Background

The Superfund cleanup process begins with site discovery or notification to  EPA of possible releases of hazardous substances posing a threat to human  health or the environment. Sites are discovered by various parties,  including citizens, state agencies, and EPA regional offices. Once  discovered, sites are entered into the Comprehensive Environmental  Response, Compensation, and Liability Information System, EPA’s  computerized inventory of potential hazardous substance release sites.  EPA then evaluates the potential for a release of hazardous substances  from the site to determine and implement the appropriate response to the  threats posed by the releases of hazardous substances.
The Superfund program addresses two basic types of cleanups: (1)  remedial actions—generally long-term cleanup actions at NPL sites—and  (2) removal actions—generally cleanups needed to mitigate more  immediate threats at both NPL and non-NPL sites. Remedial actions are  generally designed to provide a permanent remedy and thus can take a  considerable amount of time and money, depending on the nature of the  contamination. EPA’s regulations provide that a site must be on the NPL to  receive Superfund trust fund financing for the remedial action. Cleanups at  NPL sites progress through several steps: investigation and study, remedy  selection and design, and the remedial action. Often the construction of  cleanup remedies also requires subsequent operation and maintenance  activities to ensure that the remedy continues to protect human health and  the environment. In addition, the Superfund program conducts removal  actions, which are usually short-term cleanups for sites that pose  immediate threats to human health or the environment. Examples of  removal actions include excavating contaminated soil, erecting a security  fence, stabilizing a dike or impoundment, or taking abandoned drums to a  proper disposal facility to prevent the release of hazardous substances into  the environment. Typically, removals are limited to a 1-year effort and $2  million in expenditures. While EPA expended an average of about $220  million on removal actions in each of the past 10 fiscal years—in constant  2002 dollars—it generally spent at least twice this amount on remedial  actions, which constitute the largest portion of annual Superfund program  expenditures.
The NPL is EPA’s list of the nation’s most contaminated sites. EPA regions  use a ranking system to assess the potential of sites to pose a threat to  human health or the environment, then choose from the sites that qualify  for the NPL which sites to submit to EPA headquarters for proposal to the  NPL. Once approved by the EPA Assistant Administrator for Solid Waste  and Emergency Response, the sites are proposed for listing in the Federal  Register. After a comment period, most proposed sites are finalized on the  NPL. A majority of sites on the NPL at the end of fiscal year 2002 were  manufacturing or waste management sites, while other types of sites listed  included recycling, mining, and contaminated sediment sites.
The first stages of the remedial process are the remedial investigation and  feasibility study phases, during which the site is investigated further and  remedial options are studied. The culmination of these initial phases is a  record of decision, which identifies EPA’s selected remedy for addressing  the site’s contamination. The selected remedy is then designed in the  remedial design phase and implemented in the remedial action phase,  when actual cleanup of the site begins. When physical construction of all  cleanup actions is complete, all immediate threats have been addressed,  and all long-term threats are under control, a site is generally deemed to be  “construction complete.” Most sites then enter into the operation and  maintenance phase, when the responsible party or the state ensures that  the remedy continues to be protective of human health and the  environment. Eventually, when EPA and the state determine that no further  remedial activities at the site are appropriate, EPA deletes the site from the  NPL.
The Superfund program has over 3,000 full time equivalent staff (FTE). In  fiscal year 2002, EPA used about 2,500 FTEs for program staff in its regional  offices, and used the remaining 644 FTEs in its headquarters. The  headquarters’ FTEs are spread across numerous offices, the majority in the  Office of Solid Waste and Emergency Response (OSWER), the Office of  Enforcement and Compliance Assurance, and the Office of Administration  and Resources Management. OSWER provides policy, guidance, and  direction for the Superfund program; the Office of Enforcement and  Compliance Assurance assists with enforcement aspects of the Superfund  program; and the Office of Administration and Resources Management  assists in many aspects of managing the Superfund program, such as  human resources and grants and contract management.

	The Superfund Program’s Historical Revenue Source Is Dwindling While EPA Continues to Add Sites to the NPL

The balance of the Superfund trust fund available for future appropriations  has decreased significantly since 1996, while EPA has continued to add  sites to the NPL. The Superfund trust fund revenues from taxes, cost  recoveries, interest, fines, and penalties have decreased from over $2  billion in fiscal year 1995 to less than $370 million in fiscal year 2002, when  presented in constant 2002 dollars. Since fiscal year 2000, the Superfund  program has increasingly relied on revenue from the general fund  appropriations to supplement its trust fund, with general fund supplements  generally growing in constant 2002 dollars from $283 million in fiscal year  1995 to $676 million in fiscal year 2002. Annual program expenditures,  expressed in constant 2002 dollars, have remained between $1.3 and $1.7  billion from fiscal years 1993 to 2002. From these expenditures, remedial  actions at sites on the NPL have consistently received the largest share.  EPA continues to place hazardous waste sites on the NPL, adding 283 sites  to the NPL from fiscal years 1993 through 2002. At the end of fiscal year  2002, there were 1,233 sites on the NPL, 265 sites had been deleted, and 62  sites were proposed to the NPL. Of the 1,233 sites on the NPL, 21 percent  were in the preconstruction stage, which is primarily study and design, 31  percent had construction activities under way, and 47 percent had  completed the construction of the cleanup facility at the site. After  construction of the facility is completed, a site can remain on the NPL for  many years while the actual cleanup takes place. In fiscal year 2002, EPA  funded more investigations and studies at NPL sites than responsible  parties, while responsible parties paid for, and sometimes also performed,  about half of actions related to the sites’ cleanup design, construction, and  maintenance of remedies.

