Order Code RS21154
Updated June 10, 2002
CRS Report for Congress
Received through the CRS Web
The Natural Resources and Environment
Function in the FY2003 Federal Budget:
An Overview of Programs and Funding
David M. Bearden
Environmental Information Analyst
Resources, Science, and Industry Division
Summary
Function 300 of the federal budget includes activities related to natural resources
and the environment, and is divided into five subfunctions: water resources,
conservation and land management, recreational resources, pollution control and
abatement, and other activities such as research and technical support. For FY2003, the
Administration requested $29.97 billion in budget authority and $30.60 billion in outlays
for Function 300. As passed, the House budget resolution (H.Con.Res. 353) would
provide $29.22 billion in budget authority and $29.87 billion in outlays for Function
300. While these amounts are an overall decrease, H.Con.Res. 353 assumes full funding
of the Administration’s request for several programs. As reported, the Senate budget
resolution (S.Con.Res. 100) would provide $33.29 billion in budget authority and
$31.55 billion in outlays, and includes numerous funding assumptions. Neither
H.Con.Res. 353 as passed, nor S.Con.Res. 100 as reported, assumes future revenues
from leasing the Arctic National Wildlife Refuge for oil and gas exploration, as the
Administration proposed. In the absence of an agreement with the Senate, the House
passed a resolution (H.Res. 428) which provides that H.Con.Res. 353 “shall have force
and effect in the House”, as though it were adopted by Congress. To date, the Senate
has not taken further action to adopt S.Con.Res. 100. This report will be updated as
legislative action occurs.
Introduction
The federal budget is divided into 20 spending and revenue functions. Function 300
includes activities related to natural resources and the environment and is divided into five
subfunctions: water resources, conservation and land management, recreational resources,
pollution control and abatement, and other activities such as research and technical
support. The House and Senate Budget Committees traditionally develop a concurrent
resolution on the budget according to procedures established under the Congressional
Budget and Impoundment Control Act of 1974 (2 U.S.C. 631 et seq.). While the House
and Senate vote on the budget resolution, it is not submitted for the President’s approval,
Congressional Research Service ˜ The Library of Congress

CRS-2
and therefore does not become law. This annual resolution establishes budget policies
and assumptions for spending and revenue, and sets the level of budget authority and
outlays for the 20 budget functions.1 The House and Senate Appropriations Committees
traditionally use the policies and funding levels in the budget resolution as a guideline to
allocate funding for Function 300 to various federal agencies under 6 of the 13
appropriations bills: 1) Department of Agriculture and Related Agencies; 2) Commerce,
Justice, and State, the Judiciary and Related Agencies; 3) Energy and Water
Development; 4) Department of the Interior and Related Agencies; 5) Department of
Transportation and Related Agencies; and 6) Veterans Affairs, Housing and Urban
Development, and Independent Agencies.2 The figure below displays a 5-year history of
budget authority and outlays for Function 300, the Administration’s request for FY2003,
and House and Senate proposals under the FY2003 budget resolution.
Budget Authority and Outlays for Function 300:
FY1998 to FY2002, FY2003 Request, and House and Senate Actions
Billions of Dollars
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
1998
1999
2000
2001
2002(est)
2003
2003
2003
Outlays
22.30
23.97
25.03
26.34
30.24
30.60
29.87
31.55
Budget Authority
24.37
24.43
25.03
29.76
30.46 *
29.97
29.22
33.29
Request
House
Senate
Passed
Reported
* Excludes $406 million in emergency funding to respond to the terrorist attacks of September 11, 2001. Prepared by the
Congressional Research Service with data from the Office of Management and Budget and congressional documents.
As indicated in the chart above, the President’s budget proposed a decrease of $490
million in new budget authority for Function 300, from the Administration’s estimate of
$30.46 billion in FY2002 to $29.97 billion in FY2003. The requested decrease is mostly
due to the Administration’s proposal to eliminate or redirect support for projects that
received “earmarked” funding in FY2002. The House approved funding levels for
Function 300 that are lower than requested, while the Senate has proposed an increase.
