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Report to the Chairman, Subcommittee on Oversight of Government 
Management, the Federal Workforce, and the District of Columbia, 
Committee on Governmental Affairs, U.S. Senate:

On January 4, 2004, this document was revised to add various 
footnote references missing in the text of the body of the document.

July 2003:

Superfund Program:

Current Status and Future Fiscal Challenges:

GAO-03-850:

GAO Highlights:

Highlights of GAO-03-850, a report to the Chairman, Subcommittee on 
Oversight of Government Management, the Federal Workforce, and the 
District of Columbia, Committee on Governmental Affairs, U.S. Senate 

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 EPAís selection of sites to be placed on its 
National Priorities List, and the programís 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), EPAís list of the nationís 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 EPAís fiscal year 2004 budget request for the 
Superfund program, the general fund appropriation would make up about 
80 percent of the programís 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 EPAís 
actions to address future program challenges remains uncertain. 
Because Superfund lacks indicators to fully measure the outcomes of 
the programís cleanup efforts, EPA has asked an advisory council to 
develop criteria by which to measure the programís 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. 

What GAO Recommends:

In considering changes to the program to address future challenges 
associated with the Superfund programís fiscal uncertainty, GAO 
recommends that the Administrator, EPA, develop indicators that can be 
used to measure program performance.

EPA generally agreed with this reportís findings and recommendation 
but provided a number of comments, which we incorporated in this 
report as appropriate.

www.gao.gov/cgi-bin/getrpt?GAO-03-850.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact John B. Stephenson at 
(202) 512-3841 or stephensonj@gao.gov.

[End of section]

Contents:

Letter: 

Results in Brief: 

Background: 

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

EPA Considers Many Factors in Selecting Sites for the NPL: 

The Superfund Program Faces Numerous Future Fiscal Challenges: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Appendixes:

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Environmental Protection Agency: 

GAO Comments: 

Tables: 

Table 1: Revenue into the Superfund Trust Fund, Fiscal Years 1993 
through 2002: 

Table 2: Cleanup Status of Proposed, Final, and Deleted NPL Sites at the 
End of Fiscal Year 2002: 

Table 3: Percentage of Ongoing Actions at NPL Sites Led by Various 
Entities, Fiscal Year 2002: 

Table 4: Projected Balance of the Superfund Trust Fund Available for 
Future Appropriations, Fiscal Year 2003: 

Figures: 

Figure 1: Stages of the Remedial Process at NPL Sites: 

Figure 2: The Balance of the Superfund Trust Fund Available for Future 
Appropriations, Fiscal Years 1993 through 2002: 

Figure 3: Total Appropriations to the Superfund Program, Fiscal Years 
1993 through 2002: 

Figure 4: EPA's Superfund Program Expenditures, Fiscal Years 1993 
through 2002: 

Figure 5: EPA's Superfund Program Expenditures, Fiscal Year 2002: 

Figure 6: Cleanup Status of Proposed, Final, and Deleted NPL Sites, 
Fiscal Years 1993 through 2002: 

Abbreviations: 

ATSDR: Agency for Toxic Substances and Disease Registry:

CERCLA: Comprehensive Environmental Response, Compensation, and 
Liability Act:

CERCLIS: Comprehensive Environmental Response, Compensation, and 
Liability Information System:

EPA: Environmental Protection Agency:

FTE: Full time equivalent:

NIEHS: National Institute for Environmental Health Science:

NPL: National Priorities List:

ORD: Office of Research and Development:

OSWER: Office of Solid Waste and Emergency Response:

RCRA: Resource Conservation and Recovery Act:

Letter July 31, 2003:

The Honorable George V. Voinovich 
Chairman 
Subcommittee on Oversight of Government Management, the Federal 
Workforce, and the District of Columbia 
Committee on Governmental Affairs 
United States Senate:

Dear Mr. Chairman:

The Environmental Protection Agency (EPA) estimates that one in four 
Americans lives within 4 miles of a hazardous waste site. Congress 
established the Superfund program in 1980 to address the threats that 
these sites pose to human health and the environment. Among the 
hazardous waste sites that the Superfund program addresses are 
manufacturing facilities where hazardous waste has been spilled or 
disposed of on site, waste disposal facilities where soil or 
groundwater has been contaminated, or sites where toxic materials have 
been disposed of improperly and abandoned. EPA, which administers the 
Superfund program, has identified 44,000 potentially hazardous waste 
sites and continues to discover about 500 additional sites each year. 
EPA places the nation's most seriously contaminated sites, which 
typically are expensive and can take many years to cleanup, on its 
National Priorities List (NPL). At the end of fiscal year 2002, there 
were 1,233 sites on the NPL.

The Comprehensive Environmental Response, Compensation, and Liability 
Act (CERCLA) of 1980 established the Superfund program to clean up 
highly contaminated hazardous waste sites. CERCLA authorizes EPA to 
compel the parties responsible for the contamination to clean up the 
sites; allows EPA to pay for cleanups, then seek reimbursement from the 
responsible parties; and establishes a trust fund to help EPA pay for 
cleanups and related program activities. The law also authorizes states 
to participate in the cleanup process, provides for public 
participation in the cleanup decisions, and provides that responsible 
parties are liable for damage to injured natural resources. In 
addition, the law establishes a process for cleaning up hazardous waste 
at federal facilities, although the Superfund trust fund is generally 
not available to fund these federal cleanups, which are funded from 
federal agency appropriations.

States and responsible parties play a significant role in the cleanup 
of hazardous waste sites. Most states have established their own 
programs to clean up hazardous waste sites independently of the federal 
Superfund program. However many of these state programs have limited 
capacity to address costly and complex sites that do not have 
responsible parties to pay for the cleanup. Within the Superfund 
program, states may enter into agreements with EPA to perform certain 
program actions, such as initial site assessments; EPA also consults 
with states on cleanup decisions throughout the cleanup process. 
Parties responsible for the contamination, such as current or former 
owners or operators of a site or the generators and transporters of the 
hazardous substances, often pay for and sometimes even perform the 
cleanup under agreements with EPA or the state. In some cases, parties 
responsible for the contamination cannot be identified or do not have 
sufficient resources to perform the cleanup.

To fund the Superfund program, CERCLA established a trust fund that can 
be used to conduct removal and remedial actions, to administer and 
manage the program, and to identify and oversee responsible parties. 
Until 1995, the trust fund was financed primarily by a tax on crude oil 
and certain chemicals and an environmental tax on corporations. The 
authority for these taxes expired in December 1995 and has not been 
reauthorized; however, the trust fund continues to receive revenue from 
interest accrued on the unexpended invested balance, recoveries of 
cleanup costs from responsible parties, and collections of fines and 
penalties. The trust fund has also received revenue from annual general 
fund appropriations that, along with its other revenues, have been used 
to fund the Superfund program's operations. As the general fund 
appropriations grow, the debate continues on whether to reinstate the 
taxes to support the Superfund program.

As agreed with your office, we examined (1) the current status of the 
Superfund program, (2) the factors guiding EPA's selection of sites to 
be placed on the 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, 10 states, associations that 
represent states, industry groups, and environmental groups.[Footnote 
1] To assess the program's status, we reviewed the status of the 1,560 
hazardous waste sites that have been proposed and/or listed on the NPL 
since the beginning of the program, program funding and expenditure 
data, and EPA's use of human capital resources to administer the 
Superfund program. In this report, we present all program funding and 
expenditure data 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 assess the NPL listing process, we 
evaluated EPA's minimum eligibility criteria, policies, guidance, and 
recent practices; we also assessed 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. To assess 
the program's future fiscal outlook, we examined the effect of the 
expiration of the taxing authority for the trust fund, identified and 
reviewed estimates of future funding requirements and workload 
projections, and examined EPA's current efforts to address future 
program needs. We did not examine future challenges associated with 
benefits, health risks, or cleanup standards. Appendix I provides 
detailed information on our scope and methodology.

