Appropriations for FY2001: Energy and Water Development
Released: 2000-11-20T00:00:00

Most Recent Developments

A rare veto of the Energy and Water appropriations bill led to late-session maneuvering for FY2001funding. After President Clinton vetoed H.R. 4733 over a provision (ï¿½103) regarding control of the Missouri River (see Title I, Army Corps of Engineers, below),the House voted 315-98 to override the vetoon October 11. On October 12, the Senate attached the H.R. 4733 conference bill, minus ï¿½103 and with a fewother water provisions, to H.R. 4635 , the appropriations bill for Veterans Affairs and Housing and Urban Development, and then passedthat bill by a vote of 87-8. OnOctober 18, H.R. 5483 was introduced in the House, containing the Energy and Water appropriationsprovisions included in the Senate-passedversion. On the same day the conference report to H.R. 4635 was filed, including the provisions of H.R. 5483 . The House and theSenate agreed to the conference report on October 19, and the President signed the bill October 27 ( P.L. 106-377 ).

Status

Table 1. Status of Energy and Water Appropriations,FY2001

* H.R. 4733 was vetoed October 7. The House voted 315-98 October 11 to override the veto, but theSenate attached the conference bill, minus theprovision provoking the veto, to H.R. 4635 , funding VA/HUD, and passed that bill October 12. H.R. 5483 , containing the Senate'sEnergy and Water provisions, was included in the conference report on H.R. 4635 , filed October 18 ( H.Rept.106-988 ) and passed by the House andthe Senate October 19. The President signed H.R. 4635 October 27.

Overview

The Energy and Water Development appropriations bill includes funding for civil projects of the Army Corpsof Engineers, the Department of the Interior'sBureau of Reclamation (BuRec), most of the Department of Energy (DOE), and a number of independent agencies,including the Nuclear RegulatoryCommission (NRC) and the Appalachian Regional Commission (ARC). The Administration requested $22.7 billionfor these programs for FY2001, comparedwith $21.2 billion appropriated for FY2000.

For the Corps of Engineers, the Administration sought $4.06 billion in FY2001, about $78 million less than the amount appropriated for FY2000. The final billappropriated $4.54 billion. The Administration requested $841 million for FY2001 for the Department of theInterior programs included in the Energy and Waterbill -- the Bureau of Reclamation and the Central Utah Project. This would have been an increase of $32.3 million. The final bill appropriated $816.4 million, anincrease of $10.4 million over FY2000. The request for DOE programs was $18.1 billion, about 8% above theprevious year. The major activities in the DOEbudget are energy research and development, general science, environmental cleanup, and nuclear weaponsprograms. The final bill appropriated $18.3 billion. (Funding of DOE's programs for fossil fuels, energy efficiency, and energy statistics is included in the Interior andRelated Agencies appropriations bill. TheFY2001 net appropriations request for these programs was $865 million.) For the Nuclear Regulatory Commissionand other independent agencies funded in TitleIV of the Energy and Water bill, the net appropriations requested for FY2001 was $177.2 million. The final billappropriated $171.9 million.

Table 2. Energy and Water Development Appropriations, FY1994 to FY2001 (budget authority inbillions of current dollars) *

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

Table 2 includes FY2001 budget request figures and budget totals for energy and water appropriations enacted for FY1994 to FY2000. Tables 3-7 provide budgetdetails for Title I (Corps of Engineers), Title II (Department of the Interior), Title III (Department of Energy) andTitle IV (independent agencies) for FY2000 -FY2001.

Title I: Corps of Engineers

The final Energy and Water bill ( P.L. 106-377 ) included $4.54 billion for the civil projects of the U.S. ArmyCorps of Engineers (Corps) for FY2001,approximately $481 million more than requested by the Administration and approximately $403 more than enactedfor FY2000. The Administration requested$4.06 billion for FY2001, slightly less (2%) than the $4.14 billion enacted for FY2000. The House-passed billincluded $4.12 billion; the Senate-passed versionincluded $4.11 billion; the earlier conference version ( H.R. 4733 , vetoed by the President) had included $4.52billion. The final version includes$21.5 million more for the Corps' construction budget.

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

Key Policy Issues -- Corps of Engineers

Funding for Corps of Engineers civil programs is often a contentious issue between the White House and the Congress, with final appropriations bills typicallyproviding more funding than requested. For FY1998, for example, the Congress added $270 million (7%) to the$3.63 billion requested by the Administration. Similarly, the FY1999 bill as passed included a total of $3.86 billion for the Corps, $638 million more (20%) thanrequested, and for FY2000, Congress providedapproximately $250 million more (6%) than requested.

The story continued in FY2001. The conference report for H.R. 4733 , which the President vetoed over another issue (see below), included nearly$460 million more (11.3%) than requested. The final version ( P.L. 106-377 ) added $21.5 million to the Corps'construction budget, bringing the total toapproximately $481 million more than requested, about 11.8%. The late additions included $6.9 million more foran Elba, Alabama, flood control project; $10.3million more for the Geneva, Alabama, flood control project; $0.5 million more for the Metropolitan Louisville,Beargrass Creek, Kentucky, project; $2.8 millionmore for the St. Louis, Missouri, environmental infrastructures project; and $1 million more for the Black Fox,Murfree and Oaklands Springs Wetlands,Tennessee, project. The final bill also includes $0.8 million more for the Upper Susquehanna River Basin, NewYork, project under the General Investigationsaccount; however, this amount is offset by an increase of $0.8 million in the line item for reductions and anticipatedsavings, slippage, and carryover balanceswithin that account.

