environmental science and management at the federal, state, and local level. I am the secretary of the North Carolina Department of Environment, Health, and Natural Resources and a former mayor of Chapel Hill, North Carolina. I am pleased to be joined today by one of the panel members, Alvin Alm, former deputy administrator of the Environmental Protection Agency and senior vice president of Science Applications International Corporation.

The National Academy of Public Administration-NAPA-is a private, nonpartisan, not-for-profit organization chartered by Congress to strengthen the institutions of governance. Both Mr. Alm and I are fellows of the Academy.

NAPA's report to you is the product of roughly a year of research. The project's panel and staff conducted more than 350 interviews and 19 roundtables with EPA officials and staff here in Washington and in the regional offices, and with state and local officials, the leaders of small and large businesses, environmental groups, congressional staff, and a wide range of stakeholders. This research revealed serious problems in the nation's management of the environment, and a growing consensus on the steps Congress, EPA, and others need to take to continue to make environmental progress.

Today, I would like to highlight the most important findings and recommendations of the panel. Copies of the full report have been provided to the members; additional copies are also available here today. I will focus on steps both EPA and Congress can take to improve environmental management.

(1). The United States needs a strong and effective Environmental Protection Agency. EPA in turn needs a well-defined, coherent statutory mission and the flexibility to carry it out.

At present, EPA is hobbled by overly prescriptive statutes that pull the agency in too many directions and permit managers too little discretion to make wise decisions. EPA's mission should focus on those responsibilities which can best be managed by a federal agency: leading the nation in setting national goals and priorities, setting standards, and conducting research. EPA should have a mission statement that spells out clearly its own responsibilities, as well as those of the states, localities, and the private sector.

Congressional enactment of this statement would be ideal because it would give EPA a durable mandate for change.

(2). EPA and Congress need to reform EPA's relationship with state and city governments, giving states and cities more flexibility and responsibility for solving local problems.

Many states, cities, and industries have developed both the capacity and political will to manage their environmental problems with far less oversight and direction from the federal agency. EPA should redesign its programs to encourage state, cities, and firms to find their own best approach to managing problems and meeting national standards. EPA should focus on the results of those efforts, rather than the bureaucratic processes.

The academy called this a system of "accountable devolution" of national programs.

Those states that are capable and willing to take over functions from the federal government should have full operational responsibility and no second-guessing from EPA. In those states without the capability or political will to assume responsibility, EPA should continue to exercise intensive oversight to ensure that the public health is protected and that states do not victimize other states downwind or downstream. And for those states falling between the two extremes, EPA should try to enhance their capabilities and help move them toward full delegation.

Implementing "accountable devolution" would require a shift in the role of EPA's regional offices away from traditional oversight and toward supporting state and community-level initiatives.

(3). Congress should pass legislation to authorize a "beyond compliance” program. Many businesses have found it in their interests to meet or exceed environmental standards, particularly if they can use their own strategies to achieve pollution-reduction targets. Congress should pass legislation encouraging firms to go beyond mere compliance with EPA regulations in exchange for more leeway in how to meet the standards.

Whenever possible, EPA and Congress should design environmental programs and regulations for businesses to find their own best way to solve problems. These efforts should lower costs while encouraging technological innovation.

EPA should extend the same kind of flexibility to local governments.

EPA's new "XL" initiative is similar to NAPA's "beyond compliance" proposal and should be applauded.

(4). EPA should put its own house in order.

The agency should redesign and improve its management operations to support its new direction. EPA should: Establish specific environmental goals and develop strategies to attain them; use comparative risk analyses to inform the selection of priorities and the development of specific program strategies; use the budget process to allocate resources to the agency's priorities; establish accountability by setting and tracking benchmarks, and evaluating performance.

To better achieve its goals and priorities, EPA should develop strong central management systems to track its activities, evaluate its programs, and manage its people.

(5). EPA should refine and expand its use of risk analysis and cost-benefit analysis in making decisions.

Congress should ask the agency to explain its significant regulatory decisions in terms of reductions in risk, and in terms of other benefits and costs. The agency should support state and local efforts to engage the public in comparing environmental risks, report periodically to Congress on a national ranking of risks and riskreduction opportunities, and use comparative risk analysis to help set program and budget priorities.

Good policy decisions depend on public values and a wide range of concerns that neither risk analyses nor economic analyses can measure well. Thus, the agency should use risk analyses to inform decisions but not to drive them. Risk analysis should be "a tool, not a rule." To use risk analysis effectively, the agency should be explicit about the inherent uncertainties in estimates of risk, and disclose the assumptions used by the analysts.

Congress should be careful to see that its requests for analysis do not burden the agency with information requirements that would add little value to public understanding of environmental issues.