1 Budget authority is new funding which may be spent within the year that it is made available,
or in some cases, carried over to future years. Outlays are the actual amounts that are spent
within a year. Generally, budget authority is a more accurate indicator of funding trends because
outlays can vary widely from year to year depending on many factors such as the payment of
funds obligated in past years for the completion of long-term projects.
2 Refer to the CRS web site at [http://www.crs.gov/products/appropriations/apppage.shtml] for
upcoming reports that will track these appropriations bills for FY2003.

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The House passed its version of the FY2003 budget resolution (H.Con.Res. 353, H.Rept.
107-376) on March 20, 2002, which would provide $29.22 billion in budget authority and
$29.87 billion in outlays for Function 300. While these amounts are an overall decrease,
H.Con.Res. 353 assumes full funding of the Administration’s request for numerous
programs. The Senate Budget Committee filed its report on the FY2003 budget resolution
(S.Con.Res. 100, S.Rept. 107-141) on April 11, 2002. It would provide $33.29 billion in
budget authority and $31.55 billion in outlays for Function 300. It also assumes specific
funding increases for several programs.
The substantial differences in funding levels between the House and Senate budget
resolutions make it unclear as to how and whether such differences would be resolved in
conference. In the absence of an agreement with the Senate, the House passed a
resolution (H.Res. 428) on May 22, 2002, which provides that, pending the adoption of
the FY2003 budget resolution, H.Con.Res. 353 "shall have force and effect in the House"
as if it were adopted by Congress. As such, H.Res. 428 provides the House with an
enforceable limit on discretionary spending for the FY2003 appropriations bills. During
Senate floor debate of the FY2002 supplemental appropriations bill (H.R. 4475), an
amendment to adopt S.Con.Res. 100, as reported, was defeated, and no further action has
been taken on the budget resolution in the Senate to date.
The following sections describe the activities under each subfunction of Function
300, indicate the Administration’s FY2003 request, list the federal agencies that
implement various programs, provide information on offsetting receipts, tax revenues, and
tax incentives related to Function 300, and examine relevant provisions in the House and
Senate versions of the FY2003 budget resolution.3 Since the amounts allocated to each
subfunction are not indicated in the budget resolution as they are in the President’s budget
request, the following sections only indicate requested amounts for each subfunction.
Water Resources
The subfunction for water resources includes funding for the Department of
Defense’s Army Corps of Engineers (Corps) and the Department of the Interior’s Bureau
of Reclamation (BOR). The Corps constructs and maintains facilities for flood control,
commercial navigation, and hydroelectric power. While the Corps operates nationwide,
BOR constructs, maintains, and operates diversion dams, reservoirs, and related facilities
that provide water for irrigation, hydroelectric power, and municipal and industrial uses
in 17 western states. Numerous water projects have been controversial because of their
perceived negative effects on water quality and fish and wildlife habitat.4 The President’s
budget proposed a 12% decrease of $656 million in budget authority for water resources,
from $5.58 billion in FY2002 to $4.93 billion in FY2003. For outlays, the President’s
budget proposed an 11% decrease of $685 million, from $5.96 billion in FY2002 to $5.28
billion in FY2003. Most of the requested decrease is due to a reduction of $460 million
in discretionary funds for the Corps’ civil works projects. The Administration requested
3 This report does not include information on military cleanup and other defense-related
environmental programs administered by the Department of Defense and the Department of
Energy. Funding for these programs is allocated under Function 50 for National Defense.
4 For a discussion of these and other issues, refer to CRS Report RS20569, Water Resource Issues
in the 107th Congress
, and CRS Issue Brief IB10019, Western Water Resource Issues.

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this decrease because it seeks to eliminate certain “earmarked” projects that it believes fall
outside of the historic missions of the Corps. As passed, H.Con.Res. 353 assumes full
funding of the Administration’s request for a $19 million increase for the Corps’ salmon
conservation efforts, from $109 million in FY2002 to $128 million in FY2003. As
reported, S.Con.Res. 100 assumes $990 million more than the request of $4 billion in
discretionary funding for the Corps, and it assumes “at least” $888 million for the BOR
to help reduce the backlog of authorized projects. The Senate also recommends
increasing BOR funds due to the importance of drinking water and irrigation projects.

