B-206940.2, JUNE 16, 1982, 61 COMP.GEN. 482

B-206940.2: Jun 16, 1982

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WHERE THOSE PROGRAMS AND PROJECTS ARE NOT SPECIFICALLY MANDATED IN EITHER THE APPROPRIATION ACT OR AUTHORIZING LEGISLATION. WHERE THE SECRETARY OF ENERGY IS GIVEN CONSIDERABLE DISCRETION IN FORMULATING AND EXECUTING A COMPREHENSIVE NONNUCLEAR ENERGY RESEARCH AND DEVELOPMENT PROGRAM. DEFERRAL - PROGRAM TERMINATION COSTS A PROPOSAL BY DOE TO DEFER USE OF NO-YEAR FUNDS TO FISCAL YEAR 1983 WAS NOT A PROPOSED RESCISSION UNDER SECTION 1012(A) OF THE IMPOUNDMENT CONTROL ACT OF 1974. MERELY BECAUSE IT WOULD HAVE BEEN USED TO COVER EXPENSES INCURRED IN CONNECTION WITH THE TERMINATION OF AUTHORIZED PROJECTS AND ACTIVITIES. WHERE ALL AVAILABLE BUDGET AUTHORITY WILL IN FACT BE EXPENDED FOR TERMINATION COSTS.

B-206940.2, JUNE 16, 1982, 61 COMP.GEN. 482

APPROPRIATIONS - AVAILABILITY - OBJECTS OTHER THAN AS SPECIFIED - TERMINATION COSTS - DISCRETIONARY PROJECTS - NONNUCLEAR ENERGY RESEARCH FUNDS APPROPRIATED FOR FOSSIL ENERGY RESEARCH AND DEVELOPMENT ACTIVITIES OF THE DEPARTMENT OF ENERGY (DOE) MAY BE USED FOR EXPENSES PERTAINING TO THE TERMINATION OF VARIOUS FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAMS AND PROJECTS, WHERE THOSE PROGRAMS AND PROJECTS ARE NOT SPECIFICALLY MANDATED IN EITHER THE APPROPRIATION ACT OR AUTHORIZING LEGISLATION, WHERE THE SECRETARY OF ENERGY IS GIVEN CONSIDERABLE DISCRETION IN FORMULATING AND EXECUTING A COMPREHENSIVE NONNUCLEAR ENERGY RESEARCH AND DEVELOPMENT PROGRAM, AND WHERE THE PROPOSED TERMINATIONS AND REDUCTIONS WOULD NOT LEAVE THE REMAINING OVERALL PROGRAM INCONSISTENT WITH THE STATUTORY SCHEME. APPROPRIATIONS - IMPOUNDING - IMPOUNDMENT CONTROL ACT - REPORTING TO CONGRESS - RESCISSION V. DEFERRAL - PROGRAM TERMINATION COSTS A PROPOSAL BY DOE TO DEFER USE OF NO-YEAR FUNDS TO FISCAL YEAR 1983 WAS NOT A PROPOSED RESCISSION UNDER SECTION 1012(A) OF THE IMPOUNDMENT CONTROL ACT OF 1974, 31 U.S.C. 1402(A), MERELY BECAUSE IT WOULD HAVE BEEN USED TO COVER EXPENSES INCURRED IN CONNECTION WITH THE TERMINATION OF AUTHORIZED PROJECTS AND ACTIVITIES. WHERE ALL AVAILABLE BUDGET AUTHORITY WILL IN FACT BE EXPENDED FOR TERMINATION COSTS, A RESCISSION PROPOSAL IS NOT REQUIRED. APPROPRIATIONS - IMPOUNDING - PROGRAM TERMINATION - PRIOR TO CONGRESSIONAL ACTION ON PROPOSED DEFERRAL - PROPRIETY THERE IS NO LEGAL REQUIREMENT THAT WOULD HAVE PREVENTED DOE FROM INITIATING TERMINATION ACTIVITIES WITHIN THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM IN ADVANCE OF CONGRESSIONAL ACTION ON A PROPOSED DEFERRAL OF FUNDS FROM THAT PROGRAM.

MATTER OF: DEPARTMENT OF ENERGY - TERMINATION OF FOSSIL ENERGY PROGRAMS, JUNE 16, 1982:

THE CHAIRMAN AND SEVERAL MEMBERS OF THE HOUSE COMMITTEE ON SCIENCE AND TECHNOLOGY HAVE REQUESTED OUR OPINION AS TO WHETHER THE DEPARTMENT OF ENERGY MAY USE FUNDS APPROPRIATED FOR FOSSIL ENERGY RESEARCH AND DEVELOPMENT TO PAY FOR THE TERMINATION OF A NUMBER OF FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAMS, PROJECTS, AND ACTIVITIES. WE HAVE RECEIVED SIMILAR CONGRESSIONAL REQUESTS CONCERNING THE MAGNETOHYDRODYNAMICS PROGRAM AND THE HYDROPYROLYSIS COAL GASIFICATION PROJECT. IN CONNECTION WITH THESE VARIOUS REQUESTS, WE HAVE ALSO BEEN ASKED SEVERAL QUESTIONS CONCERNING A PROPOSAL BY DOE TO DEFER CERTAIN FOSSIL ENERGY FUNDS TO PAY FOR SUBSEQUENT PROGRAM TERMINATION COSTS: WHETHER THE PROPOSED DEFERRAL SHOULD NOT HAVE INSTEAD BEEN DESIGNATED A PROPOSED RESCISSION, AND WHETHER ENERGY COULD INITIATE PROGRAM TERMINATIONS IN ADVANCE OF CONGRESSIONAL ACTION ON THE IMPOUNDMENT PROPOSAL.