To improve the agency's risk estimates and to implement the academy panel's proposals for accountable devolution and regulatory flexibility, the agency should develop more complete, consistent, and credible information about environmental conditions. Congress should create a new bureau of environmental statistics within EPA to compile scientific data about environmental risks, as well as about the quality and limitations of these data. The new bureau should make these data much more readily available to the public, states, communities and businesses than they are today.

(6). The environmental control effort should be integrated.

Many of EPA's problems, including its difficulty in setting priorities and its overly complex regulations, stem directly from the fragmented nature of the nation's environmental statutes, the congressional authorizing committees, and the resulting programmatic "stovepipes" within the agency and the states. EPA and Congress should make a commitment to ending that fragmentation.

Congress should initiate the process by directing EPA to begin work on a reorganization plan that would break down the internal walls between the agency's major "media" program offices for air, water, waste and toxic substances. Congress should also direct the agency to draft a statute that would integrate the agency's pollution management programs. Congress should ask EPA to complete work on these plans within 18 months.

AN IMMEDIATE AGENDA

The NAPA panel fully understood the magnitude of its recommendations for a complete reorganization of the agency and an integration of its major statutes. We believe these efforts are necessary for the long-term health of the environment and the public institutions that must protect it.

In the short-term there is much that EPA and Congress can do, even without new legislation. Perhaps it would be most helpful to the committee if I sketched the steps it could initiate.

The Appropriations Committee can insist that EPA do a better job setting priorities, allocating resources, and measuring results. The committee can ask EPA to rank its programs in terms of their potential to reduce risks cost-effectively. (High, medium, and low rankings would be precise enough to begin to encourage more productive programs.) The Committee could ask EPA to identify the statutory barriers and court-ordered deadlines that inhibit EPA from moving resources from low-gain programs to higher-gain programs. That exercise would lead to sharper priorities and a more productive set of programs overall.

The Appropriations Committee could ask EPA to report back periodically on the relative seriousness of remaining environmental risks and the opportunities EPA and others would have for reducing them.

The Appropriations Committee could accelerate EPA's efforts to provide flexibility to states, cities, and businesses by supporting the beyond-compliance initiative, the Common Sense Initiative, and consolidated grants. The committee could accelerate accountable devolution by investing in the environmental information base and local capacity building that will make the concept work.

Many of NAPA's recommendations are directed to the leadership of EPA. We urged the administrator to define the new role of the regional offices and to restructure them to deliver this role. We also urged the administrator to merge the planning and budget offices, and to strengthen internal management systems. The Appropriations Committee may want to track the agency's response to the report's recommendations.

Many of the report's recommendations would require changes in EPA's authorizing statutes. Increasing the states' role in Superfund site management and remedy selection, for example, was the subject of a hearing earlier this month in the Senate Environment and Public Works Committee. The Appropriations Committee has only indirect influence over most of these issues. Nevertheless, as the only committee in the Senate with responsibility for integrating all aspects of EPA's operations, the Appropriations Committee is in a unique position to speak with authority on the importance of working toward more integrated statutes and program offices.

In summary, I would add that the panel recognized the intensity of the political debate about environmental protection in America and the tendency of that debate to push people to polar extremes. It is my hope that NAPA's recommendations will do the opposite: define a common ground. We concluded that in order to continue to make environmental progress, EPA must change the way it does business. I hope that our insights will help this committee and EPA achieve a goal that most American's share: a healthier, sustainable environment at the lowest possible cost.

STATEMENT OF ALVIN L. ALM

Senator BOND. Dr. Alm.

Mr. ALM. Mr. Chairman, ranking member Mikulski, first of all, thank you for the honor of a Ph.D. Although a former academic, I do not have a Ph.D. So I thought I would make that clear for the record.

Senator BOND. Oh, darn. [Laughter.]

Mr. ALM. I want to talk for just a moment about the kind of vision that the recommendations really has, because I see a transition occurring between the centralized command and control system to a decentralized system, and that in the 21st century, I would foresee a time when most of the modern-most of the enforcement, really being handled within industry itself by a system very similar to the SEC system with certified environmental auditors, with performance requirements rather than detailed permit requirements on each stack, and made available to community groups, to other systems.

And we are talking about, in my opinion, a revolutionary change in the entire environmental management regime. Likewise, I think the operational responsibilities are being fundamentally handled by the State.

You will always have an EPA backup, because you have a problem of pollution going between political boundaries. So you always have this requirement. You also have environment for standardsetting tactical systems, R&D.

But we are talking about a fundamental change. The one point I wanted to make was that to make this change occur, it is going to require investments. Investments need to be made now that is going to allow for this long-term devolution and decentralization. I thank you very much.

