Appropriations for FY2003: Energy and Water Development
Released: 2003-02-27T00:00:00

Most Recent Developments

On February 20 the President signed an omnibus appropriations resolution for the rest ofFY2003 ( H.J.Res. 2 , P.L. 108-7 ) that included all 11 appropriations bills that hadfailed to pass during the 107th Congress. The final measure included funding for Energy and WaterDevelopment programs totaling $26.5 billion, compared to the Bush Administration request of $26.2billion.

Status

Table 1. Status of Energy and Water Appropriations,FY2003

*H.R. 5431 and S. 2784 did not reach the floor during the 107th Congress.

Overview

The Energy and Water Development bill includes funding for civil worksprojects of the Army Corps of Engineers, the Department of the Interior's Bureau ofReclamation (BOR), most of the Department of Energy (DOE), and a number ofindependent agencies, including the Nuclear Regulatory Commission (NRC) and theAppalachian Regional Commission (ARC). The Administration's request was $26.2billion for these programs for FY2003, compared with $25.8 billion appropriated forFY2002.

The Energy and Water bill was one of 11 appropriations bills that did not pass in the 107th Congress, although both the House and Senate AppropriationsCommittees reported their versions of the bill. Funding for these programs wasprovided by a series of continuing resolutions, including two in the 108th Congress( H.J.Res. 1 , P.L. 108-2 , covering the period through January 31, 2003,and H.J.Res. 18 , P.L. 108-5 , through February 20). In the meantime theSenate took up H.J.Res. 2 , which passed the House January 8, adoptingan amendment in the nature of a substitute by Appropriations Chairman Stevens tofund programs in all 11 unpassed appropriations bills for the remainder of FY2003. After numerous amendments were considered on the Senate floor, the bill passed theSenate January 23. After a House-Senate conference the omnibus measure passedboth Houses February 12 and was signed by the President February 20.

The Energy and Water programs are funded in Division D of H.J.Res. 2 . In this CRS report, funding levels of individual programsare given as requested by the Administration, as recommended by the House andSenate Appropriations Committees in the 107th Congress, as passed in H.J.Res. 2 by the Senate January 15, and as signed into law February 20. The appropriations tables include all these figures except last year's SenateAppropriations Committee figures. H.J.Res. 2 as passed by the Senatecontained an offset across-the-board rescission of 2.9%, and the final measureprovides for an across-the-board cut of 0.65%. These across-the-board cuts are notreflected in the appropriations table figures or in the figures cited in the text of thereport.

For the Corps of Engineers, the Administration requested $4.17 billion in FY2003, about $450 million less than the amount appropriated for FY2002. TheHouse Appropriations Committee recommended $4.76 billion, and the Senaterecommended $4.55 billion. The final bill funded the civil works of the Corps at$4.63 billion.

The Administration asked for $881 million for FY2003 for the Department ofthe Interior programs included in the Energy and Water bill -- the Bureau ofReclamation and the Central Utah Project. This would have been a decrease ofapproximately $61 million from the FY2002 funding level. The Houserecommended $947.5 million for this title, the same as appropriated for FY2002. The Senate approved $956.2 million, and the final bill appropriated $953.5 million.

The request for DOE programs was $20.89 billion, about $928 million more than the previous year. The major activities in the DOE budget are energy researchand development, general science, environmental cleanup, and nuclear weaponsprograms. The House Appropriations Committee recommended $20.68 billion forthese programs; the Senate Appropriations Committee recommended $20.93 billion. H.J.Res. 2 as passed by the Senate maintained the Senate figure. Thefinal bill appropriated $20.89 billion. (Funding of DOE's programs for fossil fuels,energy efficiency, and energy statistics is included in the Interior and RelatedAgencies appropriations bill. The FY2003 net appropriations request for theseprograms was $1.7 billion.)

The request for funding the independent agencies in Title IV of the bill was $214.4 million, compared with $220.5 million in FY2002. The House bill wouldhave cut this funding to $151.9 million, and the Senate Appropriations Committeerecommended $219.7 million. H.J.Res. 2 as passed by the Senatemaintained the Senate funding level, and the final bill appropriated $208.0 million.

Table 2. Energy and Water DevelopmentAppropriations, FY1996 to FY2003 (budget authority in billions of current dollars*)

*These figures represent current dollars, exclude permanent budget authorities, andreflect rescissions.

Table 2 includes budget totals for energy and water appropriations enacted for FY1996 to FY2002 and the Administration's request for FY2003. Tables 3-7provide budget details for Title I (Corps of Engineers), Title II (Department of theInterior), Title III (Department of Energy) and Title IV (independent agencies) forFY2002 - FY2003.

Title I: Corps of Engineers

The President's budget request for FY2003 included $4.173 billion for the civilworks projects of the U.S. Army Corps of Engineers (Corps), a decrease of $450million from the total enacted level for FY2002. (The Corps received $4.486 billionvia the annual Energy and Water appropriations bill for FY2002. An additional $139million was appropriated for Site Security/Counter Terrorism in the FY2002 Defenseand Emergency Supplemental Appropriations bill, P.L. 107-117 .) The HouseAppropriations Committee recommended funding of $4.76 billion for Corpsprograms; the Senate included $4.55 billion. The final bill ( P.L. 108-7 ) funded theCorps at $4.63 billion.

The final legislation included appropriations for some of the Corps' controversial projects. The bill authorized and directed the Corps to use $5 millionfor construction of the emergency outlet from Devils Lake, North Dakota, subject tonumerous provisions. One of the provisions was that no funds be used to carry outa feasibility study--a study that a tabled amendment by Senator McCain would haverequired before appropriations could be spent for outlet construction. The finalfunding level for the Yazoo Basin's Backwater Pumping Plant was $10 million;previous language had placed funding as high as $15 million, while another tabled amendment by Senator McCain would have reduced funding to $0.25 million. Thefinal appropriations bill contained no language related to the flow regime in theMissouri River, despite attempts by Senator Bond to include language restrictingactions by the Fish and Wildlife Service (FWS).

Table 3. Energy and Water Development Appropriations Title I: Corps of Engineers (in millions ofdollars)

*Figures do not include across-the-board recisions: 2.9% in Senate H.J.Res.2, 0.65% in P.L. 108-7 .

Key Policy Issues -- Corps of Engineers

Funding for the Corps' civil works program has often been a contentious issue between the Administration and Congress, with final appropriations typicallyproviding more funding than requested, regardless of which political party controlsthe White House and Congress. For FY2001, for example, Congress added $480million (12%) to the $4.08 billion requested by the Clinton Administration. Similarly, the FY2002 House bill funded the Corps at almost 15% more thanrequested by the Bush Administration, and the final act appropriated slightly morethan that.

The FY2003 budget followed a similar pattern. The request as presented in February 27, 2002, testimony in the House recommended a cut from currentspending: approximately 4% overall, but 30% less for investigation/studies, and 16% less for construction - with virtually no "new starts" in these two accounts duringfiscal year 2003. Request priorities continued only projects with Administrationsupport - not congressionally added projects from FY2002 that lacked favorableexecutive branch review (such as water supply assistance). The SenateAppropriations Committee report ( S.Rept. 107-220 ) noted that four projectsaccounted for 30% of the Administration's proposed general construction budget.

The budget proposal received considerable media attention in the wake of the March 2002 resignation of the Assistant Secretary of the Army for Civil Works (whosets policy for the Corps' civil activities). The resignation, or dismissal by someaccounts, was reportedly over a rift with the White House on the budget proposal. The Senate Committee report noted that the absence of a replacement for theAssistant Secretary resulted in the committee accepting written testimony from theAdministration in lieu of an oral statement. The House report did not comment onthe resignation per se , but both the Senate and House reports expressed displeasurewith the relatively low budget request.

Project Construction & Maintenance Backlog. The Administration estimated the current project backlogfor ongoing work at $21 billion and used this backlog in part to justify its "no newstarts" stance on construction. The Senate Committee countered that theAdministration's request would cause the construction backlog to grow from $40billion to $44 billion and result in a critical maintenance backlog of $884 million (a$182 million increase from FY2002 levels). The House Appropriations Committeenoted that "many ongoing construction projects would be negatively impacted" bythe budget proposals; it included in its recommendations several new constructionprojects and studies "in the belief that the water resources development needs of theNation are growing and cannot be met with just the projects currently underway." P.L. 108-7 funded the Corps at 11% higher than the Administration's request.

Changes in Corps Operation. There are currently two initiatives to change the operation of the civil works (andmilitary programs) of the Army Corps of Engineers: the government-wide President'sManagement Agenda (PMA) and an Army initiative referred to as the Third Wave. Neither initiative specifically targets the Corps, but both encompass the Corpsactivities.

The PMA was undertaken by the Bush Administration as part of a movement toward more "entrepreneurial government;" one of the five components of the PMAis a competitive sourcing initiative. The PMA directed executive agencies tocompetitively source commercial activities in order to produce quality services at areasonable cost through efficient and effective competition between public andprivate sources. The Administration mandated for FY2002 and FY2003 thecompetition of 5% and 10%, respectively, of the commercial positions at agencies,including the Corps.

