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PURPOSE

BACKGROUND

WITNESSES

The Water Resources and Environment Subcommittee is scheduled to meet on Thursday, February 14, 2002, at 10:00 a.m. in 2167 RHOB, to receive testimony from the U.S. Environmental Protection Agency (EPA), the Tennessee Valley Authority (TVA), the National Oceanic and Atmospheric Administration (NOAA), and the Natural Resources Conservation Service (NRCS) on their proposed budgets and program priorities for FY 2003.

The Subcommittee will receive testimony from the Assistant Secretary of the Army (Civil Works) on the Corps of Engineers’ budget and priorities for FY 2003 in a separate hearing that will be held on February 27, 2002.

Similar to other budget hearings held by the Subcommittee, this hearing is intended to provide Members with an opportunity to review both the FY 2003 budget requests, as well as Administration priorities for consideration in the Subcommittee’s legislative and oversight agenda for the second session of the 107th Congress.

EPA's total budget request is $7.723 billion, $423 million above the FY 2002 request of $7.3 billion, and $351 million less than the FY 2002 enacted level of $8.075 billion. Of the FY 2002 funding, $7.9 billion was provided in the Fiscal Year 2002 Appropriations Act for Veterans Affairs, Housing and Urban Development, and Independent Agencies and $175 million was provided in a supplemental appropriation for activities to respond to the September 11th attacks. Of the $7.723 billion FY 2003 request, $107 million is to fund retiree benefits that had previously been funded out of a government wide account. EPA’s budget request identifies $133.4 million in funding for Homeland Security, of which $9.4 million is part of ongoing base resources and $124 million is new investment. After subtracting new investments for Homeland Security from both the FY 2002 enacted funding and the FY 2003 request, and subtracting the proposed retirement funding, the net difference between the FY 2002 enacted level and the FY 2003 request is a reduction of $406 million (-5.1%). This reduction is roughly equivalent to the funding for earmarks added by Congress in the FY 2002 enacted budget.

Wastewater Infrastructure - EPA's wastewater infrastructure budget consists of funding for the Clean Water State Revolving Loan Fund (Clean Water SRF) and special purpose grants.

Clean Water SRF - For the Clean Water SRF, EPA is requesting $1.212 billion. This is the $362 million more than the FY 2002 request of $850 million (+ 43%), and $138 million less than the FY 2002 enacted level of $1.35 billion (-10%). EPA notes that, to date, Congress has provided $19.8 billion in grants to help capitalize 51 Clean Water SRFs, which has allowed states to provide nearly $37.7 billion in loans for wastewater infrastructure. The President’s budget request also repeats the statement made in prior year budget documents that SRF funding requests are set at a level intended to allow the Clean Water SRFs to provide an average of $2 billion a year in loans. The matter of the appropriate level of federal assistance for funding our nation’s wastewater infrastructure is currently under review by the Subcommittee and will be the subject of a legislative proposal.

Special Purpose Grants - EPA requests $115 million in special purpose wastewater infrastructure grant requests. This total includes $75 million for US/Mexico Border wastewater infrastructure projects, the same as the FY 2002 requested and enacted level and $40 million for Alaska native villages, $5.1 million more than the FY 2002 request, and the same as the FY 2002 enacted level. Funding for special purpose projects added by Congressional earmarks, $419 million in FY 2002, is not included in the President’s FY 2003 budget request.

Non-Point Source Funding- For Section 319 state program grants, EPA requests $238 million. This is $1 million more than the FY 2002 requested and enacted level of $237 million. As it did for FY 2002, EPA also requests authorizing language to lift, for FY 2003 only, the .3% cap on Section 319 grants that can go to Native American Tribes.

For national non-point source program implementation, EPA requests $17 million, compared to its FY 2002 requested and enacted level of $16 million.

Regional Programs - - EPA requests $15 million for the Great Lakes National Program Office, the same as the FY 2002 requested and enacted level. EPA also is requesting $2.7 million for Great Lakes grants, $300,000 less than the FY 2002 request, and the same as the FY 2002 enacted level.

The Chesapeake Bay Program request is $21 million, $3 million above the FY 2002 request of $18 million, and the same as the FY 2002 enacted level.

The Long Island Sound program request is $477,400, the same as the FY 2002 request, and $2 million less than the enacted level of $2.5 million (-80%).

The Lake Champlain request is $1 million, the same as the FY 2002 request, and $1.5 million less than the FY 2002 enacted level of $2.5 million (-60%).

The National Estuary Program is funded at $19 million, more than the FY 2002 request of $17 million, and less than the FY 2002 enacted level of $23 million (-17%).

EPA Management Programs - Funding requests for EPA implementation of CWA programs are as follows. The effluent limitations guidelines program request is $23 million, $2 million more than the FY 2002 request of $21 million, and same as the FY 2002 enacted level.

