United States General Accounting Office GAO Report to Congressional Requesters October 1999 SUPERFUND Information on the Program’s Funding and Status GAO/RCED-00-25 United States GAO General Accounting Office Washington, D.C. 20548 Resources, Community, and Economic Development Division B-283841 October 29, 1999 The Honorable Trent Lott Majority Leader United States Senate The Honorable Robert Smith Chairman, Subcommittee on Superfund, Waste Control, and Risk Assessment Committee on Environment and Public Works United States Senate Nearly 20 years after the establishment of the Superfund program and total expenditures of over $14 billion for cleanups, about 42 percent of the approximately 1,400 hazardous waste sites that the Environmental Protection Agency (EPA) has designated as national priorities for environmental cleanup do not have completed cleanup remedies. The sites that EPA has placed on its list of severely contaminated sites, the National Priorities List, are located on both federal and nonfederal property. As of April 1999, 838 sites still required cleanup actions; 640 of these were nonfederal sites. The pace and cost of this cleanup effort have been the subjects of long-standing congressional debate. Cleanup actions fall into two broad categories: removal actions and remedial actions. Remedial actions usually take longer, cost more, and are designed to provide a permanent remedy. These actions progress through several steps that can be grouped in three phases: the remedial investigation and feasibility study phase, the remedial design phase, and the remedial action phase. Together, these phases have historically taken 10 or more years to complete and often cost millions of dollars. Half of these sites also require a fourth phase—operation and maintenance—for long-term cleanups of groundwater or surface water. This phase can take over 30 years. Removal actions are usually shorter-term cleanups for sites that pose immediate threats to human health or the environment. EPA has the authority to require the parties responsible for a site’s contamination to pay for its cleanup. These responsible parties may include, among others, the site’s current and former owners and parties that transported waste to the site. Responsible parties incur legal costs, called “transaction costs,” to allocate the cleanup expenses among themselves, to settle with the government, and to litigate liability for cleanups. EPA may also pay for Page 1 GAO/RCED-00-25 Superfund B-283841 site cleanups using funds from the Hazardous Substance Superfund (commonly referred to as the Superfund trust fund). The Superfund trust fund, which has also financed among other things, the Superfund program’s administrative expenses, has been financed primarily by a tax on crude oil and certain chemicals, together with an environmental tax on corporations. Although the authority for these taxes expired in December 1995, some taxes continued to be received into the trust fund because of private-sector arrears and corrections made by the U.S. Treasury when adjusting allocations made to various federal trust funds. The trust fund also continues to receive revenue from interest accrued on the unexpended invested balance, recoveries of cleanup costs from responsible parties, and collections of fines and penalties. Since 1995, the program has been funded primarily from the trust fund’s remaining balances, supplemented by appropriations from general revenues (i.e., from Treasury’s General Fund). Superfund moneys may be appropriated, transferred, or allocated to other federal agencies to accomplish Superfund activities. In addition, EPA relies heavily on contracts and assistance agreements to accomplish Superfund work. When EPA awards a contract or enters into an assistance agreement, it obligates federal funds to cover the cost of the planned work. In some instances, obligated but unspent Superfund moneys may be deobligated and used for other Superfund activities because congressional appropriations for the Superfund program remain available for use until expended. Because of your interest and the interest of the late Senator John Chafee, Chairman, Senate Committee on Environment and Public Works, in the financial status of the Superfund program and the status and cost of cleanups at the 640 nonfederal sites already on the National Priorities List, you asked us to provide information on (1) the status of the program’s funding and expenditures, including information on the Superfund trust fund to date and the moneys appropriated from it to federal agencies other than EPA for Superfund activities; (2) the costs to responsible parties for all site cleanups and these parties’ related transaction costs from 1980 through 1998, categorized before and after December 1995, when the authority for Superfund taxes expired; and (3) the cleanup status of the 640 nonfederal sites, as of April 1999, and the estimated total and annual costs to complete cleanups of these sites. Page 2 GAO/RCED-00-25 Superfund B-283841 • Taxes paid into the Superfund trust fund totaled about $13.5 billion from Results in Brief 1981 through 1998, and the unappropriated balance in the Superfund trust fund we estimated to be $1.4 billion at the end of fiscal year 1999. A total of $940 million in program funds was also deobligated for use on other Superfund projects for fiscal years 1994 through 1999, but this total is not included in the unappropriated trust fund balance. Expenditures from the trust fund totaled $14.7 billion from fiscal year 1987 through fiscal year 1998, the most recent year for which these data are available. From 1996 through 1998, approximately 45 percent of all expenditures were for contractor cleanup costs; 17 percent were for on site-specific cleanup support costs, such as supervising cleanup contractors; and 38 percent were for non-site-specific cleanup support costs, such as financial management and policy development activities. During fiscal years 1995 through 1998, about 10 percent of the funds appropriated annually for the Superfund program were appropriated from the trust fund, transferred or allocated to federal agencies other than EPA. For example, the Department of Justice receives funds to provide EPA with enforcement assistance. • From 1980 through 1998, responsible parties’ total costs for cleanup activities at sites on the