Air Pollution: Reductions in EPA's 1994 Air Quality Program's Budget
(Briefing Report, 11/29/94, GAO/RCED-95-31BR).

This briefing report provides information on (1) reduction in the
Environmental Protection Agency's fiscal year 1994 budget for its air
quality program, (2) how the agency allocated reductions among various
components of the air quality program, and (3) the extent to which the
reductions affected efforts to meet requirements and deadlines set by
the Clean Air Act Amendments of 1990.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED-95-31BR
     TITLE:  Air Pollution: Reductions in EPA's 1994 Air Quality 
             Program's Budget
      DATE:  11/29/94
   SUBJECT:  Air pollution control
             Budget cuts
             Standards evaluation
             Reprogramming of appropriated funds
             Environmental legislation
             Mission budgeting
             Environmental research
             Budget year
             Environmental monitoring
             Motor vehicle pollution
IDENTIFIER:  EPA Acid Rain Program
             EPA Climate Change Action Plan
             
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Cover
================================================================ COVER


Briefing Report to the Chairman, Subcommittee on Oversight and
Investigations, Committee on Energy and Commerce, House of
Representatives

November 1994

AIR POLLUTION - REDUCTIONS IN
EPA'S 1994 AIR QUALITY PROGRAM'S
BUDGET

GAO/RCED-95-31BR

Air Pollution


Abbreviations
=============================================================== ABBREV

  AC&C - abatement, control, and compliance
  EPA - Environmental Protection Agency
  GAO - General Accounting Office
  MACT - maximum achievable control technology
  OMB - Office of Management and Budget

Letter
=============================================================== LETTER


B-258558

November 29, 1994

The Honorable John D.  Dingell
Chairman, Subcommittee on Oversight
 and Investigations
Committee on Energy and Commerce
House of Representatives

Dear Mr.  Chairman: 

As requested, this briefing report provides information on (1)
reductions in the Environmental Protection Agency's (EPA) fiscal year
1994 budget for its air quality program, (2) how the agency allocated
reductions among various components of the air quality program, and
(3) the extent to which the reductions affected efforts to meet
certain requirements and deadlines established by the Clean Air Act
Amendments of 1990.  We briefed your staff on this information on
November 22, 1994. 

In summary, EPA's fiscal year 1994 air quality program's budget was
reduced by $32 million, from $552 million in the President's budget
request to $520 million in the agency's June 30, 1994, operating plan
that was approved by the congressional appropriations committees. 
The largest reduction to the air quality program--$25.4 million--was
made to comply with an $81 million cut in EPA's budget for contracts,
grants, personnel, research, and other activities.  Additionally, the
appropriations committees required a net reduction of $825,000 in
specific air quality programs and the EPA Administrator further
reduced the air quality program budget by reprogramming $5.7 million
to fund the administration's high-priority initiatives.  Although the
$32 million reduction represents only about 6 percent of EPA's air
quality program budget, it had a significant budgetary impact on some
individual programs.  Specifically, funds for developing the toxic
emission standards and implementing the Acid Rain Program were cut by
51 and 31 percent, respectively, in EPA's June 30, 1994, operating
plan.  Although a total of $16.6 million was restored to the air
program's budget in the last quarter of the fiscal year, according to
EPA officials, the funds were received too late to meet 1994 needs
and were carried forward into fiscal year 1995.  Also, EPA officials
told us that the agency's 1995 proposed operating plan shows that
these programs will have their budgets reduced by comparable amounts,
thus negating the benefits of the restored funds. 

According to EPA officials, allocating the budget reductions among
individual programs was a difficult task because of certain
constraints imposed by the Congress and the administration.  For
example, EPA determined that about 60 percent of the $319 million in
the Abatement, Control, and Compliance (AC&C) budget, which provides
funding for activities such as grants and contracts, was protected
from cuts because of congressional requirements and the
administration's priorities, such as grants to the states to help
fund their air pollution control programs.  In addition, EPA decided
to reprogram funds from other programs to support the agency's role
in carrying out the administration's Climate Change Action Plan--the
U.S.  strategy for reducing emissions that contribute to global
warming.  Therefore, the air quality programs that were not protected
from budget cuts were reduced in order to absorb reductions in the
AC&C budget and accommodate funding for the administration's
priorities, such as the Climate Change Program. 