Senator BOND. Thank you very much, Mr. Alm.

As Senator Mikulski has already referenced, 2 years ago, the New York Times ran a series of articles on environmental policy. They offered some specific criticisms; among other things, that a generation after the United States responded to poison streams and filthy air with the world's first comprehensive strategy to protect the environment, many scientists, economists and Government officials have reached the dismaying conclusion that much of America's environmental program has gone seriously awry.

Experts say that in the last 15 years, environmental policy is too often has evolved largely in reaction to popular panics, not in response to sound scientific analysis of which the environmental hazards present the greatest risks.

As a result, many scientists and public health specialists say billions of dollars are wasted each year in battling problems no longer considered especially dangerous, leaving money for others that cause far more harm.

Dr. Howes, when that panel confirmed what the New York Times reported, what do we do about the problem of environmental policy being created as a result of public hysteria, rather than real risk?

Dr. HOWES. Well, I think we need to recognize, first of all, that much of what we have done in the name of environmental protection in the United States does not necessarily derive directly from that, but results from the enactment of statutes in a somewhat more studied way over a long period of time, administered both by the EPA, as well as by counterpart State agencies.

It is a dull, nonheadline grabbing approach, but it has been largely effective in the way it has worked. This is not to take away from the underlying point made in that New York Times article, that we do tend to focus on crises.

We tend to focus on specific cases that may represent horrendous kinds of problems. But the day-to-day work of environmental protection occurs far from that particular arena, and it has produced some pretty good results.

I think in the assessment of the environmental protection that we saw on the 25th anniversary of Earth Day, generally, the consensus was that we have done a pretty good job in this country and that we have a lot of positive things to show for it. And that is what our report shows, as well.

But it still shows that EPA as an agency is torn by these conflicting pressures generating both by the Congress and by these external forces that you mentioned, and by its own organization. And most of these things can be fixed.

Senator BOND. How does the EPA go about setting priorities? And what would you recommend to improve the way EPA sets priorities to ensure that we are really allocating the resources to what will do the most good?

Dr. HOWES. We looked at that, and now each of their offices, each of the major program areas, sets their priorities and makes budget proposals. They convene their major leaders to agree upon a budget. And they link their proposals to OMB and ultimately to the Congress.

We are suggesting here a process that would use science to better inform policy choices that need to be made, not expecting science to answer the questions but to provide an underlying basis

for these kinds of decisions by asking questions in which focus would be on results rather than on process, most of all by creating a system of goals that we would seek to attain as a country.

There are a number of specific recommendations that we make in here, and we think that they will result in a better process. Again, I think you spoke to that in your statement this morning. Senator BOND. Yes, sir, Mr. Alm.

Mr. ALM. Mr. Chairman, the report does lay out a very specific set of recommendations, but I think the central recommendation is to continually update relative risk rankings.

Now, the rankings eventually will rank the problems of high, medium and low in terms of the risk. The next step then is to associate costs with those risks to come up with a new ranking, which is basically a potential for risk protection.

And if you are going to that kind of an exercise, then it strikes me you have a basis for making a more informed set of judgments on the budget and in terms of management time.

Senator BOND. You effectively foresaw my third question, so let me ask you the fourth question.

You served on the EPA science's advisory board, and I understand you were a member of the committee which produced the report, "Reducing Risk, Setting Priorities and Strategies for Environmental Protection."

Let me ask you a couple questions about that. Some people have disputed the specific risk delineations. For example, radon is ranked as a relatively high risk.

Do you believe the 5-year-old report should be updated to ensure that the areas identified as relatively high risk, based on the best science, so that all assumptions of uncertainties when you review?

Mr. ALM. Mr. Chairman, I would think it would make sense to update risk rankings every couple of years by some combination of goals for the outside groups and internally in the I think both methods have been effective. And I think probably using both would make the most sense.

Senator BOND. Are there specific programs which you believe EPA is spending too much on, based on the idea that emphasis should be placed on opportunities for the most risk reduction?

Mr. ALM. I tell you I would like to pass that for the simple reason that my company does all kinds of work for EPA, and I think that anything I see would either look self-serving or defeating. So if I could pass it

Senator BOND. How about Dr. Howes?

Mr. ALM. Well, he has an open field to run in.

Dr. HOWES. I was just talking with DeWitt, who was the project director on this. We did not make specific recommendations for elimination of programs.

What we suggested in here was a process under which programs could be better coordinated, the older stovepipe problem of trying to develop cross-media approaches that we think will save money. By the same token, we also suggest that the role of regional offices might very well change if the States were given additional responsibility from EPA.

We now have EPA employees and State employees basically work sharing the same activities. It would appear that that could be