January 1991
The Pollution Control Agency (PCA) was created in 1967 to be the state's primary regulator of air and water pollution. Since that time, the Legislature has also given PCA authority to regulate solid and hazardous wastes. The number of agency staff has grown from 35 to more than 700 over its 24-year history.
Unlike most state agencies, PCA consists of both a policy board and a staff agency. The Governor appoints members of the nine-member board to staggered terms, and also appoints PCA's Commissioner. The PCA Board has most of the agency's formal power. Almost all agency actions must be approved by the board or explicitly delegated to staff.
PCA has a difficult mission. It is expected to protect the environment, while at the same time avoiding unduly burdensome regulations. It is an agency that serves many "masters": the U.S. Environmental Protection Agency (EPA), the Governor, the Legislature, the PCA Board, and the citizens of the state. It regulates some pollutants for which there is little information on health and environmental risks. To a large extent, PCA's practices are dictated by federal rather than state regulations. Some people want PCA involved in decisions about facility siting, size, and production processes, while others want to limit PCA's role to ensuring that facilities' discharges are at safe levels. In short, PCA operates in an environment with many constraints, little consensus, and very high stakes.
Because of concerns about PCA's growth and effectiveness, the Legislative Audit Commission directed us in May 1990 to evaluate PCA. In our study, we asked:
To answer these questions, we interviewed PCA staff and board members, EPA officials, and representatives of regulated facilities and environmental advocacy groups. We reviewed files and data in each of PCA's major divisions. We surveyed county solid waste officers and companies with air quality permits.
In general, we found that PCA's monitoring and enforcement efforts have not been sufficient to ensure ongoing compliance with pollution regulations. PCA does too few inspections, collects too little information on pollution levels, and does not adequately monitor information submitted by permittees. Many of the agency's permitting processes have been slow and inefficient, and there is significant room for improvement in the agency's information management systems. Some of the agency's priorities have been driven by funding sources rather than by an assessment of health and environmental risks. While there may be some areas in which PCA should seek fee increases for additional staff, we think the agency should address most of its problems through management efficiencies and staff reallocations. At the same time, it is worth noting that two-thirds of the agency's budget comes from federal funds and special revenue sources (such as fees), thus limiting PCA's flexibility to reallocate staff.
Public concern about the environment led to the creation of PCA and has fueled its growth ever since. The number of authorized staff tripled from 1972 to 1982, and has nearly doubled since 1982. In recent years, most of the growth resulted directly from new legislative initiatives, particularly in solid and hazardous waste. For example, in 1980 Congress created the federal superfund program to clean up hazardous waste sites, and three years later the Minnesota Legislature created a state superfund program. Together, these programs have resulted in 90 new staff positions.
Until 1984, most of PCA's programs were funded by the state general fund and federal program grants. However, as shown below, agency funding sources have diversified during recent years. PCA started collecting permit fees in 1985. In addition, the Legislature has approved a fee on petroleum distributors to fund regulation and cleanup of storage tanks, a tax on hazardous waste generators to fund state superfund cleanups, and a user fee to fund a vehicle emissions inspection program.
The nature of PCA's staff has changed considerably since 1967. Originally, PCA was created primarily to be a regulatory agency--that is, to develop and enforce standards. Nearly all of PCA's early staff regulated water and air pollution, and there were no staff overseeing pollution cleanups. Today, in contrast, permitting and enforcement remain significant responsibilities, but cleanup staff are the largest single category of staff. The proportion of the agency's staff working in the Air Quality and Water Quality Divisions has dropped to just 40 percent.
The expansion of the agency and development of new programs has contributed to staff turnover problems. During a recent 12-month period, about one-fourth of PCA staff left their positions. Most staff took other positions in the agency or state government, rather than jobs in the private sector. High staff turnover is a problem at PCA because it delays action, confuses the regulated industries and local governments, and increases the workloads of PCA staff. Although high rates of turnover exist in all of PCA's divisions, its effects are especially severe in PCA's Ground Water and Solid Waste Division, where cleanups and permitting processes often take several years.
Minnesota companies emit more than 500,000 tons of air pollutants each year. These emissions pose health risks, contribute to acid rain and ozone depletion, and are unsightly. Federal regulations establish "ambient" (or atmospheric) standards for the six "criteria pollutants" listed in the box at right, and EPA is beginning to develop standards for other pollutants, known as air toxics. There are also federal and state standards for air pollution emissions from individual sources.
