Superfund:

Funding and Reported Costs of Enforcement and Administration Activities

GAO-08-841R: Published: Jul 18, 2008. Publicly Released: Aug 18, 2008.

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The Environmental Protection Agency (EPA) estimates that one in four Americans lives within 3 miles of a hazardous waste site. To clean up these highly contaminated sites, the Congress established the Superfund program under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 1980. EPA, the principal agency responsible for administering the Superfund program, has since identified more than 47,000 hazardous waste sites potentially requiring cleanup actions and has placed some of the most seriously contaminated sites on its National Priorities List (NPL). Through the end of fiscal year 2007, EPA had classified 1,569 sites as NPL sites. Cleanup efforts at NPL sites are typically expensive and can take many years. There are two basic types of cleanup actions: (1) removal actions--generally short-term or emergency cleanups to mitigate threats--and (2) remedial actions--generally long-term cleanup activities. Among other efforts, EPA may respond to and provide technical support for emergency actions, collect and analyze site data, and design and construct remedies, or oversee the work of others. However, the parties responsible for contributing to the contamination of a hazardous waste site are also primarily responsible for conducting or paying for the cleanup of the site. Responsible parties include current or former owners or operators of a site or the generators and transporters of the hazardous substances. CERCLA authorizes EPA to compel the responsible parties to clean up contaminated sites and also allows EPA to conduct cleanups and then seek reimbursement from the responsible parties. One of EPA's goals is ensuring that, to the extent possible, parties who are responsible for the contamination perform or pay for cleanup actions. In some cases, however, parties cannot be identified or may be unwilling or financially unable to perform the cleanup; we previously found that the number of NPL sites without viable responsible parties may be increasing. In these cases, EPA can assume responsibility for site cleanup and seek reimbursement from any responsible parties that can be identified. The states may also play a significant role in cleaning up hazardous waste sites. Most states have established programs to help address hazardous waste sites, although many states have limited capacity to address costly and complex sites. To fund program activities, CERCLA established a trust fund that was financed primarily by taxes on crude oil and certain chemicals, as well as an environmental tax assessed on corporations based upon their taxable income. Although the authority for these taxes expired in 1995, some tax revenues have continued to accrue to the fund as audits of past years' tax returns have led to the recovery of Superfund taxes previously owed by companies. In addition, the trust fund continued to receive revenue--also referred to as receipts--from various other sources, including appropriations from the general fund. EPA receives annual appropriations from the trust fund for program activities; since 1981, Superfund appropriations have totaled over $32 billion in nominal dollars, or about $1.2 billion annually. CERCLA authorizes EPA to use its Superfund appropriation to conduct cleanup actions, and the agency's Office of Solid Waste and Emergency Response (OSWER) is accountable for achieving Superfund's cleanup goals. In this context, Congress asked us to examine the (1) sources of funding for the Superfund trust fund and (2) allocation of these resources to Superfund program activities, particularly enforcement and administration.

The Superfund trust fund has received revenue from four major sources: taxes on crude oil and certain chemicals, as well as an environmental tax assessed on corporations based upon their taxable income; appropriations from the general fund; fines, penalties, and recoveries from responsible parties; and interest accrued on the balance of the fund. The contribution of each of these sources changes from year to year, although trends are evident when comparing the composition of trust fund revenue during the periods before and after the expiration of Superfund's taxes. For fiscal years 1981 through 1995, after which Superfund-related taxing authority expired, taxes accounted for about 68 percent of trust fund revenues; appropriations from the general fund for 17 percent; interest for 9 percent; and fines, penalties, and recoveries for 6 percent. In contrast, from fiscal years 1996 through 2007, taxes accounted for about 6 percent of trust fund revenues; appropriations from the general fund for about 59 percent; interest for about 16 percent; and fines, penalties, and recoveries for about 19 percent. Each year, appropriations laws stipulate the level of the annual EPA Superfund program appropriation from the trust fund, and, regardless of the balance of the fund, EPA can only expend what is appropriated. For fiscal years 1981 through 2007, the Congress appropriated an annual average of $1.2 billion in nominal terms to EPA's Superfund program, although the annual level of appropriated funds has declined in recent years when adjusted for inflation. The balance of the trust fund also declined from $4.7 billion at the start of fiscal year 1997 to $173 million at the start of fiscal year 2007. In addition to setting an overall level of funds available for EPA's Superfund program, the Congress has transferred portions of EPA's Superfund appropriation to other agencies or programs that support site cleanup. For fiscal years 1999 through 2007, EPA spent 77 percent of its Superfund monies on remedial and removal activities and almost all of the rest on enforcement and administration activities. During this period, overall program expenditures declined nearly 30 percent in constant dollars, from $1.8 billion in fiscal year 1999 to $1.3 billion in fiscal year 2007, mostly due to a decline in expenditures for remedial activities. Enforcement expenditures made up the largest portion of expenditures after site cleanup activities for fiscal years 1999 through 2007. EPA's annual enforcement expenditures fell from $243 million to $187 million over this period, but they consistently accounted for between 13 percent and 15 percent of total Superfund expenditures. Superfund program administration costs also declined from fiscal year 1999 through fiscal year 2007, from $143 million to $132 million. Although declining in constant dollars, these costs increased from 8 percent to 10 percent of total Superfund expenditures during this period.

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