Statement of Administration Policy: H.R. 4867 - Department of the Interior and Related Agencies Appropriations Bill, FY 1989

(House)
(Sponsors: Whitten (D), Mississippi; Yates (D), Illinois)

Based on a number of objectionable funding and language provisions included in the present version of the bill, the Director of the Office of Management and Budget would recommend that the President veto the bill.

The Committee bill undercuts efforts begun in FY 1988 to demonstrate the Nation's ongoing commitment to implement the recommendations of the joint U.S. - Canadian Special Envoys on Acid Rain. It fails to provide the requested funding for the Clean coal technology program for future rounds of project solicitations from FY 1990 through FY 1992, thereby jeopardizing the Federal commitment for acid rain control technologies. It also changes the availability of the $525 million previously appropriated for FY 1989, appropriating only $100 million in FY 1989 and $425 million for FY 1990 and FY 1991. These actions result in a shortfall of $1^775 billion from the total of $2.3 billion requested for the program.

The bill includes $157 million for energy conservation grants that should be financed by States from receipts resulting from petroleum overcharge violation cases, $145 million for land acquisition that should be postponed, if it cannot be foregone, $156 million for discretionary, non-critical construction, and $64 million for Indian health facilities despite a 50 percent occupancy rate at these facilities. The enclosure explains why these and other low priority and unnecessary programs should not be funded.

Language has been included that would require that structures on the Outer Continental Shelf (OCS) contain at least 50 percent U.S. labor and materials. The Administration is strongly opposed to this provision. It would seriously delay and increase the cost of oil production from the OCS; it conflicts with the Administration objective of encouraging reliance on indigenous energy sources; it is contrary to U.S. obligations under the General Agreement on Tariffs and Trade — inviting retaliation from countries such as the United Kingdom, Norway, the Netherlands, and Denmark; and it would create a new trade barrier at a time when markets are particularly concerned about creeping protectionism.

The bill also includes language that excludes areas cf the North Atlantic, California, and Florida from the offshore leasing program. This moratorium contradicts the statutory mandate of the OCS Lands Act designed to expedite exploration and production consistent with proper balancing of environmental and other concerns. It overrides the process of scientific studies and balancing analysis required by sections 18 and 19 of the- OCS Lands Act. Finally, it would reduce anticipated FY 1989 receipts by $165 million — $125 million from California leases and another $40 million from Florida and the North Atlantic leases.

The Administration has serious concerns about the policy implications of language that prohibits the Bureau of Mines from proceeding with the sale of Federal helium operations. The Bureau is currently reviewing the results of an independent study analyzing the issues relating to the valuation and potential disposition of the helium processing and distribution operations- Generally, we have found nothing in the study to indicate that the privatization initiative should not proceed.

The Administration urges the House to support fiscally responsible efforts to upgrade our emergency preparedness assets and to improve the Nation's ability to deal with potential turbulance in world oil markets through enactment of legislation to authorize the sale of the Naval Petroleum Reserve (NPR). The proceeds of this sale should be earmarked for the acquisition of oil for a 10 million barrel Defense Petroleum Inventory (DPI) and for increasing the fill rate of the Strategic Petroleum Reserve (SPR) to an average rate of 100,000 barrels per day. As many members of Congress have pointed out, now is the time to increase the fill rate of the SPR since oil prices are relatively low. Now is also the time to build the DPI since the NPRs are becoming less adequate for this purpose.

The enclosed fact sheet discusses these and other funding and language provisions that are objectionable to the Administration.

Enclosure

INTERIOR AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1989
OBJECTIONABLE PROVISIONS

I. FUNDING LEVELS

Clean Coal Technology Program. The bill undercuts efforts begun in FY 1988 to demonstrate the Nation's ongoing commitment to implement the recommendations of the joint U.S. -' Canadian Special Envoys on Acid Rain. It fails to provide the requested funding for future rounds of project solicitations from FY 1990 through FY 1992, thereby jeopardizing the Federal commitment for acid rain control technologies. It also changes the availability of the $525 million previously appropriated for FY 1989 and appropriates $100 million in FY 1989 and $425 million for FY 1990 and FY 1991. These actions result in a shortfall of $1,775 billion from the total of $2.3 billion requested for the program.

Fossil Energy Research and Development. The bill would significantly increase spending for fossil energy research and development ($30 million or 9 percent over FY 1988 and $190 million or 114 percent over the request). It would maintain duplicate contractor research efforts that may result in additional future outlays. It includes numerous special-interest items that are inappropriate for Federal research.

