Split Personality

here are two Environmental Protection Agencies. One is an enthusiastic innovator that has won awards for finding electronic solutions to regulatory problems. Visit EPA's online Compliance Assistance Centers (www.assistancecenters.net) to see how the agency has teamed up with trade associations and local governments to stanch the flow of industrial pollution. The virtual centers, which focus on small businesses, such as metal finishers, printers and auto repair shops, help business people exchange information about environmental problems.

"People need to talk to somebody that understands their business," says Larry Zitko, president of ChromeTech Inc., a company that designs electroplating systems in Windsor, Ohio, and a volunteer "answer man" on environmental rules for the metal-finishing Web site. "They are looking for somebody they can trust." The centers, launched three years ago, are a hit. Though EPA has yet to determine the centers' impact on pollution, the agency knows that more than 485,000 people-more than 1,300 a day-visited the site in 2001. EPA figures the $1.3 million program helps multiply the effect of its regulatory compliance office, which has seen its staff and budget shrink in recent years.

Then there's the other EPA-the one that's a feather in the swirling political winds. This EPA repeatedly has missed deadlines for assessing cancer risks and reassessing pesticides. It has flipped and flopped since the mid-1970s over how much arsenic should be allowed in drinking water. Administrator Christie Todd Whitman finally stopped the agency's embarrassing hand-wringing over the arsenic standard last fall, deciding that the maximum allowable amount of the naturally occurring carcinogen would be dropped from the 1942 standard of 50 parts per billion to 10 parts per billion.

"I wish I could say how EPA handled arsenic was extremely unusual, but it's pretty typical of how the agency undertakes major rule-making," says Erik Olson, a former EPA researcher who is now senior attorney at the Natural Resources Defense Council, a nonprofit environmental organization. "You name a major rule and you see the same pattern of excessive delay in the face of industry opposition. It's almost impossible to get the agency to do its job without somebody from the outside holding a gun to its head."

EPA's split personality is hardly a secret. The story emerges in assessments of the agency published in recent years by government analysts and think tanks. And the tale was told again and again in dozens of Federal Performance Project interviews with EPA employees and former employees and observers from industry groups, environmental organizations and universities. They portray an agency with an unusually bright, dedicated workforce whose efforts are all too frequently undone by EPA's rigid statutory requirements, crippling bureaucracy, funding shortfalls and fierce outside political pressure.

EPA's two previous administrators-William K. Reilly and Carol Browner-tried to revamp the agency by reordering its priorities and crafting innovative approaches to regulation, which produced mixed results. Whitman likewise has pledged in appearances before Congress that she intends to follow a reform agenda that would not weaken environmental protections. Whitman expressed her commitment to reform in her fiscal 2003 budget overview, which described EPA as "limited, uncoordinated and inflexible" and promised changes to make the system "as efficient and low-cost as possible while at the same time maintaining environmental progress."

But bold reform at EPA will be difficult to accomplish in the Bush administration, which has clashed repeatedly with environmentalists on a wide range of issues. With Congress divided between the two parties, it's impossible to restructure EPA without winning over environmentalists who have the ear of the Democrats who control the Senate.

Environmentalists and congressional Democrats have joined, for example, to battle Whitman's proposal for abolishing an enforcement program aimed at reducing air pollution from old power plants. Owners of utilities and other industrial facilities hated the so-called "new source review" enforcement effort, under which the Clinton administration sued nine utilities in 1999. Siding with the industries, which argued that threat of enforcement and legal action stifled innovative approaches to controlling pollution, Whitman proposed the "Clean Skies" initiative, which called for significant pollution reductions but allowed polluters flexibility in how they met emissions goals. Whitman says the proposed program would get cleaner air without lawsuits. But the senior official in charge of EPA's Office of Regulatory Enforcement disagreed publicly with her. Eric Schaeffer, who had directed air enforcement efforts for 12 years, quit in late February to protest administration efforts that, he said, would weaken the 1970 Clean Air Act. Schaeffer told Whitman in a widely publicized letter that EPA had made significant progress in cracking down on polluting power plants in recent years but now "we seem about to snatch defeat from the jaws of victory."

As political wars raged on Capitol Hill over the Bush administration's environmental policies, EPA reform efforts-shaped by a decade-old National Academy of Public Administration report-are moving along all but unnoticed by the public. The NAPA report urged EPA to set broad environmental goals and focus its agenda on achieving them. EPA started setting environmental goals in 1992. "We were thinking about looking for outcomes, creating a report card," says Mike Ryan, the agency's deputy chief financial officer. That effort dovetailed with the 1993 Government Performance and Results Act, which requires federal agencies to craft long-range strategic plans to help them use their resources wisely.