AFTER THE COMMITTEE MEMBERS SUBMITTED THEIR QUESTIONS, THE CONGRESS REJECTED THE PROPOSED DEFERRAL. SEE H.R. RES. 411, 97TH CONG., 2D SESS., 128 CONG.REC. H1660 (DAILY ED. APRIL 29, 1982). NONETHELESS, WE SHALL ADDRESS THE IMPOUNDMENT QUESTIONS BECAUSE THEY RAISE SIGNIFICANT ISSUES THAT MAY AGAIN ARISE IN THE FUTURE.

WE HAVE EXAMINED THE DEPARTMENT'S PROPOSALS IN LIGHT OF THE AUTHORIZATION AND APPROPRIATION STATUTES GOVERNING THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM, AND CONCLUDE THAT THE FUNDS IN QUESTION MAY BE USED TO PAY FOR FOSSIL FUEL PROGRAM TERMINATION EXPENSES. WE ALSO CONCLUDE THAT THE PROPOSED IMPOUNDMENT BY ENERGY WAS IN FACT A DEFERRAL, AND THAT THE DEPARTMENT NEED NOT HAVE WAITED UNTIL THE CONGRESS HAD ACTED ON THE IMPOUNDMENT PROPOSAL BEFORE COMMENCING TERMINATION ACTIVITIES. A DETAILED DISCUSSION OF THE REASONS FOR OUR CONCLUSIONS FOLLOWS.

BACKGROUND PROGRAM AUTHORIZATION

THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM CONSISTS OF A NUMBER OF RESEARCH AND DEVELOPMENT EFFORTS CARRIED OUT UNDER AUTHORITY OF THE FEDERAL NONNUCLEAR ENERGY RESEARCH AND DEVELOPMENT ACT OF 1974 (THE NONNUCLEAR ENERGY ACT), 42 U.S.C. 5901 ET SEQ. (1976), AND THE DEPARTMENT OF ENERGY ORGANIZATION ACT, 42 U.S.C. 7101 ET SEQ. (SUPP. III 1979). THE NONNUCLEAR ENERGY ACT REQUIRED THE ADMINISTRATOR OF THE ENERGY RESEARCH AND DEVELOPMENT ADMINISTRATION (ERDA) TO FORMULATE AND CARRY OUT A COMPREHENSIVE FEDERAL NONNUCLEAR ENERGY RESEARCH AND DEVELOPMENT PROGRAM TO ADVANCE CERTAIN POLICIES AND COMPLY WITH CERTAIN REQUIREMENTS OF THAT STATUTE. 42 U.S.C. 5903(B) (1976). IT FURTHER REQUIRED THE ADMINISTRATOR TO DEVELOP AND TRANSMIT TO THE CONGRESS A COMPREHENSIVE NONNUCLEAR ENERGY RESEARCH, DEVELOPMENT, AND DEMONSTRATION PROGRAM, DESIGNED "TO ACHIEVE SOLUTIONS TO THE ENERGY SUPPLY AND ASSOCIATED ENVIRONMENTAL PROBLEMS IN THE IMMEDIATE AND SHORT TERM (TO THE EARLY 1980'S), MIDDLE-TERM (THE EARLY 1980'S TO 2000), AND LONG-TERM (BEYOND 2000) TIME INTERVALS." 42 U.S.C. 5905(B)(2) (1976).

THE NONNUCLEAR ENERGY ACT REQUIRED THAT THE PROGRAM TRANSMITTED TO THE CONGRESS INCLUDE ELEMENTS AND ACTIVITIES DESIGNED TO ADVANCE THE DEVELOPMENT AND DEMONSTRATION OF SPECIFIC CATEGORIES OF ENERGY TECHNOLOGY, INCLUDING CONSERVATION, LOW SULFUR BOILER FUELS, ELECTRICAL GENERATION, COAL GASIFICATION AND LIQUEFACTION, OIL SHALE, PETROLEUM, GEOTHERMAL AND SOLAR ENERGY, TIDAL POWER AND SYNTHETIC FUELS. 42 U.S.C. 5905(B)(3) (1976). PROGRAM ELEMENTS AND ACTIVITIES WERE TO BE ASSIGNED TO THE THREE TIME INTERVALS. THE PROGRAM WAS REQUIRED TO INCLUDE JUSTIFICATIONS FOR THESE ASSIGNMENTS AND FOR THE DEGREE OF EMPHASIS GIVEN TO EACH. ID. IN ADDITION, THE ADMINISTRATOR WAS REQUIRED TO REVISE THE PROGRAM ANNUALLY. 42 U.S.C. 5914(A) (1976).

THE RESPONSIBILITY AND AUTHORITY PROVIDED TO THE ADMINISTRATOR BY THE NONNUCLEAR ENERGY ACT WERE TRANSFERRED TO THE SECRETARY OF ENERGY BY SECTION 301(A) OF THE DEPARTMENT OF ENERGY ORGANIZATION ACT. 42 U.S.C. 7151(A) (SUPP. III 1979). FUNDING AUTHORIZATION AND APPROPRIATIONS

APPROPRIATIONS TO CARRY OUT THE REQUIREMENTS OF THE NONNUCLEAR ENERGY ACT ARE MADE SUBJECT TO ANNUAL AUTHORIZATION. 42 U.S.C. 5821, 5915, 7270 (1976 AND SUPP. III 1979). THE FISCAL YEAR 1982 AUTHORIZATION FOR FOSSIL ENERGY RESEARCH AND DEVELOPMENT WAS INCLUDED IN SECTION 1001 OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1981, PUB. L. NO. 97-35, 95 STAT. 357, 606. THAT PROVISION AUTHORIZED THE APPROPRIATION OF $460.8 MILLION FOR FISCAL YEAR 1982 FOR "(FOSSIL ENERGY RESEARCH AND DEVELOPMENT, INCLUDING CAPITAL EQUIPMENT NOT RELATED TO CONSTRUCTION."

