Detailed Information on the
Air Quality Grants and Permitting Assessment

Develop at least one efficiency measure that adequately reflects program efficiency.

Develop a measure that assesses the State permitting programs' quality, efficiency, and compliance.

Develop policy and criteria for transitioning the fine particulate matter (PM2.5) monitoring program from Clean Air Act Section 103 grant funding to Clean Air Act Section 105 grant funding.

Review and update current grant allocation processes to ensure resources are properly targeted.

Measure: Percent reduction in population-weighted ambient concentration of fine particulate matter (PM2.5) in all monitored counties from 2003 baseline.

Explanation:Measures improvements (reductions) in the ambient concentration of fine particulate matter (PM2.5) pollution across all monitored counties, weighted by the populations in those areas. To calculate this weighting, pollutant concentrations in monitored counties are multiplied by the associated county populations. Therefore the units for this measure are "million people-micrograms per meter cubed" (million people-ug/m3). The 2003 baseline is 2,581 million people-ug/m3. The goal of a 6% reduction in 2015 is based on the forecasted effect of successful implementation of emission reduction programs that had been adopted as of the time the goal was set, including the Clean Air Interstate Rule.

Measure: Percent reduction in population-weighted ambient concentration of ozone in all monitored counties from 2003 baseline.

Explanation: Measures improvement (reductions) in the ambient concentration of ozone pollution across all monitored counties, weighted by the populations in those areas. Weighting by population makes this measure more closely track the aggregate public health improvement from ozone reductions, independent of jurisdictional boundaries. To calculate this weighting, pollutant concentrations in monitored counties are multiplied by the associated county populations. The units for this measure are therefore "million people-parts per billion" (million people-ppb). The 2003 baseline is 15,972 million people-ppb. The goal of a 14% reduction in 2015 is based on the forecasted effect of successful implementation of emission reduction programs that had been adopted as of the time the goal was set, including the Clean Air Interstate Rule.

Measure: Cumulative percent reduction in the number of days with Air Quality Index (AQI) values over 100 since 2003, weighted by population and AQI value.

Explanation:This nationwide annual measure applies to the grant program and tracks reductions in the number of days with an Air Quality Index of 100 or greater, indicating air quality deemed to be "unhealthy" or "hazardous" for ozone and/or fine particular matter. In calculating progress, data for each county in the U.S. is weighted by the severity of the pollution problem and the population in the area, such that the measure is dominated by progress in the highest population nonattainment areas with the most frequent and highest AQI days. In addition, the measure uses a three-year average to account for year-to-year variability in the data. The annual goals are based on continuation of recent progress.

Measure: Cumulative percent reduction in the average number of days during the ozone season that the ozone standard is exceeded in baseline non-attainment areas, weighted by population

Explanation:This measure is for the grants program and applies to areas not attaining the national ambient air quality standard for ozone. It is a new measure and therefore the baseline and annual targets are still under development.

Measure: Percent of major NSR permits issued within one year of receiving a complete permit application.

Explanation:Measures percent of new major NSR permits that are issued within one year of the receipt of a complete application. A "major NSR permit" is any permit issued under the major source NSR program, which includes permits for new major sources and major modifications within the meaning of the Clean Air Act and NSR regulations. The baseline for this measure is 61% in 2004.

Measure: Percent of significant Title V operating permit revisions issued within 18 months of receiving a complete permit application.

Explanation:Measures the percent of the total significant Title V permit revision applications that are completed and issued within 18 months of the receipt of the complete application. "Significant" permit revisions include major new source review modifications, significant changes to monitoring and other similar changes as outlined in 40 CFR 70.7(e)(4). The baseline for this measure is 85% in 2004.

Measure: Percent of new Title V operating permits issued within 18 months of receiving a complete permit application.

Explanation:Measures the percent of new applications for Title V operating permits that are processed and issued within 18 months of the receipt of the complete application. The baseline for this measure is 75% in 2004.

Measure: Cumulative percent reduction in the number of days with Air Quality Index (AQI) values over 100 since 2003 per grant dollar allocated to the States in support of the NAAQS program

Explanation:

Is the program purpose clear?

Explanation: The Clean Air Act (CAA) provides clear authority and purpose for the programs considered in this PART - Air Pollution Control Grants, Title V permitting, and New Source Review (NSR) permitting. For the purposes of this PART, NSR also includes Prevention of Significant Deterioration (PSD) activities and the grant program includes all air pollution-related grants issued using authority in the Clean Air Act. The CAA specifies that grants are for state and local air pollution agencies, tribes and interstate air quality agencies for the prevention and control of air pollution and to implement the national ambient air quality standards (NAAQS), program implementation, and for research and development activities that support the prevention and control of air pollution, including the "criteria" pollutants for which NAAQS are set (lead, carbon monoxide, ozone, particulate matter, nitrogen dioxide, and sulfur dioxide). The Title V program, established in Title V of the CAA, issues operating permits to major air pollution sources and ensures their proper implementation. The program's purpose is to support the prevention and control of air pollution by assuring that CAA requirements are fulfilled and that sources achieve the emission reductions the CAA requires. The NSR is preconstruction review and permitting program that also supports the prevention and control of air pollution. This program focuses on certain new or modified sources of air pollutants. For areas of the country that already have attained compliance with the NAAQS, the NSR program works to preserve, protect, and enhance the air quality in national parks, national wilderness areas, national monuments, national seashores, and other areas of special national or regional natural, recreational, scenic, or historic value and to ensure that economic growth will occur in a manner consistent with the preservation of existing clean air resources. The purpose of the program in areas that have not attained NAAQS compliance is to ensure "Reasonable Further Progress" or annual incremental reductions towards attainment of the NAAQS.