Permits
PCA issues five-year permits to companies that demonstrate that they are capable of meeting air quality standards. At a minimum, there are 1,100 sources of air pollution in Minnesota that should have permits. PCA issued permits to about 700 of these sources in the past five years, and another 100 have permits that are more than five years old. In addition, we found that:
One reason for the large number of unpermitted facilities is that the Air Quality Division has not adequately publicized the need for permits to Minnesota companies. In addition, the lack of state and federal air toxics rules account for many of the unpermitted sources of toxic air emissions. For example, the list of unpermitted facilities includes 19 of Minnesota's 33 top emitters of carcinogenic compounds and 40 of the 66 top emitters of noncarcinogenic toxic compounds.
An efficient permitting process not only encourages environmental protection, but enables businesses to operate without unnecessary delays and makes PCA a more credible regulator. Unfortunately, we found that:
The application backlog represents a minimum of 18 months of work for the division's permit staff. Permittees and PCA staff offered us many suggestions for improving the efficiency of the permitting process. For example, updating air quality rules would avoid many case-by-case negotiations that now occur, and better permit application forms and instructions would help avoid the need for repeated requests for information from PCA staff to applicants.
Given the large backlog of permit applications and unpermitted facilities, it is likely that management efficiencies alone will not enable PCA to establish a comprehensive, timely permit system. The division will probably need some additional permit staff, and PCA should first consider internal staff reallocations. PCA should also consider using revenues from the state permit fees mandated by recent amendments to the federal Clean Air Act. Unless Minnesota applies for an exemption from EPA, the new federally-mandated fees will result in 10 times more annual fee revenue than the Air Quality Division collected in 1990.
Monitoring and Enforcement
Once PCA issues permits, it is responsible for ensuring ongoing compliance with permit conditions. To do this, the Air Quality Division has several potential sources of information, including: (1) on-site PCA inspections, (2) reports from companies that have continuous emissions monitoring equipment, (3) "stack tests" indicating the content of emissions, and (4) data reported by companies for PCA's periodic "emissions inventory." We found that the Air Quality Division does too few inspections and does not make enough use of the other sources of information on company compliance.
For example, we found that:
EPA and PCA guidelines generally call for annual inspections of large sources, biennial inspections of medium sources, and inspections every five years for smaller sources. However, based on 1989 inspection rates, PCA inspects large facilities once every 2.5 years, medium facilities once every 2.7 years, and small facilities once every 16 years. PCA records indicate that inspections have never been conducted at 21 percent of Minnesota's large sources, 29 percent of the medium sources, and 58 percent of the small sources. We found that PCA conducts more frequent inspections in the Twin Cities metropolitan area and the eastern half of the state, where its inspection staff are based.
In addition, PCA has not made extensive use of information sources that provide better data on actual emissions than do inspections. Only about 50 of Minnesota's 800 permitted sources have continuous emissions monitoring equipment, and PCA did not systematically review emissions data from these systems until 1990. Also, we found that only about one-third of Minnesota's large emission sources conducted stack tests in a recent 42-month period. Finally, PCA collects emissions inventory data from companies every two years, contrary to the annual reporting requirements of state and federal rules.
We reviewed notices of violation issued by the Air Quality Division during 1989 and found that the most common reasons for these actions were operating without a permit and smoky or dusty emissions. In contrast, the division issued relatively few notices of violation for emissions of criteria pollutants and none for toxic pollutants--in part because the division collects and reviews limited information on these pollutants, and because there are no air toxics rules. Criteria and toxic pollutants usually pose greater health risks than smoke and dust, and should receive greater scrutiny by PCA enforcement staff. <FN - PCA staff noted that opacity can be used as a surrogate for air toxics in certain cases.>
Federal and state water quality regulations predate the regulations for other forms of pollution. The federal government started providing construction grants to municipal wastewater treatment plants in 1956, and it first required states to develop ambient pollution standards in 1965. EPA delegated authority to issue water quality permits to Minnesota in 1974. In the past, PCA focused its efforts on municipal pollution sources because there was federal funding available for treatment plant construction and staff. Today, both PCA and EPA are shifting their emphasis to nonpoint sources of pollution (such as agricultural run-off) and toxic pollutants.
