EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503

July 21, 2000
(Senate)

The President's FY 2001 Budget is based on a balanced approach that maintains fiscal discipline, eliminates the national debt, extends the solvency of Social Security and Medicare, provides for an appropriately sized tax cut, establishes a new voluntary Medicare prescription drug benefit in the context of broader reforms, expands health care coverage to more families, and funds critical investments for our future. An essential element of this approach is ensuring adequate funding for discretionary programs. To this end, the President has proposed discretionary spending limits at levels that we believe are necessary to serve the American people.

Unfortunately, the FY 2001 congressional budget resolution provides inadequate resources for discretionary investments. We need realistic levels of funding for critical government functions that the American people expect their government to perform well, including education, national security, law enforcement, environmental protection, preservation of our global leadership, air safety, food safety, economic assistance for the less fortunate, research and technology, and the administration of Social Security and Medicare. Based on the inadequate budget resolution, this bill fails to address critical needs of the American people.

The Administration appreciates efforts by the Committee to accommodate a number of Presidential priority programs within its 302(b) allocation. However, the bill contains several highly objectionable riders that inappropriately interfere with important Executive Branch efforts, and the bill still inadequately funds certain key domestic priorities. Because of these issues, if this bill were presented to the President in this form, his senior advisors would recommend that he veto it. These concerns and others are discussed below.

Department of Energy

The Administration is concerned with the large shift in the Senate bill from key domestic priorities of the Department of Energy (DOE) to fund Atomic Energy Defense Activities. The bill provides $599 million less than the President's request for DOE's domestic programs and adds $401 million to the President's request for defense activities. The bill would significantly reduce vital programs in science, radioactive waste management, energy research, and other activities. Specific funding issues include:

• Science. The Administration strongly opposes the Committee's severe cut of $281 million to DOE's science programs including facilities utilization, nanotechnology, and scientific computing. Among the most objectionable are the reductions of $99.0 million in basic energy sciences, including a $38 million reduction to Spallation Neutron Source construction and a $23.7 million reduction in funds for the operation of user facilities; a reduction of $42.0 million for advanced scientific computing research; a reduction of $40.0 million in high energy physics; a reduction of $19.6 million in nuclear physics; and a reduction of $20.0 million in fusion energy sciences. These deep cuts to DOE's basic science research programs are short-sighted and will cripple basic research in these disciplines. The reductions undermine our country's basic research, with the costs to be borne by thousands of researchers and students at universities across the country and at Government and private-sector laboratories. We strongly urge that these critical research funds be restored.

• Radioactive Waste Management. The Administration strongly objects to the Committee's mark of $351.2 million for the Radioactive Waste Management Program, $86.3 million (20 percent) below the $437.5 million request. This severe funding reduction would delay the long-awaited Secretarial Site Recommendation for up to a year, and because of resulting personnel reductions, delay submittal of a License Application to the Nuclear Regulatory Commission for several years. In addition, this reduction would further delay the planned date for operation of the repository and further limit the ability of the Department of Energy to meet its contractual obligations to accept spent fuel from utilities. Finally, the consequent delay of repository operations would hinder the Environmental Management Program's cleanup of the nuclear weapons complex and disposal of spent fuel from the Naval Reactors program, potentially affecting defense readiness.

• Solar and Renewable Energy. The Administration appreciates the Committee's support for solar and renewable energy R&D, which is funded at $54 million more than the House-passed bill. We would, however, urge the Senate to fund biofuels and biopower, wind energy, and solar electric technologies at their requested levels, because they are important to energy security and the environment.

• Environmental Management. The Administration appreciates the Senate Committee's support for accelerating cleanup activities at uranium enrichment facilities in Paducah, Kentucky; Portsmouth, Ohio; and, Oak Ridge, Tennessee, in response to recently identified threats to the safety and health of workers, the public, and the environment. However, the Administration urges the Senate to include $10 million, as requested, to initiate cleanup activities at the Moab, Utah site. The requested funding would supplement existing Moab Mill Reclamation Trust and Title X of the Energy Policy Act (Uranium/Thorium Reimbursement Program) resources to ensure that ground water mitigation activities continue, as needed, and allow for initial planning of cleanup and disposal of the tailings.

• Nuclear Energy Research Initiative (NERI). The Administration appreciates the Committee's support for the NERI program, which awards research grants to laboratories, universities, industry, and consortia to address key issues affecting the future of nuclear energy. However, the Administration strongly opposes the $7.5 million in earmarks. These restrictions undermine NERI's goal, as defined by the President's Council of Advisors for Science and Technology (PCAST), as a competitive, peer-reviewed program that funds projects based on merit.

• Advanced Accelerator Applications. The Administration strongly opposes the $60 million provided for advanced accelerator research and development and the creation of a new Office of Advanced Accelerator Applications within the Office of Nuclear Energy, Science and Technology. The Department is already committed to a Commercial Light Water Reactor program that is developing a tritium production system based on highly reliable and technically mature technology. The Administration is strongly opposed to funding increases for the Accelerator Transmutation of Waste (ATW) program until important questions regarding non-proliferation issues, alternative technologies, and ATW's effect are resolved.

