The Environmental Protection Agency's FY2003 Budget

Order Code IB10101

CRS Issue Brief for Congress

Received through the CRS Web

The Environmental Protection Agency’s

FY2003 Budget

Updated June 16, 2003

Martin R. Lee

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

Homeland Security

EPA’s Budget by Appropriations Accounts

Science and Technology

Environmental Programs and Management

Office of Inspector General

Buildings and Facilities

Oil Spill Response

Superfund

Leaking Underground Storage Tanks

State and Tribal Assistance Programs

LEGISLATION

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

CHRONOLOGY

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The Environmental Protection Agency’s FY2003 Budget

SUMMARY

For FY2003, the President requested

$7.62 billion in budget authority for the Environmental Protection Agency (EPA), $458

million less than the total FY2002 appropriation of $8.08 billion. The Administration did

not request nearly $500 million to continue

activities earmarked in the FY2002 appropriation, most of which were for water infrastructure projects.

In the 107th Congress, S. 2797 (S.Rept.

107-222) would have provided $8.30 billion

for EPA in FY2003. H.R. 5605 (H.Rept. 107740) would have provide $8.20 billion. Both

bills would restore much of the water infrastructure funding but there was no final action

by the end of Congress. Continuing resolutions funded at the same level as in FY2002.

In the 108th Congress, P.L. 108-7 (H.J.Res. 2)

provides EPA with $8.08 billion for FY2003.

While the EPA request is presented

according to 10 goals (clean air, safe food,

etc.), EPA’s appropriations bill continues to

be organized according to traditional accounts.

The President’s FY2003 request included

$670 million for the Science and Technology

account. S. 2797 included $710 million, H.R.

5605 and P.L. 108-7 $715 million. For the

Environmental Programs and Management

account, the request was $2.05 billion. S.

2797 contained $2.14 billion, H.R. 5605 $2.11

billion and P.L. 108-7 $2.10 billion. To clean

Congressional Research Service

up toxic waste sites under Superfund, S. 2797

would have provided the request of $1.27

billion, H.R. 5605 $1.42 billion and P.L. 1087 $1.26 billion.

The adequacy of federal funding to help

meet state and local wastewater and drinking

water capital needs has been an ongoing issue,

and estimates of funding needs are as high as

$1 trillion over the next 20 years. The FY2003

request for the State and Tribal Assistance

Grants (STAG) account to address these and

other needs was $3.46 billion, $275 million

less than in FY2002, assuming a discontinuance of earmarked funding. S. 2797 would

have provided $4.01 billion, adding $140

million for special needs grants. H.R. 5605

would have provided $3.79 billion, including

$228 million for targeted projects.

P.L. 108-7 included $3.83 billion. The

STAG request included $1.21 billion for

Clean Water State Revolving Funds (SRF). S.

2797 would have provided $1.45 billion, H.R.

5605 would have provided $1.30 billion, and

P.L. 108-7 includes $1.35 billion. The STAG

request also included $850 million for the

Drinking Water SRF. H.R. 5605 would provide the requested amount, and S. 2797 would

provide $875 million. P.L. 108-7 provides

$850 million.

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MOST RECENT DEVELOPMENTS

As of the beginning of FY2003, Congress had not completed action on the

appropriations bill for the Environmental Protection Agency (EPA). Continuing resolutions

provided funding at least at the same level as enacted for FY2002. In the 107th Congress, on

July 25, 2002, the Senate Committee on Appropriations approved a total of $8.30 billion for

EPA in reporting the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Bill for FY2003 (S. 2797, S.Rept. 107-222). The

House Committee on Appropriations approved a total of $8.20 billion for EPA on October

10, 2002, in reporting its version of the bill (H.R. 5605, H.Rept. 107-740). Both amounts

would have exceeded the Administration’s request of $7.62 billion for FY2003, as well as

the FY2002 funding level of $8.08 billion. Floor action did not occur on either bill by the

end of the 107th Congress.

The 108th Congress enacted P.L. 108-7 (H.J.Res. 2), an FY2003 Omnibus

Appropriation signed on February 20, 2003which included $8.08 billion for EPA.

In addition to appropriations, the House passed the FY2003 budget resolution

(H.Con.Res. 353, H.Rept. 107-376) on March 20, 2002, and the Senate Budget Committee

reported its version of the resolution (S.Con.Res. 100, S.Rept. 107-141) on April 11, 2002.

Both measures contain funding assumptions related to EPA’s budget.

