements
EPA Inspection Manual
/
Inspections
/
Self-monitoring reports
<
Quarterly noncompliance reports ^
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Water Quality Control Board. We also evaluated the storm water compliance
monitoring systems of the Los Angeles Regional Water Quality Control Board.
Both boards are part of California's State Water Resources Control Board.
Moreover, we considered Region 9's audits of Clean Water programs that had
been performed in California's three other regional water boards. In evaluating
compliance monitoring and enforcement systems in Utah, we selected a
judgmental sample of six major facilities.
We also evaluated a sample of 34 major facility inspections in California and
Utah; California's were selected from the San Francisco region. We evaluated
four storm water inspections in the Los Angeles region and seven from Utah.
These were judgmental samples; however, we believe they were representative.
To evaluate regional oversight of state programs and performance measures,
we conducted a survey of 10 regions; seven regions responded. We also
obtained information on oversight procedures for another region. In evaluating
oversight, we compared annual and in-depth state evaluation criteria to EPA's
1986 Policy Framework and the National Environmental Performance
Partnership System's core performance measures.
Evidence Considered In analyzing state strategies, we considered the National Water Quality
Inventory; EPA's Strategic Plan and annual plans; state plans, strategies, and
grant agreements; EPA's 2000/2001 Memorandum of Agreement Guidance;
Office of Water's report, "Liquid Assets 2000"; regional memoranda of
agreement, strategies and plans; and GAO reports. We interviewed
responsible EPA headquarters, regional, and state personnel.
We considered the following evidence in evaluating compliance monitoring and
enforcement:
State compliance monitoring activities, including receipt and review of
discharge monitoring reports, discharger inspections, and handling of
complaints.
State enforcement actions, including timeliness and appropriateness of the
response, appropriateness of the penalty, and penalty collection.
We reviewed inspection procedures and examined state inspection reports.
We also considered state and regional board policies and practices,
management reports and interviews with responsible officials.
For the three regions we reviewed, we obtained regional evaluations of state
performance.
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Data Limitations There were serious limitations in the scope of the management information
available to evaluate state enforcement programs. EPA's permit compliance
system was inaccurate and incomplete. (This problem is described in Chapter
3, page 19.) Thousands of smaller discharge permits were not required to be
included in the system. Further, state systems were limited, especially for storm
water program compliance status and activities. These issues are also further
discussed in Chapter 3, page 19 and Chapter 4, page 35.
Prior Audit Neither EPA Office of Inspector General nor GAO have conducted any recent
Coverage national audits of state enforcement of Clean Water Act dischargers.
The National Academy of Public Administration issued a report in November
2000 which included evaluations of EPA's water and enforcement programs.
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Exhibit 2: Other Matters
Key Management Decisions Needed for the
Permit Compliance System
During the audit we attempted to determine if the plans for the modernized
Permit Compliance System would remedy data gaps in EPA and state water
enforcement information. These data gaps are discussed in Chapter 3 of this
report (page 19). We were unable to ascertain whether the modernized system
and its components would remedy these data gaps. We also identified
management decisions the Office of Enforcement and Compliance Assurance
should address promptly to ensure the system will meet both EPA and state
needs.
Permit Compliance
System
Modernization
Projects
EPA is redesigning the Permit Compliance System to better address current
requirements of discharge permitting and enforcement programs and to meet
new Office of Water initiatives, such as tracking reduced pollutant loadings,
capturing information on storm water sources, and assessing the health of
individual watersheds. EPA estimates that the cost for modernizing the system
is between $12 and $14 million.
The Office of Enforcement and Compliance Assurance has three major
initiatives currently underway for its Permit Compliance System, in conjunction
with the states, which are intended to address system problems and improve its
usefulness as a management tool:
System modernization,
State interim data exchange format, and
• Electronic reporting.
Permit Compliance System Initiatives
Initiative
Target Date
(Fiscal)
New Functions
System Modernization
)
2003
Tracks reduced pollutant loadings,
captures information on storm water
sources, assesses health of watersheds
Interim Data
Exchange Format
2001
Eases entry of state data into system;
simplifies transition to modernized
system
Electronic Self
Reporting
2002
Discharger self-monitoring reports
submitted electronically
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Efforts to modernize the system have been frustrated over the years by a lack
of funding and other Agency priorities. In addition, there have been regulatory
hurdles to overcome. For example, to enable electronic reporting, the Agency
had to modify federal discharge regulations to allow the regulated community to
use electronic reporting to submit discharge information to EPA.
Concerns In evaluating whether the modernized system would remedy problems with data
gaps, we identified several concerns that we believe should be promptly
addressed:
• Data Entry Requirements Were Not Updated The Agency policy
that identifies data that EPA and states are required to enter into the
national information system had not been updated for over a decade
and excluded storm water data. Meanwhile, the functional
requirements documents for the new system had been completed and
the project had started the detailed design phase. Data entry
requirements are critical for determining system requirements,
identifying system costs and benefits, and developing electronic
reporting regulations.
Requirements Documents Were Incomplete. The requirements
documents for the new system were incomplete. We were told that
new data elements had been established for storm water and
concentrated animal feeding operation permits and, potentially, new
data elements will be needed for certain minor facility operation
permits. However, this will not be fully known until the data entry
policy is updated. Also, the Office of Enforcement and Compliance
Assurance had not determined how the compliance status would be
determined for storm water, concentrated animal feeding operations,
and other new permits.
Formal Consensus Was Not Reached The Office had not
successfully collaborated with the Office of Water in the design of the
system requirements. Further, the states had not formally bought into
system requirements. Although the Office of Water and states had
been included in workshops to determine system requirements, they
had not reached a formal consensus on the modernized system
requirements to ensure the new system will meet the users' needs.
