Appropriations

FY 2017 Budget and Congressional Appropriations

Background

On February 9, 2016, President Barack Obama proposed a budget for fiscal year (FY) 2016, which includes $268.2 million for state and local air agency grants under Sections 103 and 105. This is $40 million more than the FY 2016 appropriation and the same amount contained in last year’s request.  Of the increase, $25 million will be set aside for state and local agencies to implement the Clean Power Plan and $15 million for continuing air quality implementation activities.  The total request for EPA will be $8.27 billion, which is $127 million above the FY 2016 appropriation.  The proposed budget will not include the $20-million Targeted Airshed grants (a competitive grant program for the most polluted nonattainment areas) or the $21-million Multipurpose Grant program, both of which Congress included in the FY 2016 appropriations bill.  Grants for the Diesel Emissions Reduction Act (DERA) program are requested at $10 million, which is $40 million less than appropriated for FY 2016, but equal to the amount the President requested last year.  The budget proposes to establish the “Climate Infrastructure Fund” under the “21st Century Clean Transportation Plan,” which would be separate from and in addition to EPA’s regular budget.  It includes $1.65 billion over 10 years to retrofit, replace or repower diesel equipment, especially school bus upgrades. The program calls for up to $300 million in FY 2017 for renewed and increased funds for the DERA program, which is scheduled to expire in 2016.

Key Actions

December 10, 2016 – By a vote of 326-96 in the House and 63-36 in the Senate, on December 8 and 9, respectively, Congress adopted H.R. 2028, a Continuing Resolution (CR) that will keep the federal government in operation until April 28, 2017 at FY 2016 levels of funding.  President Obama signed the measure into law on December 10, 2016.  As reported in the Washington Update of December 5-9, 2016, the previous CR, adopted on September 28, 2016, provided funding at FY 2016 levels through December 9, 2016.  The CR provides continued funding at the rate of $228.2 million for state and local air quality grants, which was the amount appropriated in FY 2016, and does not include the controversial riders or provisions related to air pollution control programs that were included in the Congressional bills considered this past summer.

July 15, 2016 – EPA prepared a summary of the actions taken on the floor of the U.S. House of Representatives on July 14, 2016 during consideration of H.R. 5538, which is the FY 2017 Interior, Environment, and Related Agencies Appropriations Bill.

July 14, 2016 – By a vote of 231-196, the U.S. House of Representatives voted to adopt H.R. 5538 – the “Department of the Interior, Environment, and Related Agencies Appropriations Act, 2017,” which includes funding for EPA for FY 2017.  This is the first time since 2009 that the House has passed a stand-alone bill that includes EPA’s budget.  However, The Senate has not yet considered its version of the appropriations legislation and will not do so before the Congressional recess that will extend past Labor Day.  This opens up the likelihood that a Continuing Resolution will be needed to keep the federal government in operation after September 30, 2016.  Additionally, on July 11, 2016, the White House issued a Statement of Administration Policy expressing the President’s opposition to the bill and indicating that he would veto it if it is adopted with the provisions to which he objects (see related article).  The House bill calls for $7.9 billion in FY 2017 for EPA’s budget (the Administration’s request was $8.27 billion) and provides $228.2 million for state and local air grants under Sections 103 and 105 of the Clean Air Act, which is equal to the FY 2016 appropriation and $40 million less than the President’s request. The House bill contains air-related provisions, including, among others: (1) $100 million for grants under the Diesel Emission Reduction Act (DERA) program; 2) $40 million for the Targeted Airshed Grant program; 3) retention of funding for fine particulate matter monitoring under Section 103 authority, rather than transitioning to Section 105 authority as EPA proposed; 4) prohibition on funds being used for Section 111(b) rules related to greenhouse gas (GHG) emissions from new units; 5) prohibition on funds being used for Sections 111(b) or 111(d) rules related to GHG emissions from modified, reconstructed or existing units; 6) postponement of the implementation of the 2015 ozone NAAQS by up to eight years; and 7) prohibition on EPA developing rules or guidelines to address methane emissions in the oil and natural gas sector.  During the debate on the floor, the House considered over 130 amendments covering a range of topics.  Several noteworthy ones included: a set of amendments proposed by Democrats to eliminate provisions in the bill that prohibit EPA activities related to greenhouse gas emissions from power plants, EPA’s program to reduce ozone-depleting substances and EPA’s use of the Social cost of Carbon estimates (rejected); a provision prohibiting EPA from using Section 115’s international provisions to regulate GHGs (adopted); a provision preventing EPA from issuing the final Clean Energy Incentive Program that provides credit to states for early action under the Clean Power Plan (adopted); a prohibition on EPA taking action under the Clean Air Act without analyzing economic effects (adopted); a provision to prevent EPA rulemaking on accidental release prevention requirements under the Risk Management Program (adopted); the elimination of over $88 million from EPA’s Air, Climate and Research Program (rejected); an amendment to remove provisions in the bill that opposed the President’s Executive Orders on climate change and sustainability (rejected); and a provision to eliminate funding for Diesel Emission Reduction Grants (rejected).  