		The Balance of the Superfund Trust Fund Available for Future Appropriations Has Decreased Significantly in Recent Years

The balance of the Superfund trust fund available for future appropriations  has significantly decreased since fiscal year 1996 and at the end of fiscal  year 2002 stood at $564 million. Further, revenues into the Superfund trust  fund from taxes, cost recoveries, fines, penalties, and interest have steadily  decreased, from over $2 billion in fiscal year 1995 to less than $370 million  in fiscal year 2002, when presented in constant 2002 dollars. The Superfund  program’s total annual appropriations from the trust fund, in constant 2002  dollars, have decreased overall from almost $1.9 billion in fiscal year 1993  to about $1.3 billion in fiscal year 2002. Since fiscal year 2000, the  Superfund program has increasingly relied on the revenues from general  fund appropriations to supplement the Superfund trust fund, with general  fund supplements growing overall—in constant 2002 dollars—from $283  million in fiscal year 1995 to $676 million in fiscal year 2002. In addition to  appropriations from the trust fund, EPA uses moneys collected from other  sources to help pay for cleanups, such as funds collected in advance from  responsible parties for cleanups at designated sites.
The balance of the Superfund trust fund available for future appropriations,  presented in constant 2002 dollars, has decreased significantly from a high  of $4.2 billion in fiscal year 1996 to $564 million in fiscal year 2002. Figure 2  shows the decline in this balance.
As discussed above, before 1995, the Superfund trust fund was largely  funded by certain taxes, including excise taxes on crude oil and petroleum  products and sales of certain chemicals, and an environmental tax on  corporations. The trust fund continues to receive revenue from other  sources, including cost recoveries, interest from investments, fines, and  penalties. Table 1 shows the Superfund trust fund revenue sources,  excluding general fund appropriations, from fiscal years 1993 through 2002.
While revenues from the taxes provided the majority of resources through  fiscal year 1996, revenues from cost recoveries and interest have provided  the greatest portion of the income to the Superfund trust fund since that  time, excluding revenues from general fund appropriations. Cost  recoveries represent amounts that EPA recovered through legal  settlements with responsible parties for site cleanup costs it incurred.  Interest revenues stem from the investment of the unexpended balance of  the Superfund trust fund, which stood at $3.4 billion at the end of fiscal  year 2002. As shown in table 1, the trust fund continues to receive a small  amount of revenue from the excise and corporate taxes that expired in  1995 as the Internal Revenue Service processes amended tax returns or  settles litigation with private companies.
Each year EPA receives appropriations from the Superfund trust fund,  which is supplemented by appropriations from the general fund. Until  fiscal year 2000, the balance of the Superfund trust fund available for  appropriations and annual revenues from taxes, cost recoveries, interest,  fines, and penalties remained the primary source of appropriations for the  Superfund program. Since fiscal year 2000, appropriations from the general  fund have been about equal to the amount from the program’s historical  primary source of appropriations. Overall, general fund appropriations—in  constant 2002 dollars—generally grew from $283 million in fiscal year 1995  to $676 million in fiscal year 2002. (See fig. 3.)
Apart from the annual appropriation from the Superfund trust fund, EPA  collects funds from other sources to pay for the activities of the Superfund  program. These funds, called offsetting collections, are deposited into the  trust fund but are not subject to the annual appropriation process. The  largest source of these collections is payments by responsible parties as  part of settlement agreements to fund response actions at specific sites.  These responsible parties typically are unable or unwilling to perform the  response action. EPA uses these funds to help finance site cleanups in  accordance with the terms of the settlement agreements. In fiscal year  2002, EPA collected about $130 million from this source. Other sources of  offsetting collections include states, which pay a small portion of the  cleanup costs at sites, and other federal agencies, which pay for services  provided by EPA. The total amount collected from these additional sources  in fiscal year 2002 was about $40 million.

		Actions at NPL Sites Consume the Largest Share of Program Expenditures

During fiscal years 1993 through 2002, in constant 2002 dollars, EPA’s  annual program expenditures remained between $1.3 and $1.7 billion.  However, EPA’s Superfund program expenditures steadily decreased by  $255 million from fiscal years 1999 through 2002. In responding to this  report, EPA noted that this decrease followed a $100 million reduction to  the Superfund enacted appropriation during fiscal year 2000 and  subsequent years.
During fiscal years 1993 through 2002, remedial actions consumed the  largest share of program expenditures. Remedial actions are generally  costly, long-term projects that are designed to provide a permanent remedy  at a complex and highly contaminated site. Management and  administration expenditures consumed the second largest share of  program expenditures. Figure 5 shows the percentages of EPA’s Superfund  program expenditures in fiscal year 2002.

