oversight

Environmental Protection: EPA's Fiscal Year 1998 Superfund Budget

Published by the Government Accountability Office on 1997-10-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

       United States
GA!0   General Accounting
       Washington,
                             Office
                     D.C. 20548

       Besourdes, Communily,     and
       Economic Development      Division
       B-277908


       October 3, 1997


       The Honorable Jerry Lewis
       Chairman, Subcommittee on VA, HUD,
        and Independent Agencies
       Committee on Appropriations
       House of Representatives
       Subject: Environmental Protection: EPA’s Fiscal Year 1998 Sunerfund
       Budget

       Dear Mr. Chairman:

       On August 28, 1996, in Kalamazoo, Michigan, the administration announced a
       major initiative to accelerate the pace of the toxic waste cleanups performed
       under the Environmental Protection Agency’s (EPA) Super-fund program.
       The god of this initiative is to clean up, by the year 2000, the 900 sites on the
       Superfund program’s National priorities List (NPL). According to EPA, the
       Superfund program had already cleaned up 423 sites, as of March 1997. As a
       part of its f&xl year 1998 budget request, EPA stated that it wiIl require an
       additional $650 million as a first step toward addressing the remaining 477
       NPL sites.l

       Because of your interest in EPA’s fiscal year 1998 Superfund budget request,
       you asked us to determine if EPA based its budgetary requirements on the
       most current available information. We concentrated our review on 58
       Superfund sites because approximately $620 million, or 95 percent of the
       additional $650 million requested for fiscal year 1998, is directed toward
       these sites. According to EPA, 27 of the sites were ready for cleanup work



       ‘EPA’s total fiscal year 1998 budget request for the Superfund program is
       $1.72 billion, which includes $650 milhon specifically for the work aimed at
       meeting the agency’s goal of completing the cleanup of the 900 sites by the
       year 2000.

                                            GAOLRCED-9%15R   EPA’s Fiscal   Year 1998 Superfnnd   Budget


                                                      3
                                                                                             .:



 B-277908

 to begin during fiscal year 1997, but funding was not available. The
 rem aining 31 sites were to becom e ready for cleanup during fiscal year 1998.

 RESULTS IN BRIEF

 EPA’s fiscal year 1998 Superfund budget request to clean up the 58
 Superfund sites is potentially overstated by $205 m illion because EPA used
 historical cost data fkom fiscal years 1987 through 1995 as the basis for its
 request, rather than the m ore recent cost inform ation that was available to
 the agency when it prepared its budget request. For 27 of these sites, EPA
 had the m ore recent cost estim ates that were provided by the EPA regions
 responsible for the cleanups. While such estim ates are not available for the
 other 31 sites, EPA’s m ost recent data suggest that the cost of cleaning up
 these sites could be substantially less than the amount the agency has
 requested. EPA’s data show that cleanup costs during recent years have
 been substantially reduced, which EPA has attributed in part to
 adm inistrative improvem ents in the Super-fund program , such as standardized
 rem edies for cleaning up certain types of sites.

  FUNDING REQUEST FOR SITE CLEANUPS
  M A Y BE OVERSTATED BY $205 M ILTJON

  EPA’s budget request for cleaning up the 27 toxic waste sites that were ready
  for cleanup during fiscal year 1997 was based on historical cost data for the
  agency’s Superfund cleanup activities. Had EPA based its request on the
  m ore recent cost estim ates provided by its regions, its request could have
  been reduced by about $128.3 m illion. On the basis of historical estim ates,
  EPA requested $300 m illion to clean up these 27 sites. In preparing its
  budget request, EPA used historical cost estim ates for cleanup activities
  perform ed from fiscal years 1987 through 1995, adjusted for inflation and
  engineering changes.

  EPA’s Super-fund resource m anagem ent office provided us with cost
  estim ates that indicate that the cost of cleaning up the 27 sites m ight be
  substantially less than the amount requested in EPA’s budget subm ission.
  These estim ates were prepared by the EPA regions responsible for these
  sites. We estim ate that, on the basis of the inform ation provided by the
  regions, the average current cost of cleaning up a site would be $6.36 m illion.
  Therefore, had the regions’ estim ates been used to develop EPA’s budget
  request, the estiated cost of cleaning up the 27 sites would be $171.7
  m illion, or $128.3 m illion less than the amount actually requested. EPA
’ officials told us that the agency did not use the m ore recent estim ates

  2                            GAO/RCED-98-15B   EPA’s Fiscal Year 1998 Superfund   Budget
B-277908
to prepare its budget request because it had used historical data in prior
years and did not wish to change its methodology.