Cost-Benefit Analysis Was Incomplete. System modernization for
the Permit Compliance System had begun the detailed design phase
without completing the required life cycle cost-benefit analysis. Office
of Management and Budget Circular No. A-l 1, Part 3 - Planning,
Budgeting, and Acquisition of Capital Assets (July 2000), and OMB
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Circular No. A-130, Management of Federal Information
Resources (November 2000), require agencies to prepare and update
cost benefit analyses for information systems. An accurate cost-benefit
analysis is necessary to identify the most cost-effective solution for the
new system. Also, the expected benefits of the new system need to be
quantified for evaluating the return on investment.
Key Decision Documents Were Needed Although the modernized
system was estimated to cost more than $10 million in life cycle costs,
the required system charter and system management plan decision
papers had not been prepared or approved by appropriate levels of
management. According to EPA's Information Resources
Management Policy, the system charter should have been developed
during project initiation, included an estimate of life cycle costs, and
identified appropriate management levels for approval of decision
papers. Further, the decision paper for the system management plan
should have been produced at the conclusion of the analysis stage and
updated as the project progressed.
Suggestions We suggest that the Office of Enforcement and Compliance Assurance
collaborate with the Office of Water to create an updated data entry policy.
Upon completion of this policy, we suggest that the Assistant Administrator for
Enforcement and Compliance Assurance:
Complete the system requirements document.
Execute memoranda of agreements with the Office of Water and state
participants to help ensure (1) that the baseline requirements for the
new system design are formally agreed to and (2) that both federal and
state needs are addressed in the design of the new system.
Perform a cost-benefit analysis of the new system that addresses the
electronic reporting and data entry requirements, the system
development costs, and the projected operational and maintenance
costs over the life of the system.
Establish and approve a system charter and system management plan.
The Office of Enforcement and Compliance Assurance agreed with the
suggestions, except for the suggestion to execute memoranda of
agreements with the Office of Water and the states on the system
requirements and design. It explained that the schedule below addresses
the tasks it will perform, with the involvement of EPA regions and states:
Agency Response
and OIG Position
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Update system management plan
Complete system design specification document
Update federally required data element list
Update system policy statement
5/01-12/01
7/01-3/02
4/02-9/02
Ongoing-9/02
• System Requirements Document. The Office of Enforcement and
Compliance Assurance informed us that data requirements were
collectedfrom EPA (the Office of Water and the Office of
Enforcement and Compliance Assurance) and states to determine the
scope of the modernized Permit Compliance System. The next phase
of system modernization is the design phase. One of the major
products from that phase will be a design specification document.
This document will be developed with very intense participation by
EPA and states (both direct users and interface states). The design
specification includes data elements to be collected in the system, data
entry screens, report formats, and specific functionality to be
supported, including electronic reporting efforts being managed
elsewhere in the Agency. This effort will begin in July 2001 with the
national Permit Compliance System meeting and will be completed by
March of2002.
OIG Position: The finalization of the data requirements has the potential to
affect the design phase and the cost benefits of system modernization.
Accordingly, we suggest that extensive work on the design phase not be
initiated until after the finalization of the data and functional requirements.
• Memoranda of agreements with the Office of Water and state
participants. The Office of Enforcement and Compliance Assurance
agreed that full consultation and coordination with the Office of Water
and the states was necessary; however it did not agree that the
development of agreements with these parties was necessary or
desirable. The Office believed that such a process would be extremely
time consuming and resource intensive, and the goals of such a
process can be achieved in other ways. Coordination had already
occurred (and will continue) with Association of State and Interstate
Water Pollution Control Administrators and the Environmental
Council of the States.
Decisions on policy and system issues will be handled at a senior level
between the Office of Water and the Office of Enforcement and
Compliance Assurance with recommendations coming from the Permit
Compliance System Steering Committee (representing EPA
headquarters, regions, and states). One of the tasks before the
Steering Committee and senior water managers is the updating of the
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system Policy Statement and the identification of federally-required
data elements.
The Office of Enforcement and Compliance Assurance stated it had
worked extensively with the Office of Water to identify data
requirements. It intended to continue to work with the Office of Water
and the states to finalize data requirements, both for existing
programs andfor new regulatory activities which were not well
handled in the Permit Compliance System. In the next several months,
system modernization managers will be working with the Office of
Water to verify that requirements are still accurate and complete.
Additionally, a data requirements team with representatives from the
Office of Enforcement and Compliance Assurance, Office of Water,
and state will be established at the Permit Compliance System
national users meeting in July to review, validate, andfinalize the
identified requirements.
Once the data requirements are established, a workgroup, including
EPA headquarters and regional representatives, as well as states, will
be formed to identify the subset of data requirements which will be
federally mandatedfor entry into the Permit Compliance System. The
Policy Statement will then be modified to incorporate the data
elements which states and regions are required to enter into the system
as well as the universe to which those requirements will apply.
OIG Position: We believe it is critically important that the data and functional
requirements for the modernized system be formally agreed to by the Office of
Water and states to help ensure the system contains the agreed upon data, data
definitions, data formats, and pertinent technical information needed to foster
data quality and data integration. Without such agreements, there is an
increased risk that the modernized system will not (1) meet the users' needs
and (2) lower the costs to exchange data.
Formal agreements are also called for by the Exchange Network, an EPA
project to improve environmental decision-making, improve data-quality and
accuracy, and reduce data redundancy. The Exchange Network's Blueprint
calls for EPA and the states to have "trading partner agreements" that contain
the agreed upon data, formats, and related technical information. The Blueprint
specifically cites Permit Compliance System data as an exchange of data to be
governed by trading partner agreements.
• Cost-Benefit Analysis. The Office of Enforcement and Compliance
Assurance agreed to complete a cost-benefit analysis by September
2001.
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OIG Position: Because the finalization of the data requirements has the
potential to affect the design phase and the costs and benefits of the Permit
Compliance System modernization, we suggest that the cost-benefit analysis be
completed after the finalization of the data and functional requirements.
