Appropriations for FY1999: Energy and Water Development
Released: 1998-10-27T00:00:00

Most Recent Developments

The President submitted his budget for FY1999 on February 2, 1998. In it was $21.7 billion for energyand water development programs. The request was larger than the FY1998 appropriation of $21.2 billion. The Senate Appropriations Committee reported out itsfunding levels for energy and water programs onJune 5, 1998 ( S. 2138 , S.Rept. 105-206 ). The committee approved funding of nearly $21.4 billion forFY1999. The House Appropriations Committeereported its version on June 16, 1998 ( H.R. 4060 , H.Rept. 105-581 ); it would fund energy and waterprograms at $21.1 billion for FY1999. Thefigures above do not include scorekeeping adjustments. The Senate approved S. 2138 for $21.4 billion onJune 18,1998 by a vote of 98-1. A flooramendment added $70 million to the solar and renewable energy program and offset the increase by reductions inother non- defense energy programs. TheHouse approved its version of the bill ( H.R. 4060 ) by a vote of 405-4 on June 22, 1998 for $21.1 billion. Theconference agreement, for $21.2billion, was reported out ( H.Rept. 105-749 ) on September 25, 1998, approved by the House on September 28, 1998,and approved by the Senate one day later,September 29, 1998. The President signed the bill ( P.L. 105-245 ) October 7, 1998.

The FY1999 Omnibus Appropriations Act ( P.L. 105-277 ) added money to several programs funded inthe Energy and Water Appropriations bill, including theCorps of Engineers, DOE's renewable energy program and its defense activities program, and TVA. This additionalfunding is not incorporated in the budgettables that follow, but significant changes are noted in the text under Key Policy Issues.

Status

Table 1. Status of Energy and Water Appropriations,FY1999

Table 2. Energy and Water Development Appropriations, FY1992 to FY1999 (budget authority inbillions of current dollars) *

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

This table includes FY1999 budget request figures and budget totals for appropriations enacted for FY1992 to FY1998. The tables for Titles I, II and III providebudget details for FY1997 - FY1999.

Title I: Corps of Engineers

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

Key Policy Issues

Funding for the Corps of Engineers civil programs is often a contentious issue between the Administration and the Congress, with appropriations typically endingup significantly higher than the amount requested. For FY1998, for example, the Congress added $270 million(7%) to the $3.63 billion requested by theAdministration.

The FY1999 request of $3.22 billion is more than $800 million less than the amount appropriated last year. Most of that reduction is in the Corps' constructionbudget, which was cut almost in half compared with FY1998 appropriations. As a result, construction funding hasbeen a major issue in the Corps' appropriationlegislation for FY1999. For example, both the House and Senate appropriations Committees described theAdministration's request for a limited constructionbudget as "irresponsible" ( H.Rept. 105-581 , H.R. 4060 ; and S.Rept. 105-206 , S. 2138 ).

The House-Senate conference agreement included a total of $3.86 billion for the Corps for FY1999, $638 million more than requested. The conference committeerecommendation was $106 million less than recommended by the House and $72 million more than recommendedby the Senate. The recommended constructionbudget was $1.43 billion -- nearly double what was requested by the Administration.

The House originally supported a substantial decrease in funding for Columbia River fish mitigation activities on the grounds that previous efforts have shown "noclear evidence" of success. The Administration had requested $117 million for FY1999. The House recommended$7.8 million, limiting expenditures to thecompletion of the John Day drawdown study and the lower Snake River feasibility study; the Senate recommended$95 million. The conference committee hasrecommended $60 million for Columbia River fish mitigation. Funds are to be used for phase I of the John DayReservoir drawdown study, and continuation ofthe Snake River feasibility study and ongoing construction.

The conference agreement also included $5 million for construction of an emergency outlet from Devils Lake, North Dakota; however, it deletes Senate languagedescribing the appropriation as an emergency requirement. The Senate had recommended up to $8 million for theproject.

The FY1999 Omnibus Appropriations Act ( P.L. 105-277 ) added funding to a number of Corps projects, including an additional $35 million for Columbia Riverfish mitigation. It also added a prohibition on the use of any funds to study or implement a plan to drain LakePowell or decommission the Glen Canyon Dam.