Conservation and Land Management
The subfunction for conservation and land management includes funding for the
Department of the Interior’s Bureau of Indian Affairs, Bureau of Land Management,
Minerals Management Service, National Park Service, and Fish and Wildlife Service,
which manage the majority of federal lands. This subfunction also contains funding for
the Department of Agriculture’s Forest Service and Natural Resources Conservation
Service, and the Department of Commerce’s National Marine Fisheries Service.5 The
President’s budget proposed a 4% increase of $410 million in budget authority for
conservation and land management, from $9.51 billion in FY2002 to $9.92 billion in
FY2003. For outlays, the President’s budget proposed a 6% increase of $511 million,
from $9.15 billion in FY2002 to $9.66 billion in FY2003. As passed, H.Con.Res. 353
indicates that funding for the Pacific Northwest Salmon Recovery program should receive
a “high priority”, but a dollar amount is not specified. It also assumes full funding of the
Administration’s request for several activities, including the Land and Water
Conservation Fund, National Wildlife Refuge System, wildland fire prevention, and
maintenance and repair of Bureau of Indian Affairs schools. As reported, S.Con.Res. 100
assumes full funding for the Payments in Lieu of Taxes program, which compensates
local governments for the loss of property tax revenues from non-taxable federal lands.
S.Con.Res. 100 also assumes $164 million more than requested for salmon conservation
and restoration, full funding of $1.92 billion for the Land, Conservation, Preservation, and
Infrastructure Improvement program (commonly referred to as the conservation spending
category), an (unspecified) increase for the National Wildlife Refuge System, and
(unspecified) mandatory funding for agricultural conservation programs authorized under
the Farm Security and Rural Investment Act of 2002 (P.L. 107-171).
Recreational Resources
The subfunction for recreational resources includes funding for the Department of
Agriculture’s Forest Service and the Department of the Interior’s Bureau of Land
Management, National Park Service, and Fish and Wildlife Service, which manage
federal lands that offer outdoor recreational opportunities.6 The President’s budget
proposed a less than 1% decrease of $24 million in budget authority for recreational
resources, from $3.10 billion in FY2002 to $3.07 billion in FY2003. While budget
5 For a discussion of conservation issues, refer to CRS Issue Brief IB96030, Soil and Water
Conservation Issues
. For a discussion of land management issues, refer to CRS Issue Brief
IB10076, Public (BLM) Lands and National Forests.
6 For a discussion of recreation issues, refer to CRS Issue Brief IB10093, National Park
Management and Recreation
.

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authority would decline slightly under the President’s budget, there would be a 7%
increase of $218 million in outlays, from $2.96 billion in FY2002 to $3.17 billion in
FY2003. One of the major budgetary issues related to recreational resources has been the
adequacy of funding to reduce the backlog of park maintenance projects. As passed,
H.Con.Res. 353 assumes full funding of the Administration’s request of $663 million for
park maintenance and construction, which includes deferred maintenance. As reported,
S.Con.Res. 100 assumes $137 million more than requested for operations of the National
Park Service, and recommends increases over the next 5 years to make up for funding
shortfalls.
Pollution Control and Abatement
The subfunction for pollution control and abatement includes funding for the
Environmental Protection Agency (EPA), which is the primary federal agency responsible
for the control of pollution and the cleanup of civilian environmental contamination.
EPA’s main functions are to enforce federal environmental laws and regulations and assist
state, local, and tribal governments in controlling pollution.7 Funding for the U.S. Coast
Guard’s programs to prevent and clean up hazardous spills on coastal and inland
waterways also falls under this subfunction. The President’s budget proposed a 6%
decrease of $457 million in budget authority for pollution control and abatement, from
$8.16 billion in FY2002 to $7.70 billion in FY2003. While budget authority would
decline under the President’s budget, there would be a 3% increase of $269 million in
outlays, from $7.96 billion in FY2002 to $8.23 billion in FY2003. The requested
decrease in new budget authority is primarily due to the elimination of support for
“earmarked” projects in EPA’s budget, most of which were for wastewater infrastructure.