The National Pollutant Discharge Elimination System (NPDES) permit program request is $42 million, a $2 million increase from the FY 2002 request of $40 million, and a $1 million increase from the FY 2002 enacted level of $41 million (+2.4%).

The wetlands program request is $18 million, a $1 million increase above the FY 2002 request of $17 million, and the same as the FY 2002 enacted level.

State Management Programs – EPA requests $180 million for Section 106 state water pollution control grants, a decrease of $12 million over last year's enacted level of $192 million (-6.25%).

EPA requests $14.9 million for state wetlands program development, the same as the FY 2002 enacted level.

EPA requests $39 million for State water quality cooperative agreements, a $20 million increase from the FY 2002 level of $19 million, to support a limited number of watershed restoration pilots (+105%).

EPA requests $10 million for State coastal water quality monitoring programs, the same as the FY 2002 enacted level.

The total Superfund request is $1.293 billion. This is $25 million more than the FY 2002 request of $1.268 billion, and $18 million less than the FY 2002 enacted level of $1.311 billion, which included $41 million from an emergency supplemental appropriation.

This Superfund account no longer supports the brownfields program. However, the President’s budget proposes to increase funding out of the Superfund account for science and technology by $74 million (from $37 million in FY 2002 to $111 million in FY 2003). Of that amount, $75 million is intended for research into techniques for cleaning up buildings contaminated by anthrax and other biological agents and $36 million is for contaminated site research and development. Taking into account the transfer of brownfields out of the Superfund account (+$98 million), the effect of funding retirees within each program account (-$20 million), the effect of spending $75 million on research to decontaminate buildings (-$75 million), and the fact that $41 million of the FY 2002 funding was emergency supplemental funding, the net change in funding for core Superfund program activities is a $26 million (2.2%) increase over FY 2002 enacted levels.

Superfund Response Actions - EPA requests the following amounts for Superfund response actions: $489 million for Superfund remedial actions, less than the FY 2002 request of $492 million, and more than the enacted level of $484 million (+1%); $203 million for Superfund removal actions, the same as the FY 2002 requested and enacted level; and, $76 million for site assessments, less than the FY 2002 request of $78 million, and the same as the FY 2002 enacted level.

Superfund Enforcement – EPA requests $172 million for Superfund enforcement activities. This is $4 million more than the enacted level of $168 million (+2.4%). Of this amount, $28 million is to be transferred to the Department of Justice to fund its Superfund enforcement activities, the same as the FY 2002 enacted level.

The President requests $81 million for the Agency for Toxic Substances and Disease Registry (ATSDR), $3 million more than the FY 2002 enacted level of $78 million (+3.8%). The President also requests $75 million for the National Institute of Environmental Health Sciences (NIEHS), $5 million above the FY 2002 enacted level (+7.1%). These amounts are not included in the EPA budget request for the Superfund program. Beginning in FY 2002, these programs are funded out of separate accounts for these two agencies.

The President’s budget proposes $200 million for EPA brownfields programs for FY 2003, $102 million more than the FY 2002 requested and enacted level of $98 million (+104%). Of the $200 million total, $50 million is requested out of the State & Tribal Assistance Grants (STAG) account for grants to States to fund State voluntary cleanup programs, $120.5 million is requested out of the STAG account to fund grants and loans for brownfield site assessments and cleanup revolving loan funds, and $29.5 million is requested out of the Environmental Program and Management Account to fund 150 FTEs (an increase of 65 FTEs over FY 2002 levels).

The Oil Spill Response program funds EPA's Clean Water/Oil Pollution responsibilities. EPA requests $15.6 million, slightly more than the FY 2002 requested and enacted levels of $15 million.

TVA is the nation's largest wholesale power producer and the fifth largest electric utility. TVA supplies power to nearly eight million people over an 80,000 square mile service area covering Tennessee, and parts of Mississippi, Alabama, Georgia, North Carolina, Virginia, and Kentucky. In addition, TVA's non-power program responsibilities include the multi-purpose management of land and water resources throughout the Tennessee Valley, and fostering economic development.

Since FY 2001, 100% of TVA's power and non-power programs have been funded through its power revenues. TVA receives no appropriated funds. TVA's expected revenues for FY 2003 are $7.275 billion and expenses are expected to be approximately $7.175 billion. This compares to FY 2002 expected revenues of $7.1 billion and expenses of $7 billion. In FY 2003, TVA plans to spend approximately $42 million on its non-power programs.