These reductions will contribute to the agency's missing some
important deadlines established by the Clean Air Act Amendments of
1990, according to EPA officials.  For example, EPA officials told us
that the significant reductions in funding for fiscal years 1993 and
1994 for maximum achievable control technology (MACT) standards will
essentially preclude the agency from issuing standards to reduce
emissions of toxic air pollutants by the 1994 and 1997 deadlines. 
Because of delays, the majority of the 1994 MACT standards have
already been put on a court-ordered schedule to be issued between
1994 and 1996.  Although the agency is attempting to streamline its
development of the MACT standards, EPA officials told us that because
of the budget reductions and the priority for issuing the 1994
standards, they expect delays in issuing many of the 1997 standards. 
Therefore, the officials anticipate that the courts will establish
schedules to issue these standards as well. 

Also, reductions in the fiscal year 1994 budget for the Acid Rain
Program, intended to develop regulations to control sulfur dioxide
and nitrogen oxides emissions that cause acid rain, have contributed
to EPA's postponing the development of some rules mandated by the
Clean Air Act Amendments of 1990.  For example, reductions in the
1994 budget request contributed to existing delays in EPA's issuance
of the Opt-in Rule, which provides for voluntary reductions of sulfur
dioxide emissions.  According to EPA officials, budget cuts will also
jeopardize EPA's ability to issue phase II of the nitrogen oxides
rule by the January 1997 statutory deadline.  Section I contains more
detailed information on each of the areas discussed above. 


---------------------------------------------------------- Letter :0.1

In conducting our review, we interviewed officials from EPA's Office
of the Comptroller and Office of Policy, Planning, and Evaluation. 
Within the Office of Air and Radiation, we interviewed officials in
the Offices of Program Management Operations, Air Quality Planning
and Standards, and Atmospheric Programs.  We analyzed data contained
in EPA's budget requests to the Office of Management and Budget, the
President's budget submissions to the Congress, and EPA's operating
plans.  We also examined EPA's Air Media Operating Plan Impact
Analysis, describing the impacts of budget cuts on the agency's
ability to carry out the requirements of the Clean Air Act Amendments
of 1990.  As you requested, we did not obtain written agency comments
on a draft of this briefing report, but we did discuss the facts
contained in the report with budget and program officials in the
Office of Air and Radiation.  Specifically, we held conferences with
the Director, Office of Program Management Operations; Directors,
Planning and Management and the Emission Standards Division within
the Office of Air Quality Planning and Standards; and Directors,
Program Management and Acid Rain Division within the Office of
Atmospheric Programs.  The officials generally agreed with the
information that we provided, and we have incorporated their comments
where appropriate. 

As arranged with your office, unless you announce its contents
earlier, we plan no further distribution of this briefing report
until 30 days after the date of this letter.  At that time, we will
send copies to the Chairmen of the Senate Committee on Environment
and Public Works and its Subcommittee on Clean Air and Nuclear
Regulation; other appropriate congressional committees; the
Administrator, EPA; and the Director, Office of Management and
Budget.  We will make copies available to others upon

Please contact me on (202) 512-6111 if you or your staff have any
questions.  Major contributors to this briefing report are listed in
appendix I. 

Sincerely yours,

Peter F.  Guerrero
Director, Environmental
 Protection Issues


REDUCTIONS IN EPA'S 1994 AIR
QUALITY PROGRAM'S BUDGET
============================================================ Chapter 1



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's budget process for fiscal
   year

   (See figure in printed
   edition.)


   EPA'S BUDGET PROCESS
---------------------------------------------------------- Chapter 1:1

Reductions in fiscal year 1994 funding for the Environmental
Protection Agency's (EPA) air quality program have occurred at
various stages in the budget process.  After reviewing the
President's budget request of $552 million, the appropriations
committees directed specific increases and reductions in some air
programs, for a net decrease of $825,000.  The committees also
required additional general reductions in EPA's budget, which
resulted in the EPA Administrator's reducing funding for the air
quality program by $25.4 million.  Additionally, the Administrator
reprogrammed funds among EPA programs, which resulted in another
decrease of $5.7 million for the air quality program.  This
reprogramming was done in order to increase funding for programs or
initiatives that the administration considered a high priority. 
These total reductions of about $32 million were reflected in EPA's
June 30, 1994, operating plan that was submitted to the
appropriations committees for their approval. 



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's fiscal year 1994 budget
   data.

   (See figure in printed
   edition.)


   GENERAL REDUCTIONS TO EPA'S
   FISCAL YEAR 1994 BUDGET
---------------------------------------------------------- Chapter 1:2

The appropriations committees required an $81 million general
reduction in EPA's total budget request.\1 Additionally, the
committees directed that the agency take approximately 75 percent, or
$61.5 million, of this general reduction from funds for the agency's
contracting services in the Abatement, Control, and Compliance (AC&C)
budget.  Additional reductions of $8.7 million in the Program and
Research Operations and $10.9 million in the Research and Development
budgets were also required. 



