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Release No. 0056.04

**OF**

**CONFERENCE CALL CONCERNING THE\
PROPOSED FY 2005 ENVIRONMENTAL AND NATURAL RESOURCES BUDGET WITH: MARK
REY, U.S. DEPARTMENT OF AGRICULTURE**

**LYNN SCARLETT, U.S. DEPARTMENT OF THE INTERIOR**

STEPHEN JOHNSON, U.S. ENVIRONMENTAL PROTECTION AGENCY\
MODERATOR: JAMES CONNAUGHTON\
TIME: 12:30 P.M. EST\
MONDAY, FEBRUARY 2, 2004

**\
** **OPERATOR:** Good day, ladies and gentlemen, and welcome to the
environmental budget call. At this time all participants are in a
listen-only mode. Later, we will conduct a question-and-answer session,
and instructions will follow at that time. If anyone should require
audio assistance during the conference, please press \"\*,\" then \"0\"
on your touchtone telephone.\
\
I would now like to hand the call over to Mark Sidley (ph). Please go
ahead, sir.\
\
**MR. SIDLEY (ph):** Thank you, Jamie, and thanks to everybody for being
on the call. This is the environmental and natural resources \'05 budget
conference call. Just a couple of quick things before I turn it over to
Chairman Connaughton. We ask that each reporter, when we get to the
question-and-answer segment of the call, please give your name and your
media outlet before asking the question. Of course there is individual
budget briefings going on throughout the afternoon, so please attend
those. Unfortunately, this call has to end at about 12:45, so that the
principals can race off to their budget hearings.\
\
And, if you have any follow-up questions after the call, there\'s a
whole list of phone numbers for the individual agencies that you could
please call those public affairs people for further information.\
\
With that, I will turn it over to our master of ceremonies, Chairman Jim
Connaughton.\
\
**MR. CONNAUGHTON:** Thanks, Mark, and good afternoon, everybody. Since
time is short, what we are going to try to do is zip through a few short
presentations. I\'ll lead off. Lynn Scarlett from Interior will go
second. Mark Rey from the Department of Agriculture will go third. And
Steve Johnson from EPA will go fourth. And we\'ll just talk for about
two or three minutes. I\'ll try to keep mine to two.\
\
As you will see today in the documents I hope you received already\--if
not, you will be receiving\--the President\'s 2005 budget will propose
record funding for our environment and natural resources programs, and
it will have a continued improved emphasis on measuring performance and
effectiveness.\
\
The purpose of today\'s call is really to try to put the overall budget
in perspective, so that when you go out to your individual agencies we
hope to give you a different way of looking through the lens, because
our overall effort has been to try to better integrate the performance
that our programs are producing across the agencies, and find the
opportunities both for how we use taxpayer dollars to achieve outcomes
and how we look to other resources and other actions achieving
outcomes\--which is to say the environment is not just about how much is
in our federal budget, even at record levels, but it is how much we are
then leveraging and mobilizing in the private world to achieve our
environmental priorities.\
\
On the federal side, in terms of the cross-cutting across the three
agencies that we talked about, we\'re looking at \$46.9 billion, which
is a \$1.4 billion increase, or roughly 3.0 percent over what the
president put forward in the 2004 budget. I would note that does not
include other budgetary areas that we can talk about if you have
questions\--the Department of Energy, NOAA, Army Corps of
Engineers\--that again feed into this integrated planning and budgeting
process. But it\'s still sizable for just those three agencies.\
\
But let me highlight a little bit of what I was talking about in terms
of cutting across areas. One combination of initiatives that is worth
looking at is how the brownfields program\--which is a sizable increase
that Steve Johnson will talk about, that will help assess and create the
platform for redeveloping abandoned industrial sites in our
cities\--works together with our funding for the regulatory programs on
air pollution to cut it from power plants, or for the legislation, if it
passed, which will enable us to reduce the air pollution in our cities,
and therefore attract high-value jobs and manufacturing back into our
cities\--which then combines with the Department of Energy technology
programs both for transportation in terms of hydrogen, and in terms of
producing zero-pollution coal electricity. That combination of federal
programs and budgets---together, then, with the leveraging that will
come from redevelopment\--will result in massive new environmental
improvements as well as a real opportunity to create jobs.\
\
The other one I would highlight is the area of conservation, especially
when it comes to wetlands and water quality. While EPA sets many of the
performance standards and helps with much of the planning and research,
you will see in this budget that the real action, then, based on EPA\'s
expertise, does not come from EPA\'s budget but it comes from the
