DOE BRACES FOR ACROSS-THE-BOARD SPENDING CUTS

Tamar Hallerman
GHG Monitor
3/1/13

Across-the-board spending cuts go into effect today for federal agencies like the Department of Energy, with most programs expecting to see more than 8 percent slashed from their budgets. Congress and the White House failed to find common ground on offsetting legislation for the sequester ahead of the March 1 deadline, allowing for $85.3 billion in indiscriminate funding cuts, equally divided between defense and non-defense programs, to take effect today. Discretionary programs like those funded by DOE were initially expected to see 8.2 percent cuts across all programs and projects, but more recent estimates from the White House indicated that because those spending reductions must be achieved over the remaining seven months of the fiscal year, that those cuts will be closer to 9 percent for nondefense programs. For programs like DOE’s Fossil Energy R&D, with a pre-sequester budget of $534 million, that means a reduction of closer to $48 million.

President Obama and lawmakers on both sides of the aisle ramped up finger-pointing throughout the week as the cuts loomed. President Obama warned of the crippling impacts of sequestration on the nation’s economy in a meeting with the National Governor’s Association Feb. 25. The impacts of the sequestration “will not all be felt on day one. But rest assured the uncertainty is already having an effect,” Obama said. “Companies are preparing layoff notices. Families are preparing to cut back on expenses. And the longer these cuts are in place, the bigger the impact will become.” The White House also released documents Feb. 24 assessing the state-by-state impacts of sequestration aimed at upping pressure on lawmakers to do something.

Meanwhile, the Senate defeated opposing plans Feb. 28 to limit the effects of the sequester. The upper chamber defeated a Republican-backed plan 38-62 that would have delayed the cuts by two weeks and instead would have required the President to send Congress a list of alternative budget cuts by March 15. The Senate also killed a Democratic replacement bill 51-49 that would have replaced the cuts with tax increases for the wealthy and $48.5 billion in cost savings from farm subsidies and reduced appropriations for future defense spending. Both measures failed to make the required 60-vote threshold for passage in the Senate.

OMB Issues Guidance for Agency Heads

Less than two days ahead of the scheduled cuts, the White House’s Office of Management and Budget issued detailed guidance to agency heads about how they should plan for the sequester, which it called “bad policy that was never intended to be implemented.” It called for leaders to use “increased scrutiny” for new hires, training, conferences and travel, as well as to detail as soon and specifically as possible which contracts need to be cancelled, delayed, or re-scoped, as well as the number of employees that need to be furloughed and for how long. OMB said agencies should also consider delaying or reducing block grants and other financial assistance. “Agencies’ planning efforts must be guided by the principle of protecting the agency’s mission to serve the public to the greatest extent practicable,” the OMB guidance states. “Planning efforts should be done with sufficient detail and clarity to determine the specific actions that will be taken to operate under the lower level of budgetary resources required by sequestration.”

The Department of Energy would not comment on what, specifically, the sequester could mean on a program level for FE. In a letter to Senate appropriators last month, though, outgoing Secretary of Energy Steven Chu said that the furloughs and project delays that would have to occur as a result of sequestration would “reduce the Department’s ability to serve the American people.” “The cuts would come five months into the fiscal year, forcing the Department to absorb the spending reduction in a seven-month period,” he said. “While the Department has assiduously followed the direction of Congress and operated at prescribed levels during the current Continuing Resolution, such reductions would be difficult to absorb while continuing to sustain the same level of progress on our mission.”

Chu particularly assailed the fact that the cuts apply equally to all government programs and do not allow leaders to “prioritize and make tradeoffs.” For basic scientific research, impacts of the funding cuts would be particularly “severe,” he said, and could curtail operations at “numerous” national labs and impact more than 25,000 researchers and operations personnel. Chu said the sequester would also “decelerate the nation’s transition into a clean energy economy” by cutting the number and size of grants given out to clean energy research projects.

Perciasepe Says Climate Research Programs Will Hurt

At EPA, acting Administrator Bob Perciasepe outlined in a similar letter to the Senate Appropriations Committee early last month that sequestration would particularly hurt air quality monitoring programs in the states, which carry out the majority of EPA’s rulemakings. Perciasepe said the cuts would likely shut down some sites that monitor for pollutants like ozone and fine particulates while hurting civil and criminal enforcement of environmental laws. The cuts could also reduce support for environmental reviews under the National Environmental Policy Act, which could subsequently slow the approval of energy projects, he added.

Perciasepe also told lawmakers that the sequester would hurt EPA’s air and climate R&D programs. “Under sequestration, cuts to EPA climate research would limit the ability of local, state and the federal government to help communities adapt to and prepare for certain effects of climate change, such as severe weather events,” Perciasepe said. “Without information provided by climate research, local governments would not know how climate change would affect water quality, and therefore would be unable to develop adaptation strategies to maintain protection of water quality as the climate changes.”