JUNE 10, 1997

Good morning, Mr. Chairman and members of the committee. I am pleased to have the opportunity to discuss recent audits conducted by the Office of Inspector General dealing with issues related to environmental enforcement activities.

Our work has shown that EPA is pursuing an enforcement program through compliance assistance to the regulated community, backed up by the more traditional enforcement mechanisms including administrative, civil and criminal remedies. EPA is working in partnership with state and sometimes local agencies to achieve environmental goals. This morning I would like to discuss three aspects of a partnership that are essential if it is to work well and achieve its objectives: (1) mutually agreed upon enforcement approaches; (2) clear agreement on each partner's responsibilities; and (3) complete and accurate reporting of enforcement data. I will discuss these three areas in light of audits we have recently conducted in the Air and Hazardous Waste Programs.

Enforcement Approaches

Compliance assistance is a key component of an effective enforcement and compliance assurance program. Compliance assistance includes outreach, response to requests for assistance and on-site assistance. By providing clear and consistent descriptions of regulatory requirements, compliance assistance helps the regulated community understand its obligations. For instance, Texas and Louisiana held workshops and distributed brochures that described which air emissions rules applied to dry cleaning businesses. Compliance assistance can also help regulated industries find cost-effective ways to comply through the use of pollution prevention and other innovative technologies. When voluntary compliance is not achieved, EPA and the states have the authority to use more traditional enforcement actions to encourage compliance.

One generally agreed upon enforcement concept is that of escalating enforcement actions for repeat violations. For instance, a violator may initially be required to comply with an administrative order or be assessed a relatively small monetary penalty. If these actions do not bring about compliance, the enforcement actions may be escalated to civil or criminal judicial actions and progressively higher monetary penalties. We found numerous instances where this progressive enforcement approach was not employed. For example, in California, a glass manufacturing company paid a penalty of $1,000 for emitting excessive particulate matter from its furnace. This company was cited 18 times for the same violation within a two year period, and each time the penalty was $1,000. During this time, the company also received nine notices of violation for failure to report its excess emissions, and was fined an average of $645 for each violation. The fact that the company remained out of compliance for two years indicates the enforcement actions (which were not progressively more stringent) were unsuccessful in bringing the company quickly into compliance.

Another enforcement concept is that penalties should be large enough to negate any economic benefits of noncompliance. For the most part, EPA regions included an economic benefit component in their penalty assessments, but the states we reviewed generally did not. For example, five of the nine hazardous waste cases we reviewed in Louisiana should have included in the penalty calculations the economic benefits received by the firms for noncompliance, but none were collected. In one case the calculated economic benefit was $45,000. When economic benefits are not consistently calculated and collected, complying industries are treated unfairly due to the lack of a "level playing field," and varied levels of environmental protection could put public health and the environment at varying levels of risk.

A third enforcement concept is that compliance with rules and regulations should be enforced consistently across the country, including the assessment of penalties. Our audits, however, found a great variance when we compared EPA and state penalties, and when we compared penalties between states. In both the Air and Hazardous Waste Programs we found that penalties assessed by states were much less than those assessed by EPA. For example, we reviewed 54 randomly selected local air enforcement cases in California and found, with the exception of a one million dollar penalty, the average assessed penalty was about $1,000. By contrast the penalties assessed by EPA averaged $31,000. Penalties assessed against hazardous waste violators in a sample of 13 states varied from an average of about $7,000 in Maryland to almost $60,000 in Texas.

These inconsistencies were caused partly by such factors as limited resources, including a lack of administrative or legal support. Another reason for varying enforcement actions is because federal, state, and local agencies have preferences for different enforcement approaches. Representatives of state and local agencies we interviewed were concerned that larger penalties would result in negative impacts on their economies, such as the possibility of industry relocations.

Partnership Responsibilities

In order for a partnership between EPA and a state enforcement agency to work, there must be common agreement about the activities each will perform. However, Office of Inspector General audits showed that EPA and the states frequently did not come to agreement on program requirements, and commitments made were not fulfilled. To illustrate the problems that can occur in this area, I would like to refer to an audit we did of EPA and the Pennsylvania Air Enforcement program. EPA expected the State of Pennsylvania to report all significant violators so that EPA could carry out its oversight role and take necessary enforcement actions. In comparison to EPA, the state placed less emphasis on reporting violators. While Pennsylvania performed 2,000 inspections at major facilities in fiscal year 1995, it only reported six significant violators to EPA. We reviewed 270 of the inspections and identified 64 additional facilities that should have been reported. Pennsylvania did not believe these violators warranted being reported, and this allowed the state to work with violators to achieve compliance without EPA involvement. Unfortunately it took Pennsylvania a long time to resolve some of these violations -- sometimes years -- during which time facilities were emitting excessive pollution into the atmosphere in violation of their permits. Because EPA was unaware of these violations, it was unable to exercise appropriate oversight. This example shows the importance of EPA and the states having a meeting of the minds on expectations.

This is especially critical in our view because EPA is now awarding new Performance Partnership Grants in lieu of the old categorical grants. These grants necessitate a new cooperative relationship where EPA and states share the same environmental and program goals. No partnership can be successful without such sharing.

Collecting and Reporting Enforcement Data

Accurate and complete data on environmental enforcement is vital to provide a baseline so that we as a nation can judge the extent that industry complies with environmental laws, and to provide the information that states and EPA need to target areas for increased enforcement. We found major omissions and inaccuracies in enforcement data systems of both the Air and Hazardous Waste Programs. In the Air Program, enforcement actions were often underreported and inaccurately characterized. In the San Francisco area, for instance, half of the notices of violation were not entered into the data system; while in Texas and Louisiana not all enforcement cases were reported, and almost half of those that were reported were not properly identified as significant violators.

By way of contrast, a data information system must guard against requiring unnecessary reporting. In the Hazardous Waste Program, we found that EPA's instructions and forms were long and complex, using a programming language that was difficult to learn and use. As a result many users of the system had problems obtaining useable data and used their own versions instead. EPA is now working with its state partners through the Waste Information Needs initiative to reduce reporting requirements for states and industry, while ensuring accurate data is available for tracking national results in areas such as waste minimization.


I have discussed three elements we believe are necessary for effective partnerships between EPA and the states.

First, partners must agree upon an overall enforcement approach. That approach should include assisting the regulated community to comply with environmental laws and regulations; and must include consistent employment of fines and penalties when voluntary compliance cannot be achieved.

Second, all partners must have a clear understanding and acceptance of their responsibilities. This requires a meeting of the minds on what the partners are going to be held accountable for, agreement on measures of success, and good faith efforts to achieve environmental goals.

Third, data collection and systems must be improved to provide complete, accurate and timely data on enforcement activities. However, systems should not burden the regulated community with unnecessary reporting requirements.

This concludes my prepared remarks. I will be happy to answer questions.