LIMITED RESULTS

But there's a catch to that impressive success rate: EPA has met 51 of the 64 annual performance goals for which the agency has enough data to assess whether the goal has been achieved. But the agency doesn't have enough information on nine other goals to tell whether its actions have helped clean up the air, water or soil. "The more our goals reflect environmental conditions instead of just counting inspections conducted or permits issued, the harder it is to get information that's timely," Ziegele said. Translation: Mother Nature doesn't operate on a one-year budget cycle.

EPA's data gap is also a sign of distress. The agency relies on outsiders-mostly state, local and tribal governments-for an estimated 94 percent of its information about pollution and the quality of the nation's natural resources. One of its goals is to improve information sharing among environmental protection partners at various levels of government. EPA is in the midst of crafting several initiatives to improve the exchange of information with these partners. By the end of the year, EPA says 45 states will be part of a new central data exchange that will enable its users to share information about pollution, inspections and permits.

EPA has made impressive strides toward linking spending to broad environmental goals, but the agency continues to stumble over its grant programs. This is not a small matter in an agency that distributes nearly 76 percent of its money to outside sources-private contractors, states and other federal agencies. EPA relies heavily on outside contractors to clean up waste sites and on state agencies to process permits and enforce regulations.

The agency has had problems even with the smallest grant programs. A May 2001 report by EPA's inspector general found the agency was unable to justify more than $1 billion in noncompetitive grants given to nonprofit groups and state and local governments in fiscal 2000. An Associated Press analysis found that EPA's grants to nonprofits had grown from $168 million in 1993 to almost $350 million in 2001. EPA officials say the agency will use more competitive bidding this year. EPA is trying to increase control over state grants by imposing requirements, but progress has been slight.

The Office of Management and Budget seems unimpressed by EPA's management initiatives. OMB gave the agency three red lights and two yellows in the management scorecard published in the president's 2003 budget. OMB turned thumbs down on EPA in the following areas:

• Human capital. The agency lacks an up-to-date workforce strategy that supports its mission goals and strategic plan, according to OMB. It also has "significant skill imbalances in critical occupations." For example, 60 percent of the scientists in EPA's Office of Research and Development will be eligible for retirement in 2005. In response, EPA says it will complete a workforce restructuring plan by early summer.
• Competitive outsourcing. The agency has failed to meet its two-year goal of competing 15 percent of its commercial jobs. In response, it has established a work group to implement the president's competitive sourcing initiative. The goal is to meet the 15 percent, two-year goal and eventually hit 50 percent.
• Financial management. The agency is unable to provide unqualified statements about the security of its information systems and about backlogs in its water pollution permit system. EPA officials say they are working to fix these problems.

"Part of the problem is measuring progress toward our goals," says planner Alex Wolfe of the EPA's Office of the Chief Financial Officer. "The environment may take years to yield a response.

"And then," he adds, "the structure of the agency poses its own problems."

STUCK IN STOVEPIPES

The agency's decentralization reflects its roots. EPA really is a collection of programs and offices created to carry out environmental laws that Congress began passing in 1970. The agency's air program, for example, arose that year from the Clean Air Act, with permitting, monitoring and research being handled from headquarters and each regional office. EPA is spending $593 million on air programs this year. Similar stovepipes exist for water, pesticides, drinking water, hazardous wastes, toxic substances, food protection and scientific research and development. "Companies have long complained that this approach brought a constant parade of EPA inspectors, each representing a different medium, into their facilities," Donald Kettl, professor of public affairs and political science at the University of Wisconsin in Madison, wrote in "Environmental Governance: A Report on the Next Generation of Environmental Policy" (Brookings Institution, 2002).

"Moreover, such a fragmented approach reduced the effectiveness of environmental regulations," Kettl continued. "After all, the regulations focused on the company's operations, not the different media. Reformers have argued for an approach that is more place- than media-based: one set of environmental standards to cover an entire facility, one integrated set of permits to regulate the standards, and one inspector to oversee compliance. For an agency that has long been Washington-based and media-centered, such a geographical focus poses enormous challenges."