		More Than 1,200 NPL Sites Require Further Cleanup Activities

Of the 1,233 sites on the NPL at the end of fiscal year 2002, 21 percent were  in the preconstruction phase that largely consists of sites in study and  design, 31 percent had construction activities under way, and 47 percent  were in the “construction complete” stage. The number of construction  completions serves as the program’s key measure of progress for sites on  the NPL. EPA continues to add sites to the NPL, adding 283 new sites  during fiscal years 1993 through 2002. During that same time frame, EPA  deleted 221 sites from the NPL because no further cleanup response was  necessary. In fiscal year 2002, EPA funded more investigations and studies  at NPL sites than responsible parties, while responsible parties paid for,  and sometimes also performed, about half of the actions related to the  sites’ cleanup design, construction, and maintenance of remedies.
As shown in table 2, at the end of fiscal year 2002, there were 1,233 sites on  the NPL, 265 sites had been deleted, and 62 sites were proposed to the NPL.
Of the total 1,233 NPL sites at the end of fiscal year 2002, 158 were federal  facilities, sites owned or operated by a federal agency. Through fiscal year  2002, 265 NPL sites had been deleted because no further cleanup response  is appropriate. According to EPA regional officials, about one fourth of the  62 sites proposed for placement on the NPL were expected to become final,  while most of the cleanups at other sites continue under other authorities  or agreements.
A majority of NPL sites are in the construction complete phase. However,  depending on the remedy, work may continue at a site for many years after  a site is deemed construction complete. A common example of this is a  groundwater restoration project, where the treatment of the groundwater  begins after the facility is completed. For these cleanups at sites that are  financed by the Superfund program, EPA operates and maintains the  cleanup facility for up to 10 years, with the state paying 10 percent of the  cost, after which the site is turned over to the state to continue operation  and maintenance activities.
EPA typically adds new sites to the NPL each year and finalized 283 new  sites from fiscal years 1993 through 2002. During this time period, EPA  deleted 221 sites when no further response was appropriate. Although  more sites have been finalized on the NPL than deleted throughout these  fiscal years, the overall number of sites on the NPL remained relatively  steady. While the number of sites reaching the construction complete phase  grew, and the number of sites in study and design decreased, the number of  sites in the construction underway phase remained relatively steady. At the  end of fiscal year 2002, approximately half of the NPL sites were still in  study and design or had construction under way. Figure 6 demonstrates the  overall growth in the NPL and the number of sites that have reached the  construction complete phase.
In responding to this report, EPA noted that figure 6 does not reflect a  backlog of unfunded projects that are ready to begin construction. EPA  also responded that, in their opinion, projects currently in or about to enter  construction tend to be larger, more complex, and more expensive than  those of 5 to 10 years ago. According to EPA, these factors led to the  Administration’s decision to request a $150 million increase for Superfund  construction in the fiscal year 2004 President’s budget request.
Although the law allows EPA to pay for the cleanup at a site and use  enforcement actions to recover the cleanup costs, responsible parties  frequently cooperate with EPA and conduct the cleanup under EPA  oversight. In such cases, the responsible party pays for all or part of the  cleanup. According to EPA, responsible party involvement in the program  remains strong, and the total value of responsible party commitments since  the inception of the program exceeds $20 billion. The actual dollar amount  that responsible parties expend for site cleanups is unknown because the  parties are not required to publicly report either the cleanup or any related  transaction costs they incur. However, EPA tracks the participant—EPA,  the responsible party, a federal agency, or in some limited cases, the state— leading a cleanup action at a site and indicates whether the participant is  providing a majority of the funding for the action. For example, if a  remedial action is identified as a Superfund lead action, EPA uses annual  Superfund appropriations to conduct the work and pay for the remedial  action. Over the course of a cleanup, however, a variety of participants may  take the lead on different actions. Table 3 demonstrates the percentage of  actions led by EPA, a responsible party, or another participant.
In fiscal year 2002, EPA took the lead on more actions than responsible  parties in the earlier stages of the cleanup process, whereas responsible  parties took the lead more often in the later stages of the cleanup,  specifically on remedial actions and during operation and maintenance.  However, EPA still pays for oversight of the responsible party’s cleanup  activities when the responsible party primarily finances an action; and in  some limited cases EPA reimburses the responsible party for some or all of  the cleanup work. Other lead participants include a responsible party  leading an action under a state program; EPA, a state, or tribe conducting a  cleanup using a responsible party’s funds; or a state with a state cleanup  program that does not use Superfund dollars.

	EPA Considers Many Factors in Selecting Sites for the NPL

EPA uses its Hazard Ranking System to assess the hazards that a site poses  to human health and the environment to determine a site’s eligibility for  placement on the NPL. After a site’s eligibility is determined, EPA regions  then consider many other factors in selecting the sites to submit to EPA  headquarters for proposal to the NPL. The more prominent of these factors  considered are the availability of alternative federal or state programs that  could be used to clean up the site, the status of responsible parties  associated with the sites, and the cost and complexity of the cleanup. State  cleanup programs serve as an alternative to the Superfund program and are  the approach preferred by most of the state officials that we interviewed,  many of whom believed state cleanups are faster. However, state cleanup  programs generally present a feasible alternative only when a viable and  cooperative responsible party has been identified to fund and perform the  cleanup. According to EPA regional officials, at least 42 of the 54 sites  proposed to the NPL in fiscal years 2001 and 2002 either did not have a  viable and cooperative responsible party or were too costly or complex for  states to address.

		EPA Uses Its Hazard Ranking System as the Principal Mechanism for Listing Sites

EPA uses the Hazard Ranking System as its principal mechanism for  determining the eligibility of sites for placement on the NPL, accounting for  1,506 of the 1,560 sites that were proposed or finalized on the NPL through  fiscal year 2002. The ranking system is a numerically based screening  system that uses information from initial, limited investigations to assess  the relative potential of sites to pose a threat to human health or the  environment. Using a structured analysis approach to scoring sites, the  ranking system assigns numerical values to factors that relate to risk-based  conditions at the site. The factors considered are grouped into three  categories: (1) the likelihood that a site has released or has the potential to  release hazardous substances into the environment; (2) the characteristics  of the waste; and (3) the people or sensitive environments affected by the  release. The site inspection provides the data necessary to score the site  according to the Hazard Ranking System. Sites that score at least 28.5 on  the ranking system are eligible for listing on the NPL. Because the ranking  system scores are based on initial, limited investigations, they are only used  to determine the eligibility of sites for listing on the NPL. Scores are not  used to prioritize among sites that qualify for the NPL and do not determine  priority in funding cleanup actions. More detailed studies, following the  listing, are needed to determine the extent of the contamination and the  appropriate response for particular sites.
Hazardous waste sites can also qualify for the NPL by means of state or  territorial designation or by meeting a set of three criteria. Each state and  U.S. territory is permitted a one-time opportunity to designate a site for  placement on the NPL. Through fiscal year 2002, 37 states and four  territories had designated sites for addition to the NPL. A site may also be  added to the NPL when it meets three criteria: (1) the Department of Health  and Human Services’ Agency for Toxic Substances and Disease Registry  has issued a health advisory that recommends individuals leave the area of  the site, (2) EPA determines the site poses a significant threat to public  health, and (3) EPA anticipates that using its remedial authority will be  more cost-effective than using its removal authority. Only 13 sites have  been added to the NPL through this mechanism.

		EPA Considers Alternative Programs, Availability of Responsible Parties, and the Cost and Complexity of the Sites