massive new funding through the Department of Agriculture with respect
to private ranchers and farmers, and enabling them to prevent runoff
pollution and help restore ecosystems\--as well as the work at the
Department of the Interior in terms of their public land management, and
how they are orienting themselves toward, again, with better
performance-based budgets toward producing those substantial
conservation and ecosystem restoration benefits.\
\
So I will stop there and turn it over to Lynn.\
**\
MS. SCARLETT:** Thanks, Jim, and welcome everyone. I want to cut right
to the chase and say that Interior\'s budget reflects our continued
emphasis on conservation and stewardship through partnerships. Our
overall budget request is \$11 billion. That\'s an increase of \$250
million, or about 2.3 percent over the 2004 enacted budget. If you take
out the fire repayment that actually is included in the 2004 enacted,
our 2005 budget actually represents over a 3.0 percent increase.\
\
I want to highlight some of the conservation and environmental features
of that overall budget. We are continuing the emphasis on cooperative
conservation, with a budget that proposes \$507 million, or a 20 percent
increase over the 2004 enacted level, for conservation partnerships with
citizens organizations and communities. That includes a 25 percent
increase over the 2004 enacted for what we call our 'cooperative
conservation initiative.'

This is a series of grants programs with which we work with local
communities and organizations and individuals.\
\
Turning to another related area important to rangeland and forest health
is our budget for forest and rangeland management. As you are all aware,
on December 3rd last year, President Bush signed the Healthy Forests
Restoration Act. Our proposed investment combined with the Forest
Service\--and Mark Rey will be picking up on this theme\--will provide a
total of \$760 million to meet the goals of the Healthy Forests
Restoration Act. Specifically, our 2005 budget at Interior includes a
\$25 million increase for fuels reduction projects. We also have a
variety of other increases in other areas relating to restoration
monitoring and research pertaining to fuels treatment and forest and
rangeland restoration.\
\
I want now also to turn to something that is not directly in the
environment cross-cut budget for the federal government as a whole, but
nonetheless it\'s highly relevant to environmental protection, and that
is our abandoned mine lands program. As many of you know, the Surface
Mining Act was established in 1977, and through that act we worked with
states, local governments and tribes to reclaim lands damaged in the
past by abandoned mine lands.\
\
Despite all the work that has been done in the past two decades, our
estimates are that 3.5 million Americans still live less than one mile
from dangerous abandoned coal mines. We estimate that under the current
program, if unchanged, it would take 60 years to reclaim dangerous sites
in Pennsylvania, and 50 years in West Virginia, and an equally long
number of years in some other states.\
\
We have a plan in our 2005 budget to correct this problem. Our budget
will be accompanied by a legislative proposal. And under that proposal
we will direct funding to abandoned mine land sites where the danger is
greatest, thereby speeding cleanup by approximately two decades. To
support this proposal, we are requesting \$244 million for the abandoned
mine land program. That\'s the largest amount requested since states
established their programs 20 years ago. And, specifically, it\'s about
a \$53 million increase.\
\
And then, finally, I want to conclude with two other areas. One is water
and the other is our national parks. Our budget does include \$21
million for our Water 2025 initiative. This is an initiative we began
last year between the Bureau of Reclamation and the U.S. Geological
Survey to help communities develop conservation efficiency and water
marketing projects, as well as invest in new technologies to enhance
water supplies. Our 2005 budget presents a \$13 million increase over
the 2004 enacted level for that program.\
\
We\'re also increasing\--before I move to the parks, I also wanted to
mention one other area and that is: our focus on performance. We are
proposing increases for monitoring. Specifically, we have a \$5 million
increase in the Park Service to track the health of park ecosystems and
the plants and animals that reside therein; and a \$4 million increase
to strengthen and enhance the Bureau of Land Management\'s resource
health monitoring, so that we can monitor oil and gas activity,
rangeland management, and overall implementation of land-use plans.\
\
We also have a several million dollar increase\--a \$2 million
increase\--for monitoring activities in the Fish and Wildlife Service.\
\
And then, finally, ending with our parks, as all of us are aware, the
President has committed to addressing the maintenance backlog in the
parks, and our budget continues that investment. In fulfilling this
promise, our 2005 budget request is \$725 million for park facility
maintenance and constructions. That\'s a \$25 million increase over
2004.