Results in Brief:

The balance of the Superfund trust fund available for future 
appropriations has decreased significantly since 1996, while additional 
hazardous waste sites continue to be placed on the NPL. The Superfund 
trust fund revenues from taxes, cost recoveries, interest, fines, and 
penalties have decreased from more than $2 billion in fiscal year 1995, 
the year the taxing authority expired, to less than $370 million in 
fiscal year 2002 when presented in constant 2002 dollars. The decline 
in these revenues has led the Superfund program to rely increasingly on 
appropriations from the general fund to supplement its 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. While the program's funding sources have changed, annual program 
expenditures, in constant 2002 dollars, have remained between $1.3 and 
$1.7 billion. As the balance of the trust fund available for future 
appropriations declines, EPA continues to place hazardous waste sites 
on the NPL. EPA added 283 sites to the NPL from fiscal years 1993 
through 2002; the NPL contained 1,233 sites by the end of fiscal year 
2002. Of these 1,233 NPL sites, 21 percent were in the study and design 
stage, 31 percent had construction activities under way, and 47 percent 
had completed the construction of any required 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.

EPA uses its Hazard Ranking System, a numerical scoring system that 
assesses the hazards a site poses to human health and the environment, 
as the principal mechanism for determining which sites are eligible for 
placement on the NPL. After a site's eligibility is established, EPA 
regions then consider many other factors in selecting the sites to 
submit to EPA headquarters for proposal to the NPL. The most prominent 
of these factors 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, because of resource limitations, 
state cleanup programs generally present a viable alternative only when 
a party responsible for the contamination can be identified and is 
ready, willing, and able to fund and perform the cleanup.

The Superfund program's need for federal cleanup funds to address sites 
that lack alternative sources of cleanup funds may grow in the future, 
while the program's funding from sources other than general fund 
appropriations dwindles. A 2001 study by an environmental research 
group estimated that the cost of implementing the program under then-
current law would average $1.5 billion annually through 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 may propose to do. However, 
according to EPA, 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 the National Advisory Council for Environmental 
Policy and Technology for guidance on several issues affecting the 
Superfund program's future. For example, 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. In 
light of the uncertainty about whether the advisory council will 
develop outcome measures for EPA's consideration, this report makes a 
recommendation that EPA develop indicators that can be used to measure 
program performance so that changes to the program to address future 
challenges associated with the Superfund program's fiscal uncertainty 
can be more fully considered.

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. We acknowledge that EPA 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 two new environmental indicators.

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.

Figure 1: Stages of the Remedial Process at NPL Sites:

[See PDF for image]

[End of figure]

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.

Figure 2: The Balance of the Superfund Trust Fund Available for Future 
Appropriations, Fiscal Years 1993 through 2002:

[See PDF for image]

[End of figure]

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.

Table 1: Revenue into the Superfund Trust Fund, Fiscal Years 1993 
through 2002:

Constant 2002 dollars in millions.

Taxes; Fiscal year: 1993: $2,019; Fiscal year: 1994: $1,685; Fiscal
 year: 1995: $1,672; Fiscal year: 1996: $705; Fiscal year: 1997: $82; 
Fiscal year: 1998: $85; Fiscal year: 1999: $22; Fiscal year: 2000: 
$5; Fiscal year: 2001: $6; Fiscal year: 2002: $7.

Cost recoveries; Fiscal year: 1993: 214; Fiscal year: 1994: 231; 
Fiscal year: 1995: 285; Fiscal year: 1996: 276; Fiscal year: 1997: 341; 
Fiscal year: 1998: 343; Fiscal year: 1999: 338; Fiscal year: 2000: 239; 
Fiscal year: 2001: 205; Fiscal year: 2002: 248.