Achieving the minimum hazard ranking score of 28.5 to qualify for the NPL  does not guarantee a site placement on the list. EPA regions consider many  factors before deciding to submit a site to EPA headquarters for proposal to  the NPL. EPA and state officials told us that they consider a variety of  additional factors, the most common of which are determinations of  whether (1) other federal or state programs are available to cleanup the  site, (2) a viable responsible party has been identified to clean up the site,  and (3) the cost or complexity of the cleanup effort is likely to require  federal assistance through the Superfund program.
Many of the EPA regional and state officials we interviewed considered the  NPL a “last resort” for sites that cannot be addressed under other state or  federal programs. Officials of one EPA region told us, for example, that  programs other than Superfund are covering about 98 percent of the  hazardous waste sites discovered in that region. In response to this report,  EPA headquarters officials stated that the NPL is one of a number of  options for cleaning up sites and that the regions should evaluate all  reasonable options and select the one that best meets the objectives for the  site. EPA defers NPL listing for sites that can be cleaned up under other  federal programs or authorities. For example,   The Resource Conservation and Recovery Act (RCRA), Subtitle C,  which regulates hazardous waste management. Under this program,  EPA requires RCRA-regulated facilities to investigate and clean up  releases of hazardous waste to the environment; and  EPA’s Brownfields program, which is designed to assist in the  assessment and cleanup of abandoned, idled, or underused industrial  and commercial facilities where expansion of redevelopment is  complicated by real or perceived environmental contamination.
Two EPA policies also defer NPL listing for sites that can be cleaned up  under state programs. EPA’s state deferral policy establishes formal  agreements between EPA and states through which EPA defers  consideration of NPL listing of sites, while the state compels and oversees  responsible parties’ response actions. Under this policy, response actions  should be substantially similar to a response required under CERCLA.  EPA’s voluntary cleanup program policy establishes agreements with states  that, for sites that are cleaned up under state programs, EPA will generally  assume that state activities are sufficient and the agency will not take  separate removal or remedial action at sites in the state program. Both of  these policies allow states to handle the cleanup of sites that may  otherwise be proposed to the NPL. Hazardous waste cleanup officials in 6  of the 10 states that we interviewed indicated a preference for cleaning up  hazardous waste sites under their state programs.
EPA has also established the Superfund alternative sites policy within the  Superfund program that provides a framework for the agency to suspend  the NPL listing process for sites that might otherwise be listed on the NPL.  This policy gives the responsible parties an opportunity to enter into an  agreement that commits them to clean up the site in the same manner as if  it were listed on the NPL. Because less time is spent on the site-listing  process, according to EPA, this policy helps to expedite the process of  entering into settlements with responsible parties and the eventual  cleanup.
In addition to performing cleanups under their own state programs, states  play an important role in the cleanup of hazardous waste sites through their  agreements with EPA. Many states are involved in the early phases of the  cleanup process, such as preliminary assessment and site investigation.  Many of these states have entered into cooperative agreements with EPA to  perform this work. Appropriations laws for fiscal years 1995 and 1996  required the concurrence of the governor of the applicable state before  EPA could propose a site for inclusion on the NPL. Although no longer  required by appropriations language, as a matter of policy, EPA continues  to request state support on the listing of sites onto the NPL. According to  EPA, since 1995 EPA has proposed 203 sites to the NPL; among them, only  one site was proposed over state opposition.
EPA regional officials stated that the lack of cooperation by the party  responsible for a site was a factor in 36 of the 54 sites proposed to the NPL  in the last 2 fiscal years. The burden on states of funding the cleanup effort  when they are unable to obtain responsible party cooperation often drives  state support for listing such sites on the NPL. In some cases, site cleanup  responsibility cannot be assigned to a specific party because the party is no  longer in existence or is unable to pay. Cleaning up such “orphan” sites  would require government funding; these cleanups may be too expensive  for states to perform. In other cases, responsible parties may have been  identified, but they are uncooperative or unwilling to fund the cleanup.  While all states have some form of enforcement authority to compel  responsible parties to fund cleanups, EPA’s enforcement powers are  sometimes more compelling or applicable to the situation. For example,  officials in several states stated that they had experienced difficulty when  pursuing enforcement actions at sites with numerous responsible parties.  Some sites, such as hazardous waste dumps, may have hundreds or even  thousands of responsible parties because CERCLA defines responsible  parties as the generators and transporters of hazardous waste, in addition  to the owners and operators of the site.
Officials in most of the regions and states pointed to the strength of EPA’s  enforcement powers to compel responsible parties to cooperate with state  authorities. Several officials told us that they had used the threat of NPL  listing to persuade responsible parties to cooperate earlier in the process.  EPA’s enforcement powers include the ability to seek financial penalties  against responsible parties for noncompliance, the ability to issue formal  orders to the responsible parties to perform cleanups, and the liability  scheme by which EPA can force one responsible party to fund the entire  cleanup at a site, even if it is unclear how much of the contamination it  caused. EPA’s enforcement powers are sometimes referred to as a “gorilla  in the closet”—states can threaten to unleash the EPA “gorilla” on  recalcitrant responsible parties. A few states pointed to the value of  maintaining strong EPA enforcement powers because they encourage  responsible parties to cooperate with states.
Officials in many of the regions told us that the complexity and cost of sites  were factors that helped them determine whether sites should be  submitted to EPA headquarters for proposal to the NPL. Of the 54 sites  proposed in the last 2 fiscal years, regional officials described 25 percent of  them as either complex or costly, or both. Officials in one region described  a site where contamination had leaked about 500 feet out into a major river  and spread through approximately 15 feet of sediment, making cleanup of  the site complex. According to a recent study, while 48 states and Puerto  Rico have funds that can be used for the cleanup of hazardous waste sites,  31 of the 41 states that provided data had relatively small fund balances  (under $25 million), making it difficult for states to clean up expensive  sites. In addition, the study found that states’ cleanup fund balances have  been declining since 1990. Without adequate funding to cleanup the more  expensive sites, state cleanup programs generally present a feasible  alternative to NPL listing only when a viable and cooperative responsible  party has been identified to fund or perform the cleanup.

	The Superfund Program Faces Numerous Future Fiscal Challenges

The need for federal cleanup funds to address sites without alternative  funding sources may grow in coming years, even as EPA predicts the  program’s historical source of funding will be depleted at the end of fiscal  year 2003. A 2001 study estimated that the cost of implementing the  program under then-current law would total $15 billion for the 10 years  ending in fiscal year 2009. The number of sites whose cleanup cannot be  funded by responsible parties or states could increase because an increase  in bankruptcies would lead to more sites without viable responsible parties  and states face budget problems that will curtail their already limited  ability to pay for cleanups at sites that lack viable responsible parties.  Without responsible parties to fund remediation costs at hazardous waste  sites and with states’ capacity curtailed, federal funding would likely be  sought to perform any cleanup that EPA proposed to do. However, EPA  officials expect that the balance of the Superfund trust fund available for  future appropriations will be depleted at the end of fiscal year 2003. EPA  has recently asked an advisory council for guidance on several issues  affecting the Superfund program’s future. Because Superfund lacks  indicators to fully measure the outcomes of the program’s cleanup efforts,  EPA has asked the advisory council to develop criteria by which to  measure the program’s progress. However, it is unclear whether the  advisory council will reach consensus on its recommendations; and its  findings are not expected until December 2003, at the earliest.