Corps Management Reforms. The House Appropriations Committee noted in report language concerns about the Corps' project review process and indicatedits desire for a more streamlined process. The Committee also mentioned recent allegations that agency officialshave improperly manipulated a study ofnavigation improvements on the upper Mississippi River and Illinois Waterway; however, the Committee noted thatbecause these allegations are still underinvestigation, it is recommending no specific action to address the alleged behavior. On a related matter, theCommittee addressed accusations of the Corps'efforts toward "improperly trying to 'grow' its Civil Works program." It noted that while pressure on planners andengineers to "inappropriately justify projects"is clearly unacceptable, it viewed it the "proper role of the Chief of Engineers to advise the Administration, theCongress, and the Nation of the level of investmentin water resources infrastructure ... needed to support the economy and improve the quality of life for our citizens."

The Senate Appropriations Committee report also noted criticisms of the Corps' operations and the Committee'sdissatisfaction with the Administration'sproposed management reforms. While the Committee initially did not include language prohibiting such reforms,it put the Administration on notice that it wouldcontinue to "assess the need for such language as the process moves forward." No mention of such language wasincluded in the conference bill or the statementof conference managers. However, language directing the Corps to contract with the National Academy of Sciencesto study the feasibility of establishing anindependent review panel for Corps project studies is included in the conference report for the Water ResourcesDevelopment Act of 2000 ( S. 2796 ,Section 216).

Missouri River Water Flows. The final version of the Energy and Water Development appropriations bill deleted Section 103 of the original conference reporton H.R. 4733 . Section 103 would have prohibited, under certain circumstances, the use of funds to revisethe Corps' Missouri River Master WaterControl Manual. Floor consideration of H.R. 4733 stalled in the Senate on July 21 over the language, and a Senate amendment to strike theprovision was defeated 45-52 during floor consideration September 7. The Administration said it would veto thebill if such language remained, and indeed,when the conference left Section 103 in, the President did veto the bill on October 7.

The issue involves the controversial subject of how to operate mainstem dams along the Missouri River, given the diverse statutes potentially affecting the Corps'river management activities. Upper basin states generally contend that the current master manual, which has beenunder review for many years, does not reflectchanges in demand along the river. This is especially true, they argue, of increased demand for water and waterreleases to meet fish and wildlife and recreationaluses, particularly water to support the pallid sturgeon, and other threatened and endangered species. Downstreamstates generally fear that changes in theoperations manual to accommodate upstream concerns may result in an inadequate supply of water to meet fullseason navigational uses. Downstream states havealso noted fears of increased flooding below Gavins Point dam if higher water releases are made in the springmonths.

Title II: Department of the Interior

For the Department of the Interior, the Energy and Water Development bill provides funding for the Bureau ofReclamation (BuRec) and the Central Utah ProjectCompletion Account. The final bill ( P.L. 106-377 ) includes $39.9 million for the Central Utah Project CompletionAccount, the same as enacted for FY2000. Thebill also includes $776.5 million for BuRec for FY2001, approximately $10 million more than enacted for FY2000.

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

* Includes funds available for Utah Reclamation Mitigation and Conservation Commission activities and $5 millionfor the contribution authorized by ï¿½402(b)(2)of the Central Utah Project Completion Act ( P.L. 102-575 ).

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

* Does not reflect appropriations derived from transfer of $25.8 million from the Working Capital Fund, but doesinclude $1.5 million in supplementalappropriations ( P.L. 106-31 ).

**Does not include $980,000 transferred from the U.S. Geological Survey to the Bureau of Reclamation forsupport of the Department of the Interior NationalBusiness Center.

*** Does not include $424,000 transferred from the U.S. Geological Survey.

Background on Reclamation Policy

Most of the large dams and water diversion structures in the West were built by, or with the assistance of, BuRec. Whereas the Corps built hundreds of floodcontrol and navigation projects, BuRec's mission was to develop water supplies and to reclaim arid lands in theWest, primarily for irrigation. Today, BuRecmanages more than 600 dams in 17 western states, providing water to approximately 10 million acres of farmlandand 31 million people.

BuRec has undergone many changes in the last 15 years, turning from largely a dam construction agency to a self-described water resource management agency. The agency describes the "intent" of its programs and projects as follows:

to operate and maintain all facilities in a safe, efficient, economical, and reliable manner;

to sustain the health and integrity of ecosystems while addressing the water demands of a growing west; and

to assist states, tribal governments, and local communities in solving contemporary and future water and related resource problems in anenvironmentally, socially, and fiscally sound manner.

In practice, however, the agency is limited in how it can address new demands and new priorities because of numerous federal, state and local statutes, compacts,and existing contracts, which together govern the delivery of water to project users. Consequently, any proposalto change BuRec water allocation or watermanagement policies often becomes difficult to implement and extremely controversial.