Evidence: Sections 103(a)(1) and 103(b)(3), 105(a)(1)(A), and 106 of the Clean Air Act provide grant authority. Title V of the CAA, 501 through 506. Purpose of and need for Title V operating permit program and program requirements can be found in "A Legislative History of the Clean Air Act Amendments of 1990", Vol. 5, Nov. 1993, p.346-8, Senate Committee on Environment and Public Works (available through the Government Printing Office). NSR program is discussed in Part C of CAA Title I (attainment areas) and Part D of CAA Title I (non-attainment areas). Also see CAA Sections 165, 172 and 173.

Does the program address a specific and existing problem, interest, or need?

Explanation: Air pollution continues to be a problem in many areas of the country and the NAAQS standards have changed (and will continue to change) to ensure an adequate level of protection. The Clean Air Act rightly places the primary responsibility of addressing air pollution issues with state and local governments and specifies that federal financial assistance and leadership are essential. The grants program was established and continues to provide the necessary financial assistance to address air pollution concerns close to the source. Like the grants, the Title V and NSR programs are important tools for addressing air pollution problems and are essential for attaining and maintaining compliance with the NAAQS. These permitting programs are a critical mechanism for states to control sources of air pollution and therefore are necessary for addressing the ongoing air pollution problem.

Evidence: The Clean Air Act (CAA) clearly states the role of states and need for federal funding: Section 101(3) & (4). Evidence of revisions to NAAQS, demonstrating continued need for grants: Air Quality Designations and Classifications for the new 8-Hour Ozone National Ambient Air Quality Standards, Air Quality Designations and Classifications for the Fine Particles (PM2.5) National Ambient Air Quality Standards (all available on the web). The Legislative history relating to the Title V program indicates the intent of Congress for Title V to include all requirements in one document and to improve enforcement ("A Legislative History of the Clean Air Act Amendments of 1990", Vol. 5, Nov. 1993, p.346-8, Government Printing Office). The authority for Title V permits to require compliance certifications by facilities and to add monitoring requirements can be found in CAA section 504(a) and (c). Congress identified problems and thus need for NSR program - see CAA part C § 160 & part D of Title I.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: None of the programs reviewed in this PART duplicate other programs. There are no other programs authorized to provide financial assistance to states specifically for air pollution control activities. Title V was expressly designed not to be redundant with existing state or federal construction or operating permit programs. State and local agencies develop and seek authorization for their own Title V programs in lieu of a federally-run program. While there were many pre-existing State and local operating permit programs, these programs were replaced by the Title V program for major sources. Similarly, state and local agencies implement the NSR program either through a delegation agreement or by adopting the federal program or a similar program. Hence there is no redundancy or duplication of any State, local or private effort relative to the permitting programs.

Evidence: Supporting authority to issue grants and defining eligible recipients: Clean Air Act November, 15, 1990; §105(a)(1)(A) and §105(c)(2), §302(b). Currently, all States have approved title V programs. Requirements of Title V were described in the Legislative history (Vol. 5, p. 346-8, Nov. 1993. Basis of NSR program mandate are in CAA section 110 and Parts C& D of Title I.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: There is no clear evidence that the Air Pollution Grants program has design flaws but there is evidence of problems with the Title V and NSR programs. These permitting programs do have clear statutory purposes but aspects of the design, either by statute or through implementing regulations, negatively impact the ability of the permitting programs to be effective and efficient. Limitations on the ability to innovate, grandfathering of pollution sources, the lack of a clear definition of key triggers (such as "significant change" for NSR permits), permit renewal timeframes, and the defined set of sources subject to permitting are examples of factors in the design of the permitting programs that negatively impact the programs' performance. EPA reported to the President in 2002 outlining the issues with the New Source Review program specifically. The National Academies of Science recently completed a review of the overall air quality management in U.S., covering broadly the federal and state responsibilities, which reports that progress has been made under the current Clean Air Act but that changes in the system are needed to ensure necessary further progress.

Evidence: Reports that indicate problems with the permitting programs include: "Reforming Permitting", Resources For the Future (RFF) Report, December 2001; "New Source Review; Report to the President", EPA, June 2002; "Air Quality Management in the United States", report by the National Research Council of the National Academies, 2004; "A Breath of Fresh Air: Reviving the New Source Review Program", National Academy of Public Administration (NAPA) report, April 2003; and the recent EPA Inspector General report "Substantial Changes Needed in Implementation and Oversight of Title V Permits if Program Goals are to be Fully Realized", number 2005-P-00010, March 2005.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: The Clean Air Act clearly defines eligible beneficiaries for the programs covered in this PART but the targeting for several programs is not adequate. It is not clear that the current allocation methodology adequately targets these defined beneficiaries. The allotment formula information provided is outdated. The 103 grants are not effectively targeted because the agency currently requires that the network of fine particulate matter (PM2.5) monitors across the nation be funded 100% through section 103 grant funding, without considering or reviewing other projects or needs that are eligible for that funding. Given that the monitors is in place at this point, at least a portion of the operation and maintenance of the network should be borne by the states, as is the case with other pollutant monitors. In terms of the Title V permitting program, the CAA specifies the scope of emission sources and scenarios that require permits as part of the program design. Though there has been a backlog of applications in many states, the program is designed to adequately target permitting the sources they have authority to regulate. Also, the program is fee-funded which helps ensure the resources are used for their intended purpose. The NSR program effectively targets new sources but problems exist in effectively targeting existing sources. For example, inadequate statutory and regulatory definitions of key criteria for determining applicability have lead to targeting problems. After a comprehensive review of the program, EPA reported to the President in 2002 that the program as administered had impeded or resulted in the cancellation of projects that would have maintained or improved the reliability, efficiency or safety of existing power plants and refineries. EPA also concluded that at that time, at existing industrial facilities outside the energy sector, the NSR program was discouraging projects that would have improved capacity or efficiency and would not increase emissions. EPA has made efforts to improve the NSR program. In 2002, EPA promulgated NSR program reforms to address some of the identified design and implementation deficiencies. Many reforms have not yet been fully implemented because of litigation.