Title II: Department of the Interior

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

* Includes funds available for Utah Reclamation Mitigation and Conservation Commission activities and $5 million for the contribution authorized by ï¿½402(b)(2)of the Central Utah Project Completion Act ( P.L. 102-675 ).

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.

** The Office of Management and Budget and the Congressional Budget Office disagree as to whether thereis an offset for this fund.

Background

Most of the large dams and water diversion structures in the West were built by, or with the assistance of, the Bureau of Reclamation (Bureau). Where the Corpshas built hundreds of flood control and navigation projects, the Bureau's mission was to develop water supplies andto reclaim arid lands in the West, primarily forirrigation. Today, the Bureau manages more than 600 dams in 17 western states, providing water to approximately10 million acres of farmland and 31 millionpeople.

The Bureau has undergone many changes in the last 15 years, turning from largely a dam construction agency to a self-described water resource managementagency. 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 somewhat limited in how it can address new demands and new priorities because of numerous statutes, compacts, and existingcontracts, which together govern the delivery of water to project users. Consequently, any proposal to changeBureau water allocation or water managementpolicies often becomes difficult to implement and extremely controversial.

Key Policy Issues

The Administration requested an appropriation of $852 million for FY1999 (net current budget authority), approximately $13 million more than enacted forFY1998. The Administration has again requested $143.3 million for the California Bay-Delta EcosystemRestoration program (CALFED). Although funding forthe CALFED program has been requested within the Bureau's budget, the appropriation will be allocated amongseveral federal agencies. It is expected that themajority of funding will go to the Bureau and the Corps.

The FY1999 request included no new money for the Animas-La Plata project, a controversial water supply project in southwestern Colorado. Rather, theproposed budget would allocate $3 million in existing appropriations authority for ongoing preconstruction workwhile changes to the project's constructionauthorization are under consideration.

The House-Senate conference agreement included $780.5 million in net current authority for the Bureau for FY1999 -- $71.5 million less than requested, and$58.7 million less than enacted for FY1998. The Senate had recommended an appropriation of $837.1 million; theHouse had recommended an appropriation of$762.8 million.

The conferees agreed upon $75 million for the CALFED program, which is $68.3 million less than requested. On a related matter, the conferees direct theDepartment of the Interior to provide as soon as possible an implementation plan for the Anadromous FishRestoration Plan required under the Central ValleyProject Improvement Act (CVPIA, P.L. 102-575 , Title 34).

The conference agreement included $3 million for resource management and development for the Animas-La Plata project, the same amount as requested.

The Senate Appropriations Committee report took issue with several other items within the Bureau's budget, including: 1) recommending a reduction of $3.5million in fish and wildlife coordination, mitigation, and native species activities associated with the Central Arizona Project; 2) directing the Department of theInterior to keep constant budget levels for the Grand Canyon Monitoring and Research Center to avoid unauthorizedexpansion of the program; 3) prohibiting theBureau from using funds for evaluations of current practices, with an aim towards finding ways to managecompeting demands for water; and 4) directing theagency to explore ways to consolidate ecosystem restoration activities carried out under the CVPIA.

The House Appropriations Committee report included language encouraging the Bureau to better coordinate ecosystem activities carried out through the CALFEDprogram and under CVPIA. The House Committee also admonished the Bureau for its declining focus on waterresources infrastructure and transformation to a"water resources management and protection" agency; however, it also notes that the West has largely beenreclaimed and that "serious consideration is due thequestion of the Bureau's ... role in this fully developed region ...."

Title III: Department of Energy

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

*Senate bill increased solar and renewable funding by $70 million and decreased other programs by 1.6%. Not all line item figures reflect the 1.6% reduction.

Key Policy Issues

Research and Development Programs. For FY1999, DOE requested $6.78 billion for civilian and defense R&Dactivities, 10.8% above the FY1998 level. For civilian R&D programs, the request was $3.49 billion comparedwith $3.10 billion for FY1998, and for defenseR&D (nuclear weapons) programs, the request was $3.28 billion compared with $3.02 billion for FY1998.