		The Number of Sites Without Responsible Parties or States to Fund Their Cleanup Is Expected to Rise

The number of sites that have no identifiable nonfederal source to fund  their cleanup is growing, and several factors indicate the potential for  additional growth in the future. Responsible parties and EPA lead most  actions at NPL sites. According to EPA, responsible parties have funded  about 70 percent of the remedial actions begun at sites other than federal  facilities in the last 3 fiscal years. Officials in 7 of the 10 EPA regions,  however, have either observed an increase in the number of sites without  viable responsible parties, or expect such an increase in the future.  Officials in one region, for example, told us that the proportion of  responsible party-led remedial actions in their region had decreased over  the last 10 years, from about 70 percent to about 50 percent currently.  Officials in all regions pointed out factors that could lead to an increase in  sites in the coming years whose cleanup cannot be funded by responsible  parties or states, including (1) the states’ preference to work directly with  viable responsible parties, which leaves fewer sites with viable responsible  parties eligible for proposal to the NPL; (2) an increase in sites that lack  viable responsible parties due to bankruptcies; and (3) fiscal constraints on  states’ capacity to clean up sites on their own. For example, officials in one  region mentioned that difficult economic times would likely contribute to  an increase in bankrupt facilities at the same time that states are  experiencing budget shortfalls. Without responsible parties to fund  remediation costs at hazardous waste sites and with states’ capacity  curtailed, any cleanup at these sites would have to be funded with federal  funds.
The states’ preference to work directly with responsible parties makes sites  with viable and cooperative responsible parties less likely to be listed on  the NPL, increasing the potential need for federal funds if any of the  remaining sites that are added to the NPL are to be cleaned up, since these  sites may lack viable responsible parties. When Congress enacted the  federal Superfund program in 1980 at least 21 states did not have cleanup  statutes that provided them with enforcement authorities. As of 2001, all  states had laws that provide them with some form of enforcement  authority, and 48 states had statutory authority for conducting voluntary  cleanup programs, according to a study by the Environmental Law  Institute—an environmental research group. Officials in most of the 10  states we contacted agreed that they preferred to work with viable and  cooperative responsible parties under their state program, rather than turn  the sites over to the EPA for NPL listing. They provided a variety of reasons  for not supporting a site’s listing on the NPL, including the state’s ability to  perform the cleanup faster, community or political opposition to listing,  and a belief that the federal process leads to more expensive cleanups. For  example, one state’s officials believed the state could perform a site’s  cleanup more quickly than EPA because, in their opinion, EPA spent too  much time in the inspection and design phases. Although states may  sometimes need EPA’s enforcement capacity to compel responsible parties  to clean up sites, states prefer working with responsible parties under their  own authority whenever the parties are available, viable, and cooperative.  As a result, some sites that would have been led by the responsible party  under the Superfund program are addressed using state enforcement. This  has the potential to increase cleanup costs to the Superfund program for  any of the remaining sites that are added to the NPL, since these sites may  not have viable responsible parties.
The reported increase in sites without viable responsible parties could, if  EPA proposes to address the cleanup of these sites, lead to EPA requesting  an increased appropriation because states cannot handle many of these  orphan sites on their own. Officials in 8 of the 10 EPA regions told us that  they expect more responsible parties to declare bankruptcy in the future.  Officials in one region, for example, believed that more of the small,  marginal industries might go bankrupt because of difficult economic times.  States, however, cannot pay to clean up more expensive orphan sites on  their own. According to the recent study by the Environmental Law  Institute, 48 states have established cleanup funds or provided a  mechanism for the state agency to pay for one or more types of cleanup  activities at non-NPL sites. Among the most common sources for these  state cleanup funds are appropriations from the legislature, fees charged  for hazardous waste or other activities, taxes, and cost recoveries.  However, most of the states that have funds to pay for orphan sites can  only afford to clean up sites with lower cleanup costs. Only 13 of the states  with cleanup funds spent more than $10 million on cleanups in fiscal year  2000, according to the report. Even in a state that was among those that  spent the most on cleanups in fiscal year 2000, the state usually funds the  cleanup at sites where the overall cleanup costs less than $5 million,  leaving sites that cost over $10 million to federal authorities, according to  state officials.
The potential for current state budget shortfalls to affect states’ capacity to  clean up orphan sites is another factor that could result in EPA increasing  its request for federal cleanup funds, if EPA proposes to address the clean  up of these sites. The National Governor’s Association estimated in  February 2003 that states’ budget shortfalls were mounting—$30 billion for  2003 and about $82 billion in 2004. Officials in 6 of the 10 EPA regions  agreed that states in their region faced fiscal problems and anticipated that  shortfalls could cause problems with states’ future cleanup capabilities.  According to the National Governor’s Association, states must reduce  spending or increase taxes to offset these shortfalls in the short run. Any  reductions in the budgets of state cleanup programs might decrease the  states’ ability to fund further cleanups, raising the question of whether  federal funds would be provided for any potential cleanup of affected  orphan sites. Officials in one region, for example, suspected the region  might be asked to fund cleanup at more sites as a result of state financial  problems because two of its states were implementing across-the-board  percentage cuts to all state programs, including their cleanup programs.