National Priorities list was an estimated $15.5 billion. About 17 percent of these costs occurred after the authority for Superfund taxes expired in December 1995. The total estimated transaction costs from 1980 through 1998 incurred by responsible parties ranged from $3.2 billion to $7.6 billion, according to several studies of these costs. • Of the 640 nonfederal sites on the National Priorities List, 376 were in the remedial investigation and feasibility study phase, 133 were in the remedial design phase, and 131 were in the remedial action phase, as of mid-April 1999. We estimate, on the basis of EPA’s projections for some sites1 and actual experience at others, that cleanups will be completed at 85 percent of the sites by the end of calendar year 2008. The remainder will not be completed until well after 2008. We estimate that, in total, it will cost between $8.2 billion and $11.7 billion more than already expended to clean up the 640 nonfederal sites. Our estimate is based on EPA’s estimated cleanup costs and includes contractor cleanup costs, site-specific support costs, non-site-specific support costs, and operation and maintenance costs, including costs to maintain long-term remedies, such as pumping and treating groundwater. We also estimate that if EPA is 1 See Superfund: Half the Sites Have All Cleanup Remedies in Place or Completed (GAO/RCED-99-245, July 30, 1999). Page 3 GAO/RCED-00-25 Superfund B-283841 to finish cleaning up 85 percent of the 640 sites by the end of fiscal year 2008, its costs will average $875 million annually through 2008. In 1980, the Congress passed the Comprehensive Environmental Background Response, Compensation, and Liability Act (CERCLA), creating the Superfund program to clean up highly contaminated hazardous waste sites. CERCLA requires EPA to develop and maintain a list of sites, known as the National Priorities List (NPL), that the agency considers the most hazardous to human health or the environment. Regulations for the program are set forth in the National Contingency Plan, which provides specific guidance concerning the selection and performance of cleanup remedies. Under these regulations, sites undergoing remedial action progress through several stages in the cleanup process. In the remedial investigation stage, a site’s contamination is assessed in terms of type, extent, and associated risks to human health or the environment. A feasibility study is done concurrently with the remedial investigation and focuses on the development and analysis of cleanup alternatives for the site. A preferred remedy is then set forth in a proposed plan that is released for public comment. After the public comments are considered, a record of decision (ROD) is prepared describing the site and the chosen remedy. Next, the site proceeds to the remedial design phase, where technical plans are prepared for the chosen remedy. Finally, the site enters the remedial action phase where construction work is performed as indicated in the remedial design. When the chosen remedy has been constructed and inspected by EPA, the agency considers the site to be “construction complete.” At this point some sites proceed to an operation and maintenance stage, where additional measures are taken to maintain the implemented remedy. Funding for the Superfund program is derived from taxes and other Status of the revenues deposited in the Superfund trust fund and appropriations made Superfund Program’s available from general revenues. In total about $13.5 billion in taxes was Funding and collected from 1981 through 1998. Although the authority for these taxes expired in December 1995, some taxes continue to be received into the Expenditures trust fund because of private-sector arrears and corrections made by the U.S. Treasury when adjusting allocations made to various federal trust funds. The trust fund also continues to receive revenue from interest accrued on the unexpended invested balance, recoveries of cleanup costs Page 4 GAO/RCED-00-25 Superfund B-283841 from responsible parties, and collections of fines and penalties. Table 1 summarizes the Superfund taxes, by category and year. Table 1: Taxes Paid Into the Superfund Trust Fund, by Category, Fiscal Years 1981-98 Dollars in millions Fiscal year Tax 1981 1982 1983 1984 1985 1986 1987 1988 1989 Crude and petroleum $21 $40 $35 $38 $41 $2 $419 $503 $595 Certain chemicals 107 204 196 224 233 13 216 196 288 a a a a a a Corporate environmental 196 313 292 Annual total $128 $244 $230 $261 $273 $15 $831 $1,011 $1,175 Cumulative total $128 $372 $602 $863 $1,136 $1,151 $1,982 $2,993 $4,168 Dollars in millions Fiscal year Tax 1990 1991 1992 1993 1994 1995 1996 1997 1998 Crude and petroleum $572 $547 $550 $569 $557 $576 $160 $1 $(3) Certain chemicals 246 262 268 256 250 291 94 7 2 Corporate environmental 461 591 380 886 653 612 382 68 79 Annual total $1,279 $1,401 $1,197 $1,711 $1,459 $1,479 $636 $76 $79 Cumulative total $5,447 $6,848 $8,045 $9,757 $11,216 $12,695 $13,331 $13,407 $13,486 Note: The taxes paid from the three sources may not add to the totals shown because of rounding. a Not applicable. Source: EPA’s Budget Division. The Superfund trust fund balance at the end of fiscal year 1999 is estimated to be about $1.4 billion. This balance is available for appropriation in fiscal year 2000. EPA’s audited financial statements for fiscal year 1998 show that, as of September 30, 1998, the trust fund had an unappropriated balance of $2.06 billion.2 For fiscal year 1999, the Congress made $1.5 billion available to the Superfund program ($1.2 billion from the trust fund and $0.3 billion from general revenues), leaving $0.9 billion available for future appropriations. The fund continues to receive revenue, primarily from interest on the unexpended balance and recoveries from responsible parties that have reimbursed EPA for its cleanup costs at hazardous waste sites. There is a lag between the appropriation of funds, 2 EPA’s Fiscal Year 1998 Financial Statement, EPA, Office of the Inspector General. Page 5 GAO/RCED-00-25 Superfund B-283841 the obligation of funds, and the actual disbursement of funds. Until funds are actually disbursed, they remain in the trust fund earning interest. The total undisbursed balance in the trust fund as of July 31, 1999, was $4.6 billion. We estimate that the trust fund will receive approximately $0.6 