The Senate approved $6.58 billion for R&D, 3% below the request but 8.7% above FY1998. The House approved $6.51 billion for R&D, 3.6% below the requestbut 6.4% above FY1998. The Conference agreed upon $6.55 billion, 3.4% below the request but 8.1% aboveFY1998. Of that amount, the conferees directed thatabout $93.7 million should come from prior year funds. The actions suggest strong congressional support for basicresearch.

Energy Resource R&D. For programs under this heading, DOE requested a 17.5% increase for FY1999 comparedto the FY1998 appropriation. DOE made this program a key element in the Administration's Climate ChangeTechnology Initiative (CCTI) program. During theappropriations process, Congress expressed concern about whether support of the Initiative implied a commitmentto the Kyoto accord.

The Senate approved $415.3 million for this program, including the $47.9 million funded under the Basic Energy Sciences (BES) program. An amendmentapproved on the Senate floor added $69.8 million to the Appropriations Committee recommendation. Theappropriation was about 5% below the request butabout 20% above FY1998.

The House approved $351.6 million, including the $47.9 million funded by BES. The Committee expressed concern about the CCTI technology choices andurged DOE to focus more on long-term basic research rather than trying to commercialize technologies not yet readyfor the market.

The conference approved $365.9 million including the $47.9 million funded by BES. Most of the funds added by a Senate floor amendment were not agreed to bythe conferees.

The FY1999 Omnibus Appropriations Act ( P.L. 105-277 ) added $60 million to DOE's renewable energy programs.

Nuclear Energy. For nuclear energy programs -- including research and development, closing of surplus facilities,uranium programs, and international nuclear reactor safety -- the conference report provides $284 million, about$40 million below the DOE request. Theconferees provided $19 million for a new DOE program to support innovative nuclear energy research projects (the"nuclear energy research initiative"), butnothing for a proposed program to improve the economic competitiveness of existing nuclear power plants ("nuclearenergy plant optimization").

DOE's nuclear energy request, including the nuclear power initiatives, had been approved essentially intact by the Senate. However, the House had cut theAdministration request by nearly $100 million, including a reduction of the nuclear energy research initiative to $5million and rejection of the nuclear plantoptimization program.

DOE justified its efforts to encourage the continued operation of commercial U.S. nuclear plants as an important element in meeting national goals for reducingcarbon dioxide emissions, an argument strongly endorsed by the Senate panel. Because nuclear plants directly emitno carbon dioxide, the United States couldreduce its annual emissions of carbon by up to 47 million metric tons if nuclear plants could be operated longer thancurrently anticipated, according to the DOEbudget justification. Opponents have criticized the nuclear energy research proposals as providing wastefulsubsidies to a failing industry. A similar nuclearresearch program proposed by DOE last year was rejected by Congress.

Funding for "electrometallurgical treatment" of DOE spent fuel has also drawn controversy. The conferees provided $45 million for the technology in FY1999. In that treatment process, metal fuel is melted and highly radioactive isotopes are electrically separated fromuranium and plutonium. DOE contends that suchtreatment may be the best way to render certain types of spent fuel -- particularly from the closed ExperimentalBreeder Reactor II in Idaho -- safe for long-termstorage and disposal.

Opponents contend that such treatment is unnecessary and that the process could be used for separating plutonium to make nuclear weapons. They note that theprocess uses much of the same technology and equipment developed for the plutonium-fueled Integral Fast Reactor,or Advanced Liquid Metal Reactor, whichwas canceled by Congress in 1993 partly because of concerns about nuclear weapons proliferation.

The conferees provided $3 million from the fissile materials control and disposition program for a joint U.S.-Russian project to develop an advanced reactortechnology -- the gas-turbine modular helium reactor -- to destroy weapons plutonium. Russia would have toprovide matching funds or equivalent in-kindcontributions.

Science. DOE asked for an 11.1% increase for the basic research programs making up the science category. Thelargest increase, $167.6 million or 25.1%, was for the Basic Energy Sciences program. Most of that increase, $130million, would be to begin construction of thespallation neutron source (SNS), which is designed to provide neutrons for use in research ranging from geneticsto advanced materials. The facility is to cost$1.3 billion when completed in 2005. The High Energy Physics program requested a $30 million increase -- to $65million -- for the U.S. contribution to thelarge hadron collider project at the Center for European Nuclear Research (CERN). Overall the HEP program askedfor an $11 million increase.

