97019: Environmental Protection Agency: FY1998 Budget

Martin R. Lee
Environment and Natural Resources Policy Division

Updated January 12, 1998

CONTENTS

SUMMARY

On February 6, 1997, the President requested $7.7 billion for the Environmental Protection Agency (EPA) in FY1998. On July 16, the House approved $7.2 billion in H.R. 2158; the Senate approved $7.0 billion on July 17, 1997. The conferees recommended $7.4 billion on September 30, 1997, and the President signed the legislation as P.L. 105-65 on October 27, 1997.

EPA appropriations are included in the annual VA-HUD-Independent Agencies Appropriation Bill. Two major issues were whether Superfund cleanups should be accelerated in the absence of statutory reforms and whether the requested state assistance funds are adequate. Because the House and Senate were in agreement on not granting the requested 50% increase in Superfund and in passing increased state funds, the chief conference issue focused on the roughly $225 million difference between the House and Senate versions.

Beginning in FY1996, the appropriations committee established a new account structure for EPA. For the new Science and Technology account, the FY1998 budget request sought $614 million; the House passed $623 million and the Senate passed $600 million. Both actions include recommendations for additional funds for ozone and particulates health effects. The conferees approved $631 million, including $49.6 million for particulate matter research.

For the Environmental Programs and Management account, the budget sought $1.9 billion; the House, Senate, and the conferees approved $1.8 billion. The House adopted report language expressing concern with EPA's perceived inflexibility in implementing the enhanced vehicle inspection and maintenance program; the Senate did not, and the conferees agreed to include this language. The Senate funded the Chemical Safety and Hazard Investigation Board, not funded by the House. The conferees included $4 million for the Chemical Safety Board.

To clean up toxic waste sites under Superfund, the budget proposal sought $2.1 billion, $694 million, or 51% more than current year funding. Citing continuing program management problems and the need for statutory reform, both chairmen of the subcommittee on VA-HUD-Independent Agencies questioned this increase. Compromising with the Administration, the conferees recommended $1.5 billion for the Superfund program for FY1998, and agreed to provide another $650 million in FY1999 if the Superfund program is reauthorized by May 15, 1998.

The needs of states and localities to address major capital wastewater and drinking water needs remains a congressional concern. To assist states and tribal governments, the budget sought $2.8 billion, 4% less than current year funding; the House approved $3.0 billion, the Senate $3.1 billion, and the conferees $3.2 billion. For the most part, the differences were in the clean water state revolving funds ($1.2 billion in the House/$1.35 billion in the Senate/$1.35 billion in conference), the newly established drinking water state revolving funds ($750 million in the House/$725 million in the Senate/$725 million in conference), state and tribal grants ($750 million in the House/$735 million in Senate/$745 million in conference), and special needs grants ($153 million in the House /$82 million in the Senate/$253 million in conference.

MOST RECENT DEVELOPMENTS

On February 7, 1997, the President requested $7.7 billion for the Environmental Protection Agency in FY1998. In final approval of the FY1998 Budget Resolution, H.Con.Res. 84, Congress assumed full funding of the Superfund program contingent on reauthorization policies being worked out. The House Appropriations Subcommittee on VA-HUD-Independent Agencies made its recommendations on June 25 and the House Appropriations Committee approved (H.Rept. 105-175) the bill on July 8, 1997, at $7.2 billion, $413 million less than requested. The House Committee denied the request for the Superfund increase. The full House passed H.R. 2158 on July 16, approving $7.2 billion for EPA, after adopting an amendment reducing research funding by $27 million . On July 17, 1997, the Senate Appropriations Committee approved (S.Rept. 105-53; S. 1034) $7.0 billion. The Senate passed H.R. 2158 on July 22, 1997, after substituting the provisions of S. 1034. Conferees were appointed. On September 3, 1997, the House voted to instruct the House members of the conference to insist on the House-passed Superfund level. The conferees recommended $7.4 billion overall in H.Rept. 105-297 on September 30, 1997; the President signed the legislation as P.L. 105-65 on October 27, 1997.

