Statement of Administration Policy: H.R. 1976 - Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1996

(House Floor)
(Sponsors: Livingston (R), Louisiana; Skeen (R), New Mexico)

This Statement of Administration Policy provides the Administration's views on H.R. 1976, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1996, as reported by the House Appropriations Committee.

The Administration is committed to balancing the Federal budget by FY 2005. The President's budget proposes to reduce discretionary spending for FY 1996 by $5 billion in outlays below the FY 1995 enacted level. The Administration supports reducing spending but does not share the priorities reflected in the Committee's mark or support the level of funding assumed by the committee's 602(b) allocations.

For the reasons discussed below, the Secretary of Agriculture and the Director of the Office of Management and Budget would recommend that the President veto H.R. 1976 if it were presented to him in its current form.

Reductions in Rural Development Funds

The Administration understands that an en bloc amendment may be offered to remove certain provisions in the Committee bill that would reduce mandatory spending. The Administration supports the deletion of these items. The amendment would permit spending for the Export Enhancement Program to be funded at the level agreed to in the GATT implementing legislation, which was part of the Administration's commitment made during negotiations on that legislation. Another of those commitments, continued sign-ups for the Conservation Reserve Program would also be permitted under the en bloc amendment, as would the Administration's request for the Wetlands Reserve Program. The Administration strongly supports these vital programs that provide both environmental and farm income benefits.

However, the amendment would make deeper, unacceptable reductions in rural development programs. These high-priority programs are part of the Administration's Rural Development Initiative, and they form an integral part of the proposed Rural Development Performance Partnership program. The amendment would reduce rural water and wastewater loans and grants to $435 million. This would represent a 45-percent reduction from the request level and a 35-percent reduction from FY 1993 levels.

The amendment would also terminate the Intermediary Relending Program, which provides State-sponsored rural development intermediaries with program funds that can be tailored to individual community and regional needs. In addition, single-family housing direct loans would be reduced to $500 million under the amendment, a 50-percent reduction to the request. This would represent the lowest level for these housing loans in 30 years, and would deny thousands of rural low-income families the opportunity to become homeowners.

Food Stamps

The Committee bill would undermine the essential nature of the Food Stamp Program — its ability to respond to increased need during times of economic downturn. For the last five years, the Committee has provided a benefit reserve or "cushion" to guard against an unexpected economic downturn or estimating errors. The bill would remove this cushion, placing all food stamp recipients in jeopardy of reduced benefits due to a regional recession. The Administration urges the House to maintain the food stamp benefit reserve, which is essential to this national nutrition safety net-

The Administration urges the deletion of language in the committee bill that would freeze the food stamp standard deduction at the FY 1995 level. The Administration understands that the Committee anticipates savings of $190 million in FY 1996 due to this action. This proposal is similar to one included in the House-passed welfare reform bill (H.R. 4), and that bill already has claimed similar savings. Shifting these savings to the discretionary side of the budget would put pressure on the authorizing committees to replace these lost savings by making further cuts in assistance to needy individuals.

WIC

Under the Committee's proposals, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) would be funded at $260 million above the FY 1995 appropriation but $90 million below the request. The Administration appreciates the Committee's support for this important program but recommends that the House provide the full amount of the request. In addition, the Administration strongly opposes the Committee's proposal to cap WIC participation. The Administration's goal is to serve 7.5 million persons by the end of FY 1996 while the Committee would cap participation at 7.3 million, currently, funding — rather than participation — is capped. This encourages States to reduce costs in order to serve more participants within available funding- Instituting a participation cap would remove a State's incentive to control costs once the State had reached its participation limit. The Administration would strongly support a Floor amendment that would remove the WIC participation cap.

In addition, the Committee bill would require that $20 million of FY 1996 administrative funds be made available for food benefits. While the Administration believes that this is preferable to the Subcommittee proposal to cap administrative funding, the Administration is concerned that this would set a precedent for reducing administrative funding within WIC. Continued reductions could diminish program management and erode the positive impacts of WIC for low-income women, infants, and children.

Language Delaying Food Safety Regulations

The Administration opposes bill language that would mandate negotiated rulemaking for the Department's proposed Hazard Analysis and Critical Control Point (HACCP) program. Although the Administration supports the use of negotiated rulemaking to ensure effective regulation, the choice of when negotiated rulemaking would be a more effective process should be determined by the agency officials involved in the specific rulemaking process. The proposed HACCP and Pathogen Reduction rule that the Administration published in February 1995 is an important step toward guaranteeing the safety of meat and poultry products. Requiring that the agency undertake a negotiated rulemaking at this time could significantly delay the modernization of the Nation's meat and poultry inspection system.

Food and Drug Administration

The President's budget proposes language to permit the Food and Drug Administration (FDA) to collect new user fees for medical device review and import inspection. The language references the government's general user fee authority, 31 U-S.C. 9701, as one potential authority for these collections. The Committee bill would limit the ability of the FDA to ensure the proper and most efficient uses of its resources through the recovery of full value for its services to industry. The Administration urges the House to permit the FDA to collect and use these user fees.