June 14 and 16, 2016 – The Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies (June 14, 2016) and then the full Senate Appropriations Committee (June 16, 2016) marked up and approved the FY 2017 appropriations bill that contains funding for EPA.  The subcommittee approved the bill by a voice vote and the full Senate Appropriations Committee approved it by a vote of 16-14. The Senate bill calls for $8.12 billion for EPA, as compared to the President’s request of $8.27 billion and the House Appropriations Committee’s recommended amount of $7.98 billion. The Senate Committee rejected the President’s $40 million increase for state and local air grants and, instead, approved last year’s enacted level of $228.2 million.  In addition, the bill includes $25 million for the Diesel Emissions Reduction Act (DERA) program (the President requested $10 million and the House called for $100 million) and $20 million for Targeted Airshed grants (the President did not recommend any funding for this program and the House called for $40 million).  The Senate bill does not contain the controversial air-related riders included in the House version of the bill. During the full committee mark-up, Senator Shelley Moore Capito (R-WV) introduced an amendment that would have prohibited EPA from expending funds on any Clean Power Plan-related activities while the court’s stay on the regulation is in effect.  Senator Capito expressed her “strong feelings” for the amendment and then withdrew the measure, indicating that she felt the bill itself would limit EPA’s spending in certain accounts related to the Clean Power Plan. The bill has a number of other important measures affecting the air program, some described in the accompanying committee report. Most notably, the Committee expressed disagreement with EPA’s implementation of the “directive from fiscal year 2016 to update the formula for State and Tribal Air Quality Management Grants,” directing the agency to “hold all States and regions harmless in fiscal year 2017 by allocating funds in the exact same manner as fiscal year 2016…Should the Agency update the formula, the Committee directs the Agency to provide the new formula and funding estimates” to the Committee. The Committee expressed its displeasure with EPA’s implementation of the multipurpose grant program “in a manner that was not flexible and aligns more directly with the Agency’s priorities. Given that such is the case, the Committee has not continued funding for the multipurpose grant program.”  The Committee also expressed concern with “potentially overlapping implementation schedules related to the 2008 and 2015 standards for ground-level ozone” and has directed EPA to “provide the Committee with a report examining the potential for administrative options to enable States to enter into cooperative agreements with the Agency that provide regulatory relief and meaningfully clean up the air.”  The Committee also expressed disappointment with the “Agency’s efforts to regulate methane from existing petroleum and gas sources,” and concluded, “States are adequately regulating methane emissions.”  The Appropriations Committee expressed concern with the “mandate for fuel with a sulfur content of 0.1% in the North American Emission Control Area…having a disproportionately negative impact on vessels which have engines that generate less than 32,000 horsepower,” asking the agency to consider exempting these engines. Finally, with respect to wood stoves, the Committee noted that the “observed variance for the best current methods of measuring PM emission from new residential wood stoves may be too great for the test to reliably confirm compliance with the Step II, 2020 standard” and asked the Administrator to report back.

June 15, 2016 –The House Appropriations Committee marked up and approved a bill containing EPA funding for FY 2017 by a vote of 31-18. Just prior to the mark-up, the House Appropriations Committee released drafts of the bill and the associated committee report that provided information about the measure.  Some of this information, including a draft of the bill, had previously been made available at the time of the Subcommittee on Interior, Environment, and Related Agencies’ mark-up of the bill on May 25, 2016.  The bill calls for $7.98 billion in FY 2017 for EPA’s budget (the President requested $8.27 billion).  It also would provide $228.2 million for state and local air grants under Sections 103 and 105 of the Clean Air Act, which is equal to the FY 2016 appropriation and $40 million less than the President’s request.  Other air-related provisions were made public at the time of the May 25, 2016 mark-up (see below).  The report language includes the following statement with respect to the funds for EPA’s operations: “Further, the amount provided does not include funding for EPA’s greenhouse gas rules for stationary sources, including efforts to develop Federal Implementation Plans while the Supreme Court has stayed the regulations. The Committee is concerned that EPA continues to expend funds on related activities despite the Supreme Court ordered stay on the regulations. These funds would be better used to address the backlog of State Implementation Plans that EPA has yet to approve. As such, within the funds provided, the Committee includes $3,000,000 to enhance the efficiency and effectiveness of both preconstruction and operating permitting programs.”  During the mark-up, the committee considered various amendments, including one offered by the Subcommittee on Interior, Environment, and Related Agencies Ranking Member Betty McCollum (D-MN) to strip the bill of several provisions related to EPA’s budget, including prohibitions on the use of funds for greenhouse gas-related activities.  The amendment failed, so the provisions remain in the bill. The draft committee report has important information on the following pages: EPA budget, page 54; STAG, page 68; DERA, page 70; Targeted Airshed Grants, page 71; EPA tables, page 160; STAG tables, page 165. The draft bill is also available.