The Senate appropriated $2.67 billion for the DOE for the science programs including the entire request for the SNS project for FY1999. This amount includesthe Fusion Energy Sciences program account, which the Senate moved from the Energy Supply R&D accountto the Science account. It also includes a 1.585%cut imposed by the amendment to help offset increased funding for solar and renewable energy R&D. Finally,another amendment adopted by the Senate added$7 million to the science total recommended by the Senate Appropriations Committee. The final appropriation wasabout 6% over the FY1998 appropriation.

The House appropriated $2.42 billion, 2.8% below the request, but 5.6% above FY1998. In making the recommendation, the Committee noted its strong supportfor DOE basic research programs. The House, while supporting the SNS, cited budget constraints in approving$100 million for FY1999 compared to the $157million request. The House also declined to fund the request for DOE's portion of the Next Generation Internetinitiative.

The conference agreed to $2.70 billion, 2.5% below the request but 7.1% above FY1998. The large increase above the House-approved amount was due primarilyto the transfer of the Fusion Energy Science program from the Energy Supply R&D programs to the Scienceprograms. The conferees approved $130 million forthe SNS, $27 million below the request but above the House approved amount. In the fusion budget, the confereesincluded funds to complete R&D on theInternational Thermonuclear Reactor (ITER) project, but directed DOE not to sign an extension of the ITERagreement without written consent of Congress. Theconferees also approved the House mark for the high energy and nuclear physics programs, which would providea small increase above the request. Theconferees did not provide any funds for DOE's portion of the Administration's Next Generation Internet initiative.

National Security R&D. DOE requested an 11.5% increasefor Stockpile Stewardship and Maintenance (SSM)over FY1998. The Stockpile Stewardship program, which is charged with developing the scientific basis formaintaining the safety, reliability, and performanceof the existing nuclear weapons stockpile in the absence of nuclear testing, requested a 17.8% increase over FY1998,most of which would go to the acceleratedstrategic computing initiative (ASCI) and continued construction of the national ignition facility (NIF). The ASCIprogram is designed to develop computerfacilities and codes that are capable of simulating nuclear weapon explosions including changes in the explosioncharacteristics resulting from aging of thestockpile.

The Senate approved a reduction of $25 million from the request for the Stockpile Stewardship program, all of which would be in the ASCI account. The Senateexpressed concern that the ASCI effort is growing faster than justified and that such growth may adversely affectother parts of the program.

The House supported a reduction of $65 million for the Stockpile Stewardship program from the request. The House committee expressed concern about themanagement of the program and existence of extraneous activities. The reduction, it stated, could be absorbed bygreater efficiencies and managementimprovements. The House also directed that $305 million of prior year carryover balances be used for the FY1998appropriation.

The conferees agreed on $2.14 billion for the Stockpile Stewardship program, half-way between the House and Senate marks. The reduction below the request,$40 million, was directed at the ASCI program and construction of new facilities. The conferees directed DOE toundertake an independent cost assessment ofthe latter projects before expending any FY1999 funds on them.

Environmental Management. DOE's Environmental Management Program (EM) is responsible for cleaning upenvironmental contamination and disposing of radioactive waste at DOE nuclear sites. The conferees voted toprovide $5.58 billion for EM activities atdefense-related sites, and $431 million for non-defense sites, both about the same as the DOE request. Thedefense-related funding includes $228 million for the"privatization" of DOE waste management projects, such as the solidification of high-level radioactive waste atHanford, Washington -- less than half the DOErequest.

The FY1999 EM budget request was the first to reflect the program's new accelerated cleanup strategy, which attempts to maximize the number of sites that canbe completely cleaned up by 2006. 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. Based on that strategy, the budget request wasdivided into three major segments:

Site closure. Under the conference agreement, this account provides $1 billion for cleanup of sites that can be completely closed by 2006,including Rocky Flats, Colorado; Fernald, Ohio; and Grand Junction, Colorado.