There is separately in the Department of Transportation budget another
\$310 million for park roads. And together that keeps us right on track
to meet the President\'s commitment.\
\
So I\'ll conclude just by emphasizing that you\'ll see a common theme in
this Interior budget, and that is a theme of partnerships, cooperation,
and an emphasis on performance, particularly in high priority challenge
areas.\
\
**MR. CONNAUGHTON:** Thank you, Lynn.\
\
Mark Rey from the Department of Agriculture.\
\
**MR. REY:** Thanks, Jim. As Lynn just mentioned, in the healthy forest
area we\'re proposing a combined USDA-Department of Interior budget of
\$760 million. That\'s around an 80-some-million-dollar increase from
last year, and compares favorably with the authorized levels in the
Healthy Forests Restoration Act.\
\
In addition, we are proposing record levels of spending for programs
associated with the conservation title of the farm bill. We will be
requesting roughly \$4 billion for that effort. As Jim indicated, much
of the effort behind those programs will go into improving conservation
practices on working agricultural land, to assist in meeting air and
water quality goals, as well as providing easements to protect working
agricultural and ranch lands that are threatened by development. That
is, as I said, the largest budget ever proposed for working lands
conservation.\
\
Over in the Forest Service, as is the case with Interior, we\'re
investing increasing funds on inventory and monitoring. We\'ll show a
\$21 million increase in that account in 2005, and we are requesting
that because we want to do a much more active job of monitoring our
progress in federal forest management.\
\
We\'re also proposing 30 percent increases in two of our popular
programs working with private forest landowners. We\'re proposing \$100
million, or a \$36 million increase over 2004, for the Forest Legacy
Program, which provides assistance in purchasing easements to protect
forest lands that are threatened by development.\
\
We\'re also asking for about a \$10 million increase\--again, about a 30
percent increase over 2004\--for our Forest Stewardship Program, a
program where we provide assistance to states to work with private
forest landowners to improve forest practices on their holdings.\
\
So, all in all, this is a very robust budget for those parts of the
Department of Agriculture\'s programs that contribute to environmental
and natural resources objectives. The Secretary will be holding her
briefing on the overall USDA budget at 1:30. But I think it\'s fair to
say, since it\'s Groundhog\'s Day today, that this budget casts a long
shadow in favor of working lands conservation and environmental
protection.\
\
**MR. CONNAUGHTON:** Thank you, Mark.\
\
Steve Johnson from EPA.\
\
**MR. JOHNSON:** Thanks, Jim. A few general comments just to help set
the stage. Obviously, working together our common purpose is to provide
Americans with real everyday benefits, whether it\'s fresh air to
breathe, safe water to drink and recreate in, land that\'s safe to live
on, food that\'s safe to eat, and the beautiful forest and park lands to
renew our spirit and enhance our quality of life.

This budget maintains the President\'s dedication to protect and
safeguard public health and the environment. As Administrator Leavitt
has said, we will be the builders of a 21st century network, and the
keeper of a 30-year ethic.\
\
EPA and the Departments of Agriculture and Interior are working and
continuing to work closely together in all our 50 states and with our
U.S. territories. We collaborate, as has been noted, on improving
visibility of national parks, enhancing our environmental stewardship
partnerships with our tribes, ensuring the security of our nation\'s
dams and reservoirs, protecting our coasts and coral reefs, sharing
scientific information, ensuring health forests, protecting threatened
and endangered species, and obviously much more.\
\
The President is proposing a 2005 budget for EPA of \$7.76 billion.
