Statement of Administration Policy: H.R. 2698 - Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1992

(House Floor)
(Sponsor: Whitten (D), Mississippi)

This Statement of Administration Policy expresses the Administration's views on the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1992, as reported by the Committee.

Budget and Farm Bill Agreements

It is the Administration's view that the Committee bill would undermine several important provisions of the Omnibus Budget and Reconciliation Act (OBRA) and the farm bill. These laws, enacted last year, reflect agreement between the Congress and the Administration on agricultural policy and funding priorities.

The Committee bill would significantly alter sections 1201 and 1202 of OBRA. These sections prescribe loan levels for each of the next five years for both the Rural Electrification Administration (REA) insured electric and telephone loans and the Farmers Home Administration (FmHA) farm ownership and operating loans. The OBRA savings from agriculture were carefully developed by the Congress and the Administration to ensure a fair and balanced distribution of reductions across agricultural programs and interests.

The Committee's recommendations would significantly undercut this balanced approach by not only exempting a major part of the agricultural community from responsibility for shouldering reductions, but by actually increasing the availability of loans over FY 1991 levels. Most importantly, this exemption would go to the most wealthy of Federal aid recipients: REA telephone borrowers. At the end of FY 1989, telephone borrowers had $1.6 billion in cash on hand, with many holding cash in excess of twice the value of their physical assets. In FY 1990, only $58 million in loan requests out of $415 million in telephone loans actually granted qualified outright for highly subsidized five- percent telephone loans. Virtually all other applicants could well afford REA loans of 8.5 percent, or commercial loans.

The Committee bill would greatly increase the subsidized farm operating direct loan program by adding $500 million more in direct loans than was authorized in OBRA, while not reducing the provision of subsidized guaranteed loans that OBRA increased to offset direct loan reductions. Subsidized guaranteed loans provide borrower financing that is just as affordable as direct loans and, in addition, help Federal borrowers establish needed relations with commercial banks.

Rural Development Administration

No funding is provided for the Rural Development Administration (RDA), which was authorized by the 1990 farm bill and requested at a program level of $73 million in the FY 1992 Budget. A general provision of the Committee bill (section 739) would prohibit the RDA's establishment, which would provide the first step toward better coordination of the many rural development programs throughout USDA. In the absence of the RDA, the confusion voiced by rural Americans about the purpose and availability of Federal assistance for rural development would continue. The Administration urges the House to permit the establishment of the RDA.

Quarantine Inspection Program

The Committee bill also undermines an OBRA and farm bill agreement (sections 1203 and 2509, respectively) for the collection of user fees to cover the cost of the Agriculture Quarantine Inspection program of the Department of Agriculture. Under the budget agreement, the Department was to recover the costs (estimated at $82 million in FY 1992) of inspection of passengers and freight arriving at the mainland U.S. border from other countries as well as from off-shore domestic sites. The Committee bill would prohibit the use of appropriated funds to develop or operate the domestic fee program, at a cost of $13 million in forgone revenue. OBRA and the farm bill intended to shift the burden of the inspection costs from the taxpayer to those carrying or shipping potentially dangerous animal and plant diseases and pests into the mainland.

The Administration urges the House to amend the Committee bill to conform with the national agricultural priorities already established by the farm bill and OBRA.

Food and Drug Administration

Instead of adopting the Administration's proposal for Food and Drug Administration (FDA) user fees to recoup industry benefits from FDA approvals, the Committee has made one-quarter of the FDA's resources dependent upon a subsequent budget request from the Executive Branch. The Administration believes that the FDA requires the full $770 million requested in the FY 1992 Budget to protect the health and safety of the American people. The Administration would not submit an amended budget request and urges the House to make the full appropriation available upon enactment and to adopt the Administration's proposal for user fees. If the Congress provides the funding level in the Committee bill the direct and unavoidable result will be an increased health and safety risk to millions of Americans.

