DEFENSE ENVIRONMENTAL RESTORATION PROGRAM FUNDING

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1 DEFENSE ENVIRONMENTAL RESTORATION PROGRAM FUNDING We are constantly striving to improve our efficiency and effectiveness, and improve the management of our cleanup program. This is an exciting time for DoD's environmental restoration program, as we work to strengthen our mature restoration efforts and plan expanded efforts to deal with the unique problems associated with military munitions. John Paul Woodley, Jr., Assistant Deputy Under Secretary of Defense (Environment) Conducting environmental restoration activities at each site at an installation requires accurate planning, funding, and execution of the plan. Addressing cleanup and response requirements at over 28,500 sites across the country requires careful coordination, prioritization, and tracking. To get the most from the taxpayer s money, the Department of Defense (DoD) must plan its activities years in advance to ensure that adequate funding is available and used most efficiently. Development of the overall Defense Environmental Restoration Program (DERP) budget begins at the site level and builds to the Component level. DoD s ability to plan and conduct cleanup activities depends on receiving stable and predictable funding from year to year. Funding for cleanup is influenced by many factors, including changing priorities in the cleanup process, identification of new sites, and, sometimes, changes in national security priorities. In addition to these considerations, each site s sequencing for environmental restoration activities is based on overall site conditions and the factors related to the environmental and safety risks present. To ensure that the program progresses smoothly toward meeting its environmental restoration requirements and maintains continuity in changing circumstances, DoD must carefully and methodically plan its activities while remaining flexible and adaptable to changes. Preparation for the cleanup process consists of four interrelated phases planning, programming, budget development, and program execution. Figure 2 illustrates this complex process. Planning at the Installation Level Each installation works toward completing its environmental restoration requirements by developing and maintaining a management action plan (MAP) or a base realignment and closure (BRAC) cleanup plan (BCP) for managing its individual environmental restoration activities. A MAP contains information about an active installation s past activities and current status, presents a vision for future site-level requirements, establishes schedules, and identifies funding requirements through completion. The BCP is the equivalent planning document for installations undergoing base closure and transfer of property to the community. The comprehensive nature of a MAP or BCP requires installation environmental restoration personnel to detail requirements for response action under 19

2 Figure 2 DERP Budget Process Fiscal Year 2001 Fiscal Year 2002 Fiscal Year 2003 Congress FY03 Appropriations Act Authorizaton Act OMB Agencies FY03 President s Budget Funds OSD FY03 Defense Planning Guidance FY03 Program Decision Memorandum FY03 DoD President s Budget Input Funds Services Headquarters Staff Major Commands FY03 Program Objective Memorandum (6-Year Plan) Components FY03 Budget Estimate Submittal Input Execution Plans Funds Fiscal Year 2001 Execution Plan Fiscal Year 2002 Execution Plan FY03 Program Execution Installations Management Action Plan (Current Version) Management Action Plan (Current Version) Management Action Plan Calendar Year (CY) 2001 CY 2002 CY 2003 both the Installation Restoration and Military Munitions Response programs. Each installation updates its MAP or BCP at least once a year to reflect changes in priorities, additional cleanup information, policies, cleanup progress, and availability of funding. The best opportunity for stakeholder involvement and input is during this update process. Programming at the Component Level Components use the requirements identified in their installations MAPs or BCPs to prepare long-range (5- to 6-year) plans called Program Objective Memorandums (POMs). The Office of the Secretary of Defense (OSD) reviews the POMs and then issues Program Decision Memorandums to the Components, if necessary, to help them prepare their budget estimate submittals. Budgeting at the Top The Components develop and submit budget estimates to OSD for review and approval. Any issues are resolved during a rigorous 3- to 4- month review process. One of DoD s main concerns is making sure it can fulfill its Defensewide requirements within the budget targets set 20 FY01 Annual Report to Congress