That\'s a \$133 million increase, as compared to the President\'s \'04
request.\
\
I\'d like to highlight four items in the President\'s budget which I am
particularly proud of. The first is: this budget includes an
unprecedented \$45 million for the cleanup of contaminated sediments in
the Great Lakes. And what this is about is to remove toxic pollutants
from the sediment that can enter the environment and the food chain. As
part of this, also, the President is seeking an additional \$3 million
for the Great Lakes program for restoration projects, and an additional
\$1 million for research on the control of invasive species. Some of you
are already aware of the kind of invasive species that the Great Lakes
are dealing with, such as the zebra mussel or the Asian carp, both of
which sort of plague the Great Lakes.\
\
For a national treasure closer to home\--the Chesapeake Bay\--the
President has requested \$10 million to be given out as competitive
grants to reduce nutrient discharges that foul the Bay. This is part of
a larger budget request of \$25 million for watershed initiatives
nationally, and this represents a \$10 million increase over 2004.\
\
Third, I\'d like to highlight the President\'s proposed expansion of the
very successful Clean School Bus USA program, from \$5 million to a
proposed \$65 million\--from \$5 to 65 million. The Clean School Bus USA
is helping ensure that school buses, which are the safest way for kids
to get to school, are also the cleanest. As a result of this new
funding, EPA can expand this program from just 17 districts in 2004 to
nearly 220 school districts all across the country.\
\
Fourth, as Jim mentioned, brownfields. The President\'s budget reflects
a total of \$210 million for brownfields cleanup. This is a \$40
million, or 24 percent, increase over the 2004 consolidated
appropriations legislation level. The funding also includes an increase
for grants and loans to fund cleanup\--that\'s what this is used
for\--for contaminated sites, slightly contaminated sites.\
\
Again, in summary, in each of these areas, and certainly working
together with our other federal partners, we\'ve shifted the focus from
process to results and achieving measurable outcomes. Using this budget
together wisely, we will the accelerate the achievement collective
goals.\
\
And with that, Jim, I turn it back to you.\
\
**MR. CONNAUGHTON:** Thank you, Steve. We\'re going to turn it to
questions. Just one other point I would make of the three agencies\--and
I think it\'s important in context. At the Department of Energy the
president is going to propose \$7.4 billion\--that \"b\" as in boy,
billion dollars\--which is an increase of \$400 million over 2004 for
the Department of Energy\'s cleanup program to accelerate the hazardous
and radioactive waste cleanup at our large highly contaminated federal
facilities.

That\'s the highest request ever for the program, and it will allow us
to dramatically accelerate the time in which those cleanups will be
complete. And I thought that\'s worth mentioning in the context of
protecting our land.\
\
With that, we\'ll open it up for questions.\
\
**OPERATOR:** Thank you. Ladies and gentlemen, if you have a question at
this time, please press the \"1\" key on your touchtone telephone. If
your question has been answered or you wish to remove yourself from the
queue, please press the \"#\" key. Again, if you would like to ask a
question, please press the \"1\" key now.\
\
The first question comes from Seth Borenstein from Knight-Ridder
Newspaper.\
\
**QUESTION:** First, thank you so much, Jim, and all of you, for doing
this. I think it\'s a great idea for the combined one, and I hope you
keep this up for the future. It is a great help to those of us.\
\
The thing that you talked about all your numbers are compared to
previous increases \-- previous president\'s budgets. When you look at
the OMB website and compare it to the \'04 omnibus, you\'re looking at a
\$0.6 billion decrease in EPA, a \$1.7 billion decrease in Ag, and a
\$0.2 billion increase in Interior. Given those numbers, I guess I\'m
having a hard time understanding why this is an unprecedented increase
when you look at it and it\'s a decrease. You\'re talking about \$46.9
billion over the three agencies. That\'s not the numbers that are even
on the OMB website. So can you explain to me why, when you\'re cutting
from the actual spending that\'s going on now, that is an increase?\
**\
MS. SCARLETT:** Let me tackle that first from the perspective of
Interior. All of the figures that I gave you were in fact a comparison
to the 2004 congressional-enacted, not to previous requests. And our
overall budget of \$11 billion is in fact a 2.3 percent increase over
the 2004 congressional-enacted. So I\'m not sure quite what you\'re
looking at as it relates to Interior at OMB, but those are in fact
comparisons with enacted\--every number I gave you.\
\
**QUESTION:** But all the others don\'t seem to be. And when you look at
the table S. 3 in the budget, 'agency growth in discretionary spending,'
of all the federal Cabinet agencies\--and Cabinet level when you take
EPA in there\--the biggest percent decreases are in Ag is number one and
EPA is number two. So I guess what I\'m having a hard time understanding
is how this is an increase.\
\
**MR. CONNAUGHTON:** Let\'s have Mark first and then Steve respond to
each of those.\
\
**MR. REY:** Thanks, Jim. You have to look at both mandatory and
discretionary funding for the Agriculture Department. Because of the
farm bill accounts, Agriculture, unlike the other agencies, has a
significant amount of mandatory spending. You\'re correct, the
discretionary spending totals for Agriculture are slightly down from
2004 enacted to 2005 enacted. But if you add the mandatory accounts,
it\'s actually an increase. The total outlays for 2004, mandatory and
