AUSTIN -- The agency charged with protecting the state's air and water has been taken to task for rules changes and enforcement weaknesses that auditors say may be an open invitation to polluters. A 50-page state audit cites a spate of problems at the Texas Commission on Environmental Quality, whose emphasis on voluntary compliance has long needled environmentalists. The 3,000-employee agency is responsible for enforcing the state's clean air and water laws.

Auditors said that unless corrected, the deficiencies could restrict the agency's ability "to collect penalties on a timely basis, hold environmental violators accountable and deter future instances of non-compliance." They also said the penalties imposed on polluters aren't high enough to force compliance.

Margaret Hoffman, the environmental agency's executive director, said an internal review already is underway that will address many of the auditors' concerns. She said she ordered the review before the release of the auditor's report this week. "We will be starting our review with what is our goal in our compliance and enforcement office," Ms Hoffman said. "Once we set that out, then we'll start with looking at how do we decide which cases to pursue, how do we decide and set our penalty policy, should it be flexible, should it not be flexible ... "

Mary Kelly, a lawyer with Environmental Defense, a conservation group, said the audit confirms many of the findings cited in a report she wrote earlier this year. "It says we need a stronger enforcement program at the commission," she said of the auditors' findings. "If you really do look at this report, you can see how regulated industries might make the calculation that it could pay to pollute under certain circumstances."

Auditors said recent changes in the agency's penalty policies might hinder its effectiveness stopping polluters. The economic benefits polluters derive from violating the law often exceed penalties, they said. In 80 cases reviewed by the auditors over the last three years, polluters received about $8.6 million in benefits while in noncompliance and were fined only $1.69 million.

Auditors also questioned the effectiveness of the agency's policy of reducing penalties for polluters that make a "good-faith" effort to clean up. Another change, auditors cited, lowers the amount of additional penalties tacked onto the fines of polluters with long histories of violations. This new policy "has the potential to weaken the influence of enforcement actions on the regulated community, as well as decrease the penalty dollars assessed and collected."

The auditors also noted that the current cap on fees on air emissions fails to serve as an incentive for facilities to improve performance, while also depriving the commission of millions in new fine revenues. Under the cap, any emissions over 4,000 tons a year from a single source aren't subject to additional fees. "For example, one facility reported emitting 85,990 tons of sulfur dioxide in fiscal year 2002 but paid a fee for emitting only the first 4,000 tons," the auditors said.

Were that cap eliminated, the fine would rise to $25 million based on fiscal 2002 data, according to the report. Auditors also said that the agency does not consistently issue enforcement orders or settle the cases it filed in a timely manner. And it doesn't accurately calculate penalties or fully collect all that is owed, they said. As of May outstanding delinquent penalties for air and public drinking water violations totaled $571,332.

Auditors also said that 45 percent of the enforcement orders reviewed covering 2001 to 2003 were not mailed on time -- exceeding the deadline by an average of 76 days. They said the penalties assessed in those cases totaled just less than $300,000, while the violators received economic benefits during the lag time worth more than twice that amount.

"These delays in the enforcement process could result in violators' continuing to pollute and cause the state to lose the use of penalty funds," auditors said.