The Army's Third Wave initiative is broader than the PMA. The Third Wave is searching for ways to not only improve the Army's operations but also focus itsenergies on its core war-fighting competencies. Under the Third Wave, the Army isreviewing all its commands, including the Corps, to identify how to focus theagency's activities. The Third Wave reviews all positions and functions (i.e., entireareas of responsibilities and missions, such as wetlands regulation) that are not partof the Army's core competencies. Options that can be considered under the ThirdWave for non-core functions and positions include competitive sourcing, transfer ofresponsibilities to other agencies, and divestiture. A significant portion of the Corps'workforce is included in the current early phase of the Third Wave because much ofthe work performed by the Corps is not considered as essential to the Army'swar-fighting competencies.

P.L. 108-7 included language that prohibits the use of funds to study or implement any "plans privatizing, divesting or transferring of any Civil Worksmissions, functions, or responsibilities" without specific direction by Congress. Thecontinuing resolutions have contained a related provision since H.J.Res. 122 ( P.L. 107-240 ) which went into effect on October 11, 2002.

Proposed "Reforms" of Corps Processes and Procedures. During the 107th Congress, the Corps came undercriticism for the way it evaluates and undertakes projects. Although the issuereceived media attention, it was not directly addressed in consideration of FY2003appropriations. Legislation proposing changes to the project development andauthorization process was introduced in the 107th Congress ( e.g. , see H.R. 1310 and S. 1987 ); however, no action was taken.

Some have called for major agency "reforms"; others have called for review of Corps programs and policies. The 106th Congress, in passing the Water ResourcesDevelopment Act of 2000 (WRDA, P.L. 106-541 , Section 216) directed the Corpsto contract with the National Academy of Sciences to study the feasibility ofestablishing an independent review panel for Corps studies. Its July 2002 report recommended that large-scale Corps projects be independently reviewed by expertsoutside the agency. In response to the criticism, the Corps initiated during FY2002an additional internal staff review of project justifications by the office of theAssistant Secretary of the Army for Civil Works.

In reporting the FY2002 Energy and Water Development Appropriations bills, the House and Senate Appropriations Committees acknowledged criticism of theCorps; however, both committees generally supported the Corps' efforts to deal withsuch criticisms. Neither committee addressed reform issues in reporting the bills forFY2003. These issues might be addressed during consideration of a biennialauthorization bill for the Corps, the Water Resources Development Act (WRDA).The WRDA expected in 2002 did not pass; a WRDA in 2003 is anticipated. (Formore information, see CRS Report RL30928, Army Corps of Engineers: ReformIssues for the 107th Congress. )

P.L. 108-7 did not address Corps reform directly; however, it did change authorizations for some activities criticized by those supporting reforms. Forexample, the authorization for municipal water infrastructure projects in rural Nevadawas increased from $25 million to $100 million, and a $25 million authorization forIdaho was added. Municipal infrastructure is an area that has historically been theresponsibility of local government, with the federal government providing directedgrants and low-interest loans. Prior to 1992, the Corps' involvement in municipalinfrastructure was limited to water supply from Corps' reservoirs and was paid forby local project sponsors. The increase in authorizations for municipal infrastructure has drawn criticism not only from taxpayer groups and fiscal conservatives but alsofrom beneficiaries of projects in the Corps' traditional missions who are concernedabout dilution of the agency's efforts and funding.

Missouri River Water Flows. The current drought in the Missouri River basin has contributed to the ongoing debate onthe operations of the basin's dams. Operations of the mainstem dams of the MissouriRiver are managed under a Master Manual and annual operating plans. In lateJanuary 2003, the Corps published the 2002-2003 Operating Plan. Nonetheless, theflow regime that will be implemented during the nesting season for threatened andendangered species, and during the navigation season that begins April 1, has yet tobe finalized. The Corps has proposed two options: a steady flow release and a flowto meet navigation targets. The Fish and Wildlife Service has expressed concernswith both the regimes. The Corps and the FWS have renewed consultation on the2002-2003 Operating Plan.

The revision of the Master Manual continues to be a contentions issue. The Master Manual has been in a revision process for 14 years. The Master Manualguides the operation of the Missouri River's dams. The timing of water releasesaffects competing uses of the river such as barge traffic, threatened and endangeredspecies protection, and upstream recreation. In February 2003, a coalition of 10national and regional conservation organizations filed a suit against the Corps andFWS due to the adverse impacts of current operations on threatened and endangeredspecies. The suit was filed in the U.S. District Court for the District of Columbia.

The Corps and FWS reinitiated formal consultation on the operation of the Missouri River mainstem dam system in December 2002. The reconsultation wasinitiated to review the information that the Corps presented in its SupplementalBiological Assessment for the Master Manual, published in January 2003. In thisdocument, the Corps challenged the recommended flow regime presented by theFWS in its November 2000 biological opinion. The FWS had recommended alteringdam operations to provide higher springtime water releases to benefit the pallidsturgeon. This change was believed by some to also benefit other threatened andendangered species negatively affected by dam operations. In the SupplementalBiological Opinion, the Corps concluded that the changes proposed by FWS are notwarranted at this time and that a research, monitoring, and evaluation program of thepallid sturgeon is needed.

Missouri River management issues have been taken up in appropriations legislation in recent years. After extended debate in both the House and the Senate,Section 116 of the final Energy and Water Development Appropriations bill forFY2002 included Senate language that prohibited the use of funds "to accelerate theschedule to finalize the Record of Decision for the revision of the Missouri RiverMaster Water Control Manual and any associated changes to the Missouri RiverAnnual Operating Plan." The amended provision also directed the Corps to considerviews of other federal and non-federal agencies and individuals "to ensure that othercongressionally authorized purposes are maintained" in addition to endangeredspecies protection. The provision represented a temporary compromise of an ongoingissue that had led President Clinton to veto the Energy and Water Developmentappropriations bill for FY2001.

Neither the House nor the Senate Appropriations Committee FY2003 reports mentioned Missouri River operations. Senator Bond offered an amendment to theInterior portion of the Stevens Amendment that would have restricted the use offunds by the FWS to require a steady release flow and to prevent the Corps fromrelocating bird nests along its banks. On the Senate floor, the amendment (SA186)was modified to a Sense of the Congress provision that encouraged agreement on aflow regime for 2003 among the Member States and Tribes of the Missouri RiverBasin Association. (The language in the Congressional Record for January 23, 2003,on page S1428 was confusing because the Sense of the Congress language appearsalongside part of the FWS language that was expected to be removed. On January28, the Senate by unanimous consent further modified the amendment to contain onlythe Sense of the Congress language.) During conference, Bond tried again to includelanguage restricting FWS actions. The final bill included neither the FWS restrictionsnor the Sense of the Congress.

Everglades. Implementation of a Comprehensive Everglades Restoration Plan (CERP) was authorized in 2002 byTitle VI of WRDA. CERP is one of many efforts to restore the Central and SouthernFlorida ecosystem. The annual Energy and Water Development Appropriations billprovides funding for the Corps' participation in these efforts. Funding for theparticipation of the DOI agencies, such as the National Park Service and Fish andWildlife Service, is part of the annual Department of the Interior and RelatedAgencies Appropriations bill.

The President's request for FY2003 included a total of $151 million for Corps' construction projects in the region. The FY2003 request for the Kissimmee Riverrestoration and the Everglades and South Florida ecosystem restoration was $23.7million and $19.5 million, respectively. For these two projects, the House and SenateAppropriations Committees, and the final bill, P. L. 108-7, provided the samefunding level as requested. For the Central and Southern Florida project, theAdministration requested $108 million (which included $37 million for CERPactivities). The final appropriations bill funded that project at $90 million. TheSenate and Stevens reports explained that the reduction resulted from questionsraised about the implementation of the project, specifically that it was too heavilyweighted in favor of commercial development of water supplies.

The final omnibus appropriations bill included language in the Department of the Interior portion that not only funded Everglades restoration activities performedby Interior agencies but also authorized the Corps to implement a controversial planknow as Alternative 6D. This plan is being undertaken as part of the Modified WaterDelivery Project. This project seeks to improve water deliveries to EvergladesNational Park and, to the extent possible, restore the natural hydrological conditionswithin the park. Implementation of the Modified Water Delivery Project will increasethe flooding risk for an area known as the 8.5 Square Mile Area. The Alternative 6DPlan is expected to control flooding in much of this area through flood controlmeasures and land acquisitions, which will require the acquisition of 77 residences.More information on Interior agencies activities and appropriations for Evergladesrestoration is available in CRS Report RL31306 , Appropriations for FY2003: Interior and Related Agencies . More information on the Modified Water DeliveryProject is available in CRS Report RS21331(pdf) , Everglades Restoration: ModifiedWater Deliveries Project .