June 14 and 16, 2016 – The Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies (June 14, 2016) and then the full Senate Appropriations Committee (June 16, 2016) marked up and approved the FY 2017 appropriations bill that contains funding for EPA.  The subcommittee approved the bill by a voice vote and the full Senate Appropriations Committee approved it by a vote of 16-14. The Senate bill calls for $8.12 billion for EPA, as compared to the President’s request of $8.27 billion and the House subcommittee’s recommended amount of $7.98 billion. The Committee has not yet released the details of the final bill, including the amount of state and local air grants.  However, information NACAA has received indicates that bill includes $25 million for the Diesel Emissions Reduction Act (DERA) program (the President requested $10 million and the House called for $100 million) and $20 million for Targeted Airshed grants (the President did not recommend any funding for this program and the House called for $40 million).  It does not appear that the Senate bill contains the controversial air-related riders included in the House version of the bill.  During the full committee mark-up, Senator Shelley Moore Capito (R-WV) introduced an amendment that would have prohibited EPA from expending funds on any Clean Power Plan-related activities while the court’s stay on the regulation is in effect.  Senator Capito spoke in favor of the amendment, articulating her wish to express her “strong feelings” and then withdrew the measure, indicating that she felt the bill itself would limit EPA’s spending in certain accounts related to the Clean Power Plan.

June 13, 2016 – NACAA submitted a letter to the House and Senate Appropriations Committees urging increased funding for state and local air grants in FY 2017.  The President requested $268.2 million for Sections 103 and 105 grants, representing an increase of $40 million above FY 2016 levels.  NACAA’s letter expresses support for the amount of the President’s request but recommends that state and local air pollution control agencies be provided with the flexibility to determine how best to use the additional resources.  Additionally, NACAA requests that grant funds for fine particulate matter monitoring remain under Section 103 authority, rather than being shifted to Section 105 authority, as EPA is proposing.

May 25, 2016 – The House Appropriations Subcommittee on Interior, Environment, and Related Agencies approved the FY 2017 appropriations bill that contains funding for EPA and reported it to the full Appropriations Committee.  The bill calls for a total of $7.98 billion in FY 2017 for EPA’s budget, as compared to the President’s request of $8.27 billion for the agency in FY 2017.  While the bill does not contain information for all of the specific programs in EPA’s budget (this information is typically included in report language, which has not yet been issued), it is expected that the bill will include $228.2 million for state and local air grants under Sections 103 and 105 of the Clean Air Act, which is equal to the FY 2016 appropriation and $40 million less than the President’s request.  Other provisions related to the air program include the following: 1) $100 million for grants under the Diesel Emission Reduction Act (DERA) program (compared to $50 million in FY 2016 and $20 million in the President’s request) (p. 78 of the bill); 2) $40 million for the Targeted Airshed Grant program (compared to $20 million in FY 2016 and $0 in the President’s request) (p. 78); 3) retention of funding for fine particulate matter monitoring under Section 103 authority, rather than transitioning to Section 105 authority as EPA proposed (p. 79); 4) prohibition on funds being used for Section 111(b) rules related to greenhouse gas (GHG) emissions from new fossil fuel-fired electric utility generating units (p. 144); 5) prohibition on funds being used for Sections 111(b) or 111(d) rules related to GHG emissions from modified, reconstructed or existing fossil fuel-fired electric utility generating units (p. 145); 6) postponement of the implementation of the 2015 ozone NAAQS by up to eight years (p. 150); 7) exemption of permitted sources from the 2015 ozone NAAQS under certain circumstances (p. 151); 8) prohibition on EPA using funds on rules or guidelines to address methane emissions in the oil and natural gas sector under Sections 111(b) or (d) (p. 151); 9) prohibition on the issuance of regulations calling for Title V permits for emissions from biological processes associated with livestock production (p. 138); 10) prohibition on the issuance of a rule that includes mandatory reporting of GHG emissions from manure management systems (p. 138); and 11) prohibition on EPA’s incorporation of the social cost of carbon into any rulemaking or guidance until a new Interagency Working Group revises the estimates (p. 149).  Also on Wednesday, EPA’s Deputy Chief Financial Officer issued a memorandum providing information on the FY 2017 bill, including tables summarizing the appropriation to EPA and 17 legislative riders related to EPA’s regulatory authority.

April 11, 2016 – NACAA submitted testimony to the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies providing input on the President’s proposed FY 2017 budget, including grants to state and local air agencies under Sections 103 and 105 of the Clean Air Act.  The testimony was nearly identical to that submitted by NACAA to the House Appropriations Subcommittee on Interior, Environment, and Related Agencies on March 21, 2016.

March 21, 2016 – NACAA submitted testimony to the House Appropriations Subcommittee on Interior, Environment, and Related Agencies providing input on the President’s proposed FY 2017 budget, including grants to state and local air agencies under Sections 103 and 105 of the Clean Air Act.  The President requested $268.2 million for Sections 103 and 105 grants, representing an increase of $40 million above FY 2016 levels.  NACAA’s testimony expresses support for the amount of the President’s request but recommends that state and local air pollution control agencies be provided with the flexibility to determine how best to use the additional resources.  Additionally, NACAA requests that grant funds for fine particulate matter monitoring remain under Section 103 authority, rather than being shifted to Section 105 authority, as EPA is proposing.  Finally, NACAA expressed support for the $1.65-billion “Climate Infrastructure Fund” and resources for the Diesel Emission Reduction Act (DERA) program, which are included in the President’s request.

Additional Information