THE FISCAL YEAR 1982 APPROPRIATION STATUTE PROVIDED A LUMP-SUM OF $431.1 MILLION, TO REMAIN AVAILABLE UNTIL EXPENDED, FOR "NECESSARY EXPENSES IN CARRYING OUT FOSSIL ENERGY RESEARCH AND DEVELOPMENT ACTIVITIES UNDER THE AUTHORITY OF THE DEPARTMENT OF ENERGY ORGANIZATION ACT * * * ." ACT OF DECEMBER 23, 1981, PUB. L. NO. 97-100, 95 STAT. 1391, 1407. THE REPORT OF THE COMMITTEE OF CONFERENCE ON THIS ACT CONTAINED DETAILED RECOMMENDATIONS AS TO SPECIFIC AMOUNTS THAT WERE INTENDED TO BE USED FOR VARIOUS PROGRAMS, PROJECTS, AND ACTIVITIES WITHIN THE OVERALL FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM. THIS SPECIFIC LANGUAGE, HOWEVER, WAS NOT CARRIED OVER INTO THE APPROPRIATION ACT ITSELF. ADMINISTRATION'S PROPOSALS

THE REAGAN ADMINISTRATION IS PROPOSING A MAJOR MODIFICATION OF THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM, BASED UPON A PERCEPTION THAT "IT IS THE ROLE OF THE PRIVATE SECTOR, RESPONDING TO FREE MARKET FORCES, TO SUPPORT AND ACCELERATE ADVANCED TECHNOLOGY DEVELOPMENT." FEDERAL ENERGY PROGRAMS, FY 1983 BUDGET HIGHLIGHTS, AT 15 (FEBRUARY 1982). ACCORDING TO ENERGY, THE FOSSIL ENERGY PROGRAM WAS REALIGNED IN FISCAL YEAR 1982 TO CONCENTRATE ON LONG-TERM, HIGH-RISK RESEARCH AND DEVELOPMENT WHILE RELYING ON THE PRIVATE SECTOR TO DEMONSTRATE AND COMMERCIALIZE PROMISING INDIVIDUAL TECHNOLOGIES. ID. CONTINUING THIS REALIGNMENT, ENERGY NOW INTENDS TO HALT LONG-TERM RESEARCH AND DEVELOPMENT DESIGNED TO ACCELERATE THE DEVELOPMENT OF "ADVANCED" TECHNOLOGIES, AND INTENDS TO LEAVE "PROOF OF CONCEPT" WORK TO INDUSTRY FOR COMPLETION. ID.

DURING THE REMAINDER OF FISCAL YEAR 1982 AND CONTINUING INTO FISCAL YEAR 1983, ENERGY PLANS TO PHASE OUT THOSE SPECIFIC ACTIVITIES NO LONGER CONSIDERED TO BE CONSISTENT WITH THE REAGAN ADMINISTRATION'S FOSSIL ENERGY RESEARCH AND DEVELOPMENT OBJECTIVES. SOME OF THE SPECIFIC PROGRAMS AND PROJECTS SLATED FOR TERMINATION INCLUDE THE MAGNETOHYDRODYNAMICS PROGRAM, THE HEAT ENGINES DEVELOPMENT PROGRAM, THE IN SITU COAL GASIFICATION PROGRAM, THE EASTERN OIL SHALE PROJECT, THE TAR SAND OIL RECOVERY PROJECTS, THE PRESSURIZE FLUIDIZED BED COMBINED CYCLE PROJECT, THE BI-GAS COMBINED CYCLE PILOT PLANT PROJECTS, AND A NUMBER OF SURFACE COAL GASIFICATION PROJECTS, INCLUDING THE HYDROPYROLYSIS COAL GASIFICATION PROJECT.

AS A CONSEQUENCE OF ENERGY'S PROPOSED "REALIGNMENT" OF THE FOSSIL ENERGY PROGRAM, A PORTION OF THE FUNDS THAT WERE APPROPRIATED TO CARRY OUT ACTIVITIES WITHIN THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM ARE NOW PROPOSED TO BE USED TO COVER CONTRACT TERMINATION COSTS, PERSONNEL REDUCTION-IN-FORCE EXPENSES, "MOTHBALL" COSTS, AND OTHER EXPENSES RELATED TO PROGRAM REDUCTIONS AND TERMINATIONS. IN ADDITION, THE REAGAN ADMINISTRATION HAD PROPOSED TO DEFER SOME $45 MILLION IN FOSSIL ENERGY FUNDS TO COVER THESE SAME TYPES OF EXPENSES IN 1983. SEE DEFERRAL MESSAGE D82-236, H.R. DOC. NO. 155, 97TH CONG., 2D SESS. 3 (1982).

DISCUSSION I. PROGRAM TERMINATIONS

THE COMMITTEE MEMBERS FIRST ASK WHETHER IT IS LAWFUL FOR THE DEPARTMENT OF ENERGY TO USE FOSSIL ENERGY FUNDS TO TERMINATE VARIOUS FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAMS, PROJECTS, AND ACTIVITIES. THE COMMITTEE MEMBERS HAVE EXPRESSED CONCERN THAT PROPOSED TERMINATIONS ARE CONTRARY TO THE INTENTION OF THE CONGRESS AS EVIDENCED BY APPROPRIATION AND AUTHORIZING LEGISLATION, THAT SUCH PROGRAMS AND PROJECTS BE CONTINUED. ACCORDING TO THE COMMITTEE MEMBERS, ENERGY'S PROPOSAL APPEARS TO VIOLATE THE REQUIREMENTS OF SECTION 3678 OF THE REVISED STATUTES, WHICH PROVIDES THAT SUMS APPROPRIATED TO BE APPLIED SOLELY TO THE OBJECTS FOR WHICH THEY ARE APPROPRIATED. SEE 31 U.S.C. 628 (1976).

