Appropriations for FY2004: Energy and Water Development
Released: 2004-01-30T00:00:00

Most Recent Developments

The Bush Administration's FY2004 budget request, released February 3, 2003, budgetedEnergy and Water Development Programs at $26.95 billion. The FY2003 ConsolidatedAppropriations Resolution ( H.J.Res. 2 , P.L. 108-7 ) and the Emergency WartimeSupplemental Appropriations Act, 2003 ( P.L. 108-11 ) funded these programs at $26.20 billion. OnJuly 15 the House Appropriations Committee reported a bill ( H.R. 2754 ) containingFY2004 appropriations of $27.08 billion, and the House passed the bill with the same funding onJuly 18. The Senate passed a $27.38 billion version of H.R. 2754 on September 16. The conference committee on the bill approved $27.33 billion on November 5, 2003 ( H.Rept.108-357 ), and both the House and the Senate agreed to the conference report on November 18. Thebill was signed December 1.

On November 25 House and Senate conferees reported out H.R. 2673 , the omnibus Consolidated Appropriations Act, 2004 ( H.Rept. 108-401 ),which included seven of the 13 regularappropriations bills not yet passed. Although Energy and Water Development was not one of thoseincluded in the omnibus bill, several provisions affected Energy and Water programs. The Houseapproved the conference report on H.R. 2673 on December 8, and the Senate on January22, 2004. The President signed the bill January 23 ( P.L. 108-199 ).

Status

Table 1. Status of Energy and Water DevelopmentAppropriations, FY2004

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 Bush Administration's request was$26.946 billion for these programs for FY2004, compared with $26.198 billionappropriated for FY2003. The House Appropriations Committee recommended$27.080 billion for FY2004 ( H.R. 2754 ), and the bill passed the Housewith that amount on July 18. The Senate bill, S. 1424 , reported out bythe Senate Appropriations Committee on July 17, contained funding of $27.378billion, and the Senate incorporated that bill in its version of H.R. 2754 with a number of noncontroversial amendments on September 16. The final bill,signed into law December 1, contained $27.328 billion.

Although Energy and Water Development is not one of the seven regular appropriations bills included in H.R. 2673 ( P.L. 108-199 ), the omnibusConsolidated Appropriations Act, 2004, several provisions in that measure affectedEnergy and Water programs, including a 0.59% rescission for all non-defenseprograms. Except where specifically noted, the dollar amounts cited in this report donot reflect provisions included in P.L. 100-199 .

For the Corps of Engineers in FY2004, the Administration requested $4.19 billion, almost 10% ($445 million) less than the amount originally appropriated forFY2003. The Administration's request focused funding on construction projects thatcould be completed in FY2004 and eight projects considered priorities by theAdministration, including the Florida Everglades. The House bill included $4.482billion, the Senate Appropriations Committee bill recommended $4.427 billion. Thisfunding was increased to $4.491 billion on the Senate floor. P.L. 108-137 provided$4.571 billion for the Corps. In the end, only one of the Administration's eightproject received the full amount requested; the other priority projects all received lessthan requested.

The Administration asked for $891 million for FY2004 for the Department of the Interior programs included in the Energy and Water Development bill -- theBureau of Reclamation and the Central Utah Project. This would have been adecrease of $41 million from the FY2003 funding level. The House bill contained$916 million, the Senate bill $956 million, and the final bill $917 million.

The FY2004 request for DOE programs in the bill was $21.689 billion, about $1.32 billion more than the previous year. The major activities in the DOE budget areenergy research and development, general science, environmental cleanup, andnuclear weapons programs. The House bill funded these programs at $21.542billion, and the Senate bill at $21.674 billion. The final bill includes $21.570 billion. (Funding of DOE's programs for fossil fuels, energy efficiency, and energy statisticsis included in the Interior and Related Agencies appropriations bill ( P.L. 108-108 ).The FY2004 net appropriations for these programs was $1.7 billion.)

The request for funding the independent agencies in Title IV of the bill was $148 million, compared with $207 million in FY2003. The House bill contained$138 million for FY2004, the Senate bill $230 million. The final bill provides $229million.

Table 2 includes budget totals for energy and water development appropriations enacted for FY1997 to FY2003 and the Administration's request for FY2004.

Table 2. Energy and Water Development Appropriations, FY1997 to FY2004 (budget authority in billions of current dollars) a

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

Tables 3-10 provide budget details for Title I (Corps of Engineers), Title II (Department of the Interior), Title III (Department of Energy), and Title IV(independent agencies) for FY2003-FY2004.

Title I: Corps of Engineers

The President's request for FY2004 for the civil works program of the U.S.Army Corps of Engineers was $4.19 billion, a decrease of $445 million from theoriginally enacted appropriation for FY2003. P.L. 108-137 provided totalappropriations for the Corps of $4.57 billion. The final amount represents anincrease in construction funding from the House and Senate versions of the bill. Theconference committee requested removing all funding for the Flood Control andCoastal Emergencies account in H.R. 2754 because the depleted accountwas recently replenished with $60 million through the Legislative BranchAppropriations Act for FY2004, P.L. 108-83 . The omnibus FY2004 ConsolidatedAppropriations bill, H.R. 2673 ( P.L. 108-199 ), includes severalprovisions related to the Army Corps, most notably $14 million in additionalappropriations for the Corps' construction account.

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

a Includes $39 million appropriated in Emergency Wartime SupplementalAppropriations Act, 2003, P. L. 108-11.

b "Formerly Utilized Sites Remedial Action Program"

c Includes $60 million of appropriations provided in the Legislative BranchAppropriations for FY2004, Title III, Chapter 2 of P.L. 108-83 , enacted onSeptember 30, 2003.

The President's budget request for FY2004 limited funding for the planning and design of new projects; however, it fully fund all projects whose construction couldbe completed in FY2004, and provided substantial funding for eight projectsconsidered by the Administration to be priorities. The Administration's budget wouldhave provided some support for 140 other projects, but construction would haveproceeded more slowly than originally planned by the Corps because these projectswould not have been fully funded. (1) TheAdministration's request includes fundingto complete design of 22 proposed projects, while deferring work on all other designefforts. P.L. 108-137 provided less than the requested amount for seven of the eightpriority projects. The final legislation spread the construction appropriations acrossa broader set of construction activities than the President's request.

The President's request would have provided no funds for studies and "environmental infrastructure" projects in the following non-traditional missionareas: wastewater treatment, irrigation water supply, and municipal and industrialwater supply treatment and distribution. By not seeking funding for these activities,the Administration was reinforcing its interest in focusing available federal fundingon navigation, flood control, storm damage reduction, and ecosystem restorationprojects. The final legislation provided funding for several environmentalinfrastructure projects.

The Administration's $70 million request for the Flood Control and Coastal Emergencies account was significantly higher than the FY2003 appropriation of $15million and the FY2003 request for $20 million. The actual expenditure for activitiesunder this account in previous years has averaged $70 million, with much of thefunding being provided through supplemental appropriations. This account financesresponse and recovery activities for flood and storm events, preparedness for theseevents, and the Corps' support of the Federal Emergency Management Agency(FEMA) through the Federal Response Plan. Because this is an emergencymanagement program, annual costs vary significantly based on actual events and/orchanging missions. P.L. 108-137 contained no funding for this account; theconference report language ( H.Rept. 108-357 ) cited the recent replenishment of thedepleted account with $60 million through P.L. 108-83 as the reason. TheConference report also directed the Secretary of the Army to consider changes to themanagement of the account and to report to the Appropriations Committees of theHouse and Senate within 180 days of enactment.

Key Policy Issues -- Corps of Engineers

Funding Level. Funding for the Corps' civil works program has often been a contentious issue between theAdministration and Congress, with final appropriations typically providing morefunding than requested, regardless of which political party controls the White Houseand Congress. For FY2001, for example, Congress added $480 million (12%) to the$4.08 billion requested by the Clinton Administration. Similarly, the FY2002 Housebill funded the Corps at almost 15% more than requested by the BushAdministration, and the final act appropriated slightly more than that. The FY2003appropriation followed suit; it was $466 million (11%) above the requested amount.The FY2004 budget request proposed a 10% cut from the initial appropriationamount enacted for FY2003. P.L. 108-137 restored appropriations to an amountcloser to the Corps' FY2003 budget.

Savings and Slippage and Reprogramming. Since all work will not be accomplished asplanned, appropriations for the Corps include a reduction for Saving and Slippage (S&S) to account for the slip of spending on projects due to delays caused byweather, non-federal sponsor financing, or a decision not to proceed -- or to accountfor savings from a project costing less than estimated. The Administration proposesan S&S rate for the various accounts in the Corps budget in its budget estimate;Congress can maintain or modify the S&S rate during the appropriations process. Congress has since FY2002 increased the S&S rates from the rates proposed by theAdministration for the General Investigations and the Construction accounts. Forexample, the enacted S&S rate for FY2004 was 14% for the construction account,compared to the Administration's requested rate of 8%. The enacted S&S rates arenormally applied across the board to all projects in an account, except for thoseactivities specifically set forth in act language. Over the course of the fiscal year, theCorps reprograms funds within an account from the projects that are not proceedingas planned to those that are moving forward. S&S rates that exceed the actual savingand slippage experienced could contribute to appropriations constraints on theprogress of projects.

There is no statutory language permitting or prohibiting reprogramming of funds; however, Congress has provided specific guidance in the past with regard toreprogramming of the construction account in report language. The conferencereport for the enacted appropriations for FY2004 identified numerous areas ofdissatisfaction with the Corps' reprogramming procedures. (2)

Trust Fund Proposals. The Administration included in its request legislative proposals to fund more activitiesfrom several trust funds. The Administration proposed that for FY2004 thesechanges be made through the appropriations process. The two trust funds -- theInland Waterway Trust Fund (IWTF) and the Harbor Maintenance Trust Fund(HMTF) -- have built up substantial unused balances in recent years, causingconcern about why the funds were not being put to use and leading to interest inexpanding their use to decrease the federal monies spent on inland waterways andharbors. The enacted legislation dismissed the Administration's proposals related tothe HMTF and the IWTF.