discretionary, for USDA were \$77.7 billion. And the total outlays for
2005, mandatory and discretionary, are \$81.7 billion. So we do adjust
our discretionary request based upon what\'s in the farm bill as far as
mandatory spending is concerned, because for no other reason the farm
bill\--fully implementing the farm bill programs\--causes us to move
money around in terms of what we would be spending it on.\
\
But, overall, USDA is going to enjoy about a \$4 billion budget increase
between fiscal 2004 as enacted and the 2005 request.\
\
**MR. CONNAUGHTON:** Steve?\
\
**MR. JOHNSON:** Thanks, Jim. Seth, from an EPA perspective, when you
look at the \'04 omnibus there are really two pieces\--which I know
you\'ve been following the EPA budget for years. One is congressional
earmarks. In the \'04 omnibus, there\'s \$533 million in
earmarks\--that\'s one. Second is: there\'s \$492 million in additional
funds allocated by Congress for the state revolving fund\--for the water
state revolving fund. So when you take both of those\--the earmarks and
that additional increase in state revolving fund\--off the table, and
you know it\'s been controversial through the years\--the \'05
President\'s budget actually represents approximately about a 5.0
percent increase.\
\
**MR. CONNAUGHTON:** This is Jim. I\'d just make two other notes. On the
earmarks, you will hear this across the administration, you know,
'that\'s Congress imposing additional projects or other items on us.'
That\'s not the kind of thing you either, one, budget for or can budget
for; and, number two, these are unrequested earmarks that actually cut
against important programs and statutory priorities that the agencies
need to manage. So that\'s why you need to compare apples and apples.\
\
I would also note that you should, when you go out to your agencies,
look at some of the places where we are doing increases, because in
addition to the overall budget numbers being up, the money spent\--for
example, the very small amount of money that is going to spent on the
interstate air quality rule, is going to produce a \$50 billion
investment by the utilities in modern pollution control equipment. Many
of the brownfields money, that increase is going to net several times
greater investments from state funding and from private sector funding
to do cleanups. So you should look as much at the total number as you do
at the increased leveraging.\
\
With the Healthy Forests, we are going to see programs that will enable
us to do stewardship contracting, which will allow us to do more forest
restoration work with the same level of\--or slightly increased level
of\--taxpayer dollars. So that\'s the other feature that I hope you can
all take a close look at.\
\
Next question, please?\
\
**OPERATOR:** The next question comes from Jay Newton-Small from
Bloomberg News.\
\
**QUESTION:** Hi. My question is also about the discretionary spending.
In terms of if there is, according to the budget, more than a 7 percent
decrease in EPA\'s budget and in the Agriculture budget it\'s more than
8 percent, I believe, in discretionary spending, what programs are being
cut? You\'ve highlighted programs you are going to spend more money on,
but where is the decrease coming from?\
\
**MR. REY:** At USDA, the predominance of the decrease is coming from
non-environmental and natural resources programs. We are reducing within
the Natural Resources Conservation Service an account called our
Conservation Technical Assistance Account. The primary reason we\'re
reducing that is that the obligation to fully implement the farm bill
programs is going to consume a significant amount of staff effort. So we
really don\'t have the staff resources to spend the \'04 level, and
we\'re reprogramming that in the interest of fully delivering the farm
bill programs, the conservation title programs. But that\'s the only
area where we\'re seeing a significant reduction in the natural
resources and environmental program at USDA. The majority of the
decreases are coming in other areas related to rural development and
other places across the department.\
\
**QUESTION:** And how much is that cut by?\
\
**MR. REY:** I don\'t know, but Secretary Veneman will be talking about
the Department\'s budget as a whole at 1:30. So that would probably be a
better place to posit that question.\
\
**MR. JOHNSON:** And for EPA it\'s just as I mentioned: the \$533
million for earmarks, which is\--I\'m not sure what the division is, but
it is in our operating programs as well as in our grant programs. And
then the \$492 million in state revolving funds, the water state
revolving funds. So those are the two areas, that when you take those
off the top then indeed you see an increase in the \'05 president\'s
budget.\
\
**MR. CONNAUGHTON:** And I direct you to the budget document on the
state revolving fund, because the main point there is the taxpayer has
now put the body of the capital into that fund, and it\'s now doing what
it\'s supposed to do, and that is revolve. And so that\'s why the money
starts coming down under that program. The states pay it back, and then
it goes to other states to fund their next program.\
\
**MR. JOHNSON:** Yeah, when you see the EPA budget document, you should
look at Section D(3), sort of the third, fourth and fifth paragraph,
which is a very nice explanation of the history and where we\'re at in
the state revolving fund, whether it be the clean water or drinking
water revolving funds.\
\
**MR. CONNAUGHTON:** Next question, please?\
\
**OPERATOR:** The next question comes from Jim Barnett from The
Oregonian.\
\
**QUESTION:** Hi, Mark. I\'ve got a question about Healthy Forests, kind
of following up from last week. You mentioned there\'d be \$80 million
in new spending on fuels reduction. But, as you know, the bill calls for
a \$340 million increase, and you said there\'d be some reprogramming.
