SPECIAL UPDATE: The President's FY 2003 Budget Request: Department of Energy

(Posted 2-23-02)

This update was originally sent out as an e-mail message to AGI's member societies.

IN A NUTSHELL: President Bush's fiscal year (FY) 2003 budget request includes $19.8 billion for the Department of Energy (DOE), a 3.2% increase. Within that nearly flat total, however, there were some big winners and bigger losers among geoscience-related programs. Although domestic energy security is a top priority of the Bush Administration, several key energy research programs are slated for deep cuts. Support for fossil energy research would drop 12.6% to $548.2 million. Oil research would receive a 37% cut to $35.4 million, and natural gas research would drop 50% to $22.6 million. DOE's Office of Science, which supports fundamental research at universities and national laboratories, would receive approximately $1 billion, a 2% increase. Within that total, geoscience research within the Basic Energy Sciences program would receive $21.3 million, the same as in FY 2002. Funding for geothermal energy programs would decrease 3% to $26.5 million. Support for the department's high-level nuclear waste disposal program would shoot up 40% to $527.1 million in order to carry out license application activities. On February 15th, President Bush announced his recommendation of the Yucca Mountain site to Congress. This update is the fourth in a series on how the geosciences fared in President Bush's FY 2003 budget request. Previous alerts on USGS, NSF, NASA, NOAA, and EPA can be accessed at http://www.agiweb.org/gap. A final budget update will cover remaining geoscience programs.


Overall, the request for the Department of Energy (DOE) is up 3.2% to $19.8 billion. Of that total, $8 billion goes to the National Nuclear Security Agency with responsibility for development and maintenance of the nation's nuclear weapons stockpile; $7.4 billion goes to cleaning up waste associated with nuclear weapon production over the past sixty years; $3.3 billion goes to support scientific research at national laboratories and universities; and $2.4 billion funds programs related to energy.

Fossil Energy

The budget request for DOE's Office of Fossil Energy (FE) looks remarkably similar to last year's request -- sizable cuts in the majority of fossil energy programs. The overall FE request is down 5.2% from last year's allocation, bringing the total to $816 million.  Funding for actual R&D activities is down 12.6% to total $548.2 million. Once again, natural gas and oil research programs are faced with particularly large cuts.

Last week, the House Science Committee met to assess the president's request for science programs. The committee's ranking Democrat, Rep. Ralph Hall (TX), expressed his concern that DOE funding for domestic energy production and research is down significantly despite the fact that improving homeland security is a major theme of the president's budget. Hall, a co-chair of the Congressional Oil and Gas Forum, questioned DOE Chief Financial Officer Bruce Carnes about fossil energy research in particular. Carnes responded that the Office of Fossil Energy is undergoing a mission review process that will help it prioritize the areas in which industry is not undertaking research and where federal investment is most beneficial.

Peppered throughout the FE budget document are snippets of information including one that states: "Public Benefit: The National Academy of Sciences reported economic benefits of $4.5 billion from 1978 to 2000 resulting from the Office of Fossil Energy's investment in advanced oil exploration and production technologies -- a nearly 4 to 1 return on federal R&D dollars.  The investment also resulted in the production of more than half a billion barrels of U.S. oil that might otherwise have remained in the ground."  But such praise translated into a 36.8% cut to the Oil Technology program for a total of $35.4 million. Funding for exploration and production (E&P) activities, specifically noted in the quote, would drop 49.3% to total $16.4 million. The majority of the E&P funding would go into PRIME, a program designed to "support high-risk, fundamental research that could produce revolutionary advances in oil technology," which will kick off in April 2002.  Funding for fundamental geoscience research to improve characterization of oil-bearing formations will also continue to be funded through E&P.  Also within the Oil Technology account, reservoir management activities would be funded at $9.5 million (down 26.6%) and environmental protection activities related to oil field operations would be funded at $9.5 million (down 11.2%).  The budget document notes that the environmental management account would scale back risk assessment activities in favor of supporting cooperative efforts between oversight agencies, both at the local and federal level, to improve the permitting process for oil production.

The stated goal of the Natural Gas Technologies program is to "add almost 2 trillion cubic feet per year of additional gas production" by 2010.  The program is slated for a 50% cut down to $22.6 million. Citing a period of expected growth in the coming years in natural gas, DOE budget documents state that the FE should target funding toward areas with the greatest return and that "industry clearly is not funding major development efforts."  The requested $15.5 million for natural gas exploration and production is a 24.6% decrease from last year's allocation.  A majority of the natural gas E&P account will be directed to the final year of development in several advanced drilling and diagnostic tools, including research in the area of secondary gas recovery.  E&P funds will be invested in developing technologies for drilling in ultra-deep waters and continental deep drilling, such as in the Rocky Mountains.  The budget document states that E&P will continue to support the Stripper Well Gas Consortium. Within the natural gas research program, two subaccounts are zeroed out; Gas Infrastructure activities would be transferred to DOE's Office of Pipeline Safety and Emerging Processing Technologies would fall completely to the private industry.

Over the past few years, there has been an increase in funding for research programs associated with gas hydrates.  The FY 2003 budget scales back (by 54.1%) the funding for gas hydrate research, but the $4.5 million requested, according to the budget document, "is still sufficient to collect important data on safety and seafloor stability and the role of hydrates in global climate change."