Interest on unexpended balance; Fiscal year: 1993: 165; Fiscal year: 
1994: 202; Fiscal year: 1995: 359; Fiscal year: 1996: 388; Fiscal 
year: 1997: 359; Fiscal year: 1998: 313; Fiscal year: 1999: 233; 
Fiscal year: 2000: 245; Fiscal year: 2001: 223; Fiscal year: 2002: 
111.

Fines and penalties; Fiscal year: 1993: 4; Fiscal year: 1994: 3; 
Fiscal year: 1995: 3; Fiscal year: 1996: 4; Fiscal year: 1997: 3; 
Fiscal year: 1998: 5; Fiscal year: 1999: 4; Fiscal year: 2000: 1; 
Fiscal year: 2001: 2; Fiscal year: 2002: 1.

Total; Fiscal year: 1993: $2,403; Fiscal year: 1994: $2,121; Fiscal 
year: 1995: $2,318; Fiscal year: 1996: $1,372; Fiscal year: 1997: 
$785; Fiscal year: 1998: $745; Fiscal year: 1999: $597; Fiscal 
year: 2000: $490; Fiscal year: 2001: $437; Fiscal year: 2002: $368.

Source: EPA and U.S. Department of Treasury.

Notes: Table does not include revenues from general fund 
appropriations. Revenues reflected are presented on an accrual basis 
and may differ from the numbers presented in the President's Budget 
Appendix, which presents revenues on a cash basis. Totals presented in 
this table do not add up due to rounding. 

[End of table]

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.):

Figure 3: Total Appropriations to the Superfund Program, Fiscal Years 
1993 through 2002:

[See PDF for image]

Note: These appropriations do not include spending authority for 
offsetting collections.

[End of figure]

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.[Footnote 2] 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.

Figure 4: EPA's Superfund Program Expenditures, Fiscal Years 1993 
through 2002:

[See PDF for image]

[End of figure]

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.

Figure 5: EPA's Superfund Program Expenditures, Fiscal Year 2002:

[See PDF for image]

Notes: EPA's total program expenditures were $1.34 billion in fiscal 
year 2002. EPA determined which activities to include under each 
expenditure category. "Remedial" expenditures include related 
activities such as investigations, remedy design, community 
involvement, construction, post-construction, and oversight of 
responsible parties. "Removal" expenditures include costs relating to 
removal assessments, investigations, removal construction, and 
oversight. "Response support" expenditures include site-specific costs 
related to technical assistance, technology innovation, contracts 
management, records management, and general support, as well as costs 
provided to other organizations through grants, interagency or 
cooperative agreements. "Management and administration" expenditures 
include non-site-specific costs, such as program management and budget, 
policy development and implementation, emergency preparedness 
activity, contract and information management, training, and general 
support. "Enforcement" expenditures include activities such as 
searching for and negotiating agreements with responsible parties. 
"Other" includes site assessment, federal facilities, and Brownfields 
expenditures. The Brownfields program is no longer funded by the 
Superfund appropriation.

[End of figure]

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.[Footnote 
3] 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.

Table 2: Cleanup Status of Proposed, Final, and Deleted NPL Sites at 
the End of Fiscal Year 2002:

NPL status: Proposed; Study and design phase: Awaiting study: 14; Study 
and design phase: Study under way: 30; Study and design phase: Remedy 
selected: 6; Study and design phase: Design under way: [Empty]; 
Construction under way: 11; Construction completed: [Empty]; 
Deferred to another authority: 1; Total: 62.

NPL status: Final; Study and design phase: Awaiting study: 19; Study 
and design phase: Study under way: 155; Study and design phase: Remedy 
selected: 29; Study and design phase: Design under way: 58; 
Construction under way: 387; Construction completed: 585; Deferred 
to another authority: [Empty]; Total: 1,233.

NPL status: Deleted; Study and design phase: Awaiting study: [Empty]; 
Study and design phase: Study under way: [Empty]; Study and design 
phase: Remedy selected: [Empty]; Study and design phase: Design under 
way: [Empty]; Construction under way: [Empty]; Construction 
completed: 261; Deferred to another authority: 4; Total: 265.