BACKGROUND AND ANALYSIS

The FY2003 EPA request of $7.62 billion is $458.3 million, or 5.7%, less than the

total FY2002 funding level of $8.08 billion, which included $175.6 million in supplemental

funding for terrorism-related activities provided by P.L. 107-117, Division B. (The amount

indicated for EPA’s request does not include an additional $107 million that the

Administration has proposed in order to shift the full cost of federal employee pensions and

health benefits to the agency’s budget. Consequently, variations of this amount can be found

in figures used for EPA’s total request. The House Committee on Appropriations and the

Senate Committee on Appropriations criticized the Administration for including this

proposed amount, since providing it would require legislation. Both committees indicated

that, for the purposes of budget estimates, future spending proposals should be sent to

Congress without assuming the enactment of legislative proposals.) The Administration’s

request seeks fairly level funding for many EPA programs, but would eliminate about $500

million for activities that received earmarked funding in the FY2002 conference report

(H.Rept. 107-272).

Figure 1 depicts EPA funding by major categories—operating programs, state

assistance, and Superfund—since FY1983. Within these broad categories are $2.05 billion

for environmental programs and management, $670 million for science and technology, and

$1.27 billion for Superfund in the FY2003 proposal. Also under the proposal, funding would

decrease by $275 million in the State and Tribal Assistance Grants (STAG) account, which

incorporates Clean Water and Drinking Water State Revolving Funds (SRFs) monies and

traditional state program assistance and management grants. The request for this account

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includes $1.21 billion for Clean Water SRFs, $850 million for Drinking Water SRFs, $75

million for Mexican Border projects, and $1.16 billion for traditional grants to states for

administering their programs.

As reported by the Senate Budget Committee, the FY2003 budget resolution,

S.Con.Res. 100, assumes that the Clean Water SRF will be fully funded, the Superfund

request will be increased by $113 million, and that a proposed shift in enforcement

responsibilities will be denied. It also contains a sense of the Senate that Superfund funding

should be adequate to clean up the remaining sites. The House-passed FY2003 budget

resolution, H.Con.Res. 353, assumes full funding of EPA’s operating programs.

The major issue associated with the request is the discontinuance of funding for a

number of activities which received about $500 million in earmarked funding in FY2002,

much of which was allocated to about 300 wastewater infrastructure projects. The

Administration’s budget document argues, “Congressional earmarks include research

projects targeted to specific institutions that bypass the normal competitive process; projects

that benefit a limited geographic area with no national significance; and infrastructure

projects that bypass the State formula allocation and priority-setting process.” It also

calculates that the FY2002 appropriation contained 479 earmarks totaling $494 million.

Many Members of Congress disagree with the Administration on the earmarks issue overall

and assert Congress’ right to decide funding priorities in this way. Given their enormous

popularity, reinstatements, or new earmarks, of much of this funding is being pursued during

the FY2003 appropriations process.

EPA’s FY2003 budget presentation, now referred to as the “2003 Annual Plan,” was

the fifth presented under provisions of the 1993 Government Performance and Results Act

(GPRA), which directs that a performance plan accompany the budget. In 2000, EPA

submitted a second GPRA-mandated strategic plan spelling out its mission and 10 major

goals and associated objectives. Its FY2003 budget justification is aligned with these 10

goals which are as follows:

1. Clean Air;

2. Clean and Safe Water;

3. Safe Food;

4. Preventing Pollution and Reducing Risk in Communities, Homes, Workplaces and

Ecosystems;

5. Better Waste Management, Restoration of Contaminated Waste Sites, and Emergency

Response;

6. Reduction of Global and Cross-border Environmental Risks;

7. Quality Environmental Information;

8. Sound Science, Improved Understanding of Environmental Risk, and Greater

Innovation to Address Environmental Problems;

9. A Credible Deterrent to Pollution and Greater Compliance with the Law

(Enforcement); and

10. Effective Management.

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Figure 1. EPA Funding, FY83 to FY02 Enacted and FY03 Request

State Assistance

Operating Programs

Superfund & LUST

$ Billion

10.00

8.02 8.18

7.36

8.00

6.67

6.88

7.59 7.56

7.72

6.64 6.60 6.53 6.80

6.09

5.30

6.00

5.54 5.53

5.06

4.18 4.37

3.70

3.68

4.00

2.00

0.00

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Prepared by the Congressional Research Service.

FY2002 totals include $175 million supplemental funding.

The 108th Congress approved a new FY2003 measure P.L. 108-7, H.J.Res.2, an

Omnibus Appropriation bill which included $8.04 billion for EPA.

Homeland Security

In the FY2003 budget proposal, the President seeks $133.4 million for EPA’s homeland

security activities. This is 29% less than the total appropriation of $188.1 million in FY2002.

