Federal EPA Budget Doesn't Reflect Stated Priorities

This week, President Trump released his Administration's first federal budget dubbed the "America First- A Blueprint to Make America Great Again."  Under the budget proposal, U.S. EPA current budget would be cut by 31% which amounts to a $2.6 billion dollar reduction.  

This leaves the Agency with $5.7 billion to run its programs which is the lowest amount funding provided U.S. EPA since 1990.  As reported by POLITICO, the proposed budget cuts would force U.S. EPA to layoff 3,200 workers. 

Since 1990, environmental regulation and science has advanced significantly.  As a result, numerous new programs have been added, including: climate change, protection of the Great Lakes, improving air and water quality standards.  

In the early years of environmental regulation the "easy" pollution reductions were achieved first. Additional reductions become much more challenging.  As a result, environmental permitting (NPDES, Title V, New Source Review) has become far more complex.

A drastically reduced workforce at the state and federal level will make implementation of these programs impossible and threaten to compromise the progress made over the last forty years.  The improvements to air and water quality since environmental regulations were implemented in the U.S. are well documented:

  • From 1970 to 2015, aggregate national emissions of the six common pollutants alone dropped an average of 70 percent while gross domestic product grew by 246 percent. This progress reflects efforts by state, local and tribal governments; EPA; private sector companies; environmental groups and others.
  • In the forty years since passage of the Clean Water Act there has been dramatic improvement to U.S. waterways:
    • Only about a third of U.S. water was safe for swimming or fishing. Now, an estimated 65% pass the fishable and swimmable test;
    • Before passage of the Clean Water Act, the country was losing up to 500,000 acres of wetlands per year. With wetland regulations, average wetland losses have fallen below 60,000 acres per year; and
    • Before the Clean Water Act and Safe Drinking Water Act, 30% of tap water samples exceeded federal limits for certain chemicals. According to a 2012 EPA report, 90.7% of U.S. community water systems met “all applicable health-based standards” in 2011.

The President's EPA budget blueprint has a stated goal of shifting authority back to the states for primary implementation of the federal environmental regulations.  The Administration cites to waste as a result of duplication between state EPA's and U.S. EPA.  Here are some of the statements included in the budget blueprint regarding prioritizing delegation of authority and responsibility to the states:

  • Avoids duplication by concentrating EPA’s enforcement of environmental protection violations on programs that are not delegated to States, while providing oversight to maintain consistency and assistance across State, local, and tribal programs. This reduces EPA’s Office of Enforcement
    and Compliance Assurance budget to $419 million, which is $129 million below the 2017 annualized CR level;
  • Supports Categorical Grants with $597 million, a $482 million reduction below 2017 annualized CR levels. These lower levels are in line with the broader strategy of streamlining environmental protection. This funding level eliminates or substantially reduces Federal investment in State environmental activities that go beyond EPA’s statutory requirements.

State Categorical Grants fund core programs, such as implementation of the Clean Air Act, Clean Water Act, hazardous waste regulation (RCRA) and the Safe Drinking Water Act.  The budget blue print calls for a 45% reduction in support to the states to run these programs.  

A recent article in the Columbus Dispatch discussed the potential impacts on Ohio EPA.  As noted in the article, federal funds make up a significant portion of Ohio EPA's operating budget.

After fees for permits, inspections and licenses, federal funding is the Ohio EPA's second-largest source of income, accounting for about $40 million of its $200 million budget.

In 2016, the U.S. EPA awarded its Ohio counterpart nearly $37 million for programs that maintain Superfund sites, restore wetlands, protect the Great Lakes and manage hazardous waste. 

The Administration is missing an opportunity to be more cost effective in implementation of environmental regulation.  The Administration is also losing a significant opportunity to be true to principles of federalism by entrusting the states with greater autonomy with regard to implementation of environmental program.  

If the Administration truly wants to shift power more toward the states, then drastic cuts to federal funds that allow states to implement those federal programs undermines that important policy goal. The danger exists that without adequate funding states cannot meet the increased demands.  In the years to follow, the states inability to be to handle the increased burden will be used by those who champion increased federal oversight to justify taking authority away from the states.  

Thirty EPA Rules Frozen by New Executive Action

On January 20th, Reince Preibus, President Trumps Chief of Staff, issued a broad regulatory freeze memorandum entitled “Regulatory Freeze Pending Review” halting federal rules that had not yet become effective. All rules covered by the memorandum are suspended for 60 days (March 21, 2017). On January 26, 2017, EPA published a list of 30 rules subject to the freeze.

The vast majority of EPA rules temporarily frozen are actually rules that would lessen regulatory burdens or approve plans for meeting existing standards.  These include: a grant of primacy to Kentucky's Underground Injection Control Program, numerous air plans for compliance with ozone or PM 2.5 air quality standards and attainment designations for areas that now meet air quality standards.

The most significant rule affected by the freeze include:

  • Amendments to EPA's Risk Management Program (RMP)
  • Renewable Fuel Standard's renewable volume obligations
  • Pesticides; Certification of Pesticide Applicators

EPA's recent amendments to the Risk Management Plan (RMP) Rule titled "Accidental Release Prevention Requirements:  Risk Management Programs Under the Clean Air Act."  The RMP amendments, which will be discussed in a later post, increase emergency preparedness requirements at some 12,500 facilities that handle chemicals or hazardous substances.

Another rule impacted is the Renewable Fuel Standard's renewable volume obligations.  As discussed in a recent Bloomberg article, the biofuel industry struck a major victory when the Obama Administration raised 2017 quotas- Renewable Volume Obligations (RVOS)- to new record levels. As discussed in the Bloomberg article, the freeze triggered a sell-off of biofuel credits.

Renewable Identification Numbers (RINs), tracking compliance with 2017 ethanol consumption targets, plummeted 23 percent to 46 cents a piece on Wednesday, the lowest since November 2015, broker data compiled by Bloomberg show.  The credits are attached to each gallon of biofuel.  Once a refiner blends ethanol or biodiesel into petroleum, they can keep the credit to show adherence to the program or trade it to another party.

Finally, the final rule Pesticides; Certification of Pesticide Applicators was also frozen.  EPA states the purpose of the rule was to ensure that persons using certain types of pesticides- Restricted Use Pesticides (RUPs)- were competent to use the product.  The rule creates new certification requirements for persons who want to use RUPs.  According to EPA, the most acutely toxic pesticides or those needing to be applied with special care are classified as RUPs.

Conclusion

While the freeze did have a major impact on the RMP rules, pesticide certification and biofuels, the vast majority or rules affected are likely beneficial.  These majority rules demonstrate compliance with federal air quality standards, allows states to take over implementation of regulatory programs or  approves air quality compliance plans developed by States.

After the temporary freeze most if not all of the rules will likely move forward.  The most likely rules that could be targeted by future Congressional action include the RMP amendments and raise in biofuel volume requirements.