House Republicans have proposed significant cuts to U.S. EPA's budget in their $1 trillion spending measure for fiscal 2012, despite leaving out several of the most high-profile riders.

Republican appropriators last night filed what they called a bipartisan omnibus as a stand-alone bill, their latest move in a political tug of war with Senate Democrats over funding and extending payroll tax cuts.

The bill sets EPA funds at $8.4 billion for the remainder of the fiscal year, a $233 million reduction from the enacted level. It is also $524 million below President Obama's budget request and represents a $1.8 billion, or 18.4 percent, reduction for the remainder of the current calendar year.

The House GOP plans to vote on the stand-alone measure this week before most government funding runs out tomorrow. By passing the measure, Republicans hope to pressure Senate Democrats to take up a House-passed payroll tax cut extension measure that includes provisions that roll back EPA's air pollution emissions rule for boilers and speed up consideration of the controversial Keystone XL pipeline.

But Senate Majority Leader Harry Reid (D-Nev.) warned that a House vote on the omnibus would be a "mistake" and suggested that he and Minority Leader Mitch McConnell (R-Ky.) were making headway in their own talks on a broad deal to resolve all outstanding legislative issues.

"We hope that we can come up with something that would get us out of here at a reasonable time in the next few days," Reid said in a floor speech this morning.

McConnell echoed that sentiment, describing "useful discussions" about how to pass extensions of the payroll tax cut and unemployment insurance (UI) as well as a final omnibus deal.

Both the White House and Senate Democratic leaders have indicated that their party has some outstanding concerns with specific provisions in the omnibus, though congressional aides in the president's party indicated they will need some time to review what the House Republicans released late last night before being able to comment.

Republicans said significant EPA cuts were needed because the agency has been overfunded.

"Funding for EPA has been unparalleled over the past several years, leading to unnecessary spending and contributing to the agency's regulatory overreach, which has a detrimental effect on American businesses and the recovering economy," Republican appropriators wrote in their bill summary.

But the measure omitted many of the controversial riders that were anticipated and may ultimately be very palatable to Democrats. It does not include language that would prevent EPA's industrial boiler air toxics emissions rule nor does it defund EPA efforts to crack down on pollution generated by mountaintop-removal mining, and it would not broadly affect EPA limits on greenhouse gas emissions -- all riders that had previously earned significant Republican support.

The top Democratic appropriator for EPA, Virginia Rep. Jim Moran, said yesterday that the deal was fair to Democrats and that he would vote for it "in a New York minute."

"This is a reasonable compromise," Moran said. "It's a much better bill than I'd anticipated. When the House majority is being fair and reasonable, we ought to seize the opportunity to get that bill enacted" (E&ENews PM, Dec. 13).

The bill would cut $14 million from EPA's clean air and climate research programs as well as $12 million in its regulatory development office and another $14 million to air regulatory programs.

It would trim the administrator's office budget by a third and calls for a $78 million reduction for operations and administration. That cut would include a $41 million, or 5 percent, reduction in the agency's regulatory programs.

Appropriators are also trying to prohibit EPA from regulating stormwater pollution discharged from construction sites. EPA has backed away from that effort twice, however, most recently in August (Greenwire, Aug. 19).

The legislation includes specific provisions regarding climate change. It would cut funding for the White House climate change director as well as require the president to submit a report to Congress on all federal spending for climate change programs.

Any EPA effort toward regulating greenhouse gases from manure management systems on farms would also be scuttled by the legislation, and another provision would limit the Agency for Toxic Substances and Disease Registry to releasing 40 toxicological profiles for use in hazardous waste cleanups.

The cuts were quickly criticized by environmental groups, which decried its "special-interest, anti-environmental riders."

"This bill continues the House GOP leadership's attacks on the environment," said Scott Slesinger of the Natural Resources Defense Council. "Must-pass spending bills should not be used as vehicles to insert unpopular provisions that would damage health and the environment, and block progress toward energy efficiency. These riders need to be dropped -- from this bill and the payroll tax-cut measure."

Water program cuts

The bill would cut $101 million from EPA-administered loan programs that help states finance sewer and drinking water system upgrades, further squeezing cities and public utilities facing expensive federal mandates to build and fix pipelines and upgrade treatment systems.

Notably absent from the bill were more riders that environmentalists deemed more pernicious, including one that would have blocked Obama administration efforts to strengthen Clean Water Act regulation of streams and wetlands.

"It could have been worse," said one environmental lobbyist.

However, cities and utilities will continue to bear the brunt of cuts to the water loan programs, called the Clean Water and Drinking Water State Revolving Funds. Congress slashed them by $997 million to $2.5 billion under the spending bill approved in April that funded the government through fiscal 2011.

Water utilities will continue to face pressure to pass rate increases to customers, as many have already. As a result, EPA has agreed to offer cities and utilities some flexibility on compliance (E&E Daily, Dec. 15).

Authors of the spending bill downplay the significance of those cuts by noting the funds received $6 billion under the 2009 federal stimulus.

Mining permits

Coal mining supporters included a provision in the budget bill that would cut $4 million they say have helped EPA delay mining permits in Appalachia.

Republicans and some Democrats from Appalachian states have complained about the administration's enhanced oversight of mountaintop-removal mining projects, which they say has amounted to a permit moratorium, hurting job creation and economic development.

Joan Mulhern, senior legislative counsel for Earthjustice, said the cut's effect is unclear. But in an interview, she decried it as showing House Appropriations Chairman Hal Rodgers (R-Ky.) and other coal-state lawmakers were "in the pocket of the coal industry."

"There is nothing in the bill that affects EPA's authority under the Clean Water Act to review permits," she added.

In October, a U.S. District Court judge struck down EPA's program for enhanced reviews of Appalachian strip-mining permit reviews, saying the agency overstepped its bounds. And several pieces of legislation are pending to rein in the administration's oversight agenda.

Reporters Elana Schor, Manuel Quinones and Paul Quinlan contributed.