Key Policy Issues -- Bureau of Reclamation

The final bill includes $776.5 million for FY2001 for BuRec, which is approximately $10 million more than enacted for FY2000. Funding for BuRec was notaffected by modifications to the conference bill as included in H.R. 4635 . The House-passed bill includedapproximately $730 million for BuRec forFY2001; the Senate-passed version included $752.7. The Administration requested an appropriation ofapproximately $801.03 million - approximately $33million more than enacted for FY2000.

Both the House and Senate Appropriations Committees stated they would not fund the Administration's request of $60 million for the California Bay-DeltaRestoration Program (Bay-Delta, or CALFED), the same amount as was enacted for FY2000, until the programreceived an authorization for such appropriations. (Funding for Bay-Delta is requested in BuRec's budget, but the appropriation would be allocated among severalfederal agencies.) A proposal to include $20million in CALFED funding for FY2001 was dropped in conference, as was a proposal to adopt authorizinglanguage similar to that recently reported from theHouse Resources Committee ( H.R. 5130 ). The Administration submitted language to extend the Bay-Deltaappropriations authorization throughFY2003, for an additional total of $429.9 million (averaging $143.3 million per year, but not requested by year). The FY2001 request of $60 million forBay-Delta activities included $30 million for ecosystem restoration activities, $5 million (maximum) for planningand management, and $24 million for "otheractivities." According to BuRec, there are still unobligated prior year funds that may be used for some CALFEDprojects.

Title III: Department of Energy

The Energy and Water Development bill includes funding for most of DOE's programs. Major DOE activitiesin the bill include research and development onrenewable energy and nuclear power, general science, environmental cleanup, and nuclear weapons programs. TheAdministration's FY2001 request was $18.06billion, which would have boosted DOE programs in the bill by about 8%. The House approved $17.29 billion forDOE programs. The Senate bill contained$17.95 billion. The final bill, P.L. 106-377 , appropriated $18.34 billion. (The FY2001 appropriation for DOE'sprograms for fossil fuels, energy efficiency, theStrategic Petroleum Reserve, and energy statistics, included in the Interior and Related Agencies appropriations bill, P.L. 106-291 , was $1.46 billion. See CRS Report RL30506 , Appropriations for FY2001: Interior and Related Agencies.)

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

Key Policy Issues -- Department of Energy

Renewable Energy. "The solar and renewable energy program is a major component of the Administration'sactivities to address global climate change," according to the Appendix to the U.S. Government's FY2001 Budget(p. 403). In accordance with that policy, DOEproposed to boost solar and renewables funding to $454.8 million (net, including $47.1 million for programs underthe Office of Science) -- an increase of $92.6million (26%) over the FY2000 level. This includes $407.8 million for DOE's Office of Energy Efficiency andRenewable Energy (EERE), an increase of $92.6million, and $47.1 million for the Office of Science, which is the same as for FY2000. The EERE amount includes$29.9 million more for biofuels, $17.1 millionmore for wind, $14.5 million more for photovoltaics, $9.5 million more for electric and storage programs, and $7.5million more for international renewableenergy programs.

For Biofuels, DOE proposed an Integrated Bioenergy Technology Research and Technology Initiative, prompted by President Clinton's Executive Order 13134, Developing and Promoting Biobased Products and Bioenergy , and ethanol production from agriculturaland forestry residues.

Wind initiatives would accelerate deployment, address regional barriers, and enhance wind energy use in developing countries. Photovoltaic initiatives supportcost reductions, "Million Solar Roofs," and private sector "clean energy" projects and national action plans indeveloping countries. Electric/Storage initiativesfocus on power system security and reliability, power electronics technology, and distributed power systems.

The House Appropriations Committee recommended $352.8 million (including $47.1 million for programs under the Office of Science) for the DOE RenewableEnergy Program. However, voice vote approval of an amendment sponsored by Representatives Salmon, Udall,Boehlert and Kaptur ( H.Amdt. 920 ,A006) added $37.7 million, bringing the House-passed total to $390.5 million. In contrast, the Senate approved$444.1 million (including $47.1 million forprograms under the Office of Science) for the DOE Renewable Energy Program. Seven Senate floor amendmentscreated earmarks for various renewable energyprograms, but none of the amendments modified the level of appropriations.

The final bill appropriated $422.1 million (including $47.1 million for programs managed by the Office of Science). This figure is $59.9 million, or 17%, abovethe FY2000 funding. It includes $13.6 million more for Electric/Storage, $8.8 million more for Photovoltaics, $7.5million more for Biofuels-Power, $7.0 millionmore for Wind, $6.7 million more for Biofuels-Transportation, and $3.0 million more for Geothermal. However,relative to the request, the final bill provides$32.8 million (7%) less for the Renewable Energy Program. This includes $10.1 million less for Wind, $8.0 million less for Biofuels-Transportation, $7.8million less for Biofuels-Power, $6.5 million less for International Renewables, $5.7 million less for Photovoltaics,and $3.0 million less for Departmental EnergyManagement programs.

