Largest EPA Sequester Cuts Not Immediate; Agency Has Limited Some Spending Already

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By Patrick Ambrosio  

The Environmental Protection Agency plans to implement significant savings measures, including employee furloughs and reduced contract spending, to comply with across-the-board automatic discretionary spending cuts to all nondefense programs, but the largest cuts are not expected until April at the earliest.

Additionally, state environmental agencies are still waiting to learn how the discretionary spending cuts will affect federal funding for their activities, including grant programs that support water infrastructure projects and clean air programs.

EPA, along with other nondefense agencies and departments, is facing an unspecified cut in discretionary spending March 1 in the budget sequestration process under the Budget Control Act of 2011.

Bob Perciasepe, EPA's acting administrator, said in a Feb. 26 email to employees that the agency would not have final numbers until a sequestration order is issued but said officials are preparing for a cut of approximately 5 percent.

EPA Employees Face Furloughs in April

One major saving measure anticipated as a result of sequestration is employee furloughs. EPA has already informed employees that they will be provided with at least 30 days notice before any furlough process begins.

Perciasepe said Feb. 26 that the agency intends to notify employees of the need for furloughs on the same day President Obama issues a sequestration order. If that order is issued as expected on March 1, that would mean that actual furloughs could not begin until April 1.

The agency is planning to implement furloughs in two phases, with the first phase requiring employees to take 32 hours of unpaid leave before June 1. The agency would then review its total spending in June to determine how many additional furlough days would be required to meet the agency's budget target for fiscal year 2013.

An agency spokeswoman told BNA Feb. 28 that the information in Perciasepe's Feb. 26 email “still stands.”

States Unsure of Grant Cut Size, Timing

R. Steven Brown, executive director for the Environmental Council of the States, told BNA Feb. 28 that state environmental agencies are ready to implement funding cuts when they have to, but states are still unsure of exactly how large a cut they will receive.

Approximately 40 percent of EPA's total budget is redirected to the states through various programs, including the clean water and drinking water state revolving funds and grants issued under the Clean Air Act, according to Brown.

The White House Council on Environmental Quality estimated Feb. 25 that states could see a $154 million reduction in federal funding for environmental activities under sequestration (see related story).

Brown said he views March 27 as the “real date” of concern because the continuing resolution currently funding the government is scheduled to expire that day. He said that even if Congress agrees to fund the government at Budget Control Act levels, he doubts that Congress would include across-the-board cuts in the continuing resolution or omnibus package that will fund the government through the end of the fiscal year.

Brown said he anticipates that states will receive more information on the size and timing of cuts to environmental grant programs at the ECOS Spring Meeting, which will be held March 4-6 in Scottsdale, Ariz.

Several senior EPA officials, including Perciasepe, are scheduled to attend that meeting, according to Brown.

Limited Spending on Travel, Overtime

Although major reductions to personnel spending and federal aid to states will not be immediate March 1, EPA already has taken some measures to limit spending in advance of sequestration.

Barbara Bennett, EPA's chief financial officer, and Craig Hooks, the agency's assistant administrator for administration and resources management, in a memo to program and regional EPA offices obtained by BNA Feb. 28, described several steps the agency is taking to “exercise caution” in an uncertain fiscal environment.

The memo, which was sent Feb. 8, states that EPA is taking steps to reduce nonessential travel and eliminate any nonessential overtime and compensation time awarded to employees. The agency also said it plans to freeze quality step increases for employees and cap cash awards at 0.35 percent, approximately one-third of the normal allocation.

Bennett and Hooks also advised EPA's senior resource officials to establish a process to review and approve all extramural expenditures greater than $3,000. Those expenditures include procurements, contracts, discretionary grants, essential travel, and training programs.

These EPA actions are consistent with recent guidance from the White House Office of Management and Budget, which advised department and agency heads to place “heightened scrutiny” on some activities funded by discretionary accounts that are subject to sequestration.

Danny Werfel, controller of OMB, told agencies in a Feb. 27 memo that they should place increased scrutiny on the hiring of new personnel, discretionary monetary awards to employees, and incurring obligations for new training, conferences, and travel. Monetary awards to employees should occur “only if legally required until further notice,” according to the OMB guidance.

Contractor Anticipates Work Slowdown in April

Juliana Birkhoff, vice president of collaborate practice at RESOLVE, told BNA Feb. 28 that she does not expect sequestration to have “a huge impact” on work with EPA in March, but the automatic cuts would likely affect RESOLVE if they are still in place in April and May.

RESOLVE is a nonprofit organization that provides conflict resolution services under EPA's Conflict Prevention and Resolution Services Contract. RESOLVE also holds a contract to provide on-call, independent scientific peer review and risk assessment services to EPA's Office of Research and Development.

Birkhoff said that it is her understanding that projects that are already funded, whether through a commitment in a contract or in a task order, will continue even if the automatic spending cuts go into effect. However, she said that for projects that have an approved work plan but have not yet been funded, contractors should not assume that the work will continue.

EPA has not formally notified RESOLVE of any reduced contract spending, but the agency's program offices have told them to keep working on already-funded projects, according to Birkhoff.

Birkhoff said that she is continuing to hold the time for planned work with EPA in April, even though she assumes that it will not happen due to sequestration. No work has begun on that project, even though organizing calls would have already been held under normal conditions, she said.

The Feb. 27 guidance from OMB to the heads of federal departments and agencies is available at

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