Basic Research in Agricultural Science

The Administration urges the House to restore adequate funding for basic research in agricultural science. The Committee bill would provide only $99 million of the $125 million that the President requested for competitive grants. Authorized by the farm bill, the National Initiative for Research on Agriculture, Food, and Environment would enable the U.S. to maintain and build its competitive edge in agriculture by supporting the development of new food production, processing, and marketing technologies. It is the Administration's view that — with the prospect of freer global farm trade ahead — this is not the time to undercut the research that will form the foundation of farming's prosperity.

Rural Housing Programs

The Committee has constrained the options available for financing low-income housing by not funding the Farmers Home Administration's (FmHA's) subsidized guaranteed home purchase loans and voucher program for rural rental assistance. For FY 1992, the President has requested a $317 million increase over the FY 1991 level for subsidized guarantees. Although the Committee has funded both unsubsidized direct and guaranteed loans, it has eliminated subsidized guarantees entirely. With the rural housing market in need of credit, the subsidized guaranteed loans available in FY 1991 have filled a gap for low- income home borrowers who need modest Federal assistance to qualify for commercial loans. The Administration believes that the $190 million requested for housing vouchers should be restored. Vouchers are a proven, cost-effective alternative to providing housing assistance to rural Americans, especially those who cannot afford FmHA home purchase loans at one percent. The successful rural voucher demonstration program in FY 1988 underscored the demand for and effectiveness of vouchers in rural areas.

Initial Scoring of Bill

On the basis of OMB's initial scoring, the Administration finds that the Committee bill exceeds the House 602(b) domestic discretionary budget authority allocation by $40 million and the domestic discretionary outlay allocation by $51 million. The bill is within the House 602(b) allocation for international discretionary budget authority and outlays. In aggregate, the House 602(b) allocations are consistent with the statutory spending limits enacted in the Budget Enforcement Act.

Additional Administration Concerns with Bill

Additional Administration concerns with the Committee- reported bill are discussed in the attachment.

Attachment

June 26, 1991
(House Floor)

ADDITIONAL CONCERNS
H.R. 2698 — AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1992

MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

A. Funding Levels

Department of Agriculture:

Conservation Programs. Environmental goals of the President, echoed in the farm bill, would be seriously compromised by the Committee's action. First, the Committee bill fails to provide funds for the wetland reserve component of the Environmental Conservation Acreage Reserve Program (ECARP). The President has requested $124 million to purchase easements on 150,000 acres of farmland, working toward a wetland reserve enrollment goal of 600,000 acres as part of the farm bill minimum enrollment goal for ECARP of 40 million acres. Wetland acres would be selected in a nationwide competition to ensure that environmental and wildlife benefits would be maximized.

In addition, by reducing the President's request by $25 million, the Committee bill would markedly hamper the Soil Conservation Service's work with farmers to implement recently-completed conservation compliance plans.

These programs would provide a significant environmental benefit by improving the land and water resource base through farm management actions and wetland restoration and protection. At the same time that the Committee has reduced funding for the farm bill-mandated programs, it has provided an increase of $56.8 million, or 33 percent, above the budget request for discretionary watershed and river basin programs that fail to provide broad environmental benefits. The Administration urges the House to fund fully the important environmental initiatives addressed in the President's request.

Federal Crop Insurance Corporation (FCIC). The Committee-reported bill would provide $87 million less than requested for the Federal Crop Insurance Corporation Fund. The Administration believes that only a $50 million reduction can be justified. The difference arises out of variance in assumptions concerning the level of reimbursement to the Fund necessary to provide for its prior-year spending for administrative expenses. These operating costs are paid out of FCIC's Administrative and Operating Expenses appropriation unless funds there are insufficient to cover the total need. Then, FCIC may use the Fund's resources to meet selected expenses. The Administration believes that $37 million of reimbursement for FYs 1989-90 expenses is still required in the FY 1992 appropriation but agrees that the $50 million in reimbursement originally requested for FY 1991 is not needed. The Administration urges the House to fund the necessary $37 million.