Nuclear Energy. For nuclear energy programs -- including reactor research and development, space powersystems, and closing of surplus facilities -- the enacted bill provides $259.9 million for FY2001. This amount isabout $30 million below the Administrationbudget request, but the legislation transfers $53.4 million of the request for uranium management programs into anew Uranium Facilities Maintenance andRemediation account and added $9 million more for treatment of depleted uranium stockpiles. The Senate versionof H.R. 4733 had $262 million fornuclear energy, plus $62.4 million for the uranium management programs. The House had approved $231.8 million,plus $53.4 million for uranium management.

The approved bill provides the Administration's $35 million request for a program to support innovative nuclear energy research projects, the "nuclear energyresearch initiative" (NERI). The House had voted to leave NERI at the FY2000 funding level of $22.5 million,while the Senate had approved $41.5 million. Theenacted bill provides an additional $7.5 million for a separate program on nuclear energy technologies, which theSenate had proposed to include in NERI. Of thatamount, $4.5 million is to be spent on a "road map for the commercial deployment of a next-generation powerreactor;" $1 million is earmarked to analyzepotential improvements in advanced versions of today's commercial light water reactors; $1 million is for initiativessupporting an advanced gas-cooled reactor;and the final $1 million is for a feasibility study for deploying small modular reactors.

Reflecting House and Senate support, the bill provides the Administration's full request of $5 million -- nearly the same as the FY2000 appropriation -- for"nuclear energy plant optimization" (NEPO), a research program to improve the economic competitiveness ofexisting nuclear power plants. The confereesspecified that non-federal partners share at least half the costs of NEPO projects.

Funding for NEPO is part of the Administration's Climate Change Technology Initiative. To be matched by industry, the NEPO funding is to focus on research toextend the operating lives of existing reactors and to allow them to operate more efficiently and reliably. Theprogram's goal is to increase the average productionof U.S. nuclear plants to 85% of full capacity by 2010; the capacity utilization percentage of U.S. reactors generallyaverages in the mid-70s, although it was closeto 85% in 1999.

Because nuclear plants directly emit no carbon dioxide, greater production of nuclear power from existing reactors could help the United States reduce its total"greenhouse gas" emissions. "Nuclear energy is the only proven large-scale power source that has unlimitedpotential to provide clean and reliable electricity intothe next century," according to the DOE budget justification. However, opponents have criticized DOE's nuclearenergy research programs as providing wastefulsubsidies to a failing industry.

Controversy has also been generated by the "electrometallurgical treatment" of DOE spent fuel, a process in which metal fuel is melted and highly radioactiveisotopes are electrochemically separated from uranium and plutonium. DOE contends that such treatment may bethe best way to render sodium-bonded spentfuel -- particularly from the closed Experimental Breeder Reactor II (EBR-II) in Idaho -- safe for long-term storageand disposal. DOE decided in September2000 to use the process to prepare spent fuel for disposal.

DOE received $40 million in FY1999 to complete a demonstration program for the technology. Continued research on sodium-bonded fuel treatment received$18 million for FY2000, and DOE requested $15 million for FY2001. The final bill approved the Administrationbudget request within a restructured fundingcategory of $34.9 million for nuclear facilities management. House Appropriations Committee report languagerequires DOE to submit a report by March 2001on the types of waste that the process would produce.

Opponents of electrometallurgical treatment contend that it is unnecessary and that the process could be used for separating plutonium to make nuclear weapons. They note that the process uses much of the same technology and equipment developed for the plutonium-fueledIntegral Fast Reactor, or Advanced Liquid MetalReactor, which was canceled by Congress in 1993 partly because of concerns about nuclear weapons proliferation.

The appropriations act establishes a new DOE program called Advanced Accelerator Applications, which includes $3 million for research on acceleratortransmutation of waste (ATW) at the University of Nevada-Las Vegas. ATW would use powerful particleaccelerators to transmute long-lived elements inradioactive waste into shorter-lived elements for safer disposal. DOE issued a "roadmap" for the ATW programNovember 1, 1999, concluding that a six-yearR&D program costing $281 million would be needed to support future technology decisions for deploying sucha system. No FY2001 funding was requested orprovided by the House for ATW, but DOE proposed to use some of the $9 million appropriated for FY2000 tocontinue studies of the technology during FY2001. The Senate had earmarked $5 million for ATW studies in Nevada under the new Advanced Accelerator Applicationsprogram.

The enacted measure includes DOE's $44 million request for the Fast Flux Test Facility (FFTF) at Hanford, Washington, a boost of about $5 million from thebudget request and $16 million above the FY2000 level. The House had voted to provide $39 million, and theSenate had approved $44 million. FFTF, asodium-cooled research reactor originally designed to support the commercial breeder reactor program, has notoperated since 1992 and is being maintained instandby condition. DOE intends to decide in FY2001 whether to restart the reactor for nuclear research and medicalisotope production or permanently shut itdown. DOE contended that a funding increase would be needed in FY2001 to begin implementing the decision.