Title II: Department of the Interior

For the Department of the Interior, the Energy and Water Development billprovides funding for the Bureau of Reclamation (BOR) and the Central Utah ProjectCompletion Account. For FY2003 the President requested $36.2 million for theCentral Utah Project Completion Account and $844.9 million for BOR (gross currentauthority; the net current authority request was $805.4). The total Title II request forFY2003 was $881.2 million. The total appropriation for these programs in FY2002,according to congressional sources, was $951.5 million: $915.3 million for BOR(gross current authority), and $36.2 million for the Central Utah Project CompletionAccount.

The House Appropriations Committee recommended $947.5 million for this title, the same as appropriated for FY2002 prior to supplemental appropriations of$7 million contained in P.L. 107-206 . The Senate approved $956.2 million in itsversion of H.J.Res. 2 , and the final bill, P.L. 108-7 , appropriated $953.5million.

Table 4. Energy and Water Development Appropriations Title II: Central Utah Project CompletionAccount (in millions of dollars)

Columns may not total because of rounding.

1 Includes funds available for Utah Reclamation Mitigation and ConservationCommission activities and $5 million for the contribution authorized by ï¿½402(b)(2)of the Central Utah Project Completion Act ( P.L. 102-575 ). Totals do not reflectpermanent appropriations of approximately $1.2 million.

2 Includes $1.33 million for program administration and oversight; $23.64 million forCentral Utah Project construction.

3 Figures do not include across-the-board recisions: 2.9% in Senate H.J.Res.2, 0.65% in P.L. 108-7 .

Table 5. Energy and Water DevelopmentAppropriations Title II: Bureau of Reclamation (in millions ofdollars)

1 Includes $30.3 million from Site Security/Counter Terrorism appropriated in the FY2002 Defense and Emergency Supplemental Appropriation Act, P.L. 107-117 .

2 In presenting its budget justifications, the Bureau includes an "offset" ofapproximately $39.6 million for the CVP restoration fund, resulting in Net CurrentAuthority of $805.4 million. (Figures may not total due to rounding.)

3 Figures do not include across-the-board recissions: 2.9% in Senate H.J.Res.2, 0.65% in P.L. 108-7 .

Background on Reclamation Policy

Most of the large dams and water diversion structures in the West were built by, or with the assistance of, the Bureau of Reclamation (BOR). Whereas the Corps builthundreds of flood control and navigation projects, BOR's mission was to developwater supplies and to reclaim arid lands in the West, primarily for irrigation. Today,BOR manages more than 600 dams in 17 western states, providing water toapproximately 10 million acres of farmland and 31 million people. BOR is thelargest supplier of water in the 17 western states and the second largest hydroelectricpower producer in the nation. BOR facilities also provide substantial flood control,recreation, and fish and wildlife benefits.

Bureau of Reclamation Budget In Brief

For FY2003, the Administration requested a total of $844.9 million in gross current authority for BOR. This request was $70.4 million less than BOR'sappropriated funding of $915.3 million in gross authority for FY2002. The FY2003request as presented included a $39.6 million "offset" for the Central Valley Project(CVP) Restoration Fund, yielding a "net" current authority of $805.4 million .

BOR's single largest account, Water and Related Resources, encompasses the agency's traditional programs and projects, including operations and maintenance,the Dam Safety Program, Water and Energy Management Development, and Fish andWildlife Management and Development, among others. For this account in FY2003,BOR requested $726.2 million, $36.3 million less than appropriated in the regularannual appropriations for FY2002 and $73.6 million less than the totalappropriations. (Total BOR FY2002 funding for this account included $30.3 millionfor site security and counterterrorism appropriated in the FY2002 Defense andEmergency Supplemental Appropriations Act, P.L. 107-117 , and an additional $7million in supplemental appropriations provided in P.L. 107-206 ). The HouseAppropriations Committee recommended $807.5 million for the Water and RelatedResources Account, while the Senate approved $816.2 million in its version of H.J.Res. 2 . Conferees agreed on $813.5 million, $13.7 million morethan the total appropriated for FY2002, in the final FY2003 bill, P.L. 108-7 .

Key Policy Issues - Bureau of Reclamation

CALFED. Funds have not been appropriated for the California Bay-Delta Restoration Program (Bay-Delta, orCALFED) account since FY2000, when the authorization for appropriations expired. However, funds were provided for FY2002 for some activities that support theCALFED program. The Administration for FY2003 requested $15 million for theprogram, for the Environmental Water Account and costs associated withadministrative support. Neither the House nor the Senate bill provided fundingdirectly for the CALFED account; however, the Senate recommended $30 million foractivities that support the goals of the program in funding for the Central ValleyProject (CVP) in the Water and Related Resources account, and the Houserecommended $2 million in the same account to support local work to accelerateinvestigations associated with determining the feasibility of constructing SitesReservoir. (For information on the status of authorization bills, see CRS Issue Brief10019, Western Water Resource Issues .)

The final FY2003 bill provided $23 million for CVP activities that support the goals of the CALFED program within the Water and Related Resources Accountinstead of the $30 million proposed by the Senate. Several specific activities wereidentified in the conference agreement, including $1.75 million for investigations ofstorage opportunities in the Upper San Joaquin watershed (Friant Division); $9million for the Environmental Water Account (under Miscellaneous ProjectPrograms); $1.5 million to continue planning activities related to the Sites Reservoir(Sacramento River Division); and $2.5 million for evaluation of potential impacts ofraising Shasta Dam (Shasta Division). Section 215 of the bill specifically authorizesthe Secretary, "in carrying out CALFED-related activities," to begin feasibilitystudies for Sites Reservoir, enlargement of Los Vaqueros Reservoir, and an UpperSan Joaquin Storage project.

Other Issues. BOR requested $28.4 million for continued heightened safety and security efforts at BOR facilities. This request included $26.6 million specifically for counterterrorism measures,including guards and surveillance and equipment to provide increased security for thegeneral public, BOR employees and facilities (including rehabilitation), andinformation technology security. Both the House and Senate recommended $28.4million in funding for FY2003, the same as the President's request, and this amountwas appropriated in the final bill. (For more information on terrorism and securityissues involving the water infrastructure sector, see CRS Report RS21026: Terrorismand Security Issues Facing the Water Infrastructure Sector , CRS Report by ClaudiaCopeland and [author name scrubbed], updated September 4, 2002).

Title III: Department of Energy

The Energy and Water Development bill includes funding for most of DOE'sprograms. Major DOE activities in the bill include research and development onrenewable energy and nuclear power, general science, environmental cleanup, andnuclear weapons programs. The Administration's FY2003 request for DOE programsin the Energy and Water bill is $20.53 billion, about $650 million more than theamount appropriated for FY2002. (The FY2003 appropriations request for DOE'sprograms for fossil fuels, energy efficiency, the Strategic Petroleum Reserve, andenergy statistics, included in the Interior and Related Agencies appropriations bill,was $1.8 billion. For details, see CRS Report RL31306 , Appropriations forFY2003: Interior and Related Agencies .)

The House Appropriations Committee recommendation for these programs was $147 million over the Administration's request, $800 million over the FY2002appropriation. The Senate Appropriations Committee bill included funding of$20.96 billion, $430 million greater than the request. H.J.Res. 2 aspassed by the Senate included the same figure as the Senate bill. The final billappropriated $20.89 billion.

Table 6. Energy and Water Development Appropriations Title III: Department of Energy (in millions of dollars)

Figures do not include across-the-board recisions: 2.9% in Senate H.J.Res. 2, 0.65% in P.L. 108-7 .

Key Policy Issues -- Department of Energy

Renewable Energy. The FY2003 request for DOE's Renewable Energy Program seeks "to meet the growing need forclean and affordable energy," according to the Appendix to the U.S. Government'sFY2003 Budget (p. 397). In accordance with this policy, DOE proposed to increasesolar and renewables funding under DOE's Office of Energy Efficiency andRenewable Energy (EERE) from $396.0 million in FY2002 to $407.0 million inFY2003 (excluding funding for programs under the Office of Science).

In the 107th Congress, the Senate Appropriations Committee recommended $448.1 million (excluding $15.0 million in prior year balances) for the RenewableEnergy Program. This is $41.1 million, or 13%, more than the request. This includes$14.0 million more for Biomass/Biofuels, $10.5 million more for Geothermal, $6.0million more for Wind, $5.1 million more for Hydrogen, $4.1 million more forConcentrating Solar Power, and $4.0 million more for Program Support.

In contrast, the House Appropriations Committee sought $396.0 million for the Renewable Energy Program. This was the same amount, not accounting for inflation,as the FY2002 appropriation, and it was $11 million, or 3%, less than theAdministration's request.

The Senate report found that DOE has not adequately implemented "congressionally-directed activities" that were specified in the previous year'sconference report. The House report also expressed concern about DOE's "slowpace in executing projects" directed in the previous year's appropriation bill. Additionally, the House report aimed to "renew" its previous year's direction to DOEto provide Congress with "quantitative measures that can be used to evaluate thepotential costs and benefits of various renewable energy technologies." The Housefound that DOE failed to meet the previous request for this information and, thus,"had no objective basis for supporting the changes in research emphasis proposed inthe fiscal year 2003 budget request."