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 through legislation. (For moreinformation, see CRS Report RL30928, Army Corps of Engineers: Reform Issues forthe 107th Congress , and CRS Issue Brief IB10120, Army Corps of Engineers CivilWorks Program: Issues for Congress .) Corps officials gave testimony at FY2004budget hearings, and at a March 2003 hearing of the Subcommittee on WaterResources and Environment of the House Committee on Transportation andInfrastructure, on how the agency is "transforming" itself in response to thesecriticisms. In this testimony, Corps officials defended the integrity of the agency'sreview process and detailed efforts to further strengthen it, including the use ofindependent peer review panels for a few complex projects. (3) The Administration'sFY2004 budget request included $3 million for a peer review panel to examineselected projects and $2 million for ex post facto studies of 15 to 25 completedprojects to compare the estimated and actual project costs and benefits. P.L.108-137 funded neither of these efforts.

Everglades. A significant addition to the Corps' mission in recent years is its growing role in largeenvironmental restoration programs, raising concerns that funding for these programscould displace the funding for other water resources activities. (See CRS Issue Brief IB10120, Army Corps of Engineers Civil Works Program: Issues for Congress, formore information.) The Corps plays a significant coordination role in the restorationof the Central and Southern Florida ecosystem. The Corps is particularly involved inthe planning, construction, and operation of facilities under the ComprehensiveEverglades Restoration Plan (CERP) that was authorized by Title VI of the WaterResources Development Act of 2000 ( P.L. 106-541 ). The annual Energy and WaterDevelopment Appropriations bill provides funding for the Corps' participation inthese efforts. (4) During 2003, the quality of waterentering the Everglades has receivedmuch attention and congressional concern because of the passage of a state law inFlorida that may affect phosphorous mitigation deadlines and goals. This concern isreflected in the Energy and Water appropriations bill for FY2004. (See CRS Report RL32131 , Phosphorus Mitigation in the Everglades , by [author name scrubbed] andBarbara Johnson.)

The President's request for FY2004 included a total of $145 million for the Corps' construction projects in the region, compared to $151 million appropriatedfor FY2003. The FY2004 request for the Kissimmee River restoration project and theEverglades and South Florida ecosystem restoration project was $17.7 million and$14.8 million, respectively. For the Central and Southern Florida project, theAdministration requested $112.5 million (which included $39.0 million for CERPactivities).

The enacted legislation provided $137.5 million for the Corps' constructionprojects in the Everglades, compared to $151 million appropriated for FY2003 and$145 million requested by the Administration. For FY2004, $105 million wasprovided for the Central and Southern Florida Project (it is unclear how much of thistotal will be directed toward CERP); this amount was $7.5 million lower than theAdministration's request. For the Kissimmee River restoration project and theEverglades and South Florida ecosystem restoration project, $17.7 million and $14.8million, respectively, were provided in the final legislation, which was the sameamount requested by the Administration. The final legislation included $0.5 millionfor the Florida Keys Water Quality Improvements project, which was not requestedby the Administration. The conference managers in their report requested that thisproject be considered in future funding requests and as a part of the larger Evergladesrestoration effort.

P.L. 108-137 conditions funding for Everglades restoration on the quality of water entering the A.R.M. Loxahatchee National Wildlife Refuge (LNWR) andEverglades National Park (ENP). According to P.L. 108-137 , federal funding for thepreservation and restoration of the Florida Everglades will be available forexpenditure unless all four conditions apply: (1) the Secretary of the Army finds thatwater entering the LNWR and ENP do not meet water quality requirements in a 1992consent decree; (5) (2) the state fails to submit a planfor compliance within 45 days; (3)failure to submit the plan is reported; and (4) either the Senate or House Committeeson Appropriations disapprove further expenditure of funds. In the Interior andRelated Agencies Appropriations Act ( P.L. 108-108 ), similar conditions wereenacted for some of the Everglades-related funding provided by that bill.

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.

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

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

a Includes $25 million appropriated in Emergency Wartime SupplementalAppropriations Act, 2003, P. L. 108-11.

b In its request, the Bureau lists this as an "offset."

Bureau of Reclamation Budget In Brief

For FY2004, the President requested $44.2 million for the Central Utah Project (CUP) Completion Account, an increase of $8 million over the FY2003 enactedamount. Of the increase, $6 million was a requested transfer to DOI from theWestern Area Power Administration (WAPA)in DOE of funding for the UtahReclamation Mitigation and Conservation Fund. This requested transfer was notincluded in either House and Senate bills, and the CUP amount was reduced to $38.2million. The Conference agreement provided that the payment continue to be madefrom WAPA for ten years.

The FY2004 request for BOR totaled $878 million in gross current budget authority. (6) This amount was $37 million less thanenacted for FY2003 in P.L.108-7 . The Bureau received an additional $25 million in supplementalappropriations for FY2003 for homeland security purposes ( P.L. 108-11 ).

The House-passed bill for FY2004 ( H.R. 2754 ) included $909.7 million for the BOR, an increase of $31.7 million above the FY2004 requestedamount and a decrease of $26.6 million from the FY2003 enacted level. The Senatebill included $949.2 million, $12.9 above the FY2003 enacted level and $71.2million above the FY2004 requested amount. The final bill included $948.3 millionfor FY2004.

Included in the $878 million BOR request was $863 million in current appropriations for agency water resources management activities and $15 million forthe California Bay-Delta Restoration Account (CALFED). The House bill includedan increase of $51.2 million above the requested amount for water resourcesmanagement activities and no funds for the CALFED account, whereas the Senatebill included an increase of $86.8 million over the requested amount and no funds forCALFED. The FY2004 request included a $30.8 million "offset" for the CentralValley Project (CVP) Restoration Fund, yielding a "net" current authority of $847.2million for BOR. This offset, listed in the Conference Committee budget tables as"Central Valley project collections," was in both the House and Senate bills and thefinal appropriation.

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. BOR requested $771.2million for this account for FY2004, $37 million less than appropriated in P.L. 108-7 . The House bill included $817.9 million for Water and Related Resources, $46.7million above the FY2004 request and $9.7 million above the FY2003 enacted level. The Senate bill included $859.5 million, $88.3 million above the FY2004 requestedlevel and $27.3 above the FY2003 enacted level. The final bill, P.L. 108-137 ,included $857.5 million for FY2004.

Key Policy Issues -- Bureau of Reclamation

Background. Most of the large dams and water diversion structures in the West were built by, or with the assistanceof, the Bureau of Reclamation (BOR). Whereas the Army Corps of Engineers builthundreds of flood control and navigation projects, BOR's mission was to developwater supplies, primarily for irrigation to reclaim arid lands in the West. Today,BOR manages hundreds of dams and diversion projects, including 348 storagereservoirs in 17 western states. These projects provide water to approximately 10million acres of farmland and 31 million people. BOR is the largest supplier of waterin the 17 western states and the second largest hydroelectric power producer in thenation. BOR facilities also provide substantial flood control, recreation, and fish andwildlife benefits. At the same time, operations of BOR facilities are oftencontroversial, particularly for their effect on sensitive fish and wildlife species andconflicts among competing water users.

CALFED. Funds have not been appropriated for the California Bay-Delta Restoration Account (Bay-Delta, orCALFED) since FY2000, when the authorization for appropriations expired. However, funds were provided for FY2002 and FY2003 for activities that supportthe CALFED program. The Administration has requested $15 million for thisaccount for FY2004. The House Appropriations Committee and the SenateAppropriations Committee recommended that no funds be appropriated forCALFED, since the program has not been authorized for appropriations -- a positionreiterated in the conference report for the final bill. (For more information onCALFED, see CRS Report RL31975 , CALFED Bay-Delta Program: Overview ofInstitutional and Water Use Issues .) However, ï¿½208 of the Senate-passed bill, andfinally ï¿½211 of P.L. 108-137 , permanently authorizes the Secretary of the Interior toundertake feasibility studies for Sites Reservoir, Los Vaqueros ReservoirEnlargement, and Upper San Joaquin Storage projects. Section 211 further notesthese studies "should be pursued along with ongoing environmental and otherprojects in a balanced manner." The three site-specific projects referenced above arerelated to the water supply and water management functions of the CALFEDprogram.

The final FY2003 appropriation for BOR provided $23 million for CVP activities that support the goals of the CALFED program within the Water andRelated Resources Account. Several specific activities were identified in the finalbill, including $1.75 million for investigations of storage opportunities in the UpperSan Joaquin watershed (Friant Division); $9 million for the Environmental WaterAccount (under Miscellaneous Project Programs); $1.5 million to continue planningactivities related to the Sites Reservoir (Sacramento River Division); and $2.5million for evaluation of potential impacts of raising Shasta Dam (Shasta Division). Division D, Section 215, of the bill specifically authorized the Secretary, "in carryingout CALFED-related activities," to begin feasibility studies for Sites Reservoir,enlargement of Los Vaqueros Reservoir, and an Upper San Joaquin Storage project. The conference bill language for FY2004 now extends those feasibility studiesindefinitely.

Security. BOR requested $28.6 million for continued heightened safety and security efforts at BOR facilities. Thebulk of the request is for facility operations/security. Funding covers such activitiesas administration of the security program, periodic security reviews, and employeetraining and awareness. An additional $1 million is being requested for nationalsecurity cyber systems, under the category of Critical Infrastructure Protection. (Formore information on terrorism and security issues involving the water infrastructuresector, see CRS Report RS21026, Terrorism and Security Issues Facing the WaterInfrastructure Sector .) The BOR received an additional $25 million for homelandsecurity expenses in P.L. 108-11 .

Sumner-Peck Settlement. The federal government and the Westlands Water District, which receives CVP water,settled a long-standing lawsuit December 10, 2002. The lawsuit concerned theeffects of irrigation water buildup beneath private land and the government'sobligation to provide irrigation drainage service. The drainage problem has been anongoing problem within the San Luis Unit of the CVP, where toxins such asselenium have built up in the soil and rendered land unsuitable for farming. The$107 million settlement (federal share) has been quite controversial both for its initialsum and potential for additional suits from other nearby landowners, as well as forthe specific terms of the agreement and how it will be paid. While the land will beretired from farming, Westlands will hold title to the land and water rights, theplaintiffs reserve valuable commodity base acreage, and the federal governmentreceives certain easements and covenants guaranteeing the land will not be usedagain for farming. A proposal to pay for the first installment of the settlement usingappropriated funds from the Energy and Water annual appropriations bill wasblocked by a provision in the FY2003 omnibus appropriations bill (ï¿½212, DivisionD of P.L. 108-7 ), on the grounds that it would reduce funding for other programs. The action caused the Justice Department to reverse its earlier stance and allow thefirst $34 million to be paid from the federal government Judgment Fund. However,it is not clear how future settlement payments will be made.