• System charter and system management plan. The Office of
Enforcement and Compliance Assurance agreed to establish and
approve a system charter and management plan by December
2001. However, the Office stated that a system management plan
was done early in the planning phases of system modernization. It
was replaced with the Information Technology Management
Reform Act submission, which contained all of the information
required in the system management plan and was approved by
Deputy Assistant Administrator. This submission was provided to
the Office of Management and Budget. As this document was
updated each year, the Office believed that it served the purpose of
the system management plan; however, it agreed to update the
plan by December 2001.
OIG Position: We concur with the decision to update the system management
plan by December 2001. However, we were unable to substantiate that a
system management plan was previously prepared. Further, a system
management plan must be approved by the Assistant Administrator, rather than
the Deputy Assistant Administrator. Also, a system management plan also must
be linked with Agency and organizational information resource management
strategic and multi-year implementation plans, and be updated to reflect actual
and planned changes as new system decision papers are approved.
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Exhibit 3
Report Contributors
Western Audit Division
Charles McCollum, Divisional Inspector General for Audit
Katherine Thompson, Team Leader
Dan Cox, Assistant Team Leader
Melinda Burks, Auditor
Clem Cantil, Auditor
Jimmy Ko, Auditor
Lori Risby, Auditor
Deborah Stanley, Auditor
Southern Audit Division (North Carolina Audit)
Mary Boyer, Divisional Inspector General for Audit
John Bishop, Audit Manager
James Hatfield, Team Leader
Laurie Adams, Auditor
Jerri Dorsey, Auditor
Chris Dunlap, Auditor
Geoff Pierce, Auditor
Central Audit Division (North Carolina Audit)
Denton Stafford, Auditor
Charlie Watts, Auditor
Headquarters
Eric Hanger, Associate Counsel
Ernest Ragland, Auditor
Bernard Stoll, Engineer
Stephen Schanamann, Environmental Scientist (North Carolina Audit)
Gerald Snyder, Engineer (North Carolina Audit)
Michael Wilson, Environmental Scientist (North Carolina Audit)
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Exhibit 4
Report Distribution
U.S. Environmental Protection Agency
Administrator
Deputy Administrator
• Chief Financial Officer
Assistant Administrator for Water
• Assistant Administrator for Environmental Information
Associate Administrator for Congressional and Intergovernmental Relations
Agency Followup Official (2710)
Agency Followup Coordinator (2724)
Regional Administrators
State of California
• Environmental Protection Agency
State Water Resources Control Board
State Auditor
State of North Carolina
• Department of Environment and Natural Resources
Division of Water Quality
State Auditor
State of Utah
• Department of Environmental Quality
Division of Water Quality
State Auditor
Association of State and Interstate Water Pollution Control Administrators
Environmental Council of the States
General Accounting Office
National Academy of Public Administration
National State Auditors' Association
Natural Resources Defense Council
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Appendix: Agency Response
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
JUN 29 2001
OFFICE OF
ENFORCEMENT AND
COMPLIANCE ASSURANCE
MEMORANDUM
SUBJECT: OECA Comments on the Draft Audit Report, "State Enforcement of Clean Water Act
Dischargers Can Be More Effective"
Thank you for the opportunity to review and comment on the April 25, 2001 version of the Draft
Audit Report, "State Enforcement of Clean Water Act Dischargers Can Be More Effective." We agree
with several of the conclusions in the report, including that States need to implement risk-based
approaches to water enforcement and that it would be useful to have a process for periodic evaluation of
the Clean Water Act program in each State. We also agree that modernization of the Permit Compliance
System (PCS) should be a high priority; in fact, the modernization of the Permit Compliance System
(PCS) has been an OECA priority for the last four years. As we have informed you on at least two
previous occasions, part of the justification for this work was to improve the quality of information in PCS.
OECA has funded modernization efforts during this 4 year period and Agency funds have been provided
since FY 2000. OECA's commitment to modernizing PCS is further demonstrated through our
recommendations as early as 1999 that PCS be added as an Agency-level FMFIA weakness.
However, we remain very concerned about the way some of the issues, as well as EPA's role, are
characterized in the report and that many of the findings are based on anecdotal information. In brief, the
draft report does not recognize that: 1) the Office of Enforcement and Compliance Assurance (OECA)
has an exhaustive process for setting national enforcement priorities, including stakeholder meetings and a
Federal Register notice and comment period (p. ii), 2) States should be responsible for setting
"watershed-specific enforcement priorities"(p. 13), and 3) flexibility in NPDES program requirements
FROM: Sylvia K. Lowrance
Acting Assistant Administrator
TO:
Charles McCollum
Divisional Inspector General for Audit
Western Audit Division
Office of the Inspector General
-------
(e.g., tradeoffs of major and minor inspections are allowed) supports State enforcement strategies (p. 7).
We are also concerned that the issues related to PCS have been oversimplified in the report.
OECA's national enforcement priority setting process includes consultation with the Regions, States,
Tribes, and the national program managers. In addition, the views of the public are solicited through the
publication of a Federal Register notice identifying proposed priorities. Public health and environmental
risk is a major criterion used in identifying possible priorities, and documents coming from States, such as
the 305(b) report, are used in determining which environmental problems pose the greatest risks. Wet
weather issues, such as sewer overflows and contaminated urban and agricultural runoff, were identified as
major sources of water quality impairment in the 305(b) reports and were identified as an OECA priority
for FY 2000-2001. Storm water was added at the request of EPA's Office of Water. A stakeholder
meeting held in the fall of 2000, which included State representation, verified that "wet weather" should be
a priority again for FY 2002-2003. The audit report fails to recognize the involvement of States in the
OECA national priority setting process, as well as the significance given to environmental issues identified
by the States. A chronology of OECA's stakeholder process is included in response 2-1 of the
attachment.