In the 108th Congress, the Senate Appropriations Committee's recommendations in the 107th Congress totaling $448.1 million (excluding $15.0 million in prior yearbalances) were adopted into the Senate-passed version of H.J.Res. 2 . The Conference Committee approved $422.3 million (excluding $10.0 million fromprior year balances) for DOE's Renewable Energy Program. Relative to the request,the final bill provides $15.3 million, or 4%, more for the Program. Compared toFY2002, it provides $26.3 million, or 7%, more (not adjusting for inflation). Thisincludes $22.0 million more for Electric/Storage, $9.0 million more for Hydrogen,$3.0 million more for Wind, and $2.0 million more for Renewable American IndianResources. It also includes $3.2 million less for Program Direction and $3.0 millionless for Biomass/Biofuels.

Nuclear Energy. P.L. 108-7 provides $261.7 million for nuclear energy programs in FY2003, about $12 millionabove the FY2002 level and the Administration request. The omnibus bill includesfunding for an initiative to encourage construction of new commercial reactors by2010 ("Nuclear Power 2010") and additional funding for advanced ("Generation IV")reactor designs that could be ready for deployment after 2010. Funding is alsoprovided for an Advanced Fuel Cycle Initiative to develop spent fuel reprocessingand treatment technologies, and the Nuclear Energy Research Initiative for innovativenuclear research.

"Nuclear energy is the only expandable, large-scale electricity source that avoids air emissions and meets the energy demands of a growing, modern economy,"according to the DOE FY2003 budget justification. However, opponents havecriticized DOE's nuclear research program as providing wasteful subsidies to anindustry that they believe should be phased out as unacceptably hazardous andeconomically uncompetitive.

The House Appropriations Committee in the 107th Congress recommended $213.7 million for nuclear energy programs, a decrease of $36.1 million from theAdministration request. However, the reduction would have come entirely fromtransferring funds for decommissioning the Fast Flux Test Facility (FFTF) fromnuclear energy to the environmental management program. The SenateAppropriations Committee recommended $324.1 million, including FFTF and theAdvanced Accelerator Applications program, previously funded elsewhere in theenergy and water bill. The final bill includes the accelerator activities but transfersFFTF to environmental management.

The budget request sought $46.5 million for nuclear energy technologies, which included $38.5 million for Nuclear Power 2010 and $8.0 million for Generation IVadvanced reactor technologies. The House Appropriations Committee recommendedcutting the nuclear energy technologies request to $41.5 million so that $5 millioncould be shifted to the nuclear energy plant optimization program (NEPO), which theAdministration had proposed to terminate. The House panel also called for $5million of the nuclear energy technologies funding to go toward pursuing theadvanced nuclear reactor and fuel-cycle recommendations of a joint U.S.-Russiantask force. The Senate voted to boost the nuclear energy technologies request to$48.5 million, and the final omnibus bill provides $45 million.

According to the DOE budget justification, the Nuclear Power 2010 program, which received a $30.5 million increase over FY2002, will "identify the technical,institutional and regulatory barriers to the deployment of new nuclear power plantsby 2010." The program seeks to deploy both a water-cooled reactor (similar to mostexisting commercial plants) and a gas-cooled reactor. The current phase of theinitiative would include site approval, reactor design certification, licenseapplications, detailed design work, and development of improved constructiontechniques. DOE announced it would seek proposals for joint DOE/industry teamsin which DOE would pay up to half the cost of these activities.

DOE's request for Generation IV technologies was double the FY2002 level. A variety of concepts are under consideration, according to the budget justification,including reactors fueled by plutonium recovered through reprocessing of spentnuclear fuel. The Administration's National Energy Policy report contends thatplutonium recovery could reduce the long-term environmental impact of nuclearwaste disposal and increase domestic energy supplies. However, opponents contendthat the separation of plutonium from spent fuel poses unacceptable environmentalrisks and undermines U.S. policy on nuclear weapons proliferation.

DOE requested $18 million to study pyroprocessing technology and for electrometallurgical treatment of spent fuel from the Experimental Breeder ReactorII (EBR-II) in Idaho. No funding was requested for waste transmutation, whichinvolves bombarding nuclear waste with neutrons from a fast reactor or particleaccelerator to convert long-lived radioactive isotopes into radioisotopes that decaymore quickly. Because those programs involve plutonium separation, they aregenerally opposed by nuclear nonproliferation groups. DOE announced July 17,2002, that work on advanced nuclear reactor and reprocessing technologies wouldbe centered at the Idaho National Engineering and Environmental Laboratory(INEEL), which would be placed under the control of the DOE Office of NuclearEnergy, Science, and Technology.

The Senate proposed to boost DOE's advanced nuclear fuel cycle activities to $77.9 million, including the requested $18 million for EBR-II fuel treatment. According to the Senate Appropriations Committee report, "This program subsumesthe Advanced Accelerator Applications program and its activities and will focus onthe development of advanced fuel cycles, recycle or reprocessing of spent fuel, andtransmutation technologies." The House panel also approved the $18 million requestfor EBR-II but, aside from the $5 million related to the joint U.S.-Russia task force(noted above), recommended no additional FY2003 funding for reprocessing andtransmutation. The final omnibus bill provides $58 million for the renamedAdvanced Fuel Cycle Initiative, which includes electrometallurgical treatment,accelerator transmutation, and reprocessing technologies.

NERI was provided $25 million by the omnibus bill, the same as the request but $7 million below FY2002. Although the budget request sought no new funding forNEPO, the omnibus bill provided $5 million, $2 million below the FY2002 level.

Science. The DOE Office of Science conducts basic research in six program areas: basic energy sciences,high-energy physics, biological and environmental research, nuclear physics, fusionenergy sciences, and advanced scientific computing research. Through theseprograms, DOE is the third-largest federal supporter of basic research and the largestfederal supporter of research in the physical sciences.

For FY2003, DOE requested $3.279 billion for Science, compared with $3.233 billion appropriated in FY2002. Within this nearly flat overall funding, increaseswere requested for five of the six programs relative to their FY2002 levels, and areduction was requested (but not received) for biological and environmental research.The House Appropriations Committee recommended a net reduction of $8 millionfrom the request. The Senate Appropriations Committee recommended an increaseof $50 million. P.L.108-7 provides $3.306 billion.

The requested funding for the largest program, basic energy sciences, was $1.020 billion, compared with $1.004 billion in FY2002. The request included $211million for continued construction of the Spallation Neutron Source, a large facilityat Oak Ridge National Laboratory for research in physics, materials science, andother fields. Funding for the Spallation Neutron Source in FY2002 was $276 million;the reduction in FY2003 reflected the planned construction schedule, not a delay orscaling back of the project. The House Appropriations Committee recommendedfunding basic energy sciences at the requested level. The Senate AppropriationsCommittee recommended an increase of $25 million. The final bill provides $1.030billion. The two committee recommendations and the P.L. 108-7 all included fullfunding for the Spallation Neutron Source.

The largest requested percentage increase versus FY2002 was for the smallest program, advanced scientific computing research, which was requested to increasealmost 8% to $170 million. The House Appropriations Committee recommended anfurther increase of $5 million for this program. The Senate AppropriationsCommittee recommended funding the program at the requested level. The final billprovided $173 million and encouraged DOE to request reprogramming that wouldprovide additional FY2003 funding in response to recent Japanese progress insupercomputing.

The only program to be reduced in the request was biological and environmental research, which was requested to receive $504 million, compared with $527 millionthe previous year. The proposed reduction was explained as resulting mainly fromthe completion of 74 medical applications projects that were funded at congressionaldirection in FY2002. Funding for the Genomes to Life project, which was a newinitiative in FY2002, was requested to increase to $37 million. The HouseAppropriations Committee recommended funding biological and environmentalresearch at the requested level. The Senate Appropriations Committee recommendedan increase of $27 million above the request, more than reversing the requestedreduction. Of the Senate increase, $10 million was designated for the Genomes toLife program, which the Committee "strongly encouraged" DOE to expand inFY2004, stating that it "shows tremendous potential and deserves enhanced support."Another $6 million of the Senate increase was designated for research anddemonstration projects on removal of arsenic from municipal water supplies. Thefinal bill provided $530 million, including $4 million for arsenic removal researchand $50 million in directed funding for 46 medical applications projects.

The House Appropriations Committee recommended funding high-energy physics and nuclear physics at the requested levels of $725 million and $382 millionrespectively. In both cases this was an increase over FY2002. The SenateAppropriations Committee recommended increasing each of these programs by anadditional $5 million above the request. The final bill provided $727 million and$384 million respectively.

The requested budget for fusion energy sciences was $257 million. The House Appropriations Committee recommended a reduction of $9 million and directedDOE to prepare an updated fusion program plan, including an evaluation of thepossibility of re-engaging in the International Thermonuclear Experimental Reactor(ITER) project. (U.S. participation in ITER was discontinued by Congress in 1998at the end of the initial engineering design phase. The remaining partners, Canada,Europe, Japan, and Russia, are currently in negotiations prior to the start ofconstruction. On January 30, 2003, the Administration announced its decision torejoin those negotiations.) The Senate Appropriations Committee recommended a $2million increase above the request. The final bill provided $250 million. The Senatecommittee and the final bill both called for an evaluation of the "fast ignition"concept, with the report of that evaluation to be provided by August 1, 2003. TheSenate committee provided $2 million additional for that evaluation; the final bill didnot.

