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National Environmental Performance Partnership System (NEPPS)

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EPA and states share responsibility for protecting human health and the environment. The unique relationship between EPA and states is the cornerstone of the nation's environmental protection system. Working together, EPA and states have made enormous progress protecting our air, water, and land resources.

Since 1995, EPA and states have been implementing the National Environmental Performance Partnership System (PDF) (performance partnerships, or NEPPS). NEPPS is a performance-based system of environmental protection designed to improve the efficiency and effectiveness of state-EPA partnerships. By focusing EPA and state resources on the most pressing environmental problems and taking advantage of the unique capacities of each partner, performance partnerships can help achieve the greatest environmental and human health protection.
 
 

Goals of Performance Partnerships

Performance partnerships are designed to take best advantage of the unique capacities of each partner and achieve the greatest environmental results. The goals are to: 
 
  • Promote joint planning and priority setting based on information about environmental conditions and program needs;
  • Give states more flexibility to direct resources to the most pressing environmental problems;
  • Foster use of innovative strategies for solving water, air, and waste problems;
  • Use a balanced mix of environmental indicators and traditional activity measures for managing programs and measuring results; and 
  • Improve public understanding of environmental conditions and engagement in protection efforts.

Implementing Performance Partnerships

One of the main ways EPA and states implement performance partnerships is by negotiating Performance Partnership Agreements (PPAs). These agreements set out jointly-developed priorities and protection strategies and how EPA and the state will work together to address priority needs. States can also choose to combine funds from multiple federal environmental program grants into Performance Partnership Grants (PPGs) which allow them to direct resources where they are needed most or try innovative solutions to environmental problems. 

State participation in performance partnerships is voluntary and the scope of implementation varies across the country. FY2014 NEPPS Program Implementation Summary (PDF) data show that most states now use one or both of the key tools for implementing performance partnerships. There are many variations in the scope and coverage of PPAs and how they are funded by PPGs and other grant funds.  However, nearly all states are working with EPA on various projects to improve joint planning and priority setting, develop better performance measures and environmental indicators, and increase public understanding of progress in the protection of human health and the environment.

Participants report benefits such as increased communications between EPA and states, better mutual understanding of issues and priorities, more clearly defined roles and responsibilities, increased flexibility, and more effective worksharing arrangements. 

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Performance Partnership Agreements

One of the main ways that EPA and individual states implement the principles of performance partnerships on the ground is by negotiating Performance Partnership Agreements (PPAs).
 
Joint strategic planning is fundamental to building effective partnerships.  Therefore, PPAs should have a strong underpinning of strategic thinking based on: 
 
  • An assessment of environmental conditions and program implementation needs;  
  • Analysis of approaches and tools that are most likely to bring about the greatest environmental results; and
  • Jointly developed goals and priorities that are translated into plans at the operational level. 
Joint planning opportunities exist for all states, even states that do not negotiate formal PPAs with their EPA regional offices.  In these cases, the results are articulated in grant work plans or other agreements.
 
Elements of Effective PPAs
Successful PPAs typically include the following key elements:
 
  • A description of environmental conditions, priorities, and strategies;
  • Performance measures for evaluating environmental progress;
  • A process for jointly evaluating how well the PPA is working and an agreement to implement any needed improvements;
  • A description of the process for mutual accountability, including a clear definition of the roles of each party in carrying out the PPA and an overview of how resources will be deployed to accomplish the work; and
  • A description of how the priorities in the PPA align with those in the EPA Strategic Plan and the state's own strategic (or other related) plan.
Incorporating these key elements still allows for a wide range of PPAs. A fundamental concept underlying performance partnerships is that most states have unique environmental priorities and program implementation needs. Each EPA-state partnership negotiation takes into account the particular capacities, needs, and interests of that state. 
 
Scope and Content of PPAs
The scope and content of PPAs vary. Individual PPAs can range from a general statement about how the state and EPA will work together as partners (perhaps identifying joint priorities that will be addressed) to comprehensive, multi-program documents that detail each party's roles and responsibilities. 
 

Some PPAs meet relevant statutory and regulatory requirements and also serve as the work plans for Performance Partnership Grants (PPGs) or other EPA grants. In a few cases, the PPA contains a more general discussion of the working relationship between EPA and the state rather than a dicussion of priorities and programs.

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Performance Partnership Grants

EPA provides financial assistance to states and tribes to help them develop and implement environmental programs.

