Who Finances the EPA’s Superfund Program?

The Superfund program, administered by the U.S. Environmental Protection Agency (EPA), addresses the cleanup of hazardous waste sites across the nation. Established by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 1980, its purpose is to investigate and remediate uncontrolled or abandoned sites contaminated with hazardous substances. This federal initiative protects public health and the environment, aiming to reduce risks through cleanup efforts and restore sites for productive use or as natural ecosystems.

Current Sources of Funding

The Superfund program is currently financed through a combination of mechanisms, primarily through appropriations from the U.S. Congress. While the Superfund Trust Fund continues to exist, its balance has historically been supplemented by general appropriations from the U.S. Treasury. The Trust Fund receives revenue from interest on its balance and cost recoveries from responsible parties.

A significant shift in funding occurred with the Infrastructure Investment and Jobs Act (IIJA). This act reinstated excise taxes on certain chemical manufacturers, effective July 1, 2022, and set to expire on December 31, 2031. These reinstated chemical excise taxes are double the rates that were in effect before 1996, with tax rates varying by chemical from $0.44 to $9.74 per ton. Additionally, the IIJA authorized $3.5 billion in emergency appropriations from the U.S. government’s general fund for hazardous site cleanups.

Further changes to Superfund financing were enacted with the Inflation Reduction Act (IRA). This legislation reinstated and modified the taxes on crude oil and petroleum products, effective January 1, 2023. The rate for petroleum taxes increased from 9.7 cents to 16.4 cents per barrel, a 69% increase, and these taxes do not have an expiration date. These renewed excise taxes are expected to generate substantial revenue for the Superfund Trust Fund, with estimates suggesting up to $23 billion over a five-year period.

Role of Potentially Responsible Parties

A foundational element of Superfund financing is the “polluter pays” principle, asserting that entities responsible for environmental contamination should bear cleanup costs. The EPA identifies “Potentially Responsible Parties” (PRPs) who may be held liable under CERCLA for the contamination at a site. PRPs can include current or past owners and operators of a contaminated site, as well as those who arranged for the disposal or transported hazardous substances to the site.

The EPA conducts PRP searches to identify all parties potentially liable for contamination. Once identified, the EPA seeks to compel PRPs to either perform the necessary cleanup themselves or reimburse the government for cleanup costs already incurred. To achieve this, the EPA utilizes various legal mechanisms, including administrative and judicial enforcement actions, settlements, and court orders.

Approximately 70% of Superfund cleanup activities have historically been paid for directly by PRPs. Funds recovered from PRPs through settlements are often held in site-specific “special accounts” within the Superfund Trust Fund. However, in instances where a responsible party cannot be found or is unable to pay, the Superfund Trust Fund provides funding for the cleanup.

Historical Funding Mechanisms

The Superfund program’s initial funding structure, established by CERCLA in 1980, relied heavily on specific excise taxes designed to fund the Hazardous Substance Response Trust Fund. From 1980 until their expiration in 1995, these taxes served as the primary source of revenue.

The original Superfund taxes included an excise tax on domestic crude oil and imported petroleum products. This tax was typically levied at a rate of 9.7 cents per barrel. Another key component was an excise tax on chemical feedstocks, specifically 42 listed chemicals, paid by manufacturers and importers.

The rates for these chemical taxes varied, ranging from $0.22 to $4.87 per ton, based on the percentage of individual chemicals found in hazardous waste sites. Additionally, a corporate environmental income tax was implemented, which was a 0.12% tax on a corporation’s alternative minimum taxable income exceeding $2 million annually. These taxes were intended to reflect the “polluter pays” principle.

However, Congress chose not to reauthorize these specific taxes after their expiration on December 31, 1995. This decision led to a significant depletion of the Trust Fund, which was exhausted by the end of fiscal year 2003, necessitating a greater reliance on general taxpayer appropriations for Superfund activities.