AS A PRELIMINARY MATTER, WE NOTE THAT, ALTHOUGH THE COMMITTEE REPORTS ON ENERGY'S LUMP-SUM APPROPRIATION FOR FOSSIL ENERGY RESEARCH AND DEVELOPMENT CONTAIN SPECIFIC RECOMMENDATIONS AS TO THE USE OF THAT APPROPRIATION, THOSE RECOMMENDATIONS ARE NOT LEGALLY BINDING ON ENERGY. SEE LTV AEROSPACE CORP., 55 COMP.GEN. 307, 315-26 (1975). AGENCIES ARE NOT REQUIRED TO FOLLOW RESTRICTIONS EXPRESSED IN COMMITTEE REPORTS WHEN THOSE EXPRESSIONS, AS HERE, ARE NOT EXPLICITLY CARRIED OVER INTO THE STATUTORY LANGUAGE. NONETHELESS, ENERGY'S USE OF THE FUNDS IN QUESTION MUST BE CONSISTENT WITH THE PURPOSES SPECIFIED BY THE APPROPRIATION ACT ITSELF, AS WELL AS THE APPLICABLE AUTHORIZING STATUTES. SEE 31 U.S.C. 628 (1976); 53 COMP.GEN. 328 (1973).

IN A 1977 OPINION, THIS OFFICE CONCLUDED THAT FUNDS APPROPRIATED FOR A PARTICULAR PROJECT, SPECIFICALLY THE CLINCH RIVER BREEDER REACTOR PROJECT, COULD NOT BE USED TO FURTHER ACTIONS INTENDED TO IMPLEMENT A PROPOSED CURTAILMENT OF THAT PROJECT. SEE B-115398.33, JUNE 23, 1977. IN THAT CASE OUR DECISION WAS BASED UPON THE RESTRICTIVE LANGUAGE OF THE AUTHORIZING LEGISLATION. WE STATED THAT THE PROPOSED CURTAILMENT ACTIONS WOULD RESULT IN THE IMPLEMENTATION OF A PROJECT THAT WOULD NO LONGER BE CONSISTENT WITH THE MAJOR ELEMENTS OF THE UNDERTAKING EXPLICITLY DICTATED BY THE CONTROLLING STATUTE. ALTHOUGH CLINCH RIVER FUNDS WERE INCLUDED IN A BROAD LUMP-SUM APPROPRIATION FOR ERDA OPERATING EXPENSES, WE FOUND THAT THE AUTHORIZING LEGISLATION PLACED SPECIFIC CONSTRAINTS ON THE PURPOSES FOR WHICH THOSE APPROPRIATED FUNDS COULD BE USED. THE APPLICABLE STATUTE AUTHORIZED ERDA TO ENTER INTO AGREEMENTS FOR THE RESEARCH AND DEVELOPMENT, DESIGN, CONSTRUCTION, AND OPERATION OF A DEMONSTRATION REACTOR THAT WOULD COMPLY WITH CRITERIA APPROVED BY THE JOINT COMMITTEE ON ATOMIC ENERGY. SEE SECTION 106, PUB. L. NO. 91-273, AS AMENDED BY ACT OF DECEMBER 31, 1975, PUB. L. NO. 94-187, SEC. 103(D), 89 STAT. 1069. AS THE PROPOSED CURTAILMENT ACTIONS WOULD HAVE BEEN INCONSISTENT WITH THE APPROVED CRITERIA AND THUS WITH THE STATUTORY SCHEME, WE CONSIDERED USE OF FUNDS TO FURTHER SUCH ACTIONS TO BE UNAUTHORIZED.

IN CONTRAST TO THE CLINCH RIVER OPINION, WE HAVE ON OCCASION BEEN ASKED FOR OUR VIEWS ON THE LEGALITY OF PROJECT TERMINATION OR CURTAILMENT EXPENDITURES WHERE THE PROJECT OR PROGRAM THAT WAS TO BE TERMINATED HAD NOT BEEN SPECIFICALLY PROVIDED FOR IN EITHER THE APPLICABLE APPROPRIATION OR , AUTHORIZATION STATUTE, BUT INSTEAD HAD BEEN PART OF AN AGENCY EFFORT TO IMPLEMENT A BROADER STATUTORY DIRECTIVE. IN A RECENT CASE, WE STATED THAT EXPENSES PERTAINING TO THE TERMINATION OF ACTIVITIES CARRIED OUT IN FURTHERANCE OF A STATUTORY PROGRAM COULD BE PAID FROM FUNDS APPROPRIATED FOR THAT PROGRAM, SO LONG AS THE PROPOSED TERMINATION ACTION WOULD NOT RESULT IN SUCH A CURTAILMENT OF THE OVERALL PROGRAM THAT IT WOULD NO LONGER BE CONSISTENT WITH THE STATUTORY REQUIREMENTS. SEE B-203074, AUGUST 6, 1981, IN WHICH WE APPROVED THE USE OF FUNDS APPROPRIATED FOR IMPLEMENTATION OF THE RAILROAD REORGANIZATION AND REGULATORY REFORM ACT OF 1976 TO TERMINATE CONTRACTS INTENDED TO MEET CERTAIN GOALS OF THAT STATUTE. ACCORD B-115398, AUGUST 1, 1977, CONCERNING TERMINATION OF B 1 BOMBER PRODUCTION.

THE PRESENT SITUATION IS COMPARABLE TO THESE LATTER CASES. FIRST, NONE OF THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROJECTS AND ACTIVITIES THAT ARE THE SUBJECT OF DOE'S PROPOSED TERMINATIONS AND REDUCTIONS IS SPECIFICALLY PROVIDED FOR IN EITHER THE FISCAL YEAR 1982 APPROPRIATION STATUTE OR THE FISCAL YEAR 1982 FUNDING AUTHORIZATION, BOTH OF WHICH REFER BROADLY TO FOSSIL ENERGY RESEARCH AND DEVELOPMENT ACTIVITIES OF ENERGY. SEE PUB. L. NO. 97-100, 95 STAT. 1391, 1407 (1981); PUB. L. NO. 97-37 SEC. 1001, 95 STAT. 357, 606 (1981). INSTEAD, EACH PROJECT AND ACTIVITY WAS INITIATED AS PART OF ENERGY'S EFFORT TO IMPLEMENT THE RESEARCH AND DEVELOPMENT REQUIREMENTS OF THE NONNUCLEAR ENERGY ACT. SECOND, WHILE THE ORIGINAL PROGRAM AUTHORIZATION, CONTAINED IN THE NONNUCLEAR ENERGY ACT, REQUIRES THAT ENERGY'S PROGRAM BE DESIGNED TO ADVANCE CERTAIN SPECIFIC CATEGORIES OF ENERGY TECHNOLOGY, IT DOES NOT EXPLICITLY REQUIRE THE PROGRAM TO INCLUDE ANY OF THE INDIVIDUAL PROJECTS AND ACTIVITIES NOW CONSIDERED FOR TERMINATION.