billion in additional revenues during fiscal year 1999. See table 2. Table 2: Unappropriated Superfund Trust Fund Balance Estimated for the Unappropriated balance Estimate for fiscal year 1999 End of Fiscal Year 1999 Unappropriated balance at start of fiscal year $2,056,248,000 Appropriated from general revenues 325,000,000 Subtotal $2,381,248,000 Appropriated to Superfund program (1,500,000,000) Total unappropriated balance $881,248,000 Revenues Interest on unexpended balance 233,982,377a Recoveries 307,082,270a Fines and penalties 4,096,417a Tax revenues 18,866,431a Total revenues $564,027,495a Unappropriated balance at end of fiscal year $1,445,275,495 a Projections based on actual Treasury data current as of July 31, 1999. Source: GAO’s analysis of data from Treasury and EPA. For fiscal years 1994 through 1998, EPA deobligated $772 million in Superfund moneys. For fiscal year 1999, we projected that EPA would deobligate another $168 million, for a total of $940 million, in fiscal years 1994 through 1999. Although deobligated funds do not affect the unappropriated balance of the trust fund, they do affect its unobligated balance and the amounts EPA can obligate in any particular year. EPA obligates appropriated Superfund moneys for contracts to clean up and oversee the cleanup of Superfund sites. If these contracts expire or are canceled and unexpended obligated funds remain, EPA is allowed to deobligate these funds and use them for other projects. EPA begins to identify Superfund moneys for deobligation early in each fiscal year so that it can use the moneys during the same fiscal year. We previously reported that EPA had opportunities to identify and recover additional Superfund moneys.3 Additionally, EPA’s Office of Inspector General has 3 See Environmental Protection: Funds Obligated for Completed Superfund Projects (GAO/RCED-98-232, July 21, 1998). Page 6 GAO/RCED-00-25 Superfund B-283841 reported weaknesses in the deobligation process and found that overall improvements in EPA’s deobligation process would result in additional funds being made available to the agency for environmental goals.4 For the 12-year period from fiscal year 1987 through fiscal year 1998, EPA’s expenditures for the Superfund program totaled $14.7 billion. Appendix I provides information on expenditures by year for this period. For fiscal years 1996 through 1998, the program’s expenditures totaled $4.3 billion, and data were readily available for allocating these expenditures among three general categories—contractor cleanup work, site-specific support, and non-site-specific support.5 For the years before fiscal year 1996, expenditure data could not readily be allocated among these three general categories. As figure 1 shows, 45 percent of the $4.3 billion spent from fiscal year 1996 through fiscal year 1998 was for contractor cleanup work, 17 percent was for site-specific support costs, and 38 percent was for non-site-specific support costs. 4 See Audit of EPA’s Fiscal Year 1998 Financial Statements, EPA, Office of Inspector General, Report No. 99B0003 (Sept. 28, 1999). 5 See Superfund: EPA Can Improve Its Monitoring of Superfund Expenditures (GAO/RCED-99-139, May 11, 1999). Page 7 GAO/RCED-00-25 Superfund B-283841 Figure 1: Superfund Expenditures for Fiscal Years 1996-98, in Three Dollars in millions Categories. Contractor cleanup work 38% • Non-site specific support • 45% ($1,638) ($1,930) 17% • Site-specific support ($726) Source: GAO’s analysis of data from EPA. The total Superfund moneys appropriated, transferred, or allocated to other federal agencies ranged from 9 percent to 11 percent of the total Superfund appropriations for fiscal years 1995 through 1998. The Congress appropriates funding from the Superfund trust fund to federal agencies other than EPA for Superfund activities. EPA does not routinely track expenditures of Superfund moneys by these agencies; however, it does track appropriations and transfers of program funds to these other federal agencies. The other federal agencies with important Superfund responsibilities include the Department of Justice, which provides enforcement assistance; the National Institute of Environmental Health Sciences, which provides research on human health effects for individual chemicals and is a National Institute of Health within the Department of Health and Human Services; and the Agency for Toxic Substances and Disease Registry, which provides overall health assessments for individual Superfund sites and is within the Public Health Service of the U.S. Department of Health and Human Services. Table 3 displays the annual Superfund appropriations, transfers, or allocations for these agencies for fiscal years 1995 through 1998. Page 8 GAO/RCED-00-25 Superfund B-283841 Table 3: Superfund Appropriations, Transfers, or Allocations to Federal Dollars in millions Agencies Other Than EPA for Fiscal Fiscal Year Years 1995-98 Agency 1995 1996 1997 1998 Department of Justice (enforcement) $32.2 $30.0 $30.0 $29.7 Other federal agencies Agency for Toxic Substances and Disease Registry 68.8 59.0 64.0 74.0 National Institute of Environmental Health Science 58.7 50.5 53.3 58.0 U.S. Coast Guard 4.8 4.4 4.8 4.8 National Oceanic and Atmospheric Administration 2.2 2.0 2.2 2.4 Federal Emergency Management Agency 0.9 1.1 1.1 1.1 Department of the Interior 0.6 0.7 0.9 0.9 Occupational Safety and Health Administration 0.3 0.3 0.5 0.7 Total, other federal agencies $136.3 $118.0 $127.0 $141.9 Total $168.5 $148.0 $157.0 $171.6 Source: EPA’s Budget Office. According to EPA’s estimates, the costs of site cleanup for work performed Responsible Parties’ by responsible parties totaled approximately $15.5 billion from 1980, the Cleanup and year of CERCLA’s enactment, through 1998. During this same period, EPA Transaction Costs recovered about $2.4 billion from responsible parties for cleanup work it performed, as shown in table 4. EPA principally relies on data collected from settlement agreements reached with responsible parties to estimate these recoveries. Because responsible parties are not required to publicly report the cleanup and related transaction costs they incur, the actual dollar amount that responsible parties have expended for site cleanups is unknown. EPA principally relies on standard cost assumptions or information contained in RODs to estimate the value of cleanup work