Nuclear Weapons Stockpile Stewardship. Congress established the Stockpile StewardshipProgram (SSP) in the FY1994 National Defense Authorization Act ( P.L. 103-160 )"to ensure the preservation of the core intellectual and technical competencies of theUnited States in nuclear weapons." The program is operated by the National NuclearSecurity Administration (NNSA), a semiautonomous agency established by Congressin the FY2000 National Defense Authorization Act ( P.L. 106-65 , Title XXXII)within DOE. It seeks to maintain the safety and reliability of the U.S. nuclearstockpile.

A key issue is whether this task can and should continue to be done without nuclear testing. While SSP has sought to maintain warheads without testing,statements in early 2002 implied a reduced commitment to that approach. Secretaryof Defense Donald Rumsfeld said that nations with nuclear weapons have "aresponsibility to see that they are safe and reliable. To the extent that can be donewithout testing, clearly that is the preference. And that is why the President hasconcluded that, thus far, that is the case." J.D. Crouch, Assistant Secretary ofDefense for International Security Policy, stated that there is "no change in theAdministration's policy at this point on nuclear testing. We continue to opposeCTBT [Comprehensive Test Ban Treaty] ratification. We also continue to adhere toa testing moratorium."

The Administration requested $15 million to improve "nuclear test readiness" - to reduce the time between a decision to test and the conduct of the test - pendingcompletion of a study and policy on optimum test readiness time. The SenateAppropriations Committee, in its report accompanying S. 2784 , theFY2003 Energy and Water Development Appropriations bill in the 107th Congress,stated the matter differently: "weapons activities [funds] provide for the continuingassurance of safety, reliability, and security of the nuclear weapons in our enduringnuclear weapons stockpile while adhering to the spirit of the Comprehensive TestBan Treaty." The committee bill provided "within available funds" $64.2 million fortest site readiness (a category broader than nuclear test readiness), as well as otherfunds that "contribute to the test readiness posture." The House AppropriationsCommittee recommended providing the requested amount, while directing DOE tonotify the committee before obligating any of these funds in FY2003. The finalomnibus resolution contains $60.0 million for maintaining Nevada Test Sitereadiness and $15.0 million for enhanced test readiness, and directs DOE to notifythe Appropriations Committees before obligating any of these funds in FY2003.

Stockpile stewardship consists of all activities in NNSA's Weapons Activities account, for which the FY2003 request was $5,867.0 million, compared to $5,560.2million for FY2002. The Senate bill, S. 2784 , provided $6,109.0million, and that funding remained in H.J.Res. 2 as passed by theSenate. The House bill, H.R. 5431 , provided $5,967.1 million, of which$195.0 million was prior year balances. The final bill, P.L. 108-7 , contains $5,954.2million.

The three main elements of stockpile stewardship, described below, are Directed Stockpile Work, $1,045.8 million for FY2002, $1,234.5 million requested for 2003and provided by P.L. 108-7 ; Campaigns, $2,167.1 million for FY2002, $2,067.8million requested for FY2003, $2,148.2 million provided by the Senate bill, $2,088.9million provided by H.R. 5431 , and $2,133.5 million provided by P.L.108-7 ; and Readiness in Technical Base and Facilities, $1,553.1 million for FY2002,$1,688.2 million for FY2003, $1,849.8 million provided by the Senate bill, $1,738.2million provided by H.R. 5431 , and $1,832.2 million in P.L. 108-7 .

NNSA manages two major programs in addition to Weapons Activities: Defense Nuclear Nonproliferation ($1,113.6 million requested; see below) and NavalReactors ($706.8 million requested). The total FY2003 request for NNSA, includingthe foregoing elements and several smaller ones, was $8,023.4 million, comparedwith $7,590.5 million appropriated for FY2002. The Senate bill contained $1,115.6million for Defense Nuclear Nonproliferation, $706.8 million for Naval Reactors,and $8,267.3 million in total for NNSA. Comparable figures for H.R. 5431 are $1,167.6 million, $706.8 million, and $7,908.4 million, respectively. Comparable figures in the final bill, P.L. 108-7 , are $1,113.6 million, $706.8 million,and $8,105.6 million, respectively.

Most stewardship activities take place at the nuclear weapons complex, which consists of three laboratories (Los Alamos National Laboratory, NM; LawrenceLivermore National Laboratory, CA; and Sandia National Laboratories, NM andCA), four production sites (Kansas City Plant, MO; Pantex Plant, TX; SavannahRiver Site, SC; and Y-12 Plant, TN), and the Nevada Test Site. NNSA manages andsets policy for the complex; contractors to NNSA operate the eight sites.

Directed Stockpile Work (DSW). This program involves work directly on nuclear weapons in the stockpile, such asmonitoring the condition of weapons and maintaining them through repairs,refurbishment, life extension, and modifications. It includes R&D to supportactivities to be undertaken for specific warheads. The FY2003 DSW request wouldsupport work on a number of nuclear weapons: full-scale refurbishment of the W87,development engineering for the B61 mods 7/11, an engineering study of the W80to extend its life and enhance surety, and development engineering to extend the life,refurbish major systems, and add new components to the W76. NNSA plans to beginproduction engineering for the latter two warheads in FY2003. It also plans toconduct a study for the "Robust Nuclear Earth Penetrator" (RNEP), for which $15.0million was requested for FY2003. Warheads of this type would burrow into theground before detonating in order to destroy underground targets with less explosiveyield than a surface-burst weapon would require. The Senate Armed ServicesCommittee's FY2003 defense authorization bill, S. 2514 , included nofunds for the RNEP and required a study on RNEP, including military requirements,employment policy, targets, and conventional weapon alternatives. The HouseArmed Services Committee's bill, H.R. 4546 , provided the requestedamount. The National Defense Authorization Act, P.L. 107-314 , fully funded therequest but barred obligation of FY2003 funds for the study until 30 days after theDepartment of Defense (DOD) had submitted the RNEP study proposed by theSenate Armed Services Committee's bill. The House and Senate AppropriationsCommittee bills provided the amount requested for RNEP, and that funding remainsin the final bill, P.L. 108-7 .

Campaigns. These are "focused scientific and engineering efforts" that seek to "develop and maintain specialcapabilities and tools needed for continued certification of the stockpile ... in theabsence of underground nuclear testing." For FY2003, there are 16 campaigns. Examples are: Enhanced Surveillance ($82.3 million appropriated for FY2002,$77.2 million requested for FY2003 and appropriated in the final bill), which seeksto assess lifetimes of weapons components and predict defects resulting from aging;Advanced Design and Production Technologies ($75.5 million for FY2002, $74.1million requested for FY2003 and provided by the final bill), which seeks to improveindividual manufacturing processes, integrate product information, and develop theability to fabricate complex parts in small lots; Advanced Simulation and Computing($729.9 million for FY2002, $724.9 million requested for FY2003 and provided by H.R. 5431 , $704.3 million provided by the Senate bill and by the finalbill), which aims to obtain a 100-trillion operations per second computer by 2005 andis developing computer models (e.g., of nuclear weapon performance) needed tocertify the stockpile; and Tritium Readiness ($123.5 million for FY2002, $126.3million requested for FY2003 and provided by H.R. 5431 , $112.9million provided by the Senate bill, and $118.2 million provided by P.L. 108-7 ),which is developing means of using a commercial light water reactor to producetritium, an isotope of hydrogen that is a key ingredient in nuclear weapons.

The Pit Manufacturing and Certification campaign has attracted much congressional interest. Pits are the fissile cores of nuclear warheads that trigger thethermonuclear secondary stage. The United States has been unable to produce pitsfor use in stockpiled weapons since 1989, when DOE suspended pit production at theRocky Flats Plant (CO). As a result, the United States has been unable to makeall-new nuclear warheads of existing or advanced new designs. The campaignsupports two pit projects: installation of a low-capacity pit production facility, andsupporting R&D, at Los Alamos National Laboratory; and planning for ahigher-capacity Modern Pit Facility. R&D, procurement, and construction costs forthe two projects might total some $5 billion over two decades. The FY2003 requestwas $194.5 million, compared with $219 million appropriated for FY2002. Therequest includes $112.5 million for manufacturing the pit for the W88 warhead, oneof the two types of warheads used on the Trident II missile, $78.0 million for W88pit certification, $2.0 million for pit activities not specifically supporting the W88,and $2.0 million for planning for the Modern Pit Facility.

In action on this issue for FY2002, the House Appropriations Committee recommended the requested amount, $128.5 million, but asserted that DOE cannotshow "that it has a viable plan to manufacture and certify pits on the scheduledictated by national security needs," criticized the project as "years behind scheduleand hundreds of millions of dollars over the original cost estimate," and stated thatit will judge NNSA's success on how well the pit project succeeds. The SenateAppropriations Committee recommended increasing funding for FY2002substantially to "fully fund" all relevant activities, viewing the then-current schedule,which would not certify a pit for use in the stockpile until FY2009, as"unacceptable." In its FY2003 request, NNSA states that it plans to "certify a W88pit built at [Los Alamos National Laboratory] without underground nuclear testingby FY 2009, with a goal of achieving an earlier date of FY 2007." Further, NNSAplans to defer detailed design of a Modern Pit Facility until FY2004, "with FY 2003funding used to continue manufacturing concepts."