EPA’s budget request also includes $320 million to begin work at 31 new
sites in 1998, an amount also based on historical data for fiscal years 1987
through 1995. However, EPA has recent data showing that cleanup costs
have been declining. By basing its budget request on these recent data, EPA
could have reduced its request by nearly $77 million.

EPA’s recent experience with the Superfund program suggests that cleanups
cost less than they did in the earlier years of the program. For example, in
responding to our February 1997 testimony on Superfund cleanups,’ EPA
provided data showing that the average cost of a site cleanup completed in
fiscal years 1993 through 1995 was about $2.8 million less than the average
cost for fiscal years 1987 through 1992.

EPA believes that cleanup costs will continue to decline because of
improvements in the Superfund program to make cleanups faster and more
efficient. For example, EPA believes that its Superfund Accelerated Cleanup
Model will enable the agency to accomplish cleanups in less time at less
cost. This model includes (1) integrated site assessments to reduce
redundancies in data collection, (2) non-time-critical removals (which
streamline the steps for studying a site’s contamination and for designing a
cleanup method) to reduce risks sooner by accelerating‘some cleanup
actions, and (3) presumptive remedies to identify in advance the most
effective cleanup remedy for a given situation EPA has stated that other
improvements, such as community-based remedy selection and the
establishment of a National Remedy Review Board, will also promote cost-
effectiveness and result in future cost reductions.

Had EPA used its most recent available data for fiscal years 1993 through
1995 to determine the cost of the 31 cleanups, its budget request for the sites
would have been based on an average cost of $7.85 million per site. This
lower cost would have resulted in a request for $243.4 million rather than for
$320 million, a reduction of $76.6 million.

In September 1997, EPA officials told us that they visited EPA’s regions in
August 1997 to perform a site-by-site analysis of Superfund sites that the


2Suuerfund: Times to Assess and Clean Un Hazardous Waste Sites Exceed
Proerram Goals (GAO/T-RCED-97-69, Feb. 13, 1997).

3                           GAO/WED-9S-15R   EPA’s Fiscal   Year 1998 Superfnnd   Budget
B-277908

agency would like to clean up by the end of calendar year 2000. The officials
told us that their analysis shows that $1.3 billion will be needed to complete
cleanup work at a total of 516 sites. They also said that EPA’s fiscal year
1998 budget request of $650 million was meant to be the jirst installment
toward the total amount needed. However, the EPA officials were not able
to provide us with the information that we had requested to show by fiscal
year the specific sites to be cleaned up and their costs. The officials
acknowledged that, while EPA had estimated in its budget request that 58
sites would be ready for cleanup activities to begin during fiscsil year 1998,
the agency does not have any analyses showing which or how many sites will
be ready for such activities during that year.

AGENCY COMMENTS AND OUR EVALUATION

We provided a draft of this report to EPA for review and comment. (See
enc. 1 for EPA’s comments.) EPA disagreed that its budget request may be
overstated. According to EPA, the results of the analysis that it performed in
August 1997 demonstrate that its budget projections were sound and that it
needs $1.3 billion, including a $650 million installment in fiscal year 1998, to
meet the agency’s cleanup goals by the end of calendar year 2000. The
Director of EPA’s Office of Emergency and Remedial Response said that he
understood that we have “received this updated site specific information
which supersedes the resource estimates made over a year ago and which
should be the foundation for validatjng” the agency’s fiscal year 1998 budget
request. However, EPA did not provide information in either its written
comments or in response to our earlier requests to show the specific sites to
be cleaned up during fiscal year 1998 or their costs. In this regard, the only
documentation that EPA has provided us to support its fiscal year 1998
request shows that work would be performed at 58 sites, which were not
specified, and that the costs of this work would be similar to EPA’s historical
cleanup costs for tical years 1987 through 1995. Because EPA’s data show
that its cleanup costs have been reduced in recent years, we believe that the
agency should use its most recent cost data as a basis for its budget
estimates, rather than its historical costs. Accordingly, we continue to
believe that the budget request for fiscal year 1998 may be substantially
overstated.

