    [Budget of the U.S. Government]
    [VI. Investing in the Common Good: The Major Functions of the Federal Government]
    [16. Natural Resources and Environment]
    [From the U.S. Government Publishing Office, www.gpo.gov]

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                     16.  NATURAL RESOURCES AND ENVIRONMENT

      ----------------------------------------------------------------------

                     Table 16-1.  FEDERAL RESOURCES IN SUPPORT OF NATURAL RESOURCES AND ENVIRONMENT
                                                (In millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                                                Estimate
                Function 300                1996   -----------------------------------------------------------------
                                           Actual      1997       1998       1999       2000       2001       2002
    ----------------------------------------------------------------------------------------------------------------
    Spending:
      Discretionary Budget Authority...     20,668     21,071     22,393     22,393     21,848     21,741     21,829
      Mandatory Outlays:
        Existing law...................        667      1,045      1,012        863        911        907        843
        Proposed legislation...........  .........  .........        113         74         62         97        104
    Credit Activity:
      Direct loan disbursements........         34         45         38         37         37         39         40
    Tax Expenditures:
      Existing law.....................      1,650      1,670      1,680      1,690      1,705      1,685      1,655
      Proposed legislation.............  .........         -8        -89        -92        -94        -96        -97
    ----------------------------------------------------------------------------------------------------------------

      ----------------------------------------------------------------------
       The Federal Government spends over $20 billion a year to protect the
    environment, conserve Federal resources, provide recreational
    opportunities, and construct and operate water projects. \1\ The Federal
    Government manages about 700 million acres--a third of the U.S.
    continental land area--including 25 million acres managed by the Defense
    Department (DOD) and 56 million that the Interior Department holds in
    trust for Indian Tribes and individual Indians. The lands generate about
    $2.7 billion in receipts a year, mainly from royalties and revenues from
    the oil and gas, coal, and timber industries. About half of the receipts
    go to the Federal Treasury, the rest to States and to various Federal
    land and water resource programs. The Government also allocates nearly
    $1 billion a year in tax incentives for natural resource industries,
    especially timber and mining.
    ---------------------------------------------------------------------------
      \1\ The Natural Resources and Environment function does not reflect
    total Federal support for the environment and natural resources. It does
    not include, for instance, the environmental clean-up programs at the
    Departments of Energy and Defense.
    ---------------------------------------------------------------------------
       Federal lands include the National Park System, with such unique
    resources as Grand Canyon National Park, Everglades National Park,
    Yellowstone National Park and Gettysburg National Military Park; the 156
    National Forests that the Forest Service manages for various uses,
    including timber harvesting, wildlife habitat, and recreation; the
    National Wildlife Refuge System, comprising 510 refuges for the
    conservation of migratory birds and other important species; and the 264
    million acres that the Bureau of Land Management (BLM) manages in 11
    Western States for economic, conservation, and recreational purposes.
    Visitors make about 700 million recreational visits a year on Federally-
    owned lands.
       Federal spending on natural resources and the environment also
    includes the Environmental Protection Agency (EPA), for which the budget
    proposes $7.6 billion in 1998. EPA implements most of the Nation's major
    environmental laws, including the Clean Air, Clean Water, and Safe
    Drinking Water Acts; administers the Superfund program; and finances
    water infrastructure projects.
       Largely due to Federal efforts, the air and water are cleaner across
    most of the

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    United States, and a much larger share of Americans are
    served by secondary wastewater treatment. Our natural resources are
    better conserved--with national forests and public rangelands returned
    to sustainable levels of productivity, soil erosion substantially
    reduced, thousands of wetland acres restored, unique ecosystems
    protected, contaminated areas cleaned up by a record rate, and billions
    of dollars in flood damages averted. Formerly endangered or threatened
    species like bald eagles, wolves, and condors again grace the landscape
    in the lower 48 States. Finally, one of America's best inventions--its
    national park system--has been improved and preserved for future
    generations.