In its report on FY2003 energy and water appropriations, the Senate Appropriations Committee recommended $246.0 million for pit manufacturing andcertification, an increase of $51.5 million over the request. The sum includes therequested $2.0 million for pit activities and $2.0 million for the Modern Pit Facility. The committee, however, "remains greatly concerned about the NNSA's refusal torequest funds consistent with its own project plan submitted less than 1 year ago." Because this was not done, which would have resulted in a lower request for thisproject, "the Committee has been forced to reduce other items in the budget." TheSenate Appropriations Committee directed NNSA to revise the plan and report toCongress before the end of the current fiscal year and then annually. The HouseAppropriations Committee provided $194.5 million, the requested amount, for pitmanufacturing and certification. P.L. 108-7 provides $222.0 million for pitmanufacturing and certification. According to the joint explanatory statement of theCommittee of Conference, "The increase will ensure that the NNSA maintains itscommitment to produce a certifiable W88 pit by 2003 and a certified W88 pit by2007." The statement directed NNSA "to provide a revised pit production andcertification plan to the relevant Congressional committees by March 31, 2003, andannually thereafter."

The National Ignition Facility (NIF), under construction at Lawrence Livermore National Laboratory, is to be the world's largest laser. It is a key project for thestockpile stewardship program. NIF is intended to help solve weapons problems,attract top physicists to the nuclear weapons program, and advance the quest forfusion power. A top priority of the facility is to achieve "ignition," in which nuclearfusion of deuterium and tritium (isotopes of hydrogen) would release more energythan was provided by the laser to achieve fusion.

In 1999, the NIF Project identified several problems with the original cost estimates and notified DOE that NIF could not be completed for the originalestimated cost. The project was rebaselined and revalidated in 2000, addingapproximately $1 billion to the cost and several years to the schedule. Over theyears, various reports have raised questions about technical issues. The NIF ProjectOffice, however, states that the project is now on the schedule and budget set forthin the new baseline, and that no technical obstacles remain. In its FY2003 request,DOE estimated total project-related costs for NIF at $3,448.1 million.

In its report on FY2003 energy and water appropriations, the Senate Appropriations Committee expressed great concern over changes to the project'sscope implied by the request. The title of the campaign has changed from "InertialConfinement Fusion and High Yield" to "High Energy Density Physics," which theSenate Appropriations Committee felt marked a shift "from a focus on achieving thespecific goal of ignition to a generalized physics research program."

The Senate panel was also concerned that the performance criteria for acceptance testing of the laser beams could be reduced "significantly below what isrequired to support ignition experiments." The Committee expressed its "impressionthat NNSA is not committed to the NIF Project and might down scope the project tothe point where laser performance that is needed to evaluate ignition targets wouldnever be realized." In response, "[t]he Committee rejects this re-prioritization anddown-scoping. Ignition is now and will remain the primary objective" for NIF. Inpart because of concern that the Administration did not request certain funds forequipment and technology essential for ignition, the Senate AppropriationsCommittee added $35.0 million to the FY2003 request for inertial confinementfusion, for a total of $487.3 million.

The House Appropriations Committee provided $498.8 million, and also expressed concern that NNSA was changing the focus "from the specific goal ofignition to a generalized physics research program." Accordingly, it "direct[ed]NNSA to re-establish ignition as the primary objective and justification for the NIF."

The final bill, P.L. 108-7 , provides $504.3 million for inertial confinement fusion, $52.5 million over the request. The $504.3 million includes $214.0 million,the same as the request, for continued construction of NIF. The conferees' statementdid not provide further guidance on the focus of the inertial confinement fusionprogram.

Readiness in Technical Base and Facilities (RTBF). This program provides infrastructure and operationsat the nuclear weapons complex sites. The request includes eight categories. By farthe largest is Operations of Facilities ($897.8 million for FY2002, $949.9 millionrequested for FY2003, $1,026.0 million provided by the Senate bill, $994.9 providedby H.R. 5431 , and $1,026.8 million provided in the final bill). Otherlarge categories include Program Readiness, which supports activities occurring atmultiple sites or in multiple programs ($192.0 million appropriated for FY2002,$208.1 million requested for FY2003 and provided by H.R. 5431 ,$218.0 in the Senate bill, and $220.0 million in the final bill), and Construction($204.9 million appropriated for FY2002, $270.3 million requested for FY2003 andprovided by the House bill, $328.2 million in the Senate bill, and $308.8 million in P.L. 108-7 ).

Of particular interest is the RTBF element Nuclear Weapons Incident Response, for which $91.0 million was requested for FY2003 and provided in the House bill, $96.0 million was provided in the Senate bill, and $91.0 million is provided in P.L.108-7 , compared with $88.9 million appropriated for FY2002. This activity providesfunds for an appropriate technical response to any nuclear or radiological emergencywithin DOE, in the United States, or abroad. In addition, the RTBF elementOperations of Facilities includes $10.0 million requested for FY2003, unchangedfrom FY2002, for the National Center for Combating Terrorism. The Senate billprovides $27.0 million for this center, H.R. 5431 does not specify anamount, and the final bill provides $23.5 million.

Nonproliferation and National Security Programs. DOE's nonproliferation and national security programsprovide technical capabilities to support U.S. efforts to prevent, detect, and counterthe spread of nuclear weapons worldwide. These nonproliferation and nationalsecurity programs are included in the National Nuclear Security Administration(NNSA).

Funding for these programs in FY2002 was provided both in the regular Energy and Water Development bill, which appropriated $803.6 million, and in the FY2002Defense and Emergency Supplemental Appropriations Act ( P.L. 107-117 ), whichadded $223 million, for a total of $1.0266 billion. In FY2001 these programsreceived $872.3 million. The FY2003 request maintained an increased level, at$1.1136 billion. The House Appropriations Committee recommended $1.17 billion. The Senate Appropriations Committee bill included $1.1156 billion, and this amountwas included in H.J.Res. 2 as passed by the Senate. The final bill, P.L.108-7 , appropriated the requested amount, $1.1136 billion.

In particular, the Nonproliferation and Verification R&D program, which received a total of $286.5 million for FY2002, was funded at $283 million in the finalbill, the amount requested by the Administration. Nonproliferation and InternationalSecurity programs, formerly called "Arms Control," also received the amountrequested, $132 million, compared with $118 million in FY2002. These programsinclude international safeguards, export controls, treaties and agreements, and twoprograms in the former Soviet Union, Initiatives for Proliferation Prevention (IPP)and the Nuclear Cities Initiatives (NCI). (The final bill breaks out IPP and NCI intoa separate line item called "Russian Transition Initiative" and lists the FY2003appropriation for them as $39.3 million, compared to $42.0 million appropriated forFY2002.)

International Materials Protection, Control and Accounting (MPC&A), which is concerned with reducing the threat posed by unsecured Russian weapons andweapons-usable material, received a big increase in FY2002 to $293 million, from$174 million in FY2001. The request for FY2003 was $233 million, and that amountwas appropriated in the final bill.

Funding for the Fissile Materials Disposition program for FY2003 in P.L. 108-7 was $448.0 million, the amount requested, compared with $302.4 million in FY2002. The Administration proposed abandoning plans to vitrify and immobilize a portionof surplus plutonium from dismantled U.S. nuclear weapons and instead dispose ofalmost all of it as fuel for commercial power reactors. Some of the increased fundingwould go toward construction of a facility to convert the plutonium to reactor fuel atSavannah River, SC. FY2003 funding for the project is $93.0 million, compared to$65.9 million for FY2002. Money for Russian surplus materials disposition alsoincreased, from $61.0 million in FY2002 to $98.0 million in FY2003.

(For details on these programs, see CRS Issue Brief IB10091, Nuclear Nonproliferation Issues .)

Environmental Management. The amount of time and money needed to clean up environmental contamination resultingfrom the production of nuclear weapons during the Cold War has been a longstandingissue. Since the beginning of the U.S. atomic energy program, DOE and itspredecessors have been responsible for administering the production of nuclearweapons and managing radioactive and other hazardous waste. In later years, DOEexpanded its efforts to include the environmental restoration of radioactive sites andthose with other hazardous contamination in buildings, soil, and water to ensure theirsafety for future uses. In 1989, the Bush Administration established anEnvironmental Management Program within DOE to consolidate the agency's effortsin cleaning up contamination from defense nuclear waste, as well as waste fromcivilian nuclear energy research. DOE is responsible for complying with numerousfederal environmental laws and regulations in administering the program, and issubject to fines and penalties for violations of these requirements. Consequently,DOE has signed numerous legally binding compliance agreements with theEnvironmental Protection Agency (EPA) and the states to perform cleanup activitiesand dispose of waste according to specific deadlines.