In addition to homeland security funding allocated directly to EPA in FY2002, P.L. 107-206

(H.R. 4775) included another $16.1 million in supplemental FY2002 funds for the Capitol

Police Board to reimburse EPA. This law also would have appropriated $50 million more

in FY2002 funds to EPA for drinking water facility vulnerability assessments if the President

had declared these emergency funds by September 1, 2002, which he did not do. EPA has

several responsibilities, including protecting its own facilities, determining the vulnerability

of the nation’s water infrastructure, responding to contamination of buildings, monitoring

of air quality at contaminated sites, and conducting research on better cleanup technologies.

The justification for the 29% reduction is, according to EPA, that the special funds,

almost all of which ($175.6 million) were in the emergency FY2002 terrorism supplemental

(P.L. 107-117, Division B), were one-time expenses. Of the $133.4 million requested, most

—$75 million—would be directed to conducting research on better technologies and

assessments to clean up contaminated buildings. The request also includes $19 million to

upgrade EPA security. The next largest allocation would be $17 million for more

vulnerability assessments for smaller water systems along with $5 million in state grants

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relating to homeland security. Other portions of the request include $5.5 million for the

newly created West Coast Environmental Response Team, and an additional $7.7 million to

improve EPA’s response capabilities. The issues for EPA’s homeland security activities are

how adequate the Agency’s resources are to protect its own facilities, to promote protection

of the nation’s infrastructure, and to develop better knowledge about responding to bio- and

chemical-terrorism.

EPA’s Budget by Appropriations Accounts

Traditionally, EPA’s budget has been presented, considered, and enacted according to

several major appropriations accounts. These accounts, including environmental programs

and management, science and technology, Office of Inspector General, buildings and

facilities, and oil spills, representing about 37% of EPA’s FY2003 request, are sometimes

referred to as the “operating programs” and reflect the heart of the Agency’s research,

regulatory, and enforcement efforts. Two trust fund-based accounts—about 18% of EPA’s

FY2003 request—are Superfund and the Leaking Underground Storage Tank (LUST) Trust

Fund. All state supporting activities are reflected in the State and Tribal Assistance Grants

(STAG) account. About 45% of EPA’s FY2003 request is allotted to this account. Table 1

shows the breakdown of EPA’s funding by appropriations accounts.

Table 1. EPA Major Appropriations Accounts: FY1999-FY2002

Enacted, FY2003 Request, and Legislative Action

(in millions of dollars)

Account

FY1999

P.L.

105-276

FY2000

P.L.

106-74

FY2001

P.L.

106-377

FY2002

P.L. 107-73;

P.L.

107-117

FY2003

Request

P.L.

108-7

640.0

645.0

709.1

788.4

670.0

715.5

1,848.0

1,895.3

2,039.2

2,093.5

2,047.7

2,097.7

57.0

62.5

28.3

25.3

42.9

42.6

31.2

32.4

40.8

34.0

35.3

35.7

15.0

1,500.0

14.9

1,400.0

14.6

1,392.4

15.0

1,311.3

15.6

1,273.0

15.4

1,264.6

72.5

69.8

70.7

73.0

72.3

71.8

Operating

Programs

Science and

Technology

Environmental

Programs and

Management

Buildings &

Facilities

Office of

Inspector

General

Oil Spill

Response

Superfund

Leaking

Underground

Storage Tank

Trust Fund

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State and

Tribal

Assistance

Grants

EPA Total

All Programs

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3,406.8

3,581.0

3,623.3

3,738.3

3,463.8

3,834.9

7,590.4

7,591.7

8,018.9

8,078.8

7,620.5

8,078.7

Notes: The total amount indicated for the FY2003 request does not include the Administration’s proposal for an additional

$107 million to shift the full costs of federal employee retirement pensions and health benefits to the agency’s budget.

Funding for this proposal would require legislation that has not been enacted. In FY2000, the conferees elected to fund

the National Institutes of Environmental Health Sciences (NIEHS) and the Agency for Toxic Substances and Disease

Registry (ATSDR) – a total of $130 million – independent of the Superfund appropriation. FY2002 figures include $175.6

million in terrorism supplemental funds included in P.L. 107-117, Division B. P.L. 107-206 (H.R. 4775) included $16.1

million in supplemental FY2002 funds for the Capitol Police Board to reimburse EPA. The Act would have appropriated

$50 million more for FY2002for drinking water facility vulnerability assessments if the President had declared these

emergency funds by September 1, 2002, which he did not do.

In the 108th Congress, the Senate amended and passed H.J.Res. 2, an FY2003 Omnibus Appropriation bill which was

conferenced with the House-passed version of H.J.Res. 2 (which is a continuing resolution and does not contain omnibus

funding provisions). The Senate version would have funded EPA at a level of $8.2 billion - - about the same as the Senatereported amount in the 107th Congress (S. 2797). However, it would have provided for a possible rescission of 2.9% of the

$8.2 billion level. P.L. 108-7 (H.J.Res. 2) provided for a 0.65% rescission of each activity which is reflected in these

figures.

Within the many EPA programs, there are numerous issues with respect to

implementing and administering the media (air, water, etc.) protection programs, wastewater

treatment funding, and Superfund.

Science and Technology

The Science and Technology (S&T) account incorporates elements of the former

research and development account (also called extramural research) as well as EPA’s inhouse research, development, and technology efforts. The FY2003 request of $670.0

million for the S&T account represents a 15% decrease when compared to the total FY2002

funding level of $788.4 million. During the 107th Congress, the Senate Committee on

Appropriations approved $710.0 million for the S&T account, reinstated $9.75 million for

the Science to Achieve Results (STAR) program, which the Administration has proposed to

move to the National Science Foundation, and added $10 million to the request for small

drinking water system arsenic removal research. The House Committee on Appropriations

approved $714.6 million for the S&T account, and provided $5.0 million to retain the STAR

program at EPA. In the 108th Congress, P.L. 108-7 (H.J.Res. 2) includes $715 million for the

S&T account.

Increasing under the President’s budget proposal would have been S&T funds for clean

air (3%), clean and safe water, (3%), and quality information (0.5%) goals; safe food,

pollution prevention, and enforcement S&T allocations would decline slightly. The main

decreases— about 72%, or $42.3 million—would be for waste management, almost all from

contaminated site/emergency response activities related to September 11th, and $74.9 million

from safe water goals reflecting completion of vulnerability assessments. In report language,

the Senate Committee on Appropriations directs EPA to provide, by March 31, 2003, a full

accounting of how the agency has expended drinking water security funds. While the

Administration’s decision not to request about $5.3 million added by Congress in FY2002

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funds is a contributing factor, S&T funds allocated for the global/cross border goal would

decline 20% due to the Administration’s decision to reduce research funds for alternative

vehicle technologies. S&T funds for the effective management goal would decline 42%

under the proposal, reflecting completion of the Research Triangle Park facility.

EPA’s role in climate research and in the Bush Administration’s Climate Protection

Program (CPP), formerly the Climate Change Technology Initiative (CCTI), has been an

issue. EPA requests $136.9 million for its objective to “reduce Greenhouse Gas Emissions”

(research and programmatic activities) in FY2003, a 6%, or $8.4 million, decrease when

compared to the FY2002 funding level of $145.3 million. About $38 million, or 28%, of

the request is under the S&T account; the rest is under the Environmental Programs and

Management request.

There is no funding change planned for the $21 million research program in climate

change. Most categories of the Climate Protection Program would remain at about the same

levels. This includes some research and incentive programs related to buildings, carbon

removal, international capacity building, and state/local programs. What is driving the overall

decrease is the Administration’s decision to reduce climate change transportation-related

activities from $30.8 million to $21.6 million in FY2003, a $9.3 million or a 30% reduction.

This reflects the Administration’s decision to discontinue activities on high-efficiency fuel

engines and developing an 85 miles per gallon family size prototype vehicle. Neither S.

2797, nor H.R. 5605, proposes specific funding levels for climate change activities. (For a

discussion of climate change issues, see the CRS Electronic Briefing Book on Climate

Change [http://www.congress.gov/brbk/html/ebgcc1.html].)

Environmental Programs and Management

The Environmental Programs and Management (EPM) account—representing about a

quarter of the Agency’s resources—reflects the heart of the Agency’s regulatory, standardsetting, and enforcement efforts for various media programs such as water quality, air quality,

and hazardous waste management. The President’s FY2003 budget sought $2.05 billion,

$46.7 million, or 2.2%, less than the FY2002 funding level of $2.09 billion. In the 107th

Congress, the Senate Committee on Appropriations would have provide $2.14 billion, and

the House Committee on Appropriations would have provided $2.11 billion. The 108th

Congress provided $2.10 billion in P.L. 108-7 (H.J.Res. 2) Many controversial

regulatory/standard setting issues can be associated with this account. (CRS Issue Brief

IB10067, Environmental Protection Issues in the 107th Congress, discusses some of them.)

EPM allocations for clean air, safe food, pollution prevention, global activities,

information, enforcement and effective management goals would remain roughly the same

as in FY2002. The EPM allocation for clean/safe water would be reduced $63.2 million, or

13%, under the plan. This reflects the Administration’s decision not to request about $93.6

million in congressional earmarks in the EPM account. For waste management/emergency

response, the EPM allocation would increase $24.8 million or 15%, almost all of which is

accounted for by the new Brownfields grant program administration responsibilities, for

which the Administration has proposed $29.5 million. (Another $170.5 million in

Brownfields grants would be funded separately under the State and Tribal Assistance Grants

account, for a total Brownfields request of $200 million.) The Senate Committee on

Appropriations approved the total request for the Brownfields program, but the House

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Committee on Appropriations would provide $2.3 million less for Brownfields

administrative costs under the EPM account. For sound science activities, the EPM portion

would increase 6%, or $3.6 million. This reflects the elimination of the Common Sense

Initiative ($1.8 million) which the Office of Management and Budget (OMB) has labeled as

“ineffective” and the addition of $9.6 million in EPM funds for an expanded regulatory

development process, strengthened economic analyses, and regulatory innovation.

Another program that OMB has labeled as “ineffective” is the environmental education

program. The President’s budget plans to end EPA’s activities authorized under the 1990

National Environmental Education Act ($9.2 million in FY2002) and transfer them to the

National Science Foundation (NSF). As discussed earlier, it also would eliminate EPA’s

STAR Fellowship Program ($9.75 million in FY2002), which has been funded under the

S&T account, and would transfer those functions to the NSF “as part of a larger effort to

increase environmental science education programs” there. (The National Oceanic and

Atmospheric Administration’s Sea Grant program’s funding level of $57 million would also

be transferred to NSF under this plan.) According the NSF’s budget summary, NSF would

work in partnership with the relevant agencies to sustain each program’s major objectives

while incorporating NSF’s experience with merit-based, competitive processes. The Senate

Committee on Appropriations did not approve the Administrations’s proposal to transfer

EPA’s environmental education and STAR program activities to the NSF, and would provide

funding in FY2003 at the same level as enacted for FY2002. The House Committee on

Appropriations also rejected the Administration’s transfer proposal, and would continue

funding for the environmental education program at the FY2002 enacted level. Although the

House Committee on Appropriations would reinstate the STAR program at EPA, it would

reduce funding for the program to $5.0 million in FY2003.

The EPM account funds most of EPA’s enforcement effort. For EPA’s enforcement

goal the budget seeks $402.5 million, $8.9 million, or 2% more than in FY2002. This reflects

$15.0 million in new funds under the STAG account for proposed enforcement grants to

states, while at the same time EPA’s own enforcement resources would be reduced $10.0

million under the EPM account. This would involve a reduction of 99 full time equivalent

positions (or FTEs). Appropriators rejected a similar plan during the consideration of the

FY2002 request. The Senate Budget Committee-reported version of the FY2003 budget

resolution, S.Con.Res. 100, assumes that this proposal will not be adopted. The Senate

Committee on Appropriations also denied this requested change and included extensive

report language on enforcement. It directed the agency to stop redirecting civil enforcement

resources to criminal enforcement and to restore civil enforcement funding. It also directed

the agency to develop a plan to fill vacant positions in the Office of Enforcement and

Compliance. The House Committee on Appropriations also denied the requested shift in

enforcement responsibilities.

Office of Inspector General

The President’s FY2003 budget sought, and both the Senate Committee on

Appropriations and the House Committee on Appropriations approved, $35.3 million for the

Office of Inspector General, $1.3 million more than in FY2002. P.L. 108-7 (H.J.Res. 2)

provided $35.8 million.

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Buildings and Facilities

The Administration requested $42.9 million for the Buildings and Facilities account for

FY2003, which is $17.6 million, or 69.5%, more than the FY2002 funding level, reflecting

new security needs. Both the Senate Committee on Appropriations and the House

Committee on Appropriations approved the requested amount. P.L. 108-7 (H.J.Res.2)

included $42.6 million.

Oil Spill Response

For EPA’s oil spill response activities, the President’s FY2003 budget sought $15.6

million, $600,000 more than in FY2002. Both the Senate Committee on Appropriations and

the House Committee on Appropriations approved the requested amount. P.L. 108-7

(H.J.Res.2) included $15.5 billion.

Superfund

In its FY2003 request, EPA sought $1.27 billion for the Superfund account, about $38

million less than the FY2002 funding level of $1.31 billion (which included $41.3 million

in supplemental funding for terrorism-related activities). During the 107th Congress, the

Senate Committee on Appropriations approved the requested amount of $1.27 billion,

whereas the House Committee on Appropriations would have provided $1.42 billion. In the

108th Congress, P.L. 108-7 (H. J. Res 2) provides $1.26 billion. Taxing authority to support

the Superfund Trust Fund expired on December 31, 1995, and since then the fund balance

has been declining. It is anticipated that trust monies will only be available in significant

amounts through FY2003. (Also part of the President’s FY2003 budget is a $200 million

request for cleaning up certain urban sites, called Brownfields, that have development

potential. None of this is funded under the Superfund account. Most of this, $170.5 million

for grants, would be funded in the State and Tribal Assistance Grants account, and the

remainder of $29.5 million would be funded as EPA’s administrative expenses under the

EPM account. P.L. 108-7 funded the Brownfields program at $167 million) As reported by

the Senate Budget Committee, the FY2003 budget resolution, S.Con.Res. 100, includes a

Sense of the Senate on Superfund which states:

(a) FINDINGS- The Senate finds the following:

(1) The most contaminated, toxic sites in the country are cleaned up through the

Superfund program;

(2) The President’s budget assumes sharp reductions in the number of Superfund sites to

be cleaned up in fiscal year 2003; and

(3) This resolution provides a significant increase in funding for the Superfund program

for fiscal year 2003 compared to the President’s budget proposal.

(b) SENSE OF THE SENATE- It is the sense of the Senate that funding for Superfund

be at a level sufficient to significantly increase the number of toxic waste sites cleaned

up through the Superfund program.

The Senate Budget Committee’s resolution also assumes that the $1.27 billion request

for Superfund will be increased by $133 million. As indicated above, the Senate Committee

on Appropriations approved the requested amount, but would not provide an increase in

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funding. As passed by the House, the FY2003 budget resolution, H.Con.Res. 353, does not

contain any funding assumptions regarding the level of support to provide for Superfund, nor

does it include any commentary on the implementation of the program. The House

Committee on Appropriations would increase the program’s funding to $1.42 billion.

Two major studies have concluded that the nation’s toxics cleanup program has major

challenges ahead and requires large funding levels for the next few years. Looking ahead,

the General Accounting Office (GAO) has estimated that by 2008, 85% of all non-federal

National Priority List sites will be cleaned up (GAO/RCED-00-25, Superfund: Information

on the Program’s Funding and Status). This will entail annual appropriations on the average

of at least $875 million through FY2008, according to GAO. GAO estimates that it will cost

between $8.2 billion and $11.7 billion for studies, design and remedial work to clean up all

remaining sites. On July 10, 2001, Resources for the Future (RFF) released its EPA-funded

report requested by the House and Senate appropriations committees. Superfund’s Future:

What Will It Cost? estimates that for fiscal years 2000 through 2009, EPA will have to spend

$14 billion to $16.4 billion on the Superfund program and that appropriations will have to

be maintained at current levels through these years. RFF anticipated in its base case scenario

that “EPA’s need for Superfund monies will not decrease appreciably below FY1999

expenditures of $1.54 billion until 2006...”.

In FY2003, EPA’s budget proposal anticipates 285 removal response actions, down 17,

or 6%, when compared to FY2002. It also anticipates 40 construction completions, 7 or 18%

fewer than in FY2002. The reduction in these measures of the Superfund program has caused

some concern, given the remaining Superfund cleanup challenges.

The President’s FY2003 budget does not propose renewing the taxes that support the

Superfund Trust Fund. It indicates that the balance of the fund on October 1, 2002, the

beginning of FY2003, will be $427 million. The requested appropriation of nearly $1.3

billion includes $593 million, or 46%, derived from the fund and $700 million from general

appropriations. With an estimated balance of $28 million anticipated at the beginning of

FY2004, the fund could only be a very minor contributor for that year although some income

sources for the fund - recoveries, interest, offsetting receipts - could increase the amount

available. If the Superfund account levels are to be maintained, general revenues would have

to fund a significant part of the program for that year.

The President’s FY2003 budget represents a significant change in hazardous waste

cleanup policy. For the first time in the Superfund program’s 22-year history, the taxpayer

would be funding the majority—54%—of the program. Some have interpreted this as a

departure from a longstanding “polluter pays” policy in which the industry-maintained trust

fund supported the majority—roughly 70%—of the Superfund program for many years. On

February 25, 2001, in response to questions about the Administration’s support of the

Superfund program, the President stated: “...we’re looking at ways to reform the system to

make sure it works, to make sure it actually accomplishes what Congress wants it to

accomplish.”

The role of general revenues for Superfund cleanup will be a continuing matter for the

appropriators to consider. Whether the Superfund tax is reinstated is likely to be a point of

contention. Superfund tax issues have generally been addressed by the revenue committees.

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Leaking Underground Storage Tanks

The President’s FY2003 budget sought $72.3 million, about the same as in FY2002, for

the Leaking Underground Storage Tank (LUST) program, which assists states in addressing

substandard underground petroleum storage tanks. In the 107th Congress, both the Senate

Committee on Appropriations and the House Committee on Appropriations approved the

requested amount. In the 108th Congress, P.L. 108-7 (H.J.Res. 2) included $71.8 million

The status of state LUST programs is a significant issue. Many states are finding it

difficult to finance their programs. At the same time, the fact that the balance of the LUST

Trust Fund has passed the $2.0 billion threshold and the likelihood it will grow even larger,

if not drawn upon significantly, has led some to call for allowing greater use of the fund

balance by states. (For further discussion, refer to CRS Report RS21201, Leaking

Underground Storage Tanks: Program Status and Issues.)

State and Tribal Assistance Programs

The FY2003 request for the State and Tribal Assistance Grants (STAG) account was

once again particularly controversial in Congress since the President requested $3.46 billion,

$274.5 million (or 7.3%) less than FY2002 funding level of $3.74 billion. This reflects the

Administration’s decision not to request funds for activities and grants earmarked in the

FY2002 conference report. In the 107th Congress, the Senate Committee on Appropriations

approved $4.01 billion, adding $140 million for special needs grants. The House Committee

on Appropriations approved $3.79 billion, adding $228 million for targeted projects. In the

108th Congress, P.L. 108-7 (H.J.Res. 2) includes $3.83 billion. The chief elements of the

STAG request include:

$1.21 billion, as compared to the FY2002 funding level of $1.35 billion for

Clean Water State Revolving Funds; the Senate Committee on

Appropriations approved $1.45 billion; the House Committee on

Appropriations approved $1.30 billion; P.L. 108-7 includes $1.35 billion.

! $850.0 million for Drinking Water State Revolving Funds, the same as in

FY2002; the Senate Committee approved $875 million; the House

Committee approved the requested amount; P.L. 108-7 includes $850

million.

! $75.0 million for Mexican Border infrastructure projects, the same as in

FY2002 and as approved by the both the House and Senate Committees;

P.L. 108-7 includes $50 million.

! $40.0 million for Alaska Native Village water infrastructure projects, the

same as in FY2002; the Senate Committee approved $45.0 million; the

House Committee approved $35.0 million; P.L. 108-7 includes $43 million.

! $1.16 billion, $79 million more than in FY2002, for traditional grants to

states for their administration of various environmental programs; the Senate

Committee approved the requested increase; the House Committee approved

$1.17 billion; P.L. 108-7 includes $1.15 billion.

! $170.5 million for the Brownfields program, including $50 million for

assessment grants and $120.5 million for capitalizing Brownfields state

revolving funds; both the House and Senate Committees approved the

requested amounts. P.L. included $130 million.

!

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The major capital needs that communities face for funding drinking water and

wastewater facility construction remain the chief issue associated with the STAG account.

The primary federal contribution to help meet these needs has been through the Clean Water

Act and Safe Drinking Water Act State Revolving Fund (SDF) programs. Under these

programs, EPA makes grants to states to capitalize state funds from which states loan monies

to communities.

Despite these programs, the total national needs estimated by EPA and various

stakeholders remain great. EPA’s 1996 needs survey for Clean Water SDF monies estimated

remaining needs at $139.5 billion through the year 2016, while sewerage agencies estimate

funding needs may be as high as $330 billion. EPA acknowledges that funding needs exceed

levels in the 1996 needs survey and is working on more current assessments. The needs of

small communities remain a special component of this problem. Since most localities are

now financing projects through SDF loans, any remaining direct grants for special projects

have become controversial.

EPA’s 2001 drinking water needs survey indicated that public water systems need to

invest $151 billion over 20 years. Part of the increase is attributable to new regulations and

about half due to installation and rehabilitation of transmission and distribution systems.

One estimate has spotlighted the FY2003 total water SDF request even more. A

stakeholder group, the Water Infrastructure Network (WIN), in Clean and Safe Water for the

21st Century, estimates total wastewater and drinking water capital needs at around $1 trillion

over the next 20 years, even more if operation and maintenance (O&M) needs are added in.

(O&M needs currently are not eligible for federal assistance). WIN estimates that 20-year

capital funding needs for wastewater are about $460 billion and for drinking water are about

$480 billion. WIN foresees a $23 billion per year funding gap: $12 billion for wastewater and

$11 billion for drinking water capital needs.