Even presidential initiatives are not spared from the FE cuts.  President Bush began a new Clean Coal Research Initiative (CCRI) in last year's budget that is continued in the FY 2003 budget.  This budget request is the second in a planned ten-year, $2 billion investment to improve technologies for using abundant domestic coal reserves.  FE plans to combine $150 million from FY 2002, $30 million from the now-closed Power Plant Improvement Initiative (a Clinton-era program), and $150 million from the FY 2003 budget -- for a total of $330 million -- to solicit proposals for cooperative, cost-sharing demonstrative projects for CCRI.  The first solicitation, expected in the coming weeks, "will focus on rapidly advancing technologies that can be accelerated into the power sector through government-industry partnership projects."  Future funding for CCRI is expected to be supported through royalties from patents expected from these early projects.  Research on carbon sequestration is part of the CCRI, and is one of the two areas to see an increase.  The budget directs $54 million, an increase of 67.8% from last year, toward carbon sequestration research to aid in moving promising laboratory projects to field tests.  The other area of CCRI to see an increase in the request is the Advanced Research account, which requested a 13% increase to total $31.7 million.

The FE request includes $188.8 million for the Strategic Petroleum Reserve (SPR) and $93.1 million for the Naval Petroleum Reserves, both increases. Last fall, President Bush announced an executive order to fill the SPR to its full capacity using in-kind royalties from federal leases, and the first deliveries are expected this spring.  Increased funds for SPR are expected to help cover the costs associated with these deliveries.

The FE budget document is available at http://fossil.energy.gov/budget/.

Office of Science

The president's budget request for DOE's Office of Science is $1 billion, a 2% increase from last year's allocation.  A key area of interest for the geosciences is the Basic Energy Science (BES) program, which sponsors fundamental research in areas to support the department's missions in energy, environment, and national security.  A budget restructuring to align the accounts with the BES working structure would move geoscience programs into a combined Chemical Sciences, Geosciences, and Energy Biosciences Research account, which would total $220.1 million, a 5.9% increase.  Within that total, Geoscience Research would remain at the $21.3 million received last year, continuing to support geophysical research focused on "new approaches to understand[ing] physical properties of fluids, rocks and minerals."  The Office of Science and Basic Energy Science budget documents are available at http://www.sc.doe.gov/orm/Budget_Finance/FY_03_Budget/FY_03_Budget.htm.

Geothermal Energy

DOE funds research into geothermal energy production through the department's Office of Energy Efficiency and Renewable Energy. The geothermal program would receive $26.5 million in FY2003, a 3% decrease. Overall, spending on renewable energy would increase 5% to $291.5 million. For more details on the renewables budget request, see http://www.eren.doe.gov/budget/.

Nuclear Waste Disposal

President Bush's budget request includes a large increase for the Yucca Mountain project, anticipating his February 15th decision to officially recommend the Nevada site to Congress as the nation's permanent disposal site for high-level nuclear waste. The president's decision comes after DOE spent $4 billion over the past 20 years characterizing the site. The FY 2003 budget for DOE's Office of Civilian Radioactive Waste Management would increase 40% to $527.1 million with the bulk of the increase related to a shift from site characterization to activities supporting submission of a license application to the U.S. Nuclear Regulatory Commission.

The president acted one day after Energy Secretary Spencer Abraham made his official recommendation. Abraham noted in his letter to Bush: "I have considered whether sound science supports the determination that the Yucca Mountain site is scientifically and technically suitable for the development of a repository. I am convinced that it does. The results of this extensive investigation and the external technical reviews of this body of scientific work give me confidence for the conclusion, based on sound scientific principles, that a repository at Yucca Mountain will be able to protect the health and safety of the public when evaluated against the radiological protection standards adopted by the Environmental Protection Agency and implemented by the Nuclear Regulatory Commission."

Under the procedures outlined in the Nuclear Waste Policy Act of 1982 (amended in 1987). the president's recommendation triggers a series of actions. The State of Nevada has 60 days to submit a Notice of Disapproval to Congress, which the state will certainly do (in addition to suing DOE for failing to follow proper procedures). Often referred to as a veto, the Nevada governor's notice must be voted on by Congress within the next 90 days that they are in session ("in the first period of 90 calendars of continuous session"). Unlike a presidential veto, the state's notice can be overturned by a simple majority vote in both houses. If the disapproval is overturned, then the Secretary of Energy has 90 days to submit a license application to the U.S. Nuclear Regulatory Commission. This series of actions could be over in a matter of months, although a recent General Accounting Office report suggested that DOE would not be ready to submit a license application for several years. Moreover, Nevada is launching a full-court press, both legally and politically, to stop the project. For more on developments related to Yucca Mountain, see http://www.agiweb.org/gap/legis107/yucca.html.

More details on the overall DOE budget request can be found at http://www.mbe.doe.gov/budget/03budget/

Special update prepared by Margaret A. Baker and David Applegate, AGI Government Affairs Program

Sources: American Institute of Physics Bulletin of Science Policy News, Department of Energy, House Science Committee, and White House budget documents.

Please send any comments or requests for information to the AGI Government Affairs Program.

Posted February 23, 2002

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