Site/project completion. The $1 billion in this account was provided for individual cleanup projects that can be completed by 2006, but arelocated at DOE sites that will continue operating after 2006.

Post-2006 completion. Despite the accelerated cleanup plan, several large EM projects are projected to continue well after 2006. As aresult, this is the largest EM funding area, totaling $2.74 billion. Many of the large waste management projectsincluded in the separate privatization fundingrequest would also continue operating after 2006.

The accelerated cleanup plan has drawn opposition from some environmental groups because of concerns that its focus on 2006 might result in insufficientcleanups. In the program's FY1999 budget justification, DOE maintained that the requested funding would besufficient to meet environmental requirements atmost sites, although it added, "At some sites, there is a small gap between compliance requirements and availablefunding. EM therefore is striving for additionalefficiencies and other measures to close this gap."

Two-thirds of the EM privatization funding request would go for Phase 1 of the Hanford Tank Waste Remediation System, consisting of a pilot vitrification plantthat would turn liquid high-level waste into radioactive glass logs for eventual disposal. Other major privatizedprojects include a project to treat "mixed"radioactive and hazardous waste at the Idaho National Engineering and Environmental Laboratory, and wastetreatment, storage, and disposal facilities at OakRidge, Tennessee.

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 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. The contractorcould earn higher profits by reducing costs, butthe contractor could lose money if project costs were higher than expected or the required services were notdelivered.

DOE requested more than $1 billion last year for privatized projects, but Congress provided only $200 million. The strong congressional resistance to the requeststemmed largely from concerns about providing such a large amount of up-front funding for contracts that had notyet been fully negotiated in many cases. Thecontracts are to spell out such crucial details as how much risk for project cost overruns and other problems thatDOE would continue to bear.

In response to such criticism, DOE promised in the FY1999 budget justification to submit proposed privatization contracts to Congress for review at least 30 daysbefore they are signed. Contract information submitted for such reviews is to include anticipated costs and fees,performance specifications, activities to becarried out, project schedules, goods or services to be delivered, and estimated cost savings. DOE also promisedto establish its own review teams to examinerequests for proposals and contracts for privatization projects, to procure and disseminate independent cost-savingsestimates, to increase training for DOEoversight of privatized contracts, and to assure that contractors hire sufficiently experienced personnel. Nevertheless, the conferees cut the DOE privatizationrequest by more than half.

Civilian Nuclear Waste Disposal. The conference report provides $358 million in FY1999 for developing adisposal site for highly radioactive spent fuel from nuclear power plants and weapons-related high-level waste --about the same as the FY1998 level. The Senatehad voted to cut the request by $5 million, while the House, citing "severe budget constraints" held the program tolevel funding.

The FY1999 budget request was issued shortly after DOE missed a statutory deadline of January 31, 1998, to begin taking waste from nuclear plant sites. TheDepartment currently expects to begin receiving waste at an underground disposal facility at Yucca Mountain,Nevada, by 2010 if the site is found suitable. Nuclear utilities and state utility regulators, upset over DOE's failure to meet the 1998 disposal deadline, have wontwo federal court decisions upholding theDepartment's obligation to meet the deadline and to compensate utilities for any resulting damages.

The House and Senate passed similar bills last year ( S. 104 , H.R. 1270 ) to require DOE to build an "interim" waste storage facility nearYucca Mountain that could begin operating within the next few years. The Clinton Administration has threatenedto veto the legislation, contending that YuccaMountain should not be selected for waste storage until the site has been determined to be acceptable for permanentdisposal. DOE plans to complete a "viabilityassessment" of the site in 1998 and, if the site is found suitable, submit a license application to the NuclearRegulatory Commission in 2002. Passage of thenuclear waste legislation in the 105th Congress was blocked by the Senate's rejection of a cloture motion on H.R. 1270 on June 2, 1998.

DOE contends that under current law it has no authority to take waste for temporary storage, so the FY1999 budget request did not include funding for near-termwaste acceptance activities, despite the recent court rulings on the missed disposal deadline. Instead, storage andtransportation funds were requested only for"long-lead time activities that must precede removal of spent nuclear fuel (SNF) from reactor sites once a Federalfacility becomes available."