BACKGROUND AND ANALYSIS

The total FY1998 EPA request of $7.7 billion was roughly $846 million, or 12%, more than the current FY1997 funding of $6.8 billion. Figure 1 shows EPA funding by appropriation accounts by major category since FY1983.

The roughly $846 million dollar increase requested by the President reflected additional funds of $54 million for buildings, $251 million for program management, $62 million for science and technology, and $700 million for Superfund. Under the proposal, funding would have decreased $117 million, or 4%, from the State and Tribal Assistance Grants account, which incorporates wastewater/drinking water state revolving funds (SRFs) monies and traditional state program grants. This account included $1.8 billion for wastewater SRFs, $725 million for the recently authorized drinking water SRFs, $150 million for Mexican Border and $15 million for Alaskan projects, as well as $113 million for traditional grants to states for administering their programs.

Congressional efforts to reduce the budget deficit were a major factor affecting EPA's final FY1998 funding, as the needs of environmental programs were balanced against many competing national needs for limited federal dollars. A significant issue was whether the allocations for the VA-HUD appropriations subcommittees could accommodate the proposed EPA increase aas well as those increases for other departments and agencies. In approving the FY1998 Budget Resolution, H.Con.Res. 84, Congress referenced funding of EPA's operating programs at the requested level and full funding of the Superfund program contingent on reauthorization policies being worked out. At April 8 hearings, Senator Bond, Chair of the Senate Appropriations Subcommittee on VA-HUD-Independent Agencies, cited various pressures on the Subcommittee from other programs, including housing, veterans, and disaster programs. A House Science Subcommittee conducted overviews of EPA's science and technology request on March 12 and April 9. The forefront issue was how to implement many environmental protection requirements efficiently. The flexibility of those regulated -- business, industry, states, communities -- also continues to be a major concern.

Figure 1. EPA Appropriations FY 1983 to FY1998 Request, House, Senate and Conference Actions

Prepared by CRS P.L. 104-134 funded EPA until the end of FY 1996. Temporary spending measure funded EPA until April 24, 1996 at a level of $5.7 billion. P.L. 104-134 funded EPA through the end of FY1996 at a level of $6.53 billion.

A=Administration Request H=House Passage S=Senate Passage. C=House-Senate Conference

LEGISLATION

FY1996 marked the beginning of a new appropriation account structure (see Figure 1). Within the many EPA programs, there are numerous issues with respect to implementing and administering the media protection programs, wastewater treatment funding, and Superfund.

Operating EPA's Programs

About one-third of EPA's appropriation is for conducting its operating programs, the heart of its regulatory and standard-setting mission. These programs address directly the protection of environmental media (air, water, etc.). The requested appropriation included increases for most media programs in the program management account, and the science and technology and buildings and facilities account, as well as the Office of Inspector General and EPA oil response activity.

Science and Technology

The Science and Technology account incorporates elements of the former research and development account (extramural research) as well as EPA's inhouse research, development, and technology efforts. The FY1998 request of $614.0 million was about 11% more than current year funding of $552.0 million; in approving EPA's funds, the House Appropriations Committee added-on $42 million for total of $656 million. The full House adopted an amendment reducing this account by $27 million and the Senate Appropriations Committee recommended, and the Senate passed, $600 million. The conferees recommended and P.L. 105-65 included $631 million.

Increasingly over the past few years, environmental research has been recognized as multimedia in scope rather than limited to a single medium. The change in the appropriation account and EPA's own management of research and development reflect this. EPA's FY1998 budget justification stressed that the science and technology program would strengthen the basis for new regulations related to the passage of the Safe Drinking Water Act Amendments of 1996 and the Food Quality Protection Act of 1996. In addition, EPA anticipated developing ways to integrate monitoring measurement with data management and to communicate risks to the public. The budget also stressed research related to assessing health risks to children, enhancing environmental measurement and monitoring capabilities, and developing research on particulate matter, endocrine disruptors, sediment contamination, and global change.