Funds have again been earmarked for the magnetohydrodynamics (MHD) program. This year, however, the Committee has reversed its previously stated intention that the level of private cost sharing should increase by five percentage points each year. In FY 1987, the appropriations act set the cost sharing requirement at 20 percent; in FY 1988, it was set at 25 percent; in FY 1989, it should be set at 30 percent.

Energy Conservation. The bill includes increases of $202 million for conservation grants, offset by an expected $45 million in petroleum overcharge receipts. This additional amount is unnecessary because the States that would receive these funds have also received $2.9 billion from petroleum overcharge violation cases that they can use to fund conservation grant activities.

The bill includes significant increases in conservation research and development ($4 million and 3 percent over FY 1988 and $69 million and 77 percent over the request). It includes many special interest items that are inappropriate for Federal research. Particularly troublesome is the stipulation in the bill that the earmarked funds for Northwestern University can be used to expand the energy demonstration and research facility specified in the FY 1988 appropriations act to also include space for life sciences.

Federal Land Acquisition. Substantial funds (5145 million) are added to the President's Budget for land acquisition by the Bureau of Land Management, the National Park Service, the Fish and Wildlife Service, and the Forest Service. Given the 730 million acres already in Federal ownership (one-third of the Nation) and the serious budget situation, discretionary land acquisition should be postponed, if it cannot be foregone. Adding more land is a lower priority than providing quality operations and maintenance of existing lands.

Historic Preservation Fund. Funds ($30 million) are included for the Historic preservation fund whereas the President's Budget proposed no funding. The Federal Government already contributes hundreds of millions of dollars annually to the cause of historic preservation through tax code provisions. Financing State historic preservation offices and the National Trust for Historic Preservation is more properly a State and private responsibility.

Construction. Substantial funds ($156 million) are added to the President's Budget for construction by the Bureau of Land Management, the National Park Service, the Fish and Wildlife Service, and the Bureau of Indian Affairs. Only high priority construction projects, generally devoted to meeting health and safety needs, are proposed in the President's Budget. The additional construction projects are discretionary or non-critical and can be foregone or postponed. New construction is a lower priority than providing quality operations and maintenance of existing facilities.

Operations. A total of $132 million is added to the President's Budget to expand the operating budgets (exclusive of fire suppression) of various Interior bureaus, including the Bureau of Indian Affairs ($51 million), the U.S. Geological Survey ($23 million), the Bureau of Mines ($20 million), and the Fish and wildlife Service ($18 million). These increases fund numerous lesser priority or special interest projects.

Fire Fighting. The bill adds a total of almost $36 million for fire suppression for the Department of the Interior. These funds are to be used to reimburse fire fighting costs that will be incurred by Interior bureaus in FY 1988. It is premature to add funds over the President's Budget until actual FY 1988 fire costs are known. The Budget represents a conservative estimate based on recent historical experience. If costs prove higher, the shortfall can be made up (with appropriate offsets) in an FY 1989 supplemental or the FY 1990 appropriation.

Forest Service. The bill adds $167 million in discretionary appropriations (excluding land acquisition and fire fighting) for low priority program operations and construction projects. Unwarranted increases include $11 million for research; $43 million for state and private forestry programs that are not a Federal responsibility; $18 million for facility and Mt. St. Helens road construction; $39 million for recreation, fish and wildlife programs; and $12 million for soil, water, and range management.

Reductions in timber harvest administration (-$10 million), road construction (-$30 million), the Tongass National Forest (-$15 million) and other programs (-$17 million) will unduly affect timber sales and forest management.

Indian Health Services. To support increased Indian self-determination, the Administration urges the Congress to adopt the Administration's proposal to set aside funding in the bill for tribal operated hospitals and clinics. With such a distinction, the Federal government can demonstrate its long-term .commitment to increasing tribal participation in the management and operation of health facilities. There is wide-spread support for separate funding among Indians and Alaska Natives. Without separate funding, Indian tribes have no way of knowing whether Federal support for self-determination contracting is waning, increasing, or remaining the same.

Indian Health Facilities. The bill includes $64 million for Indian health facilities. This amount is but the tip of an iceberg since the bill includes only partial funding for several inpatient and outpatient projects estimated to cost an additional $153 million. In addition, the need for these facilities is dubious. Funding for these facilities has continued to increase in recent years despite a 50 percent occupancy rate at IHS hospitals.

National Foundation on the Arts and the Humanities. The bill includes an increase of $15 million (5 percent) that would make no material difference in the quality of American cultural life and cannot be objectively justified. The amounts requested reflect sufficient support for the Federal role in the arts.

National Capital Arts and Cultural Affairs. The Pill includes $5 million for general operating support cn a non-competitive grant basis to Washington, D.C. arts and cultural organizations — a duplication of existing Federal nationwide competitive grants.