    Parks and Recreation

       The Federal Government invests over $1.4 billion a year to maintain
    the National Park System, which has 374 parks, covering over 83 million
    acres in 49 States, the District of Columbia, and various territories.
    The popularity of national parks has prompted a steady rise in
    congressional funding (almost five percent a year since 1986) for the
    National Park Service (NPS), but has generated even faster growth in the
    number of new parks and other NPS responsibilities. Since 1986, the
    number of national parks has grown by 10 percent, including the five
    designated in the 1996 Omnibus Parks Act. NPS also maintains an
    infrastructure of aging facilities, fragile ruins, and declining
    historic structures.
       So, with demands growing faster than available funding (and with an
    estimated 280 million park visitors in 1996), NPS is taking new,
    creative approaches to managing parks, including broader cooperative
    arrangements with public and private groups. The Government, for
    instance, is establishing the Tallgrass Prairie National Preserve in
    Kansas at substantially less cost than a traditional national park unit,
    due to a partnership with a private group that owns most of the land. At
    the Presidio of San Francisco, a government corporation will be able to
    lease and manage hundreds of unused buildings in a manner consistent
    with park purposes, but that cuts taxpayer costs. More park managers
    also are accepting the support of individuals and corporate citizens
    that donate their time and money to help protect national parks.
    Finally, NPS is seeking additional resources by asking Congress for
    permanent authority to collect fees and retain all the receipts from new
    fees, and for reforms in park concessions policies to increase
    competition for concessions contracts and provide incentives for parks
    to negotiate higher returns from concessioners.

    Conservation and Land Management

       How we use the public lands that BLM manages (the 264 million acres
    in 11 Western States) has evolved over time--and continues to. To meet
    changing and diverse demands, BLM is promoting both biological diversity
    and the sustainable development of natural resources. In 1996, BLM
    provided for nearly 65 million recreational visits while accommodating
    more traditional users, including 20,000 Western ranchers, the timber
    industry, and other commercial interests.
       BLM and the Forest Service, with combined annual budgets of about $3
    billion, manage Federal forests for multiple purposes. Federal forest
    lands in the Pacific Northwest and northern California were plagued by
    conflict between environmentalists and industry over logging and,
    eventually, a court injunction that brought Federal timber sales to a
    virtual halt in 1991. To end the impasse, the President established his
    Northwest Forest Plan in 1994. Now, Federal forest management is nearing
    a fully sustainable level. The Federal Government offered for sale over
    1.7 billion board feet from Federal forest lands in Washington, Oregon,
    and northern California from 1994 to 1996--enough to build 142,000
    average homes and employ about 11,700 people. The Forest Plan also
    supports area communities by distributing grants and loans to help over
    100 communities further diversify their economies.
       Federal and non-Federal agencies also are implementing long-term
    restoration plans for the South Florida and Bay-Delta, California
    ecosystems. The South Florida ecosystem is a national treasure that
    includes the Everglades, Florida Bay, and other internationally-renowned
    natural resources. Its long-term viability and sustainability is
    critical for the tourism and fishing industries, as well as

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    for the water supply, economy, and quality of life for South Florida's
    population of over six million people. As with South Florida, the lack
    of enough clean water in the San Francisco Bay-San Joaquin Delta
    ecosystem has reduced the quality and quantity of wildlife habitat,
    endangered several species, and reduced the estuary's reliability as a
    source of high quality water.
       The Interior Department's Fish and Wildlife Service (FWS) and
    Commerce Department's National Marine Fisheries Service (NMFS) protect
    species under the Endangered Species Act (ESA) while allowing economic
    development to continue. To protect species on non-Federal lands, these
    agencies work with States and local governments, private groups, and
    landowners to develop Habitat Conservation Plans (HCPs), which provide
    the flexibility and certainty that everyone needs to plan for, and use,
    their land. From 1983 to 1992, such parties devised only 14 HCPs but,
    from 1993 to 1997, the number issued or under development soared to
    300--covering 8.4 million acres in the Pacific Northwest alone. To
    protect species on Federal lands, Federal agencies consult with State
    and local governments, groups, and others before allowing private
    parties to use the land.
       Another important land conservation program is the Land and Water
    Conservation Fund (LWCF), which uses the royalties of offshore oil and
    gas leases to help Federal, State, and local governments acquire land
    for conservation and outdoor recreation. From its inception in 1964, the
    program has helped Federal, State, and local governments to acquire
    about seven million acres of parks and other lands. The program, for
    instance, is funding the acquisition of Sterling Forest in New York and
    New Jersey, the largest undeveloped tract of forest and open lands
    within 45 miles of downtown New York City, thus creating vast new
    recreational opportunities for the whole area.
       Half of the continental United States is cropland, pastureland, and
    rangeland owned and managed by two percent of Americans--farmers and
    ranchers. The Agriculture Department's (USDA) Natural Resources
    Conservation Service provides these private interests with technical
    assistance to ensure the health and sound management of this land. Other
    USDA programs mainly provide financial conservation assistance, the
    largest of which is the Conservation Reserve Program (CRP) through which
    USDA can maintain up to 36 million acres under land retirement
    contracts, reducing soil erosion by over 600 million tons a year. The
    1996 Farm Bill should greatly enhance CRP's conservation benefits. Under
    it, for instance, producers may enroll partial fields into the CRP
    (e.g., filterstrips, riparian buffer areas, and grassed waterways) to
    gain the maximum conservation for the least cost.

