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 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. 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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)