Science. DOE's science programs consist of a wide variety of basic research activities concentrated in thephysical, biological, and computer sciences, and mathematics. These programs include high-energy physics, nuclearphysics, basic energy sciences (BES),biological and environmental research (BER), fusion energy sciences, and advanced scientific computing. For theDOE science programs, the FY2001 requestwas 12.1% above FY2000. The House approved $2.757 billion for these programs, 10.1% below the request, whilethe Senate appropriated $2.842 billion, 5.4%below the request. Funds were restored in conference, however, with the final bill including $3.186 billion, 0.75%above the request.

About two-thirds of the requested increase was concentrated in three areas. First, DOE requested an increase of $162 million in construction funding for theSpallation Neutron Source (SNS) project. The House, citing "severe funding constraints," appropriated level fundingfor the project of $100 million. The Senate,however, approved $221 million for construction, touting the importance of the project for advancing science andtechnology. Again, the final bill restored someof the funding, providing $259.5 million, $2.4 million below the request.

DOE also requested a $49 million increase for civilian information technology (IT) research. The latter focuses on development and application of highperformance computing for scientific applications. The House, again citing funding limitations, approved only $5million of the requested increase. The Senateapproved funding about $20 million of the requested increase although much of that would come by shifting fundsfrom other programs. The final bill providednearly all of the requested funding, although a specific amount was not given.

The third major program request by DOE was an additional $36 million for nanoscience and nanotechnology research within BES. The House madeno mention of this initiative, although its appropriation for the BES program not including the SNS was $62.9million below the request. The Senate expressedstrong support for the initiative but provided only about 56% of BES funding requested for it. Funds were restoredin conference with the final bill providing thefull request.

The House's appropriation for the BER program was 8.8% below the request. Again, funding constraints were cited although the House argued that theappropriation was in line with previous years when new projects started in FY2000 were removed. The Senateapproved funding the program at 0.3% below therequest. The final bill provided $500.3 million for this program, 14.1% above the request. Much of the increaseis for projects specifically identified by Congress.

The House approved funding the High Energy and Nuclear Physics programs at their requested level. It did note, however, that it was not anxious to fund designwork for large new accelerators in a period of limited funds. The Senate's appropriation for these two programs wasabout 5.3% below the request. The Senatecited "severe budget constraints" as the reason. Funding was restored in the final bill for a total 2.0% above theoriginal request.

The House also approved an increase of $7.5 million above the request for the Fusion Energy Sciences program, which would be a slight increase over theFY2000 level. The Senate, again citing budget constraints, approved funding fusion research at 8.1% below therequest. The final bill funded at the House mark.

Nuclear Weapons Stewardship R&D. This activity is aimed at developing the science and technology tomaintain the nation's nuclear weapons stockpile in the absence of nuclear testing. Principal activities are thedevelopment of computational capabilities that cansimulate weapons explosions and perform other important computations, and experimental facilities to simulate andtest various aspects of weapons behaviorwithout resorting to a full scale explosion. For the last four years, nuclear weapons stewardship R&D wascalled stockpile stewardship. This year, as DOE'sdefense programs were absorbed by the newly created National Nuclear Security Administration (NNSA), DOEreorganized the activity, eliminating both thestockpile stewardship and maintenance designations, and creating four new programs: directed stockpile work,campaigns, readiness in technical base andfacilities, and construction. Weapons R&D falls across all four programs.

For FY2001, DOE requested a 3.0% increase for weapons R&D. The House approved a slight increase of 0.2% above the request. The House also directed DOEto consolidate its inertial confinement fusion and defense modeling and computing activities within the campaignsprogram, and approved a transfer of funds fromthe readiness in technical base and facilities program to campaigns to this effect. The Senate approved a 4.9%increase above the request for weapons R&D. It isconcerned about the slow pace of the stockpile stewardship program and believes that significantly more fundingis needed if it is to meet its goals. The final billincluded $2.454 billion for weapons R&D, 12.5% above the request. Nearly all of the increase above theSenate-approved amount was assigned to the NIF project(see below).

The national security budget for FY2001 was prepared for the first time under the rubric of the NNSA, the new organization created by Congress ( P.L. 106-65 , H.Rept. 106-301 ) to manage most of DOE's defense activities in the wake of security concerns uncovered in 1998. Implementation of the NNSA has been quitecontroversial, and several in Congress have expressed displeasure about the way DOE is undertaking this task. TheHouse noted that it has been citing DOEmanagement problems for some time and expressed its desire that the new director of the NNSA take theopportunity afforded by the reorganization to makemajor changes in the current DOE management structure. The Senate expressed hope that NNSA can resolve theserious concerns the Senate has with the currentstockpile stewardship program. The conferees expressed their support of efforts to staff the NNSA and agreed thatsuch actions should not be affected by a changein administration.

A major problem that has emerged is the large cost overrun on the National Ignition Facility (NIF). Currently, DOE estimates the total project cost to be about$3.26 billion compared to the original estimate of $2.03 billion. GAO estimates the cost to be $3.9 billion. Theoverrun is due primarily to significantmanagement and technical problems that emerged during NIF construction. (1) DOE has not amended its FY2001 budget request for NIF, which was $74millionfor construction plus about $85 million in related costs. With the FY2000 appropriations, Congress had directedDOE to provide a new cost baseline by June 1,2000, or provide an estimate of termination costs. The House noted DOE's failure to meet the deadline, and statedthat it would reserve judgment about the NIFproject until September. In the meantime it approved funding the original DOE request for NIF for FY2001.