Under traditional environmental program grants (sometimes called "categorical" grants), states receive funds to implement the various water, air, waste, pesticides, and toxic substances programs. Environmental program grant funds can only be spent on activities that fall within the statutory and regulatory boundaries of that program. 

For many years, states wanted greater flexibility in how they use and manage the grant funds they receive from EPA. In 1996, Congress responded by authorizing EPA to award Performance Partnership Grants (PPGs). States, certain interstate agencies, and tribes can now choose to combine two or more environmental program grants into a single PPG. 

(Note: The Office of Congressional and Intergovernmental Relations is the lead office for performance partnerships overall.  The American Indian Environmental Office oversees EPA's tribal programs.)

With PPGs, states (and tribes) can:

  • Reduce administrative costs through streamlined paperwork and accounting procedures;
  • Direct EPA grant funds to priority environmental problems or program needs; and
  • Try multi-media approaches and initiatives that were difficult to fund under traditional categorical grants.
PPGs are important tools for implementing performance partnerships. Currently, 43 state environmental agencies and 32 state agriculture agencies combined some or all of their grants into PPGs. 

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Part 35 Rule and Performance Partnerships

Regulations governing all state environmental program grants including PPGs are published in 40 CFR Part 35.

The Part 35 rule:

  • Fosters joint planning and priority setting by requring consideration of state as well as EPA priorities in developing grant work plans;
  • Allows grant work plans to be organized by environmental program area or by function (permitting, monitoring, inspections, etc.);
  • Promotes results-oriented environmental programs by recognizing that both outcome and output measures are needed for management purposes; and 
  • Reduces or eliminates many administrative requirements.

A state does not need to negotiate a Performance Partnership Agreement (PPA) in order to request its funds in a Performance Partnership Grant (PPG). However, a PPA often serves as the strategic underpinning for a PPG (or other state grants). A PPA can also serve as a grant work plan, but only if it meets the statutory, regulatory, and other requirements for a grant work plan. 

Range of Flexibility in State Grants
States can take advantage of a range of flexibility under Part 35.

  • All state grants (categorical grants and PPGs) provide some flexibility to direct resources to state priorities within a program area.
  • All PPGs provide administrative flexibility by allowing states to meet state match requirements as a whole rather than by individual program, streamlining paperwork and accounting requirements, and allowing funding of cross-cutting projects.  Application requirements for these PPGs are the same as for categorical grants.
  • In the most flexible form of a PPG, a state can increase efforts in some program areas where the state's environmental protection needs are greater, and decrease them in others where the state's needs are less.  For this flexibility, the state must provide a rationale for the shifts it proposes. 

Features of PPGs
PPGs offer savings on administrative costs as well as more flexible ways to fund priority needs and programs. 

Many states have found that the PPG's single, composite match feature is particularly valuable. States can meet the composite match from any combination of program sources rather than come up with individual matches program-by-program. This allows a state to overmatch with funds from a program that has more than adequate resources to help cover the match for a program that is strapped for resources. 

Each environmental program grant can fund a specified set of activities associated with that particular program. Once combined in a PPG, the funds are not tied to the individual programs. PPG funds can be used for any activity that is eligible under at least one of the combined grants.

PPG carryover funds, left over after a state has met all of its work plan commitments, are also not tied to a particular program. Because PPGs can fund a wide range of activities, many states have used them to support projects that cut across program boundaries. Examples include upgrading data systems, carrying out geographic and sector initiatives, and conducting multi-media compliance inspections.

PPGs also allow states to adjust the relative amount of work to be performed in each program area in accord with the state's needs and priorities. The state must continue to meet all base program requirements. However, the state can negotiate a work plan that decreases lower priority activities in exchange for increases in activities that address a higher priority need. Some states have used PPG flexibility to help them respond to environmental problems stemming from emergencies such as floods and droughts. 

See Exhibit 3 (p. 37) in the Best Practices Guide for Performance Partnership Grants with States (PDF) for examples of how states have used the flexibility available through PPGs.

Grants Eligible for PPGs
Congress originally authorized 16 state environmental program grants as being eligible for inclusion in PPGs. Since then, the EPA Administrator has added four new grant programs to the list. For more information on eligible grants, see Catalog of Domestic Federal Assistance, Performance Partnership Grants, Number 66.605.