The Water Quality Division issues about 200 permits a year, more than 90 percent of which are renewals of existing permits. We found that it takes PCA a median of nine months to reissue permits after receiving applications, and most permits are not renewed before their expiration date. Based on our review of permit files, we determined that permittees usually submit applications in a timely manner, but:
We also have concerns about the accuracy of permittee monitoring reports. For example, we found that more than 18 percent of municipal treatment plants (especially small plants) do not have properly certified operators. Also, 160 of Minnesota's 1,100 permittees have not submitted monitoring plans that describe procedures for gathering and analyzing water samples. In 1991, the Department of Health will start certifying laboratories that analyze samples, so this should improve the accuracy of effluent data.
EPA requires that 90 percent of major facilities be inspected each year, and PCA's goal is to inspect minor facilities once every five years. We found that:More than one-half of facility inspections found permittees out of compliance with some permit conditions.
We examined permittee compliance with effluent standards during fiscal year 1990. Effluent violations are more serious if they occur often or are significantly above limits. As shown in the table, 18 percent of industrial major, 13 percent of municipal major, and 5 percent of municipal minor facilities had effluent violations in six or more months during the year.
Permittees must meet certain reporting requirements as well as scheduled dates the permittee has agreed to. We found that:
To determine how many of the 1990 effluent, schedule, and reporting violations at major facilities were significant, we examined quarterly reports that PCA submitted to EPA. These reports are based on standard EPA methods for identifying serious noncompliance. We found that, depending on the quarter examined, between 70 and 93 percent of industrial facilities and 77 and 89 percent of municipal facilities were in complete compliance. Only three major facilities were out of compliance during all of fiscal year 1990.
The Water Quality Division issues about 65 notices of violation annually. However, we found that PCA did not issue notices of violation to most permittees that had effluent violations in more than three months of 1990. In addition, the division has rarely used more formal enforcement actions, such as stipulation agreements, because they are time-consuming to negotiate and it has limited means of encouraging companies to enter these agreements.
Many solid waste landfills and hazardous waste disposal sites pose long-term threats to the state's ground water. The Ground Water and Solid Waste Division administers two major programs that address this problem: (1) the permitting and regulation of solid waste landfills, and (2) state and federal superfund programs to clean up hazardous waste sites. Compared to most other areas of pollution regulation, there has been relatively little federal regulation of solid waste. In contrast, Minnesota's counties have important roles in solid waste planning and also operate many landfills.
Landfill Regulation
PCA has issued permits to 373 solid waste management facilities of various types, and 218 are still handling solid waste. Most household garbage goes to "sanitary landfills," for which PCA started issuing permits in 1971. However, the early permits (called "perpetual" permits) did not have expiration dates and did not require adequate water monitoring systems or other measures to protect against ground water contamination. PCA now issues permits for five year periods and requires landfill liners and extensive ground water monitoring systems. In the mid-1980s, PCA embarked on an effort to upgrade all sanitary landfills and adopted new solid waste rules in 1988. We found that:
We found that 24 of 53 operating sanitary landfills and 17 of 80 closed sanitary landfills do not have ground water monitoring systems that comply with state rules. In fact, 4 open and 30 closed sanitary landfills do not monitor ground water quality at all.
We also found that it usually takes several years for PCA to issue landfill permits. This has been particularly frustrating to county solid waste staff. According to our survey of county staff, 55 percent of the counties rated the timeliness of the division's permit staff as "poor" and another 25 percent rated them as "fair." Thirty-nine percent said delays have caused their counties financial hardship.
The division also enforces state rules by inspecting landfills and reviewing water quality monitoring reports. We found that:
For example, as of October 1990, 54 percent of the open and closed sanitary landfills had not submitted ground water monitoring reports for either the spring or summer quarters of 1990, due June 30 and September 30 respectively. We also found that the division did not inspect as many landfills as planned during 1990. When inspectors find violations, the division usually has not taken effective action to correct the problems. We found numerous examples of long-term permit reporting and operational violations that did not result in penalties or eventual compliance. In fact, the penalties levied by the Ground Water and Solid Waste Division (less than $10,000 in 1989) are a small fraction of those levied by each of the other PCA divisions.