Evidence: Clean Air Act sections 105, 103 and 302(b) define eligible grant recipients and grant regulations can be found at 40 CFR 35 (40 CFR 35.143). The program also provided the allocation methodology currently used - it was originally issued in March of 1991 and has not been revised. Special authority is required in annual appropriations acts to allow the agency to continue to use Section 103 grant funds for the purposes of fine particulate matter monitoring, indicating that the agency is not targeting as originally intended by the Act. EPA submitted a report to the President in June 2002 on a comprehensive review it completed of the NSR program ("New Source Review: Report to the President", June 2002, EPA website).

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: Two long-term measures have been approved that cover all three programs addressed in this PART. The same long-term measures will be used for all programs related to the National Ambient Air Quality Standards (NAAQS) within the purview EPA's Office of Air and Radiation, including NAAQS activities undertaken at the federal level (covered in a separate PART). These measures track reductions in concentrations of two criteria pollutants of particular concern - particulate matter that is less than 2.5 microns in size (PM2.5 or "fine particulate matter") and ozone. The Office of Air and Radiation has access to large amounts of robust data related to these measures. New measures that apply to the grants program will be disaggregated as necessary and built into grant agreements.

Evidence: The two long-term measures have been listed in the Measures section of this PART.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The program has establish baselines and long-term targets for the two new long-term measures. The targets are ambitious and based on analysis of expected reductions due larget to the implementation of regulations. Because the measures are new, targets and calculation methods may need to be revised once initial results are available.

Evidence: The program has developed internal implementation plans for these measures which describe how the targets were established and how data will be analysed to determine progress.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: Annual measures have been established for all the programs covered in this PART. The Title V and NSR permitting measures track the issuance of permits and permit revisions. Because the permitting programs are process-oriented, output measures have been accepted for these programs. Two new outcome measures have been established for the grants program. One tracks progress on reducing the number of days that the standard for ozone is exceeded in areas that are not meeting the standard. The other measures the reduction in the number of days that the Air Quality Index (AQI) is above 100. The AQI rates the quality of the air and calculated daily based largely on levels of pollution. The higher the AQI value, the greater the level of air pollution and the greater the health concern. An AQI of 0-100 means air quality is good to moderate. An AQI greater than 100 means the air quality is unhealthy to hazardous. New measures that apply to the grants program will be disaggregated as necessary and incorporated into grant agreements.

Evidence: All approved new annual measures have been listed in the Measures section of this PART. Information about the Air Quality Index can be found on the internet at airnow.gov or through the EPA website.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: Targets and baselines have been established for the permit program measures. Targets and a baseline have been established for the grants program's new Air Quality Index (AQI) performance measure but not for the new ozone measure. The Title V targets are adequate because in the short run a number of factors have the potential to impact timely permit issuance, making the achievement of the targets a challenge. The NSR targets are adequate considering the other competing priorities that states will be required to address during the next few years. The AQI targets are weighted by the severity of the pollution and population in counties across the country. Targets and calculation methods for all measures will need to be revisited and possibly revised once initial performance results are available.

Evidence: Requirement to issue Title V permits within 18 months: Clean Air Act section 503(c) and Operating Permits Rule: 40 CFR Section 70.7. Factors that could impact the timeliness of permit issuance include; the permit renewal cycle, incorporation of new monitoring requirements, and possible program revisions. Title V permit issuance and backlog data are available for all regions and states through EPA's TOPS (Title V Operating Permit System) database. Internal implementation plans have been developed for the permitting measures and the AQI measure for the grants program, which outline how baselines and targets have been establihsed and how progress will be calculated.

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Partners are primarily grantees, state Title V programs, and contractors. Work plans are established with grantees which include specific tasks or activities that the state must complete but they do not consistently demonstrate commitment to or adoption of program goals. Many activities in the grant work plans are input-oriented (i.e. the development plans, having staff available to respond to inquiries, issuance of a certain number of permits) rather than outputs or outcomes (i.e. reduction in number of days with poor air quality, improvement in the level of compliance, or reduction in emissions). Though these input activities are critical to ensuring sufficient grantee action and proper use of grant funds, they do not adequately demonstrate contribution to the overall program goals. For Title V, as part of the delegation agreement states are required to provide program information to EPA and to meet all statutory and regulatory requirements, but it is not clear how the delegated programs commit to program goals. The NSR permitting program also delegates authority to states and as part of that authority, EPA requires that compliance status data be provided to EPA. Because NSR programs can be funded with grant money, delegated NSR programs commit to NSR-related actions through the grant agreements and reporting. As noted, these agreements don't consistently or explicitly demonstrate commitment and progress toward program goals. Contractors provide support for regulation and guidance development, which are mechanisms for achieving the programs' goals. Work plans and progress reports are submitted by contractors to track progress on contractor goals.

Evidence: Evidence included individual grantee work plans and reports, permit issuance data from States (reports from EPA's Title V Operating Permits System (TOPS)), the Program Evaluation Questionnaire for auditing delegated programs to demonstrate oversight, and contract documents for Integrated Implementation and Operating Permits and associated work assignment details to show commitment and relevance to program activities.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: There have been no evaluations of the Grants program that meet all the PART criteria. The National Academies of Science recently completed a review of the overall air quality management process, which included a review of the State Implementation Plan development process which uses grant funding, but the review did not evaluate effectiveness. Annually, the EPA Inspector General (IG) targets selected grantees in various EPA Regions for independent review and/or audit of their program and fiscal accountability, but it has not done an overall review of the air grants program management and performance. The IG has also looked at states' progress on reaching attainment of air quality standards for certain pollutants, but the report does not relate activities to grant funding or grant program effectiveness. For Title V, the EPA IG recently evaluated the effectiveness of the program and the program has made arrangements for another review to be completed in 2006. The NSR program has been reviewed by different entities over time but only one, an evaluation by the National Academy of Public Administration, has met all the criteria for this question.

