Why the Superfund's Budget is Not So Super

President Jimmy Carter signed the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) to clean up hazardous waste sites where owners had shirked responsibility. Now, according to a speech by Thomas Dunne (delivered this past Thursday here in Charlottesville) the federal government is shirking their responsibility. The Superfund has an annual budget of $450 million. However, the fund is expected to accumulate demands costing $250 billion over the next 30 years. This means that, if the current level of funding is maintained, only 5.4% of Superfund projects over the next 30 years will be cleaned up. It is clear that demand for Superfund’s services exceeds what it is able to supply. Why hasn’t the Superfund’s annual budget increased? Niskanen’s model of the “budget-maximizing bureaucrat” helps explain. This model says that bureaucrats seek to expand the power of their bureau by expanding their budget. Additionally, bureau output is nonmarket so marginal benefits of agency output are based on perception. This means that the bureau has some power to obtain budgets that exceed the optimum level as long as three conditions are met. If any of these assumptions do not exist in reality, the bureau is less able to secure a budget where marginal costs to Congress exceed marginal benefits. This is the case with the Superfund, since the assumption that only the EPA knows the true cost schedule does not hold. The Superfund has quantifiable output. How many sites were cleaned? How much did it cost? How was this money used? This is all readily available information. The bureau’s cost schedule is known to the Congress. Therefore, funding level is based on the intersection of Congress’ marginal cost and benefit curves. The problem now is that our Republican Congress places little value on Superfund’s services. Big business is one of their main supporters. It is not in the Republicans’ interest to tax these businesses, which they rely on for campaign contributions and votes, for pollution they emit. This tax was one of the Superfund’s main sources of funding until 1995. Reinstating it would be the likely way to increase CERCLA’s budget. However, doing this has high costs to the Republican party. Benefits are small since they are highly localized to areas directly affected by Superfund sites and it is unlikely that, even in these specific localities, clean up would be attributed to the Republican party. Marginal costs of increasing CERCLA’s budget are high while marginal benefits are low. Therefore, even though Congress seems to be in control, this Superfund conundrum is consistent with Niskanen’s model.