Superfund Cleanups
At sites where hazardous waste has been improperly disposed, PCA assesses the extent of environmental contamination, identifies responsible parties, and oversees cleanups. We found that:
As of October 1990, Minnesota had identified 166 sites needing cleanup under either the federal or state superfund programs. Cleanups have been completed at 32 (19 percent) of the sites. There has been no cleanup started at another 46 sites (28 percent), and cleanup is now being done at the remaining 88 sites (53 percent). Responsible parties are paying for 81 percent of the cleanups completed or underway. According to EPA officials and national data we reviewed, Minnesota appears to have cleaned up sites faster than most states.
Superfund cleanups take from five to seven years to complete, and the division has made more progress on the more seriously contaminated sites. Eventually, most sanitary landfills will be eligible for inclusion on the superfund list. However, there has been relatively little progress in cleaning up the state's current landfill superfund sites. The division estimates that the total cleanup cost for landfills could be $300 million. The present balance in the superfund account is only $14 million, and superfund revenues from Minnesota's hazardous waste tax were only $700,000 in 1989. Municipal liability limits of $400,000 raise additional questions about how future landfill cleanups will be financed.
Hazardous Waste Division
According to federal regulations, wastes are hazardous if they have one of the four characteristics shown in the box at right. Federal and state regulation of these wastes is more recent than regulation of air, water, and solid waste. EPA issued its first hazardous waste rules in 1980, and PCA created a separate Hazardous Waste Division in 1987. In 1989, Minnesota hazardous waste generators shipped 57,000 tons of waste out of state, compared to 23,000 tons that went to in-state facilities.
We found that PCA's Hazardous Waste Division has established a good framework for its regulatory programs. The division has comprehensive rules, regular communications with regulated facilities, and good training programs for staff. Although the 8,000 generators identified by the division are probably less than one-third of the state's total, the division has made considerable efforts to identify generators.
We also found that:
We found that the Minnesota facilities that treat, store, and dispose of hazardous waste have been inspected an average of once a year since receiving their permits. Also, PCA inspects about 10 percent of the state's "large quantity generators" every year. These inspection rates are within EPA guidelines for inspection frequency. There are no EPA guidelines for smaller generators, but, at current inspection rates, PCA could inspect small generators only once every 100 to 300 years. One way the division could increase its inspections of small quantity generators is to improve inspector productivity. We found that the division's inspectors averaged only about 12 full compliance inspections each during 1989. In part, this reflects travel time, since this division is the only one that has no enforcement staff located outside the Twin Cities metropolitan area.
We also found that hazardous waste generators in the Twin Cities area receive more frequent inspections than the rest of the state's generators. This is because the seven metropolitan counties conduct a total of more than 2,000 hazardous waste inspections annually, and other counties conduct no inspections. Annually, PCA inspects about 50 generators in the Twin Cities area and about 50 generators outside the Twin Cities. <FN - Although counties conduct a large number of inspections, they often do little followup when problems are discovered. In contrast, PCA staff spend more time on followup than on inspections.>
The 1987 Legislature granted the Hazardous Waste Division an enforcement tool that other PCA divisions do not have. Specifically, the division can issue administrative penalty orders for up to $10,000 without PCA Board approval. We found that:
The 1987 Legislature also authorized a fee on petroleum products to be used for cleanup of storage tank leaks. The Department of Commerce administers this fund (the "Petrofund"), and PCA oversees the cleanup process. Unlike superfund cleanups in which responsible parties pay for most costs, the state Petrofund pays for most leaking storage tank costs (more than $16 million since 1987). PCA added about 50 staff to oversee tank cleanups in the past three years, but has still accumulated a large backlog of leak cases, as shown below.
Relative to other PCA programs, the resources devoted to leaking storage tanks are probably not justified solely by the environmental threats posed, although some leaks do pose significant risks. Rather, the tanks program has grown primarily because of the availability of dedicated federal and state funding and the Legislature's desire to help businesses with large, unanticipated costs. We also found that:
For example, the Department of Commerce has lacked the staff and standards to determine whether applications for tank cleanup reimbursements are "reasonable," as required by state rules. Also, state regulations do not require responsible parties to seek competitive bids when selecting vendors for tank cleanups.
Some leaks and spills that pose risks greater than those posed by most tank leaks have not received sufficient PCA oversight. Most notably, there is little long-term oversight of pipeline leaks because there are no PCA programs with funding or clear jurisdication for pipeline cleanups.