Evidence: "A Breath of Fresh Air: Reviving the New Source Review Program", National Academy of Public Administration (NAPA) report, April 2003.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Congressional Justifications and budget submissions to OMB do incorporate both performance goals and budget data, but the information is presented at such an aggregate level that it is not possible to determine how changes funding would impact progress toward the programs' goals. Funding for the Title V and NSR activities is not explicitly presented in these documents. Divisions and branches Office of Air and Radiation that contribute resources to these programs use several systems to track financial and performance information, but there is no place where program or activity funding is expressly tied to specific performance targets for the programs' activities. Also, there are no central systems or processes that clearly tie grant funding to progress on program measures. Therefore it is not possible to readily estimate what impact an increase in grant funding would have on the programs' ability to meet performance targets. Funds are distributed to Regional offices each of which uses individual (commonly spreadsheet-based) mechanisms for tracking funds. Some divisions at EPA headquarters have systems that bring financial data to the activity level, but this is not done universally. Also, it is unclear whether all direct and indirect costs are accounted for, apportioned, and incorporated in budgets.

Evidence: EPA Congressional Justification, annual OMB Budget Submission documents, reports from Office of Air and Radiation financial systems, and example spreadsheets from EPA regional offices.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The programs review strategic planning by participating in the agency-wide strategic plan development process. Programs contribute to an office-level national guidance document that looks 3 years into the future. Regional air offices develop Regional Strategic Plans, which address approaches to meeting the Agency's Strategic Plan goals and the national guidance, as well as approaches to meeting regional priorities and goals. A performance measure development process is also coordinated at the office level that identifies annual performance goals and targets, translates these into annual outputs for headquarters, regional offices, states, local and Tribal agencies. In addition to these regular strategic direction review processes, there have been other examples of action taken to correct strategic deficiencies. The programs have begun to use the agency's Annual Commitment System in which they establish national targets for high priority activities. Regional offices, working with their states, are required to commit to meeting these targets. Another example specific to the Title V program is the new Clean Air Act Advisory Committee Title V Task Force which has been established to review the program activities and identify good practices and program improvements that may be needed. State, industry and environmental groups are represented as well as EPA. A report on the task force's findings is expected mid-2006.

Evidence: Regional Strategic Plans as well as the agency strategic plan are available on the web. Other evidence included the Office of Air and Radiation's FY 2006-2008 National Technical and Grant Guidance, reports from the agency's Annual Commitment System (commitment tables for NAAQS-related activities), and the Federal Register notice initiating Title V Task Force.

Are all regulations issued by the program/agency necessary to meet the stated goals of the program, and do all regulations clearly indicate how the rules contribute to achievement of the goals?

Explanation: Though all currently required regulations needed to meet the Title V program goals have been issued, several regulations are outstanding for the NSR program. The Clean Air Act (CAA) requires EPA to issue regulations that define the minimum elements of state and local Title V Operating Permit programs. The CAA also requires EPA to promulgate federal operating permit programs where a state program has not been approved (e.g., in tribal lands and off-shore territories). The preamble of these final rules explains how the Title V program will work toward clarifying and consolidating a facility's requirements, improving compliance, increasing public participation, and providing a vehicle for administration of the air toxics program. For the NSR program, both the Prevention of Significant Deterioration (PSD) regulations and the non-attainment NSR regulations are clearly mandated by the CAA. NSR rules for Plantwide Applicability Limits (PALs) and aggregation/debottlenecking have not been proposed, rules for the Clean Air Interstate Rule NSR reforms have been proposed but not finalized, and rules for the definition of Routine Maintenance and Repair have been finalized but not implemented.

Evidence: Rules go through extensive public review, interagency review, and meet all the requirements of EO12866. Title V regulations establishing minimum program elements are required in CAA section 502(b) and the Federal permit program is required in CAA section 502(d)(3). The preamble to 40 CFR part 70 explains how Title V program goals will be met, which can be found in the Federal Register (Vol. 57, pg. 32251, col. 2 and 3. July 21, 1992). The purpose of and need for PSD program regulations can be found in CAA Title I, Part C, Subpart 1, Section 160 and for the non-attainment portion of the NSR program in CAA Title I, Part D, Subpart 1, Section 171.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The program does collect high-quality data on ambient air pollution levels as well as on emissions of various pollutants from certain sources. This data is essential for states to determine progress on attaining or maintaining the NAAQS and for EPA to determine air quality trends and measure progress toward the nationwide long-term performance goals. The states use the data to inform their grant-funded State Implementation Plan development and implementation decisions. Emissions data is used by the states and EPA for the Title V and NSR programs to inform permit-related decisions on topics such as control measures, emission limits, and inspection and enforcement action.