A major issue associated with this account was the status of research to support EPA promulgation of numerous air quality regulations and standards, including the current controversial promulgation (promulgated July 18) of revised ozone and particulate standards. Responding to this concern, the House included $40 million more for research on the health effects of particulates ($35 million transferred to NIEHS) and ozone ($5 million). It also adopted language authorizing EPA to grant money for particulates research to states, tribes, and local air pollution control agencies without requiring matching funds. Taking a different approach, the Senate Appropriations Committee added on $8 million to the $26.6 million requested for particulate matter (PM) research and stipulated the creation of up to five university-based research centers. It also directed EPA to contract with the National Academy of Sciences to develop a research agenda to allocate these funds. The conferees recommended $631 million for the Science and Technology account, including $49.6 million for a PM research program and health effects research plan in lieu of language contained in the House bill.

The House adopted an amendment that would prohibit agencies funded under the bill from making grants to universities that prohibit ROTC or military recruiting; the Senate version of H.R. 2158 did not contain this provision, and the conferees deleted this provision.

Environmental Programs and Management

The Environmental Programs and Management account reflects the heart of the Agency's regulatory, standard setting, and enforcement efforts for various media programs such as water quality and air quality and for hazardous waste management. The FY1998 budget sought $1.9 billion, $135 million, or 7%, more than current year funding. The House approved $1.8 billion, including increases for over 30 specific activities and a general reduction of $65.5 million. The Senate recommended $1.8 billion including numerous increases for particular activities and a general reduction of $36 million. Both actions reduced the budget request for the Montreal Protocol Fund by $9 million to a level of $12 million for FY1998. Also, both actions did not approve major increases for the Climate Change Action plan, funding the program at roughly the current level.

The conferees recommended $1.8 billion for this account, including a reduction of $9 million from the Montreal Protocol Multilateral Fund, $54 million from Climate Change Action Plan programs, and a general reduction of $55.1 million.

Office of Inspector General

The budget requested $28 million for the Office of Inspector General (OIG), the same as current year funding and as approved by the House, Senate and the conferees.

Buildings and Facilities

The $141 million requested was substantially higher than previous years and reflects two major facility-related efforts. One, $3 million, was directed to EPA's moving to a new headquarters in the Federal Triangle, Washington, D.C.; the other, $122 million, was for the construction of a consolidated laboratory and office complex at Research Triangle Park, NC. Other capital expenses involve EPA research facilities. The House approved $40.7 million more than requested, all for the Research Triangle Park facility. The Senate Appropriations Committee, however, recommended $19.4 million, essentially denying the request for Research Triangle Park, which was agreed to on the Senate floor. In its action, the conferees recommend $109 million for this account, including $90 million for the new research facility. Conferees also included bill language which raises the authorized construction cost ceiling for this project to $273 million, but directed EPA to provide a cost/benefit analysis justifying the inclusion of certain facilities in the original construction plan prior to expenditure of funds for those facilities.

Oil Spill Response

For EPA's oil spill response activities, the budget sought $15 million, the same as current year funding and as approved by the House, the Senate and conferees.

Addressing Toxic Waste Sites Under Superfund

The most controversial budget issue was the Administration's plan to expand toxic waste sites cleanup under Superfund. The budget sought $2.0 billion, 50% greater than current FY1997 funding; Superfund represents roughly 25% of the Agency's resources. The House did not approve the proposed increase, recommending $1.5 billion; the Senate approved $1.4 billion; and the conferees recommended $1.5 billion for FY1998. On September 3, 1997, the House had voted to instruct the conferees to insist on the House-passed amount. Both bodies approved the President's request of $85 million for the Brownfields program. At the Senate Appropriations Subcommittee on VA-HUD- Independent Agencies April 8, 1997 hearings, the Subcommittee Chair, Senator Bond, announced his opposition to this expansion. In the House, Subcommittee Chair Jerry Lewis raised serious questions about the proposed increase. The request and congressional appropriation actions were concurrent with efforts to reauthorize the Comprehensive Environmental, Response, and Compensation Act -- Superfund's authorizing statute. According to the budget justifications, EPA would also expand its Brownfields program, which redevelops urban hazardous waste sites.