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's fiscal year 1994 budget
   data.

   (See figure in printed
   edition.)


--------------------
\1 The appropriations committees required an additional $45 million
of general reductions that were specified for the Superfund Program
and the Office of the Inspector General.  We did not include these
reductions because they did not affect the air quality program. 


   ALLOCATING THE BUDGET REDUCTION
---------------------------------------------------------- Chapter 1:3

Unlike the appropriations committees' directed reduction of $825,000
for air quality programs, the $81 million general reduction to EPA's
budget was not designated for specific programs.  Rather, the
appropriations committees allowed the EPA Administrator to use
discretion in allocating the general reduction among the agency's
programs.  While most programs were reduced, some were cut more than
others.  For example, the Administrator took $25.4 million, or about
31 percent of the general reduction from the air quality program
budget.  About $21 million was cut from the air program's AC&C
budget, and $4.4 million was cut from the Program and Research
Operations and Research and Development budgets.  According to EPA
budget officials, a larger share of the reductions was taken from the
air quality program because the program's budget was larger than
other programs' and a smaller percentage of the air quality program's
budget was protected from cuts.  In addition to the congressionally
directed reduction and EPA's allocation of a significant portion of
the general reduction to the air quality program budget, the EPA
Administrator reprogrammed an additional $5.7 million from air
quality programs to fund the administration's high-priority
initiatives. 



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's fiscal year 1994 budget
   data.

   (See figure in printed
   edition.)


   SOME PROGRAMS PROTECTED FROM
   BUDGET CUTS
---------------------------------------------------------- Chapter 1:4

According to EPA officials, allocating the budget reductions among
individual programs was difficult.  Many air quality programs were
protected from budget reductions because they supported congressional
and the administration's priorities.  In addition to the
appropriations committees' protecting funds to assist the states in
operating their air pollution control programs, EPA protected funding
for the Climate Change Action Plan, the Multilateral Fund of the
Montreal Protocol to help developing countries discontinue the use of
ozone-depleting chemicals, and other high-priority initiatives.  EPA
officials estimate that about 60 percent of the $319 million in the
air quality program's AC&C budget was protected from budget
reductions.  Therefore, the approximately 40 percent of the budget
that was not protected had to absorb a $21 million reduction.  As a
result, some programs, including programs with statutory requirements
and deadlines, received significant reductions. 



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's fiscal year 1994 budget
   data.

   (See figure in printed
   edition.)


   FISCAL YEAR 1994 BUDGET
   REDUCTIONS FOR SELECTED AIR
   QUALITY PROGRAMS
---------------------------------------------------------- Chapter 1:5

As a result of the approximately $32 million reduction in the
President's air quality budget for EPA, funds for developing the
maximum achievable control technology (MACT) standards and for
implementing the Acid Rain Program were reduced by 51 and 31 percent,
respectively.  In contrast, funding for the Climate Change Program
was increased by the EPA Administrator to $37.3 million, a 59-percent
increase over the amount appropriated by the Congress. 

We examined the MACT standards and the Acid Rain Program because they
must meet a significant number of statutory requirements of the Clean
Air Act Amendments of 1990 and court-ordered deadlines.  Also, these
programs received some of the largest budget cuts among the air
quality programs.  We selected the Climate Change Program because,
although it has few statutory requirements, it received a 59-percent
increase in funding. 



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's fiscal year 1994 budget
   data.  EPA's Operating Plan as
   of June 30, 1994.

   (See figure in printed
   edition.)

   Note:  Because MACT standards
   are part of a larger air
   quality program, EPA was unable
   to determine which portion of
   the $7.4 million reduction was
   due to congressional cuts and
   the agency's reprogramming. 
   Therefore, both bars--for the
   congressional appropriation and
   EPA's operating plan--reflect
   the total

   (See figure in printed
   edition.)


   REDUCTIONS TO TOXIC AIR
   EMISSION STANDARDS
---------------------------------------------------------- Chapter 1:6

Title III of the Clean Air Act Amendments of 1990 required
significant reductions in emissions of toxic air pollutants that
cause serious health problems.  The act requires EPA to issue MACT
standards for 189 toxic air pollutants and identify the categories of
sources that emit these pollutants.  EPA is required to set standards
for 25 percent of all source categories by 1994 and 50 percent of all
categories by 1997. 