IN CONNECTION WITH THIS LATTER POINT, WE RECOGNIZE THAT SECTION 6(B)(3) OF THE NONNUCLEAR ENERGY ACT REQUIRES ENERGY TO DESIGN ITS NONNUCLEAR ENERGY RESEARCH AND DEVELOPMENT PROGRAM TO ADVANCE THE DEVELOPMENT AND DEMONSTRATION OF SPECIFIC CATEGORIES OF ENERGY TECHNOLOGY, 42 U.S.C. 5905(B)(3). AMONG THE TECHNOLOGIES SPECIFICALLY MENTIONED ARE MAGNETOHYDRODYNAMICS (ALTHOUGH ONLY "IF PRACTICABLE") AND IN SITU COAL GASIFICATION, BOTH OF WHICH HAVE BEEN TARGETED FOR TERMINATION BY ENERGY. WE DO NOT, HOWEVER, CONSIDER SECTION 6(B)(3) TO BE A MANDATORY LIST OF TECHNOLOGIES THAT MUST BE PURSUED AT ALL TIMES WITH THE OVERALL PROGRAM. CERTAINLY, IF ANY OF THE LISTED TECHNOLOGIES PROVED TO BE TECHNOLOGICALLY INFEASIBLE, COMMERCIALLY IMPRACTICAL, OR SIMPLY TOO EXPENSIVE TO PURSUE AT A PARTICULAR TIME, THE CONGRESS DID NOT INTEND THAT THE SECRETARY CONTINUE IMPLEMENTATION OF SUCH PROJECTS. THIS VIEW IS CONFIRMED BY SECTION 5 OF THE STATUTE, WHICH SETS OUT BROAD CRITERIA THAT ARE TO GOVERN THE SECRETARY'S ACTUAL SELECTION OF PROJECTS TO CONSTITUTE THE PROGRAM AT ANY GIVEN TIME. SEE 42 U.S.C. 5904. CONSEQUENTLY, SO LONG AS THE PROGRAM THAT IS TRANSMITTED TO THE CONGRESS CONTAINS A FULL JUSTIFICATION FOR THE DEGREE OF EMPHASIS FOR EACH OF THE TECHNOLOGIES LISTED IN THE STATUTE, THE SECRETARY MAY DECIDE TO DISCONTINUE PRESENT RESEARCH AND DEVELOPMENT ACTIVITIES IN ANY PARTICULAR TECHNOLOGY, SO LONG AS THAT DECISION IS MADE IN CONFORMANCE WITH THE CRITERIA OF SECTION 5.

CONSISTENT WITH OUR PREVIOUS OPINIONS REGARDING TERMINATIONS OF NONMANDATORY PROGRAM ACTIVITIES, WE CONSIDER THAT EXPENSES PERTAINING TO THE TERMINATION OF ACTIVITIES CARRIED OUT IN FURTHERANCE OF THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM MAY BE PAID FROM FUNDS APPROPRIATED FOR THAT PROGRAM, SO LONG AS THE PROPOSED TERMINATION ACTIVITIES DO NOT RESULT IN SUCH A CURTAILMENT OF THE OVERALL PROGRAM THAT IT WOULD NO LONGER BE CONSISTENT WITH THE NONNUCLEAR ENERGY ACT. CONSEQUENTLY, THE UNDERLYING QUESTION IN THIS MATTER IS WHETHER ENERGY'S PROPOSED "REALIGNMENT" OF THE PROGRAM, OF WHICH THESE TERMINATION ACTIVITIES WOULD BE A PART, IS IN VIOLATION OF THE REQUIREMENTS OF THE NONNUCLEAR ENERGY ACT. WE CONCLUDE THAT IT IS NOT.

AS DESCRIBED ABOVE, THE NONNUCLEAR ENERGY ACT AFFORDS THE SECRETARY OF ENERGY CONSIDERABLE DISCRETION IN THE SELECTION OF INDIVIDUAL PROGRAMS, PROJECTS AND ACTIVITIES, SO LONG AS THOSE SELECTIONS ARE MADE IN ACCORDANCE WITH CERTAIN PRINCIPLES AND CRITERIA SET OUT IN SECTION 5, 42 U.S.C.5904. OF PARTICULAR RELEVANCE TO AN EXAMINATION OF THE SECRETARY OF ENERGY'S PROPOSAL TO RESTRUCTURE THE FOSSIL ENERGY PROGRAM ARE THE CRITERIA CONTAINED IN 42 U.S.C. 5904(B)(2). THAT PROVISION REQUIRES THAT, IN THE EXECUTION OF AN ENERGY RESEARCH AND DEVELOPMENT PROGRAM, THE SELECTION OF INDIVIDUAL RESEARCH EFFORTS SHOULD BE DETERMINED BY REFERENCE TO THE FOLLOWING:

(A) THE URGENCY OF THE PUBLIC NEED FOR THE POTENTIAL RESULTS OF THE RESEARCH, DEVELOPMENT, OR DEMONSTRATION EFFORT IS HIGH, AND IT IS UNLIKELY THAT SIMILAR RESULTS WOULD BE ACHIEVED IN A TIMELY MANNER IN THE ABSENCE OF FEDERAL ASSISTANCE.