3 Defense Environmental Restoration Program Funding by the Office of Management and Budget (OMB). The Department believes it is critical that the Components receive adequate environmental restoration funding to meet their program goals and protect human health and the environment. Once OSD has received and approved the Components budget estimates, it develops the overall Defense budget and submits it to the Office of Management and Budget for review and approval before forwarding the budget to the President for signature. The President submits the full Federal budget to Congress early in the following calendar year. For a given fiscal year, Congress authorizes DoD s activities through the National Defense Authorization Act and provides funds through the National Defense Appropriations Act. Program Execution Once Congress has approved the budget, the environmental restoration funds for active installations and Formerly Used Defense Sites (FUDS) properties are appropriated into five specific accounts Environmental Restoration (ER), Army ER, Navy ER, Air Force ER, FUDS ER, Defense-Wide (includes funding for the Defense Logistics Agency (DLA), the Defense Threat Reduction Agency, and the OSD Cleanup offfice). Cleanup activities at BRAC installations are funded through the overall BRAC account, which was extended by Congress in This account also covers closure-related environmental compliance and environmental planning activities. In the past 17 years, DoD has spent almost $25 billion on the DERP. In FY01 alone, Congress appropriated $1.3 billion for environmental restoration activities at active installations and FUDS properties. In addition, Congress appropriated over $793 million for environmental activities, including compliance and planning, at BRAC installations. Figure 3 shows DoD's funding through FY03. DoD requires predictable funding levels for accurate planning and estimation of future costs and activities. As the DoD Components draw nearer to achieving their Installation Restoration program (IRP) goals and work to develop the Military Munitions Response program, DoD will depend more heavily on congressional support to ensure stable and predictable funding for environmental restoration activities. The President s Management Plan, released in Summer 2001, noted the DERP s success and the importance of the program to the health and safety of service members, their families, and surrounding communities. It attributed this success to program management and to performance metrics the Department developed for tracking program progress. The President s Management Plan identifies government-wide initiatives, such as formally integrating performance with budget decisions, and agencyspecific management reforms aimed at improving administration of the Federal Government. As requested in the President s Management Plan, DoD will provide explicit links between Defense Environmental Restoration Program 21

4 Figure 3 Environmental Restoration (ER) and BRAC Environmental Funding Trends (in millions of dollars) Millions of Dollars $2,500 $2,000 $1,500 $1,000 Dramatic changes in funding from one year to the next create tremendous upheaval and impede program execution and progress. BRAC ER $540.5 $487.3 $852.0 $643.2 $830.2 $793.2 $679.6 $757.1 $594.1 $519.7 $1,965.0 $354.8 $625.4 $621.9 $1,482.0 $366.4 $1,638.5 $1,278.2 $1,409.2 $1,296.9 $1,296.8 $1,269.1 $1,129.6 $1,311.1 $1,268.4 $1,310.3 $1,065.0 $601.3 $500 $502.5 DoD's challenge is to maintain the program's $360.5 $377.2 $404.0 $314.0 momentum while sustaining stable funding levels. $150.0 $0 FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 Fiscal Year FY03 budgetary resources and DERP performance goals in its FY03 budget. Figure 4 shows actual and requested FY00, FY01, FY02, and FY03 DoD funding by Component for environmental restoration activities at active installations and FUDS properties. For FY01, Congress appropriated $389 million to Army, $293 million to Navy, $376 million to Air Force, $231 million to FUDS, and $21 million for Defense-wide active-installation restoration activities. Once funds have been allocated, the Components are responsible for distributing the funds to their individual major commands and installations for program execution. Figure 5 shows actual and estimated FY00, FY01, FY02, and FY03 DoD funding by Component for environmental restoration activities, including compliance and planning in addition to restoration, at BRAC installations. As part of the FY01 BRAC appropriation, $255 million was provided to Army, $385 million to Navy, $147 million to Air Force, and $7 million to DLA for their environmental efforts. As is the case with active installations and FUDS properties, once BRAC funds have been appropriated to the Components, they are responsible for allocating the funds to their major commands and installations for program execution. 22 FY01 Annual Report to Congress

5 Defense Environmental Restoration Program Funding Figure 4 Environmental Restoration Funding Profile for Active Installations and FUDS Properties* (in millions of dollars) FY00 Funds Obligated Total = $1,296.8 million FY01 Funds Obligated Total = $1,310.3 million ER Account Army Navy Air Force FUDS Defense-Wide 21.4 FY02 Execution Planned Total = $1,269.1 million FY03 Planning Estimate Total = $1,278.2 million *Due to rounding, Component subtotals may not equal Fiscal Year totals. Defense Environmental Restoration Program 23

6 Figure 5 BRAC Environment Funding Profile for BRAC Installations* (in millions of dollars) FY00 Funds Obligated Total = $354.8 million FY01 Funds Obligated Total = $793.2 million BRAC Account Army Navy Air Force Defense-Wide 6.5 FY02 Execution Planned Total = $594.1 million FY03 Planning Estimate Total = $519.7 million *Due to rounding, Component subtotals may not equal Fiscal Year totals. Funding shown includes compliance, planning, and program management in addition to restoration FY01 Annual Report to Congress