Yuma Desalting Plant. The conference committee's report for P.L. 108-137 directed the Bureau of Reclamationto expedite modifications to the Yuma Desalting Plant on the Colorado River nearthe U.S.-Mexico border and to accelerate the permitting and environmentalcompliance activities needed for its operation. The Bureau of Reclamation was alsodirected to report to the House and Senate Committee on Appropriations on the statusof those activities within 180 days.

The Yuma Desalting Plant was built in order to treat saline agriculture water before it entered the Colorado River; the plant has not been operated since itscompletion in the early 1990s because of technical problems and high operationalcosts. Interest in operating the plant and using the treated water toward the U.S.treaty obligations has increased recently due to the region's drought condition, whichhas reduced storage levels in Colorado River reservoirs, and the growing competitionfor limited water resources.

Preparing the Yuma Desalting Plant is controversial because of its expense and the possible environmental consequences. The modification to the plant are expectedto take 36 to 48 months to complete at a cost of $24 to $28 million; operating theplant is estimated to cost between $26 and $34 million annually. Maintaining theplant on standby status also has its cost ($5 million annually).

Preparing the plant for full operational capacity has some environmental advocacy groups in the United States and Mexico concerned. They are worried about the impact on a wetland in Mexico as a result of plant operations. The salineagricultural water that is currently diverted around the desalting plant because it isnot operating is discharged into the Cienega de Santa Clara wetlands in Mexico. This diverted water supports 11,000 acres of wetlands that are a protected biosphereby the Mexican government and provide habitat for species designated as threatenedand endangered by the U.S. and Mexican governments. The water diverted to thesewetlands does not currently count toward the Colorado River water that the UnitedStates is required to deliver to Mexico under a 1944 treaty. If the plant were tobecome operational, the treated water would likely be discharged into the ColoradoRiver and the saline effluent stream discharged into the Cienega. The water reachingthe Cienega would likely be 4 to 5 times more saline, and the quantity reaching theCienega would be 30% of the current flow. Environmental groups supportalternatives to plant operation, such as short-term leases of water rights, whilesupporters of plant operations argue that the demand for the water in the UnitedStates is too high to allow for the water to continue flowing to the Cienega withoutit counting toward the treaty requirements.

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 FY2004 request for DOE programsin the Energy and Water Development bill was $21.67 billion, about $780 millionmore than the amount appropriated for FY2003. The House bill would haveappropriated $21.54 billion. The Senate bill included $22.15 billion. The final bill, P.L. 108-137 , appropriated $21.57 billion. (The FY2004 appropriation for DOE'sprograms for fossil fuels, energy efficiency, the Strategic Petroleum Reserve, andenergy statistics, included in the Interior and Related Agencies appropriations bill( P.L. 108-108 ), was $1.7 billion.)

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

a Includes funding appropriated in the Emergency Wartime Supplemental Appropriations Act, 2003,P. L. 108-11.

b New program structures proposed for FY2004. See "Environmental Management" section,below.

c Budget Request and House bill transfers programs funded at $113.4 million from Energy Supply-- Nuclear Energy to Other Defense Activities. Senate Appropriations Committee bill did nottransfer these programs. In the final bill, the programs were transferred to Other Defense Activities.

Key Policy Issues -- Department of Energy

Renewable Energy. The Administration's FY2004 budget request for DOE found that hydrogen energy is the"most promising long-term revolution in energy use that can help the nation liberateitself from dependence on imported oil." Thus, the request for DOE's RenewableEnergy Program said that its aim was to "accelerate progress" and make hydrogentechnologies "cleaner, safer, and lower in cost." Also, it stressed that theAdministration's proposed National Climate Change Technology Initiative wouldcreate "competitive solicitations" in applied research that aim to reduce greenhousegas emissions and would "complement" existing R&D programs.

The request for the Renewable Energy Program under DOE's Office of Energy Efficiency and Renewable Energy (EERE) sought $444.2 million, including $371.3million for Renewable Energy Technologies and $72.9 million for theElectric/Storage sub-program. This was $24.7 million more than the FY2003appropriation of $419.5 million, which included $335.0 million for RenewableEnergy Technologies and $84.4 million for the Electric/Storage sub-program. Therequest included $48.3 million more for Hydrogen (as part of the President'sHydrogen Fuel Initiative) and $15.0 million more for a National Climate ChangeTechnology Initiative. It would have terminated the Concentrating Solar PowerProgram and cut the Biomass and Biorefinery Program (which the FY2003appropriations bill, P.L. 108-7 , formed by combining the former biofuels andbiopower subprograms) by $19.7 million. Following from a major EEREreorganization, the request also presented a new budget structure.

The House approved $407.5 million, including $330.1 million for Renewable Energy Technologies and $77.4 million for a new Office of Electricity Transmissionand Distribution (OETD) that replaces the former Electric/Storage sub-program.

The Senate approved $458.9 million, including $358.5 million for Renewable Energy Technologies and $100.4 million for OETD. Three floor amendmentsaffecting renewable energy were approved. They did not propose funding changes,but had intended to qualify some funding uses. S.Amdt. 1697 specifiedthat $750,000 for a wind farm transmission study may be nonreimbursable. S.Amdt. 1709 directed that up to $400,000 may be made available forthe Clean Energy Technology Exports (CETE) Initiative. S.Amdt. 1717 provided that some of the funds made available to OETD may be used to providegrants to states and regional organizations for transmission system planning.

The final bill appropriated $426.8 million, including $344.4 million for Renewable Energy Technologies and $82.4 million for OETD. The renewables totalincludes $75.0 million for biomass/biofuels and $85.0 million for solar energy. Theconference report for the final bill says the "agreement does not include languagespecifying funding allocations as contained in the House and Senate reports." However, the report says the agreement does "adopt the Senate proposal[ S.Amdt 1709 ] for the Clean Energy Technology Exports (CETE)Initiative," which requires DOE and other federal agency partners to provide a statusreport by January 15, 2004, on the implementation of the strategic plan and specificactions to engage non-governmental, private sector, and other international partners.

Also, the overall conference agreement was $17.4 million, or 4%, less than the request. This includes $26.9 million, or 7%, less for renewables, and $9.5 million,or 13%, more for OETD. Compared to the FY2003 appropriation, the conferenceagreement has $7.3 million, or 2%, more. This includes $9.4 million, or 3%, morefor renewables and $2.1 million, or 2%, less for OETD. The renewables amountincludes an increase of $38.3 million for Hydrogen and reductions of $14.4 millionfor Biomass/Biofuels, $9.4 million for Solar Energy, $3.8 million for Geothermal,and $3.3 million for Program Direction.

In addition to the funding in the regular FY2004 Appropriations Act ( P.L. 108-137 ), nearly $20 million for several additional funding earmarks for projectsunder DOE's Renewable Energy Program is included in the omnibus ConsolidatedAppropriations Act ( H.R. 2673 , P.L. 108-199 ). Section 132 provides$5.0 million, including $750,000 for the Energy Center of Wisconsin RenewableFuels Project; $500,000 for the Wind Energy Transmission Study; $250,000 for theWhite Pine County, Nevada, Public School System biomass conversion heatingproject; $250,000 for the Lead Animal Shelter Animal Campus renewable energydemonstration project; $3.0 million to establish a Hawaii Hydrogen Center forDevelopment and Deployment of Distributed Energy Systems; and $250,000 for theEastern Nevada Landscape Coalition for biomass restoration and science-basedrestoration. Further, Section 167 provides $14.9 million, including $12.4 million tothe Society for Energy and Environmental Research for facilities that produce fuelsfrom agricultural and animal wastes; and $2.5 million to the Enterprise Center for theChattanooga Fuel Cell Demonstration Project.

Nuclear Energy. For nuclear energy research and development -- including advanced reactors, fuel cycletechnology, and nuclear hydrogen production -- the Administration requested $277.1million for FY2004, a $17.1 million increase from the FY2003 appropriation. Anadditional $113.4 million was requested for defense-related activities at the IdahoNational Engineering and Environmental Laboratory (INEEL), which is beingtransferred to the nuclear energy program from DOE's environmental managementprogram, for a total of $390.6 million.

The House cut the nuclear energy request to $268.0 million, plus $112.3 million for INEEL provided under "other defense activities." The Senate boosted the requestto $437.4 million, without shifting any funds to "other defense activities." Theenacted measure provides $300.8 million for nuclear energy programs, plus $112.3million for INEEL under "other defense activities."

"Nuclear energy, which is already a vital component of our balanced energy portfolio, presents some of our most promising solutions to the world's long-termenergy challenges," according to DOE's FY2004 budget justification. However,opponents have criticized DOE's nuclear research program as providing wastefulsubsidies to an industry that they believe should be phased out as unacceptablyhazardous and economically uncompetitive.

Within the nuclear energy budget, the Administration requested $48 million for the nuclear energy technologies program, which focuses on development of newreactors. That request was $3.0 million above the FY2003 appropriation. Therequest included $35.0 million for an initiative to encourage construction of newcommercial reactors by 2010 ("Nuclear Power 2010") and $9.7 million for advanced("Generation IV") reactor designs that could be ready for deployment after 2010. The House voted to cut the request to $42.7 million, while the Senate provided anincrease to $55.7 million. The Senate shifted funds for gas reactor technologies fromNuclear Power 2010 to the Generation IV program, with the funding directed towarddevelopment of a hydrogen-producing reactor at INEEL. The conferees approved$44.0 million for nuclear energy technologies, with $20 million allocated to NuclearPower 2010 and $24 million to the Generation IV initiative. From the Generation IVfunding, $15 million is to be used for development of an INEEL hydrogen productionreactor.