The nature of EPA's evolution also put it at the beck and call of two dozen or so congressional committees and subcommittees. The extent of congressional oversight leads to conflicting directions. Members of the House Science Committee, for example, submitted legislation last year to bolster scientific research at EPA, while Republicans on the Senate Environment and Public Works Committee were pushing to have scientific research removed from the agency altogether and farmed out to independent research panels. The consequent fragmentation and intense political supervision complicate reform. "Progress and change can be frighteningly slow," says Barry DeGraff, associate director of the resources management division at EPA's Region 5 in Chicago. "It's a constant battle in terms of resources and political will on the part of Congress to see initiatives through." The agency's difficulty in standing up to political pressure disappoints representatives of both industry and environmental groups, who otherwise agree on very little. "When you look to an agency that's supposed to be a leader in this field, you don't want them to be so buffeted by outside parties," says David Clarke of the American Chemistry Council, an Arlington, Va.-based trade association.

DATA GAP

"The EPA data systems stink," says Shelley Metzenbaum, a former EPA official who's a visiting professor at the University of Maryland and directs the performance management project at Harvard University's Kennedy School of Government. "GAO has produced reams of reports on problems with [EPA's] data collection."

The agency is at the mercy of outside parties for the data. The states do more than 80 percent of the environmental enforcement and collect 95 percent of the information about air, water and soil quality, according to the Environmental Council of the States (ECOS), an association of state and territorial environmental commissioners. EPA is in the midst of a $25 million grant program to improve information sharing with the states. Robert Roberts, who for seven years served as executive director of ECOS, is pleased with EPA's direction. "We are moving toward a true partnership between the states and EPA," says Roberts, who was appointed in March to head EPA's Region 8 Office in Denver. A major development two years ago was an agreement between ECOS and EPA that allowed states to attempt innovative regulatory programs. Progress, he said, has been slow but steady.

Mark Day, EPA's deputy chief information officer for technology and director of its Office of Technology Operations, says the agency isn't just moving aggressively to integrate information with states. EPA also is launching a program to collect information on critical indicators that will be useful for state officials and the general public in assessing progress in environmental protection.

"This is a complex information environment," Day says. "We have many different types of partners-universities tribes, states, industries-and many different types of data. This is very different from the Social Security Administration, which has a very clear job and very settled questions about their partners. Ours is still evolving to a great extent."

ENVIRONMENT.GOV

OMB, however, didn't assign a green light to EPA's e-government efforts in its 2003 budget proposal. Instead, the budget office cited problems with EPA's capital asset planning and cost control and performance targets for information technology. OMB did note EPA's plans to improve its regulatory database and to make that information more widely available to the public.

Day, who joined EPA a decade ago after working in interactive technology management for the Missouri Department of Environmental Quality, says EPA is more prepared to tackle IT challenges than OMB or other critics might think. "This is a pretty entrepreneurial place," Day says. "It's a young agency. It doesn't have 200 years of history. Also, the environmental mission attracts people with high levels of energy. We have a lot of scientists, a lot of people who do think outside the box. And if you have a vision, you can get a chance here to achieve it."

The National Academy of Public Administration suggested, in its 2000 report, "Environment.gov," that EPA needs to be even more entrepreneurial to meet its considerable challenges.

While struggling to reinvent itself, EPA must also prepare to replace some of its most skilled and valued employees. In just three years, 53 percent of computer specialists at the Office of Environmental Information and 60 percent of scientists and chemists at the Office of Research and Development will be eligible for retirement. Jane Moore, acting chief of EPA's Office of Administration and Resources Management, says the agency is just starting to properly assess its human resource needs. The agency installed a personnel management system last year to collect and assess information about employees' abilities. "We're really just getting a handle on the skills and competencies we have versus the skills and competencies we're going to need," Moore says.

SECOND-LEVEL STRUGGLES

The second generation of environmental laws added more stringent requirements. They affirm the public's right to detailed information about the chemicals industries are discharging into the environment. They require property owners to disclose to buyers and renters the presence of lead paint in properties and force cleanups of leaking underground petroleum tanks. This second round of laws vastly expanded the amount of regulation EPA and its state partners must promulgate and enforce.

The agency must now lead the effort to solve increasingly complicated environmental problems such as global warming, while figuring out how to protect people and natural resources from previously unregulated sources of pollution that rain washes into waterways. Those pollutants include fertilizers and chemicals from lawns and metals and petroleum products from highways and parking lots whose cumulative impacts can be devastating. The agency is trying to move away from regulating one permit at a time, instead overseeing the impact of a wide range of pollution sources on entire ecosystems. In other words, instead of focusing on how a sewage treatment plant will affect one creek, the agency is trying to focus on, say, the impact on the Chesapeake Bay.

"EPA's first challenge came from Congress, which passed a bunch of laws that essentially said to use the best technologies you can and bring everybody up to a certain average," says Ray Loehr, professor of environmental and water resources engineering at the University of Texas. "We got a lot of pollution cleaned up simply on the basis of using the best technologies. But now, the agency has got to evolve," adds Loehr, who was chairman of the EPA Science Advisory Board during the first Bush administration.