The conferees directed that $165 million of the nuclear waste program's funding come from the Nuclear Waste Fund, which holds fees assessed on nuclear powergeneration to pay for spent fuel disposal. Another $189 million would be appropriated from general revenues, under"Defense Nuclear Waste Disposal," to coverdisposal costs for high-level radioactive waste from nuclear weapons production. The remaining $4 million wouldcome from general revenues to pay for researchon treating high-level radioactive waste with advanced particle accelerators. Such treatment would be intended totransmute long-lived radioactive waste intoshorter-lived isotopes.

The conference agreement rejected all but $250,000 of DOE's nearly $5 million request for funds for the State of Nevada to monitor the Yucca Mountain Project. Congress denied all such funding for FY1998 because of concerns that the state was using it to fight the wasteprogram. The conferees provided $5.5 million tobe disbursed directly to local governments near Yucca Mountain to monitor the project.

National Security Programs -- Russian Plutonium and Uranium. The FY1999 Omnibus Appropriations Act( P.L. 105-277 ) added $525 million for DOE's "other defense activities" to address the issue of uranium andplutonium from excess Russian nuclear weapons. Theuranium is to be purchased for DOE stockpiles, while the plutonium funding would help pay for facilities in Russiato begin converting plutonium componentsfrom warheads into fuel for nuclear reactors.

The bill provides $325 million for purchasing natural uranium that is associated with ongoing purchases of highly enriched uranium (HEU) from Russianwarheads. Under the HEU agreement, the U.S. Enrichment Corporation (USEC) buys the enriched Russian uraniumand gives back an equivalent amount ofnatural (unenriched) uranium, which the Russians can then sell. However, the Russians have complained that theprice for natural uranium has been depressed byUSEC's plans to sell large amounts of natural uranium on the world market. USEC, formerly a governmentcorporation, received that uranium from DOEstockpiles as part of its recent privatization.

To keep the Russians from backing out of HEU agreement, the new funding would allow DOE to purchase the natural uranium associated with Russia's 1997 and1998 deliveries of enriched uranium deliveries to USEC. However, the DOE natural uranium purchases cannot bemade until Russia reaches a long-termagreement for the commercial sale of natural uranium associated with all enriched uranium deliveries after 1998.

Regarding Russian plutonium, the bill provides $200 million to begin implementing a U.S.-Russian accord on disposition of plutonium from surplus nuclearweapons. Presidents Clinton and Yeltsin signed a joint statement of principles on the issue in September 1998, withthe goal of reaching a detailed bilateralagreement by the end of the year. The funding is expected to help Russia design and construct facilities to convertplutonium weapons components intomixed-oxide fuel for nuclear reactors, but the details of the program will not be known until the U.S.-Russianagreement is finalized. As a result, the billwithholds the plutonium funding until DOE submits a detailed budget justification and receives approval from theHouse and Senate Appropriations Committees.

Title IV: Independent Agencies

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

Key Policy Issues

Tennessee Valley Authority. The Tennessee Valley Authority (TVA) was established as a federal corporation in1933 to bring electricity and development to a region encompassing the entirety of Tennessee, and portions ofKentucky, Virginia, North Carolina, Georgia,Alabama, and Mississippi. The agency's electric power operations are entirely self-supporting and receive noappropriation.

However, TVA is also responsible for certain non-power functions that are intended to further the agency's mission to develop and conserve the region's naturalresources. These include flood control, recreation, navigation, and an Environmental Research Center. Amongthese, TVA operates more than 50 dams andreservoirs and a 170,000 acre recreational area in Kentucky and Tennessee, Land Between the Lakes. Thecongressional appropriation for these programs was$106 million for FY1997, representing 2% of the agency budget.

In January 1997, TVA Chairman Craven Crowell proposed that TVA prepare to become a higher-profile player in a deregulated market for electricity. Crowell'sproposal was that Congress no longer appropriate funds to TVA for non-power activities beginning in FY1999. Aninternal TVA task force would recommendwhich functions would be transferred to other agencies and which would be eliminated. The Administrationproposed a reprogramming of FY1997 fundsappropriated to the Corps of Engineers to jointly study with TVA how the agency's assets and functions should bereassigned to the Corps and other appropriateagencies.