OECA believes it has been sending a consistent and strong message to the Regions and the States
that enforcement resources should be concentrated on the most significant pollution sources. OECA has
developed national risk-based strategies for addressing sewer overflows, concentrated animal feedlot
operations, and storm water; each of these emphasize the importance of focusing on impaired watersheds.
We agree more needs to be done, but we question whether additional guidance documents and further
rounds of consultation would help, or whether they would drain scarce resources in redundant and time
consuming bureaucratic processes with little environmental result. We believe that the real issue is not
OECA's priority setting process but whether risk-based strategies are being implemented in the field by
the States. The draft report reveals that several States have no risk-based planning at all. States need to
assume a greater share of responsibility in addressing significant pollution problems. For example, they are
often in the best position to identify watershed-specific priorities and develop field level implementation
plans. A constructive recommendation would be that EPA should place more emphasis on program
reviews and improve its efforts to share information (e.g., on "best practices") with the States.
OECA disagrees with the finding that the core NPDES program inhibits the development of State
strategies. In its FY 2000/2001 OECA Memorandum of Agreement (MO A) Guidance ("the MO A
Guidance"), OECA's focus was not on major point sources, but on the same "wet weather" risks to water
quality cited by OIG in its report, including CAFOs and storm water. The MOA Guidance does state that
it is an Agency goal to inspect 100% of all major point sources annually because major point sources
generate the majority of effluent flow and toxic pollutant loadings which can significantly affect water
quality in receiving waters. OECA believes that implementing a risk-based approach means evaluating all
dischargers contributing to water quality impairment and an important component of that is maintaining a
field presence at major facilities. Consistently inspecting major facilities in the past may be responsible for
the relatively high levels of compliance among majors. We need to recognize that we would lose
significant environmental benefits associated with higher levels of compliance among majors if we were to
allow a total shift to minors. OECA's MOA Guidance allows Regions/States flexibility in shifting a portion
of their total inspection resources from major to minor facilities, particularly in priority watersheds, where
those minor facilities represent a significant risk. OECA's guidance makes clear that minor inspections can
be traded for major inspections at a 2:1 ratio, using a risk-based rationale, if the Region/State is willing to
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report the minor inspection results in PCS. Resistance sometimes arises from a lack of rationale (e.g., no
risk-based strategy), unwillingness to commit to the tradeoff ratio, and/or unwillingness to report minor
data in PCS. Reporting and tracking outcomes from these inspections is critical to addressing OIG's
concerns regarding the lack of data on minors and for EPA to document results under the Government
Performance and Results Act (GPRA).
Other guidance documents issued by OECA (e.g., the "Revision to Inspection Coverage and
Frequency Criteria of Clean Water Act Permittees," dated September 1, 1995, the "Compliance
Assurance Implementation Plan for Concentrated Animal Feeding Operations," dated March 5, 1998, and
the "2000 Storm Water Enforcement Strategy Update," dated February 1, 2000) also emphasize the
importance of focusing Regional and State resources on non-major diffuse sources of pollution that carry a
large risk to human health and the environment. In fact, historically, 45% of the formal enforcement
actions tracked in PCS were against minor facilities.
OECA's actions are not keeping the States from implementing a risk-based approach or from
addressing watershed priorities. Our MOA Guidance, national enforcement guidance, and strategies
provide States with the flexible framework they need to implement a risk-based program. Where a State
is authorized to implement and enforce the NPDES program, the State is responsible for identifying its
high-risk priorities and focusing its resources in those areas.
In general, OECA agrees with many of the criticisms raised by OIG regarding the PCS system.
OECA disagrees, however, with the conclusion that PCS is not designed to accept data on minor facilities
or that EPA does not require States to input some minor data. Of the 55,660 facilities in PCS, 49,044 are
minors and 6,616 are majors. Historically, of the total number of facilities with some information on them
in PCS: 13,444 (27%) minors have enforcement action data, 29,883 (61%) minors have inspection data,
and 22,128 (45%) have effluent limit data. The PCS system will accept data on minor sources, including
CAFOs and storm water sources if the requirements for CAFOs and storm water monitoring are
consistent with those for NPDES individual permits. Moreover, the PCS Policy Statement requires
States to enter facility and inspection data into PCS for minor sources, and 40 CFR Part 123.45(c)
requires authorized NPDES States to submit an annual statistical noncompliance report on "nonmajor
permittees indicating the total number reviewed, the number in noncompliance, and the number of
enforcement actions. We recognize that the majority of storm water dischargers are covered under
general permits and that EPA does not currently require storm water general permit data to be entered into
PCS and we don't have guidance on PCS data entry for general permits. OECA is committed to
modernizing PCS, updating the Policy Statement, pursuing the option of electronic reporting, and exploring
ways of tracking new program areas (such as storm water). However, ultimately, it is up to the States to
commit the resources needed to keep up with their responsibility to input data into PCS and to report on
the noncompliance status of nonmajors.
Attached are detailed responses for each recommendation in the audit report. The Office of
Enforcement and Compliance Assurance is working in all of the subject areas covered and will consider
your recommendations as we continue to move forward.
Please give me a call if you have any questions or have your staff call
Kathryn Greenwald at (202)564-3252.
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cc: Eric Schaeffer, ORE
Michael Stahl, OC
Mary Kay Lynch, OPPA-C
Michael Cook, OW/OWM
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ATTACHMENT
OECA Responses to Recommendations in Draft OIG Report,
"State Enforcement of Clean Water Act Dischargers Can Be More Effective"
I Executive Summary
OIG is recommending that the Office of Enforcement and Compliance Assurance, in partnership with the Office of
Water and EPA regions, collaborate with states to develop risk-based enforcement priorities. EPA also should
make modernization of its Permit Compliance System a high priority. Teaming with the Office of Water and the
states, the Office of Enforcement and Compliance Assurance should ensure that the new system will meet both
federal and state needs.
OIG is also recommending that the Office of Enforcement and Compliance Assurance revise its enforcement
guidance to better define significant violations for toxicity test failures, minor facilities, and storm water
dischargers.