Restoring Hetch Hetchy Valley. The Administration urges support for funds requested to study the idea of restoring the Hetch Hetchy Valley in the Yosemite National Park (CA). (These funds were denied in non-binding report language.) Carrying out such a study is the only way to find out if it is economically and environmentally feasible to restore this valley to its original state of outstanding natural beauty.

Onshore Production Accounting. The Administration opposes the $850 thousand reduction in the Mineral Management Service (MMS) for the Onshore Production Initiative. (These funds were denied in non-binding report language.) The proposed funding level would probably delay the Secretary's compliance with the Federal Oil and Gas Royalty Management Act of 1982 (FOGRMA), which mandates the establishment of a comprehensive production accounting system for all Federal and Indian oil and gas leases.

Abandoned Mine Land (AML) Fund. The Administration objects to adding $32 million to the Abandoned Mine Land Reclamation Fund. Such an add-on is unnecessary because it will only increase the projected AML unobligated balance, which is expected to exceed $350 million by the end of FY 1988.

II. LANGUAGE PROVISIONS

Buy America. Language has been included (section 113) that would require that structures on the Outer Continental Shelf (OCS) contain at least 50 percent U.S. labor and materials. The Administration is strongly opposed to this provision. It would seriously delay and increase the cost of oil production from the OCS; it conflicts with the Administration objective of encouraging reliance on indigenous energy sources; it is contrary to U.S. obligations under the General Agreement on Tariffs and Trade — inviting retaliation from countries such as the United Kingdom, Norway, the Netherlands, and Denmark; and it would create a new trade barrier at a time when markets are particularly concerned about creeping protectionism.

Moratorium on Outer Continental Shelf (OCS) Leasing. The Administration objects to language excluding areas of the North Atlantic (section 112), California (section 111), and Florida (section 110) from the rffsnore leasing program. This moratorium contradicts the statutory mandate of the OCS Lands Act designed to expedite exploration and production consistent with proper balancing of environmental and other concerns. It overrides the process of scientific studies and balancing analysis required by sections 18 and 19 of the -OCS Lands Act. Finally, the Interior Department current estimate is that it would reduce anticipated FY 1989 receipts by $155 million — $125 million from California leases and another $30 million from Florida and the North Atlantic leases.

Privatization of Helium Operations. The Administration has serious concerns about the policy implications of language that prohibits the Bureau of Mines from proceeding with the sale of Federal helium operations. The Bureau is currently reviewing the results of qn independent study analyzing the issues relating to the valuation and potential disposition of the helium processing and distribution operations. Generally, we have found nothing in the study to indicate that the privatization initiative should not proceed. However, the study raises certain issues concerning transition and specialized needs of Federal agencies that need to be addressed. The Bureau is continuing its review and has formally solicited public comment on the consultant's report and other relevant issues. Where feasible, and consistent with the President's privatization initiative, the production of such goods and services should be shifted to the private sector in order to reduce Federal expenditures and take advantage of the efficiencies that normally result when services are provided through the competitive marketplace.

SPR Petroleum Account/Naval Petroleum Reserve. The Administration urges the Congress to support fiscally responsible efforts to upgrade our emergency preparedness assets and to improve the Nation's ability to deal with potential turbulance in world oil markets through enactment of legislation to authorize the sale of the Naval Petroleum Reserve (NPR). The proceeds of this sale should be earmarked for the acquisition of oil for a 10 million barrel Defense Petroleum Inventory (DPI) and for increasing the fill rate of the Strategic Petroleum Reserve (SPR) to an average rate of 100,000 barrels per day. As many members of Congress have pointed out, now is the time to increase the fill rate of the SPR since oil prices are relatively low. Now is also the time to build the DPI since the NPRs are becoming less adequate for this purpose.

Federal Tort Claims. By continuing Federal tort claims coverage to tribal contractors, the bill continues the unacceptable practice of maintaining a special class of government contractors effectively immune from responsibility for their tortiously liable conduct. The Administration's position on this proposal is stated in a Justice Department letter to Senate Appropriations Committee Chairman Stennis dated September 21, 1987.

Spouse Travel. The Administration requests _that the Committee approve substitute language on reimbursement of travel expenses for spouses who accompany prospective Indian. Health Service physicians for pre-employment interviews. Under current law, payment of spouse travel for pre-employment interviews of prospective Federal employees is not authorized for any agency except IHS. However, because of the unique conditions of employment faced by PHS physicans employed at remote Indian reservations or traditional Indian lands, a narrowly drawn exception to current law can be accepted. The substitute language would permit spouse travel reimbursement, as determined by the Department of Health and Human Services, only where the pre-employment interview concerns possible employment at remote Indian sites that are not within reasonable commuting distance of a town or city. Thus, spouse travel would not be reimbursed if the pre-employment interview concerns employment near large and medium sized communities.