Chairman Crowell's proposal not only stirred up considerable controversy, it also exposed the existence of TVA itself to challenge. While representatives fromthe Tennessee Valley region are averse to any risk to non-power programs, the Chairman's proposal to shednon-power programs, TVA opponents have argued,would be an abrogation of TVA's mission. If the mission is no longer appropriate, the argument extends, neitheris the agency.

The unintended consequence of Chairman Crowell's proposal was that the conferees on the FY1998 Energy and Water Appropriations recommended anappropriation of $70 million for FY1998, but stipulated that TVA would thereafter absorb the entire cost of theseprograms through "internally generated revenuesand savings." Despite the language in the conference report, and pending further consideration of the future of TVAand its non-power programs, theAdministration requested $77 million for TVA non-power programs for FY1999.

The Senate funded TVA at $70 million while the House bill provided no funding. The conferees adhered to the House position and, in addition, provided nofunding for Land Between the Lakes. Additionally, the conferees required that if, in the absence of an appropriation,TVA deemed a rate increase necessary tofund these programs, a report would have to be submitted to Congress assessing whether transferring stewardshipof facilities along the Tennessee River to theArmy Corps of Engineers would alleviate or eliminate the need for a rate increase. The conferees further requiredthat this report be submitted 6 months beforethe rate increase would go into effect.

The FY1999 Omnibus Appropriation Act ( P.L. 105-277 ) restored $50 million to TVA non-power programs. In addition, the Act includes a debt-refinancing planthat would enable TVA to prepay its obligations to the Federal financing Bank without penalty, estimated to savethe agency $100 million in interest paymentsduring each of the next 10 years.

The consequences of this turnaround for TVA when the 106th Congress considers electricity deregulation legislation are difficult to predict. TVA's critics maycontinue to urge that TVA be extensively reorganized as part of any deregulation package. On the other hand,supporters suggest that if TVA takes full advantageof the opportunity to reduce its debt and operates more efficiently, the agency may come under less intense pressurein the next Congress.

Nuclear Regulatory Commission. The conference agreement gives the Nuclear Regulatory Commission (NRC)$470 million for FY 1999, about $20 million below the budget request. Major activities conducted by NRC includeregulation of commercial nuclear reactors,licensing of nuclear waste facilities, and oversight of nuclear materials users. The funding also includes about $5million for the NRC inspector general's office.

The Senate voted to appropriate $466 million to NRC -- $2 million below the FY1998 level. The Senate Energy and Water Development Subcommittee wouldhave reduced the funding by $90 million, a cutback that would have eliminated 700 of NRC's approximately 3,000employees over the next two years. Althoughthe full Committee reversed that cut, its report strongly criticized NRC for allegedly failing to overhaul its regulatorysystem in line with improvements in nuclearindustry safety. The Committee contended, among other problems, that NRC's regional offices were inconsistentwith one another, that NRC was inappropriatelyinterfering with nuclear plant management, and that numerous NRC review processes were outdated andunnecessary.

Slightly lower funding, $463 million, was supported by the House, whose report contained similar criticisms to those of the Senate panel. The House declareditself "strongly supportive" of the Administration's plans for NRC to eventually take over safety regulation of majorDOE nuclear facilities, which currently areregulated by DOE itself. The conferees gave NRC $3.2 million for regulatory reviews of DOE facilities. BothHouse and Senate also provided $4.8 million forthe NRC inspector general's office.

To ensure that NRC's budget would continue to be mostly offset by fees on nuclear power plants and other licensed entities, the conferees included a one-yearextension of the agency's current fee-collection authority. As in the past, DOE would reimburse NRC for oversightof DOE's high-level nuclear waste disposalprogram.

For Additional Reading

CRS Issue Briefs

CRS Issue Brief IB92059. Civilian Nuclear Waste Disposal .

CRS Issue Brief 97031. Renewable Energy: Key to Sustainable Energy Supply?

CRS Issue Brief IB91039. The DOE Fusion Energy Science Program.

CRS Reports

CRS Report 97-54. Department of Energy Programs: History, Status, Options.

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

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

CRS Report 98-256. The Department of Energy FY1999 Research and Development Budget.

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