The House Appropriations Committee cited its budget allocation as being inadequate to fund the requested Superfund increase but also referenced the FY1998 Budget Agreement's language which assumes funding of the expansion if "policies can be worked out." There has been differences over what this language means with some arguing that the language might refers to a general agreement over whether to reauthorize Superfund. In referring to this disagreement, the House Appropriation Committee stated that "any interpretation of working out policies other than reauthorizing this important program defies logic if not credibility." The Senate Appropriations Committee did not think the program deserved the proposed increase, noting that it rates relatively low in respect to risk and that it continues to have significant management problems.

Given that Superfund's 17-year history has been dominated by studies and design, the significant increase in actual cleanup work proposed with the budget request would have been a pivotal change. With the anticipated 150 new cleanup starts in FY1998, EPA predicted that by the year 2000, approximately two-thirds of all National Priority List sites would be cleaned up.

Also part of the request was an $86 million request for cleaning up certain urban sites, Brownfields, which have development potential; the House Committee approved this request. While essentially granting the Administration-requested $50 million increase for Brownfields, the House included bill and report language restricting its use for site assessment and not for the expanded activities the Administration had requested. The conferees approved the full budget request for the Brownfields program, but prohibited the use of Brownfields monies for revolving loan funds unless specifically authorized in subsequent legislation.

The issue was whether such a significant appropriation increase should be granted in the absence of liability, cleanup standards, and other reforms. As of February 1997, GAO continued to place the program as a "high risk" for fraud, waste, and abuse. GAO found that EPA has not taken relative risk into consideration in establishing cleanup priorities, pursued reimbursement effectively, and controlled contractor costs. While acknowledging some improvements, GAO saw the need for more progress. Congressional leaders have stated their desire to seek reforms in this Congress. Senator Bond and Representative Lewis cited the absence of reform and continued problems with EPA's management of the programs as reasons for opposing the requested 50% increase. In views and estimates reports to the budget committees, the Chair of the Senate Environment and Public Works and the House Transportation and Infrastructure committees also opposed the increase in Superfund appropriations.

Notwithstanding these concerns, the conferees responded to a late-coming veto threat and agreed to provide EPA with $2.1 billion for the Superfund program. However, $100 million of this amount will not become available until September 1, 1998, and another $650 million will not become available until FY1999, and then only if the Superfund program is reauthorized by May 15, 1998.

Leaking Underground Storage Tanks

The FY1998 budget also sought $71 million for the Leaking Underground Storage Tank program( LUST), a program which assists states in administering their individual programs to address substandard underground storage tanks. The requested level was $11 million, or 19%, greater than current year funding. The House did not approve this increase, recommending funding of $60 million, roughly the same as current year funding. The Senate recommended $65 million, and the conferees agreed to this amount. In related action, P.L. 105-34, H.R. 2014/S. 949, the tax bills, reinstated the tax on gasoline that supports the LUST trust fund.

The status of state LUST programs was a significant issue. Many states are finding it difficult to finance their programs. At the same time, the roughly $1 billion balance in the Treasury's LUST Trust Fund, from which the appropriation is actually made, has led some to call for allowing greater use of the Fund balance by states. On April 23, 1997, the House passed H.R. 688, which seeks to broaden the uses of the Trust Fund and ensure that 85% of the appropriation is made available to states. EPA generally opposes the bill and its companion, S. 555; states and petroleum marketers support it. The conference report directed EPA to allocate at least 85% of the available funds to the states.

The FY1998 budget also proposed transferring $53 million from the fund for the underground storage tank program, the Underground Injection Control program, and the ground water protection program - all programs in the Environmental Programs and Management Account. So, the total draw on the fund could have been $124 million under this request; however, the required authorizing legislation has not been forwarded and any action is unlikely.

Assisting State and Tribal Environmental Programs

For the State and Tribal Assistance Grants account (STAG), the budget requested $2.8 billion, $117 less than FY1997 funding; the House recommended a $226 million increase. The Senate recommended a $254 million increase. Conferees approved a total of $3.2 billion for this account. Representing more than one-third of all Agency resources, this new account in FY1996 is intended to reflect more fully all resources allocated to assisting states, tribes, and local governments. The components in the President's request were:

• $1.1 billion for State Revolving Funds (Clean Water), $100 million less than current year funding. This funds capitalization of state revolving funds for municipal wastewater construction. The House added-on $150 million to the request; the Senate Committee $250 million; and the conferees approved $1.3 billion.