Lastly, the Office of Enforcement and Compliance Assurance should routinely determine whether states are
fulfilling their obligations to monitor and enforce discharge programs. To do so, it should develop consistent
criteria for in-depth program evaluations of state programs. These evaluations, along with state performance
measures, should be accessible to the public.
EPA Response: The Office of Enforcement and Compliance Assurance (OECA) has an exhaustive stakeholder process
in place to determine what the national enforcement priorities are; it includes consultation with the Regions, States, and
the Office of Water (OW). OECA has developed national risk-based strategies for the wet weather priorities and will
continue to assist the Regions in working with the States to implement them. Modernization of the Permit Compliance
System (PCS) is and will continue to be a high priority for OECA. OW and the States have been involved in workshops
to help identify the data requirements needed for management of the NPDES program. Additionally, an
OECA/OW/State data requirements team will be established at the PCS national users meeting in July 2001 to review,
validate, and finalize the identified requirements. The final data requirements as identified by OECA, OW, and the States
will be incorporated in the modernized PCS system.
Existing national enforcement guidance has flexibility to address toxicity, minors, and storm water violations. OECA will
work with the Regions to ensure that the States are aware of the guidance and will consider OIG's specific
recommendations when guidance is updated in the future.
OECA agrees that State compliance and enforcement programs need to be periodically evaluated. EPA Regions do
assess State programs on a rotating basis and OECA now has a national evaluation process which focuses on "program
element reviews."
Chapter 2: State Enforcement Strategies Need to Be Modified
OIG recommends that the Acting Assistant Administrator for Enforcement and Compliance Assurance:
3- 1. In partnership with the Office of Water and EPA regions, collaborate with states to develop risk-based
enforcement priorities. Encourage states to develop mechanisms to evaluate tradeoffs in enforcement
investments.
EPA Response: OECA already has a consultation process in place, in which Regions, States, EPA's Office of Water,
and other stakeholders are extensively consulted in determining what the national water enforcement priorities should
be for each 2-year cycle. A major factor in identifying the candidates for priorities is the element of risk. To start the FY
2002/2003 process, in the Spring of 2000, Regions were asked to begin by engaging States and Tribes in a discussion of
national priorities. We received comments, suggested changes for existing priorities, and recommendations for new
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priorities from 16 individual States and their environmental agencies, as well as receiving collective State comments from
3 EPA Regional offices. Based on feedback received and combined with an analysis conducted at Headquarters, a
Federal Register (FR) notice was published on September 28, 2000 soliciting public comment on a list of 15 potential
priorities and encouraging suggestions for additional nominations. The comments received from the FR notice helped
set the stage for OECA's "National Priorities Meeting" held on November 14, 2000. State, Tribal, Regional and
Headquarters managers attended the meeting. Fifteen priority candidates were described and discussed and attendees
were then requested to recommend their top choices for OECA's FY 2002/2003 MOA priorities. Six State representatives
and 12 representatives from State associations attended the meeting and they all contributed to the outcome. The 6
recommended priorities are all current priorities, sending a clear signal that stakeholders and our regulatory partners
want OECA to continue working on those national priorities in FY 2002/2003.
While Regions can and do recommend that States participate in national water priorities, suggest where States might
focus their resources, and meet with States to conduct joint work planning, ultimately it is the State's decision as to the
priorities it will set. We believe OIG should recognize State involvement in identifying national priorities and that a more
appropriate recommendation would be for OECA to develop a process to ensure States are implementing the risk-based
strategies we have.
3- 2. Initiate action to eliminate the regulatory requirement to inspect all major dischargers annually.
EPA Response: Our regulations at 40 CFR Part 123.26(e)(5) require that State programs have the "procedures and
ability" to inspect all majors annually. We believe that it is important to retain this regulatory requirement because not
all States are authorized to implement the NPDES program yet and this requirement sets a minimum, quantifiable
standard for States to be held to (i.e., a State applying for approval to implement the NPDES program must have
procedures and resources in place to at least inspect all of its largest dischargers annually). Major facilities are
considered high risk facilities because they generate the majority of effluent flow and toxic pollutant loadings. As
shown in the maps included in this audit report (p. 17 and 39), there still are numerous noncompliance problems with
major dischargers indicating that it is important that we maintain a field presence at these facilities.
OECA recognizes that a risk-based approach, such as addressing impaired watersheds, requires addressing majors and
minors which is why we issued the September 11,1995 memorandum to the Regions entitled "Revision to Inspection
Coverage and Frequency Criteria of Clean Water Act Permittees." This memorandum, as well as OECA's Memorandum
of Agreement (MOA) Guidance, provides EPA Regions and States flexibility in shifting some inspection resources from
lower risk majors to higher risk minors. OECA's guidance makes clear that minor inspections can be traded for major
inspections at a 2:1 ratio, using a risk-based rationale, if the Region/State is willing to report the minor inspection results
in PCS. Resistance sometimes arises from a lack of rationale (e.g., no risk-based strategy), unwillingness to commit to
the tradeoff ratio, and/or unwillingness to report minor data in PCS. Reporting and tracking outcomes from these
inspections is critical to addressing OIG's concerns regarding the lack of data on minors and for EPA to document
results under the Government Performance and Results Act (GPRA).
We believe an appropriate alternative recommendation would be for OECA to ensure that any State that does not
commit to inspect 100% of its majors develops and implements an inspection plan that targets an appropriate mixture of
high risk dischargers (i.e., majors and minors) in priority areas such as impaired watersheds.
Chapter 3: Permit and Other Information Systems Inadequate
OIG recommends that the Acting Assistant Administrator for the Office of Enforcement and Compliance Assurance:
3-1. Make modernization of the Permit Compliance System a high priority. Further, ensure that future systems:
• Allows for submission and evaluation of self-monitoring reports for all dischargers, including minor
facilities and storm water.