• Russian Initiative. The Committee's cut of $70 million to the long-term nonproliferation program for Russia is highly objectionable. There is a unique opportunity to significantly reduce proliferation with this program. The Committee's concerns that the necessary support agreements with the Russians are not in place and that Russia has unresolved issues regarding nuclear cooperation with Iran do not justify eliminating this essential program.

• Office of Inspector General. The Senate Committee funding for the Office of Inspector General is $4 million (12 percent) below the President's request and would severely limit the Office's ability to achieve its mission. The reduction limits the Inspector General's ability to conduct performance audits and reviews, especially in critical areas such as contract reform, security and counterintelligence.

• National Ignition Facility. Congressional support for the National Ignition Facility (NIF) construction project is crucial to the success of the nuclear weapons stockpile stewardship program that maintains our Nation's nuclear deterrent. In June, DOE submitted to Congress an interim certification for the revised cost and schedule baseline for the NIF. DOE intends to submit a final certification by mid-September, 2000, that will include the final total project cost estimate, scope, and schedule baselines for the project. Consistent with the interim revised cost and schedule baseline, DOE modified its budget request to increase construction project funding by $95 million and reconfigure $40 million in operating funding. All of these resources for the NIF are fully offset within the budget request for Weapons Activities. The Senate Committee bill does not include the modified request. Congressional support for the modified NIF request will allow the project to get back on track. The project is an essential research element of our nuclear weapons program to help ensure a safe and reliable nuclear weapons stockpile.

National Nuclear Security Administration

The Administration strongly opposes numerous prohibitions and restraints placed on the Secretary of Energy that would inhibit the Secretary from effectively managing the missions of the Department. In particular, the Administration objects to statutory provisions in the bill relating to the National Nuclear Security Administration (NNSA). Sections 301, 302, 309, 310, 315 and 317 would strip specific authorities away from the Secretary of Energy and vest them with the Administrator of the NNSA, thereby providing the Administrator with the autonomy to grant waivers that deviate from the Federal Acquisition Regulations; approve laboratory funding plans; reorganize the agency functions; and authorize directed research and development activities at defense production plants. Section 314 restricts the Secretary's discretion by setting forth criteria for removal of the NNSA Administrator. Section 316 would preclude DOE from detailing staff with critical technical skills within the Department. This provision is unnecessary, duplicative, and too restrictive -- a prohibition on concurrent service with the NNSA is already included in pending authorizing legislation and has been agreed to by the Administration. These provisions reduce Executive authority and raise concerns regarding the Executive Branch's ability to manage a Cabinet-level agency.

Department of Energy Security Reorganization

In order to improve security at the Department of Energy, the Administration requested a budget-neutral amendment to reorganize all safeguards and security functions, and to fund these activities under the Office of Security and Emergency Operations. We urge the Senate to support this critical proposal to address the current institutional issues associated with ensuring safeguards and security.

Bureau of Reclamation

The Administration strongly objects to provisions included in the Senate bill related to the Middle Rio Grande Project and Fort Sumner Irrigation District in New Mexico. These provisions would severely constrain the Department of the Interior's ability to prevent actions that harm protected species, and would create a dangerous precedent for not enforcing the Endangered Species Act (ESA). The provisions would prohibit steps the Bureau of Reclamation can take to ensure minimum flows are maintained in the Rio Grande and Pecos Rivers to protect two endangered species -- the southwestern willow flycatcher and Rio Grande silvery minnow -- and the threatened Pecos bluntnose shiner. While Federal agencies and other stakeholders continue to develop collaborative, comprehensive recovery strategies for these species, agencies must be able to ensure that adequate flows are maintained in the Rio Grande. Failure to protect the silvery minnow this year could lead to its extinction. In addition, these provisions could potentially increase the burden on other water users to compensate for the ESA exemption provided to specific water districts.

The Administration also strongly objects to a provision that would delay through the next fiscal year any environmental analysis of Central Arizona Project (CAP) water allocations. The proposed delay jeopardizes resolution of Arizona Indian water rights settlements that are under active negotiation. It would also jeopardize the related CAP repayment litigation agreement conditionally reached by the Central Arizona Water Conservation District and the United States on May 9, 2000. Absent the environmental analysis that would be prevented by this rider, water allocation decisions would be precluded. These allocation decisions are conditions to finalizing the settlement of the CAP repayment litigations, as well as resolving outstanding Tribal water rights claims. Thus, passage of the provision would require careful analysis as to whether the parties could now fulfill CAP settlement conditions during the time set forth in the settlement stipulation, as well as a decision on whether the stipulations' termination provisions should be exercised.