Evidence: Ambient pollutant monitoring data is centralized in the agency's Air Quality System (AQS), which is accessible via EPA's website. Pollutant emissions data is contained in the National Emissions Inventory (NEI), which is also available on EPA's website. 40 CFR Part 51, Subpart A outlines emissions inventory requirements and 40 CFR Part 58 discusses Ambient Air Quality Surveillance requirements.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Performance agreements are used for Federal managers identified at headquarters and the Regional offices, which include requirements for achieving key program results and accountability for air program goals and objectives. Federal managers are responsible for monitoring progress toward achieving goals and objectives and taking actions to modify operations when results and measures indicate corrective action is needed. Specific regional Grants Project Officers and Grant Coordinators are designated to oversee and coordinate grantee activity and are responsible for ensuring grantee financial data and performance reporting are all completed as required. Grantees are held accountable for managing and reporting on grant accomplishments and expenditures through grant work plans and specific financial reporting forms. Though grant work plans do not consistently reflect the national NAAQS goals or commitments, they do all include specific required actions or activities related to NAAQS implementation for which they are held accountable, such as completing plans within specified time frames, developing inventories, performing a certain number of inspections or issuing a certain number of permits. EPA Regional offices meet with grantees periodically and complete full mid-year and end-of-year program reviews which cover performance and financial elements. Because grant funds can be used to for NSR permitting programs, delegated NSR programs are held accountable through the grant work plan and reporting process. Title V programs are not funded by grants so delegated partners are held accountable for performance through the delegation agreements and through audits conducted every four years that evaluate performance and ensure the programs are meeting all applicable requirements.

Evidence: Grantee work plans and reports were made available as evidence. Grant regulations specify administrative, monitoring and performance and financial reporting requirements - 40 Code of Federal Regulations (CFR) 30 and 31 (particularly 30.51, 30.52, 30.62, 31.40, 31.41, and 31.43). EPA Order 5700.7, "Environmental Results under EPA Assistance Agreements". The agency also has published internal directives and guidance on incorporating goals into manager's performance standards entitled "Linking Employee Performance Standards to EPA Strategic Plan and Goals". Managers' performance accountability documents were provided (Senior Executive Service appraisal/standards forms, which are used for all federal managers). Evidence of Title V Program Evaluations was provided, including an example of requiring a program correction in response to citizen comments: Notice of Deficiency for Clean Air Operating Permits Program in Washington (Federal Register Notices, Vol. 67, No. 1, January 2002. Also, broader air program reviews are also available on the web, which cover more than just the Title V program (example: Iowa Program Review, EPA Region 7 website).

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Divisions and branches use contract and procurement plans which outline what the funds are to be committed for and provide information on balances. This information is tied to the agency-wide Integrated Financial Management System (IFMS) and the Office of Air and Radiation's Management and Accounting Reporting System (MARS), which track expenditure data to the object class level. IFMS is the financial management tool used by the agency to commit, obligate and expend resources. Grant funding is transferred to EPA Regional office and the EPA Regional Administrators notify eligible grantees of fund availability and the associated annual performance objectives. The Agency tracks the grantees expenditures through active post-award monitoring including the IFMS, Financial Status Reports, regionally developed spreadsheets and databases to ensure that grant funds are expended per the approved grant agreement. Grant project officers are required to oversee and manage the expenditure of funds by their grantee.

Evidence: Reports were made available from the agency Integrated Financial Management System (IFMS) and the Office of Air and Radiation's Management and Accounting Reporting System (MARS). Grantee Financial Status Reports and other grantee financial tracking spreadsheets and reports were provided.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: No efficiency measures have been approved for these programs. The programs have undertaken some discrete activities that have contributed improvements in efficiency. For example, a national contract was established for grantees to use for the initial purchase of fine particulate matter monitoring equipment for the states and local agencies. By having one contract mechanism, grantees were able to order, receive and have equipment initially set up and tested at substantially reduced costs and it allowed greater quality control and more rapid dispersion of monitors. For Title V permitting data, EPA established a database for tracking state- and regional-level permit processing data, which provides a more efficient and effective way of collecting and presenting the information.

Evidence: Reports from EPA's Title V Operating Permit System (TOPS) demonstrate improved permit tracking.

Does the program collaborate and coordinate effectively with related programs?

Explanation: Related programs would be other programs and organizations that help states and local entities implement the National Ambient Air Quality Standards (NAAQS) and other air programs such as Regional Haze. EPA works with five Regional Planning Organizations (RPOs) to support their efforts in developing plans and addressing air pollution problems that affect visibility in certain areas of the country. As a result of a coordinated effort, EPA issued guidance for the RPOs on how to work with federal grant funding. Collaboration often occurs at the regional level. One EPA regional office has established a Memorandum of Understanding (MOU) with the Department of Energy regarding energy efficiency and anti-idling work which will help the area implement the NAAQS. The Grant program works with the State and Territorial Air Pollution Program Administrators (STAPPA) on grants policy and guidance issues, and annually on grant allocations. STAPPA members participate on various EPA work groups addressing fine particulate matter and ozone implementation issues as well as monitoring and emissions inventory issues. The headquarters and Regional permitting programs collaborate and coordinate with delegated permitting programs. In some cases, delegated Title V and NSR permitting program issue consolidated construction/ operating permits which require a high degree of coordination between programs. The Title V program specifically coordinates with the federal air toxics program by providing a mechanism to create air toxics emission limits that substitute for federal standards.

Evidence: The EPA Region 5 MOU with Department of Energy outlines how the agencies will work together in helping to implement the NAAQS. EPA and the Environmental Commissioners organization, ECOS, are jointly involved in a number of projects to improve EPA-State strategic planning as well as a number of specific projects. Information on ECOS/EPA work groups can be found on the ECOS website. A Joint Statement on Vision and Goals for the National Air Program was published in 2001 as result of a collaborative process between EPA, The National Tribal Environmental Council, The Institute for Tribal Environmental Professionals at Northern Arizona University, ECOS, STAPPA, and the Association of Local Air Pollution Control Officials. It is a 10-year vision for the National Air Program intended to guide policymakers and administrators at all levels of government in employing a long-term, strategic approach to air quality management. Examples of combined construction/operating permit are available on the web. A rule was issued for creating permit limits that substitute for certain air toxics standards: 40 CFR part 63.94 "Approval of a State program that substitutes for section 112 emission standards."

Does the program use strong financial management practices?