• Tracks storm water permits, inspections, compliance rates, and enforcement actions.
EPA Response: Modernization of PCS is, and will continue to be, a high priority for OECA. The modernized system will
build in the capacity to allow for entry of all data element fields needed to track all dischargers, including minor facilities
and storm water facilities. Information tracked for those dischargers will include permit limits, inspections, compliance
and enforcement action data. PCS modernization is scheduled for implementation by the end of 2003.
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3-2. Accelerate the development of the state data transfer system for the Permit Compliance System Also, before
proceeding further into design and development, work with the Office of Water to ensure there is an up-to-
date policy statement for water system criteria
EPA Response: Over the last year, OECA and the Office of Environmental Information (OEI) have been working closely
with our State partners in implementing the PCS Interim Data Exchange Format (IDEF). IDEF will ease the States' entry
of required information from their modernized State systems into legacy PCS, and will simplify the transition of that
information entry into the modernized PCS. OEI is the lead for implementing the IDEF project and has developed the
schedule for implementation of the project. Acceleration of that implementation schedule needs to be addressed by
OEI. Currently IDEF is scheduled for full implementation in February/March 2002.
While OECA agrees that there is a need to update the PCS Policy Statement to address new data requirements, we do
not agree that this must occur before design and software development. Broad capacity will be built into the system as
indicated in the response to 3-1. Only a subset of that capacity is likely to be Federally required. Therefore, the Policy
Statement can be updated during system design and development.
3-3. Have regions work with states to help ensure data elements needed for the new Permit Compliance System are
included in state systems being developed
EPA Response: OECA is in the process of finalizing the overall data requirements for the modernized PCS system. We
will continue to work closely with the States in developing those detailed data requirements. Until those requirements
are finalized, those States modernizing their systems should include in their modernized system the current PCS data
entry requirements as referenced in the current PCS Policy Statement.
For the most part, States do not coordinate or consult with OECA when modernizing their State systems as they are
built primarily to accommodate State needs. We will, however, request of Regions that they make a special effort to
discuss State modernization plans during their EPA/State program status meetings. Additionally, we hope that
extensive involvement of State representatives in the PCS modernization process will have a spill over effect in getting
States to include the necessary data elements in their systems.
3-4. Continue to report the Permit Compliance System as an Agency-level weakness until the modernization
project is implemented and the system data is reasonably accurate and complete.
EPA Response: OECA will continue to report PCS as an Agency-level weakness until all milestones have been met.
One of the milestones is the completion of PCS modernization which is scheduled to occur by the end of 2003.
3-5. Revise guidance to specify that whole effluent toxicity violations are significant violations. Revise
regulations to require whole effluent toxicity violations to be reported on quarterly noncompliance reports.
EPA Response: In many ways, whole effluent toxicity (WET) is treated like any other parameter in the NPDES program,
i.e., the permittee reports self-monitoring data on its discharge monitoring report, WET results are entered into PCS and
tracked, and violations should be reviewed and are subject to a range of enforcement responses. The major exception is
that WET violations are not automatically flagged as significant noncompliance or "SNC." Because of the variability in
permit requirements (e.g., many permits just require monitoring with a trigger for follow-up study instead of a numeric
limit) and the variation in frequency of compliance monitoring required (e.g., quarterly or annually),WET violations do
not neatly fit under our existing SNC criteria. However, EPA's existing regulations and guidance provide Regions and
States flexibility to identify WET violations as significant. The regulations at 40 CFR Part 123.45(a)(2)(G) currently
provide the Director with flexibility to report any violation of "substantial concern" on the QNCR. EPA's 1989 "Whole
Effluent Toxicity Permitting Principles and Enforcement Strategy" states that any violation of a WET limit is of concern
and should be reviewed. EPA's "Enforcement Management System" enforcement response guide was last revised in
1989 and recommended responses to WET violations were added.
When OECA revises the NPDES definition of SNC, we will re-consider the applicability of SNC criteria to WET.
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3-6. Establish a definition of significant violations for minor facilities, including storm water dischargers. At a
minimum, include nonsubmission of self-monitoring reports in this definition. Also, define "significant"
minor facilities. Include facilities impacting impaired waterways in this definition.
EPA Response: The Director has discretion to designate any facility with violations of concern as a "major" thereby
subjecting the facility to SNC criteria, and 40 CFR Part 123.45(a)(2)(G) currently provides the Director with discretion to
report any violation of "substantial concern" on the QNCR. OECA will commit to consider developing guidance on
when a minor should be designated as a major and to include factors such as non-submission of discharge monitoring
reports and impact of the discharge on impaired waterways.
Chapter 4: Storm Water Compliance Systems Have Deficiencies
OIG recommends that the Acting Assistant Administrator for Enforcement and Compliance Assurance:
4-1. Work with EPA regions in assisting states to:
• Develop mechanisms to better balance their limited resources between all categories of dischargers, as is
indicated by the states' analysis of risks to water quality.
• Create effective strategies for identifying storm water nonfilers.
• Develop sound storm water inspection programs which include risk-based inspection schedules and
tracking andfollow-up of inspection results.
• Establish tracking systems for citizen complaints.
EPA Response: OECA will continue to work with the Regions and States to implement risk-based approaches to water
enforcement; OECA's MOA guidance and national strategies provide flexibility to address majors as well as minors.
OECA's 2000 Storm Water Enforcement Strategy outlines a recommended "sweep" approach of targeting a priority
watershed/geographic area, then focusing storm water inspections and enforcement actions on a category of non-filers
(e.g., a priority industrial sector or large construction sites) in that area. While EPA can assist the States by providing
direction, guidance, training, and work-sharing, States must take responsibility to develop appropriate planning
mechanisms to develop and implement risk-based strategies (which should include a sound inspection program and a
system to track citizen complaints), and balance their limited resources.