Page 9 GAO/RCED-00-25 Superfund B-283841 performed by responsible parties. Specifically, these are estimates of the value of the cleanup work to be performed over the life of the cleanup, which, in some cases, can take over 30 years to complete. As a result, the actual costs incurred by responsible parties may occur well after the ROD or settlement date. Additionally, the ROD estimates do not take into account cost growth that may occur between the selection of remedies and actual cleanups or, alternatively, cost savings that responsible parties may realize when conducting cleanups more efficiently than EPA had projected. Table 4: Estimated Responsible Parties’ Site Cleanup Costs, 1980-98 Dollars in millions EPA’s costs Responsible recovered from parties’ estimated responsible Time period cleanup costs parties Total Before expiration of Superfund tax authority (1980-Dec. 1995) $11.1 $1.7 $12.8 After expiration of Superfund tax authority (Jan. 1996-Sept. 1998) 1.9 0.7 2.7 Total $13.0 $2.4 $15.5 Source: EPA’s Office of Site Remediation Enforcement. In addition to cleanup costs, responsible parties incur transaction costs, which include the legal expenses associated with cleanups, such as the costs incurred during negotiations or litigation with EPA, other responsible parties, or insurance companies. Although a number of independent studies have attempted to estimate transaction cost amounts, their respective results differ, in part because of differing methodologies. The transaction costs estimated in these studies ranged between 17 and 33 percent of responsible parties’ total expenditures. In a 1995 testimony, the Congressional Budget Office (CBO), estimated that transaction costs could range between 17 and 20 percent of responsible parties’ total expenditures.6 In 1994, the RAND Institute for Civil Justice estimated that responsible parties’ transaction costs were approximately 32 percent of 6 Statement of Jan Paul Acton, Assistant Director, Natural Resources and Commerce Division, Congressional Budget Office, on the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, before the Subcommittee on Water Resources and Environment, Committee on Transportation and Infrastructure, U.S. House of Representatives, June 22, 1995, p. 9. Page 10 GAO/RCED-00-25 Superfund B-283841 total expenditures.7 Also in 1994, we estimated that transaction costs could account for about 33 percent of responsible parties’ total expenditures at NPL sites.8 These estimates, however, could change depending on, among other things, EPA’s actions or future Superfund legislation. Specifically, the estimates were conducted before EPA initiated reforms to the Superfund program that were intended to facilitate settlements with responsible parties and reduce transaction costs. Using these estimates and the responsible parties’ cleanup costs presented in table 4, we estimate that responsible parties incurred $3 billion to $8 billion in transaction costs from 1980 through 1998, as shown in table 5. These estimates are calculated as percentages of total cleanup costs, including both cleanup costs and transaction costs. Responsible parties’ costs before the authority for Superfund taxes expired in 1995 are estimated to range between $15 billion and $19 billion for the period 1980 through 1995. After the authority for Superfund taxes expired, the costs range between $3 billion and $4 billion for the period 1996 through 1998. Responsible parties’ total estimated costs at NPL sites from 1980 to 1998 (for both cleanup costs and transaction costs) are estimated to range between $19 billion and $23 billion. Table 5: Estimated Transaction Costs as a Percentage of Total Cleanup Dollars in billions Costs Author of study/study’s estimated percentage CBO RAND GAO Time period 17% 20% 32% 33% Before expiration of Superfund tax authority (1980-Dec. 1995) $2.6 $3.2 $6.0 $6.3 After expiration of Superfund tax authority (Jan. 0.6 1.3 1996-Sept. 1998) 0.7 1.3 Total $3.2 $3.9 $7.3 $7.6 Source: GAO’s analysis of data from EPA. 7 Lloyd S. Dixon, Fixing Superfund: The Effect of the Proposed Superfund Reform Act of 1994 on Transaction Costs (Santa Monica, California: RAND, 1994), p.xvi. 8 See Superfund: Legal Expenses for Cleanup-Related Activities of Major U.S. Corporations (GAO/RCED-95-46, Dec. 23, 1994). Page 11 GAO/RCED-00-25 Superfund B-283841 As of mid-April 1999, EPA had 640 nonfederal NPL sites where the Status of and Cost to construction of a cleanup remedy, such as a removal of contaminated soil, Complete Cleanups of had not been completed. Of these sites, 59 percent, or 376, were in the 640 Nonfederal Sites remedial investigation and feasibility study phase; 21 percent, or 133, were in the design phase; and 20 percent, or 131, were in the remedial action phase. In each phase, the work may be planned, ongoing, or completed. As shown in table 6, at the 376 sites in the remedial investigation and feasibility study phase, the work is planned for 54, ongoing for 238, and completed for 84. Each site consists of one or more operable units that correspond to different areas within the site or different environmental media, such as soil and groundwater. At the 8 sites shown as completed in the remedial action phase, all operable units had been completed, but EPA had not yet finished all steps required to designate the sites as “construction complete.” We classified each site’s progress by the operable unit in the least advanced phase of the Superfund process. The 640 nonfederal sites included a total 1,279 operable units. Table 6: Status of Sites Based on the Least Advanced Operable Units, as of Status of work in phase Mid-April 1999 Cleanup phase Planned Ongoing Completed Total sites Remedial investigation and feasibility study 54 238 84 376 a Remedial design 107 26 133 a Remedial action 123 8 131 Total sites 54 468 118 640 a Sites completing an earlier cleanup phase will move to this phase. Source: EPA. In contrast, if a site’s progress is based on the operable unit in the most advanced stage of the Superfund process, then 33 percent, or 212 sites, were in the remedial investigation and feasibility study phase; 18 percent, or 112 sites, were in the design phase; and 49 percent, or 316 sites, were in the remedial action phase. On the basis of EPA’s schedule for completing work at 364 sites and our application of EPA’s average estimated