According to the DOE budget justification, the Nuclear Power 2010 program "will achieve near-term deployment of new power plants in the United States throughcost-shared demonstration of the new, untested regulatory processes and cost-shareddevelopment of advanced reactor technologies." The program seeks to deploy botha water-cooled reactor (similar to most existing commercial plants) and a gas-cooledreactor. The current phase of the initiative includes site approval, reactor designcertification, license applications, detailed design work, and development ofimproved construction techniques. DOE is soliciting proposals for jointDOE/industry teams in which DOE will pay up to half the cost of these activities.

DOE's Generation IV program is focusing on six advanced designs that could be deployed after 2010: two gas-cooled, one water-cooled, two liquid-metal-cooled,and one molten-salt concept. Some of these reactors would use plutonium recoveredthrough reprocessing of spent nuclear fuel. The Administration's May 2001 NationalEnergy Policy report contends that plutonium recovery could reduce the long-termenvironmental impact of nuclear waste disposal and increase domestic energysupplies. However, opponents contend that the separation of plutonium from spentfuel poses unacceptable environmental risks and, because of plutonium's potentialuse in nuclear bombs, undermines U.S. policy on nuclear weapons proliferation.

The development of plutonium-fueled reactors in the Generation IV program is closely related to the nuclear energy program's Advanced Fuel Cycle Initiative(AFCI), for which $63.0 million was requested for FY2004 -- about $5 millionabove the FY2003 appropriation. According to the budget justification, AFCI will"develop advanced proliferation-resistant fuel treatment and fabrication technologiesthat could be deployed by 2015," as well as technologies that could reduce thelong-term hazard of spent nuclear fuel. Such technologies would involve separationof plutonium, uranium, and other long-lived radioactive materials from spent fuel forre-use in a nuclear reactor or for transmutation in a particle accelerator. AFCIincludes a previously funded research program on accelerator transmutation calledAdvanced Accelerator Applications. The program also includes longstanding DOEwork on electrometallurgical treatment of spent fuel from the Experimental BreederReactor II (EBR-II) at INEEL. The House approved $58.5 million for the program,while the Senate provided $78.0 million, and the conferees approved $68.0 million.

In support of President Bush's program to develop hydrogen-fueled vehicles, DOE requested $4.0 million in FY2004 for a new "Nuclear Hydrogen Initiative." According to DOE's budget justification, the program would investigate the use ofhigh-temperature nuclear reactors to make hydrogen from water in a thermo-chemicalprocess. According to DOE, "preliminary estimates indicate that hydrogen producedusing nuclear-driven thermo-chemical processes would be only slightly moreexpensive than gasoline" and result in far less air pollution. Activities planned inFY2004 include development of a "roadmap" for developing nuclear hydrogentechnologies and laboratory testing of thermo-chemical processes and relatedresearch. Even if the technology is successful, however, DOE officials havepredicted that significant quantities of nuclear-produced hydrogen would not becomeavailable until 2020-2030. (7) The House voted to cutthe request to $2.5 million, whilethe Senate approved $8.0 million, including support for the INEEL hydrogenproduction reactor. The conference committee voted to provide $6.5 million for theNuclear Hydrogen Initiative in addition to the $15 million provided under nucleartechnologies for the INEEL hydrogen reactor.

The Nuclear Energy Research Initiative (NERI) provides grants for research on innovative nuclear energy technologies. DOE requested $12.0 million for NERI inFY2004, about half of the FY2003 appropriation. According to the budgetjustification, no new grants will be awarded in FY2003 and FY2004, with newprogram funding to be used only for completing previously initiated projects. TheHouse voted to cut NERI to $10.0 million, while the Senate approved the fullrequest, and the conferees provided $11.0 million.

DOE proposed no new funding in FY2004 for the Nuclear Energy Plant Optimization program (NEPO), which received $5.0 million in FY2003. Theprogram supports cost-shared research by the nuclear power industry on ways toimprove the productivity of existing nuclear plants. The House rejected the proposedelimination of NEPO, voting to provide $4.0 million for the program. The Senatesupported the Administration position, and the conferees provided $3.0 million.

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 FY2004, DOE requested $3.311 billion for Science. After adjusting for rescissions and the transfer of two programs from the Office of Science to the newDepartment of Homeland Security, the comparable FY2003 appropriation was$3.261 billion. On this basis, the FY2004 request was a net increase of 1.5%. TheHouse bill provided $3.480 billion. The Senate bill provided $3.360 billion. The finalappropriation was $3.452 billion, a net increase of 5.9%.

The requested funding for the largest program, basic energy sciences, was $1.009 billion, a decrease of $15 million below the comparable FY2003appropriation. A growth area in basic energy sciences is nanoscience, for which theFY2004 budget requested $193 million, including $85 million for construction ofthree Nanoscale Science Research Centers. The House bill increased funding forbasic energy sciences by $8 million above the administration request. The Senate billincluded funding at the requested level. The conference report provided an increaseof $8 million above the request and specified that the increase should supportnanoscience. In all cases, these funding levels included the full request of $125million for continuing construction of the Spallation Neutron Source, a large facilityat Oak Ridge National Laboratory for research in physics, materials science, andother fields.

The FY2004 request for high-energy physics was $738 million, an increase of $20 million above the comparable FY2003 appropriation. The House bill funded theprogram at $748 million. The Senate bill included the requested amount. The finalbill provided the requested amount.

The requested funding for biological and environmental research was $500 million, a decrease of $7 million below the comparable FY2003 appropriation.Activities within this program relating to microbial pathogens, with FY2003 fundingof $20 million, were transferred to the Department of Homeland Security on March1, 2003. The House bill included $562 million for biological and environmentalresearch. The Senate bill included $534 million. The final appropriation was $592million, including increases of $5 million for the Genomes to Life program, $2million for the Environmental Molecular Sciences Laboratory, and $5 million todevelop new molecular imaging probes, along with $88 million in directed fundingfor 90 specific projects.

The request for nuclear physics was $389 million, an increase of $8 million above the comparable FY2003 appropriation. The House bill provided $399 million.The Senate bill provided the requested amount. The final appropriation was $392million.

The request for fusion energy sciences was $257 million, a $9 million increase above the comparable FY2003 appropriation. In early 2003, the United Statesrejoined negotiations on construction of the International ThermonuclearExperimental Reactor (ITER), a fusion facility whose other participants includeCanada, China, the European Union, Japan, and Russia. About $12 million of therequested FY2004 budget for fusion energy sciences would be devoted to ITER. Thebudget impact of ITER in future years, once construction actually begins, dependson the outcome of the ongoing negotiations; the U.S. share is generally expected tobe in the range of $50 million to $100 million per year. The House bill provided$268 million for fusion programs. The Senate bill provided the amount requested.The final bill provided $264 million, but limited ITER activities to $8 million andcautioned DOE not to submit "any future budget requests for ITER that are fundedat the expense of domestic research."

The smallest Science program, advanced scientific computing research, was funded at $173 million in the FY2004 request, an increase of $5 million above thecomparable FY2003 appropriation. The portion of this program that was located atLawrence Livermore National Laboratory, with FY2003 funding of approximately$3 million, was transferred to the Department of Homeland Security on March 1,2003. The House bill provided $213 million for this program. The Senate billprovided $183 million. The final bill provided $203 million.

In addition to the funds appropriated in P.L. 108-137 , the FY2004 omnibus Consolidated Appropriations bill ( H.R. 2673 , P.L. 108-199 ) includesseveral appropriations for the Science account. The largest item is $50 million for theIowa Environmental/ Education Project (Div. H, Sec. 130). Four other items total$3.25 million (Div. H, Secs. 131 and 167).

Nuclear Weapons Stockpile Stewardship. Congress established the Stockpile StewardshipProgram in the FY1994 National Defense Authorization Act ( P.L. 103-160 ) "toensure 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.

Stockpile stewardship consists of all activities in NNSA's Weapons Activities account. Appropriations were $4,908.7 million for FY2001 and $5,560.2 million forFY2002; Table 7 provides FY2003 and FY2004 data. The three main elements ofstockpile stewardship, described next, are Directed Stockpile Work, Campaigns, andReadiness in Technical Base and Facilities. NNSA manages two major programsoutside of Weapons Activities: Defense Nuclear Nonproliferation, discussed in asubsequent section of this report, and Naval Reactors. Table 7 presents the mainelements of the Weapons Activities program.

Table 7. Funding for Weapons Activities ($ millions)

a Includes Facilities and Infrastructure Recapitalization Program, Secure Transportation Asset, Safeguards and Security, use of prior year balances, and otheradjustments. The FY2004 conference reduction in the "Other" category from therequest is accounted for by a reduction in Facilities and InfrastructureRecapitalization Program ($261.4 million requested, $236.4 million provided) andby use of prior year balances (none in the request, -$94.8 million for SecureTransportation Asset and for Weapons Activities generally in the conference bill.)

Details may not add to totals due to rounding.

On July 18, 2003, the House passed H.R. 2754 , the FY2004 Energy and Water Development Appropriations Bill, 377-26, without amending theWeapons Activities section. Thus, the amounts listed below that were recommendedby the House Appropriations Committee were accepted by the House. Similarly, theSenate passed its version of H.R. 2754 , 92-0, on September 16; itadopted no amendments to the Senate Appropriations Committee's bill that changedWeapons Activities funding levels. The conference report, H.Rept. 108-357 , wasordered to be printed on November 7. On November 18, the House agreed to theconference report, 387-36, and the Senate agreed to it by unanimous consent. ThePresident signed the measure into law ( P.L. 108-137 ) on December 1.

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 their condition, maintaining them through repairs, refurbishment, lifeextension, and modifications; R&D in support of specific warheads; anddismantlement. The FY2004 DSW request would support life extension programsfor four nuclear warheads: B61 (gravity bomb), W76 (for Trident I and IIsubmarine-launched ballistic missiles), W80 (for cruise missiles), and W87 (forMinuteman III and MX/Peacekeeper intercontinental ballistic missiles).

