H.R. 2203 -- ENERGY AND WATER DEVELOPMENT
APPROPRIATIONS BILL, FY 1998
(Sponsors: Livingston (R), Louisiana; McDade (R), Pennsylvania)

The Committee has developed a bill that provides requested funding for many of the Administration's priorities. However, the Administration strongly objects to the Committee's reallocation of national defense funds from Department of Energy programs to Department of Defense programs. These funds are needed for key environmental privatization projects and to provide full funding for Atomic Energy Defense Activities, as requested, which is consistent with fixed asset funding practices in the Government's other defense programs. We believe that this action is an unacceptable deviation from our understanding of the Bipartisan Budget Agreement.

As discussed below, the Administration will seek restoration of certain of the Committee's reductions. We recognize that it will not be possible in all cases to attain the Administration's full request and will work with the House toward achieving acceptable funding levels. We urge the House to reduce funding for lower priority programs, or for programs that would be adequately funded at the requested level, and to redirect funding to programs of higher priority.

Department of Energy

The Administration objects to the Committee's providing only $102 million of the $1.006 billion requested for environmental management privatization projects. Based on this mark, several environmental privatization projects would not be funded at all, and it is questionable whether the expected out-year funding would allow support for higher priority cleanup privatization projects at this funding level. Failure to invest in competitive privatization contracts for cleanup activities would force the Department of Energy (DOE) to continue using more costly, traditional contracting approaches, which the Committee Report has strongly criticized. This would result in a substantial increase to DOE's cleanup costs in future years and could jeopardize the Depar tment's ability to comply with cleanup agreements.

The Administration strongly opposes the cuts to DOE's Federal staff and management accounts, including Departmental Administration and the Office of the Inspector General. Cuts in Federal staff and support service contractors of this magnitude would make it nearly impossible for the Department to improve contractor oversight or to develop, award, and manage more competitive fixed-price contracts, which are some of the Committee's own recommendations in the accompanying report.

The Administration also opposes the Committee's attempt to micromanage the Department, limit its ability to exercise good business judgment, overly restrict its ability to implement sound innovative contracting practices, and limit its ability to participate in procurement reinvention. It would do this by: (1) requiring special reports and notification prior to the start of any FY 1998 approved construction and special congressional permission to make procurement decisions currently authorized by other statutes; (2) inhibiting market research; (3) further restricting the Department's ability to outsource beyond that required in OMB Circular No. A-76; (4) unnecessarily restricting the Department's ability to deviate from the Federal Acquisition Regulation; and, (5) inappropriately limiting the Department's ability to use current statutory exemptions from competition. Additional reporting requirements combined with the proposed staffing reductions would erode DOE's ability to gain better control over its operations and improve management of its complex mission.

The Administration also strongly opposes the transfer of the Formerly Used Sites Remedial Action Program (FUSRAP) from DOE to the Corps of Engineers. In recent years, the Department has placed nearly half of this program under competitive, fixed-price contracts and developed a plan to accelerate cleanup by 12 years. DOE has established an open, interactive dialogue with communities and regulators, through which the Department has developed cleanup standards commensurate with land use plans and proceeded with early removal of contamination at many sites. DOE has completed cleanup at 52 percent of the main sites and 56 percent of the vicinity properties. Between FYs 1996 and 1997, DOE has reduced support costs for this program by 23 percent. Transferring this well-managed program that is nearly complete to another agency would be disruptive and would most likely delay completion and increase costs.

The Administration objects to the program cuts in the requests for nuclear nonproliferation programs. For example, the reductions in verification research and development would delay the completion of next generation land-based and satellite-borne sensors for the detection of nuclear, chemical and biological weapons programs.

The Administration also opposes the $29 million reduction to the Uranium Enrichment Decontamination and Decommissioning (D&D) program. DOE is about to enter into a large contract for D&D and re-industrialization of the large gaseous diffusion plant in Oak Ridge, Tennessee, using an approach that will expedite cleanup, reduce costs, and create new jobs. The Committee's funding cuts in this program would make it difficult to proceed with this effort, comply with environmental requirements, and provide reimbursements to radium and thorium licensees.

