[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

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                 Table 16-1.  FEDERAL RESOURCES IN SUPPORT OF NATURAL RESOURCES AND ENVIRONMENT                 
                                            (In millions of dollars)                                            
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                                                                            Estimate                            
            Function 300                1996   -----------------------------------------------------------------
                                       Actual      1997       1998       1999       2000       2001       2002  
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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
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   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.
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  \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.
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   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 

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          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.