Largely due to investments in nuclear power plants, TVA carries a large debt load, which reached a high of $27.7 billion in 1997. TVA expects to reduce its debt by $252 million in FY 2003, reducing its total debt to $25 billion (a cumulative reduction of $2.654 billion since 1997). In 2002, TVA will reduce its debt by only $50 million, in part due to increased capital expenditures in scrubbers and other equipment to meet Clean Air Act requirements.

The President’s budget request states that TVA plans to work with independent power producers to tie into TVA’s transmission network and give TVA distributors a wider range of choice. However, any significant increase in competition for electricity in the Tennessee Valley would require legislation.

TVA also must plan for future demand. TVA is in the process of renegotiating many of its contracts with municipal utilities and cooperatives. TVA also is examining the possibility of returning an additional nuclear power unit, Browns Ferry Unit 1, to service. In making this decision, TVA must evaluate the impact of potential competition on demand for TVA power, as well as the impact of this investment on TVA debt reduction.

Small Watershed Program – Under authority of the small watershed program, authorized in the Watershed Protection and Flood Prevention Act of 1954 (P.L. 83-566) and the Act of December 22, 1944 (P.L. 78-534), NRCS provides technical and financial assistance to local organizations to install measures for watershed protection, flood prevention, agricultural water management, recreation, and fish and wildlife enhancement. Depending on its size and cost, a project may be carried out administratively or with Congressional authorization by the House Agriculture Committee (projects with up to 4000 acre feet of capacity) or the Transportation and Infrastructure Committee (projects with over 4000 acre feet of capacity) and comparable Senate committees. The President’s FY 2003 budget request no funding for this program. The FY 2002 funding level is $106.6 million.

If this program receives no funding in FY 2003, it is unclear what would happen to existing and ongoing contracts for work under this program. The Federal government may be liable for damages for early contract termination or may be required to fully meet its contract obligations, even if the work is not completed.

Watershed Surveys and Planning – The watershed surveys and planning program conducts the studies needed to carry out the small watershed program. The President’s FY 2003 budget requests no funding for this program. The FY 2002 funding level is $10.96 million.

Watershed Rehabilitation Program – In 2000, Congress amended the Watershed Protection and Flood Prevention Act to allow NRCS to provide assistance to rehabilitate flood protection dams that had been built with assistance provided under that Act and had now reached the end of their useful lives, creating threats to property and lives. The President’s FY 2003 budget requests no funding for this program. The FY 2002 funding level is $10 million.

Emergency Watershed Protection – The emergency watershed protection program provides assistance to state and local governments after a flood or other emergency has taken place. Under this program, NRCS helps stabilize streambanks and repair flood or other damage. The President’s FY 2003 budget requests $111.3 million for this program. It also requests that any existing balances for watershed surveys and planning, the small watershed program, and the watershed rehabilitation program be transferred to this account. In prior years, this account has been funded by emergency supplemental appropriations, after an emergency has occurred, and has not been included in the President’s budget request. NRCS received $145 million for this program in FY 2001. To date, it has received no funding for this program in FY 2002. The President’s request for this program includes funding for 225 FTEs. It is unclear what these FTEs will be doing, unless and until an emergency occurs.

The Subcommittee has jurisdiction over various NOAA programs and activities, including responsibilities under the CWA, the Coastal Zone Act Reauthorization Amendments, the Marine Protection, Research and Sanctuaries Act, Superfund, the Oil Pollution Act, the Nonindigenous Aquatic Nuisance Prevention and Control Act, the Harmful Algal Bloom and Hypoxia Research and Control Act, and the Estuary Habitat Restoration and Partnership Act of 2000. Issues involving the National Ocean Service, such as coastal water pollution and natural resource damages, are of particular interest.

NOAA requests $405 million for the National Ocean Service for FY 2003 ($6.8 million of which is to fund retirement costs), $96 million less than the FY 2002 enacted level of $501 million (-19.2%). Of that amount, $10 million is for implementation of coastal nonpoint pollution programs under section 6217 of the Coastal Zone Act Reauthorization Amendments, the same as the FY 2002 enacted level; $14 million is to fund activities under the Harmful Algal Bloom and Hypoxia Research and Control Act, the same as the FY 2002 enacted level; $16.5 million is to fund activities as a natural resource trustee under Superfund and the Oil Pollution Act, $2.56 million more than the FY 2002 enacted level of $13.95 (+18.4%); $29 million is to fund activities under the Marine Protection, Research and Sanctuaries Act, approximately $600,000 more than the FY 2002 enacted level of $28.4 million (+2%); and $1.2 million is to fund activities under the Estuary Habitat Restoration and Partnership Act of 2000, the same as the FY 2002 enacted level .

The NOAA budget also requests $800,000 for the Office of Oceanic and Atmospheric Research for activities under the Invasive Species Act of 1996, a reduction of $2.25 million from the FY 2002 enacted level of $3.05 million (-74%).