NPL status: Total; Study and design phase: Awaiting study: 33; Study 
and design phase: Study under way: 185; Study and design phase: Remedy 
selected: 35; Study and design phase: Design under way: 58; 
Construction under way: 398; Construction completed: 846; Deferred 
to another authority: 5; Total: 1,560.

Source: GAO analysis of EPA data.

[End of table]

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.[Footnote 4]

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.

Figure 6: Cleanup Status of Proposed, Final, and Deleted NPL Sites, 
Fiscal Years 1993 through 2002:

[See PDF for image]

Notes: We verified and corrected data only for fiscal year 2002. 
Deleted sites include sites deferred to another authority. Study and 
design sites include sites that are awaiting study, have study under 
way, have had a remedy selected, or have design under way.

[End of figure]

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.[Footnote 5] 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.

Table 3: Percentage of Ongoing Actions at NPL Sites Led by Various 
Entities, Fiscal Year 2002:

Entity leading action: EPA - Superfund; 
Preconstruction: Site inspection: 100; 
Preconstruction: Remedial investigation and study: 27; 
Preconstruction: Remedial design: 36; 
Construction: Remedial action: 22; 
Post-construction: Operation and maintenance[A]: 18.

Entity leading action: Responsible party; 
Preconstruction: Site inspection: 0; 
Preconstruction: Remedial investigation and study: 17; 
Preconstruction: Remedial design: 39; 
Construction: Remedial action: 45; 
Post- construction: Operation and maintenance[A]: 67.

Entity leading action: Other federal agency; 
Preconstruction: Site inspection: 0; 
Preconstruction: Remedial investigation and study: 54; 
Preconstruction: Remedial design: 24; 
Construction: Remedial action: 31; 
Post- construction: Operation and maintenance[A]: 10.

Entity leading action: Other; 
Preconstruction: Site inspection: 0; 
Preconstruction: Remedial investigation and study: 2; 
Preconstruction: Preconstruction: Remedial design: 0; 
Construction: Remedial action: 2; 
Post-construction: Operation and maintenance[A]: 5. 


Source: GAO analysis of EPA data.

Notes: This presentation of lead data includes all actions that were 
ongoing at some point during fiscal year 2002. EPA typically presents 
lead data as a percentage of remedial actions that start in a 
designated fiscal year. In addition, EPA includes actions at Superfund 
alternative sites but does not include actions at federal facility 
sites in the percentages.

[A] Operation and maintenance activities protect the integrity of the 
selected remedy for a site. According to an EPA official, all operation 
and maintenance should be led by the responsible party or state and any 
operation and maintenance activity identified as led by EPA is most 
likely an error.

[End of table]

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.[Footnote 6]

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.[Footnote 7] 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.[Footnote 8] 
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.[Footnote 9] 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.[Footnote 10] 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.

Table 4: Projected Balance of the Superfund Trust Fund Available for 
Future Appropriations, Fiscal Year 2003: 

Dollars in millions: 

Fiscal year 2002 (actual balance): $564.0.

Source: Environmental taxes; Fiscal year 2003 amount: (in millions): 
0.0.

Source: Cost recoveries; Fiscal year 2003 amount: (in millions): 175.0.

Source: Interest; Fiscal year 2003 amount: (in millions): 67.0.

Source: Fines and penalties; Fiscal year 2003 amount: (in millions): 
3.0.

Source: Tax adjustments; Fiscal year 2003 amount: (in millions): 
(99.4)[A].

Source: Transfer from general fund; Fiscal year 2003 amount: (in 
millions): 636.4.

Source: Total projected annual revenues; Fiscal year 2003 amount: (in 
millions): 782.0.

Source: Total (balance and revenues); Fiscal year 2003 amount: (in 
millions): 1,346.0.

Source: Fiscal year 2003 budget authority; Fiscal year 2003 amount: (in 
millions): 1,350.3[B].