    Pollution Control and Abatement

       The Federal Government helps achieve the Nation's pollution control
    goals in three ways. It (1) takes direct action, (2) funds action by
    State, local, and Tribal governments, and the private sector, and (3)
    imposes mandates on these parties. The Environmental Protection Agency's
    (EPA) $7 billion discretionary budget and the Coast Guard's $100 million
    Oil Spill Liability Trust Fund (which funds oil spill clean-ups in U.S.
    waters) finance the first two activities. EPA's discretionary budget, in
    turn, has three major parts--the operating program, Superfund, and water
    infrastructure financing.

       EPA's $3 billion operating program is the main Federal
              funding source to implement most Federal pollution control
              laws, including the Clean Air, Clean Water, Solid Waste
              Disposal, Safe Drinking Water, and the Toxic Substance Control
              Acts. EPA protects public health and the environment by
              developing national pollution control standards, which States
              largely implement and enforce under the authority that EPA
              delegates. These standards have led to major environmental
              improvements. EPA's pollution abatement efforts since 1970
              also have generated major environmental improvements (see
              Chart 16-1).
       Superfund's $2 billion program pays for cleaning up hazardous
              substance spills and abandoned hazardous waste sites, and for
              compelling responsible parties to clean up inactive sites--
              with a goal of 900 completed cleanups by the year 2000 of the
              roughly 1,400 sites on EPA's high-priority

    [[Page 156]]

              list. Private parties subject to Superfund's enforcement spend
              another $2 billion a year, and Federal agencies (largely DOD and the
              Energy Department) spend about $5 billion a year on hazardous
              waste cleanup. Superfund also supports the Federal brownfields
              program, designed to assess, clean up, and re-use former
              contaminated sites.
       Federal water infrastructure funds go primarily for
              capitalization grants to State revolving funds, which make
              low-interest loans to help municipalities pay for wastewater
              treatment and drinking water treatment systems, as Federal law
              requires. The more than $67 billion in Federal assistance
              since the 1972 Clean Water Act has dramatically increased the
              percentage of Americans served by secondary treatment (as
              shown in Chart 16-2) and better water quality. State and local
              governments (and private companies) also benefit from a tax
              break (costing $700 million in 1998) allowing State and local
              governments to issue tax-exempt bonds to construct private
              waste disposal facilities.

    Water Resources

       The Army Corps of Engineers and Interior's Bureau of Reclamation are
    the main Federal agencies that build and operate multi-purpose water
    projects. The Corps operates Nation-wide, while the Bureau operates in
    the 17 western States. They both seek to develop or manage water
    resources to meet changing needs. The budget proposes $4.6 billion for
    the agencies in 1998--$3.7 billion for the Corps, $0.9 billion for the
    Bureau.
       While navigation and flood damage reduction remain the Corps'
              major focus, its projects, programs, and regulatory
              responsibilities increasingly address environmental
              objectives, including wetlands protection. The Administration
              will work with Congress to develop a consensus on priorities
              for the Corps Civil Works program in an era of stable or
              falling budgets.

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       The Bureau was designed to support economic development in
              the West by financing and constructing reliable water supplies
              for irrigation and hydropower generation. With the West
              developed, the Bureau has sought since the late 1980s to
              remake itself into a customer-oriented ``water resources
              management'' agency, operating projects more efficiently and
              providing expertise on the best way to manage water resources,
              consistent with sound environmental and economic objectives.

    Regulation

       Millions of Americans have benefited not just from the spending
    programs discussed above, but from Federal regulations that are designed
    to protect the environment and public health. In issuing regulations,
    however, the Administration has sought to carefully protect the public
    without unduly burdening private interests. In this area and in others,
    the Administration has worked to eliminate unnecessary regulations while
    improving the regulations that are clearly necessary.
       State, local, and Tribal governments and the private sector devote
    considerable resources to comply with Federal environmental laws and
    regulations to make the air and water cleaner and reduce risks from
    hazardous wastes.

    Tax Incentives

       The tax code offers incentives for natural resource industries,
    especially timber and mining. The timber industry can deduct certain
    costs for growing timber, pay lower capital gains rates on profits, take
    a credit for investment, and quickly write-off reforestation costs--all
    told, costing about $500 million in 1998. The mining industry benefits
    from percentage depletion provisions (which allow deductions that exceed
    the economic value of resource depletion) and can deduct certain
    exploration and development costs--together, costing about $335 million
    in 1998.