• $725 million for State Revolving Funds (Drinking Water), as authorized by P.L. 104-182, the Safe Drinking Water Act Amendments of 1996. The House recommended $750 million; the Senate $725 million; and the conferees $725 million.

• $150 million for Mexican Border projects, including $50 million for colonias; $128 million for special projects, including $100 million for Boston Harbor, $3 million for Bristol County, MA, $10 million for New Orleans, and $15 million for Alaskan Native villages. The House recommended $154 million for special needs, specifying 24 earmarks for specific communities; the Senate Committee recommended $82 million, specifying 18 projects. The conferees approved $75 million for Mexican Border projects plus $50 million for Texas colonias; $253 million for special needs, specifying 39 projects including $50 million for Boston Harbor, $3 million for Bristol County, MA, $8 million for New Orleans, and $15 million for Alaskan Native villages.

• $715 million for traditional grants to states for their administration of various environmental programs, an increase of $41 million, or 6%, over current year funding. The House approved $750 million for these grants; the Senate $725 million; and the conferees recommended $745 million.

The major capital needs that communities face for funding drinking water and wastewater facility construction remains the chief issue associated with this account. By statutory design, the federal contribution to most of these needs has been through capitalizing state revolving funds that loan monies to communities; this replaced earlier direct construction grants. Since most localities are now borrowing their funding, the remaining direct grants listed above for special projects have become controversial. The needs of small communities remain a special component of this problem; as part of the request for the U.S. Department of Agriculture (USDA), the President sought $608 million for the rural water and waste disposal grant and loan program; the conference report for FY1998 for USDA and related agencies recommended $577 million.

Another related issue is the flexibility afforded state and localities by federal law and EPA. Congress included special reform/flexibility in 1996 amendments to the Safe Drinking Water Act; the 105th Congress may take up reform measures for the Clean Water Act.

P.L. 105-65 (H.R. 2158)
VA-HUD-Independent Agencies Appropriations Bill, FY1998. Reported from House Committee on Appropriations July 11, 1997 (H.Rept. 105-175); passed House, amended, July 16, 1997; amended and passed by the Senate on July 22, after included the provisions of S. 1034. Conference report (H.Rept. 105-297) filed September 30, 1997. Approved by the House on October 8, and by the Senate on October 9, 1997. Signed October 27, 1997.

S. 1034 (Bond)
VA-HUD-Independent Agencies Appropriations Bill, FY1998. Reported from the Committee on Appropriations (S.Rept. 105-53) on July 17, 1997.

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

U.S. Congress. House. Committee on Science. EPA's FY1998 Science and Technology Request. Hearing held March 12, 1997. Washington, GPO. (to be published)

U.S. Congress. House. DOE, NOAA, and EPA Budgets. Hearing held April 9, 1997. Washington, GPO. (to be published)

U.S. Congress. House. Committee on Appropriations. Subcommittee on VA-HUD-Independent Agencies. EPA's FY1998 Appropriations Request. Hearings held April 15-16, 1997. Washington, GPO. (to be published)

U.S. Congress. Senate. Committee on Appropriations. Subcommittee on VA-HUD-Independent Agencies. EPA's FY1998 Appropriations Request. Hearings held April 8, 1997. Washington, GPO. (to be published)

FOR ADDITIONAL READING

CRS Issue Briefs

CRS Issue Brief 97001. Clean Water Act Reauthorization in the 105th Congress, by Claudia Copeland. (Updated regularly)

CRS Issue Brief 97020. Environmental Protection Legislation in the 105th Congress, Coordinated by Martin Lee. (Updated regularly)

CRS Issue Brief 97025. Superfund Reauthorization Issues in the 105th Congress, by Mark Reisch. (Updated regularly)

CRS Issue Brief 89102. Water Quality: Implementing the Clean Water Act, by Claudia Copeland. (Updated regularly)

General Accounting Office. High Risk Series. Superfund Program Management. GAO/HR-97-14. February 1997. 43p.