(B) THE POTENTIAL OPPORTUNITIES FOR NON-FEDERAL INTERESTS TO RECAPTURE THE INVESTMENT IN THE UNDERTAKING THROUGH THE NORMAL COMMERCIAL UTILIZATION OF PROPRIETARY KNOWLEDGE APPEAR INADEQUATE TO ENCOURAGE TIMELY RESULTS.

(C) THE EXTENT OF THE PROBLEMS TREATED AND THE OBJECTIVES SOUGHT BY THE UNDERTAKING ARE NATIONAL OR WIDESPREAD IN THEIR SIGNIFICANCE.

(D) THERE ARE LIMITED OPPORTUNITIES TO INDUCE NON-FEDERAL SUPPORT OF THE UNDERTAKING THROUGH REGULATORY ACTIONS, END USE CONTROLS, TAX AND PRICE INCENTIVES, PUBLIC EDUCATION, OR OTHER ALTERNATIVES TO DIRECT FEDERAL FINANCIAL ASSISTANCE.

(E) THE DEGREE OF RISK OF LOSS OF INVESTMENT INHERENT IN THE RESEARCH IS HIGH, AND THE AVAILABILITY (OF) RISK CAPITAL TO THE NON FEDERAL ENTITIES WHICH MIGHT OTHERWISE ENGAGE IN THE FIELD OF THE RESEARCH IS INADEQUATE FOR THE TIMELY DEVELOPMENT OF THE TECHNOLOGY.

(F) THE MAGNITUDE OF THE INVESTMENT APPEARS TO EXCEED THE FINANCIAL CAPABILITIES OF POTENTIAL NON-FEDERAL PARTICIPANTS IN THE RESEARCH TO SUPPORT EFFECTIVE EFFORTS. 42 U.S.C. 5904(B)(2).

THE CONGRESS EXPECTED THESE CRITERIA TO BE IN CONFLICT WITH ONE ANOTHER UPON OCCASION, AND THE ADMINISTRATOR OF ERDA (NOW THE SECRETARY OF ENERGY) WAS ENCOURAGED TO BALANCE THESE FACTORS IN DETERMINING WHICH EFFORTS SHOULD BE FEDERALLY SUPPORTED. SEE H.R. REP. NO. 93-1563, 93D CONG., 2D SESS. 23 (1974).

IN RESTRUCTURING THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM, ENERGY APPEARS TO BE REEXAMINING EXISTING PROGRAMS WITH STRONG EMPHASIS GIVEN TO THE CRITERIA OF 42 U.S.C. 5904(B)(2)(E) AND (F), WHICH INDICATE THE APPROPRIATENESS OF FEDERAL EFFORTS WHEN THE PRIVATE SECTOR IS UNABLE OR UNWILLING TO PURSUE SUCH EFFORTS. CONSEQUENTLY, MANY OF ENERGY'S TERMINATION DECISIONS REFLECT THE REAGAN ADMINISTRATION'S CONCLUSION THAT INDUSTRY SHOULD BE EXPECTED TO SUPPORT THE DEVELOPMENT, FROM THE PILOT PLANT STAGE ONWARDS, OF ADVANCED TECHNOLOGIES THE ENGINEERING FEASIBILITY OF WHICH HAS BEEN ESTABLISHED. CONSISTENT WITH THIS CONCLUSION IS THE DECISION TO CONCENTRATE FEDERAL INVOLVEMENT IN MORE GENERIC RESEARCH EFFORTS AND LONG-TERM TECHNOLOGY BASE DEVELOPMENT.

IN SOME CASES, ENERGY HAS PROPOSED THE TERMINATION OF PROGRAMS AND ACTIVITIES THAT IN FACT SATISFY THE CRITERIA OF 42 U.S.C. 5904(B)(2)(E) AND (F) IN THAT HIGH DEVELOPMENT RISKS AND COSTS HAVE DISCOURAGED PRIVATE SECTOR INVOLVEMENT. NONETHELESS, THESE CRITERIA MUST BE BALANCED BY THAT OF 42 U.S.C. 5904(B)(2)(A): A HIGH URGENCY OF PUBLIC NEED FOR THE POTENTIAL RESULTS OF RESEARCH. ONE EXAMPLE OF ENERGY'S REEVALUATION OF PROGRAMS IN LIGHT OF THESE MULTIPLE FACTORS IS THE MAGNETOHYDRODYNAMICS (MHD) RESEARCH AND DEVELOPMENT PROGRAM. ENERGY HAS CONCLUDED THAT MHD TECHNOLOGY HAS HIGHER RISKS AND COSTS THAN OTHER ENERGY-FUNDED ELECTRICITY GENERATING TECHNOLOGIES, A FACTOR THAT WOULD SATISFY THE FEDERAL-SUPPORT CRITERIA OF 42 U.S.C. 5904(B)(2)(E) AND (F). SEE DEPARTMENT OF COMMERCE, ENERGY RESEARCH AND TECHNOLOGY ADMINISTRATION, CONGRESSIONAL BUDGET REQUEST FY 1983, VOL. 5 AT 66 (1982). ENERGY, HOWEVER, CONSIDERS THIS FACTOR OUTWEIGHED BY THE FACT THAT OTHER ALTERNATIVE ELECTRICITY TECHNOLOGIES SHOULD BE READY FOR COMMERCIAL INTRODUCTION FAR SOONER THAN MHD. ID. THE "URGENCY OF PUBLIC NEED" OF 42 U.S.C. 5904(B)(2)(A), IT APPEARS, HAS BEEN DETERMINED TO LIE ELSEWHERE.