The agency gets a lot of attention for its efforts to offer industries a carrot to encourage reduced pollution instead of wielding a big stick. One big reason is the large number of regulated entities-41 million, ranging from massive coal-burning power plants to tiny dry cleaning shops. The other reason is the vast array of laws and statutory requirements EPA must enforce.

Mike Stahl, the director of EPA's Office of Compliance, says the agency has been eager to form partnerships with industries, but still needs to wield enforcement power. "Most facilities and companies want to do the right thing," Stahl says. "But some portion, frankly, don't want to take the time or expense to do right by the environment."

Environmentalists, industry representatives, OMB and members of Congress all watch closely when the agency releases its annual enforcement statistics each January. EPA steadily has increased the cash it collects from violators to pay for pollution controls and cleanups. Last year, the agency reached agreements that resulted in polluters spending a record $4.3 billion on new pollution controls and cleanups. The cash spent on such efforts has risen steadily over the last five years. None of EPA's budget comes from fines. The agency assesses penalties based on the estimated environmental harm-the cost, say, of destroyed wetlands on water quality and wildlife populations-and sends the money it collects to the treasury. EPA netted $95 million in criminal enforcement cases last year, down from $122 million the previous year. But the agency reported a significant increase in criminal prison sentences-256, compared with 146 in 2000.

Industry groups have worked hard, meanwhile, to emphasize the costs to themselves and to consumers of complying with environmental regulations. Regulatory costs have been in the spotlight since the Reagan administration. And the pressure to relieve regulatory burdens has only grown in recent years, especially with the growing emphasis on balancing the benefits of rules with their costs. EPA has not always fared well in such analyses.

In 1997, OMB estimated that the cost of complying with environmental regulations was $18 billion greater than the $144 billion in benefits produced by the rules. Presidential candidate George W. Bush made a campaign pledge to reduce regulatory burdens on business. Once in office, he installed a guru of cost-benefit analysis, John Graham, the former director of Harvard University's Center for Risk Analysis, as the administration's regulatory gatekeeper at OMB. Graham's goal is to make regulatory agencies such as EPA justify proposed regulations with cost-benefit analyses at the beginning of the rule-making process rather than justifying decisions with post hoc calculations. Conservation groups say Graham's new cost-benefit requirements will stifle EPA's ability to craft rules that will protect human health and the environment.

CARROTS, NOT STICKS

Aside from offering the agency's enforcement squad a public relations tool, the effort to count benefits has enabled Stahl, director of the Office of Compliance, and his employees to start seeing patterns of compliance and violations. "It makes it easier for employees to look for where they can have the greatest environmental impact," Stahl says. "It's enabling us to turn from mundane to big-picture cases." EPA is also trying to counter criticism of its regulatory crackdowns by publicizing how businesses save money by reducing pollution. An EPA survey of businesses using the Web-based compliance centers found that 65 percent of the firms saved money through such efforts.

Quantifying environmental impact on a national scale is one objective of the voluntary Strategic Goals Program, which began taking shape in the late 1980s to help the agency and industries come up with strategies for "cleaner, cheaper and smarter" environmental protection. In 1995, the metal-finishing industry and its suppliers became the first to sign up for the program.

At EPA's urging, a panel representing metal finishers, regulators and environmental organizations came up with a broad policy program for improving the way the companies use metals, water and energy to reduce hazardous emissions and exposures and to improve their bottom lines. The goals, which are supposed to be accomplished over a decade, would take the industry far beyond the existing mandatory permitting regulations. By 2001, 425 metal finishers had joined EPA and 21 states and 80 local government agencies in the program. The agency is trying to step outside traditional enforcement by allowing self-policing-permitting businesses to discover their own violations and reveal them to EPA in exchange for opportunities for reduced fines and flexible cleanup agreements. "The benefit of that kind of policy is it really stretches the influence of our program," Stahl says. "We'll never have enough inspectors, but we can get environmental benefits if companies buy into the program."

EPA has been losing inspectors for five years. Its inspection and compliance staff is down 200 positions, to about 2,700 this year. EPA's enforcement staff is a target for budget cutters who want to continue to shift the responsibility for enforcement to the states. Stahl says that while it's true that states do more than 90 percent of the nation's environmental enforcement work, EPA does the largest and most complicated cases. "In the last year or two, we've been able to sustain inspection levels, but that will be hard to maintain if we continue to see our resources go down," Stahl adds.

Mission: To protect human health and to safeguard the natural environment-air, water, and land-upon which life depends.

Top official: Christie Todd Whitman