cleanup completion times as of April 1999 for the remaining 276 sites, we estimate that 85 percent, or 545, of the 640 sites will be cleaned up from April 1999 through calendar year 2008. EPA estimates that the average time to complete a site’s cleanup is 8 Page 12 GAO/RCED-00-25 Superfund B-283841 years.9 The agency emphasizes, however, that this is an average cleanup time, with some sites taking less time and others taking more. In addition, although the average includes any waiting time between cleanup phases, future average cleanup times could be different, depending on the complexity of the sites and EPA’s budget constraints. EPA also believes that completing construction at some of the remaining 15 percent of sites may take well beyond 2008, as indicated in figure 2. Figure 2: GAO’s Estimate of Site Completions, by Year Sites to Be Completed 600 545 400 Number 95 of 200 sites 0 1999 2008-2050 Year Source: GAO’s analysis of data from EPA and estimates from site managers. We estimated that the total cost to complete cleanups at the 640 sites ranges from $8.2 billion to $11.7 billion, with a midpoint cost of $9.9 billion. The midpoint cost is calculated and used to present the middle value in the range and to illustrate annual costs. The total cleanup cost includes support costs and operation and maintenance costs, as indicated in table 7. 9 For this report, we used EPA’s estimate of the average time to complete each cleanup phase—3.1 years for the remedial investigation/feasibility study, 2.8 years for the remedial design, and 2.1 years for the remedial action, for a total cleanup time of 8.0 years. We also used Superfund: Half the Sites Have Cleanup Remedies in Place and Completed (GAO/RCED-99-245, July 30, 1999). In 1997, we reported that the average cleanup time for nonfederal sites was 10.6 years. See Superfund: Times to Complete the Assessment and Cleanup of Hazardous Waste Sites (GAO/RCED-97-20, Mar. 31, 1997). EPA testified in Mar. 1999 before the Subcommittee on Finance and Hazardous Materials, Committee on Commerce, that the pace of cleanups had accelerated significantly in fiscal years 1997 and 1998. Page 13 GAO/RCED-00-25 Superfund B-283841 Table 7: Estimated Total Costs Needed by EPA to Complete Cleanups at the Dollars in millions 640 Sites Estimated total cleanup and support costs for 640 sites Type of cost High end of range Low end of range Midpoint Contractor cleanup $3,111.0 $4,680.3 $3,895.6 a Site-specific support 1,169.7 1,759.8 1,464.7 Subtotal $4,280.7 $6,440.1 $5,360.3 Non-site-specific supportb 2,641.2 3,973.6 3,307.4 Subtotal $6,992.0 $10,413.7 $8,667.7 Additional operation and maintenancec 1,280.0 1,280.0 1,280.0 Total $8,202.0 $11,693.7 $9,947.7 a Estimated by multiplying contractor cleanup costs by 0.376. This multiplier is based on total Superfund support expenditures for fiscal years 1996-98. b Estimated by multiplying contractor cleanup costs by 0.849. This multiplier is based on total Superfund support expenditures for fiscal years 1996-98. c Calculated for operable units currently on the NPL that are not construction complete and are projected to be funded by EPA. Source: GAO’s analysis of EPA data. We calculated that the estimated contractor cleanup costs for the 640 sites would range from a low of $3.1 billion to a high of $4.7 billion, with a midpoint cost of $3.9 billion. When site-specific support costs are added, this estimate becomes $4.3 billion to $6.4 billion, with a midpoint cost of $5.4 billion. Site-specific support costs include site analysis studies and EPA’s costs to oversee cleanups led by responsible parties. Adding non-site-specific support costs results in estimates of $6.9 billion to $10.4 billion, with a midpoint cost of $8.7 billion. Non-site-specific support costs include EPA’s financial management and policy analysis costs. Finally, adding operation and maintenance costs brings the range for total costs from $8.2 billion to $11.7 billion, with a midpoint cost of $9.9 billion. Operation and maintenance costs include EPA’s costs to operate and maintain cleanup remedies after they have been constructed. A remedy to pump and treat groundwater, for example, can take 30 years or longer. At sites where EPA conducts the cleanup, the agency assumes responsibility for remedies designed to restore groundwater or surface water for up to the first 10 years; afterwards, the state is responsible for operating and maintaining the cleanup remedy. Appendix II provides a summary of our assumptions in preparing these cost estimates. Page 14 GAO/RCED-00-25 Superfund B-283841 We estimated that the annual costs for cleaning up these 640 sites would range from about $827 million to $923 million per year through 2008—an average of $875 million annually. Annual costs are presented by cost category (contractor support, site-specific and non-site-specific support costs, and operation and maintenance) in appendix III. These annual cost estimates assume that 85 percent of the 640 sites will be cleaned up by 2008. After 2008, the total cost for the remaining 15 percent is $1.6 billion, but the time required to complete cleanups at these sites is difficult to project. Our July 1999 report on the completion of cleanup remedies indicated that EPA remedial managers projected completion dates extending to 2050. Although we allocated the costs for these cleanups to 2009 and 2010, the costs may extend beyond 2010. We provided a copy of a draft of this report to EPA for its review and Agency Comments comment. EPA’s comments are presented in appendix IV. EPA disagreed and Our Evaluation with our characterization of the Superfund program’s costs and future funding needs and with our presentation of the status of the program’s accomplishments. Specifically, EPA believes that our draft report greatly understates both. For example, according to EPA, our draft report neglects to consider the hundreds of millions of dollars required annually to protect communities from threats posed by sites not currently on the NPL, the cost of sites that will be placed on the NPL in the future, and what full funding for the Superfund program should be. As we state in our objectives, our report does not address the issues EPA raises. It presents information on the financial status of the Superfund program—in particular, the cost of completing the cleanup of the 640 nonfederal sites