Explanation: At the federal level, the Grants, Title V, and NSR programs are free of material weaknesses and do meet several other criteria for this question. However, the programs lack adequately specific integrated financial and performance systems that support day-to-day activities and no evidence was available to demonstrate that all grantees meet the criteria for effective financial management as specified by the PART guidance. Regional Offices create spreadsheets to track grant allocations, by program results code, for their grantees for day to day resource management but centralized systems were generally not used. The programs do follow EPA's financial management guidelines for committing, obligating, reprogramming, and reconciling appropriated funds. Program officials have a system of controls and accountability (EPA's Resources Management Directives System), based on GAO, Treasury and OMB guidance as well as generally accepted accounting practices (GAAP), to ensure that improper payments are not made. At each step in the process, the propriety of the payment is reviewed. EPA trains individuals to ensure that they understand their roles and responsibilities for invoice review and for carrying out the financial aspects of program objectives. EPA received an unqualified audit opinion on its FY 2004 financial statements, identifying no Agency level material weaknesses and no substantial noncompliance.

Evidence: The unqualified audit opinion on agency's FY 2004 financial statements is available on EPA's website. EPA's Inspector General's January 2003 report on improper contract payments is also available on the website. It concluded that the number of improper contract payments found is minimal and EPA appears focused on providing high quality and accurate contract payments.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: Meaningful actions are being taken at the office level (which impact all three programs) to address management deficiencies in terms of strategic workforce planning, assessing the performance review process and reviewing and addressing IT data management concerns. In addition, the Grants program is implementing the various elements of the Agency's 5-year Grants Management Plan to help address deficiencies in the grants management process. This includes requirements and related guidance and training affecting project officers and recipients on: (a) the appropriateness of grant competition, (b) reasonable cost and price review, (c) EPA determination of management capabilities of non-profit entities prior to award, and (d) the clear articulation and documentation of programmatic and environmental results from grants. In an effort to address a lack of management and oversight, the Title V program initiated program evaluations to comprehensively review state and local programs once every four years. Similarly, the NSR program also periodically conducts reviews of state programs to ensure that the NSR requirements are being implemented correctly and consistently across the nation. When deficiencies are found in delegated programs, the federal programs initiate processes to require reforms and regional offices follow up to ensure corrections are made.

Evidence: The "EPA Grants Management Plan: 2003-2008" (issued April 2003) is available on EPA's Office of Grants and Debarment website. Program evaluation questionnaires that review compliance and performance are used for auditing delegated programs. One example of a Title V Program Evaluation would be the Idaho program review completed in July 2003 (report published in January 2004 available on EPA website). Other evaluations that included permitting but also other aspects of delegated air programs include Iowa and Ohio Program reviews, for which reports are available via the web.

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: Though generally separate processes and systems are used to manage grantee performance and financial activities, the systems seem adequate to provide necessary oversight. Grantee oversight is done largely at the regional level. The Grants program regional Grants Project Officers (with assistance from technical staff and EPA managers) review grantee activities to ensure conformance with statutory, regulatory and EPA policy during the fiscal year. Grantees agree to and report on performance as outlined in grant work plans. Grantee financial information is reported and tracked through separate forms to a different office and the headquarters Grants program staff access and review financial data on when issues arise. Though Regional offices are responsible for overseeing grantees performance and financial information, the agency's central Office of Administration and Resource Management grants management office has the primary responsibility responsible for managing and reviewing grantee financial data. Financial information is tracked through the agency's Integrated Financial Management System and not the grant work plans. Also, on-site visits are conducted at mid-year and end-of-year to review the grantees fiscal and programmatic management principals.

Evidence: Information from the agency's Integrated Financial Management System (IFMS) was provided along with spreadsheet reports from regional offices showing grantee financial data tracking. For performance tracking, grant agreements and reports were provided from multiple states as evidence.

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: This question focuses on the collection and dissemination of information that captures the most important impacts of program performance. In general, the grants covered in this PART are used by states to implement programs and projects that help prevent and control air pollution. Some of the funds are used to support monitoring networks and modeling efforts that provide information on pollutant levels in the ambient air. This data, along with emissions information, is critical to determining overall progress toward cleaner air and to measuring impact of all the National Ambient Air Quality Standards programs. The data is collected regularly (some even continuously) and is made available to the public via both web sites and reports. Some information is now shown real time through an interactive website (AIRNow) that allows individuals to get specific air quality information for their local area. Emissions and ambient air quality data are also collected and published annually in trends reports. Other grantee performance information, such as specific grantee requirements and results, is available in individual grantee reports and agreements but could be collected, centralized, presented, and clearly linked to the program's goals in a manner more appropriate for public consumption.

Evidence: Ambient pollutant monitoring data is centralized in the agency's Air Quality System (AQS), which is accessible via EPA's website. Pollutant emissions data is contained in the National Emissions Inventory (NEI), which is also available via EPA's website.

Did the program seek and take into account the views of all affected parties (e.g., consumers; large and small businesses; State, local and tribal governments; beneficiaries; and the general public) when developing significant regulations?

Explanation: EPA's rulemaking process for both Title V and NSR rules included extensive outreach and coordination with small and large businesses, state/local agencies and environmental groups. Information from this outreach is reflected in rulemaking documents. The agency provided responses to over 500 comments on its proposed rules for the Title V program. For NSR, the December 31, 2002 NSR reform regulations were originally proposed in 1996 and after several thousand comments and several years of outreach and consultation with stakeholders, final rules were issued. The preamble to the rule explains the principal regulatory changes in response to the public comments.