The Senate bill included an amendment that would cap funding for NIF at $74.1 million until the results of a study by the National Academy of Sciences on theproject was delivered. The study was to be completed by September 1, 2001, and would, among other things,examine the contribution of NIF to the StockpileStewardship program (SSP) and determine whether existing technical problems are likely to add to the project's costand whether a smaller version of NIF wouldsuffice.

In conference, the funding of $199 million for NIF for FY2001 was agreed to. Of this amount, $65 million would come from funds transferred from otherweapons programs and $134.1 million would be in new appropriations. The final appropriations bill limits theamount available to DOE for NIF to $130 millionat the start of FY2001, releasing the remaining funds after March 31, 2001 and only after certification by the NNSAthat several conditions have been met. Theseconditions include, among other things, a review of alternative construction options; certification that projectmilestones, schedule and costs are being met;completion of a study on whether a full-scale NIF is needed to meet the goals of the SSP; and a five-year plan forthe SSP that describes how NIF is to be paid forin the out years. In the meantime, DOE completed the new baseline on September 15, 2000, and now estimates thetotal NIF project cost at $3.45 billion.

Another issue raised by the House concerned the amount and use of Laboratory Directed Research and Development (LDRD) funds. For FY2000, the Congresshad reduced the LDRD funding level to 4% of funds appropriated for labs from 6%. DOE requested restoring thelevel to 6% for FY2001, but the House retainedthat 4% level and further directed DOE to submit a specific request for these funds within each program in futurebudget submissions. In an amendment adoptedon the floor, the Senate approved a level of 8% and included funds from the Environmental Management programs. The conferees adopted a level of 6% forLDRD for the laboratories and 2% for the weapons production plants. The House requirement that DOE producea financial accounting report of these funds wasalso adopted.

Nonproliferation and National Security Programs. DOE's nonproliferation and national security programsprovide technical capabilities to support U.S. efforts to prevent, detect, and counter the spread of nuclear weaponsworldwide. Also included are CooperativeThreat Reduction programs to reduce nuclear, chemical, and biological weapon dangers in Russia and othercountries of the former Soviet Union, and armscontrol treaty verification programs. Some intelligence programs are also included. These nonproliferation andnational security programs are to be included inthe newly established National Nuclear Security Administration (NNSA). Some of these activities are also fundedin the Department of Defense. (See CRSreport RL30505: Appropriations for FY2001: Defense.)

The Administration's FY2001 request for these programs was $865.6 million, an increase of $36.5 million over FY2000. The House approved $861.5 millionfor DOE nuclear nonproliferation programs in the Energy and Water appropriations bill for FY2001. The Senatebill funded the activity at $909.0 million, and thefinal bill appropriated $874.2 million.

The FY2001 request for nonproliferation and national security programs included $100 million for a new long-term nonproliferation program with Russia. Thenew program, part of the Administration's Expanded Threat Reduction Initiative, is the result of several years ofnegotiations aimed at ending Russia's continuing production of plutonium that can be used to make nuclear weapons. The funds would be used to store Russiannuclear waste instead of reprocessing it to recoverplutonium, and to accelerate efforts to improve the safety and security of nuclear materials in Russia. The Houseand Senate bills funded some of these activities,but included the funding in existing programs rather than as a new initiative. The final bill continued this pattern.

Environmental Management. DOE's Environmental Management Program (EM) is responsible for cleaning upenvironmental contamination and disposing of radioactive waste at DOE nuclear sites. The FY2001 enacted levelfor the program is $6.4 billion, nearly the fullrequest, excluding the Uranium Enrichment Decontamination and Decommissioning Fund. The House had voteda $300 million reduction from the budgetrequest, and the Senate had cut about $100 million.

The enacted measure cuts all but $65 million of the $539 million request for the "privatization" of major DOE waste management projects, primarily a project tosolidify high-level radioactive waste at Hanford, Washington. Because DOE decided in spring 2000 that theHanford project would not be "privatized" after all,the conferees transferred $377 million from the privatization account to the Office of River Protection at Hanford,where the waste solidification effort will bemanaged under a more routine DOE contract. The conferees also approved a rescission of $97 million that hadpreviously been appropriated for the contract.

The FY2001 EM budget request was based on the program's accelerated cleanup strategy, which attempts to maximize the number of sites that can be completelycleaned up by the end of FY2006. DOE managers contend that substantial long-term savings can be gained byfocusing on completing work at those sites,allowing the earliest possible termination of infrastructure costs. Major sites scheduled for shutdown during thatperiod are included in the "defense facilitiesclosure projects" account, for which $1.1 billion is included in the enacted bill, the same as the Administrationrequest. The largest facilities under that accountare the Rocky Flats site in Colorado and the Fernald site in Ohio. Another $981.5 million is provided for"site/project completion," about $65 million above therequest, for cleanup activities to be finished by 2006 at DOE sites that will remain in operation.

