On March 16, the White House released its proposed fiscal year 2018 budget outline entitled "A Budget Blueprint to Make America Great Again." Fully realizing one of the President's priorities—to ease the burden of Federal regulations—the Office of Management and Budget's proposed outline includes a substantial reduction to the Environmental Protection Agency's (EPA) fiscal year 2017 budget of $8.1 billion. The proposal cuts nearly 31% in EPA's funding, reducing its resources dedicated to enforcement and compliance, and implementation of environmental laws through regulations to just $5.7 billion. The agency has not witnessed such a diminished budget since the early 1990s. Thus, the reduced funding will have significant impacts on current national, state, and local environmental programs. Below, we discuss what the proposed budget outline says and what it means.
What the Proposed Budget Outline Says
To effectuate the nearly $2.4 billion reduction in funding from the FY 2017 budget, the outline proposes sweeping cuts across several major agency programs, including the elimination of entire programs:
- Cuts $100 million earmarked in the FY 2017 budget for (1) EPA's support of the Clean Power Plan, (2) the Global Climate Change Initiative, the U.S.'s contributions to the United Nations Green Climate Fund, and the U.S.'s participation in other international climate change partnership programs, and (3) climate change research
- Eliminates $427 million in funding for specific regional, multistate programs such as the Great Lakes Restoration Initiative and the Chesapeake Bay water cleanup program
- Removes $347 million from the budget by cutting more than 50 other existing programs such as the Energy Star efficiency labeling program, Endocrine Disrupter Screening Program, Targeted Air Shed Grants, and programs aimed at providing infrastructure assistance to Alaska Native Villages
The budget outline further proposes decreased funding to regulatory and enforcement programs, grants to states, and internal EPA sections, including:
- Reduces funding to the Office of Research and Development and the agency's participation in providing Science to Achieve Results (STAR) grants from $483 million in FY 2017 to $250 million (STAR grants are awarded to non-EPA scientists to conduct research that compliments the agency's work)
- Shrinks funding for enforcement from $548 million in FY 2017 to $419 million (the proposed budget allocates funding to the Office of Enforcement and Compliance Assurance, which investigates violations of environmental laws, but the potential to reorganize this office, including eliminating it and combining its responsibilities with other programs, has been hinted at by the White House and EPA)
- Decreases funding to the Superfund cleanup program, pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), from $1.1 billion in FY 2017 to $762 million
- Lessens funding provided to states in the form of categorical grants intended to help states implement various air, water, waste, pesticides, and toxic substances programs from $1.1 billion in FY 2017 to $597 million
The budget outline isn't all reductions in resources, however. It includes a $4 million increase—to $2.3 billion—in funding for clean water, wastewater, and drinking water programs and for State Revolving Funds, which provide financing for water quality infrastructure projects. Moreover, it holds flat the budget for the Water Infrastructure Finance and Innovation Act at $20 million, a program that finances national and regional water projects. A more in-depth and detailed budget proposal will be issued by OMB in the next few weeks, but we don't expect this version to significantly differ from the proposed budget outline.
What the Proposed Budget Outline Means
There is no doubt that the proposed budget reflects the views of the White House and the promises made by the President during his campaign to deprioritize certain EPA programs and to reduce regulations. However, as history shows us, just like those before it, the White House's budget proposal is exactly that—a proposal. It is a starting point down a long road of negotiation.
Many Democrats and some Republicans have already voiced their opposition in some form or another – from rejecting the proposed EPA budget as a whole to beginning a dialogue regarding ways to salvage key programs and grants beneficial to their states. Industry groups' views are mixed as well as with some seeking to maintain a strong civil and criminal enforcement as a check to ensure market fairness, while others see the benefits in a streamlined regulatory process with fewer hurdles. Many are also fighting to preserve popular programs and grants beneficial to their bottom lines.
One of the arguments in support of the scaled back budget is that reductions will avoid duplicative efforts and give back to the states the important role of implementing the Nation's environmental laws. However, already resource-strained states and environmental agencies will find it difficult to step up and fill the gap left by EPA without the needed funding, much of which is proposed to be cut. This problem is exacerbated by the possible elimination of two EPA regional offices. Although not included in the budget outline, the OMB has asked EPA to develop a plan to review its current regional structure and reduce its footprint from ten offices to eight. States fear even less support and oversight assistance from EPA under this abridged structure.
Environmental groups are concerned about the integrity of the system and the agency's diminished ability to protect human health and the environment. They have voiced their difficulty reconciling the President's pledge to "promote clean air and water" in his February 28, 2017 address to Congress and the reductions in programs and staff at EPA. Finally, even EPA Administrator Pruitt has sought additional funding for his priorities, including water infrastructure, Superfund cleanups, brownfields redevelopment, and attainment of air and water quality standards, most of which saw cuts in the proposed budget outline.
The outline is not the last word and will not be the final measure voted on by Congress, possibly in a comprehensive omnibus appropriations bill in the next few months. A more in-depth and detailed proposal will be issued by OMB in the next few weeks and then negotiations will begin. As will be played out in Congress, it has been traditionally difficult to eliminate agencies, offices, programs, and personnel. That said, EPA and most other regulatory agencies should prepare for significant reductions in their operating budgets. Due to the inevitable resource constraints, the regulated community will probably see a reduction in enforcement activity, fewer environmental regulations promulgated, and many programs cut, particularly dealing with climate change, although not at the levels proposed by the White House in this initial budget outline.
Please check back to this blog for updates on the budget process and changes to environmental and energy regulations and programs under the current administration.
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