Evidence: Example of preamble discussion of regulatory changes for Title V can be found in the Federal Register (Vol. 57, pgs. 32261 - 32293, July 21, 1992). A description of NSR reform regulatory changes based on comments can be found in "Prevention of Significant Deterioration (PSD) and Non-attainment New Source Review: Baseline Emissions Determination, Actual-to-Future-Actual Methodology, Plantwide Applicability Limitations, Clean Units, Pollution Control Projects" (40 CFR parts 51 and 52), Federal Register, Vol. 67, No. 251, pgs. 80199-80204 and 80214-80222, December 2002.

Did the program prepare adequate regulatory impact analyses if required by Executive Order 12866, regulatory flexibility analyses if required by the Regulatory Flexibility Act and SBREFA, and cost-benefit analyses if required under the Unfunded Mandates Reform Act; and did those analyses comply with OMB guidelines?

Explanation: EPA regularly prepares regulatory impact analyses and regulatory flexibility analyses for its permit programs' rules. Extensive interagency review and approval by OMB/OIRA was completed for all required EPA analyses. EPA's rulemaking process includes preparation of regulatory impact analyses, regulatory flexibility analyses, SBREFA and cost-benefit analyses that comply with OMB Guidelines, including the newly revised OMB Circular A-4. All appropriate analyses are also prepared for NSR regulations. Extensive Interagency review and approval coordinated by OMB/OIRA is completed for all EPA analyses that are required.

Evidence: Title V program rule analyses examples include Regulatory Impact Analysis and Regulatory Flexibility Act Screening for Operating Permits Regulations, [insert specific rule name from file: RIA 1992 part 70.pdf], June 1992. The Administrative Requirements for NSR reform regulations include Regulatory Impact Analyses, Regulatory Flexibility Analyses, and Unfunded Mandates Reform Act: see pages 80241 - 80244, Vol. 67, No. 251, of the Federal Register, December 2002 ("Prevention of Significant Deterioration (PSD) and Non-attainment New Source Review: Baseline Emissions Determination, Actual-to-Future-Actual Methodology, Plantwide Applicability Limitations, Clean Units, Pollution Control Projects").

Does the program systematically review its current regulations to ensure consistency among all regulations in accomplishing program goals?

Explanation: There is no systematic, regular review for the permitting programs' regulations. Look-back analyses are not complete. However, the regulations have been reviewed when problems arise. Currently a review of the Title V program is being conducted by the Clean Air Act Advisory Committee Title V task force, which will include a review of regulations. The Title V program has also made attempts to reduce regulatory burden by issuing white papers that provide for streamlining of requirements and reduce the information required to be submitted, providing for broad use of general permits and proposing to exempt large numbers of small-emitting facilities. The NSR regulations have been reviewed and as a result revisions have been proposed to address streamlining requirements, implementation problems, court mandates, compatibility with other regulations and availability of new information. As a result of implementing the NSR program in early 1990's, industry, States and local agencies indicated there were some implementation concerns about certain elements of the program. To address these concerns, EPA initiated an effort to reform the NSR program and proposed NSR reform rules in 1996. Then in 2001 the President's National Energy Policy Development Group asked EPA to investigate whether the NSR program does, in fact, have negative impacts claimed by industry and other stakeholders. EPA concluded in a report to the President that the NSR program did not impede investment in new power plants or refineries but, as applied to existing power plants and refineries, the program had impeded or resulted in the cancellation of projects. As a result of these findings, EPA promulgated additional NSR reform rules in December 2002, which were designed to provide regulatory mechanisms to alleviate deficiencies and make the program more effective and efficient.

Evidence: Proposed regulatory revisions to the Title V program were published in the Federal Register on August 29, 1994 (Vol. 59, No.166), which were intended to help define when and how a permit must be revised to reflect changes at a permitted source as well as to clarify the scope or effect of certain elements. Additional Title V rule modifications were proposed in the Federal Register August 31, 1995 (Volume 60, Number 169), which were designed to streamline procedures for revising stationary source operating permits. EPA's report titled "New Source Review; Report to the President", issued in June 2002 outlines the problems with the NSR program, many of which EPA is in the process of addressing through regulatory reforms.

Are the regulations designed to achieve program goals, to the extent practicable, by maximizing the net benefits of its regulatory activity?

Explanation: EPA has designed its permitting regulations to achieve goals in a manner that maximizes net benefits. While many of the minimum Title V and NSR program elements are required by the Clean Air Act, EPA has attempted to maximize the flexibility of the permit programs where allowed by the statute. Specifically, the Title V regulations provide streamlined processes for most types of permit revisions, and allow other types of changes to avoid permit revision. In addition, the white papers issued by the Title V program attempt to reduce reporting burden associated with permit applications and streamline redundant requirements. The flexible permit pilot program demonstrated that additional burden reductions are available under the regulations. The NSR reform regulations provided five NSR improvement elements including a more flexible plantwide applicability limitation (PAL) approach. This PAL approach provides sources the ability to make quick frequent changes without permit changes so long as the total plantwide emissions stay below the PAL level. EPA's pilot study with PALs showed that the sources with PALs achieved significant emissions reductions while gaining flexibility with their operational changes. Though rules have been designed with maximizing net benefits to the extent practicable in mind, the need for significant reforms in the NSR program (which have not all been implemented) and the reports highlighting problems with Title V program implementation are evidence that net benefits may not always be maximized.

Evidence: The White Paper for Streamlined Development of Part 70 Permit Applications provides evidence of potential reduced costs of Title V applications and is available on EPA's website. A second White Paper providing guidance for streamlining redundant requirements was also provided as evidence of working to improve net benefits ("White Paper Number 2: Improved Implementation of The Part 70 Operating Permits Program"). The NSR Improvement Rule was published in the Federal Register (Vol. 67, No. 251) in December 2002. Appendix B of the Supplemental Environmental Analysis for that rule provides benefits estimates for PAL changes. In addition, EPA completed a review of the implementation of a flexible permit pilot program, which incorporated both the NSR and Title V permitting requirements. The report on this pilot, titled "Evaluation of Implementation Experiences with Flexible Permits", can be found on the EPA website. Time and cost savings demonstrated from flexible permit pilot are on pgs. 41-44 of that report. A recent report that highlights the existing problems with the Title V program is EPA Inspector General report number 2005-P-00010, "Substantial Changes Needed in Implementation and Oversight of Title V Permits if Program Goals are to be Fully Realized".