Source: End of fiscal year 2003 (estimated balance); Fiscal year 2003 
amount: (in millions): ($4.3).

Source: GAO analysis of EPA data.

[A] According to an Internal Revenue Service official, companies 
regularly file adjustments to their corporate income taxes; according 
to EPA officials, however, the size of this adjustment was unexpectedly 
large.

[B] Includes a $77.4 million transfer to the Agency for Toxic 
Substances and Disease Registry (ATSDR).

[End of table]

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.[Footnote 11] 
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[Footnote 12] 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,"[Footnote 13] 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.[Footnote 14] 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 [Hyperlink, http://
www.gao.gov.] 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.

Sincerely yours,

John B. Stephenson 
Director, Natural Resources and Environment:

Signed by John B. Stephenson: 

[End of section]

Appendixes: 

Appendix I: 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.

[End of section]

Appendix II: Comments from the Environmental Protection Agency:

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY:

WASHINGTON, D.C. 20460:

JUL 18 2003:

OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE:

John B. Stephenson:

Director, Natural Resources and Environment U.S. General Accounting 
Office Washington, D.C. 20548:

Dear Mr. Stephenson:

Thank you for the opportunity to review and comment on the draft report 
entitled "Superfund Program - Current Status and Future Fiscal 
Challenges." We have reviewed the report and have the following 
comments.

The conclusion of the report states that Superfund lacks indicators to 
fully measure program performance and implies that the Agency is 
waiting on the National Advisory Council for Environmental Policy and 
Technology (NACEPT) to suggest new measures. This conclusion is 
misleading, and in fact, EPA is actively working in this area 
concurrent with the NACEPT process. Two new Superfund environmental 
indicators were implemented during FY 2003: human exposures under 
control and migration of contaminated ground water under control. 
Baselines for these indicators were established during FY 2002 and 
targets were developed for FY 2003. The proposed draft of the Agency 
strategic plan for FY 2004 through 2008 includes new measures related 
to the redevelopment of Superfund sites following cleanup. We expect 
these measures to be in place during FY 2004. Finally, we are 
continuing to develop measures to assess human health and environmental 
exposure reduction progress at various points of the pipeline. The 
Agency has worked closely with the NACEPT subgroup, exchanging ideas 
and soliciting comments on proposed performance measures for the 
program.

The GAO report discusses at length the potential impact on the program 
of the declining Superfund Trust Fund balance. To date however, annual 
appropriations for the program have remained in the $1.3 to $1.5 
billion range, and have been largely independent of the Trust Fund 
balance. The report points to a decrease in annual program expenditures 
of $255 million from fiscal years 1999 through 2002, but does not 
acknowledge that this followed a $100 million reduction to the 
Superfund enacted appropriation during FY 2000 and subsequent years.

The report speculates on a potential reduction in potential responsible 
party (PRP) involvement in funding or performing cleanups at National 
Priorities List (NPL) sites, 
and further speculates that this could lead to a request for additional 
resources to finance the program. To date, PRP involvement in the 
program remains strong. PRP's agreed to perform over 70% of the 
construction project starts during FY 2002. The total value of PRP 
commitments since the inception of the program exceeds $20 billion.

Figure 6 (page 17) of the report represents the number of sites at 
various stages of program activity from 1993 to the present. As the 
report points out, the number of sites in the construction underway 
phase remained relatively steady. The report text draws no conclusion 
regarding this measure; however, the reader could infer that the 
resource demand associated with construction also remains relatively 
stable. What is not reflected in the figure, but is an important fact 
in the status of the program, is the backlog of unfunded projects that 
are ready to begin construction, as well as the changing nature of the 
projects underway in FY 2003 versus FY 1993. The projects currently in, 
or about to enter, the construction phase of the program tend to be 
larger, more complex and more expensive than those of 5 to 10 years 
ago. This dynamic is creating a significant challenge for the program 
and led to the Administration's decision to request a $150 million 
increase for Superfund construction in the FY 2004 President's Budget 
request.

