Environment
Budget Highlights
FY2006 Request

March 3, 2005

Analysis prepared by Committee on Energy and Commerce Democratic Staff

Superfund Program

The President’s FY2006 budget request for the Superfund program is a reduction of $102 million from his budget request last year. In FY2005, the President sought $1,381,416,000 for the Superfund program. In this year’s FY2006 budget, the President is requesting $1,279,333,000 for the Superfund program.

The request fails to provide any justification for a reduction at a time when the lack of adequate funding is already keeping many new cleanup actions from being started and in many cases is forcing ongoing cleanups to be stretched out by years. On December 2, 2004, Assistant Administrator Thomas Dunne, the top Superfund program official, commented publicly in a speech at the University of Virginia on the effects of the funding shortfall:

“For the last three years, we haven’t started cleanup at some new sites. If we assume that EPA’s budget will remain flat for the foreseeable future, construction funding could be delayed at more and more sites. Within a few years, unfunded cleanup work could total several hundred million dollars.”

This trend is clear and it comes at the expense of public health and the environment and economic redevelopment in our local communities. In June 2002, the Environmental Protection Agency (EPA) Inspector General reported a funding shortfall of $225 million that was slowing the cleanup of the Nation’s most toxic waste sites listed on the Superfund National Priorities List (NPL). Thirty-three sites in 19 states were being adversely affected. The Agency then scrambled to de-obligate and re-certify unexpended prior year funds. On October 25, 2002, the Inspector General reported the final funding shortfall for FY2002 with respect to remedial actions and long-term remedial action responses. The Inspector General concluded that ongoing cleanups at five sites were inadequately funded in the amount of $23 million. An additional seven sites received no funding at all and the shortfall amounted to $91.8 million. The total shortfall for FY2002 was thus $114.8 million.

On January 7, 2004, the Inspector General released its report of the funding shortfall for FY2003. This report identified a funding shortfall of $174.9 million dollars which was dramatically slowing the pace of cleanup at 29 sites in 17 states. In addition, internal EPA documents released by the Inspector General showed the financial stress that was confronting all aspects of the cleanup program. Shortfalls in funding were documented in (1) new start construction projects; (2) inadequately funded ongoing projects; (3) inadequately funded removal projects; and (4) inadequately funded pipeline projects.

The Inspector General observed the following:

“When funding is not sufficient, construction at National Priority List (NPL) sites cannot begin; cleanups are performed in less than an optimal manner; and/or activities are stretched over longer periods of time. As a result, total project costs may increase and actions needed to fully address the human health and environment risk posed by the contaminants are delayed.”

It has been widely reported that the funding shortfall for FY2004 reached approximately $250 million.

These funding shortfalls are a significant cause in the dramatically reduced number of Superfund sites that have completed construction during President Bush’s Administration.

During the last four years of the Clinton Administration, the Superfund program completed all construction activities at an average of 87 sites per year. The Bush FY2002 and FY2003 budgets called this “dramatic progress.” In FY2001, however, the Bush Administration completed construction at only 47 sites -- a 46 percent reduction from the average in the last four years of the Clinton Administration and a 39 percent shortfall in the Agency’s goal for FY2001.

The slowdown of Superfund cleanups has continued. The EPA attained 42 construction completions in FY2002, 40 construction completions in FY2003, and 40 construction completions FY2004. The slowdown will continue in FY2005 and FY2006 since the Administration’s budget projects only 40 construction completions each year.

Brownfields

On January 11, 2002, President Bush signed the Small Business Liability Relief and Brownfields Revitalization Act (P.L. 107-118). The Brownfields Revitalization Act placed a legislative framework around the Environmental Protection Agency Brownfields program which was initiated in the mid-1990s during the Clinton Administration.

The Brownfields Revitalization Act added a new Section 104(k) to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (Superfund) to provide explicit authorization for Brownfields funding. For each fiscal year from 2002 through 2006, the law authorized $200,000,000 to be appropriated for Brownfields grants for site assessment, remediation, and revolving loan funds. The eligible recipients of these grants are the following entities:

• Local governments
• Land clearance authority operating under supervision and control of local government
• Government entity created by state legislature
• Regional councils or group of general purpose units of local government
• Redevelopment agency sanctioned by a state
• States
• Indian tribes
• Alaska Native Regional Corporation
• Non-Profit organizations for remediation grants

The EPA Brownfields program has been significantly underfunded by the President’s budget requests and further cut in the actual appropriations provided by the Congress.