Despite the 2006 cleanup goal, the bulk of EM's funding is in the "post-2006 completion" account, including the Office of River Protection at Hanford. Thisaccount includes cleanup projects that are expected to continue sometime after 2006. The FY2001 appropriationsact provides $3.46 billion for post-2006completion projects, including the $377 million transfer for the Hanford waste solidification project from theprivatization account. The Administration hadsought $2.97 billion.

The Hanford waste project, called the Tank Waste Remediation System (TWRS), consists of a pilot vitrification plant that would turn liquid high-level waste intoradioactive glass logs for eventual disposal. The $450 million sought by DOE for TWRS was by far the largest itemin EM's FY2001 privatization fundingrequest. TWRS suffered a severe setback in spring 2000 after contractor BNFL Inc. announced that costs wouldtotal $15.2 billion, more than twice thepreviously estimated level. DOE announced in May 2000 that it would select a new contractor and switch totraditional financing methods for the project. TheHouse had cut DOE's FY2001 appropriations request for TWRS to $194 million, and the Senate had voted $259million.

Another major privatized project is a facility to treat "mixed" radioactive and hazardous waste at the Idaho National Engineering and Environmental Laboratory,for which $65 million was requested and included in the enacted bill. The Idaho project, the Advanced MixedWaste Treatment Project, is opposed by someresidents of Wyoming who are concerned about radioactivity from a planned incinerator. In response to thatopposition, Energy Secretary Bill Richardson haltedfurther work on the incinerator on March 27, 2000, and established a panel to recommend alternatives. However,the construction of the rest of the treatmentproject is to proceed.

The EM privatization effort is intended to reduce costs by increasing competition for cleanup work and shifting a portion of project risks from the federalgovernment to contractors. Profits to contractors would depend on their success in meeting project schedules andholding down costs; potentially, profits could besubstantially higher or lower than under traditional DOE contracting arrangements.

In a typical non-privatized DOE project, a contractor would be hired to build and operate a facility with government funds. DOE would approve and pay all thecontractor's costs, and then award the contractor a profit based on performance. Under the privatization initiative,a contractor would be expected to raise almostall funding for necessary facilities and equipment for a project. The contractor would recover that investment andearn a profit by charging previously negotiatedfees to DOE for providing services under the contract, such as solidification of radioactive waste.

With a privatized project, the contractor could earn higher profits by reducing costs, but the contractor could lose money if project costs were higher than expectedor the required services were not delivered. If DOE cancelled the project, the federal government would repay thecontractor's expenses to that date. To coverthat contingency, DOE needs enough funding to be appropriated as construction proceeds. If the project were tobegin operating as planned, the accumulatedappropriations would be used to pay for waste treatment under the contract. In the case of the Hanford TWRSproject, however, DOE concluded that the risksinvolved would cause the private sector to charge excessive prices to the government, negating the potential costsavings.

DOE's $295 million request for decontamination and decommissioning of uranium enrichment plants and mill sites would have provided a 21% boost over theFY2000 appropriation, and the final bill provided a further increase to $345 million. Much of DOE's proposedincrease was targeted toward environmentalcleanup activities at DOE's uranium enrichment plants at Paducah, Kentucky, and Portsmouth, Ohio, which arecurrently leased to a private firm. Recentcontroversy has focused on environmental hazards posed by the plants, particularly contamination resulting fromthe past enrichment of reprocessed uranium atPaducah. The enacted measure provides an additional $42 million above the request for reimbursing the miningindustry for cleaning up uranium and thoriummill waste. The House had voted to cut the request to $260 million because of "severe funding constraints,"according to the Appropriations Committee report,while the Senate had approved $298 million.

Civilian Nuclear Waste. The enacted bill provides up to $401million for the civilian nuclear waste program inFY2001 - nearly $30 million below the budget request but a $50 million increase over the FY2000 level. The Househad voted to provide $413 million, while theSenate had voted $351 million. As required by the Nuclear Waste Policy Act, DOE is studying Yucca Mountain,Nevada, as the site for a national wasterepository, currently scheduled to open in 2010. A final Environmental Impact Statement for the proposed YuccaMountain repository is to be completed inFY2001. DOE contends that increased funding will be needed to prepare a site recommendation report for thePresident in FY2001, and to work on a licenseapplication to be sent to the Nuclear Regulatory Commission (NRC) in 2002, but the House AppropriationsCommittee report contended that DOE could meet itsobjectives with a smaller increase.

Funding for the program comes from two sources. Under the FY2001 budget request, $318.6 million was to be provided from the Nuclear Waste Fund, whichconsists of fees paid by nuclear utilities, and $112 million from the defense nuclear waste disposal account, whichpays for disposal of high-level waste generatedby the nuclear weapons program. The House voted to appropriate $213 million from the Nuclear Waste Fund and$200 million for the defense disposal account. The House also voted to rescind $85 million appropriated in FY1986 for interim nuclear waste storage - fundingthat was contingent on the passage of legislationthat was vetoed by the President. The Senate approved $292 million from the defense disposal account and $59million from the Nuclear Waste Fund, and alsoincluded the rescission of $85 million for interim storage. The final act provides $191 million from the NuclearWaste Fund and $200 million from the defenseaccount. It also rescinds $75 million from the previously appropriated $85 million for interim storage, andauthorizes DOE to use the remaining $10 million if itis needed to complete the Yucca Mountain site recommendation report on time, for a total of $401 million.