4-2. Facilitate the development of a system which allows self-monitoring reports to be electronically scoredfor
compliance Consider low- cost options such as scan sheets (commonly usedfor electronic scoring of tests)
and web-based reporting.
EPA Response: The current PCS system already determines compliance based on the electronic review of the discharge
monitoring reports, though some improvements are needed in the system. Modernized PCS will certainly have this
capability. Additionally, modernized PCS will provide the capability for facilities and States to electronically report
information utilizing the Agency's Central Data Exchange portal and the National Environmental Information Exchange
Network for the transfer of NPDES data.
Chapter 5: Enforcement Actions Late and Penalties Insufficient
OIG recommends that the Acting Assistant Administrator for Enforcement and Compliance Assurance:
5-1. Establish a clear and consistent standard for measuring the promptness of enforcement actions.
EPA Response: The NPDES program already has a "timely and appropriate" standard described in the NPDES
"Enforcement Management System." We believe that a more appropriate recommendation would be for OECA to review
the consistency of its standard and ensure that the Regions and States are aware of it.
5-2. Continue to work with the regions to assist states in establishing proactive enforcement strategies to help
facilities avoid long-term serious violations due to plant or system obsolescence or capacity limits.
EPA Response: OECA, in conjunction with OW, has developed guidance documents and training workshops to assist
the regulated community in avoiding noncompliance due to plant or system obsolescence or capacity problems. Some
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specific examples are guidance with regard to implementation of nine minimum controls and a long-term control plan for
combined sewer overflows (CSOs) as well as guidance documents and training workshops for municipal officials and
their system operators and consultants on procedures to eliminate and prevent sanitary sewer overflows (SSOs) and
CSOs.
OECA is involved in the development of a Guide for Evaluating Capacity Management, Operation and Maintenance
(CMOM) Programs at Sanitary Sewer Collection Systems which describes the management practices and operation
and maintenance techniques that have served municipalities best in the reduction and elimination of SSOs from their
systems. The audience for this guidance is State and EPA personnel who are assisting municipalities to comply with
SSO requirements. The guidance will also help municipalities make decisions on the rehabilitation and repair of their
collection systems and ways to better operate those systems. The guidance is scheduled for release as an interim-final
document early in fiscal 2002, and is planned to be finalized following the final publication of the SSO Rule.
Guide for Evaluating Capacity Management, Operation and Maintenance Programs (CMOM) at Wastewater
Treatment Plants will provide guidance to assist compliance monitoring inspectors in determining whether a CMOM
program is adequate for a particular wastewater treatment plant. The guidance will also be useful to municipalities for
determining whether their plants are following accepted practices and for addressing any discrepancies as needed in
order to improve or maintain compliance. The guidance is scheduled for release as an interim-final document early in FY
2002, and is planned to be finalized following the final publication of the SSO Rule.
Chapter 6: Improved Performance Evaluation and Measurement Needed
01G recommends that the Acting Assistant Administrator for Enforcement and Compliance Assurance
routinely determine whether states are fulfilling their obligations to monitor and enforce discharge
programs. Specifically:
6- 1. Develop consistent criteria and measures for in-depth program evaluations of state programs:
a At a minimum, all of the oversight criteria and measures in the 1986 Policy Framework should
be included along with additional elements included in the Clean Water Act discharge
guidance Include the accuracy and completeness of data systems, the quality of inspections,
and the reliability of self-monitoring reports.
b. Evaluate all significant discharge programs including storm water, minor dischargers, and
concentrated animal feeding operations.
c. Use a uniform, objective scoring mechanism
EPA Response: OECA agrees that a process for periodic evaluation of the Clean Water Act (CWA) discharge
program in each State would be useful. In fact, most Regions do conduct an assessment of State water
enforcement programs, either annually or bi-annually, though the nature of the assessment varies. Some
variability in the assessment process is necessary since priorities vary by State, as does work sharing with the
Region. For your information, the content of the review of State performance for any program, not just the
CWA discharge program, must be governed principally by the authorization agreements, grant work plans and
agreements and the Performance Partnership agreement between the Region and State. Those policies and
agreements should define priorities, describe work sharing arrangements between the Region and State, and
define the evaluation process to be used, among other things.
OECA now has a national evaluation process which focuses on "program element reviews" among programs.
These reviews focus on examining policy and implementation of a particular program element in all Regions and
a sample of States. OECA is responsible for working with the Regions and States to evaluate a wide scope of
statutory programs, and while resources do not permit a commitment to ensure a top to bottom evaluation of the
enforcement of the CWA discharge program in every State, OECA will consider how best to concentrate on key
concerns of the program.
Since the OECA program element reviews will each address a different program or problem, there will not be a
standing uniform scoring mechanism. Elowever, within each review, the questions used and the weight
assigned to the answers will be the same. OECA agrees to continue to develop for each of its program element
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reviews a consistent set of criteria and measures as part of its design for each review. All applicable policy is
considered in designing each review. For NPDES, this will include criteria from the 1986 Policy Framework.
However, we are not yet in a position to identify what reviews will be undertaken in the future.
6- 2. Have regions perform in-depth evaluations of state enforcement programs every two to three years.
Make these evaluations available to the public through publicity releases or the EPA website.
EPA Response: Many Regions do perform in-depth evaluations of State enforcement programs on a rotating
basis, using the Performance Partnership Agreement, grant agreements, and existing policy as a basis for those
evaluations. Again, OECA agrees that it would be ideal to have these evaluations of enforcement programs in
all States every 2 or 3 years; however, resources simply would not allow that in some Regions. OECA also
agrees that publicity can be an effective factor to ensure competent program operations; however, active
publication of all evaluations on a website may exacerbate Federal/State tensions and inhibit a frank, open
review process. OECA reserves use of the website as conditions dictate.
6- 3. Continue to remind state partners, including the Environmental Council of the States, of their
obligation to use core performance measures that address the effectiveness of enforcement programs.