7 Defense Environmental Restoration Program Funding Progressing Toward Program Completion As the DERP continues to mature and the majority of sites progress from the investigation phases into cleanup phases, DoD aims to spend an increasing amount of funding on cleanup activities while decreasing the amount spent on investigation. Figure 6 shows actual and planned funding for cleanup, investigation, and program support. Figure 6 ER Active Installations and FUDS Cleanup, Investigation, and Program Support Obligations and Planning Estimates 100 Percentage of Funds Obligated/Planned 90 Funds Obligated 80 Funds Planned Cleanup Investigation 40 Program Support FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 Fiscal Year FY03 Millions of Funding Dollars Obligated/Planned (% of Total Obligated/Planned Funds) Category FY96 FY97 FY98 FY99 FY00 FY01 Studies & Investigations $334 (23) $306 (22) $329 (25) $312 (25) $345 (27) $376 (29) Program Support $178 (13) $160 (13) $161 (13) $153 (12) $171 (13) $158 (13) Cleanup $897 (64) $845 (65) $807 (62) $804 (63) $780 (60) $776 (58) TOTAL DERA/ER FUNDING $1,409 $1,311 $1,297 $1,268 $1,297 $1,310 * FY02 $291 (23) $169 (15) $809 (62) $1,269 FY03 $206 (17) $163 (14) $909 (69) $1,278 *Does not include $1.2 million applied against prior year DLA Huntsville U.S. Army Engineering and Support Center obligations. Defense Environmental Restoration Program 25

8 Figure 7 displays program progress over time, as the majority of DERP sites have moved from investigation into RC. DoD continues to make progress in its commitment to human health and the environment, which can be further demonstrated by the data presented in Figure 8. DoD s cost-to-complete funding estimates continue to decline as DoD completes its DERP requirements at an increasing number of sites. Figures 9 and 10 show BRAC site progress over time and cost-to-complete funding estimate trends, respectively. BRAC funding estimates for FY95 and FY96 included not only restoration funding, but also compliance funding estimates, causing them to increase significantly. After FY96, Compliance estimates were removed to provide a more accurate picture of restoration program funding requirements. Corollary to this, activities at military munitions response sites were previously funded through BRAC compliance; with the transition of this response Figure 7 Active Installation Site Progress Over Time (Excluding FUDS) 20,000 Number of Sites 15,000 10,000 5,000 RC RIP Cleanup Investigation End of Fiscal Year Based on DoD-wide ER Site inventory of 18,961 sites Includes all site types 26 FY01 Annual Report to Congress

9 ($000) Defense Environmental Restoration Program Funding Figure 8 Active Installation Cost-to-Complete Trends (Excluding FUDS, in $000) 25,000,000 23,495,404 20,000,000 19,215,796 17,079,812 15,000,000 14,960,545 12,888,099 11,934,641 10,833,152 10,000,000 10,330,604 5,000,000 0 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 Fiscal Year Figure 9 BRAC Installation Site Progress Over Time 5,000 4,000 Number of Sites 3,000 2,000 1,000 RC RIP Cleanup Investigation End of Fiscal Year Based on DoD-w ide BRAC Site inventory of 4,928 sites Includes all site types Defense Environmental Restoration Program 27

10 ($000) Figure 10 BRAC Installation Cost-to-Complete Estimate Trends* (in $000) 6,000,000 5,683,019 5,502,953 5,000,000 4,252,298 4,000,000 3,854,477 3,782,120 3,686,796 3,000,000 3,072,685 3,095,104 2,000,000 1,000,000 0 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 Fiscal Year *FY95 and FY96 funding includes compliance in addition to restoration funding. Based on the Department s agency-wide FY01 financial statements, the unfunded BRAC environmental liability (Cost-to-complete) was approximately $4 Billion as of Sept. 30, into restoration in FY98, additional funding was required, as shown by the increase in cost-tocomplete estimates from FY98 to FY99. BRAC cost-to-complete estimates are not declining at the same rate as the estimates for active installations. This is attributed, among other reasons, to a greater proportion of sites in study or cleanup phases, and a greater range of contaminants considered in the environmental restoration process. Requirements to address these issues to a greater extent at BRAC installations than active installations has impacted BRAC funding requirements and costto-complete estimates. In this chapter, DoD presented a comprehensive overview of the resources that have allowed the Department to achieve its current successes protecting human health and the environment and the resources it will need to guide the program to completion. The next two chapters provide an in-depth look at the status and progress and differing requirements of the DERP's Installation Restoration and Military Munitions Response sub-programs. 28 FY01 Annual Report to Congress