		EPA Officials Expect The Program’s Primary Funding Source To Be Depleted by the End of Fiscal Year 2003, Increasing the Need for Alternative Funding Sources

At the same time that many EPA regional officials expect the need for  federal cleanup funds to address sites without alternative funding sources  to grow, the balance of the Superfund trust fund available for future  appropriations—historically the program’s principal source of funding—is  nearly exhausted. In previous years, funds remained in this balance to carry  over into the next year. However, the balance has fallen consistently since  fiscal year 1996. According to EPA officials, unless EPA receives additional  funds from revenue sources such as cost recoveries, the balance of the  trust fund available for future appropriations will be negative at the end of  fiscal year 2003, as shown in table 4.
If the balance of the trust fund available for future appropriations dwindles  as EPA projects, no funds would be left to carry over into fiscal year 2004.  Annual revenues from sources other than general fund appropriations,  such as cost recoveries and interest, will be insufficient to cover cleanup  costs in fiscal year 2004. To offset this decline in funds, EPA is seeking a 73  percent increase in its fiscal year 2004 budget request for general  revenues—from $632 million in fiscal year 2003 to $1.1 billion. If the budget  request is approved, for the first time in the program’s history the general  fund would provide a vast majority—nearly 80 percent—of the Superfund  program’s funding.
As part of a fiscal year 2000 appropriations bill, Congress asked Resources  for the Future, an environmental research group, to conduct an  independent study to estimate how much money EPA would need to  implement the Superfund program from fiscal year 2000 to fiscal year 2009.  Specifically, Congress wanted researchers to examine the costs of cleaning  up sites already on the NPL, cleaning up sites that would be added to the  NPL through fiscal year 2009, conducting removal actions, performing 5- year reviews, implementing long-term response actions, and the various  activities associated with administering the program. In its 2001 report,  Resources for the Future estimated the future costs of implementing the  program under then-current law. Researchers estimated that annual  program costs would most likely remain above the fiscal year 1999 level  until fiscal year 2006, and would decrease 14 percent by fiscal year 2009.  Resources for the Future concluded that the Superfund program would  cost about $15 billion over the 10 years ending in fiscal year 2009,  according to the authors’ best estimate of the likely future cost of the  program under then-current law and policies, and would likely not  experience a dramatic decrease in its annual costs.

		EPA Is Taking Steps to Address Program Challenges

EPA has taken steps to address several uncertainties surrounding the  program’s future viability. EPA has asked the National Advisory Council for  Environmental Policy and Technology to set up a subcommittee to  address several Superfund programwide issues, including some that will  affect the program’s future. EPA charged the subcommittee, first convened  in June 2002, with addressing questions related to the role of the NPL, the  role of Superfund at so-called “mega sites,” and measurements of program  progress. According to the subcommittee’s charge, the overall intent of this  effort is to assist in identifying the future direction of the Superfund  program in the context of other federal and state waste- and site-cleanup  programs. EPA officials have stated that the results of the subcommittee’s  work will be important in setting the future course of the program. The  subcommittee is scheduled to report its findings to the full advisory council  for its consideration in December 2003, before issuing the report to EPA.  While the subcommittee’s findings are still uncertain, some of its members  and EPA officials have stated that the subcommittee may not reach a  consensus on specific recommendations, in which case it would present a  discussion of the different opinions of subcommittee members.
EPA underscored the limitations of its current means of measuring  program performance when it asked the National Advisory Council for  Environmental Policy and Technology subcommittee to address measures  of the Superfund program’s progress. Since 1995, EPA has used  construction completions as the program’s key measure of progress for  sites on the NPL. As EPA pointed out to the subcommittee, however,  construction completions suffer from several shortcomings. Construction  completions neither measure nor characterize the impacts of cleanup  efforts on human health and the environment. In addition, construction  completions do not correlate as milestones for non-NPL cleanups or with  efforts at other hazardous waste cleanups. EPA implemented two new  environmental indicators in fiscal year 2003 to measure human exposures  under control and migration of contaminated ground water under control  at NPL sites. However, EPA acknowledges that there are still few cross- program metrics to capture comprehensive program outcomes. As EPA  states, this shortcoming prevents the agency from communicating the  outcomes of its work at hazardous waste sites to the public, Congress,  states, and the regulated community.
In 2002, EPA implemented a new process related to the addition of sites to  the NPL designed to maintain a stable level of costs to the program by  considering the costs, risk, urgency, and other aspects of new NPL listings.  EPA’s new process provided an additional layer of review to select among  sites submitted for proposal to the NPL by EPA regions. As part of this  process, EPA officials used two criteria—risk and urgency—to divide the  30 sites submitted for proposal by regions into five tiers. EPA also, for the  first time at this stage in the listing process, considered the costs to clean  up the sites and the timing of those costs, according to EPA officials.  Officials used the regions’ estimates of site costs to evaluate the overall  costs of listing different groups of sites, with an understanding that these  preliminary estimates are highly uncertain. In addition, EPA considered  information on state, tribal, community, and congressional delegation  support for listing the site; whether cleanup of the site was likely to be  federally funded or funded by the responsible party; and whether any  environmental justice or tribal issues were associated with the site. EPA  staff also considered enforcement concerns in deciding which sites to  recommend to the Assistant Administrator for Solid Waste and Emergency  Response for proposal. Whereas EPA approved almost all sites that the  regions submitted for proposed placement on the NPL in the past, the April  30, 2003, proposed rule included only 14 of the 30 sites submitted.  According to EPA, this new process was at least in part a response to  concerns that EPA was listing sites without foreseeable funding to start the  cleanup. EPA officials also told us that the program has carried a backlog  of unfunded construction projects since fiscal year 2001. The process used  to select this round of proposals has not yet been formalized and thus is  subject to change before the next round of proposals expected in  September 2003, according to EPA.
In 2002, EPA had also issued a draft directive to consider, among other  things, the costs of sites before listing them, but decided not to formalize  this guidance. Representatives of the Association of State and Territorial  Solid Waste Management Officials objected to EPA’s draft directive stating  their belief that, if warranted, sites should be listed on the NPL regardless  of the program’s available funding. They further noted that listing only  those sites that could be funded gave the false impression that all necessary  site cleanups were under way. Although the process that EPA used in the  most recent round of listings was driven by the same concerns as the draft  directive, an EPA official told us that the process was not necessarily an  outgrowth of the draft directive.
EPA officials are also concerned about two aspects of the long-term  stewardship of sites: the burden that the operation and maintenance of  sites has on states and the monitoring and enforcement of institutional  controls. According to several EPA and state officials, states are  increasingly concerned about the turnover of sites with federally funded  remedial actions to the states for operation and maintenance. Current  budget problems exacerbate these concerns, according to EPA. EPA  regional officials reported that almost all states had met their obligations  for the operation and maintenance of sites in the past. EPA regions  predicted that 28 sites that have been in federally funded, long-term  response action could be transferred to states for operation and  maintenance by the end of 2005. Median annual costs for the operation and  maintenance of these sites could reach $172,500 per site, according to EPA  regional officials’ estimates. To address the issue of operation and  maintenance, EPA is conducting an initiative to optimize the performance  of federally funded groundwater treatment facilities at sites across the  country. The goal of the initiative is to ensure that these treatment facilities  are working as effectively as possible before they are turned over to states  for operation and maintenance. The EPA Inspector General found that this  study has produced valuable information on the cost and performance of  these groundwater treatment facilities and has resulted in a number of  recommendations.
EPA is also concerned about the monitoring and enforcement of  institutional controls following a site’s cleanup. According to EPA,  institutional controls include administrative or legal controls to minimize  the potential for human exposure to contamination by limiting land or  resource use. For example, a local government could use a zoning  restriction to prohibit residential development in an area of contamination.  Other examples of institutional controls include easements, covenants,  well-drilling prohibitions, and special building permit requirements.  According to EPA, however, institutional controls have certain limitations.  For example, the enforcement of institutional controls, such as local  permits or groundwater use restrictions, depends on the willingness and  capability of the local government entity to monitor compliance and take  enforcement action. In addition, because institutional controls such as  consent decrees are not binding on subsequent owners of sites, the transfer  or sale of a site can lead to the erosion of these institutional controls. In  response to concerns about maintaining institutional controls, EPA is  developing an information network to centralize the tracking of  institutional controls so that interested parties would be able to identify  institutional controls at any site.

