The Nickel Report

The Administration’s proposed 30 percent reduction to EPA’s operating budget has raised many questions.  Will it happen?  How would it impact operations?  Are all EPA programs equally affected?   The final answers will come at the end of a lengthy congressional process, but last week’s hearing provided clues that any final cuts could be significantly less than the Administration’s request.  But first, it’s worth a quick review of the federal budget process.

Once the Administration releases its budget proposal, Congress takes control.  If one views the Administration’s proposal as a fiscal road map, many a Congress has taken a wild detour on its way to a final budget.  Federal agency budgets are passed as legislation, and the final budget figure is the product of multiple hearings, votes on amendments, committee reports and a floor vote.  Moreover, it’s inevitable that House and Senate versions will have differences, given that each reflects the priorities (both policy and political) of the respective chamber.  These differences are resolved by a House/Senate “conference committee report” that is approval by both chambers.

After Congress passes final budget legislation, the President faces a “take it or leave it” decision.  Unlike many governors who enjoy “line item veto” authority to reject parts of a budget, the President must either approve or veto the budget in its entirety.  While frustrating to many recent occupants of the White House, the lack of a line item veto remains part of the federal government’s system of checks and balances.

Under the Administration’s fiscal year 2018 EPA funding proposal, EPA’s overall operating budget would shrink from more than $8 billion to $5.7 billion.  The policy basis for the reduction is the Administration’s goal of returning EPA to its core mission, and moving EPA away from functions that states can manage.  As part of this policy, the proposal would reduce EPA’s work force by 3,000 jobs.  In a renewed emphasis on cooperative federalism, EPA’s federal enforcement would focus on States that have not been delegated authority to manage federal environmental programs, with a resulting 17 percent reduction in in criminal enforcement funding and a 20 percent reduction in overall civil enforcement activities.  Other reductions would be obtained by refocusing EPA’s activity on statutory requirements, leading to significantly reduced spending on the Agency’s voluntary and other non-core mission programs.

The Administration’s proposed EPA budget faced its first major congressional hearing last week when Administrator Pruitt testified before the House Appropriations Committee.  While Administrator Pruitt received high marks for his ability to respond to questions, the overall budget cuts were less well-received.  Both Republicans and Democrats voiced opposition to the 30 percent cuts.  For example, a senior Republican committee member said “I can assure you that you will be the first EPA Administrator to come before this committee in eight years that will get more money than they asked for.”  Republican and Democrat committee members from Ohio voiced concerns over proposed cuts to programs in the Great Lakes region.  Additional committee members raised issues regarding cuts affecting other state or regional EPA programs.

That the House Appropriations Committee will add money to EPA’s proposed budget seem clear.  Committee Chairman Rodney Frelinghuysen (R-N.J.) stated “I am here to remind everyone that the power of the purse lies here on Capitol Hill.”  How much the committee will restore will be known when its final revisions to the Administration’s  proposal are issued later this summer.  And, ultimately, the President will have a “take it or leave it” decision.

It is also possible that, as in some previous years, Congress might not be able to pass an appropriations bill funding EPA.  In such a case, Congress would enact a “continuing resolution,” essentially funding federal agencies at their current levels.  Continuing resolutions are disfavored, since they restrict both Congress and the Administration from fully exercising their will.  Regardless of viewpoints on EPA funding levels, policymakers are hopeful that they will be able to express their priorities through enactment of appropriations bills instead of continuing resolutions.