Robust Nuclear Earth Penetrator (RNEP). Within DSW, NNSA plans to conduct a study for the RNEP, for which $15.0 million wasappropriated for FY2003; another $15.0 million was requested for FY2004.Warheads of this type would burrow into the ground before detonating in order todestroy underground targets with less explosive yield than a surface-burst weaponwould require. This warhead is controversial. Supporters argue that it is needed toattack hard and deeply buried targets (such as leadership bunkers or chemicalweapons production facilities) in countries of concern, thereby deterring or defeatingsuch nations; critics reply that RNEP would lower the threshold for use of nuclearweapons and prompt other nations to develop nuclear weapons to deter U.S. attack. (See CRS Report RL32130 , Nuclear Weapon Initiatives: Low-Yield R&D, AdvancedConcepts, Earth Penetrators, Test Readiness ; and CRS Report RL31805 , Authorization and Appropriations for FY2004: Defense . ) The FY2003 NationalDefense Authorization Act, P.L. 107-314 , fully funded the $15.0 million request butbarred obligation of FY2003 funds for the NNSA study until 30 days after theDepartment of Defense submits a study on RNEP, including military requirements,employment policy, targets, and conventional weapon alternatives. (The study wassent to Congress on March 19, 2003.) The Consolidated Appropriations Resolutionfor FY2003, P.L. 108-7 , provided the amount requested. RNEP is part of theAdvanced Concepts Initiative (ACI), which was established to explore futureweapons concepts and technologies. For FY2004, $6.0 million was requested (inaddition to RNEP) for additional and exploratory studies under ACI.

In its FY2004 report, the House Appropriations Committee stated that the schedule for the first production unit of the refurbished W80 warhead had slipped toFY2008 or FY2009, yet the baseline of FY2006 drove the FY2004 budget request. Further, "the Committee has yet to receive an acceptable military justification forsupporting such an aggressive W80 LEP [life extension project] program.... As aresult, the committee has reduced the weapons activity budget for the W80 LEP."The committee expected NNSA to maintain the level of effort on this program thatit had in FY2003, and reduced DSW by $13.0 million to slow W80 LEP activity.

The committee recommended reducing RNEP funding from $15.0 million requested to $5.0 million, and eliminating the $6.0 million requested for ACI. "TheCommittee is concerned the NNSA is being tasked to start new activities withsignificant outyear budget impacts before the Administration has articulated thespecific requirements to support the President's announced stockpile modifications." Further, the committee felt that the Administration was acting prematurely inrequesting funds for a range of new nuclear programs and preparing for expandedmissions for nuclear weapons before NNSA has demonstrated that it can maintain theexisting nuclear stockpile. Accordingly, "this Committee will not support redirectingthe management resources and attention to a series of new initiatives."

The Senate Appropriations Committee, in its FY2004 report, recommended increasing DSW by $3.0 million - increasing one element (Stockpile Maintenance)by $10.0 million and reducing another (Production Support) by $7.0 million. Thecommittee recommended providing the full request, $21.0 million, for ACI. In floordebate, Senator Feinstein offered an amendment ( S.Amdt. 1655 ) onSeptember 15 to eliminate all funds for RNEP and the Advanced Concepts Initiative,and for related purposes discussed below. The amendment was tabled, 53-41, onSeptember 16. Also on the latter date, the Senate adopted on voice vote anamendment by Senator Reed ( S.Amdt. 1659 ) that barred use of fundsprovided by H.R. 2754 for development engineering (a stage in theweapons development process beyond what the Administration plans for FY2004)of advanced nuclear weapon concepts including RNEP. It also agreed to severalamendments en bloc, including one by Senator Reid ( S.Amdt. 1710 ) thatbarred spending funds provided by the bill on additional and exploratory studies (acategory that excludes RNEP) under the Advanced Concepts Initiative until 30 daysafter NNSA gives Congress a detailed report on activities planned in that categoryfor FY2004.

The conference bill provided $7.5 million for RNEP. It provided $6.0 million for Advanced Concepts (excluding RNEP), but made $4.0 million available forobligation only after the Secretaries of Energy and Defense deliver to Congress arevised Nuclear Weapons Stockpile plan detailing a plan and schedule for achievingthe President's proposed adjustments to the strategic weapons stockpile (includinga reduction in operationally deployed weapons to 1,700-2,200 by 2012), and 90 dayselapse for review by the Armed Services and Appropriations Committees.

Campaigns. These are "multi-year, multi-functional efforts" that "provide specialized scientific knowledge and technicalsupport to the directed stockpile work on the nuclear weapons stockpile." ForFY2004, there are 16 campaigns. Examples are: Enhanced Surveillance ($74.9million appropriated for FY2003, $91.8 million appropriated for FY2004), whichseeks to assess lifetimes of weapons components and predict defects resulting fromaging; Advanced Design and Production Technologies ($72.0 million appropriatedfor FY2003, $77.9 million appropriated for FY2004), which seeks to develop newtechnologies and processes to improve manufacturing in the nuclear weaponscomplex; Advanced Simulation and Computing ($683.9 million appropriated forFY2003, $725.6 million appropriated for FY2004), which aims to advance the stateof the art of nuclear weapon simulation, apply these advances to current stockpiletasks, and deliver by FY2008 "a high fidelity, full-system physics characterizationof a nuclear weapon"; and Tritium Readiness ($124.8 million appropriated forFY2003, $134.9 million appropriated for FY2004), which is making preparations touse a commercial light water reactor to produce tritium, an isotope of hydrogen thatis a key ingredient in nuclear weapons.

The House Appropriations Committee recommended reducing funding for Campaigns by $127.0 million. It expressed concern about delays in some projectsand unwarranted acceleration of others, and made some reductions consistent withits desire to slow the W80 LEP. Decreases were spread across many projects withinCampaigns. The Senate Appropriations Committee recommended a net reductionof $24.8 million for Campaigns. The largest increase, $43.2 million, was toaccelerate construction of the Microsystem and Engineering Science Applicationsfacility at Sandia National Laboratories; the largest reductions were to InertialConfinement Fusion, $34.0 million, and Advanced Simulation and Computing, $25.0million. Conferees reduced funding for Campaigns by $12.0 million. Details ofappropriations actions on two campaigns are discussed next.

Pits. Pits are the fissile cores of nuclear warheads that trigger the thermonuclear secondary stage. DOE has had no facility to produce pitsfor use in stockpiled weapons since it suspended pit production at the Rocky FlatsPlant (CO) in 1989. As a result, the United States has been unable to make all-newnuclear warheads of existing or advanced new designs. The Pit Manufacturing andCertification Campaign supports two pit projects: installation of a low-capacity pitproduction facility, and supporting R&D, at Los Alamos National Laboratory; andplanning for a higher-capacity Modern Pit Facility. (See CRS Report RL31993 , Nuclear Warhead 'Pit' Production: Background and Issues for Congress. )

This campaign has attracted much congressional interest. For FY2002, the House Appropriations Committee recommended the requested amount, $128.5million, but asserted that DOE cannot show "that it has a viable plan to manufactureand certify pits on the schedule dictated by national security needs," criticized theproject as "years behind schedule and hundreds of millions of dollars over theoriginal cost estimate," and stated that it would judge NNSA's success on how wellthe pit project succeeds ( H.Rept. 107-112 ). The Senate Appropriations Committeefor FY2002 recommended increasing funding substantially to "fully fund" allrelevant activities, viewing the then-current schedule, which would not certify a pitfor use in the stockpile until FY2009, as "unacceptable" ( S.Rept. 107-39 ). In itsFY2003 request, NNSA stated its plans to "certify a W88 pit built at [Los AlamosNational Laboratory] without underground nuclear testing by FY 2009, with a goalof achieving an earlier date of FY 2007." Further, NNSA planned to defer detaileddesign of a Modern Pit Facility until FY2004, "with FY 2003 funding used tocontinue manufacturing concepts." The FY2002 appropriation for this campaign was$219 million.

The FY2003 request was $194.5 million. The request included $112.5 million for manufacturing the pit for the W88 warhead, one of the two types of warheadsused on the Trident II missile, $78.0 million for W88 pit certification, $2.0 millionfor pit activities not specifically supporting the W88, and $2.0 million for planningfor the Modern Pit Facility.

In its FY2003 report, the Senate Appropriations Committee recommended $246.0 million for pit manufacturing and certification, an increase of $51.5 millionover the request. The sum includes the requested $2.0 million for pit activities and$2.0 million for the Modern Pit Facility. The committee, however, "remains greatlyconcerned about the NNSA's refusal to request funds consistent with its own projectplan submitted less than 1 year ago." Because this was not done, which would haveresulted in a lower request for this important project, "the Committee has been forcedto reduce other items in the budget." For pit manufacturing and certification, theHouse Appropriations Committee provided $194.5 million, the requested amount,while the final appropriation provided $220.6 million. According to the jointexplanatory statement of the Committee of Conference, "The increase will ensurethat the NNSA maintains its commitment to produce a certifiable W88 pit by 2003and a certified W88 pit by 2007."

For FY2004, the Administration requested a substantial increase to items in this campaign: $126.8 million for manufacturing the pit for the W88 warhead, $108.6million for W88 pit certification, $19.7 million for Pit Manufacturing Capability (pitactivities not specifically supporting the W88), and $22.8 million for planning for theModern Pit Facility. In addition, it requested $42.4 million for "subcriticalexperiments [at the Nevada Test Site] which support the certification of the W88pit." For FY2004, this funding element was transferred into the Pit Manufacturingand Certification Campaign from Directed Stockpile Work; its FY2003 request was$41.5 million. Thus the total request for FY2004 is $320.2 million, an increase of35.7% over the FY2003 request of $236.0 million (with both figures includingsubcritical experiments supporting W88 pit certification).

The House Appropriations Committee saw the pit campaign as proceeding too quickly. It recommended reducing the request for this campaign by $47.0 million,still an increase of $12.2 million over the FY2003 budget. The committee praisedNNSA and Los Alamos National Laboratory for "turning around" this campaign, buturged NNSA to reduce costs. It stated that the current plan would "aggressivelypursue a multi-billion dollar Modern Pit Facility before the first production pit haseven been successfully certified for use in the stockpile." In reducing MPF to $10.8million from the requested $22.8 million, it recommended that NNSA should lookhard at better ways to use the pit production facility at Los Alamos for near-termrequirements and "take a less aggressive planning approach" to MPF. It felt that itwas premature to spend $19.7 million to develop technologies for manufacturing pitsother than for the W88 when MPF was at least 15 years from operating, and sorecommended reducing this part of the request, Pit Manufacturing Capability, to $4.7million. The Senate Appropriations Committee recommended the amount requestedfor this campaign. The Feinstein amendment ( S.Amdt. 1655 ) discussedunder DSW, which was tabled, would have barred use of funds provided by H.R. 2754 for MPF site selection.