already on the NPL. EPA also stated that the draft report misrepresents the status of the Superfund program’s accomplishments as indicated by EPA’s progress in cleaning up sites to date. EPA believes that it has made more significant strides to complete work at current NPL sites than our draft report suggested. We revised our draft report to clarify the percentage of sites where the cleanup was not completed. EPA further stated that our draft report primarily describes the status of cleanups at Superfund sites by the least advanced operable unit and that these data do not describe the full progress that the agency has made at these sites. This assertion is not correct. Our draft report presents the progress of site cleanups by both the least advanced and the most advanced operable unit. EPA also stated that we did not account for resources allocated to some of its offices, such as its Office of Inspector General and Office of Research Page 15 GAO/RCED-00-25 Superfund B-283841 and Development, as well as resources transferred to certain other federal agencies that carry out some of the Superfund program’s responsibilities, including the Agency for Toxic Substances and Disease Registry and other agencies. We disagree. This information appears in our discussion on the status of the program’s funding and includes the amounts of funds appropriated, transferred, and allocated to these other agencies from fiscal year 1995 through fiscal year 1998. While our draft report does not provide data on the funds appropriated to EPA’s Office of Inspector General, we believe the overall impact of this exclusion is insignificant because these funding amounts are relatively small. The funds transferred to several other federal agencies are also included in the overhead cost estimates that we present for the 640 nonfederal sites. EPA also asserted that our draft report mischaracterizes the Superfund program’s activities and expenditures by categorizing them as contractor cleanup costs, site-specific support costs, and non-site-specific support costs. EPA states that these categories are overly broad and have limited use in evaluating and managing the program. Moreover, according to EPA, using generic terms such as overhead fails to recognize the actual work that takes place to accomplish the cleanups that are the mandate of the Superfund program. We used these categories in a prior report on Superfund expenditures and believe that our categories are appropriate for defining the program’s expenditures and accurately indicating how funds are spent for cleanups. EPA also stated that our draft report inaccurately characterized responsible parties’ expenditures for cleanup work. It said our estimate of these costs represented the parties’ commitments for future cleanup work rather than expenditures to date. We revised the report to clarify this point. We conducted our review from June 1999 through November 1999 in accordance with generally accepted government auditing standards. Our scope and methodology are presented in appendix V. As arranged with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after the date of this letter. At that time, we will send copies of the report to other congressional committees; the Honorable Carol M. Browner, Administrator, EPA; the Honorable Jacob Lew, Director, Office of Management and Budget; and other interested parties. We will also make copies available to others on request. Page 16 GAO/RCED-00-25 Superfund B-283841 Should you need further information, please call me (202) 512-6111. Key contributors to this report are included in appendix VI. David G. Wood Associate Director, Environmental Protection Issues Page 17 GAO/RCED-00-25 Superfund Contents Letter 1 Appendix I 20 Superfund Expenditures for Fiscal Years 1987-98 Appendix II 21 Cost Assumptions Appendix III 24 Estimated Annual Costs to Complete 85 Percent of the 640 NPL Sites, or 1,279 Operable Units, by 2008 Appendix IV 25 Comments From the Environmental Protection Agency Appendix V 28 Scope and Methodology Appendix VI 30 Key Contributors to This Report Tables Table 1: Taxes Paid Into the Superfund Trust Fund, by Category, 5 Fiscal Years 1981-98 Page 18 GAO/RCED-00-25 Superfund Contents Table 2: Unappropriated Superfund Trust Fund Balance 6 Estimated for the End of Fiscal Year 1999 Table 3: Superfund Appropriations, Transfers, or Allocations to 9 Federal Agencies Other Than EPA for Fiscal Years 1995-98 Table 4: Estimated Responsible Parties’ Site Cleanup Costs, 10 1980-98 Table 5: Estimated Transaction Costs as a Percentage of Total 11 Cleanup Costs Table 6: Status of Sites Based on the Least Advanced Operable 12 Units, as of Mid-April 1999 Table 7: Estimated Total Costs Needed by EPA to Complete 14 Cleanups at the 640 Sites Figures Figure 1: Superfund Expenditures for Fiscal Years 1996-98, in 8 Three Categories. Figure 2: GAO’s Estimate of Site Completions, by Year 13 Abbreviations CERCLA Comprehensive Environmental Response, Compensation, and Liability Act CBO Congressional Budget Office EPA Environmental Protection Agency GAO General Accounting Office NPL National Priorities List O&M operation and maintenance OU operable unit RA remedial action RD remedial design RI/FS remedial investigation/feasibility study ROD record of decision Page 19 GAO/RCED-00-25 Superfund Appendix I Superfund Expenditures for Fiscal Years 1987-98 Dollars in millions Fiscal year Total expenditures 1987 $529.9 1988 790.3 1989 948.9 1990 1,127.0 1991 1,365.7 1992 1,367.4 1993 1,334.4 1994 1,449.7 1995 1,475.2 1996 1,411.7 1997 1,450.8 1998 1,403.1 Total $14,654.1 Page 20 GAO/RCED-00-25 Superfund Appendix II Cost Assumptions We made the following assumptions and took the following steps to calculate the cost of completing cleanups at 640 nonfederal sites on the National Priorities List (NPL). • We calculated the cost of completing cleanups of 1,279 operable units (OU) at the 640 nonfederal sites that the Environmental Protection Agency (EPA) had not designated as “construction complete” as of mid-April 1999.10 We did not include sites placed on the NPL after this time. • Each OU was classified by EPA by cleanup phase—remedial investigation/feasibility study (RI/FS), remedial design (RD), or remedial action (RA)—and by status—planned, ongoing, or completed. • Next, we determined what proportion of the OUs’ cleanups would be funded by