In this paper I will share with you my thoughts on the proper roles of the Environmental Protection Agency (EPA) and the states as we in the Reagan Administration perceive them. To be succinct, we are directing EPA's role toward the achievement of needed environmental results, and away from the stipulation of each step of the process by which those results come about. From the standpoint of the law and of management efficiency, we believe states, not EPA, should be the administrators of most environmental programs conducted within their own boundaries. More often than not, states have the manpower, the skill, and the commitment to protect our environment as well as or better than EPA.

EPA has too often in the past pre-empted the natural responsibility of states, tipping the scales toward a program of the federal government, when it ought of right to be a program of the federal system. By this I mean a collaboration, with equal and complementary roles for the national and state governments. In this Administration we intend to set the balance right again.

I intend to describe for you in some detail the roles and functions we see for EPA and states. But I want to leave you with more than just a general concept; I want to share with you a number of concrete examples which demonstrate how EPA is making the New Federalism a workable, efficient method of achieving needed environmental benefits.

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When the Constitutional Convention was convened, Rhode Island refused to attend. When the Constitution was finished, several delegates refused to sign it. Two and one-half years passed before all thirteen of the original states ratified what we now consider to be one of the greatest political documents in human history. In fact, when Rhode Island finally gave approval on May 29, 1970, it was because the United States had started to deal with it as a foreign country, imposing a tax on its exports. Even then, the vote to ratify was only 34-32! The issue, of course, was state rights and powers. A number of states and individuals felt that the Constitution went too far in awarding to the national government powers which for the previous 250 years had been the province of the several colonies, newly states.

In retrospect, it is hard to imagine such initial resistance to the Constitution. Still, it is possible to read much of our subsequent domestic history as the playing out of the tension in the relative balance of power between the states and the national government. The world has grown more complex, and the role of the United States in international affairs has grown to meet it. As our prosperity has grown, so has our commitment to human health and welfare; the national government has assumed the lead in guaranteeing to all citizens a minimum share of the rights and goods which are our common birthright.

This reliance on the national government to set minimum standards for the delivery of public services in all states has proved an inevitable tendency, and, in many respects, has served us well. Because we have had recourse to one, not fifty, decision points, each citizen benefits from equal protection under the law, regardless of his state of residence. For example, the federal role in passage and administration of the Clean Air Act and the Clean Water Act has been pivotal in reversing America's destructive drift toward unhealthy and unsightly air and streams.

Despite the benefits of a strong national government, however, I fear that we have crossed the line beyond which we begin to suffer from too much of a good thing. Our federal government has lost touch with its proper role of providing leadership, coordination, and protection to the states. Not content to be the drum major, we have sought to become the whole parade.

The federal government is in the thrall of a perverse and self-perpetuating notion that states have little or no responsibility to their own publics unless the federal government commands and reimburses state action, or pre-empts state action altogether. Part of the reason that this idea has taken root is the fact that the federal establishment has in so many instances gradually displaced states from their natural roles. In taxation, for example, the efficiency of the federal income tax has led many states to tie their tax systems to it. As the federal tax burden has grown, so has the dependence of states on transfer payments from the federal treasury in support of state staff and programs. With those payments come demands, since it has always been true that "he who pays the piper calls the tune." In fact, it is perhaps only a mild exaggeration to say that states have begun to resemble in some respects a network of regional offices for the federal government, the satrapies of a domestic empire.

Part of this circumstance is, as I say, attributable to a natural trend to centralize functions over time for efficiency's sake. But a good part has been manufactured through the exercise of sheer belligerence or mistrust at the national level. For example, EPA has by law the authority to delegate to states the administration of several environmental programs. By any reckoning, our progress in delegating these programs has been slow. Many reasons have been offered for this delay, but one in particular is telling. We have refused to delegate programs to certain states which, while otherwise well qualified, do not have the "proper attitude." This test has never been well defined. It is evident [12 ELR 15088] that EPA is not accusing these states of refusing to administer and enforce the law. Rather, I gather, we suspect that these states might make program decisions with which we at EPA would disagree, given the same act of facts. So, like the warden in Cool Hand Luke, we are waiting until these states "get their minds right."