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: Two long-term measures have been approved that cover all programs addressed in this PART. The same long-term measures will be used for all programs related to the National Ambient Air Quality Standards (NAAQS) within the purview EPA's Office of Air and Radiation, including NAAQS activities undertaken at the federal level (covered in a separate PART). These measures track reductions in concentrations of two pollutants of particular concern - particulate matter that is less than 2.5 microns in size (PM2.5 or "fine particulate matter") and ozone. The Office of Air and Radiation has access to large amounts of robust data related to these measures but because they are new, targets and baselines have not yet been established. Therefore progress can not be assessed at this time.

Evidence:

Does the program (including program partners) achieve its annual performance goals?

Explanation: Progress has been demonstrated on the grants program Air Quality Index measure. In 2004, the program achieved a reduction of over 15% from the 2003 baseline. EPA and local officials use the Air Quality Index as a tool to let the public know how clean or polluted their air is and what associated health effects might be a concern. The higher the AQI value, the greater the level of air pollution and the greater the health concern.

Evidence: The data necessary for assessing progress on the AQI measure will generally not be available until the July following the end of the target year. For example, the data needed to assess the measure for 2006 will not be available until Summer 2007. The data submission schedule for state and local agencies operating the ozone monitors requires certification of fully quality assured data to the national air quality data repository six months after the end of the calendar year of collection. This data must then be analyzed at the federal level to report progress on this measure.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The program has no approved efficiency measures to demonstrate year-to-year improvements in efficiency. Some discrete actions have been taken that improve efficiency is certain aspects of the programs processes, including the establishment of a Title V permit data tracking database which provides a more efficient and effective way of collecting and presenting the information.

Evidence:

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: There are no other programs whose purpose is to promote cleaner air through program implementation and research grants and there are no new source or operating permit programs other than the Title V and NSR programs. The permitting programs are largely delegated programs, which means states and other statutorily-allowed entities run the permitting programs in lieu of EPA. But, it is EPA's Title V and NSR programs that have oversight responsibility to ensure statutory and regulatory requirements are met. Because all delegated programs have to meet the same requirements and are under the purview of the EPA program, a comparison would not yield useful information.

Evidence:

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: No adequate evaluations have been done for the Grants program and therefore there are no results available on its overall effectiveness. For Title V, the EPA IG recently evaluated the effectiveness of the program. The overall findings indicate that substantial changes are needed if goals are to be reached. The NSR program has been reviewed over time but only one has met all the criteria for this question. The results in the report indicate that though progress is being made, the program is not fully effective. Both permitting programs have had various aspects reviewed by independent groups or have had overall evaluations done that did not meet the independence criteria established by the PART. These evaluations have generally concluded that there are problems with certain aspects of the implementation of the programs. EPA has taken action to improve the deficiencies identified but many of the corrections have not been fully implemented due to external forces or have not been fully effective.

Evidence: Reports that provided useful program performance information (but do not meet PART criteria) include: "A Breath of Fresh Air: Reviving the New Source Review Program", National Academy of Public Administration (NAPA) report, April 2003; the Resources for the Future report titled "Reforming Permitting" by Terry Davies (December 2001) which reviews deficiencies in multiple environmental permitting programs; the "New Source Review Report to the President" by EPA (April 2002), which reports to the President on the agency's review of and recommendations to improve the NSR program; the EPA Inspector General report "EPA and States Not Making Sufficient Progress in Reducing Ozone Precursor Emissions In Some Major Metropolitan Areas'', Report No. 2004-P-00033; the EPA Inspector General report "Substantial Changes Needed in Implementation and Oversight of Title V Permits If Program Goals Are to Be Fully Realized", Report No. 2005-P-00010.

Were programmatic goals (and benefits) achieved at the least incremental societal cost and did the program maximize net benefits?

Explanation: The Title V program's is to support the prevention and control of air pollution by assuring that Clean Air Act (CAA) requirements are fulfilled and that sources achieve the emission reductions the CAA requires. It is unclear that these goals have always been achieved at the least incremental societal cost. However, EPA has made efforts to reduce societal costs of the program by reducing reporting requirements, providing a means to streamline redundant requirements and demonstrating ways to avoid permit revisions. For the NSR permitting program, it is possible that in many cases the benefits associated with the NSR program could be achieved more efficiently and at lower cost through implementation of a cap and trade program (such as the Clean Air Implementation Rule will do for utilities). EPA has made efforts to reduce societal costs of the NSR program by beginning to replace command and control type requirements with market based alternatives to reduce the regulatory burden and costs for industry, reducing recordkeeping and reporting requirements, and streamlining requirements. Finally, EPA's reform regulations are expected to reduce the regulatory burden on states, tribes and local air programs, though not all have been implemented to date.

Evidence: EPA has not conducted a comprehensive analysis on the benefits of Title V, or collected data to allow for such analysis (EPA Inspector General report number 2005-P-00010, "Substantial Changes Needed in Implementation and Oversight of Title V Permits if Program Goals are to be Fully Realized" p. 53). Two Title V program white papers were provided as evidence of improvement efforts: "White Paper for Streamlined Development of Part 70 Permit Applications" and "White Paper Number 2: Improved Implementation of The Part 70 Operating Permits Program". The NSR Improvement Rule was published in the Federal Register (Vol. 67, No. 251) December 2002 is evidence of efforts to correct deficiencies.