EPA. For OUs in the RI/FS phase (planned, ongoing and completed) we assumed, on the basis of interviews with EPA officials and our reviews of EPA documents, that 55 percent would be funded by EPA. • Using EPA’s data for ongoing and completed cleanups of OUs in the RA phase, we calculated that EPA had funded 40 percent. Therefore, we assumed that EPA would fund 40 percent of future/planned RAs. EPA officials understood the basis for this assumption but stated that their goal still remains to have 70 percent of the sites funded by responsible parties. Furthermore, the officials provided statistics indicating that, for sites funded by responsible parties during fiscal years 1996 through 1998, over 70 percent of the remedial designs and remedial actions are being performed by responsible parties. • Because the same party usually performs both the remedial design and the construction, we assumed EPA would also fund 40 percent of the remedial designs. • To estimate the cost of the EPA-funded cleanups of OUs in each respective cleanup phase, we multiplied the number of OUs by a range of costs provided by EPA. According to EPA, these cost ranges considered OUs where no action is required and no remediation costs are incurred. 10 In its presentations to the Senate Committee on Environment and Public Works in June 1999, EPA reported that there were 1,261 OUs at 649 nonfederal NPL sites, as of mid-April 1999. EPA officials told us that nine sites have been transferred to other cleanup programs and that 18 OUs were not counted because of errors in coding data. The officials agreed that the figures should be 640 sites and 1,279 OUs. Page 21 GAO/RCED-00-25 Superfund Appendix II Cost Assumptions • For OUs that were ongoing (rather than planned or completed) in each cleanup phase, we assumed the action had already been partially—50 percent—funded and therefore used 50 percent of the respective cost estimate. • We used site-specific remedial action cost estimates from records of decision (ROD) available for 65 of 116 ongoing EPA-fund cleanups of OUs and added 20 percent for cost growth, as estimated by the Congressional Budget Office (CBO).11 • We estimated the number and cost of removals remaining to be funded at the 640 sites using data from our recent survey of 609 of the 640 sites.12 We estimated that 100 sites would require removal actions and that EPA would fund these actions at 61 sites. Assuming 3.5 removal actions per site and a cost of $0.8 million for each removal action, we estimated $174 million as the total remaining removal cost at the 640 sites. • In a recent report, we categorized cleanup costs as contractor cleanup costs (about 45.5 percent of the total) and cleanup support costs—site-specific and non-site-specific. Site-specific cleanup support costs are equal to 37.6 percent of contractor cleanup costs. Non-site-specific cleanup support costs are equal to 84.9 percent of contractor cleanup costs. These percentages were used to determine support costs.13 • Operation and maintenance (O&M) costs were calculated for all EPA-funded cleanups of OUs that EPA expects will require long-term funding. For example, EPA funds up to 10 years of O&M costs for OUs with remedies designed to restore groundwater or surface water. States then fund the remaining O&M costs for these OUs. EPA predicts that 50 percent of all OUs will have remedies requiring up to 10 years of expenditures for O&M, estimated by EPA to be $0.5 million per OU annually. • To estimate annual costs, we used the midpoint for each range of estimates for contractor cleanup, site-specific support, and 11 EPA officials told us that a recently completed EPA study, done in conjunction with the U.S. Army Corps of Engineers, projects the cost growth between contract award and contract completion at 16 to 37 percent. 12 See Superfund: Half the Sites Have All Cleanup Remedies in Place or Completed (GAO/RCED-99-245, July 30, 1999). 13 See Superfund: EPA Can Improve Its Monitoring of Superfund Expenditures (GAO/RCED-99-139, May 11, 1999). Page 22 GAO/RCED-00-25 Superfund Appendix II Cost Assumptions non-site-specific support costs and then evenly apportioned 85 percent of these costs over the period from 2000 to 2008, which is the 9-year period needed to complete 85 percent of the cleanups. Thus, about 9.4 percent of the total costs are incurred for each of these 9 years. Because it may take many years to complete cleanups of the remaining 15 percent of OUs, we simply allocated the costs for these sites evenly between 2009 and 2010. Thus, we assigned about 7.7 percent of the total cost to each of these 2 years. • The annual O&M costs for the 640 sites were estimated by equally distributing the costs for 85 percent of the OUs projected to require federal O&M funding over the years 2000-2008 and evenly distributing the costs for the remaining OUs over 2009 and 2010. Each OU was estimated to cost $0.5 million annually, and these costs were projected to continue for 10 years. Page 23 GAO/RCED-00-25 Superfund Appendix III Estimated Annual Costs to Complete 85 Percent of the 640 NPL Sites, or 1,279 Operable Units, by 2008 Dollars in millions Annual costs, assuming completion of 85 percent of OUs by 2008 Site- Subtotal for Non-site- Contractor specific cleanup and specific Subtotal for Percent of cleanup support site-specific support cleanup and Fiscal year total costs costs costs support costs support O&M Total costs 2000 9.4 $366.2 $137.7 $503.9 $310.9 $814.8 $12.0 $826.8 2001 9.4 366.2 137.7 503.9 310.9 814.8 24.0 838.8 2002 9.4 366.2 137.7 503.9 310.9 814.8 36.0 850.8 2003 9.4 366.2 137.7 503.9 310.9 814.8 48.0 862.8 2004 9.4 366.2 137.7 503.9 310.9 814.8 60.0 874.8 2005 9.4 366.2 137.7 503.9 310.9 814.8 72.0 886.8 2006 9.4 366.2 137.7 503.9 310.9 814.8 84.0 898.8 2007 9.4 366.2 137.7 503.9 310.9 814.8 96.0 910.8 2008 9.4 366.2 137.7 503.9 310.9 814.8 108.0 922.8 2009 7.7 300.0 112.8 412.7 254.7 667.4 118.0 785.4 2010 7.7 300.0 112.8 412.7 254.7 667.4 116.0 783.4 a a a a a a 2011 104.0 104.0 a a a a a a 2012 92.0 92.0 a a a a a a 2013 80.0 80.0 a a a a a a 2014 68.0 68.0 a a a a a a 2015 56.0 56.0 a a a a a a 2016 44.0 44.0 a a a a a a 2017 32.0 32.0 a a a a a a 2018 20.0 20.0 a a a a a a 2019 10.0 10.0 Total 100 $3,895.6 $1,464.7 $5,360.3 $3,307.4 $8,667.7 $1,280.0 $9,947.7 Note: Totals may not add because of rounding. a Cleanups completed