DOE reports that there are a total of 114 contaminated sites in 30 states where the production of nuclear weapons, and civilian nuclear energy research anddevelopment activities, resulted in radioactive and other hazardous contamination. Together, these sites occupy approximately 2.1 million acres, which is equivalent tothe land area of Rhode Island and Delaware combined. DOE reports that all responseactions were complete at 75 sites as of the end of FY2002 at a cost of over $60billion, and that cleanup is expected to be complete at two additional sites by the endof FY2003. However, the sites that have been cleaned up are relatively small and areamong the least hazardous, and the sites where cleanup remains underway containsome of the most severely contaminated areas. DOE has estimated that cleanup atthe remaining sites may take 70 years to complete, and that total cleanup costs mayreach $220 billion if changes to the program are not made. DOE contends that thesecosts could be reduced by $50 billion to $100 billion through the use of risk-basedapproaches to accelerate cleanup schedules. However, DOE's past implementationof risk-based approaches has been criticized as ineffective, and questions have beenraised as to how these goals would be accomplished without weakeningenvironmental standards.

Five accounts within the annual appropriations bill for Energy and Water Development have traditionally funded DOE's Environmental Management Program. The Defense Environmental Restoration and Waste Management Account fundscleanup and waste management activities at nuclear weapons sites where all responseactions are projected to continue beyond 2006. The Defense Facilities ClosureProjects Account supports cleanup and waste management activities at nuclearweapons sites where all response actions are scheduled to be complete by the end of2006. The Defense Environmental Management Privatization Account funds cleanupand waste management projects at nuclear weapons sites that are performed under"privatization" contracts. This contracting approach relies on the private sector toconstruct and operate facilities or conduct cleanup actions on a fixed-price,fee-for-service basis. The Non-Defense Environmental Management Account fundscleanup and waste management activities at civilian nuclear energy research anddevelopment sites. Lastly, the Uranium Facilities Maintenance and RemediationAccount funds the cleanup of uranium and thorium processing sites.

For FY2003, DOE initially requested a total of $6.7 billion for the above accounts, approximately the same amount as enacted for FY2002. However, $800million of the initial request would have been allocated to a new EnvironmentalManagement Cleanup Reform Account, which would have funded efforts to reducerisk, decrease cleanup costs, and accelerate cleanup schedules. The Administrationbudgeted the majority of the funding for this new account by decreasing support forsites funded under the Defense Environmental Restoration and Waste ManagementAccount. Under this approach, funding would have been restored at these sites onlyif compliance agreements with the Environmental Protection Agency (EPA) and thestates were re-negotiated to accelerate cleanup schedules. DOE has long argued thatmany of the requirements under its existing compliance agreements are too costly,ineffective, and unnecessarily time-consuming, and that its agreements need to bere-examined to explore ways to increase the pace of cleanup and reduce costs. Concerns were raised as to whether EPA and the states might agree to weakercleanup standards rather than face the possibility of the loss of funds, which mayhave prevented sites from fulfilling existing agreements.

To date, DOE has signed letters of intent with EPA and the states to accelerate cleanup at the following sites: the Hanford site in Washington, the Oak Ridge site inTennessee, the Idaho National Engineering and Environmental Laboratory, theNevada Test Site, the Savannah River site in South Carolina, the Pantex site inTexas, and the Los Alamos National Laboratory and Sandia National Laboratoriesin New Mexico. On August 2, 2002, the President submitted a budget amendmentto request an additional $300 million in FY2003 to fulfill these new agreements,increasing the request for a new Environmental Management Cleanup ReformAccount to $1.1 billion, and the overall request for the Environmental ManagementProgram to $7.0 billion.

During the 107th Congress, the Subcommittee on Oversight and Investigations of the House Committee on Energy and Commerce held a hearing on DOE's cleanupreform initiative on July 19, 2002. Jesse Roberson, Assistant Secretary forEnvironmental Management, testified that the objective of the cleanup reforminitiative is to identify and implement more risk-oriented and efficient cleanupapproaches, and that the intent is not to weaken any of DOE's complianceagreements. The General Accounting Office (GAO) testified on the status ofcompliance agreements with EPA and the states at each nuclear waste cleanup site,and indicated that DOE faces challenges in developing and implementing arisk-based method to prioritize cleanup activities due to failed attempts to do so inthe past. GAO also indicated that DOE's reform initiative in some cases couldinvolve "potential changes in technology or approach that would result in leavingmore of the waste on site than currently planned and thus could significantly reducecleanup costs. In other cases, it could allocate funding using a greater emphasis onrisk reduction, which could shift funding among sites." Representatives from thestates of Washington, Idaho, and Tennessee indicated that the letters of intent tore-negotiate cleanup agreements in their states would not result in weakened cleanupstandards, but would provide a framework for cooperation among the partiesinvolved to establish new cleanup goals.

As signed by the President, the FY2003 Omnibus Appropriations resolution does not allocate any funding to the proposed Environmental Management CleanupReform Account. Instead, the resolution increased funding for the existing DefenseEnvironmental Restoration and Waste Management Account by $926 million abovethe Administration's request of $4.54 billion in order to honor the letters of intent toaccelerate cleanup that DOE had already signed. The increase will be allocatedaccording to the existing structure of site categories within the account. During theappropriations debate, concerns were expressed about providing an unallocated sumfor the reform account due to uncertainties as to how DOE would have divided theamount among various sites. Section 315 of the final bill indicates that none of thefunding for environmental management activities may be obligated at individual sitesthat would be in excess of the amount obligated in FY2002 or requested for FY2003,whichever is greater, unless a performance management plan has been completed forthat site that is consistent with the intent of DOE's environmental management andcleanup reform initiative.

The level of funding to appropriate for FY2003 for the four other accounts was less controversial. Overall, P.L. 108-7 appropriated nearly $7.0 billion for all fivedefense and non-defense accounts that support DOE's Environmental ManagementProgram. This amount is approximately the same as the Administration's request of$7.0 billion, and is about $290 million more than the enacted FY2002 funding levelof $6.7 billion.

Civilian Nuclear Waste. The Bush Administration sought $524.7 million for the DOE civilian waste disposalprogram for FY2003, a 40% boost over FY2002. The increased budget is intendedprimarily to pay for preparing a construction permit application for a national nuclearwaste repository at Yucca Mountain, Nevada. DOE expects to submit the10,000-page application to NRC in late 2004. The additional funds are also neededfor detailed repository design work, repository performance studies, andtransportation planning, according to DOE. With sufficient funding, according toprogram officials, DOE can begin receiving waste at the site by 2010.

The House Appropriations Committee recommended the full Administration request, citing enactment of the Yucca Mountain approval resolution discussedbelow. However, the Senate Appropriations Committee recommended cutting therequest to $336 million, nearly 10% below the FY2002 level. The Yucca Mountainapproval resolution was vigorously opposed by Senator Reid, Ranking Democrat onthe Senate Committee's Energy and Water Development Subcommittee. The finalomnibus bill provides $460 million.

The Nuclear Waste Policy Act of 1982 (NWPA, P.L. 97-425 ) as amended, names Yucca Mountain as the sole candidate site for a national geologic repository. Following the recommendation of Energy Secretary Abraham, President Bush onFebruary 15, 2002, recommended to Congress that DOE submit an application toNRC to construct the Yucca Mountain repository. Nevada Governor Guinn thenexercised his right under NWPA to submit a "notice of disapproval" (or "state veto")to Congress. Under NWPA, the state disapproval blocks the Yucca Mountain siteunless a congressional approval resolution is signed into law within 90 days ofcontinuous session. The approval resolution was signed July 23, 2000( H.J.Res. 87 , P.L. 107-200 ), allowing the Yucca Mountain project toproceed to the licensing phase.

Funding for the nuclear waste program comes from two sources. Under the FY2003 budget request, $209.7 million was to be provided from the Nuclear WasteFund, which consists of fees paid by nuclear utilities, and $315 million from thedefense nuclear waste disposal account, which pays for disposing of high-level wastefrom the nuclear weapons program in the planned civilian repository. The omnibusbill, P.L. 108-7 , provides $145 million from the Nuclear Waste Fund and $315million from the defense account.

The 2010 target for opening a permanent repository is 12 years later than the Nuclear Waste Policy Act deadline of January 31, 1998, for DOE to begin takingwaste from nuclear plant sites. Nuclear utilities and state utility regulators, upsetover DOE's failure to meet the 1998 disposal deadline, have won two federal courtdecisions upholding the Department's obligation to meet the deadline and tocompensate utilities for any resulting damages. Utilities have also won several casesin the U.S. Court of Federal Claims, although specific damages have not yet beendetermined.

Power Marketing Administrations. DOE's four Power Marketing Administrations (PMAs) developed out of theconstruction of dams and multi-purpose water projects during the 1930s that areoperated by the Bureau of Reclamation and the Army Corps of Engineers. Theoriginal intention behind many of these projects was conservation and managementof water resources, including irrigation, flood control, recreation and other objectives. However, many of these facilities generated electricity for project needs. The PMAswere established to market the excess power; they are the Bonneville PowerAdministration (BPA), Southeastern Power Administration (SEPA), SouthwesternPower Administration (SWPA), and Western Area Power Administration (WAPA).