Legislative Vetoes. The Administration objects strongly to language in the bill prohibiting the Executive Branch from taking certain actions without prior approval of the Appropriations Committees. Such restrictions overstep the constitutional separation of powers principle as enunciated by the Supreme Court in INS v. Chada. Most objectionable is an administrative provision that would prevent the National Park Service from reprogramming funds (unless approved in advance by the Appropriations Committees) "to maintain law and order in emergency and other unforseen law enforcement situations and conduct emergency search and rescue operations in the National Park System." This provision is contrary to legal requirements to enforce the law and to preserve life and property.

Impediments to Proper Management. Several provisions in the bill impede the ability of the Executive Branch to manage programs properly and effectively. Examples of such intrusions into Executive Branch responsibilities include prohibitions on changing regional boundaries and office locations of the Forest Service as well as the closing or consolidating of Bureau of Mines research facilities (even though there are no current plans to do so), and implementing proposed eligibility regulations of the Indian Health Service.

The Administration objeers to new language concerning Federal management of Federally owned wildlife refuges. State management of Federally owned lands is authorized and is being practiced in accordance with the Fish and Wildlife Act of 1956 and the National Wildlife Refuge System Act of 1966. To constrain this practice is potentially inefficient and inconsistent -with our experience in managing under these Acts. Any management by States must conform to Federal standards, and we ask that the language be deleted.

The Administration objects to language for the National Endowment for the Arts that would intrude into the agency's grant-making process. The language would limit the Endowment's ability to assure an orderly and accountable grantmaking process and intervene in an issue that has long since been settled in a context that fully involved artistic peers, the National Council on the Arts and the Chairman.

Bureau of Indian Affairs. The bill does not include requested language to implement the tribal self-government demonstration project. Although Congress is working on separate authorizing legislation to implement the demonstration project, there is no assurance that such legislation will be enacted before FY 1989. Language is included prohibiting the publishing of higher education regulations required to implement needed program reforms and update provisions included in current law.

The Administration objects to language that would prohibit the closure of Phoenix Indian School until passage of authorizing legislation. It is costly and inefficient to operate a huge 500-student boarding facility with only about 75 students. Furthermore, once legislation passes, it would be highly unfair to these students to move them in the middle of a school year rather than to place them before the 1988-89 school year starts.

Bikini Resettlement Trust Fund. The Administration objects to the inclusion of language providing $5 million to the Bikini resettlement trust fund with the balance of $85 million provided over the next four years. It is inappropriate to provide funds for the resolution of the Bikini resettlement until appropriate documentation and analysis of costs and legal obligations associated with the resettlement have been determined.

Bureau of Land Management (BLM) Recordation and Filing Fees. The Administration objects to the earmarking of BLM recordation and filing fees for claims processing, compliance, enforcement and reclamation involving mining of hard-rock minerals. While increased funding for these activities appears justified, this should be provided via the appropriations process and subject to the scrutiny provided other activities. Any fees (such as the increased fees currently under review) should be credited to the General Fund of the Treasurv. as is the case under current law.

Seat Belts on National Park Service Roads. Language is included providing that five percent of the Office of the Secretary funds will become available only after the issuance of a rule requiring the use of seat belts on National Park Service roads. While the intent of the provision may be laudable, the Administration objects to this linkage potentially penalizing the Office of the Secretary. If the Congress believes seat belt use should be required in National parks, it should enact legislation via the authorizing committees.

Employment Ceilings. Section 310 of the bill appears to exempt programs funded by the bill from employment ceilings. The Administration opposes this provision because it prevents effective and efficient management of agency programs and promotes wasteful spending.

Required Supplementals. Sections 101 and 102 of the bill require that supplementals be requested to replenish funds transferred to cover emergencies. The President has constitutional and statutory authority to propose legislation (including supplementals). The President retains discretion on whether and when to request supplemental appropriations.

Employee Details. Section 109 of the bill is superfluous language included to prevent detailing of employees except by Office of Personnel Management regulations.

National Film Commission. The bill includes authorizing language for a new agency, the National Film Commission, and provides $500,000 for it to create a National Film Registry, label films as to their cultural and esthetic merit, and require certain disclosures in the event of alteration of a "registered" film. No hearings have been held on this agency, there is no known compelling need for it, and the resources are clearly only a small beginning for what could well become a massive and intrusive new Federal regulatory authority. Based on the information currently available, the Administration opposes enactment of this authority.