The comment on page 21 of the report --that many of the EPA regional 
and State officials interviewed for the report considered the NPL a 
last resort for sites that cannot be addressed under other programs --
does not accurately reflect Agency policy. EPA believes 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 which best 
meets the objectives for the site.

The comment on page 25 of the report states that "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 ten 
years from about 70 percent to about 50 percent currently." EPA, 
however, reports this percentage on a national rather than a Regional 
basis; so, a decrease in one Region may be offset by an increase in 
another Region.

If you have any questions about these comments, please contact Paul 
Nadeau at (703) 603-8794 or Johnsie Webster, OSWER Audit Liaison, at 
(202) 566-1912.

Sincerely, 

Barry Breen:

Acting Assistant Administrator:

Signed by Barry Breen:

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.

[End of section]

(360263):

FOOTNOTES

[1] We interviewed officials of the five states that have had the most 
sites proposed to the NPL in the last 5 years (California, Florida, New 
Jersey, New York, and Texas) and of the five states that have not had 
any sites proposed in the past 10 years (Arizona, Delaware, North 
Dakota, Nevada, and Wyoming).

[2] Program expenditures do not include transfers to the Agency for 
Toxic Substances and Disease Registry (ATSDR), the National Institute 
for Environmental Health Science (NIEHS), and EPA's Inspector General 
and Office of Research and Development (ORD). In fiscal year 2002, 
ATSDR, an agency of the Department of Health and Human Services, 
received $85 million to assist in assessments or consultations at 
hazardous waste sites. NIEHS has not received an allocation from the 
Superfund program since fiscal year 2000. EPA transferred approximately 
$49 million to the Inspector General and ORD combined in fiscal year 
2002.

[3] EPA defines a construction complete site as a site where physical 
construction of all cleanup actions is complete, all immediate threats 
have been addressed, and all long-term threats are under control.

[4] For funding purposes, CERCLA classifies activities during this 10-
year period, which EPA calls "long-term response actions," as part of 
the cleanup, not as operation and maintenance.

[5] Commitments include the value of cost recoveries and EPA's estimate 
of the value of the cleanup work that responsible parties have agreed 
to perform. 

[6] The Fox River site in Wisconsin was proposed to the NPL in July 
1998 but has not been finalized.

[7] Environmental Law Institute, An Analysis of State Superfund 
Programs: 50-State Study, 2001 Update, (Washington, D.C. 2002). Data 
is current as of the end of the state's 2000 fiscal year (June 30, 
2000, for most states).

[8] EPA tracks lead statistics based on new starts of remedial actions 
at sites other than federal facilities by fiscal year. Federal 
facilities, sites whose cleanup is led by federal agencies, make up 
about 13 percent of NPL sites.

[9] Environmental Law Institute, An Analysis of State Superfund 
Programs: 50-State Study, 2001 Update, (Washington, D.C. 2002).

[10] Only 38 states reported expenditures for the Environmental Law 
Institute's report; in addition, several states did not disaggregate 
the amounts spent on NPL and non-NPL sites.

[11] Probst, Katherine N. and Konisky, David M., Superfund's Future: 
What Will It Cost? A report to Congress, Resources for the Future 
(Washington, D.C. 2001). This study focused on costs and did not 
explicitly discuss cost-effectiveness or benefit considerations.

[12] EPA established the National Advisory Council for Environmental 
Policy and Technology in 1988 to provide independent advice to the EPA 
Administrator on a broad range of environmental policy, technology, and 
management issues. Council members include senior leaders and experts 
who represent academia, business and industry, community and 
environmental advocacy groups, environmental justice organizations, 
professional organizations, and state, local, and tribal governments.

[13] Defined by the Resources for the Future study as sites whose 
cleanup costs exceed $50 million. The National Advisory Council for 
Environmental Policy and Technology subcommittee has broadened the 
definition of mega sites to include large, complex, and other types of 
sites.

[14] EPA officials emphasized that no final decision had been made on 
the 16 sites not proposed in this round.

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