EPA also commented that it will be more appropriate to consider the effects
of its program reforms on budget needs in later years because fiscal year
1998 funds are needed to support activities that largely reflect decisions that
EPA had made before program reforms were implemented. As stated earlier,
we believe that the agency should base its funding decisions on its most

4                            GAO/RCED-98-15R   EPA’s Fiscal   Year 1998 Superfund   Budget
B-277908

recent cleanup cost data. Our anaIysis was based on these data, some of
which may reflect the effects of program reforms.



In performing our work, we visited EPA’s headquarters office located in
Washington, D.C., and EPA’s offices in Regions II (New York) and V
(Chicago). We reviewed EPA’s fiscal year 1998 budget request for the
Hazardous Substance Superfund Trust Fund, including the documentation
prepared by EPA to justify its need for resources to clean up Superfund sites.
We also met with officials from EPA regional and headquarters units to
review the processes EPA used to prepare its budget assumptions. We
conducted our review from March 1997 through September 1997 in
accordance with generally accepted government auditing standards.

We are sending copies of this report to the Administrator of EPA We are
also sending copies to the Ranking Minority Member of your committee, to
the Chairman and the Ranking Minority Member of the Subcommittee on VA,
HUD, and Independent Agencies, Senate Committee on Appropriations, and
to other interested parties. We will also make copies available upon request.

Please call me at (202) 512-4907 if you or your staff have any questions.
Major contributors to this report were Ed Kratzer, John Wanska, Jimmie
Gilbert, and John Yak&is.

Sincerely yours,




Director, Environments3
 Protection Issues

Enclosure -1




5                          GAO/WED-98-15R   EPA’s Fiscal   Year 1998 Superfund   Budget
ENCLOSURE   1                                                                              ENCLOSURE 1
        COMMENTS FROM THE ENVIRONMENTAL                          PROTECTION AGENCY

                         UNITED STATES ENVIRONMENTAL            PROTECTION AGENCY
                                          WASHINGTON, D.C. 20460



                                                SEP I3 igg7

                                                                                                     OFFICE OF
                                                                                         SOLID   WASTE AND EMEiiGENCY
                                                                                                    RESPONSE


      Peter F. Guerrero
      Director
      EnvironmentalProtection Issues
      U.S. General Accounting Office
      Washington,DC 20548

      Dear Mr. Guerrero:

             Thank you for the opportunity to review and comment on the Draft Report entitled
      “Superfimd: Duration of the Cleanup Process at Hazardous Waste Sites on the National Priorities
      List (GAO/ RCED-97-238R) and the Draft Fact Sheet “EPA’s Fiscal Year 1998 Superfund
      Budget.” This letter formally transmits our comments on these draft documents.

               EPA has shown improvementsin the time required to cleanup Super&d sites as reflected
      in the fact that more siteshave been completed in the past four years than were completedin the
      first twelve years of the program. Our reform efFxts have been key to this success.However, as
      demonstratedin our attachedcomments, we are concernedthat not enough time has passedto see
      the results of all of our reforms in a statistically significant way in terms of averagetime savingsor
      cost. However, we feel the anecdotal results demonstratedin the FY 1996 Superfund
      Administrative Reforms Annual Report are good measuresof the successof our reform efforts.
      In addition, we have provided a chart which demonstratesa trend toward reduceddurations. We
      feel this is an analysis which appropriately depicts programmatic trends.

              EPA’s discussionswith GAO on the FY 1998 President’s Budget requesttook place
      during the sametime period that significant data gathering for severalCongressionaloffices was
      underway. Our projection methods estimated an incremental need of approximately$650 million
      in FY 1998 to addressthe site backlog and acceleratecleanupin the Superfundprogram. The
      results of our more current site-by-site anaIysishave demonstratedthat our budget projections
      were sound and validated our need for the incremental finding. It is my understandingthat your
      office has received this updated site specific information which supersedesthe resourceestimates
      made over a year ago and which should be the foundation for validating our FY 1998budget
      request.