Conferees provided the full amount requested for manufacturing and certifying the W88 pit, and provided $10.0 million for Pit Manufacturing Capability. Theyreduced MPF funding to $10.8 million: "The conferees agree with the House Reportthat until the Congress reviews the revised future Stockpile plan it is premature topursue further decisions regarding the Modern Pit Facility."

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

Over the years, various reports have been highly critical of NIF on such grounds as technical problems, delays, and cost overruns. (8) In 1999, the NIF Project identifiedseveral problems with the original cost estimates and notified DOE that NIF couldnot be completed for the original estimated cost. The project was rebaselined andrevalidated in 2000, adding approximately $1 billion to the cost and several years tothe schedule. Since mid-2001, criticism of NIF has fallen sharply; for example, theNatural Resources Defense Council's NIF resources page was last updated February7, 2000, and the most recent General Accounting Office report on NIF was datedJune 1, 2001. (9) The NIF Project Office stated in 2002that the project was on theschedule and budget set forth in the new baseline, and that no technical obstaclesremained. The FY2004 budget document shows the total project cost of NIF toremain at $2,248.1 million, plus $1,200.0 million in other related costs, with physicalconstruction to be completed in the fourth quarter of 2008; these dates and costs arethe same as the FY2001 amended budget request. The document further states thatthe NIF project "continues to meet all major milestones on or ahead of schedule,"and that the first stockpile stewardship experiments on NIF are planned for 2004.

In its FY2003 report, the Senate Appropriations Committee expressed concern that the project's scope seemed to be shifting "from a focus on achieving the specificgoal of ignition to a generalized physics research program." In response, "[t]heCommittee rejects this re-prioritization and down-scoping. Ignition is now and willremain the primary objective" for NIF. In part because of concern that theAdministration did not request certain funds for equipment and technology essentialfor ignition, the committee added $35.0 million to the FY2003 request for inertialconfinement fusion, for a total of $487.3 million ( S.Rept. 107-220 ). The HouseAppropriations Committee provided $498.8 million, and also expressed concern thatNNSA was changing the focus "from the specific goal of ignition to a generalizedphysics research program." Accordingly, it "direct[ed] NNSA to re-establish ignitionas the primary objective and justification for the NIF." ( H.Rept. 107-681 .) The finalfigure for FY2003 was $489.7 million for inertial confinement fusion, including$214.0 million, the same as the request, for continued construction of NIF. Theconferees' statement did not provide further guidance on the focus of the inertialconfinement fusion program.

For FY2004, the Administration requested $466.8 million for the Inertial Confinement Fusion Ignition and High Yield Campaign, including $150.0 million forNIF construction. The title of the campaign reflected congressional concerns. Further, Everet Beckner, Deputy NNSA Administrator for Defense Programs,testified to the House Armed Services Committee on March 6, 2003, that NIF's"mission is to obtain fusion ignition." (10)

The House Appropriations Committee recommended $511.8 million for this campaign for FY2004, an increase of $45.0 million; included in the total was the$150.0 million for construction, as requested. In marked contrast to concernsexpressed in past years, the FY2004 House report stated, "The Committee recognizesthe recent successes on the NIF project and expects NNSA to focus on the core NIFproject to maintain cost and schedule performance." The Senate AppropriationsCommittee recommended $432.8 million, a reduction of $34.0 million from therequest; the total included $150.0 million for construction. The committee expressedconcern over "dramatic growth in other NIF-related activities funded elsewhere inthe inertial confinement fusion campaign and specifically rejects that portion of thebudget request." Conferees provided $517.3 million for this campaign, an increaseof $50.5 million over the request. They expressed concern that the request fundedvarious NIF-related projects within the overall NIF program, and noted that whilethey support these projects, future requests should fund these activities as separateline items.

Readiness in Technical Base and Facilities (RTBF). This program provides infrastructure and operationsat the nuclear weapons complex sites. The request includes seven subprograms. Byfar the largest is Operations of Facilities ($1,001.0 million appropriated for FY2003,$1,027.8 million appropriated for FY2004). Others include Program Readiness,which supports activities occurring at multiple sites or in multiple programs ($213.6million appropriated for FY2003, $131.1 million appropriated for FY2004), andMaterial Recycle and Recovery, which recovers plutonium, enriched uranium, andtritium from weapons production and disassembly ($100.8 million appropriated forFY2003, $76.2 million appropriated for FY2004). Construction is a separatecategory within RTBF; the appropriation was $310.9 million for FY2003 and $260.4million for FY2004.

For FY2004, the House Appropriations Committee recommended a reduction of $102.4 million from the request. Details include: $997.8 million for Operationsof Facilities, with an increase of $20.0 million for Pantex Plant (TX) and $5.0 millionfor Y-12 Plant (TN); $106.2 million for Program Readiness, reflecting theelimination of funds for Enhanced Test Readiness (discussed below); $76.2 million,as requested, for Material Recycle and Recovery; and $178.9 million forconstruction, with almost all the reduction resulting from eliminating funds requestedfor three projects ($20.0 million, exterior communications infrastructuremodernization, Sandia National Laboratories; $50.0 million, national securitysciences building, and $20.5 million, chemistry and metallurgy facility replacementproject, both at Los Alamos National Laboratory).

The Senate Appropriations Committee recommended adding $118.1 million to RTBF. Of the increase, $117.0 million went to Operations of Facilities, including$25.0 million for the National Center for Combating Terrorism, $10.0 million forPantex Plant, $10.0 million for Y-12 Plant, $20.0 million for Kansas City Plant(MO), $15.0 million for Lawrence Livermore National Laboratory, $20.0 million forLos Alamos National Laboratory, and $8.0 million for Sandia National Laboratories.

Conferees provided $1,664.2 million for RTBF, an increase of $50.8 million over the request. The main items of difference between the conference bill and therequest were Operations of Facilities (+$30.0 million), Special Projects (+$8.7million), and Chemistry and Metallurgy Facility Replacement Project, Los AlamosNational Laboratory (-$10.5 million). The increase in funding for Operations ofFacilities was distributed as follows: $5.0 million apiece to Pantex Plant, Y-12 Plant,Kansas City Plant, and Nevada Test Site, and $10.0 million to Los Alamos.

The RTBF element Nuclear Weapons Incident Response provides for a technical response to a nuclear or radiological emergency within DOE, in the UnitedStates, or abroad; $88.4 million was appropriated for FY2003 and $89.7 million wasrequested and appropriated for FY2004. In addition, the RTBF element Operationsof Facilities included $32.5 million appropriated for FY2003 for the National Centerfor Combating Terrorism. The FY2004 request contained no funds for the center"due to the uncertainty about the ultimate sponsor, scope, and size of the mission forthis facility." The Senate Appropriations Committee added $25.0 million for thecenter as part of its RTBF increase, and conferees provided that amount.

Nuclear Testing and Enhanced Test Readiness. A key issue is whether the United States can and should continue to maintain its weapons throughthe Stockpile Stewardship Program without nuclear testing. While that program hassought to do so, statements in early 2002 implied a reduced commitment to thatapproach. Secretary of Defense Donald Rumsfeld reportedly said that nations withnuclear weapons have "a responsibility to see that they are safe and reliable. To theextent that can be done without testing, clearly that is the preference. And that is whythe President has concluded that, thus far, that is the case." (11) J. D. Crouch, AssistantSecretary of Defense for International Security Policy, stated that there is "no changein the Administration'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." (12)

The FY2004 budget request contained $303.5 million for Weapons Activities at the Nevada Site Office, vs. $292.5 million for FY2003. (13) Much of this was foroperation of the site, safeguards and security, and operation and maintenance ofexperimental facilities at NTS.

Of particular interest regarding testing is Test Readiness, a component of the Program Readiness element of RTBF. Since FY1996, U.S. policy has been thatNNSA (or DOE prior to NNSA's establishment) should be ready to conduct a nucleartest within 24 to 36 months from the time the order is given. Several studiesidentified work needed to reduce this time to 18 months. These studies were fundedby "Enhanced Test Readiness." The FY2004 budget document stated, "The DoD andthe NNSA agreed to transition to an 18-month test readiness posture while continuingto review the optimum posture. The actions necessary for moving toward an18-month posture are expected to begin upon completion of the final FY 2003appropriation." The Senate Armed Services Committee's bill for FY2004 nationaldefense authorizations, S. 1050 , section 3132, required an 18-monthposture unless the Secretary of Energy determined that a different posture waspreferable. NNSA, however, prepared a study in April 2003 that concluded that an18-month posture was preferable. (14) Meanwhile,through FY2003, funds in the"Nevada Site Readiness" account maintained the 24- to 36-month posture withongoing work at the Nevada Test Site. Because no policy decision had been reachedon reducing the time needed to test, the Enhanced Test Readiness and Nevada SiteReadiness accounts had to be kept separated. With the move to an 18-month testreadiness posture, the enhanced posture was expected to become the current posture,which would have made this separation unnecessary. Accordingly, the two accountswere expected to be merged into "Test Readiness" beginning in FY2004, dependingon congressional language, though the FY2004 NNSA budget request level did notreflect that merger.

The FY2003 appropriation for enhanced test readiness was $15.0 million. Conferees on the Consolidated Appropriations Resolution for FY2003 directed DOEto notify the Appropriations Committees before obligating any of these funds inFY2003. ( H.Rept. 108-10 .) The FY2004 request for Test Readiness was $24.9million, and for Nevada Site Readiness was $39.6 million.