Management Information Systems
Throughout PCA, we found problems with management information systems. Some noteworthy examples include:
Fees
PCA collected $3.3 million in fees from polluters in 1990. Despite large increases in permit fees in recent years, we found that these fees do not cover PCA's basic regulatory costs. Fees cover 2 to 15 percent of the total costs of PCA's various divisions.
Permit fees have not reflected PCA's actual staff costs to issue permits, especially for large polluters. As a result, PCA recently accepted a $300,000 gift from a large emission source (Koch Refinery) for the purpose of expediting reissuance of the company's air quality permit. We think this is a bad precedent and does not address the fundamental problems with the agency's fee structure.
We also found that state laws are unclear about the circumstances in which pollution fees can be charged. Minnesota's general fee laws suggest that fees should be charged only for services that directly benefit fee payers, while PCA statutes authorize broader uses for fees. We think that charging polluters for the true cost of regulation, rather than shifting the burden to all taxpayers, is a reasonable and sound basis for state policy.
Pollution Control Agency Board
Aside from the Legislature, the nine-member, part-time PCA Board is Minnesota's chief policy-making body for pollution control. The 1967 Legislature created the board largely as a check against the power of the Governor or PCA commissioner. This is one of the reasons the Legislature created staggered terms for members.
Although many states besides Minnesota have boards that oversee pollution control, the PCA Board has more formal authority than any board of which we are aware. The board sets policy largely on a case-by-case basis, for instance, by approving permits and enforcement actions. However,
For example, the board rarely considers overall strategies to improve the effectiveness of the agency's enforcement efforts or looks at the relative health risks of pollution problems addressed by various PCA divisons. Because the board is involved in so many of the agency's decisions, it would be difficult for the board to devote significant time to strategic discussions without reducing the rest of its workload.
We interviewed board members, current and former PCA managers, and parties affected by PCA decisions to evaluate the need for the board. We found that the strongest advantage of having the board is that it provides a forum for discussion of difficult issues with widespread impacts. Having the board also improves staff work, buffers staff from controversial decisions, and brings an independence to decision making that staff lacks. However, the existence of both a staff and board also weakens accountability by (1) blurring responsibility for important decisions, and (2) giving the Governor less control over environmental policy. In addition, the board process results in some delays and additional staff expenditures.
Empirical analysis alone cannot determine whether or not to continue the board. The Legislature should periodically weigh the benefits of a public forum on pollution issues against the confusion and reduced public accountability that result from the current arrangement. However, if the board is to be continued, we think its focus should be on appeals and broad policy, with the PCA commissioner given more independent authority to act on individual cases.
We also examined the scope of the board's permit review. Traditionally, PCA has issued permits to applicants that could demonstrate their ability to meet state and federal pollution regulations. However, as a result of a recent Attorney General's opinion, PCA will probably conduct more in-depth analyses of permit applications, looking for less polluting alternatives. We have no legal basis for questioning the Attorney General's interpretation of current laws, but we think the Legislature should consider its practical effects: longer permit reviews, duplication of the planning roles of other governmental units, and increased focus on the means of pollution control, rather than the ends.
Recommendations
Overall, we think PCA has many capable staff and has contributed significantly to protection of the state's environment during the past two decades. But we also think there is considerable room for improvement in PCA's efficiency and its enforcement of state and federal pollution regulations.
This report contains numerous recommendations for internal improvements in agency management that we think will improve PCA's efficiency. There is a general need for better information management systems for tracking and acting on permits, compliance, and cleanups. We also think that PCA should update state air quality rules, review permit fee structures, develop a strategy for mitigating the effects of staff turnover, ensure that landfills upgrade their water quality monitoring systems, recommend to the Legislature financial options for cleaning up landfills under the superfund program, and focus hazardous waste inspections on generators outside the Twin Cities area. The PCA Board should focus more attention on strategic issues, rather than individual cases. PCA staff should help the Legislature ensure that agency priorities are driven by health and environmental risks more than by funding sources. Most important,
In the past, the PCA Board and commissioner have left most management decisions to the PCA divisions. To ensure that problems cited in this report are addressed, we think it will be especially important for the commissioner and board to provide overall direction to the divisions and expect progress reports on these issues.
Our report also contains many recommendations for the Legislature. We think it is particularly important for the Legislature to provide PCA with an enforcement tool that gives violators a stronger incentive to comply with regulations. We recommend:
We also recommend that the Legislature:
