The Environmental Protection Agency's FY2004 Budget

Order Code IB10125

CRS Issue Brief for Congress

Received through the CRS Web

The Environmental Protection Agency’s

FY2004 Budget

Updated October 3, 2003

Martin R. Lee

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

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

Conclusion

LEGISLATION

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

CHRONOLOGY

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The Environmental Protection Agency’s FY2004 Budget

SUMMARY

For FY2004, the President’s budget

requested $7.6 billion in budget authority for

the Environmental Protection Agency (EPA),

$448 million (or 6%) less than the $8.1 billion

current funding level. The House approved

$8.0 billion in H.R. 2861 (H.Rept. 108-235)

on July 25. The Senate Appropriations

Committee approved $8.1 billion in S. 1584

(S.Rept. 108-143) on September 5. On

September 30, Congress approved a

continuing resolution P.L. 108-84 (H.J.Res.

69) funding EPA through October at the

FY2003 level of $8.1 billion.

The request consisted of $3.1 billion for

EPA operating expenses, $3.1 billion for

assisting state and local governments, and

$1.4 billion for cleaning up Superfund toxic

waste sites. Wastewater infrastructure needs

and the future of Superfund are prominent

topics.

EPA’s appropriations bills continue to be

organized by traditional accounts. The $731

million sought for the Science and

Technology account reflected a $16 million

increase; for the Environmental Programs and

Management account, the proposed level was

a $122 million, a 6%, increase compared to

current funding. The $1.4 billion requested to

clean up toxic waste sites under Superfund

was $125 million, or 10%, above the current

year level. There is some concern over the

level of Superfund activities under this plan,

and a concern that general revenues would

now pay for the majority of the appropriation,

as the industry-supported trust fund balance

declines.

How to fund state and local wastewater

and drinking water capital needs, estimated to

be as high as $300 billion, continues to be a

Congressional Research Service

major issue. The request sought $3.1 billion

for the State and Tribal Assistance Grants

account, $714 million, or 19%, less than

current funding. It included $850 million for

Clean Water State Revolving Funds (SRF)

$490 million less than the current $1.34

billion. Funding for drinking water state

revolving funds would also be $850 million,

approximately the current level. Also

anticipated was $50 million for Mexican

border water projects and $40 million for

Alaska projects. For state and tribal

administrative grants, the budget sought $1.2

billion, $5 million more than current funding.

It also included $210 million for the

Brownfields program, $33 million above

current levels.

The House action reinstated some of the

funds for the Clean Water State Revolving

Fund, and included $180 million for direct

water grants. It did not approve the full

increase requested for the Environmental

Program and Management Account, and

Superfund Account. It added funds for

science and technology activities. In bill

language, the House prohibited EPA from

using a numerical estimate that could devalue

the lives of the elderly, and continued a ban on

human testing of pesticides during FY2004.

The Senate action also reinstated wastewater

funds and included bill language on

Brownfields and off-road vehicle emissions.

While considering the FY2004 budget

resolution (S.Con.Res. 23), the Senate adopted

a provision, later dropped by the conferees,

allowing for an increase in wastewater and

clean water funds by as much as $3 billion and

rejected provisions to restore the Superfund

tax and to increase natural resource and

environment funding.

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MOST RECENT DEVELOPMENTS

On February 3, 2003, the President forwarded to Congress a $7.6 billion FY2004 budget

request for the Environmental Protection Agency. On July 21, the House Committee on

Appropriations recommended $8.0 billion (H.R. 2861, H.Rept. 108-235), which the House

approved, amended, on July 25. On September 5, the Senate Committee on Appropriations

reported S. 1584 (S.Rept. 108-143), which included $8.1 billion. On September 30, Congress

approved a continuing resolution P.L. 108-84 (H.J.Res. 69) funding EPA through October

at the FY2003 level of $8.1 billion.

Earlier, while considering the FY2004 overall budget resolution (S.Con.Res. 23), the

Senate adopted a provision allowing for an increase in wastewater and clean water funds by

as much as $3 billion. It rejected amendments seeking to increase the allocation for the

natural resource and environment function, and to reinstate the tax supporting the Superfund

Trust Fund. Conferees later dropped the wastewater/clean water provision.

BACKGROUND AND ANALYSIS

The FY2004 EPA request of $7.6 billion is $448 million, or 6%, less than the total

current level of funding, $8.0 billion, which was included in P.L. 108-7, the Consolidated

FY2003 appropriation bill (H.J.Res. 2), signed February 20, 2003. From the beginning of

FY2003 until February 20, 2003, a series of continuing resolutions funded the Agency at the

FY2002 level of $7.9 billion.

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

assistance, Superfund — since FY1983. Within these broad categories, the FY2004 EPA

request calls for $2.2 billion for program management, $731 million for science and

technology, and $1.4 billion for Superfund. When compared to current levels, funding would

decrease by $714 million in the State and Tribal Assistance Grants account, which

incorporates wastewater/drinking water state revolving funds (SRFs) monies and traditional

state program assistance and management grants. The request for this account included $850

million for wastewater SRFs, $850 million for drinking water SRFs, $50 million for Mexican

border projects, and $1.2 billion for traditional grants to states for administering their

environmental protection programs.

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Figure 1. EPA Funding, FY1983 to FY2003 Enacted and FY2004 Request

State Assistance

Operating Programs

Superfund & LUST

Thousands

10.00

8.02 7.91 8.08

8.00

7.36

6.67

6.88

7.59 7.59

7.63

6.64 6.60 6.53 6.80

6.09

6.00

5.30

4.18

4.00

3.70

5.54 5.53

5.06

4.37

3.68

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 2004

FY2002 totals include $175 million supplemental funding. Prepared by CRS.

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

number of FY2003 activities totaling about $500 million. Much of this total was allocated

to 483 wastewater projects in FY2003. It is likely that reinstatement of some of these projects

or the creation of new earmarks could be pursued during the FY2004 appropriations process.

The degree to which earmarks are approved may require changes to other parts of the request

depending on the flexibility afforded the committees under their individual budget

allocations, and within the priorities set for the bill, as the needs of many other competing

national programs included in the bill such as housing, veterans affairs, disaster assistance,

and space are assessed.

The FY2004 budget presentation, now referred to as the “2004 Annual Plan,” was the

sixth 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 FY2004 budget justification is aligned with these 10

goals:

1. Clean Air

2. Clean and Safe Water

3. Safe Food

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

Ecosystems

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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)

10. Effective Management

EPA appropriations are a small portion of the federal budget. Each year the President

forwards his budget, which includes revenues and expenditures; Congress then develops its

own budget after evaluating revenue and spending projections. One of the functions is

Function 300, Natural Resources and Environment, and it is here that EPA activities are

placed for purposes of overall fiscal planning. While considering the FY2004 budget

resolution (S.Con.Res. 23), the Senate adopted a provision allowing for an increase in

wastewater and clean water funds of as much as $3 billion and rejected provisions to restore

the Superfund tax and to increase natural resource and environment funding. However,

conferees dropped the wastewater provisions. (For a discussion of this process, see CRS

Report RL31784, The Budget for Fiscal Year 2004.) The specifics of EPA funding are then

laid out during the congressional appropriations process, specifically in the Department of

Veterans Affairs, Housing and Urban Development, and Independent Agencies

Appropriations Bill.

This report will be updated as further legislative developments transpire.

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 one-third of EPA’s appropriation, 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 17% of the

Agency’s FY2003 appropriation — 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 the Agency’s FY2004 appropriation is

allotted to this account. Table 1 shows the breakdown of EPA’s funding by appropriations

accounts.

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Table 1. EPA Major Appropriations Accounts:

FY1999-FY2003 Enacted, FY2004 Request and Latest Actions

(in millions of dollars)

Account

FY2000 FY2001

P.L.

P.L.

106-74 106-377

FY2002

P.L.

107-73

FY2003

P.L.

108-7

FY2004

Req.

HousePassed

H.R.

2861

SenateReported

S. 1584

Operating

Programs

Science and

Technology

645.0

709.1

698.1

715.6

731.5

767.1

715.6

Environmental

Programs and

Management

1,895.3

2,039.2

2,054.5

2,097.7

2,219.7

2,192.6

2,219.7

Buildings &

Facilities

62.5

28.3

25.3

42.6

42.9

42.9

42.9

Office of

Inspector

General

32.4

40.8

34.0

35.7

36.8

36.8

36.8

Oil Spill

Response

14.9

14.6

15.0

15.4

16.2

16.2

16.2

Superfund

1,400.0

1,270.0

1,311.0

1,264.6

1,389.7

1,275.0

1,265.0

Leaking

Underground

Storage Tank

Trust Fund

69.8

70.7

73.0

71.8

72.5

72.5

72.5

State and

Tribal

Assistance

Grants

3,581.0

3,623.3

3,733.3

3,834.9

3,121.0

3,602.0

3,814.0

EPA Total

All Programs

7,591.7

8,018.9

7,903.2

8,078.5

7,630.5

8,005.1

8,118.3

Note: This table shows only the major activities, while totals are for all EPA programs. For FY2000 and future years, 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 million in terrorism supplemental funds included in P.L. 107-117, Div. B. From October

1, 2002, the beginning of FY2003, until February 20, 2003 when a consolidated appropriations bill was signed, the Agency

was funded under a series of continuing resolutions at the FY2002 level of $7.9 billion. The FY2003 Consolidated

Appropriations Act requires a rescission of 0.65% of the amounts enacted which these figures reflect.

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.

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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 FY2004 request of $731 million

for the S&T account represents a 2% increase when compared to the current funding level

of $716 million. The House Committee approved $767 million, adding $25 million for an

environmental research grant program, $2 million for competitive research, $4 million for

Water Environmental Research Foundation, $5 million for the American Water Works

Research Foundation, and $2 million each for the National Decentralized Water Resource

Capacity Development Project and Water Information Sharing and Analysis Center. The

Committee also approved a $5.5 million general reduction for this account. The House

approved the Committee’s recommendation.

The Senate Committee approved $715.6 million, $15.9 million below the

Administration’s request and the same as current year funding. It approved a general

reduction of $40.1 million and reductions of $5 million for particle matter research, $5

million for communicating information research, and $10 million for emerging issues

research. The Committee also approved 37 add-ons for a variety of activities.

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

(CPP), formerly the Climate Change Technology Initiative (CCTI), has been an issue in past

budget presentations. EPA requested $138.1 million for its objective to “reduce Greenhouse

Gas Emissions” (research and programmatic activities) in FY2004, about the same as current

year funding. About $39 million, or 28%, of the request is under the S&T account; the rest

is under the Environmental Program and Management request.

There is no funding change planned for the $21.5 million research program in climate

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

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

removal, international capacity building, and state/local programs. (For a discussion of

climate change issues, see CRS Issue Brief IB89005, Global Climate Change.)

The budget request sought a significant increase of $6.3 million in S&T funds for the

air program to support the Clear Skies Initiative. According to the budget justification, it

would help the Agency “analyze pollutant contributions from different sectors and provide

assistance to states regarding regional and local reductions.” (For additional discussion of

this program, see CRS Issue Brief IB10107, Clean Air Act Issues in the 108th Congress.)

Environmental Programs and Management

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

30% 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 FY2004 budget sought $2.2 billion,

$122 million, or 6%, more than the current level. Many complex or contentious regulatory /

standard setting issues can be associated with this account. (CRS Issue Brief IB10115,

Environmental Protection Issues in the 108th Congress, discusses some of them.) The House

Committee approved $2.2 billion, about $95 million more than current year funds and $27

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million less than requested. While approving a $22.2 million general reduction for this

account, the Committee included several increases above the budget request. Among these

are $25 million for an environmental grant program, $18.2 million more for rural water

technical assistance, and $4 million for state water quality ambient monitoring grants. On

the floor, the House adopted an amendment increasing this account by $550,000, to augment

funding for EPA’s environmental justice programs, according to the sponsor.

The Senate Committee also approved $2.2 billion. It restored $5 million for

environmental justice activities and added-on $16 million for rural water technical

assistance. It also approved numerous add-ons for a variety of activities.

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

information, enforcement, and effective management goals would all increase under the

proposal. The House approved a $5.4 million increase for implementing drinking water

requirements, a $15 million for sediment cleanup in the Great Lakes, a $8.6 million increase

for e-gov initiatives, and $30.6 million more for improvements to the information technology

infrastructure.

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

goal the budget sought $430.6 million. A key requested increase sought $14.0 million more

for FY2004, which translates into an additional 100 FTEs. The House action supports the

Agency’s plan to increase enforcement FTEs by 100. Another increase — $8.5 million —

would modernize the Agency’s permit compliance system. On the floor, the House adopted

two enforcement-related amendments. One increases enforcement funding, and decreases

media relations funding, by $1 million to enforce bilateral agreements, specifically enforcing

a 1992 U.S.-Canada waste agreement; the other redirects funding by $5.4 million, and staff

by 54 FTEs, for the Office of Compliance and Enforcement for civil enforcement.

In addition, the House adopted an amendment that struck committee-approved language

related to drinking water health effects studies, language dealing with contaminants, and

language on purchasing American-made goods and services. According to the Chairman of

the VA-HUD Subcommittee, these provisions were legislative in nature.

The House also adopted amendments prohibiting EPA from using a numerical estimate

that places a lower statistical value on the lives of older individuals than on the lives of

others, and another that continues the ban on human testing of pesticides. An OMB May 30

memo directed federal agencies to use a method that could value the lives of the elderly less

than others when calculating the benefits of regulations.

On June 3, a federal court reinstated an earlier approach for EPA to use when evaluating

third-party human studies of chemicals, pending further rulemaking at the agency (CropLife

America v. EPA, D.C. Cir., No. 02-1057, 6/3/03). The court reinstated EPA’s earlier

practice of considering the tests on a case-by-case basis. EPA had relied on the third-party

human tests of pesticides for decades until 1998.

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Office of Inspector General

The President’s FY2004 budget sought, and the House approved, $37.0 million for the

Office of Inspector General, $1.1 million more than current year funding. The Senate

Committee approved the same.

Buildings and Facilities

The FY2004 request of $43 million for the Buildings and Facilities account is about

the same as current funding. The House and Senate Committee approved this amount. An

amendment adopted by the House decreased this account by $550,000 and increased the

Environment and Program Management account by the same amount.

Oil Spill Response

For EPA’s oil spill response activities, the President’s FY2004 budget sought, and the

House and Senate Committee approved, $16 million, $1 million more than current funding.

Superfund

The FY2004 EPA request sought $1.4 billion for the Superfund account. This is $125

million, or 10%, more than current year funding. Taxing authority to support the Superfund

Trust Fund expired on December 31, 1995, and the fund balance has been declining since

then. It is anticipated that trust monies will only be available in significant amounts through

FY2003. The House approved $1.275 billion, $10.4 million above the current level and

$114.7 million less than requested. On the floor, the House rejected an amendment that

would have increased Superfund by $114 million and similarly reduced NASA’s Prometheus

Program. The Senate Committee approved $1.265 billion, about the current level and $125

million less than requested.

Also part of the President’s FY2004 budget is a $210 million request for cleaning up

certain urban sites, called Brownfields, that have developmental potential. This is not funded

under the Superfund account. The $180.5 million for grants is included in the State and

Tribal Assistance Grants account, and $30.3 million for EPA’s Brownfields administrative

expenses is contained in the EPM account.

While the Superfund program has completed cleanup construction at 851 sites as of

June 30, there are significant identified needs. Two major studies have concluded that the

nation’s toxic cleanup program has major challenges, requiring large funding levels for the

next few years. GAO estimates that 85% of non-federal National Priority List sites will be

cleaned up by 2008 (GAO/RCED-00-25, Superfund: Information on the Program’s Funding

and Status). This will necessitate appropriations averaging at least $875 million annually

through FY2008, according to GAO. This report calculates costs of $8.2 to $11.7 billion for

studies, design, and remedial work to address all remaining sites. In 2001, Resources for the

Future (RFF) released its EPA-funded report requested by the 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

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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.” (For further discussion

of the Superfund program, see CRS Issue Brief IB10114, Brownfields and Superfund Issues

in the 108th Congress.)

The FY2004 budget assumes about 40 construction completions per year, about average

for the program over its history, but about half of the number at the height of the program a

few years ago, according to EPA. The proposed $125 million increase would be devoted to

beginning cleanup at 10 to 15 new sites. In addition, the budget asks for $6.8 million more

for a National Decontamination Team (Decon Team) and $7 million more for specialized

field supplies and laboratory support.

Derived from industry taxes which expired in 1995, the trust fund has paid for the

majority, often over 80%, of Superfund program activities for several past years. In the

current year, the fund supports about 50% of the program costs, while the proposal for

FY2004 anticipates the trust fund paying for about 21% of program costs, with the general

fund paying the balance. In future years, general appropriations may have to pay the majority

of, if not all, program costs. So the contribution of general revenues to the annual

appropriation has increased in recent years, from $250 million annually in FY1993 to

FY1998, to about $600 to $700 million in FY2000 to FY2003 and $1.1 billion in FY2004.

Some have criticized this fundamental change in policy, maintaining that it diminishes the

responsibility of polluters, under the principle that the “polluter pays,” and instead spreads

pollution costs across the economy, by funding them as costs to the general Treasury. Others

dispute this, claiming that responsible parties continue to pay through negotiated cleanup

settlements. (For further discussion of the trust fund, see CARS Report RL31410, Superfund

Taxes or General Revenues: Future Funding Options for the Superfund Program.)

During March 25th consideration of the FY2004 Budget Resolution (S.Con.Res. 23),

the Senate tabled an amendment to reinstate the taxes supporting Superfund. It would have

increased the total federal revenues by at least $15 billion over 10 years and reduced the

deficit accordingly, according to its sponsor, Senator Frank Lautenberg.

The level of appropriations for FY2004 and the role of general revenues will be a 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.

Leaking Underground Storage Tanks

The President’s FY2004 budget sought, and the House and Senate Committee approved,

$73 million, equal to current year funding, for the Leaking Underground Storage Tank

(LUST) program, which assists states in addressing substandard underground petroleum

storage tanks. On the floor, the House adopted an amendment that increases this funding by

$7.3 million, an amount transferred from the Science and Technology Account.

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 $2.2 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

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balance by states. (For further discussion, refer to CARS Report 97-471 ENR, Leaking

Underground Storage Tank Cleanup Issues.)

State and Tribal Assistance Programs

For the State and Tribal Assistance Grants Account (STAG), the account that supports

state and local government activities including administering programs and capital

construction, the FY2004 request has been again particularly controversial. The President

requested $3.12 billion, which is $714 million (or 19%) less than the current funding level

of $3.83 billion. Reductions in funding for the Clean Water State Revolving fund and

targeted grants are responsible this planned decrease. The House passed $3.6 billion; the

Senate Committee approved $3.8 billion. The chief elements of the STAG request include:

$850 million, as compared to the current level of $1.34 billion, for State

Revolving Funds (Clean Water);

! $850 million for State Revolving Funds (Drinking Water), slightly more

than the current $844 million;

! $50 million for Mexican Border infrastructure projects, currently funded at

$50 million;

! $40 million for Alaska Native Village water infrastructure projects, current

year funding for which is $43 million; $3 million requested for remediating

above-ground storage tanks in Alaska;

! $8 million for one targeted drinking water project in Puerto Rico; $314

million for 483 individually earmarked grants was provided in FY2003;

! $1.2 billion, as compared to the current $1.15 million, for traditional grants

to states for their administration of various environmental programs; and,

! $180 million for the Brownfields program grants, including $120 million

for assessment grants and to capitalize revolving loan funds; total grant

funding for the current year is $140.5 million.

!

In making its recommendations, the House added $350 million to the Clean Water

State Revolving Loan Fund, for a total of $1.2 billion. In addition, the House included $180

million for a targeted program “making grants to communities for construction of drinking

water, wastewater, stormwater infrastructure and for water quality protection.”

The Senate Committee also increased this account, approving $1.35 billion for the

Clean Water State Revolving Fund. It included $130 million for 187 targeted project grants.

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

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

By statutory design, the federal contribution to meeting most of these needs has been through

capitalizing state revolving funds from which states loan monies to communities. Since most

localities are now borrowing their funding, any remaining direct grants listed above for

special projects have become controversial. The total national needs remain great. EPA’s

1996 needs survey for clean water SRF monies estimated remaining needs at $139.5 billion

to $200 billion through the year 2016, while sewerage agencies estimate funding needs may

be as high as $330 billion. A September 2002 EPA “Gap Analysis” estimates that $390

billion will be needed over the next 20 years to replace and build wastewater facilities. The

needs of small communities remain a special component of this problem. A November 2002

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Congressional Budget Office report, Future Investment in Drinking Water and Wastewater

Infrastructure, included two sets of projections of 20-year costs for wastewater systems. A

low-cost case included an estimate for average annual investment costs of $13.0 billion for

wastewater, compared to an estimate of $20.9 billion under the high-cost case.

One estimate has spotlighted the FY2004 water SRF request even further. 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 needs are added in (they

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 about $480 billion. WIN

foresees a $23 billion per year funding gap: $12 billion for wastewater and $11 billion for

drinking water capital needs.

Recognizing a shortfall, the FY2004 budget presentation states that the proposed $850

million annual level for the Clean Water SRF will be sustained at this annual level until 2011

for a total of $4.4 billion, which is expected to reduce the $21 billion gap between current

capital funding and future EPA-estimated needs. According to EPA budget justifications,

“This continuing investment in the CWSRF is expected to increase the long-term target

revolving level of the CWSRF from $2 billion per year to $2.8 billion per year, a 40 percent

increase.”

While much attention is devoted to the role of federal appropriations in current

wastewater infrastructure funding, many believe that legislative modifications are necessary.

Reauthorization bills have been introduced. (See CARS Issue Brief IB10108, Clean Water

Issues in the 108th Congress, for discussion).

In February 2001, EPA issued the second drinking water needs survey, which projected

that public drinking water systems need to invest $151 billion over 20 years. Part of the

increase is attributable to new regulations and about half is due to installation and

rehabilitation of transmission and distribution systems.

For state administrative grants, the President’s FY2004 budget sought $1.20 billion,

$128 million, or 12%, more than current level of $1.15 billion. These grants fund state

programs that administer various environmental protection programs. The FY2002 and

FY2003 budget requests contained proposals for new enforcement grants to the states which

the appropriators did not approve. The FY2004 presentation does not contain a similar

proposal.

During consideration of the FY2004 Budget Resolution (S.Con.Res. 23), the Senate

adopted a non-binding amendment opting to increase funding for clean water and drinking

water revolving funds by as much as $3 billion. However, this provision was not included

in the final resolution.

Conclusion

In seeking lower funding for EPA and for water infrastructure in particular, the FY2004

request for EPA was similar to proposals of the last several years. In each case, the

Administration sought to greatly reduce popular direct grants for wastewater infrastructure.

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Congress responded by reinstating most of these funds during these years. As for Superfund,

another popular program, the proposal sought slightly higher funding, but not as high as

recommended by Resources for the Future and others. Unaddressed is the condition of the

Superfund Trust Fund itself, whose funding source ceased in 1995 and whose balance is

disappearing. In the absence of a renewal of the supporting tax, the Superfund program is

now almost fully funded by the general treasury.

The proposal would advance several Administration initiatives and reflect current

policy. For instance, it asked for $210 million for the Brownfields program to implement

recent congressionally mandated provisions. Funding is requested to advance the Clear Skies

initiative and more funds are requested for state programs. To understand climate change,

the Administration sought about the same level as current funding.

LEGISLATION

S.Con.Res. 23 (Nickles)

Congressional Budget Resolution for FY2004. Passed Senate March 26, 2003, amended,

including EPA amendments. The Senate vitiated previous S.Con.Res. 23 passage after

incorporating S.Con.Res. 23 in H.Con.Res. 95. Conferees did not include EPA amendments

in conference version.

H.R. 2861 (Walsh)

VA-HUD-Independent Agencies Appropriations Bill for FY2004. Reported from the

Committee on Appropriations, July 21, 2003 (H.Rept. 108- 235). Passed House July 25.

S. 1584 (Bond)

VA-HUD-Independent Agencies Appropriations Bill for FY2004. Reported from Committee

on Appropriations September 5, 2003 (S.Rept. 108-143).

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

U.S. Senate. Committee on Appropriations. Subcommittee on VA-HUD-Independent

Agencies. Environmental Protection Agency FY2004 Budget. March 20, 2003.

Washington, GPO. (To be published)

U.S. House of Representatives. Committee on Appropriations. Subcommittee on VA-HUDIndependent Agencies. Environmental Protection Agency FY2004 Budget. April 2,

2003. Washington, GPO. (To be published)

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CHRONOLOGY

02-03-03 — President submits FY2004 budget, including $7.7 billion for EPA.

03-20-03 — Senate Committee on Appropriations, Subcommittee on VA-HUD-Independent

Agencies, conducts hearings on EPA’s FY2004 budget proposal.

04-02-03 — House Committee on Appropriations, Subcommittee on VA-HUD-Independent

Agencies, conducts hearings on EPA’s FY2004 budget proposal.

07-15-03 — House Committee on Appropriations, Subcommittee on VA-HUD-Independent

Agencies, recommends $8.0 billion for EPA.

07-21-03 — House Committee on Appropriations approves $8.0 billion for EPA.

07-25-03 — House passes H.R. 2861, including $8.0 billion for EPA.

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