Have you had a chance to go back and find where that extra \$260 million
would come from?\
\
**MS. SCARLETT:** This is Lynn at Interior, and I will\--I know that
Mark will want to add to this comment. I did want to correct one
statement you made, though. The Healthy Forests Restoration Act\'s \$760
million authorization actually is for a variety of activities, of which
fuels reduction is one component. The title, if you look at that
section, specifies a series of other activities as well. So the \$760
million we\'re proposing\--which includes close to a \$60 million
increase in the fuels reduction in the traditional National Fire
Plan\--is also accompanied by additional forest and rangeland
restoration activities.\
\
We are working on providing the details that we discussed last week, and
should have those shortly as part of our budget justification.\
\
Mark, I don\'t know whether you want to add anything at this point to
that.\
\
**MR. REY:** No, where you\'ll see the increases will be in some of our
forest management and vegetation and watershed accounts, where there\'s
an increased amount of money in those accounts that contributes to the
achievement of the projects or the activities described in the
authorization language of Title I of the Healthy Forests Restoration
Act.\
\
**MR. CONNAUGHTON:** Okay, we\'ll take three more questions.\
\
**OPERATOR:** The next question comes from Michael Ferrulu (ph) from
BNA.

**QUESTION:** This question is for Mr. Johnson. What percentage or what
amount of EPA\'s funding is state and tribal grants?\
\
**MR. JOHNSON:** The state and tribal grants\--hold on a minute, let me
see if I can find my piece of paper with that total amount. Jim, if you
want to take another question real quick while I have that\--get that
number?\
\
**MR. CONNAUGHTON:** Okay, we\'ll do that.\
\
**OPERATOR:** The next question comes from James Brosnan from Scripps
Howard News.\
\
**QUESTION:** Yeah, you said you\'re back in the forest repayments. Why
don\'t you anticipate any\--excuse me, fire repayments\--why don\'t you
anticipate any in the coming year?\
\
**MS. SCARLETT:** Well, let me say we look at our budget in two ways. As
I noted, if you include the fire repayments in the congressional \'04,
we have a 2.4 percent increase over that. If you back out the fire
repayment, which was about \$98 million, Interior\'s increase in
discretionary spending is about 3.4 percent.\
\
The reason that we backed that out, at least in one way of comparing, is
so that we have apples and apples, so that we are comparing fully our
2005 proposal with the equivalent line items and activities that were
enacted by Congress in \'04. The repayments always come in the form of
supplementals, and they\'re highly variable from year to year. It just
depends on the level of fire activity that occurs. And so for a real
apples-to-apples comparison, it\'s a good idea to back that out. But
even if we put that in, as I underscored, we do have a very healthy
increase in our discretionary spending.\
\
**MR. CONNAUGHTON:** Okay, next question please?\
\
**MR. JOHNSON:** Jim, let me come back to the categorical grants
program.\
\
**MR. CONNAUGHTON:** Sure.\
\
**MR. JOHNSON:** In the \'05 budget, our request is for \$1.252 billion,
and there\'s actually 25 categorical program grants for state and tribal
governments. This is an increase of \$49.6 million.\
\
**QUESTION:** Is that billion, Steve?\
**\
MR. JOHNSON:** \$1.2 billion\--\$1.3 billion, if you will. So, but this
is an increase of \$49.6 million over FY 2004. As a percentage, it\'s
about 4 percent over the \'04\--it\'s an increase of 4 percent over the
President\'s \'04 budget request.\
\
**MR. CONNAUGHTON:** And that\'s in the context of the question asked.
If you look to the fact sheet provided, you\'ll see that other aspects
of EPA\'s categorical state grants produce, then, a total of about an
\$84 million increase. It has \$23 million new for the state and tribal
performance fund. So\--\
\