In its FY2004 report, the House Appropriations Committee sharply criticized the plan for enhanced test readiness and recommended eliminating FY2004 funds forit. The committee expressed its concern over an "open-ended commitment" toenhanced test readiness "without any budget analysis or program plan to evaluate theefficiency or effectiveness of this funding increase," argued that the proposal "doesnot address the fundamental difficulties in maintaining test readiness during a testingmoratorium," and noted that it took 18-24 months to conduct a fully-instrumentedtest during the era of routine testing so that a proposal to maintain indefinitely an18-month posture during the testing moratorium "reflects a disturbing 'cost is noobject' perspective." Finally, even though NNSA and DOD decided to move to an18-month test readiness posture, "The Committee does not recognize the NNSAdeclaring a revised test readiness posture as a new requirement nor is it convincedthat the decision can be successfully implemented based on the planning informationprovided to date." The Senate Appropriations Committee made no reference tonuclear test readiness, and provided the amount requested for Program Readiness, thecomponent of RTBF containing test readiness funds. The Feinstein amendment( S.Amdt. 1655 ) discussed under DSW, which was tabled, would havebarred use of funds provided by H.R. 2754 for modifying the testreadiness posture to a posture of less than 24 months. Conferees provided $24.9million for test readiness, as requested, on grounds that test readiness had atrophied. "However, the conferees expect the NNSA to focus on restoring a rigorous testreadiness program that is capable of meeting the current 24-month requirementbefore requesting significant additional funds to pursue a more aggressive goal of an18-month readiness posture."

Budget Process Issues. NNSA issued its first Future Years Nuclear Security Program (FYNSP) in March 2002. The HouseAppropriations Committee criticized that effort. The committee, in its FY2003report on Energy and Water Development Appropriations ( H.Rept. 107-681 ), stated,

the FYNSP has several fundamental weaknesses that limit its usefulness for Congressional oversight. ... The NNSA budget and the FYNSP arebuilt around activities rather than programs and products. ... The FYNSPincludes a laundry list of performance targets -- few of which are the sameas an identifiable program -- and there is no specific funding associatedwith any of the performance targets. Thus, it is impossible to determinehow a specific resource allocation will impact performance. ... It is difficultfor the Congress to determine what NNSA proposes to accomplish withthese funds. ... [Accordingly, the] Committee directs the Department toconduct an independent assessment of the NNSA's PPBS [planning,programming, and budgeting system] process and structure, including itscomparability to that of the Department of Defense.

Conferees agreed with the House language and "direct[ed] the NNSA to contract for an independent assessment of the NNSA's planning, programming, and budgetingsystem, including its comparability to that of the Department of Defense."

In its FY2003 budget request document, NNSA stated, "We are implementing a new PPBE [program planning, budgeting and evaluation] process that offers thepotential for significant improvements in our resource management and decisionmaking while still meeting all of the DOE's and Congress' requirements forinformation ... [beginning] with the FY 2004 budget cycle" and noted that DOE "isconsidering a parallel PPBES process." Accordingly, the FY2004 request documentprovided a five-year projection for NNSA's budget (Table 8):

Table 8. NNSA 5-Year Budget Projection ($ millions)

In its FY2004 report, the House Appropriations Committee commendedNNSA's efforts to implement a PPBE structure and a process to budget by weapontype. More generally, the committee found the process for budgeting and for settingpriorities in nuclear weapons to be flawed, with DOD setting requirements forweapons without having to pay for them, and with DOE treating the WeaponsActivities budget as untouchable because the requirements were set by DOD.Accordingly, "this Committee will not assume that all of the proposed nuclearweapons requests are legitimate requirements." The Senate AppropriationsCommittee directed DOE to retain the Institute for Defense Analyses to assess theprocess and structure of NNSA's planning, programming, and budgeting system.Conferees did not comment on these topics.

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.

Funding for these programs in FY2003 was provided in the Consolidated Appropriations Resolution ( H.J.Res. 2 , P.L. 108-7 ), which appropriatedthe amount requested by the Administration, $1.1136 billion. An additional $148million was appropriated in the Emergency Wartime Supplemental AppropriationsAct, 2003, P. L. 108-11 For FY2004, the Administration requested $1.3402 billion. The House bill contained $1.2802 billion, and the Senate bill included the requestedamount. The final bill appropriated $1.328 billion.

Table 9. DOE Defense Nuclear Nonproliferation Programs ($ millions)

a Includes $148 million total appropriated in Emergency Wartime SupplementalAppropriations Act, 2003, P. L. 108-11: $20 million in R&D, $22 million inNonproliferation and International Security, and $106 million in MPC&A.

In particular, the Nonproliferation and Verification R&D program, which received a total of $283 million for FY2003 (less $79 million for programstransferred to the Department of Homeland Security, for a total of $204 million),would have been funded at $204 million in the Administration FY2004 request. Nonproliferation and International Security programs, formerly called "ArmsControl," would have received $102 million in the request, compared with $93million in FY2003. These programs include international safeguards, exportcontrols, and treaties and agreements. The House bill funded the R&D program atthe requested level, and boosted the Nonproliferation and International Securityprogram to $105.7 million. The Senate bill included $234.9 million for R&D and$121.7 million for Nonproliferation and International Security. The final billappropriated $233.4 million for R&D and $110.7 million for Nonproliferation andInternational Security.

International Materials Protection, Control and Accounting (MPC&A), which is concerned with reducing the threat posed by unsecured Russian weapons andweapons-usable material, would have received $226 million under the President'srequest, compared to $233 million (less $4 million transferred to DHS) appropriatedfor FY2003. The House bill increased MPC&A to $255 million, including anadditional $28 million for the "Megaports initiative," which is intended to installradiation detection equipment at the top 20 major overseas seaports to interdictnuclear material before it arrives in the United States. The Emergency WartimeSupplemental Appropriations Act, 2003, P. L. 108-11, included $84 million for thisnew program for FY2003. The Senate bill included the requested amount, $226million, for MPC&A. The final bill appropriated $260 million, including $28 millionfor the Megaports initiative.

Two programs in the former Soviet Union, Initiatives for Proliferation Prevention (IPP) and the Nuclear Cities Initiatives (NCI), which comprise the"Russian Transition Initiative," would have received $40 million under thePresident's request, compared to the FY2003 appropriation of $39.3 million. Requested funding for the Fissile Materials Disposition program for FY2004 was$656.5 million, compared with $448 million in FY2003. The increased funding isfor disposal of U.S. surplus weapons plutonium by converting it into fuel forcommercial power reactors, including construction of a facility to convert theplutonium to reactor fuel at Savannah River, SC. The House bill funded theseprograms at the requested level. The Senate bill included $50 million for the RussianTransition Initiative and the requested amount, $656.5 million, for Fissile MaterialsDisposition. The final bill appropriated requested amounts for these programs.

(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 contaminationresulting from the production of nuclear weapons during the Cold War has been alongstanding issue. Since the beginning of the U.S. atomic energy program, DOEand its predecessors have been responsible for administering the production ofnuclear weapons and managing radioactive and other hazardous waste. In later years,DOE expanded its efforts to include the environmental restoration of radioactive sitesand those with other hazardous contamination in buildings, soil, and water to ensuretheir safety for future uses. In 1989, the George H. W. Bush Administrationestablished an Environmental Management Program within DOE to consolidate theagency's efforts in cleaning up contamination from defense nuclear waste, as well aswaste from civilian nuclear energy research. DOE is responsible for complying withnumerous federal environmental laws and regulations in administering the program,and is subject to fines and penalties for violations of these requirements. Consequently, DOE has signed numerous legally binding compliance agreementswith the Environmental Protection Agency (EPA) and the states to perform cleanupactivities and dispose of waste according to specific deadlines.

DOE reports that there are 114 geographic sites in 31 states and one U.S. territory where the production of nuclear weapons, and civilian nuclear energyresearch and development activities, resulted in radioactive and other hazardouscontamination. Together, these sites occupy approximately 2 million acres, whichis equivalent to the land area of Rhode Island and Delaware combined. DOE reportsthat all response actions were complete at 75 sites as of the end of FY2002 at a costof over $60 billion, and expected that cleanup would be complete at two additionalsites by the end of FY2003. However, the sites that have been cleaned up arerelatively small and are among the least hazardous, and the sites where cleanupremains underway contain some of the most severely contaminated areas. DOE hasestimated that, if program reforms are not initiated, cleanup at the remaining sitesmay take 70 years to complete, and that total cleanup costs may range from $220billion to as high as $300 billion.

DOE has been working on a cleanup reform initiative that would accelerate cleanup and lower costs. The Department estimates that its initiative could savebetween $50 billion and $100 billion in total cleanup costs over the long term, andthat the time frame for total site cleanup could be moved from 2070 to 2035. Thesegoals would be accomplished by assessing the risk of exposure to determine whichcleanup remedies are selected. Risk is currently one of many factors that DOE usesto select cleanup remedies. Altering the current process to use risk as the primaryfactor could result in decisions to contain waste on site as a means of preventingexposure, rather than removing it. While containment can often be accomplishedmore quickly and at less cost, the possibility of future exposure remains if the methodof containment fails over time.

While there has been widespread concern about the amount of time and money needed to clean up nuclear waste sites, questions have been raised as to how DOEwould use a risk-based approach to accomplish its goals of faster and less costlycleanups without weakening environmental protection. Some have drawn attentionto the possibility that basing the selection of cleanup remedies on risk alone mightresult in more contamination being left on site, rather than it being removed. Because of the substantial amount of time required for radioactive decay to occur,arguments have been raised that contamination left in place may migrate inunexpected ways over the long term, and result in pathways of exposure that couldnot have been predicted when the remedy was originally selected. Others counterthat completely removing radioactive contamination from all sites to permitunrestricted future land use, and eliminate all future pathways of exposure, would notbe economically feasible, and in some cases would be beyond the capabilities ofcurrent cleanup technologies.

DOE first proposed a risk-based cleanup reform strategy as part of its FY2003 budget request. In the 107th Congress, numerous questions were presented during theFY2003 appropriations debate as to whether the use of risk-based approaches wouldprovide adequate environmental protection. Prior to final action on FY2003appropriations, DOE signed letters of intent with EPA and the states to acceleratecleanup at most of its sites. Some Members criticized DOE's attempt to implementits cleanup reform strategy prior to the appropriation of funds as premature. WhileCongress did appropriate funding to honor these agreements, it provided the fundsunder the existing account structure rather than under a separate cleanup reformaccount that DOE had proposed. Some Members expressed concern about how thefunds would have been distributed among the sites if DOE had been given anunallocated lump sum under a new account.