In FY2004 only about one in three Brownfields proposals received Section 104(k) Brownfields grants for site assessment, remediation, or revolving loan funds. In a letter to Members of Congress dated June 22, 2004, the U.S. Conference of Mayors, the National Association of Development Organizations, the National Association of Industrial and Office Properties, and seven other organizations called for full funding of the EPA Brownfields grant program and stated the following:

“Still, EPA has been forced to turn away more than two-thirds of the applicants for federal Brownfields assessment and cleanup funding due to limited funds. As a result, hundreds of thousands of sites remain idle, blighting neighborhoods and undermining local revitalization.”

The Government Accountability Office has estimated there are 500,000 Brownfields sites across the country that need attention. These sites include abandoned or underutilized warehouses, gas stations, salvage yards, vacant lots, and other lightly contaminated properties.

The EPA’s press release of June 15, 2004, stated that 219 applicants were selected to receive 265 grants for a total grant expenditure of $75.4 million. The press release, however, neglected to mention that there were 755 grant proposals in FY2004 from 504 applicants. Thus, 285 local governments or other applicants applied for a Section 104(k) Brownfields grant representing 490 projects that were not funded.

Both the President’s budget requests and the Congressionally enacted levels fall far short of the funding needed and authorized by the Small Business Liability Relief and Brownfields Revitalization Act.

While the Conference of Mayors praised the effectiveness of previous Brownfields grants in leveraging billions of cleanup and redevelopment monies, it stated that the Administration’s FY2005 budget request “dramatically underfunds the most important and effective component of EPA’s Brownfields program -- the grants to localities and non-profit organizations for site assessments and cleanup.”

The President’s budget for FY2006 continues the pattern of the last several years of underfunding the Brownfields grant and loan program. In FY2004, President Bush requested $120.5 million for the Section 104(k) Brownfields grants and $29 million for EPA administrative cost. Similarly, in both FY2005 and this year, the President is seeking $120.5 million for Section 104(k) Brownfields grants plus approximately $30 million in administrative costs. These Presidential budget requests are approximately $50 million less than the authorized amount.

These inadequate funding requests were slashed 23 percent by Congress in FY2004 to $92.9 million for Section 104(k) grants and $24.9 million in administrative costs. For FY2005, Congress cut the Brownfields grant appropriation even further to $89.3 million and $24.8 million for administrative costs -- a reduction of 24 percent from the President’s budget request.

Safe Drinking Water

Public water systems must invest in infrastructure improvements to ensure that they can deliver safe drinking water to consumers. In February 2001, the EPA released the results of a comprehensive survey of our Nation’s infrastructure needs. The key finding of the survey is that “$102.5 billion is needed now to ensure the continued provision of safe drinking water” and a total of $150.9 billion over the next 20 years. The EPA budget justification for FY2003 explicitly recognized the large gap between the budget request and the needs of our public water system as follows:

“According to the Agency’s 2001 Drinking Water Infrastructure Needs Survey, the total 20-year national infrastructure needed is $150.9 billion, $102.5 billion of which is needed to ensure the provision of safe drinking water under existing and recently proposed regulations. The need is even more pressing in the face of the projected increases of population growth and the subsequent increase in demand for safe drinking water over the next several decades.”

Since the submission of the FY2003 budget, two additional reports have supported the need for tens of billions of dollars of additional drinking water infrastructure funding.

In April 2002, the Congressional Budget Office (CBO) testified before the Subcommittee on Environment and Hazardous Materials that their mid-point estimate of the gap between what public water systems are now spending and what needs to be spent annually over the next 20 years is $4 billion a year or $80 billion over 20 years. This testimony was reaffirmed in a CBO Report issued May 24, 2002, entitled “Future Investment in Drinking Water and Wastewater Infrastructure.”

On September 20, 2002, the EPA released a report entitled “The Clean Water and Drinking Water Infrastructure GAP Analysis” which found that for drinking water the funding gap between projected spending, assuming no growth in revenues, was $265 billion for the 20-year period from 2000 to 2019. Assuming a three percent annual real growth in revenues the report indicates that the gap on the drinking water side could possibly be reduced to $53 billion dollars.

The huge funding needs documented in the EPA and CBO reports compares to the $850 million budgeted in FY2006 by the Bush Administration for the state drinking water revolving loan fund. Local governments, states, drinking water suppliers, and the EPA all agree that there is a tremendous resource gap – which will continue to grow – for drinking water infrastructure funding necessary to protect the public health. President Bush’s FY2006 budget request of $850 million for the state drinking water revolving loan fund freezes this important program with no adjustment for inflation. The request is $150 million less than the amount authorized by the Safe Drinking Water Act Amendments of 1996.