The power is sold at wholesale to electric utilities and federal agencies "at the lowest possible rates ... consistent with sound business practice," and priority onPMA power is extended to "preference customers," which include municipal utilities,co-ops and other "public" bodies. The PMAs do not own the generating facilities,but they generally do own transmission facilities, except for Southeastern. ThePMAs are responsible for covering their expenses and repaying debt and the federalinvestment in the generating facilities.

The 104th Congress debated sale of the PMAs and did, in 1995, authorize divestiture of one PMA, the Alaska Power Administration. There has been no pressto dispose of the remaining PMAs, and none seems likely given the broaderuncertainties governing electric utility restructuring.

The Administration's request for SEPA, SWPA, and WAPA for FY2003 was $197.4 million, a reduction from the FY2002 appropriation of $207.3 million. TheSenate Committee on Appropriations recommended $203.5 million, which includedan additional $6.1 million, added to the budget for the Western PowerAdministration, which would be transferred to the Utah Reclamation Mitigation andConservation Commission. This was the level of funding approved in the finalFY2003 Omnibus Appropriations resolution.

BPA receives no annual appropriation, but funds some of its activities from permanent borrowing authority, which was $3.75 billion in FY2002. For FY2003, BPA intended to borrow $630.8 million, to be used for transmission systemconstruction, system replacement, energy resources, fish and wildlife, and capitalequipment programs. BPA had requested an additional $2 billion in permanentborrowing authority in the FY2002 budget "to address critical infrastructure needs,"but Congress did not support the request. The Administration requested an additional$700 million in borrowing authority for BPA in the FY2003 budget request. Aprovision for an increase of $1.3 billion in borrowing authority was included in theSenate version of comprehensive energy legislation, H.R. 4 , whichreached conference in the 107th Congress but was not enacted by adjournment.Consequently, Senator Craig submitted an amendment (SA 34) to H.J.Res. 2 to add $700 million in borrowing authority, the levelsupported by the Administration in its request. The amendment was approved, andenacted in the final measure, P.L. 108-7 . However, the conferees directed that BPAsubmit a detailed budget justification, by project, to the House and SenateCommittees on Appropriations by March 30, 2003. BPA will be expected to submita similar detailed budget justification as part of future budget requests. (For detailson BPA's funding procedure see CRS Report RL31215, Bonneville PowerAdministration's Authority to Borrow from the U.S. Treasury .)

Title IV: Independent Agencies

Independent agencies that receive funding from the Energy and WaterDevelopment bill include the Nuclear Regulatory Commission (NRC), the Appalachian Regional Commission (ARC), and the Denali Commission.

Table 7. Energy and Water Development Appropriations Title IV: Independent Agencies (in millions of dollars)

*Figures do not include across-the-board recisions: 2.9% in Senate H.J.Res. 2, 0.65% in P.L. 108-7 .

Key Policy Issues -- Independent Agencies

Nuclear Regulatory Commission. The Nuclear Regulatory Commission (NRC) requested a total budget of $585.0million for FY2003, including $6.8 million for the NRC inspector general's office. The funding request would provide an increase of $25.3 million from FY2002(including FY2002 supplemental funding). Major activities conducted by NRCinclude safety regulation and licensing of commercial nuclear reactors, licensing ofnuclear waste facilities, and oversight of nuclear materials users.

The omnibus bill provides the full NRC request, as recommended by House and Senate Appropriations panels.

In the wake of the September 11 terrorist attacks against the United States, NRC has focused additional attention on the security of nuclear power plants and otherusers of radioactive material. NRC's FY2003 budget request includes $29.3 millionfor activities related to homeland security, about $6 million below the $36 millionprovided in the FY2002 Emergency Supplemental Appropriations bill. Accordingto the NRC budget justification, the funding is being used for:

Re-analyzing the threat of radiological sabotage and the theftof nuclear material;

Re-analyzing the adequacy of physical protection requirements for nuclear facilities and transportation of radioactivematerials;

Re-analyzing procedures for authorizing access to nuclear facilities;

Strengthening NRC emergency preparedness and response capabilities;

Better integrating NRC security and emergency preparedness planning; and

Strengthening NRC infrastructure and communications capabilities.

(For more information on protecting licensed nuclear facilities, see CRS Report RS21131 , Nuclear Powerplants: Vulnerability to Terrorist Attack .)

NRC proposes to more than double its spending on licensing of new commercial reactors, which are being seriously considered for the first time in at least 20 years. The FY2003 request includes $24.8 million for new reactor licensing, up from $10million provided in FY2002. According to the NRC budget justification, the fundingwill be used for early site permits (sites approved for future reactors), reactorpre-licensing and licensing reviews, and updating the nuclear licensing infrastructure. The NRC licensing program dovetails with DOE's program to encourageconstruction of two new nuclear power plants by 2010.

For the decade before FY2001, NRC's budget was offset 100% by fees on nuclear power plants and payments by other licensed activities, such as the DOEnuclear waste program. The nuclear power industry had long contended that the feestructure required nuclear reactor owners to pay for a number of NRC programs, suchas foreign nuclear safety efforts, from which they did not directly benefit. To accountfor that concern, the FY2001 Energy and Water Appropriations Bill included an NRCproposal to phase down the agency's fee recovery to 90% during the subsequent 5years - two percentage points per year. As a result, 94% of the FY2003 NRCappropriation - minus $24.9 million transferred from the Nuclear Waste Fund to payfor waste repository licensing and $29.3 million for homeland security - was to beoffset by fees on licensees, under the budget request. But the omnibus bill, asrecommended by the House and Senate Appropriations Committees, requires that the94% offset also apply to the homeland security funding, resulting in a lower netappropriation than in the budget request.

Additional Legislative Provisions

The omnibus appropriations bill includes an extension of the Price-AndersonAct nuclear incident liability system through December 31, 2003. The Senate hadproposed attaching a 15-year extension that was identical to Price-Andersonprovisions agreed to by House-Senate conferees on an omnibus energy bill( H.R. 4 ) in the 107th Congress. The energy conference agreement wasnot completed by the end of the session, however, so the proposed Price-Andersonextension was not enacted. The short extension in the omnibus appropriations billdoes not change any other provisions in the Price-Anderson Act.

Under the Price-Anderson Act (primarily Section 170 of the Atomic Energy Act of 1954, 42 U.S.C. 2210), the owners of commercial reactors must assume allliability for reactor-related radiological damages awarded to the public by the courtsystem, but their total liability is limited to the amount provided by private insuranceand a mandatory industry self-insurance system. The Price-Anderson Act alsoauthorizes DOE to indemnify contractors who operate hazardous DOE nuclearfacilities. The limit on DOE contractor liability is the same as for commercialreactors, except when the limit for commercial reactors drops because of a declinein the number of covered reactors.

Without an extension of the law, any commercial nuclear reactor licensed after August 1, 2002, could not have been covered by the Price-Anderson system, althoughcoverage continued for existing reactors. Because no new U.S. reactors are currentlyplanned, missing the deadline for extension had little short-term effect on the nuclearpower industry. However, any new DOE contracts signed during a Price-Andersonlapse would have to use alternate indemnification authority. To prevent thatproblem, the National Defense Authorization Act for FY2003 ( P.L. 107-314 ), signedDecember 2, 2002, extended Price-Anderson coverage for DOE contractors throughDecember 31, 2004.

For Additional Reading

CRS Issue Briefs

CRS Issue Brief IB88090. Nuclear Energy Policy .

CRS Issue Brief IB92059. Civilian Nuclear Waste Disposal .

CRS Issue Brief IB10041. Renewable Energy: Tax Credit, Budget, and Electricity Production Issues

CRS Issue Brief IB10019. Western Water Resource Issues .

CRS Issue Brief IB10072. Endangered Species: Difficult Choices .

CRS Issue Brief IB10091. Nuclear Nonproliferation Issues .

CRS Reports

CRS Report RS20702 . South Florida Ecosystem Restoration and the Comprehensive Everglades Restoration Plan .

CRS Report RL30928. Army Corps of Engineers: Reform Issues for the 107th Congress .

CRS Report RS20569 . Water Resource Issues in the 107th Congress .

CRS Report RS20866 . The Civil Works Program of the Army Corps of Engineers: A Primer .

CRS Report RL31116 . Water Infrastructure Funding: Review and Analysis of Current Issues .

CRS Report RL31044(pdf) . Renewable Energy Legislation in the 107th Congress .

CRS Report RL31215. Bonneville Power Administration's Authority to Borrow from the U.S. Treasury .

CRS Report RL30478 . Federally Supported Water Supply and Wastewater Treatment Programs .

CRS Report RS21026. Terrorism and Security Issues Facing the Water Infrastructure Sector .

CRS Report RS21131 . Nuclear Powerplants: Vulnerability to Terrorist Attack .

CRS Report RL31098(pdf) . Klamath River Basin Issues: An Overview of Water Use Conflicts .

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