While faced with meeting near-term and future MACT requirements,
EPA's fiscal year 1994 budget request for MACT standards was reduced
by $7.4 million, or 51 percent.  The reduction resulted from cuts in
the agency's budget and the reprogramming of funds for the
administration's priorities.  According to EPA officials, the
reductions contributed to the agency's inability to issue MACT
standards by the statutory deadlines.  EPA has focused largely on
issuing the standards that were originally due in 1992 and 1994 but
are currently under court order to be issued at various dates between
1994 and 1996.  The agency has suspended most of its work on the
standards for the source categories that are due in 1997. 

In response to the budget reductions, EPA has initiated more
efficient rulemaking procedures, including forming partnerships with
states, industry, and environmentalists, to identify the best
available data and resolve critical issues.  According to EPA
officials, however, the agency will probably continue to miss
deadlines for issuing many MACT standards, and court-ordered
schedules are likely for the 1997 standards. 



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's fiscal year 1994 budget
   data.

   (See figure in printed
   edition.)


   REDUCTIONS TO THE ACID RAIN
   PROGRAM
---------------------------------------------------------- Chapter 1:7

In order to combat the negative effects of acid rain, title IV of the
Clean Air Act Amendments of 1990 sets goals for reducing annual
sulfur dioxide emissions by 10 million tons from 1980 levels and
annual nitrogen oxides emissions by 2 million tons from 1980 levels. 
To help meet these goals, the President's fiscal year 1994 budget
request included $6.5 million for the Acid Rain Program.  However, in
allocating EPA's general budget reductions, the EPA Administrator
reduced the amount to $5.4 million.  Subsequent reprogramming of
funds to other high-priority initiatives resulted in the program's
being funded at $4.5 million, 31 percent below the amount requested. 

According to officials in the Acid Rain Program, funding reductions
have contributed to EPA's inability to meet some requirements of the
program.  For example, reductions in the fiscal year 1994 budget
request contributed to existing delays in EPA's issuance of the
Opt-in Rule, which provides for voluntary efforts to reduce sulfur
dioxide emissions.  Also, reduced funding has hampered the
development of phase II of a rule that will regulate the emissions of
nitrogen oxides from coal-fired electric utility boilers.  According
to an EPA official, fiscal year 1994 budget cuts, coupled with
expected cuts in fiscal year 1995, will jeopardize the agency's
ability to issue the phase II nitrogen oxides rule by the January
1997 statutory deadline. 



   (See figure in printed
   edition.)

   Source:  GAO's analysis of
   EPA's fiscal year 1994 budget
   data.

   (See figure in printed
   edition.)


   INCREASES TO THE CLIMATE CHANGE
   PROGRAM
---------------------------------------------------------- Chapter 1:8

The Climate Change Action Plan defines the U.S.  strategy for
addressing global warming and identifies a number of voluntary
activities to reduce the emissions that contribute to global warming. 
EPA is implementing its portion of the action plan primarily through
the agency's Climate Change Program.  While the Congress specifically
reduced funding for the program by $6 million, EPA sought and
received additional funding. 

According to EPA officials, the increased funding was needed because
funding for the Climate Change Action Plan was not included in the
1994 budget request.  Therefore, in January 1994, the EPA
Administrator proposed to reprogram $30.4 million from other
activities to implement EPA's activities in the action plan.  The
appropriations committees approved the reprogramming of only $13.8
million, thus bringing the total funding for the Climate Change
Program to $37.3 million, a 59-percent increase in the amount the
Congress had approved earlier. 

In July 1994, EPA reallocated the remaining $16.6 million of the
funds initially requested to be reprogrammed to the action plan to
programs with large statutory mandates, such as the MACT standards
and Acid Rain programs.  Because the funds were restored in the last
quarter of the fiscal year, however, they could not be allocated in
time to meet 1994 needs and were carried forward into fiscal year
1995.  However, according to EPA officials, the air quality programs
that received the $16.6 million will have their funding reduced by a
comparable amount in fiscal year 1995, thus negating the benefits of
the restored funds. 


MAJOR CONTRIBUTORS TO THIS
BRIEFING REPORT
=========================================================== Appendix I


   RESOURCES, COMMUNITY, AND
   ECONOMIC DEVELOPMENT DIVISION,
   WASHINGTON, D.C. 
--------------------------------------------------------- Appendix I:1

Bernice Steinhardt, Associate Director
William F.  McGee, Assistant Director


   NORFOLK REGIONAL OFFICE
--------------------------------------------------------- Appendix I:2

Harry C.  Everett, Evaluator-in-Charge
Everett O.  Pace, Adviser
Joseph L.  Turlington, Site Senior
James B.  Hayward, Evaluator
DeAndrea Michelle Leach, Evaluator
Kathryn D.  Snavely, Evaluator