            Again, we thank you for the opportunity to review these draft documentsand hope our
       commentswill be strongly considered as the report and fact sheet are finalized. Should you have


6                                             GAOLRCED-98-15R      EPA’s   Fisca.l Year 1998 Snperfund       Budget
ENCLOSURE   1                                                                        ENCLOSURE 1


       any questions or concernsregarding these comments, pIeasecontact Robin Richardsonat
      (703)603-8912.



                                                StephenD. Lufiig
                                                Director
                                                Office of Emergency and RemedialResponse

      Enclosures

      cc:   Timothy Fields, Jr.
            Steven A. Herman
            SallyanneHarper
            Cliff Rothenstein
            Barry Breen
            Steve Tiber




                                          GAO/RCED-98-l%     EPA’s Fiscal   Year 1998 Superfhd   Budget
ENCLOSURE   1                                                                                 ENCLOSURE          I

                                                        EPA cOA4MENXS
                           GAO Fact Sheet “EPA’s FiscaI Year 1998 Superfund Budget”
                                                        September8, 1997

                Over the courseof recent months,EPA and the Super&d program have demonstratedthat we
                have sufficient candidatesites and contractingcapacityto reach900 site completionsby the end of
                calendaryear 2000. Therefore,we needthe funding levels requestedin the FY 1998 President’s
                Budget to implementthis aggressivegoal. Our resourceprojections deveiopedin 1996and site-by-
                site programmaticinformationupdatedin August 1997 strongly support these statements.

                EFTEC~M?    RESOURCE PROJECTIONS ARE PROVEN BY SITE-SPECIFIC             FAIZTS

                EPA developsresourceprojectionsstarting 18-24months prior to the beginningof the fiscal year.
                Uncertaintiesexist in ail elementsof hazardouswaste cleanupwhich could causea wide variability
                in projection results. The Agency’sprojection methodologyattempts to minimize this variability
                through the use of standardpricing factors and site projections. Empirical data have corroborated
                these projections and pricing factors. While legitimateconcernscan be raised regardingthe
                individual elementsof the projection methodology,the resultshave proven sound.

                Specifically, in stating that “Funding for 27 sites may be overstatedby $128 miilion,” the analysis
                focuses on one aspectof the projectionmethodology. In the samemannerthat a projected universe
                of sites may have a lower averagecost, changesin the projectedlead on these, or any projected
                site, could result in a higher averagecost. Similarly, changesin the actual numberof projects
                (operableunits) expectedper site codd also changethe averagecost and the cost projection
                significantly. Therefore,empiricaldata (i.e., the site specific data developedjust prior to teh
                beginningof the fiscal year) shouldbe used in determiningthe validity of the prior year projections.

                IMPA~S     OF REFORMS IS LIMITED    IN CURRENT UNIVERSE OF SITES

                 Additionally, the ass&on that the averagecosts shouldbe lowered to reflect the impacts of
                program reforms will be more appropriatein later years sincea large percentageof the fimdmg
                 needsfor FY 1998are to support site activities reflecting pm-reform decisions. Some reforms (e.g.
                .the ROD-revisit reform) may impact eventhese sites and this would be reflected in the site-specific
                 data coIiected in August 1997.

                SITE LISTS AND FY 1998 RESOURCE NEEDS CONFIRMTHE             NEED FOR ADDITIONAL       13650 M

                In preparationfor actual distribution of the appropriatedfunds, usuahy during August, the
                Superfund programcoIiects site-specificschedulesand fimdiig needs. In responseto
                Congressionalrequests,the Agency undertook this egort earlierduring May, producing the “FY98
                ResourceNeeds”list in June. This list of site needsvalidatedour FY 1998 budget request,
                demonstratingthat EPA needsthe funding requestedfor FY 1998. Therefore, EPA feels that this
                more current site information supersedesthe initial projection methodology. In August 1997,EPA
                Headquartersrepresentativestraveledto all ten Regionsto further update project information,
                schedules,and funding needs,confirmingagainour needfor the total requestedFY 1998fimdiig.


            (160404)




            8                                     GAO/RCED-98-l%       EPA’s Fiswl   Year 1998 Superfuud     Budget
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