WHILE FAVORING ENERGY'S GENERAL VIEW THAT IT IS PREFERABLE TO HAVE THE PRIVATE SECTOR CARRY OUT ACTIVITIES TO PROMOTE NEW ENERGY TECHNOLOGY, THIS OFFICE HAS STATED IN THE PAST OUR OPINION THAT PRIVATE INDUSTRY'S WILLINGNESS AND ABILITY TO ADVANCE ENERGY SUPPLY TECHNOLOGIES MAY HAVE BEEN OVERESTIMATED. SEE ANALYSIS OF FEDERAL ENERGY ROLES AND STRUCTURES, EMD-82-21, B-205424, JANUARY 20, 1982, AT 18. WE HAVE ALSO BEEN CRITICAL OF ENERGY'S CATEGORIZATION OF CERTAIN TECHNOLOGIES AS "NEAR-TERM" SIMPLY BECAUSE FEDERAL EFFORTS HAVE BEEN CARRIED OUT FOR SOME TIME, AND ITS RESULTING DECISION TO DISCONTINUE EFFORTS IN THESE AREAS BECAUSE COMMERCIAL FEASIBILITY HAS NOT YET BEEN SHOWN. ID. DESPITE OUR CRITICISMS OF ENERGY'S FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM, HOWEVER, AND DESPITE OUR QUESTIONING MANY OF THE ASSUMPTIONS UPON WHICH THE PROPOSAL TO REALIGN THAT PROGRAM IS BASED, WE CANNOT CONCLUDE, AS A LEGAL MATTER, THAT ENERGY'S PROPOSALS VIOLATE THE REQUIREMENTS OF THE NONNUCLEAR ENERGY ACT. AS WE HAVE STATED ABOVE, THE STATUTE GIVES THE SECRETARY OF ENERGY CONSIDERABLE DISCRETION IN FORMULATING AND EXECUTING A RESEARCH AND DEVELOPMENT PROGRAM, SO LONG AS CERTAIN BROAD PRINCIPLES AND CRITERIA ARE FOLLOWED. AS ENERGY'S PROPOSALS APPEAR TO BE CONSISTENT WITH THOSE FACTORS, WE CANNOT CONCLUDE THAT THE PROPOSED PROGRAM REVISIONS ARE AN ABUSE OF DISCRETION.

WE CONCLUDE, THEREFORE, THAT IT IS LAWFUL FOR THE DEPARTMENT OF ENERGY TO USE FOSSIL ENERGY RESEARCH AND DEVELOPMENT FUNDS FOR EXPENSES INCURRED IN THE TERMINATION OF FOSSIL ENERGY PROGRAMS AND ACTIVITIES NO LONGER CONSIDERED TO BE CONSISTENT WITH THE REAGAN ADMINISTRATION'S FOSSIL ENERGY RESEARCH AND DEVELOPMENT OBJECTIVES. II. PROPOSED DEFERRAL OF FUNDS

AS DESCRIBED ABOVE, ENERGY PROPOSED TO DEFER TO FISCAL YEAR 1983 SOME $45 MILLION IN FOSSIL ENERGY RESEARCH AND DEVELOPMENT FUNDS TO COVER VARIOUS EXPENSES RELATED TO REDUCTIONS AND TERMINATIONS WITHIN THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM. /1/ THE COMMITTEE MEMBERS HAVE FIRST ASKED WHETHER THE PROPOSED DEFERRAL SHOULD HAVE INSTEAD BEEN CLASSIFIED AS A RESCISSION. WE CONCLUDE THAT IT WAS CORRECTLY CLASSIFIED AS A DEFERRAL.

THE IMPOUNDMENT CONTROL ACT OF 1974, 31 U.S.C. 1400 ET SEQ., COVERS TWO TYPES OF IMPOUNDMENT ACTIONS: "RESCISSIONS" AND "DEFERRALS." A DEFERRAL OF BUDGET AUTHORITY IS DEFINED AS A WITHHOLDING OR DELAYING (WHETHER BY ESTABLISHING RESERVES OR OTHERWISE) OF THE OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY PROVIDED FOR PROJECTS OR ACTIVITIES. 31 U.S.C. 1401(1). WHILE THE TERM "RESCISSION" IS NOT SPECIFICALLY DEFINED IN THE STATUTE, SECTION 1012(A) PROVIDES GUIDANCE AS TO WHEN A RESCISSION EXISTS. THAT PROVISION REQUIRES THE PRESIDENT TO REPORT A PROPOSED RESCISSION:

WHENEVER THE PRESIDENT DETERMINES THAT ALL OR PART OF ANY BUDGET AUTHORITY WILL NOT BE REQUIRED TO CARRY OUT THE FULL OBJECTIVES OR SCOPE OF PROGRAMS FOR WHICH IT IS PROVIDED OR THAT SUCH BUDGET AUTHORITY SHOULD BE RESCINDED FOR FISCAL POLICY OR OTHER REASONS (INCLUDING THE TERMINATION OF AUTHORIZED PROJECTS OR ACTIVITIES FOR WHICH BUDGET AUTHORITY HAS BEEN PROVIDED) * * * . 31 U.S.C. 1402(A).

IN THOSE CASES WHERE WE HAVE BEEN ASKED TO EXAMINE AN IMPOUNDMENT OF FUNDS IN CONNECTION WITH THE TERMINATION OF A PARTICULAR PROGRAM OR ACTIVITY, THE TYPICAL SITUATION HAS INVOLVED A PROPOSED RESCISSION. THOSE INSTANCES, ONCE THE ACTIVITY HAS BEEN SUCCESSFULLY SHUT DOWN, FUNDS REMAINING FOR OBLIGATION ARE NO LONGER NEEDED AND ARE PROPOSED TO BE RESCINDED. SEE, E.G., OUR CLINCH RIVER OPINION, B-115398.33, SUPRA. THIS TYPE OF SITUATION WAS CLEARLY CONTEMPLATED BY THE CONGRESS IN DRAFTING SECTION 1012(A) OF THE IMPOUNDMENT CONTROL ACT, AS PROJECT TERMINATION IS EXPRESSLY GIVEN AS AN EXAMPLE OF THE REASONS THAT MIGHT OCCASION A RESCISSION PROPOSAL. 31 U.S.C. 1402(A). WE DO NOT CONSIDER, HOWEVER, THE LANGUAGE "OTHER REASONS (INCLUDING THE TERMINATION OF AUTHORIZED PROJECTS OR ACTIVITIES) * * * " TO MEAN THAT EVERY IMPOUNDMENT IN CONNECTION WITH A PROGRAM TERMINATION MUST BE CLASSIFIED AS A RESCISSION.