**MR. JOHNSON:** Exactly. Thanks, Jim.\
\
**MR. CONNAUGHTON:** As you\'re working through that, there\'s some
additional features that\--in that set of programs\--that we think are
highly valuable in terms of producing real action on the ground.\
\
Last question, please.\
\
**OPERATOR:** The last question comes from Ben Geman from Inside EPA.\
\
**QUESTION:** Yes, this is a question for Mr. Johnson. I just wanted to
confirm when you said that this budget request would represent a 5
percent increase over when you take out the earmarks and the SRS
increases that Congress put in, that would be a 5 percent increase in
the core program spending over what was enacted in FY \'04. Is that what
Congress enacted for FY \'04?\
\
**MR. JOHNSON:** Yes, approximately, that\'s correct. If you take the
\'04 for EPA, the \'04 omnibus has a budget of \$8.37 billion. Deduct
from that the \$533 million earmarks, congressional earmarks, and 492
(million dollar) increase in state revolving fund, and that\'s the
comparison with the President\'s \'05 budget of 7.76 (billion dollars).\
\
**QUESTION:** And given then some of the program increases that are
included in the budget, for example the new \$20 million for water
quality monitoring and the new \$23 million for the state and tribal
competitive programs, what\'s getting cut programmatically to allow this
to happen?\
\
**MR. JOHNSON:** Within the two\--there are two areas within the EPA
budget that are getting cut. One is for homeland security, specifically
water. And that cut is about 23, 24 million\--\
\
**QUESTION:** From the enacted level?\
\
**MR. JOHNSON:** From the enacted level. And the reason for that is that
we will complete all of the water system vulnerability assessments by
the end of this year. So therefore the monies that were being used this
year to complete the water vulnerability assessments as part of homeland
security will not be needed. So that\'s the first piece of it.\
\
The second piece of it, or second area of cuts, is in our Office of
Research and Development, and it\'s the STAR grant program. STAR stands
for 'science to achieve results.' And that cut is approximately \$34
million. And the reason for that\--\
\
**QUESTION:** From, again, the enacted level?\
\
**MR. JOHNSON:** Excuse me, that\'s correct. And the reason for
that\--it\'s actually the 'Pres bud,' not the enacted\--34 from the
'Pres bud'\--President\'s budget.\
\
**QUESTION:** But the\--okay, just to clarify the number you gave me
before on the homeland security, that was also from the \'04 request or
from the enacted?\
\
**MR. JOHNSON:** That was the \'04 request. I think in that case it\'s
pretty much the same.\
**\
QUESTION:** And this is also from the request.\
\
**MR. JOHNSON:** In the case of the \$34 million in the STAR grants,
what that was, as you are well aware, we went through\--have been going
through what\'s called 'part assessments,' looking at our results, and
are we performing as we should in our research and development program
as well as our regulatory program.

And this was an area that in our own assessment of our achieving
performance and achieving measurable outcomes we did not do well. And so
the STAR grants in this particular area were cut and reflect what I
would say is needing to do a better job particularly in the ecological
effects area of measuring outcomes.\
**\
MR. CONNAUGHTON:** I just want to highlight, by the way, it\'s a \$34 to
\$36 million cut from a \$100 million level. So we will still be funding
STAR grants\--\
\
**MR. JOHNSON:** Exactly.\
\
**MR. CONNAUGHTON:** \--for \$4 million. But EPA is going through a
process to make that program produce more relevant information and meet
the performance requirements that we are expecting of other programs.\
\
**MR. JOHNSON:** Thanks, Jim.\
\
**MR. CONNAUGHTON:** Okay? Thank you, everybody.\
\
**OPERATOR:** Ladies and gentlemen, that does conclude the conference
for today. Again, thank you for your participation. You may all
disconnect. Have a good day.\
\
END