except for O&M. Source: GAO’s analysis of estimates by EPA. Page 24 GAO/RCED-00-25 Superfund Appendix IV Comments From the Environmental Protection Agency Page 25 GAO/RCED-00-25 Superfund Appendix IV Comments From the Environmental Protection Agency Page 26 GAO/RCED-00-25 Superfund Appendix IV Comments From the Environmental Protection Agency Page 27 GAO/RCED-00-25 Superfund Appendix V Scope and Methodology To determine the taxes paid into the Superfund trust fund, we obtained data from EPA on Superfund taxes, by year, for fiscal years 1981 through 1998. For the estimated balance for the Superfund trust fund at the end of fiscal year 1999, we obtained an income data statement from the Department of the Treasury, which was current as of July 31, 1999. For deobligated Superfund amounts, we obtained data from EPA on these amounts for fiscal years 1994 through July 1999. Using the monthly averages for fiscal year 1999 deobligations, we projected deobligations for the remaining months of the fiscal year to arrive at an estimated total through fiscal year 1999. For Superfund expenditure information, we obtained annual expenditure data from EPA for fiscal years 1996 through 1998 and allocated the expenditures among three categories presented in our May 1999 report.14 For program funds appropriated to other federal agencies, EPA provided us with Superfund appropriation data for fiscal years 1995 through 1998. To provide information on the costs to responsible parties for site cleanups and related transaction costs, we obtained EPA’s estimates of these parties’ cleanup costs, which were based on the value of the cleanup work stated in RODs and standard cost assumptions. In addition, EPA provided data from settlement agreements with responsible parties for past cleanup work performed by EPA. These costs were summed and categorized for the periods before and after the authority for Superfund taxes expired in December 1995. To determine the cleanup transaction costs incurred by responsible parties, we obtained estimates of these costs from CBO, RAND, and our studies of transaction costs. Using each estimate as a percentage of cleanup costs, we calculated transaction cost estimates. To obtain information on the cleanup status of the 640 nonfederal sites on the NPL that were not construction complete as of mid-April 1999, we obtained data from EPA on the cleanup status of the operable units at the sites. The 640 sites contained 1,279 operable units. Each site consists of one or more operable units, and we classified a site’s overall progress by the operable unit in the least advanced stage of the Superfund process. For example, we classified a site with three operable units—one in the remedial design phase and two in the remedial investigation/feasibility study phase—as in the remedial investigation/feasibility study phase. We also classified each site’s progress by the operable unit in the most advanced phase of the Superfund cleanup process. 14 Superfund: EPA Can Improve Its Monitoring of Superfund Expenditures (GAO/RCED-99-139, May 11, 1999). Page 28 GAO/RCED-00-25 Superfund Appendix V Scope and Methodology To determine the estimated completion dates for Superfund sites, we used two information sources. First, we used the site-specific completion estimates that we collected from EPA’s site managers for our recent review of the status of cleanups at NPL sites.15 Second, when such an estimate was not available, we calculated the estimated completion date using EPA’s standard completion time for each phase in the Superfund process—3.1 years for the remedial investigation/feasibility study, 2.8 years for the remedial design, and 2.1 years for remedial action, for a total of 8 years once a site is on the NPL. To obtain information on the costs to clean up the 640 sites, we obtained ranges of cost estimates from EPA for completing each phase of the remedial action process. We used these cost ranges to calculate an overall cleanup cost, and we estimated remaining removal costs at the 640 sites using EPA’s estimates of removal costs and removals already conducted at these sites. To determine overhead costs, we calculated overhead rates for site-specific overhead and non-site-specific overhead costs. We derived these rates from EPA’s Superfund expenditure data for fiscal years 1996 through 1998, as we reported in May 1999.16 We applied these overhead rates to the total cost of remedial and removal actions to derive the total site-specific and non-site-specific overhead amounts. To determine the annual cleanup costs, we allocated costs by year according to the year of estimated completion. 15 See Superfund: Half the Sites Have All Cleanup Remedies in Place or Completed (GAO/RCED-99-245, July 30, 1999). 16 Superfund: EPA Can Improve Its Monitoring of Superfund Expenditures (GAO/RCED-99-139, May 11, 1999). Page 29 GAO/RCED-00-25 Superfund Appendix VI Key Contributors to This Report Allen Rogers, Director, Design, Methodology, and Technical Assistance Resources, Group Community, and Economic Karen L. Kemper, Evaluator-in-Charge Development John Johnson, Senior Evaluator Division, Washington, D.C. John Wanska, Assistant Director Chicago Office Rosemary Torres-Lerma, Senior Evaluator Jim Hayward, Staff Evaluator Raleigh Office Richard Johnson, Senior Attorney Office of General Counsel (160494) Page 30 GAO/RCED-00-25 Superfund Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. Orders by mail: U.S. General Accounting Office P.O. Box 37050 Washington, DC 20013 or visit: Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (202) 512-6061, or TDD (202) 512-2537. Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (202) 512-6000 using a touchtone phone. A recorded menu will provide information on how to obtain these lists. For information on how to access GAO reports on the INTERNET, send an e-mail message with "info" in the body to: firstname.lastname@example.org or visit GAO’s World Wide Web Home Page at: http://www.gao.gov PRINTED ON RECYCLED PAPER United States Bulk Rate General Accounting Office Postage & Fees Paid Washington, D.C. 20548-0001 GAO Permit No. G100 Official Business Penalty for Private Use $300 Address Correction Requested
Superfund: Information on the Program's Funding and Status
Published by the Government Accountability Office on 1999-10-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)