Order Code RS21154
Updated February 10, 2003
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 Policy Analyst
Resources, Science, and Industry Division
Summary
Function 300 of the federal budget includes funding for natural resource and
environmental activities, and is divided into five subfunctions: water resources,
conservation and land management, recreational resources, pollution control and
abatement, and other activities like research and technical support. The Administration
requested $29.97 billion in budget authority and $30.60 billion in outlays for these
activities in FY2003. During the 107th Congress, the House passed a budget resolution
for FY2003 (H.Con.Res. 353) that proposed $29.22 billion in budget authority and
$29.87 billion in outlays for Function 300. The Senate Budget Committee also reported
its version of the resolution (S.Con.Res. 100), which proposed $33.29 billion in budget
authority and $31.55 billion in outlays for Function 300. However, floor action did not
occur in the Senate prior to adjournment. Due mostly to large differences in overall
funding, the 107th Congress did not reach a bicameral agreement on the FY2003 budget
resolution, and final action has not been taken on FY2003 appropriations for most
federal programs, including those under Function 300. A series of continuing
resolutions have been providing funding at the same level as enacted for FY2002. In the
108th Congress, the Senate has passed an omnibus appropriations bill for FY2003 as an
amendment to H.J.Res.2, and the final amounts will be determined in conference. This
report will be updated as relevant developments occur.
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,
and therefore does not become law. This annual resolution establishes budget policies
Congressional Research Service ˜ The Library of Congress

CRS-2
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 annual
appropriations bills.2 The figure below displays a 5-year funding history for Function
300, the Administration’s request for FY2003, and budget actions in the 107th Congress.
Budget Authority and Outlays for Function 300: FY1998 to FY2002,
FY2003 Request, and Budget Actions in the 107th Congress
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
* For purposes of comparison to other years, does not include emergency and supplemental amounts for homeland security.
Prepared by CRS with data from the Office of Management and Budget and congressional documents.
During the 107th Congress, the House passed its version of the FY2003 budget
resolution (H.Con.Res. 353, H.Rept. 107-376) on March 20, 2002, approving $29.22
billion in budget authority and $29.87 billion in outlays for Function 300. The
Administration had requested higher amounts of $29.97 billion in budget authority and
$30.60 billion in outlays. Although the House approved an overall decrease for Function
300, it assumed full funding of the Administration’s request for several natural resource
and environmental programs. The Senate Budget Committee filed its report on the
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 The six appropriations bills that fund programs under Function 300 include: 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.

CRS-3
FY2003 budget resolution (S.Con.Res. 100, S.Rept. 107-141) on April 11, 2002. The
committee approved higher amounts of $33.29 billion in budget authority and $31.55
billion in outlays for Function 300, and assumed targeted increases for numerous
programs. Floor action on S.Con.Res. 100 was not taken.
The 107th Congress did not reach a bicameral agreement on the FY2003 budget
resolution, primarily due to the lack of reconciliation over the large differences in overall
funding between the House and Senate. Consideration of FY2003 appropriations
proceeded without a bicameral agreement on the budget resolution in place. As of the
adjournment of the 107th Congress, the appropriations bills for the Department of Defense
and Military Construction had been enacted, but Congress had not completed
consideration of the remaining appropriations bills, including those which fund programs
under Function 300. In the absence of final action on appropriations, a series of
continuing resolutions have been providing funding at the FY2002 enacted level. In the
108th Congress, the Senate has passed an omnibus appropriations bill for FY2003 as an
amendment to H.J. Res. 2, which proposes funding for the pending appropriations bills.3
The House did not include an omnibus appropriations measure in passing its version of
the resolution, and the final amounts will be determined in conference.
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, and examine relevant provisions in the FY2003 budget resolution that
were considered during the 107th Congress.4 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. The Corps operates nationwide, but
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.5 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
3 Refer to the CRS Web site for information on funding proposals in the FY2003 omnibus
appropriations bill [http://www.crs.gov/products/appropriations/apppage.shtml].
4 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.
5 For a discussion of these and other issues, refer to CRS Report RS20569, Water Resource Issues
in the 108th Congress
.

CRS-4
billion in FY2003. Most of the requested decrease was due to a reduction of $460 million
in discretionary funds for the Corps’ civil works projects. The Administration requested
this decrease because it sought to eliminate certain “earmarked” projects that it believes
fall outside of the historic missions of the Corps. As passed, H.Con.Res. 353 assumed
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 assumed $990 million more than the request of $4 billion
in discretionary funding for the Corps, and it assumed “at least” $888 million for the BOR
to help reduce the backlog of authorized projects. S.Con.Res. 100 also recommended
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.6 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
indicated that funding for the Pacific Northwest Salmon Recovery program should receive
a “high priority”, but a dollar amount was not specified. It also assumed 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
assumed 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 assumed $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.
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.7 The President’s budget
proposed a less than 1% decrease of $24 million in budget authority for recreational
6 For a discussion of related issues, refer to CRS Issue Brief IB96030, Soil and Water
Conservation Issues
, and CRS Issue Brief IB10076, Public (BLM) Lands and National Forests.
7 For a discussion of recreation issues, refer to CRS Issue Brief IB10093, National Park
Management and Recreation
.

CRS-5
resources, from $3.10 billion in FY2002 to $3.07 billion in FY2003. Although budget
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 assumed full funding of the $663 million requested for park maintenance
and construction, which included deferred maintenance. As reported, S.Con.Res. 100
assumed $137 million more than requested for operations of the National Park Service,
and recommended 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.8 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. Although 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 was primarily due to the elimination of support for
“earmarked” projects in EPA’s budget, most of which were for waste water infrastructure.
As passed, H.Con.Res. 353 assumed 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 assumed $200 million for
the cleanup of brownfields. However, the Senate resolution assumed $113 million more
than requested for the cleanup of hazardous waste sites under the Superfund program, $15
million more than requested for federal personnel to enforce environmental laws, and
recommended “full” funding for the Clean Water State Revolving Fund, which appears
to mean the FY2002 funding level of $1.35 billion.
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. Although 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
8 For a discussion of pollution control and abatement issues, refer to CRS Issue Brief IB10067,
Environmental Protection Issues in the 107th Congress.

CRS-6
billion in FY2003. Neither H.Con.Res. 353 as passed, nor S.Con.Res. 100 as reported,
included 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.9
In addition to currently authorized revenues, the President’s FY2003 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 was 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, assumed revenues from such leases. However, House report language indicated
that the lack of assumed revenues did not preclude the House from authorizing such
leases. During 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.
However, the Senate did not include the House language on ANWR in passing its version
of the bill, and a conference agreement was not reached prior to adjournment. In the 108th
Congress, stand alone legislation has been introduced (H.R. 39) that would allow the
leasing of ANWR lands for oil and gas exploration and development.10
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) estimated 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.
9 For further discussion, refer to CRS Issue Brief IB10078, Superfund and Brownfields in the
107th Congress
.
10 For further discussion, refer to CRS Issue Brief IB10111, Arctic National Wildlife Refuge
(ANWR): Controversies for the 108th Congress
.