As passed, H.Con.Res. 353 assumes full funding of the Administration’s request of $4.1
billion for EPA’s core operating programs, and $200 million for the cleanup of
brownfields. Like the House, S.Con.Res. 100, as reported, also assumes $200 million for
the cleanup of brownfields. However, it assumes $113 million more than the request of
$1.29 billion for the cleanup of hazardous waste sites under the Superfund program, $15
million more than requested for federal personnel to enforce environmental laws, and
recommends full funding for the Clean Water State Revolving Fund.
Other Natural Resources
The subfunction for “other natural resources” includes activities such as research and
technical support. The agencies funded under this subfunction include the U.S.
Geological Survey (USGS) and the National Oceanic and Atmospheric Administration
(NOAA). The USGS conducts research on land, water, mineral, and biological resources
and on natural hazards. NOAA conducts research on ocean and coastal resources, air
quality monitoring, climate change, and ozone depletion, and administers the National
Weather Service. The President’s budget proposed a 4% decrease of $169 million in
budget authority for this subfunction, from $4.52 billion in FY2002 to $4.35 billion in
FY2003. While budget authority would decline under the President’s budget, there would
be a 1% increase of $50 million in outlays, from $4.21 billion in FY2002 to $4.26 billion
7 For a discussion of pollution control and abatement issues, refer to CRS Issue Brief IB10067,
Environmental Protection Issues in the 107th Congress.

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in FY2003. Neither H.Con.Res. 353 as passed, nor S.Con.Res. 100 as reported, includes
funding assumptions related to research and technical support.
Offsetting Receipts, Tax Revenues, and Tax Incentives
Natural resource and environmental programs under Function 300 are funded not
only by general tax revenues, but are also supported by receipts from a variety of sales,
fees, royalties, and leases. Major sources of offsetting receipts under Function 300
include timber sales, recreational fees, park concession fees, grazing fees, mineral
royalties from leases on onshore sites, and outer continental shelf (OCS) receipts from
offshore oil and gas leases. Superfund taxes, which support cleanup of hazardous waste
sites, were another source of revenue under Function 300 at one time, but taxing authority
expired on December 31, 1995. Whether to reinstate the taxes has been an ongoing issue
in the Superfund reauthorization debate.8
In addition to revenues authorized under current law, the President’s budget assumed
future revenues from leasing the Arctic National Wildlife Refuge (ANWR) for oil and gas
exploration. While these revenues would not directly support programs under Function
300, the proposal has been controversial on environmental grounds due to concerns over
the potential harm to critical wildlife habitat that might occur as a result of oil and gas
exploration and development. Neither H.Con.Res. 353 as passed, nor S.Con.Res. 100 as
reported, assumes revenues from such leases. However, House report language indicates
that the lack of assumed revenues does not preclude the House from taking further actions
to authorize such leases. During the first session of the 107th Congress, the House passed
comprehensive energy legislation (H.R. 4), which proposed to open a portion of ANWR
lands for oil and gas exploration. The Senate passed its version of the energy bill (S. 517)
on April 25, 2002, but did not include language that would open ANWR to oil and gas
exploration.9 Whether to adopt the House’s ANWR provision will be among the issues
to be resolved in conference.
In addition to revenues, several tax incentives related to natural resource and
environmental activities are also available to state and local governments and the private
sector. These incentives cost the federal government in terms of reduced tax revenues.
Under current law, the Office of Management and Budget (OMB) estimates that $1.41
billion in tax incentives would be available under Function 300 in FY2003. Of this
amount, state and local governments would be eligible for assistance of $440 million in
the form of tax-exempt bonds to construct water, sewer, and hazardous waste facilities,
and there would be $210 million in tax incentives for historic preservation. The timber
industry would be eligible for tax incentives of $480 million, and the mining industry
would be eligible for $280 million in tax incentives. The President’s budget also
proposed new tax incentives to exclude 50% of capital gains from the sale of property for
conservation purposes, and it proposed to permanently extend existing tax credits for
private sector costs to clean up brownfields sites, which expire at the end of 2003.
8 For further discussion, refer to CRS Issue Brief IB10078, Superfund and Brownfields in the
107th Congress
.
9 For further discussion, refer to CRS Issue Brief IB10094, Arctic National Wildlife Refuge:
Legislative Issues
.