IN THE PRESENT CASE, ENERGY HAS STATED ITS INTENTION TO EXPEND THE ENTIRE AMOUNT OF BUDGET AUTHORITY PROVIDED IN THE FISCAL YEAR 1982 APPROPRIATION FOR COSTS PERTAINING TO THE REORGANIZATION OF THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM, INCLUDING TERMINATION EXPENSES. IN ACTUALITY, ENERGY MERELY PROPOSED TO DELAY THE OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY. THIS IS DEFINED BY SECTION 1011(1) AS A DEFERRAL. 31 U.S.C. 1401(1)(A).

THE COMMITTEE MEMBERS' SECOND QUESTION IS WHETHER ENERGY COULD INITIATE PROGRAM TERMINATION ACTIONS IN THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM IN ADVANCE OF CONGRESSIONAL ACTION ON THE PROPOSED DEFERRAL OF FUNDS FROM THAT PROGRAM. THE QUESTION, HOWEVER, PRESUPPOSES THE EXISTENCE OF A LEGAL CONNECTION BETWEEN THE PROPOSED DEFERRAL AND THE INITIATION OF PRESENT FOSSIL ENERGY PROJECT TERMINATION ACTIVITIES. WE FIND NO BASIS FOR SUCH A CONNECTION. WE RECOGNIZE THAT THE INTENDED USE OF THE DEFERRED FUNDS WAS TO FINANCE FUTURE TERMINATION EXPENSES INCURRED TO THE PROPOSED REALIGNMENT OF THE PROGRAM. NONETHELESS, THE TERMINATION ACTIVITIES THAT ARE THE SUBJECT OF THE COMMITTEE MEMBERS' ATTENTION ARE THOSE THAT ARE PROPOSED TO BE FINANCED FROM PRESENT SOURCES. BECAUSE, AS DISCUSSED PREVIOUSLY, PRESENT TERMINATION EXPENSES WOULD BE PROPERLY CHARGEABLE TO THE FISCAL YEAR 1982 FOSSIL ENERGY APPROPRIATION, TERMINATION ACTIVITIES COULD BE CONTINUED WITHOUT REGARD TO CONGRESSIONAL ACTION ON THE PROPOSED DEFERRAL.

FINALLY, WE NOTE THAT CONTINUATION OF FOSSIL ENERGY TERMINATION ACTIVITIES WOULD NOT INTERFERE WITH THE POWER OF THE CONGRESS, CONTAINED IN THE IMPOUNDMENT CONTROL ACT, TO PREVENT THE WITHHOLDING OR DELAYING OF OBLIGATION OR EXPENDITURE OF BUDGET AUTHORITY BY THE EXECUTIVE BRANCH. SECTION 1013(B) OF THE STATUTE PROVIDES THAT BUDGET AUTHORITY PROPOSED TO BE DEFERRED MUST BE MADE AVAILABLE FOR OBLIGATION IF EITHER HOUSE OF THE CONGRESS PASSES AN IMPOUNDMENT RESOLUTION DISAPPROVING THE DEFERRAL. U.S.C. 1403(B). IN THE PRESENT CASE, FUNDS RELEASED BY CONGRESSIONAL ACTION WOULD BE AVAILABLE, EITHER DIRECTLY OR THROUGH REPROGRAMMING ACTIONS, FOR ANY VALID ACTIVITY OF THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM, INCLUDING THE VERY TERMINATION ACTIVITIES THE CONTINUATION OF WHICH HAS BEEN QUESTIONED BY THE COMMITTEE MEMBERS. CONCLUDE, THEREFORE, THAT THERE WAS NO LEGAL REQUIREMENT THAT WOULD HAVE PREVENTED THE DEPARTMENT OF ENERGY FROM INITIATING TERMINATION ACTIVITIES WITHIN THE FOSSIL ENERGY RESEARCH AND DEVELOPMENT PROGRAM IN ADVANCE OF CONGRESSIONAL ACTION ON THE DEFERRAL PROPOSAL.

CONCLUSION

FOR THE REASONS DISCUSSED ABOVE, WE CONCLUDE THAT ENERGY MAY USE FOSSIL ENERGY RESEARCH AND DEVELOPMENT FUNDS FOR EXPENSES PERTAINING TO THE TERMINATION OF VARIOUS RESEARCH AND DEVELOPMENT PROGRAMS AND PROJECTS NO LONGER CONSIDERED TO BE CONSISTENT WITH THE REAGAN ADMINISTRATION'S FOSSIL ENERGY RESEARCH AND DEVELOPMENT OBJECTIVES. IN ADDITION, WE CONSIDER THAT THE IMPOUNDMENT PROPOSED BY ENERGY OF CERTAIN FOSSIL ENERGY FUNDS TO BE USED FOR LATER TERMINATION EXPENSES WAS CORRECTLY CLASSIFIED AS A DEFERRAL, AND THAT THERE IS NO LEGAL REQUIREMENT THAT WOULD HAVE PREVENTED ENERGY FROM COMMENCING TERMINATION ACTIVITIES BEFORE THE CONGRESS HAD ACTED ON THE IMPOUNDMENT PROPOSAL.

/1/ AS WE INDICATED ABOVE, THE CONGRESS HAS ALREADY DISAPPROVED THE PROPOSED DEFERRAL. SEE H.R. RES. 411, 97TH CONG., 2D SESS., 128 CONG.REC. H1660 (DAILY ED. APRIL 29, 1982).