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, upset over DOE's failure to meet the1998 disposal deadline, have won two federalcourt decisions upholding the Department's obligation to meet the deadline and to compensate utilities for anyresulting damages. Utilities have also won severalcases in the U.S. Court of Federal Claims, although specific damages have not yet been determined. In August2000, a U.S. appeals court ruled that utilities couldsue DOE for damages without first pursuing administrative remedies.

Power Marketing Administrations. DOE's Power Marketing Administrations (PMAs) developed out of theconstruction of dams and multi-purpose water projects during the 1930s that are operated by the Bureau ofReclamation and the Army Corps of Engineers. Theoriginal intention behind these projects was conservation and management of water resources, including irrigation,flood control, recreation and other objectives. However, many of these facilities generated electricity for project needs. The PMAs were established to market theexcess power; they are the Bonneville PowerAdministration (BPA), Southeastern Power Administration (SEPA), Southwestern Power 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 generatingfacilities, but they generally do own transmission facilities, except for Southeastern. The PMAs are responsible forcovering their expenses and repaying debt andthe federal investment 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. The future of the remainingPMAs may rest on decisions yet to be made about the treatment of public power in the broader context of electricutility restructuring.

BPA receives no annual appropriation. The Administration's request for the other three PMAs for FY2001 was $199.6 million, a reduction of 25% from theFY2000 appropriation. The savings stemmed from the Administration's proposal that, beginning in FY2000,customers of SEPA, WAPA, and SWPA would beresponsible for making their own power purchases and transmission arrangements from any suppliers other thanthe PMA to satisfy their needs. Under thePurchase Power and Wheeling Program (PPW), the PMAs have purchased electricity and transmission capability,which is repaid by PMA customers, tosupplement federal generation. The premise behind the proposed elimination of the PPW program was thatderegulation should make it less expensive and lesscomplicated for PMA customers to make these arrangements. Another possible reason is that the moneyappropriated to the PMAs under PPW is repaid to theTreasury rather than to DOE. This means that the PPW appropriation is fully scored against the caps ondiscretionary domestic spending with which DOE mustcomply. Both the House and the Senate kept close to the Administration's proposed funding; the final billappropriated $200.7 million for the three PMAs.

Title IV: Independent Agencies

Independent agencies that receive funding from the Energy and Water Development bill include the NuclearRegulatory Commission (NRC), the AppalachianRegional Commission (ARC), and the Denali Commission. The House voted not to fund the Denali Commissionfor FY2001 or the proposed Delta RegionalAuthority. However, the Senate voted $20 million for the Delta Regional Authority and $30 million for the DenaliCommission, and that funding survived in thefinal bill.

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

*Includes appropriations from the Nuclear Waste Fund, and excludes the NRC Inspector General's Office

Key Policy Issues -- Independent Agencies

Nuclear Regulatory Commission. The final bill includes the full request by the Nuclear Regulatory Commission(NRC) for $481.9 million in FY2001, an increase of $16.9 million over FY2000. Major activities conducted byNRC include safety regulation of commercialnuclear reactors, licensing of nuclear waste facilities, and oversight of nuclear materials users. The funding requestprovides an additional $6.2 million for theNRC inspector general's office, which the enacted measure cuts to $5.5 million. Both the House and Senate hadtaken the same action.

The House and Senate Appropriations Committees sharply criticized NRC in 1998 for allegedly failing to overhaul its regulatory system in line withimprovements in nuclear industry safety. The committees contended, among other problems, that NRC's regionaloffices were inconsistent with one another, thatNRC was inappropriately interfering with nuclear plant management, and that numerous NRC review processeswere outdated and unnecessary. But the panelspraised NRC for making improvements during the FY2000 budget cycle, and the House Appropriations Committeecontinued the positive tone in its FY2001report.

For the past decade, NRC's budget has been offset 100% by fees on nuclear power plants and other licensed activities, including the DOE nuclear waste program. The nuclear power industry has long contended that the existing fee structure requires nuclear reactor owners to payfor a number of NRC programs, such asforeign nuclear safety efforts, from which they do not directly benefit. To account for that concern, the final billincludes an NRC proposal to phase down theagency's fee recovery to 90% during the next 5 years - two percentage points per year. The Senate had approveda similar phasedown plan.

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 Restructuring Issues

CRS Issue Brief IB10036. Restructuring DOE and Its Laboratories: Issues in the 106th Congress.

CRS Issue Brief IB10019. Western Water Issues .

CRS Reports

CRS Report RL30307(pdf) . Department of Energy Programs: Programs and Reorganization Proposals .

CRS Report 97-464. The National Ignition Facility and Stockpile Stewardship .

CRS Report 96-212. Civilian Nuclear Spent Fuel Temporary Storage Options .

CRS Report RL30445. Department of Energy Research and Development Budget for FY2001: Description and Analysis .