The Administration strongly objects to the Senate's decision to deny funding for the California Bay-Delta Restoration Program. This decision could significantly hamper ongoing Federal and State efforts to restore this ecosystem, protect the drinking water for 22 million Californians, and enhance water supply and reliability for over seven million acres of highly productive farmland and growing urban areas across California. After more than five years of work, on June 9th, the Secretary of the Interior and the Governor of California issued a CALFED Bay-Delta "Framework for Action" that proposes a seven year, "Phase 1" package for water and environmental initiatives. This plan has been well received by stakeholders. A Final Environmental Impact Statement is expected to be issued in late July, and a Record of Decision is expected to be signed near the end of August. The $60 million requested in the President's budget, much of which supports activities that can be carried out using existing authorities, is the minimum necessary to ensure adequate Federal participation in these initiatives, which are essential to reducing existing conflicts among water users in California.

The Administration appreciates that the Senate Committee has provided full funding for the Central Valley Project Restoration Fund and substantial funding for the Water and Related Resources account. Within the Water and Related Resources account, however, we are concerned about the level of funding for the Lower Colorado River Operations Program. The $5.7 million reduction in the Committee bill would severely limit Reclamation's ability to complete development of the Multi-Species Conservation Plan and meet the deadlines in the Biological Opinion on Lower Colorado River operations. In addition, we are disappointed that the Committee has not adopted the Administration's proposal to convert the Central Valley Project Restoration Fund program from discretionary to permanent funding to improve its operating efficiency and effectiveness.

Regional Economic Development

The Administration appreciates the initial funding provided for certain regional economic development programs, but remains concerned that the Committee bill does not provide sufficient funding to meet current needs. In the distressed counties of the Mississippi Delta, for example, per capita income is only 53 percent of the national average, and the poverty rate is more than twice the national average. To address these and other needs, the Administration strongly urges full funding of both the $30 million request for the Mississippi Delta Regional Authority (DRA), which would benefit a seven-State region, and the $71.4 million request for the Appalachian Regional Commission.

Army Corps of Engineers

The Administration strongly objects to section 103 of the Senate Committee bill, which would undermine implementation of the Endangered Species Act by preventing the Corps of Engineers from funding reasonable and much-needed changes to the operating manual for the Missouri River. The Corps and the U.S. Fish and Wildlife Service are entering a critical phase in their Section 7 consultation on the effects of reservoir project operations. This provision would prevent the Corps from carrying out a necessary element of any reasonable and prudent alternative to avoid jeopardizing the continued existence of the endangered least tern and pallid sturgeon, and the threatened piping plover. In addition to these Endangered Species Act concerns, the Corps must revise the manual because it is outdated. In its current form, the manual simply does not provide an appropriate balance among the competing interests, both commercial and recreational, of the many people who seek to use this great American river. The Administration understands that there may be an amendment offered to strike the objectionable language. The Administration would support such an amendment and strongly urges its adoption.

The Administration is concerned that the Senate's reduction in funding for priority Army Corps of Engineers projects would result in significant delays for certain critical construction projects. Of particular concern is a reduction to the ongoing Everglades restoration projects from the House level of $118 million to $95 million. The Administration supports the House level, which is needed to avoid delays in restoring the Everglades ecosystem, home to 68 threatened and endangered species. The Administration is likewise concerned about the reduction to the Columbia River Fish Mitigation project (Washington, Oregon, Idaho), from $91 million to $81 million. The full amount requested is needed to meet requirements to save endangered salmon and other species. The Administration supports funding for the construction of an emergency outlet at Devil's Lake, North Dakota, and, based on the critical need for this project, urges the Senate to provide funding in the bill. The Senate Committee bill would delay providing the flood protection that the Devils Lake area urgently needs. The Administration also requests that the Senate provide full funding for the Kill Van Kull project, which the Committee has reduced to $44 million, from the request of $53 million.

The Administration urges the Senate to fund the limited number of priority new projects and programs in the President's budget, including the "Challenge 21" program for environmentally friendly flood damage reduction projects; modifications to Folsom Dam on the American River, California; the Hillsboro and Okeechobee Aquifer Storage and Recovery pilot project in the Florida Everglades; and, the program to modernize Corps recreation facilities.

We are disappointed that the Senate has not yet addressed the Administration's Harbor Services Fund proposal, which would provide a stable source of funding that would allow port and harbor activities to be funded on an efficient schedule. This proposal would also free up funds that could be used for the priority projects and programs noted above, as well as for important new navigation projects, including projects to deepen Baltimore Harbor in Maryland and the Arthur Kill Channel (New York and New Jersey harbor), which have not been funded by the Senate Committee.

Kyoto Protocol

Section 705, "Kyoto Protocol," which purports to prohibit implementation of the Kyoto Protocol is unnecessary, as the Administration has no intention of implementing the Protocol prior to ratification. To the extent that these provisions could be read to prevent the United States from negotiating with foreign governments, it would be inconsistent with the President's Constitutional authority.

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