On September 30, 2002, EPA issued its Clean Water and Drinking Water Infrastructure

Gap Analysis, which estimates that funding needs for wastewater will be $271 billion and

for drinking water will be $263 billion, over the next 20 years. These estimates include the

costs of O&M needs, and are based on the assumption that current spending levels will

remain the same. Assuming a spending increase of 3% per year, EPA’s estimates are $31

billion for wastewater needs and $45 billion for drinking water needs.

As reported by the Senate Budget Committee, the FY2003 budget resolution,

S.Con.Res. 100, assumes full funding of the Clean Water SDF. This appears to mean the

FY2002 funding level of $1.35 billion, and would assume that the $1.21 billion request

would be increased by about $150 million. As indicated above, the Senate Committee on

Appropriations approved $1.45 billion.

For state administrative grants, the President’s FY2003 budget sought, and the Senate

Committee on Appropriations approved, $1.16 billion, $79 million more than the FY2002

funding level of $1.08 billion. These grants fund state programs, which administer various

environmental protection programs. Most state grant programs would be funded at FY2002

levels. Funding for state section 106 water grants would be reduced $12 million, or 6%,

while funding for water quality cooperative agreements would double to a level of $39

million. Under the President’s FY2003 budget, new areas would also be funded: $15 million

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for state enforcement grants and $170.5 million for Brownfields grants. The latter includes

$50 million for state administration and assessments and $120.5 million for capitalizing

Brownfields revolving funds in the states. The President’s FY2003 budget seeks funding of

$20 million for the Targeted Watersheds Project for grants to watershed stakeholders “to

implement watershed restoration efforts in a discrete set of priority watersheds.”

As discussed earlier, considerable interest has focused on the proposal to shift more

enforcement responsibility to the states. The Administration has requested $15 million in

FY2003 for new grants to state enforcement programs, and correspondingly, would reduce

the number of FTEs in EPA’s enforcement office by some 100 positions. During

consideration of the FY2002 request, appropriators rejected a similar proposal, and both the

Senate Committee on Appropriations and the House Committee on Appropriations rejected

this proposal again for FY2003.

LEGISLATION

107th Congress

H.R. 5605 (Walsh)

Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Bill for FY2003. Reported October 10, 2002, from

the House Committee on Appropriations (H.Rept. 107-740).

S. 2797 (Mikulski)

Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Bill for FY2003. Reported July 25, 2002, from the

Senate Committee on Appropriations (S.Rept. 107-222).

108th Congress

P.L. 108-7, H.J.Res. 2 (Young)

Making Continuing Appropriations for FY2003/Omnibus Appropriations Bill. Introduced

January 7, 2003. Passed House January 8. Passed Senate amended (S.Amdt. 1) January 23.

The House-passed version was a simple continuing resolution of all government funding

until January 31. Using this legislative vehicle, the Senate adopted substitute language

(S.Amdt. 1) which is an omnibus appropriations bill to fund all programs for the rest of the

fiscal year. Signed February 20, 2003.

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

U.S. Congress. House. Committee on Appropriations. Subcommittee on VA-HUDIndependent Agencies. EPA’s FY2003 Appropriation. Hearings, 107th Congress, 2nd

Session. March 12, 2002. Washington, GPO (to be published)

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Senate. Committee on Appropriations. Subcommittee on VA-HUD-Independent Agencies.

EPA’s FY2003 Appropriation. Hearings, 107th Congress, 2nd Session. March 20, 2002.

Washington, GPO (to be published)

U.S. Congress. House. Committee on Transportation and Infrastructure. Subcommittee on

Water Resources and the Environment. EPA’s FY2003 Budget. Hearings, 107th

Congress, 2nd Session. February 14, 2002. Washington, GPO. (to be published)

U.S. Congress. Senate. Committee on Environment and Public Works. EPA’s FY2002

Budget Proposal. Hearings, 107th Congress, 2nd Session. February 13, 2002.

Washington, GPO. (to be published)

CHRONOLOGY

02-04-02 – President submits FY2003 budget request, including $7.62 billion for EPA.

07-25-02 – Senate Committee on Appropriations reports S. 2797 (S.Rept. 107-222), which

includes $8.30 billion for EPA.

10-10-02 – House Committee on Appropriations reports H.R. 5605 (H.Rept. 107-740),

which includes $8.20 billion for EPA.

01-23-03 – Senate amends and passes H.J.Res. 2, including $8.2 billion for EPA, less a

potential 2.9% rescission.

02-20-03 – President signs P.L. 108-7 (H.J.Res. 2)

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