EPA has made much of our presumed "partnership" with states. It seems to me that we have set up our national 'firm' with only one senior partner. The states are junior partners, if that; some of them would still be clerks by the millenium if EPA were not to change its historic attitude. Under President Reagan and Administrator Anne Gorsuch, however, EPA views the states as its equal partner, with an equivalent environmental commitment, and with a role made distinct by their unique placement in the federal system.

The environmental statutes which are entrusted to EPA bear out this view. Typically they rely upon states for a substantial part of their administration. Here is how the major statutes include states.

• The Clean Air Act creates what is fundamentally a state program. EPA sets minimum national standards based on protection of public health and welfare, but states apply and enforce these standards under State Implementation Plans proved by EPA.

• The Clean Water Act requires states to set standards for water pollution control. States also set priorities under which communities may receive federal support for building sewage treatment plants. In both cases, states may administer the major water pollution control programs (permits and sewage grants) under authority delegated by EPA.

• The Safe Drinking Water Act acknowledges that protection of drinking water supplies is basically a state and local responsibility. EPA sets national standards for water purity, but state and sub-state water authorities administer them.

• The Resource Conservation and Recovery Act is somewhat more ambiguous. While solid waste control is assigned exclusively to states, management of hazardous waste control resides temporarily with the federal government. Even here, however, the Act encourages a quick transfer of program administration to the states. A major delay at this time is the difficulty EPA is experiencing in writing fundamental regulations which will allow a determination that a state's program is substantially equivalent to that required by RCRA.

• The Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) calls for states to maintain sites after clean-up. Administration of the time-limited fund, however, is reserved to EPA.

• The Toxic Substances Control Act (TSCA) and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) are principally federal programs, since the chemicals they regulate are not site-specific by state but are integral to interstate commerce.

It should be clear from this summary that the great improvements made in our nation's environment over the past ten years are not attributable solely to EPA. It has taken the combined talents and effort of federal, state, and local governments, combined with the persistent attention and support of American citizens in every state, to effect this change. We seek now to refine EPA's role in the system, to reduce and better target federal resources, and, in so doing, to reinforce the primary functions of state and local governments in promoting and maintaining environmental quality.

The Federal Role

What, then, is the federal role in environmental protection as we view it in the Reagan Administration? Put simply, we intend to administer the law, provide national coordination and leadership, and rely principally on states to make proper environmental decisions to serve the needs of their citizens. I see the following set of specific concerns and activities for EPA.

A first principle is to provide the basis for protection of public health nationally. To this end, EPA will seek to maintain the authority to set minimum standards for public health to which all states must adhere. Our current proposal for moderate changes to the Clean Air Act illustrates well this principle, and you will soon see the same approach in our suggestions to Congress for a fine-tuning of the Clean Water Act.

Second, EPA will provide leadership in resolving regulatory problems involving interstate and international environmental concerns. Multi-state transport of pollutants, stream use classifications which are compatible among neighboring states, and protection of multi-state aquifers are three obvious areas in which a disinterested national-level mediator is appropriate.

Third, EPA will continue to initiate new programs for subsequent transfer to states. The best example of this is RCRA's Hazardous Waste Program. EPA is going through the challenging process of creating a new administrative technology for this complex and far-reaching program. EPA is working under the pressure of court order, and without the solid body of technical data which we would like to have. With the dedication of EPA's superb technical staff, and with the advice of states, industry, and the informed public, the program is taking shape. Still, we recognize the need for one central authority to design the minimum rules of the program in the first place. We can not afford, nor does it appear that the states desire, to set up fifty or more separate and competing program models.

