Superfund Tax Returns

On June 21, 2010, the USEPA sent a letter to Congress in support of reinstating the tax on industry to fund Superfund program activities. For those of you with a long memory, this tax had been allowed to lapse on December 31, 1995 and despite a number of attempts during the late 1990s, the tax was never reauthorized. Since that time, Superfund program activities have been primarily funded via the transfer of general revenue funds to the Superfund trust fund. It should be no surprise that since 1995, the environmental community has looked for the opportunity to reinstate this tax on industry and believes that they now have this opportunity under the current Administration. Especially when the following opinion, as expressed by the USEPA, is taken into account:

 

“Since the beginning of this administration, we have made it clear that we support the reinstatement of the polluter pays system for the Superfund program,…Our taxes should be paying for teachers, police officers, and infrastructure that is essential for sustainable growth – not footing the bill for polluters.” (Pollution Engineering, August 2010).

 

When Congress initially authorized the Superfund program under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in 1980, CERCLA established a trust fund that was financed primarily by taxes on crude oil and certain chemical manufacturers, as well as an environmental tax assessed on corporations based on their taxable income. When the balance of the Superfund trust fund decreased during the mid-1980s, the Superfund Amendments and Reauthorization Act (SARA) of 1986 extended the Superfund taxes and provided additional taxing authority. The Superfund trust fund balance reached its peak in 1997 of $4.7 billion. At the start of fiscal 2007, the Superfund trust fund had a balance of $173 million. Since 1981, Superfund appropriations have totaled over $32 billion, or about $1.2 billion annually. Based on a study of Superfund and its funding and expenditures by the United States Government Accountability Office (GAO) entitled Superfund: Funding and Reported Costs of Enforcement and Administration Activities (July 18, 2008) the GAO concluded the following:

 

·     For fiscal years 1981 through 1995, 68% of the Superfund trust funds came from taxes on industry, 17% from general fund appropriations, 9% from interest, and 17% from fines, penalties, and cost recovery actions.

·     For fiscal years 1996 through 2007, 6% of funds came from taxes on industry, 59% from general fund appropriations, 16% from interest, and 19% from fines, penalties, and cost recovery actions.

·     For fiscal years 1996 through 2007, 77% of Superfund expenditures were spent on remedial/removal actions, and most of the remaining 23% on enforcement and administrative activities. During this time period, the overall level of actual Superfund expenditures declined nearly 30% from $1.8 billion per year to $1.3 billion per year.

 

The GAO report is available at www.gao.gov/new.items/d00841r.pdf. A second report, which makes the case for increased levels of Superfund funding was prepared by the Congressional Research Service, and is entitled CRS Report for Congress, Superfund Taxes on General Revenues: Future Funding Issues for the Superfund Program (February 4, 2008). The CRS report is available at http://ncesonline.org//NLE/CRSreports/08Mar/RL31410.pdf.

 

This article was authored by Greg Tieman, Acacia Environmental Group LLC. For more information on the author see here.