EPA Response: OECA agrees to continue to do so, and suggests that OIG encourage the States directly where
possible to do so as well. In FY 1999, $1.8 million was awarded to eleven States to develop outcome measures,
and in FY 2000, another $1.2 million was awarded to 10 States to develop outcome measures specifically for
compliance assistance. OECA is also discussing with States possibilities for funding performance measurement
work within the NEPPS framework.
6- 4. Have regions collect and use all core performance measures to consistently measure the effectiveness
of state enforcement programs on an annual basis. Consolidate these measures nationwide and make
them public.
EPA Response: States currently report on the required core measures through national data systems. It is the
optional measures which the States have opted not to use. OECA will continue to promote the use of the
optional measures through all means available to us, including grants. OECA does consolidate information on
required core measures of outputs nationally, and this information is used by the Regions in their performance
discussions with their States and is available to the public on request.
6- 5. Work with regions to assist states in setting specific goals and standards for compliance, recidivism,
the timeliness of enforcement actions and other important measures.
EPA Response: While the above measures are not "core measures" for States, OECA has established
performance standards for the timeliness of enforcement actions which, for the most part, derive directly from
the 1986 Policy Framework. Regions have worked with States to have them adopt these standards. In fact,
OECA includes State performance on this standard in some of its program management reports. Since the
measure for recidivism is new, OECA has wanted to get some experience with the measure before establishing
performance goals. Likewise, we have not set performance goals for compliance rates, recognizing that
compliance rates are the product of many factors, not just our OECA activities. OECA does plan to work with
the States through an ECOS grant to assist in developing a consistent approach to determining compliance
rates. OECA does monitor and report on recidivism and timeliness on a national basis and is considering setting
a national target for recidivism for all programs as well as a national target for improving compliance.
Exhibit 2: Other Matters, Key Management Decisions Needed for PCS
In evaluating whether the modernized system and components would remedy problems with data gaps, OIG
identified several concerns that they believe should be promptly addressed:
• Data Entry Requirements Not Updated
• Incomplete Requirements Document
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EPA's Response: OECA has already worked extensively with OW, particularly the Permits Division, to identify
data requirements. A number of special sessions were held with OW personnel when they were unable to
attend the established sessions. We intend to continue to work with OW and the states to finalize data
requirements, both for existing programs and for new regulatory activities which are not currently well handled
in PCS. In the next several months, PCS modernization managers will be working with OW to verify that
requirements provided previously by them are still accurate and complete. Additionally, an OECA/OW/State
data requirements team will be established at the PCS national users meeting in July to review, validate, and
finalize the identified requirements.
Once the data requirements are finally established, a workgroup, including EPA Headquarters and Regional
representatives, as well as States, will be formed to identify the subset of data requirements which will be
federally mandated for entry into PCS and, which currently required data elements can be eliminated. The PCS
Policy Statement will then be modified to incorporate the data elements which States/Regions are required to
enter into PCS as well as the universe to which those requirements will apply.
• Key Decision Documents Are Needed.
EPA Response: The System Management Plan (SMP) is a document which contains information on why the
system is needed, what contract will be used, who is the project manager, what is the estimated cost, etc. While
such a plan was done very early in the planning phases of PCS modernization, it was replaced with the OECA
ITMRA submission. This submission contains all of the information required in the SMP, is reviewed by all
management levels and is approved by OECA's Deputy Assistant Administrator. It is then reviewed by peer
review teams within the Agency and annually provided to OMB as part of the Agency's overall response to IT
investment reporting requirements of the Clinger-Cohen Act. As this document is updated each year, we
believe that it serves the purpose of the SMP; however, we will update the SMP by December 2001.
OIG suggests that the Office of Enforcement and Compliance Assurance collaborate with the Office of Water
to create an updated data entry policy. Upon completion of this policy, OIG suggests that the Acting
Assistant Administrator for Enforcement and Compliance Assurance:
• Complete the systems requirements document
EPA Response: Data requirements were collected from EPA (OW and OECA) and States to determine the scope
of the modernized PCS system. The next phase of PCS modernization is the design phase. One of the major
products from that phase is a design specification document. This document will be developed with very
intense participation by EPA and States (both direct users and interface States). The design specification
includes data elements to be collected in PCS, data entry screens, report formats, and specific functionality to be
supported, including electronic reporting efforts being managed elsewhere in the Agency. This effort will begin
in July of this year with the National PCS meeting and will be completed by March of2002.
• Execute memoranda of agreements with the Office of Water and state participants to help ensure (1)
that the baseline requirements for the new system design are formally agreed to and (2) that both
federal and state needs are addressed in the design of the new system
EPA Response: While we agree that full consultation and coordination with the Office of Water and the States
is necessary, we do not agree that the development of MOAs with these parties is necessary or desirable. Such
a process would be extremely time consuming and resource intensive, and the goals of such a process can be
achieved in other ways. Coordination has already occurred (and will continue) with ASWIPCA and the Water
Subcommittee of ECOS. Decisions on policy and system issues will be handled at a senior level between OW
and OECA with recommendations coming from the PCS Steering Committee (representing EPA Headquarters,
Regions, and States). One of the tasks before the PCS Steering Committee and senior water managers is the
updating of the PCS Policy Statement and the identification of Federally required data elements. The schedule
below addresses this task. Again, Regions and States will be involved in regular formulation and decision on
these issues.
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Update System Management Plan
System Design Specification Document
Update Federally Required Data Element List
Update PCS Policy Statement
05/01-12/01
07/01-03/02
04/02-09/02
Ongoing-09/02
• Perform a cost-benefit analysis of the new system that addresses the electronic reporting and data
entry requirements, the system development costs, and the projected operational and maintenance
costs over the life of the system
EPA Response: This analysis is underway and should be completed by September 2001.
• Establish and approve a system charter and system management plan.
EPA Response: We agree and will complete them by December 2001.
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