For FY2004, DOE requested a total of $7.24 billion for its Environmental Management Program, $290 million more than the FY2003 enacted level of $6.95billion. The budget request proposed a new appropriations account structure for theprogram in order to focus funding on DOE's reform initiative to accelerate cleanupschedules and lower costs. The proposed accounts were structured according to thepurposes of "Site Acceleration Completion" and "Environmental Services," and therewere separate "Defense" and "Non-defense" accounts for each category. The SiteAcceleration Completion accounts represented nearly $6.0 billion of the total request,and focused funding on efforts to complete cleanup and close contaminated facilitiesat a faster pace than previously scheduled. The Environmental Services accountsfocused funding on activities that indirectly support the mission of acceleratedcleanup and closure, such as policy development and coordination, and theintegration of mission activities across the complex of sites. The budget request alsoproposed a Uranium Decontamination and Decommissioning Fund Account tosupport the cleanup of uranium and thorium processing sites, for which there hadbeen a similar account entitled Uranium Facilities Maintenance and Remediation.

The conference agreement on H.R. 2754 approved the Administration's proposed account structure. However, it provided $130 million lessthan requested for the program overall, reducing the President's budget from $7.24billion to $7.11 billion. However, funding was not reduced for all activities. Thereduction was directed at defense sites, for which the conference agreement provided$6.64 billion, $168 million less than the request of $6.81 billion, whereas the requestfor non-defense sites was increased by $40 million, from $463 million to $503million. Conference report language indicated that less funding was appropriatedthan requested for defense sites, primarily due to concern that DOE had not madesufficient progress in negotiating all of its cleanup agreements to the satisfaction ofEPA and the states, which had been expressed in the House bill. Negotiations torevise these agreements would be necessary to allow the selection of cleanupremedies to be altered according to a risk-based approach.

The conference report also reiterated concerns expressed by the House and Senate about inaccurate estimates of cleanup costs and scheduling of certain projects,particularly the Hanford Waste Treatment and Immobilization Plant. DOE hadrecently understated the estimated cost of this project by 33%. The House and Senatehad expressed concerns that this sharp increase may be an indicator that costestimates of cleanup acceleration projects at other sites also could be understated. In response, the conference agreement directed DOE to transfer $2.5 million of itsEnvironmental Management funds to the Office of Management, Budget, andEvaluation for increased oversight of accelerated cleanup projects. The Senate hadrecommended $5 million for this purpose.

Another issue noted in the conference agreement is the possible need for amendments to existing law to allow certain cleanup acceleration projects to proceed. To examine this need, DOE is directed to prepare a report to Congress within 60 daysof enactment on potential statutory restrictions that may delay or prohibit cleanupacceleration projects that are currently planned. The conference agreement alsodirects DOE to submit a legislative proposal requesting these changes as part of theAdministration's FY2005 budget submission to Congress.

In addition to the conference report language discussed above, the House raised questions about long-term stewardship needs once cleanup is complete at each site,and directed DOE to consider these needs when implementing accelerated cleanupplans "to ensure that long-term stewardship is not used as a substitute for completeand effective site cleanup." As discussed earlier, some have expressed concern thatDOE's cleanup acceleration strategy may result in more waste being left on site thanwould be allowed under original cleanup agreements. If more waste were permittedto remain, rather than being removed, the stewardship costs at such sites would likelyrise as a result of the need for additional measures to ensure that the waste continuesto be safely contained in future years to prevent exposure. In response to this issue,the House report indicated that the Performance Management Plan for each cleanupsite should identify the resources that would be necessary for fulfilling DOE'sresponsibilities to manage the legacy of contained waste that is left behind aftercleanup response actions are complete.

Civilian Nuclear Waste. The Bush Administration requested $591 million for the DOE civilian nuclear wastedisposal program for FY2004, a 30% boost over FY2003. The increased budget wasintended primarily to pay for preparing a construction permit application for anational nuclear waste repository at Yucca Mountain, Nevada. The additional fundsare also needed for detailed repository design work, repository performance studies,and transportation planning, according to DOE. The Department contended that itcould not meet its 2010 target date for shipping nuclear waste to Yucca Mountainwithout receiving its entire FY2004 budget request for the program.

The House Appropriations Committee, contending that the nuclear waste program had suffered "chronic funding shortfalls," voted to provide an additional$174 million for the program in FY2004, for a total of $765 million, to which theHouse concurred. The Appropriations Committee report stressed that the additionalfunding should ensure that DOE could submit a license application for the repositoryto the Nuclear Regulatory Commission (NRC) by December 31, 2004. TheCommittee also directed DOE to prepare any plans and legislation necessary to allowshipments of spent nuclear fuel to Yucca Mountain to begin in 2007 -- three yearsbefore the repository is scheduled to open. However, House Energy and WaterSubcommittee Chairman Hobson promised in a floor colloquy to remove the reportlanguage about early shipments to Yucca Mountain, and that provision was notincluded in the conference agreement.

The Senate voted to cut the Administration's request to $425 million, setting up a difficult confrontation with the House over the controversial program. Aftermonths of deliberation on the issue, the conference committee agreed to provide$580 million for the nuclear waste program -- $11 million below the request but$123 million above the FY2003 level.

Between FY2005 and FY2010, nuclear waste funding will have to further increase to an average of $1.3 billion per year to keep the repository on schedule,according to the DOE budget justification. The Administration proposed thatdiscretionary spending caps be adjusted to accommodate higher future funding forthe program, although specific legislation was not submitted.

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 would have blocked the YuccaMountain site if a congressional approval resolution had not been signed into lawwithin 90 days of continuous session. The approval resolution was signed July 23,2000 ( H.J.Res. 87 , P.L. 107-200 ), allowing the Yucca Mountain projectto proceed to the licensing phase.

Funding for the nuclear waste program comes from two sources. Under the FY2004 budget request, $161.0 million would have been provided from the NuclearWaste Fund, which consists of fees paid by nuclear utilities, and $430.0 million fromthe defense nuclear waste disposal account, which pays for disposing of high-levelwaste from the nuclear weapons program in the planned civilian repository. TheHouse boosted the Nuclear Waste Fund portion of the request to $335 million. TheSenate cut the Waste Fund portion to $140 million and the defense portion to $285million, while the conference committee provided $190 million from the Waste Fundand $390 million in 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. (For details, see CRS Issue Brief IB92059, Civilian Nuclear WasteDisposal. )

The State of Nevada has filed a variety of lawsuits to block the Yucca Mountain project, including a contention that the federal government lacks authority under theConstitution to force Nevada to accept the nation's nuclear waste.

Power Marketing Administrations. DOE's four Power Marketing Administrations (PMAs) developed during the 1930sout of the construction of dams and multi-purpose water projects that are operatedby the Bureau of Reclamation and the Army Corps of Engineers. The originalintention behind many of these projects was conservation and management of waterresources, 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 Act, P.L. 104-58 ). Therehas been no press to dispose of the remaining PMAs, and none seems likely given thebroader uncertainties governing electric utility restructuring.

Congress enacted a funding level of $203.5 million in the FY2003 Consolidated Appropriations Resolution ( P.L. 108-7 ), including an additional $6.1 million forWAPA above the Administration's FY2003 request. The request for FY2004 was$207.3 million -- $5.1 million for SEPA, $28.6 million for SWPA, $171 million forWAPA, and $2.6 million for operation of hydroelectric facilities at the Falcon &Amistad Dams located on the Rio Grande River between Texas and Mexico. Theincrease in the FY2004 request over the enacted FY2003 spending level wasattributable to an increase of nearly $10 million for Program Direction at WAPA. Workload requirements attributed to certain orders from the Federal EnergyRegulatory Commission (FERC), and additional hires are cited as the justification foran increase of nearly 10% in higher salaries and benefits for WAPA in FY2004. TheHouse bill funded the PMAs at the requested level. The Senate bill added $6.95million to the appropriation for Western Area Power Administration, including $6.2million to be deposited to the Utah Reclamation Mitigation and ConservationAccount. The Senate bill also provided $750,000 for a transmission study on placing500 megawatts of wind energy in North and South Dakota. The conferees adoptedthe Senate provisions and funding level, and these are the levels in the enactedlegislation.

BPA receives no annual appropriation, but funds some of its activities from permanent borrowing authority, which was increased in FY2003 from $3.75 billionto $4.45 billion (a $700 million increase). BPA is not requesting additionalborrowing authority in FY2004. BPA intends to borrow $528 million in FY2004,down from $630.8 million in FY2003, to be used for generation and transmissionservices, conservation, energy efficiency, fish and wildlife, and capital equipmentprograms.

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

Key Policy Issues -- Independent Agencies

Nuclear Regulatory Commission. The Nuclear Regulatory Commission (NRC) requested a total budget of $626.1million for FY2003, including $7.3 million for the NRC inspector general's office. The funding request was 8.3% above the FY2003 level. Major activities conductedby NRC include safety regulation and licensing of commercial nuclear reactors,licensing of nuclear waste facilities, and oversight of nuclear materials users. TheHouse and Senate approved the full NRC request, as did the enacted bill.

In the wake of the September 11, 2001, terrorist attacks against the United States, NRC has focused additional attention on the security of nuclear power plantsand other users of radioactive material. NRC's FY2004 budget request included$53.1 million for activities related to homeland security, a 50% increase overFY2003. In FY2004, NRC intends to begin conducting "full security performancereviews, including force-on-force exercises, at each nuclear power plant on a 3-yearcycle instead of the 8-year cycle that the agency used before September 11, 2001." (For more information on protecting licensed nuclear facilities, see CRS Report RS21131 , Nuclear Power Plants: Vulnerability to Terrorist Attack .) The conferencereport directs NRC to contract with the National Academy of Sciences for a study ofthe safety and security of spent fuel storage at commercial reactor sites.

NRC proposed to spend $33.5 million on licensing activities for possible new commercial reactors, which are being encouraged by DOE's Nuclear Power 2010program. The FY2003 appropriation provided about $25 million for new reactorlicensing, up from $10 million in FY2002. According to the NRC budgetjustification, the funding will be used for early site permits (sites approved for futurereactors), reactor pre-licensing and licensing reviews, and updating the nuclearlicensing infrastructure.

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 Development Appropriations Act( P.L. 106-377 ) included an NRC proposal to phase down the agency's fee recoveryto 90% during the subsequent 5 years -- two percentage points per year. As a result,92% of the FY2004 NRC budget -- minus $33.1 million transferred from theNuclear Waste Fund to pay for waste repository licensing -- will be offset by feeson licensees.

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 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 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 Power Plants: Vulnerability to Terrorist Attack .

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