The Administration opposes the Committee's elimination of $25 million requested for the Next Generation Internet. While the Administration acknowledges that the private sector has shown the capability and willingness to fund considerable technology development for the Internet, the Next Generation Internet funds requested in the President's budget are necessary to assist universities and national laboratories in implementing advanced, high-speed connections that will not be financed by industry, and to accelerate research in areas where DOE laboratories have particular expertise.

The Committee's overall reduction of $30 million from the request for the civilian radioactive waste management program would threaten satisfactory completion of the Department of Energy's viability assessment of Yucca Mountain. Both the Nuclear Waste Technical Review Board and independent expert advisers have urged DOE to build and study an "east-west tunnel" or "drift" through the repository block at Yucca Mountain in order to reduce uncertainty about water moving downward through the site. The $14 million (16 percent) reduction to the request for the core science program would virtually eliminate any scientific input from this important research to the viability assessment. Additionally, the $16 million reduction in support services and personnel costs would severely constrain, if not eliminate, an independent review of critical elements of the viability assessment, including a validation of repository design concepts and operating strategies, as well as refined cost estimates of these designs.

The Administration strongly objects to the Committee's $60 million reduction to the Solar and Renewable Energy R&D request (calculated on a comparable basis). The overall funding cuts, particularly in biofuels and solar thermal energy, would seriously set back environmentally promising and increasingly economic sources of energy. Research programs such as these are also the least burdensome way for the Nation to respond to global climate change.

Army Corps of Engineers

The Administration urges the House to reduce the number of unrequested Corps of Engineers' projects and programs and to restore funds that the Administration has requested for priority Corps projects, including the Columbia and Snake Rivers Juvenile Fish Mitigation Program for salmon run restoration and for construction of an emergency outlet for Devils Lake, North Dakota. The Administration urges the House to use the $540 million in unrequested funds that the Committee has provided for the Corps of Engineers construction, studies, and operation and maintenance programs to restore reductions made in other priority Corps and DOE programs.

The Administration appreciates the Committee's full funding of the Administration's request for the Corps' regulatory program. This will allow the Corps to implement its administrative appeals process fully and to continue to process wetlands permits in a timely manner. The Administration urges the House to include the Administration's requested regulatory permit fee, which would allow the Corps to recover its costs for processing permit applications for commercial uses.

Bureau of Reclamation

The Administration appreciates the Committee's support for funding to restore the California Bay-Delta ecosystem. However, we urge the House to provide the full $143 million that Congress authorized for this program and that was requested by the President in the FY 1998 Budget. This important program plays a central role in resolving long-standing water conflicts that have plagued the State of California. In addition, we oppose the reduction of $14 million in requested Central Valley Project funding, which is an important component of the effort to restore this critical ecosystem.

The Administration objects to the Committee's decision to fund a number of Reclamation projects and activities not requested in the FY 1998 Budget, some of which could result in demands for additional funding in the out-years. The Administration supports the Committee's decision to provide funds to cover the estimated authorized Federal share of costs for the purchase of water associated with variable flood control operations at Folsom Dam during FY 1997.

Tennessee Valley Authority

The Administration objects to the Committee's elimination of all appropriations for the Tennessee Valley Authority in FY 1998. We believe that an abrupt and total elimination of funding for the agency in FY 1998 is premature. The Administration has proposed continued funding in FY 1998 while TVA completes its consultations on potential alternate funding arrangements for future years for its appropriated program.

Nuclear Regulatory Commission

The Administration urges restoration of the Committee's $4 million reduction to the request for the Nuclear Regulatory Commission's (NRC's) High-level Waste Program. This 24-percent reduction would adversely affect the NRC's ability to maintain a strong scientific capability, independent of DOE, to review high-level waste activities. This reduction could jeopardize the NRC's ability to complete timely reviews of DOE's viability assessment. Timely resolution of the high-level waste issue is important to the Nation as well as to the nuclear industry.