Sweeping funding cuts for state programs in the White House's proposed budget for fiscal year 2007 are pushing states to consider returning control, and the related cost, of some environmental programs to EPA.  

One state official notes that, while EPA is facing a $390 million budget cut in FY07, funding for state environmental programs was cut by $416 million. Effectively, EPA is growing at the expense of state and local programs, even though states implement 90 percent of environmental programs.
 

The source says it won't take too much more of this for states to start turning programs back over to EPA.

A number of state programs took cuts in the FY07 proposed budget issued by the White House on Feb. 6. The clean water state revolving loan fund (SRF) took the largest hit, with the administration proposing a funding level of $687.5 million -- down more than $200 million from an enacted FY06 funding level of $886.7 million. The SRF gives money to states which then issue the funds as low-interest loans to finance clean water efforts, such as replacing aging infrastructure or installing new water treatment technology at wastewater treatment plants.
 

The Clean Water Act (CWA) section 319 program, which funds state efforts to address nonpoint source water pollution, took a $10.2 million cut, down to $194 million. The state source says this is significant because most state officials will tell you that their biggest water problem is nonpoint source pollution.
 

EPA air quality programs also receive less funds in the proposed FY07 budget, with state and local air quality management grants being cut by $35 million -- from $220 million to $185 million. The state source says these cuts are exacerbated by the fact that EPA is also proposing to transfer funds from the Clean Air Act section 103 monitoring grants program to the section 105 program, which is used to fund a variety of air programs -- including training and permitting.
 

This transfer of funds is problematic, the source says, because section 105 money comes with a 40 percent matching requirement for states, while the section 103 money does not have a matching requirement.
 

While EPA is justifying the transfer saying states no longer need the section 103 money in order to get their monitoring programs up and running, state sources notes that the cuts will make it difficult to comply with new monitoring requirements contained in EPA's recently proposed a fine particulate matter (PM2.5) regulation.
 

This is overwhelmingly disappointing, says one local government source, adding that many states will struggle to meet the 40-percent matching requirement.
 

State and local air regulators also criticized the administration's request for $50 million in new funds for diesel retrofit programs while cutting state funds by $35 million. While our associations strongly support funding for diesel retrofit efforts, we believe such funding is inappropriate in the face of a reduced appropriation for mandatory state and local air quality efforts, said Eddie Terrill, director of Oklahoma's air quality division, in a Feb. 6 press release.
 

Under EPA regulatory programs, including the CWA, the CAA and Resource Conservation and Recovery Act, EPA can delegate its authority to states to implement various programs -- such as the CWA's National Pollutant Discharge Elimination System permitting program. However, states are not obligated to run those programs, and have the option of giving EPA the responsibility for ensuring that those programs are funded and implemented.
 

The source says states are already discussing whether to return responsibility for implementing several programs to EPA. Those programs are the CWA total maximum daily load (TMDL) program, which sets strict caps on pollutants that are harming a waterbody's water quality; the CAA maximum achievable control technology (MACT) program, which sets technology requirements to reduce air toxics; and the Safe Drinking Water Act's underground injection control (UIC) program, which regulates discharges of pollutants into underground wells.
 

Another state source says returning control of certain environmental programs to EPA is a distinct possibility. The source says there is always talk about [returning programs], but I don't know where the line is -- when do you cross that line? The source says there is a doubling of workload and no more money, and at some point you reach a perfect storm and the programs go back to EPA -- at some point it is going to happen.
 

The idea of returning programs to EPA due to financial constraints is not new. For example, in February 2003, at least two states were considering returning their UIC programs to EPA control. At the time, one state source said that the UIC program does not receive sufficient federal funding to account for even one full-time employee, and takes a significant amount of state funding in order to be effective. -- Matt Shipman