	Conclusions

As the Superfund program continues to add sites to the NPL and funding  sources shift toward general revenues, the effect of EPA’s actions to  address future program challenges remains uncertain. While the Superfund  program has implemented indicators to gauge the impacts of its efforts on  human health and the environment, EPA has acknowledged the limitations  of its current means of measuring program performance and agrees that  this shortcoming prevents the agency from communicating the outcomes  of its work at hazardous waste sites to the public, Congress, states, and the  regulated community. Although the National Advisory Council for  Environmental Policy and Technology subcommittee is expected to  recommend various policy alternatives to EPA regarding the Superfund  program, the subcommittee is unlikely to complete its final report until  December 2003, at the earliest. The group’s findings, including how EPA  should measure program performance, are as yet uncertain. Upon receipt  of the advisory council’s report, EPA will then have to decide what actions  to take to address future program challenges. Given the program's limited  funding, EPA could use performance indicators to help evaluate, prioritize,  and serve as the basis for making funding decisions. If successfully  implemented for the Superfund program, establishing these measures  would also help EPA and the Congress make the difficult funding, policy,  and program decisions that the current budget environment demands. In  doing so, EPA will have an opportunity to make fundamental changes to  improve the management of the Superfund program.

	Recommendation for Executive Action

In considering changes to the program to address future challenges  associated with the Superfund program’s fiscal uncertainty, we recommend  that the Administrator, EPA, develop indicators that can be used to  measure program performance.

	Agency Comments

We provided EPA with a draft of this report for review and comment. While  EPA generally agreed with this report’s findings and recommendation, it  provided a number of comments and clarifications, which we have  incorporated into this report as appropriate. EPA pointed out that it is  actively working on indicators to fully measure program performance  concurrent with the National Advisory Council for Environmental Policy  and Technology process. The agency specifically mentioned two new  Superfund environmental indicators implemented during fiscal year 2003:  human exposure under control and migration of contaminated ground  water under control. We acknowledge that the agency is actively working  in this area concurrent with the advisory council process, and we have  revised this report to include the agency’s recent implementation of these  environmental indicators. In responding to our draft, EPA also commented  that, to date, annual appropriations for the program have remained  relatively steady and have been largely independent of the trust fund  balance. This report does not infer any connection between the Superfund  trust fund balance and total annual appropriations for the program. EPA  provided written comments, which appear in appendix II.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this letter. At that time, we will send copies of this report to the  appropriate congressional committees; the Administrator, EPA; and other  interested parties. We will also make copies available to others upon  request. In addition, the report will be available at no charge on the GAO  Web site at http://www.gao.gov.
If you or your staff have any questions, please call me at (202) 512-3841.  Key contributors to this report were Barbara Johnson, Richard Johnson,  Jerry Laudermilk, Jonathan S. McMurray, Judy Pagano, Peg Reese, Nico  Sloss, Anne Stevens, and Tatiana Winger.