Competitive Grants in PPGs
EPA's policy is to promote competition in the award of grants. Most of the grants eligible for inclusion in PPGs are awarded to states based on an allocation formula. However, a few of the PPG-eligible grants are awarded competitively, that is, states must compete with each other, and sometimes with other entities, to receive these grants. 

Competitive grants tend to be awarded later than the other state grants. If the state's proposal is ultimately funded, the state can choose to amend its PPG to add in the new grant. The amended PPG work plan must include the commitments the state proposed in its application for the competitive grant. This requirement maintains the integrity of the competitive process.

Accountability in PPGs and Other State Grants
All state grants, including PPGs, are subject to the same accountability and joint evaluation requirements in 40 CFR Part 35 and 2 CFR Parts 200 and 1500. Just as for any other grant, states are held accountable for achieving the outcomes and outputs in PPG work plans.

States and EPA conduct joint evaluations of environmental program grants and PPGs. They use the results to support joint planning and priority setting. Progress and accomplishments are reported in national and regional program databases and reports. 

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Policies and Guidance

National Program Guidance

National Guidance for FY2016-17 for the National Environmental Performance Partnership System sets multi-year goals and objectives, highlights key policies and procedures, and lists the grants eligible for inclusion in Performance Partnership Grants. 

Best Practices Guide for Performance Partnerships Grants with States(PDF) (41 pp, 1MB, About PDF) June 2014. Highlights key regulations, policies, and procedures for developing and managing Performance Partnerships Grants. 

Principles and Best Practices for Worksharing: Report of the EPA-State Worksharing Task Force (March 26, 2013) (PDF)(10pp,302K, About PDF).

Prohibitions, Areas of Caution, and Recommendations to Enhance Worksharing Opportunities: Report of the EPA-State Worksharing Task Force (July 2012) (PDF) (11pp,364K, About PDF).

Framework for Performance Partnerships
EPA-State Renewal of NEPPS Marking the 20th Anniversary (2015) (PDF)(2pp,595K, About PDF).

The National Environmental Performance Partnership System: A Review of Implementation Practices (May, 2013) (PDF)(34pp,629K, About PDF).

Overview of Alignment and Performance Partnership Process Improvements (PDF) (11 pp, 1440K, About PDF) January 28, 2005. This paper, prepared by the joint EPA-state Alignment and Performance Partnership Agreement Work Group, explains improvements to better align EPA and state planning processes and essential elements of effective partnership agreements.

Office of Congressional and Intergovernmental Relations (OCIR): Lead Office for Performance Partnerships, Roles and Responsibilities and Issue Resolution Process (PDF)(4 pp, 27K, About PDF) April 2004. 

ECOS-EPA Vision for Aligning Planning Systems, Successful Performance Partnerships (PDF) (3 pp, 70K, About PDF) April 15, 2004. This joint letter and an attachment from EPA Administrator Mike Leavitt and ECOS President Chris Jones explains the vision and principles for aligning EPA and state planning processes and improving performance partnerships.

Performance Partnership Grant Steering Committee Recommendations and Decisions (PDF) (8 pp, 518K, About PDF) July 11, 2003. Memorandum from Deputy Administrator Linda Fisher establishes policy on several Performance Partnership Grant issues.

Policy for Implementing the National Environmental Performance Partnership System (PDF) (5 pp, 99K, About PDF) June 19, 1997. Memorandum from Deputy Administrator Fred Hanson to EPA Senior Leadership establishes policy regarding timing of National Program Guidance, reporting burden, and state grants.  Grant policy is explained more fully in an attachment, Interpreting Grant Requirements for Performance Partnership States (PDF) (3 pp, 20K, About PDF).

Joint Commitment to Reform Oversight and Create a National Environmental Performance Partnership System (PDF) (12 pp, 72K, About PDF) May 17, 1995. This document, signed by EPA and state leaders, sets out the principles and components of performance partnerships. 

Joint Policy on State/EPA Relations (PDF) (3 pp, 18K, About PDF) July 14, 1994. This policy, signed by EPA and state leaders, establishes governing principles for state-EPA relations.

Strengthening Environmental Management in the United States (PDF) (9 pp, 5.42 mb, About PDF) July 1993. The Task Force to Enhance State Capacity set the stage for performance partnerships by recommending development of a new framework and policy for state-EPA relations and urged EPA to establish a joint process with states for setting environmental goals and priorities, exercise greater flexibility in negotiating state grant work plans, and provide technical and other assistance to bolster state capacity.