The same approach may be seen in the Superfund program. You may have wondered why an Administration dedicated to decentralized management should have decided that all decisions on Superfund site selection should be made at first in Washington. The reason is simple. No one has ever managed such a program before; the first decisions will set a precedent for those to follow. To allow those decisions to be made in each Region before we have any real experience with the program is to invite chaos. We wish to develop and transfer to our Regions a carefully conceived policy and administrative system which makes sense nationally even while it can be adjusted to local realities. Once the Administrator is satisfied that the program's objectives are supported by a consistent and realistic decision philosophy and management structure, the program will be [12 ELR 15088] delegated to EPA's Regions for administration in close collaboration with states.

A fourth concern on EPA is to be the clearinghouse for central technical and scientific information which states need to do their jobs. For example, a number of states have access to top-flight technical laboratories where they make use of 'state-of-the-art' sample analysis and other technical services. Not every state, however, has such a resource. Further, as new methods of testing and measurement are devised, it is important that some central organization invest in demonstrations to ensure their quality, as well as to provide services by their use before the technology becomes generally available to the best-equipped state laboratories. EPA will serve that function.

A fifth and related concern of EPA is environmental research and development. It is clear that fifty or more separate R&D programs would be inefficient. Therefore, EPA will retain its commitment to R&D, while targetting its resources on the applied end of the research spectrum. EPA's R&D program has long struggled with an identity problem. By its title and origin we know that it was intended to apply basic knowledge to develop practical solutions to technical environmental problems; its principal mission is to provide scientific support to regulatory programs. The allure of basic research, however, has made the 'D' side of R&D unattractive to some of our most able scientists, as well as to many research managers. I believe that we must continue to invest in basic environmental research; otherwise, the flow of knowledge upon which we base our applications will eventually cease. Still, we can manage our research program a great deal more efficiently by setting our main task as the production of information and methods which help EPA and states make tangible environmental improvements. Learning how to locate, identify, and remove contaminants from essential groundwater, for example, should take priority over projects which are theoretically interesting but remote from any practical application.

Sixth, EPA retains a firm commitment to enforce the law. Under most of our statutes, EPA's enforcement role is residual, that is, allowing us to take the enforcement lead if and when states can not take effective action. To be blunt, I have concluded that EPA's reputation as a tough and effective enforcement agency over the past several years has been largely unearned. There has been little in the way of discernible enforcement strategy. Major polluters have gone untouched, and numerous cases have languished at the Department of Justice for want of adequate preparation. But we "fattened" our average by going after numerous small firms whose pollution problems were real but minor compared with those of the ones that eluded us. EPA is now refining its first real enforcement strategy, one which will emphasize careful identification of major multimedia polluters, full and persuasive case preparation, and resolution based on negotiation under the realistic threat of major court action.

Finally, the Agency will conduct moderate and constructive oversight of state performance in carrying out federal statutes. While we generally rely on the professionalism of states and on their commitment to respond to the public demand for a clean environment, we recognize that states, like EPA, are human institutions. We will therefore discharge our duty to review state programs from time to time so that we may accurately report to the President and the Congress that the law is being observed. We do not expect to quibble with states over individual permits or enforcement actions; rather we will examine a sample of state actions in order to learn how the program as a whole is operating. When appropriate, we will suggest how things might be done more effectively or efficiently based on the experience of EPA or of other states. The basic test, of course, is not procedure, but results, and we hope to learn much from those states doing the best job of cleaning up the environment.

In all of these functions, this Administration seeks to avoid the "boarding house reach" which has characterized the Agency's previous dealings with states. In carrying out the law, EPA will make the greatest possible use of state initiative and expertise. We see environmental protection as America's business, not the exclusive preserve of one modest-sized federal agency. We begin with the realistic appraisal that states require certain services and coordination, which EPA can provide, but that the nation must rely upon the commitment, technical skills, and knowledge of local needs which states can best provide.

The State Role

Simply put, we believe that states should be principally responsible for the day-to-day management of environmental programs. Even while EPA has dawdled in transferring to states the responsibility to manage federally enacted programs without undue interference in Washington, states have been building up steadily their own authorities and resources. As a matter of fact, there are now ten times the number of state environmental staff on the job than there were in 1970, at the beginning of the "Environmental Decade." In addition, education levels, specialized training (some provided by EPA), and salaries have all increased in state and local environmental programs over the past ten years.

Another indicator that states can become, and in some cases already are, the principal executors of environmental programs is the fact that federal grants to states now amount to less than half of total state expenditures for these programs. In Fiscal Year 1982, EPA will provide to states about $237 million. Estimated state funds for the same period exceed $300 million.

We envision the states assuming greater responsibility for permitting under the Clean Water Act and RCRA, to go along with their existing primacy in the Clean Air Act. To help this process along, EPA is now working to remove a legal impediment to partial delegation of the national pollutant discharge elimination system (NPDES) program. With this change, states with several agencies issuing environmental permits may choose to take responsibility for that portion of the NPDES program which is compatible with the mission of an existing state organization. A number of states are prepared to take on RCRA permitting as soon as EPA completes regulations governing permits for the major disposal options.

We also see an opportunity for states to expand their effectiveness by involving competent local authorities in permitting and inspection activities. Since states charter localities, local activities may be seen to support state environmental protection mandates. It is a fact that much of the permitting and monitoring expertise necessary for effective administration of the Clean Air Act resides at the local level. Believe it or not, there are now more local staff [12 ELR 15090] doing air quality monitoring than federal and state staff combined. Zoning and fire codes provide the basis for simple, effective hazardous waste management controls in urban areas, and local inspectors can provide a useful service to the extent that zoning ordinances and fire codes are aligned with basic permit principles which RCRA will develop. EPA will pursue cooperative arrangements which will allow states to make the most efficient use of existing local manpower, skills, and authority.

In fact, EPA has been prepared to provide to certain localities the freedom to manage their construction grants projects without the detailed in-process reviews which have caused so much expense and delay over the history of the program. If the state program director agreed, EPA was willing to allow large municipalities, those with sufficient technical staff and successful experience in managing EPA construction projects, to 'certify' their compliance with federal regulations, subject to the discipline of a final audit. We believe that this system, in contrast with the sequential submittal and review procedures built into the old program regulations, would have saved enormous amounts of time and effort, with better-designed projects put into operation sooner. This feature became unnecessary, by the way, when the Congress abolished Step I and II grants as part of its 1981 amendments to Title II of the Clean Water Act. So we have the benefit of more efficient planning and design in any case.

The point, of course, is that we are trying to build a federal system in the genuine sense, with states at the center of a collaboration among national, state, and local roles and skills.

Federal Initiatives

Until now, I have dealt with the Administration's philosophy regarding the federal and state roles in environmental protection. I have given a few examples in passing, but now I want to review some of the other major initiatives we have undertaken, or are planning, to turn our views into a complete, operational federal/state partnership which makes the best use of the differing placement and resources of each partner.

First, we are cutting our grants in support of state programs. I know how that sounds. I can hear your question now: how can cutting federal support dollars to states be expected to improve the balance between the two authorities?

To answer, I must acknowledge that it could cause some short-term anguish. But reducing federal transfer payments, such as EPA's, which make states into agents of the federal will, is essential if the states are to assume the degree of long-range independence which we believe must characterize their role. I will not try to convince you that we are reducing these grants purely out of our altruistic concern for state autonomy. An immediate reason, as you know, is that we must reduce federal spending in all domestic areas, and state grants is one of the areas which must be cut. But these cuts are not as disruptive as they seem, even in the short term.

Since federal grants represent less than half of the total being spent by states on environmental programs, cuts in the federal subsidy have less than half the impact. A cut of 20 percent in the federal grant, for example, amounts to a cut of less than 10 percent in the state program. And, EPA is taking a number of steps to reduce even this impact of funding cuts by reducing the unnecessary workload which accompanies each major program.

In nearly all program areas, EPA is acting to reduce administrative hurdles so that states may work out procedures which are both efficient and effective, given the size and complexity appropriate to a given state program. EPA has proposed, or is in the process of proposing, simplified results-oriented regulations for construction grants, water quality management, consolidated permits (including NPDES and several types of air quality permits) and state grants. We have also cut back on the hoops which states and other grantees must negotiate in procuring services under grant, peeling back layers of procedural requirements which EPA inserted over the years, and which are far in excess of standard procurement procedures required by OMB. We cannot say with precision how much staff time and dollar savings these administrative simplifications will afford to states; that is as much a factor of state ingenuity as of anything else. But I believe that we have created the opportunity for states to make up through administrative efficiency the loss of federal dollars which is planned in the next year.

In this respect, I think it is fair to say that the New Federalism which you have been reading about is by now "old hat" at EPA, at least as Anne Gorsuch administers the Agency. EPA's Construction Grants program is included in the list of programs to be funded out of the proposed trust fund. The idea is to foster state 'ownership' of this and other programs now administered by the federal government. Realistically, we know that there will be much negotiation before the concept of New Federalism becomes a reality on the scale which the President has proposed. But at EPA, we have been operating on the principle of New Federalism for more than a year. We intend to delegate to states as much responsibility as they are willing to take as soon as they are willing to take it. We intend to rely on state review of proposed projects, and to end the graceless and inefficient tradition by which we undertake technical second-guessing of state actions. The Congress has recognized the need for this by providing a strict time limit for EPA ratification of a construction project certified by a state as suitable for funding. Under this system, EPA will tend to deny a state-certified project only for major problems such as non- conformance with the state's own priority list.

EPA's commitment to delegate programs to states has never been greater than under this Administration. There are eleven programs which by law may be delegated. Six months after President Reagan's inauguration, 37 percent of the tasks and authority delegable under these programs had been fully transferred to states. By the end of September, 1982, we expect that figure to be 55 percent.

In delegating these programs, EPA is continuing its deep concern with the quality of the environment; we are leaving to states, however, the detailed management of the program mechanisms to achieve environmental results. One important feature of EPA's state relations is our use of the revised state/EPA agreement. In the past these documents tended to be paper monsters which listed every detail of state grant applications and bureaucratic process commitments. They amounted to PEA's detailed dress-drill instructions to the state. And they were mandatory; no state could receive EPA funds without one. What was missing [12 ELR 15091] was a clear, level-headed targetting of resources to clean up the environmental problems of highest priority in each state.

Anne Gorsuch will shortly announce a new policy for state/EPA agreements. From now on they will focus on a few high-priority environmental problems. They will contain specific commitments from both EPA and the state to focus resources from several programs, to help solve the problems. They will be short, crisp, to the point, and they will emphasize the results to be obtained, rather than the paper to be processed. We believe that under these rules most states will choose to negotiate an agreement. If a state chooses not to participate, however, that decision will be respected. There is no compulsion.

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I want to return now to a basic theme which underlies this paper. EPA is now committed to environmental results, not to arbitrating the specific procedures by which those results are achieved. For years we have been so concerned with controlling the process that we have lost track of the main reason for EPA's existence. For years, too, we have convinced ourselves that EPA is a voice crying in the wilderness, that without our suspicious supervision of every environmental action by state and industry, skullduggery will triumph. We have prospered under widespread public support for the environment, even while we have formed the curious opinion that no other group is equally motivated by native concern and public pressure to protect the environment and to do the job right.

The new EPA makes the opposite assumption. States are well motivated and can do the job. The majority of business interests are concerned with building good will through good citizenship. If environmental protection was not a conspicuous element of good citizenship ten years ago, it most certainly is now, and most businesses understand and respect this reality. Those who do not will be found out, and more quickly by states and localities than by EPA.

So, as I see it, we have entered a new era, a return to the type of federal system which was the focus of the Constitution, a reform of the runaway paternalism which has for so long infected federal/state relations. EPA has a unique, irreplaceable role in environmental protection. Only EPA can define and advocate national solutions to environmental problems which are national in scope. But states are the most obvious and efficient administrators of those solutions within their own borders.

Humility is defined as the ability to recognize both one's strengths and one's weaknesses, and to behave appropriately in light of that realistic appraisal. It is time for EPA to exercise a bit of humility. I believe the nation, the federal system, and the environment will be the better for it.