Objectives, Scope, and Methodology

The objectives of this review were to examine (1) the current status of the  Superfund program, (2) the factors guiding the Environmental Protection  Agency’s (EPA) selection of sites to be placed on the National Priorities List  (NPL), and (3) the program’s future outlook. To address these objectives,  we discussed the Superfund program with officials in EPA headquarters,  the 10 EPA regions, and 10 states. In order to gain a balance of views from  states, we selected a nonprobability sample of 10 states, consisting of the 5  states that had the most sites proposed to the NPL in the last 5 years  (California, Florida, New Jersey, New York, and Texas) and the 5 states that  had no sites proposed in the past 10 years (Arizona, Delaware, North  Dakota, Nevada, and Wyoming). The 5 states that have had the most sites  proposed to the NPL over the last 5 years accounted for about 44 percent of  the 164 sites proposed during that time. In addition to the states’ overall  perspective on the Superfund program, we interviewed officials in states  that had no sites proposed in 10 years to determine what issues, if any,  states had with supporting the listing of sites on the NPL. We also discussed  the Superfund program with officials in the Association of State and  Territorial Solid Waste Management Officials, the American Chemistry  Council, the American Petroleum Institute, Resources for the Future, and  the Environmental Law Institute.
To examine the status of the Superfund program, we reviewed the status of  the 1,560 hazardous waste sites that have been proposed and/or listed on  the NPL since 1980, the program’s historical funding and expenditure data,  and EPA’s use of human capital resources to administer the Superfund  program. We obtained actual dollar figures for fiscal years 1993 through  2002 from EPA and the President’s Budget Appendixes for fiscal years 1995  through 2004. All program funding and expenditure data are presented in  constant 2002 dollars. In our review of cleanup actions, we focused on  remedial actions, which are generally costly and can take a long time to  complete.
To identify the current cleanup status of NPL sites, we obtained data from  EPA’s Comprehensive Environmental Response, Compensation, and  Liability Information System (CERCLIS)—a computerized inventory of  potential hazardous waste sites that contains national site assessment,  removal, remedial, enforcement, and financial information for over 44,000  sites. CERCLIS is a relational database system that uses client-server  architecture (each computer or process on the network is either a client or  server), installed on separate local area networks at EPA headquarters and  all 10 regional Superfund program offices, and is used by more than 1,900  EPA staff. A September 30, 2002, report issued by EPA Inspector General  found that over 40 percent of CERCLIS data they reviewed were inaccurate  or not adequately supported. The Inspector General’s review focused on  site actions, which it defined as activities that have taken place at a site,  such as site inspections, removals, studies, potentially responsible parties  searches, records of decisions, and remedial actions. As a result of its  review, the Inspector General concluded that CERCLIS could not be relied  upon to provide error-free data to system users.
For our review, we verified CERCLIS data related to NPL sites and their  overall cleanup status as of the end of fiscal year 2002, but did not verify  detailed site action data for all sites in CERCLIS. To address the reliability  of CERCLIS data used in our review, we met with Inspector General staff to  review the nature of the errors discussed in their report. According to  Inspector General staff, the reliability of CERCLIS data was more of a  concern at the action level rather than the site level. They indicated that  using data related only to NPL sites and their cleanup status would  decrease concerns about data reliability, especially if we confirmed the  data with EPA regions. As a result, we checked certain CERCLIS data fields  for all 1,560 proposed, final, or deleted NPL sites with staff in each region,  as appropriate, including the sites’ NPL status (whether the site was  currently proposed to the NPL, final on the NPL, or had been deleted) and  the status of cleanup at the site (whether the site was in the study and  design phase, construction was under way, or construction was complete).  Regions found no errors with sites’ NPL status, but found errors in the  status of cleanup for approximately 1 percent of NPL sites. We corrected  the CERCLIS site-level data that we used for our analysis to reflect regions’  changes. After taking these additional steps, we determined that the  CERCLIS site-level data were sufficiently reliable for the purposes of this  report. To present information regarding which participants were leading  cleanup actions at sites, we used action-level data provided by EPA without  further verification.
For our analysis of the historical cleanup status of sites on the NPL from  fiscal years 1993 to 2002, we relied on fiscal-year-end status data provided  by EPA. In addition, to identify construction complete sites that had been  deleted, we used data provided by EPA that showed the deletion dates for  NPL sites. We asked regions to verify the dates that sites transitioned to  deleted status to the extent possible. However, to minimize the burden on  EPA regional staff, we did not ask that they check each date against source  documents.
To assess the NPL listing process, we reviewed EPA’s minimum eligibility  criteria, policies, guidance, and recent practices, and examined the extent  of EPA’s coordination with states. We analyzed available data on state  hazardous waste cleanup programs, focusing on the coordination between  federal and state programs to address current and future Superfund sites.  We also discussed the NPL listing process and factors guiding EPA’s  selection of sites to be placed on the NPL with officials in EPA  headquarters, EPA regions, and states.
To assess the program’s future fiscal outlook, we examined the effect of the  expiration of the taxing authority, identified and reviewed estimates of  future funding requirements and workload projections, and examined  EPA’s current efforts to address future program needs. In addition, we  discussed issues likely to affect the Superfund program in the near future,  such as program funding and NPL-listing trends, with officials from EPA,  states, industry associations, and environmental research groups. We did  not examine future challenges associated with benefits, health risks, or  cleanup standards.
We conducted our work between August 2002 and July 2003 in accordance  with generally accepted government auditing standards.

Comments from the Environmental Protection Agency

The following are GAO’s comments on the EPA letter dated July 18, 2003.

	GAO Comments

1. We revised this report to include the agency’s recent implementation of  environmental indicators. 2. This report presents total appropriations to the program from fiscal  year 1993 to 2002 in constant 2002 dollars. This report draws no  conclusions about connections between the Superfund trust fund  balance and total annual appropriations. 3. We revised this report to include the agency’s statement regarding the  value of responsible party commitments since the inception of the  program. 4. We included the agency’s statements regarding the backlog of unfunded  projects, the changing nature of the projects under way, and the  increased request for Superfund construction funding in this report.  5. We revised this report to reflect EPA headquarters’ position on the  proper use of the NPL.  6. We acknowledge that EPA currently reports responsible party  participation in cleanups on a national rather than a regional basis. As  this report states, officials in 7 of the 10 EPA regions have either  observed an increase in the number of sites without viable responsible  parties or expect such an increase in the future. The comment indicated  by EPA functions as an example in this report.

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Summary:
Why GAO Did This Study

Congress established the Superfund program in 1980 to clean up highly contaminated hazardous waste sites. Among other things, the law established a trust fund to help the Environmental Protection Agency (EPA) pay for cleanups and related program activities. The trust fund was financed primarily by three dedicated taxes until 1995, when the taxing authority expired. EPA continues to discover sites eligible for cleanup under the Superfund program. GAO was asked to examine the current status of the Superfund program, the factors guiding EPA's selection of sites to be placed on its National Priorities List, and the program's future outlook.

What GAO Found

The balance of the Superfund trust fund available for future appropriations has decreased significantly since 1996, while highly contaminated hazardous waste sites continue to be added to the National Priorities List (NPL), EPA's list of the nation's most contaminated sites. A decline in revenues to the trust fund has led the Superfund program to rely increasingly on appropriations from the general fund. In EPA's fiscal year 2004 budget request for the Superfund program, the general fund appropriation would make up about 80 percent of the program's total appropriation. At the end of fiscal year 2002, the NPL had 1,233 sites in various stages of cleanup. EPA considers many factors in selecting from the sites that are eligible to be listed, the most prominent of which are the availability of alternative federal or state programs that could be used to clean up the site, the status of responsible parties associated with the sites, and the cost and complexity of the cleanup required. As the Superfund program continues to add sites to the NPL and funding sources shift toward general fund appropriations, the effect of EPA's actions to address future program challenges remains uncertain. Because Superfund lacks indicators to fully measure the outcomes of the program's cleanup efforts, EPA has asked an advisory council to develop criteria by which to measure the program's progress. However, it is unclear whether the advisory council will reach consensus on its recommendations, and its findings are not expected until December 2003, at the earliest. Performance indicators could help EPA and the Congress make the difficult funding, policy, and program decisions that the current budget environment demands.