Food and Nutrition Service (FNS): Commodity Supplemental Food Program. The Committee has provided nearly $6 million more than requested for elderly caseload despite information from FNS suggesting that carryover balances from FY 1991 would be sufficient to support the elderly. The Administration urges the House to reduce the excess funding for elderly caseload.

FNS: Food Stamp Program. The Administration is pleased that the Committee has included a reasonable contingency fund for the Food Stamp Program but is concerned that the appropriations language does not include the phrase, "such sums as may be necessary," as requested in the FY 1992 Budget. Funding needs for the program have become increasingly uncertain, as the once certain relationship between unemployment and food stamp participation has broken down. "Such sums" language would ensure the continued availability of food stamp benefits to millions of participants. The Administration urges the House to include "such sums" language.

FNS: Child Nutrition Program. The Administration objects to the Committee bill's doubling of the request for nutrition education and training (NET). The increase in NET funding is unwarranted and would improve neither nutritional intake nor program accountability. The Administration urges the House to reduce funding for this program to the requested level.

Office of the Inspector General. The Administration supports full implementation of the CFOs Act of 1990. The Committee has not provided $4.5 million that was requested for audits of financial statements. The Administration urges restoration of this funding to carry out implementation of the CFOs Act at the level required by law.

Departmental Administration. A major objective of the Administration is to improve the efficiency and effectiveness of managing agencies' programs and operations. The Committee's reduction of $1.5 million to the request for Departmental Administration represents an 80-percent reduction in the funding requested for new programs to support improved management. The Committee-approved level would hamper management of the Department's planning; coordination, review, and assessment efforts in financial management, personnel, information resources, and general operation of the Department. The Committee's recommended level would not allow appropriate implementation of important initiatives related to the preparation of financial statements and necessary integration of administrative and financial management systems. The Administration urges the House to provide full funding for this area.

B. Language Provisions

Micro-management: Implementation of Regulations. Section 714 of the committee bill would prohibit the use of funds to implement, administer, or enforce regulations disapproved by resolution. This represents unwarranted micromanagement and is an intrusion into Executive Branch functions. The Administration urges the House to remove this section.

Micro-management: Farmers Home Administration (FmHA) Loan Programs. The Committee bill includes general provisions that represent micro-management of FmHA's loan programs, including a prohibition on the use of private debt collection agencies to collect delinquent payments from FmHA borrowers (section 729). The use of debt collection agencies for seriously delinquent debt is a proven private sector debt collection tool. Federal agencies received authority to use this tool in the Debt Collection Act of 1982. Several Federal agencies have successfully used these collection services for housing, student, and business loans. In the Administration's view, there is no reason to exempt the rural sector of the country from a technique that is intended simply to supplement the efforts of agency personnel to collect problem debts. The Administration urges the House to delete this provision.

FTE Floors. The Administration objects to the continuation of arbitrary personnel floors for the Food and Drug Administration, the Farmers Home Administration, the Agricultural Stabilization and Conservation Service, the Rural Electrification Administration, and the Soil Conservation Service. Personnel floors are an unwarranted intrusion into Executive Branch management prerogatives and can only result in the inefficient allocation of scarce Federal resources. For example, the FDA personnel floor would slow the drug-approval process and reduce the flexibility needed to respond to emergencies by tying up funds in maintaining unneeded personnel. Further, FDA would not have the flexibility to contract for non- Federal expertise or invest in developing the agency's capability to meet future challenges. The Administration urges the House to delete section 724.

New Projects. The Administration objects to the section 721 requirement that not less than 20 new construction projects be initiated under the Watershed Protection and Flood Prevention Act (P.L. 566), and not less than five new projects be initiated under the Flood Control Act (P.L. 534). Such requirements applied within a fixed appropriation would necessitate that funding be applied to the more expensive construction projects and would reduce funding for environmentally sensitive land treatment activities. The Administration urges the House to delete section 720.

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