Federal Lab Closures

The Administration has proposed closing 12 Federal agricultural research facilities and re-targeting the funding to current, higher-priority research projects. The Committee report states that only five facilities should be closed, three facilities should be relegated to alternate work sites, and the four remaining facilities should be kept open. Committee decisions such as these make it difficult for the Department to manage its research programs to meet the highest priority food, agricultural, and environmental needs. The Administration urges the House to reverse the Committee action.

Additional Administration concerns with the bill as reported by the Committee are contained in the attachment.

Attachment

Attachment (House Floor)

ADDITIONAL CONCERNS

H.R. 1976 — AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1996

(AS REPORTED BY TEE HOUSE FULL COMMITTEE)

The Administration looks forward to working with the Congress later in the process in an effort to address the following concerns:

Department of Agriculture

• Rural Telephone Bank (RTB) Privatization. The Administration encourages the House to reconsider the Committee mark for RTB privatization. The mark would severely impede privatization efforts by placing a limitation of five percent on the amount of Federal stock that can be retired in FY 1996- Current law sets a minimum of five percent retirement per year beginning in FY 1996, and the Committee would set the maximum at five percent. The Administration will submit the appropriate authorizing legislation in the near future. This legislation will address the concerns raised by the committee in its report. The Administration urges the House to allow the balances in the RTB "equity fund" to be used to repurchase government-held stock in the RTB, and allow the RTB privatization to be accelerated, consistent with a smaller, streamlined Government.
  
  
• Export Assistance Programs. The Committee mark for the Foreign Agricultural Service (FAS) is $5.7 million below the request. In its request, the Administration has included additional FAS funds in order to expand the presence of U.S. agriculture overseas and increase GATT-compatible, "greenbox" spending for agricultural promotion. Providing adequate export funding is essential in order to maintain the momentum of increased agricultural exports that has been achieved.
  
  
• P.L. 480. The Committee has funded P.L. 480 in excess of the President's request. In particular, the funding level for Title I is $115 million above the President's request level. Title I has been shown to have limited effectiveness in advancing its goal of market development! The Administration urges the House to reduce this program so that higher priority programs can be funded. The Administration regrets that the Committee has not funded the request of $1.5 million for the cost of reducing the P.L. 480 Title i debt of the poorest, most heavily indebted countries. This is an important element of multilateral action by the creditor community to support policy reforms and improve growth and export opportunities in these countries. The President has agreed, at both the Naples and Halifax G- 7 Summits, to participate in this multilateral endeavor. The Administration urges the House to support this request.
  
  
• Rural Development Performance Partnership. The Administration commends the Committee for embracing the concept of the Rural Development Performance Partnership. However, the bill would combine only water and wastewater loans and grants into the partnership, whereas the Administration has proposed to include 14 programs in the initiative. The Administration urges the House to provide greater flexibility in assistance to rural America by including more programs under the partnership.
  
  
• Food and Consumer Service. The Committee has provided the Administration's request for the Nutrition Assistance Program to Puerto Rico. While the Committee bill would not provide for a transfer of funds to the Animal and Plant Health Inspection Service for the cattle tick eradication project, the Committee report notes that Puerto Rico has the authority to continue to fund the project within available funds. The purpose of the block grant as described in the Food Stamp Act is to "finance 100% of the expenditures for food assistance provided to needy persons and 50% of the administrative expenses related to the provision of the assistance." The Administration does not share the Committee's view that funding a cattle tick eradication project is an appropriate use of funds intended to assist low-income Puerto Ricans.
  
  The Committee report directs that $65 million be used for the food distribution program on Indian reservations. The Administration's request is $14 million higher based on projections of the number of Indians who will participate in the program. The Administration can work with the participating tribes "to convert this population to the food stamp program," but, under the law, the Administration cannot force recipients to switch programs. The amount recommended by the Committee may not be adequate to provide assistance to those Indians Who continue to choose to participate in the commodities program. In addition, encouraging USDA to move Indians from the commodities program to Food Stamps would increase Federal costs since the average benefit cost is higher in Food Stamps than in the commodities program.
  
  The Committee, in report language, would provide $5 million in support for the school Meals Initiative. The Administration has requested $26 million to help schools comply with Dietary Guidelines, as mandated by the Healthy Meals for Healthy Americans act. The Administration urges the House to provide additional funding for the School Meals Initiative.
  
  The Committee bill does not provide the requested $4 million for an ADP infrastructure investment. The Administration believes that funding in this area is Prudent as it will assist the agency to manage with less — through long-term increased efficiencies. The Administration urges the House to provide the ADP funding.
  
  
• Info Share. The Administration has requested $59 million as a direct appropriation for Info Share. The Committee has provided $7.5 million, based upon the assumption that a contract for telecommunications would not be let until late in FY 1996. However, at the funding level approved by the Committee, telecommunications investments in the new county service centers would be curtailed. In addition, Info Share expenditures involve more than a telecommunications contract- Under the Committee mark, direct funding for all other Info Share program areas would be eliminated, such as business process reengineering and planning for management changes. The Committee recognizes the importance of this initiative to improving field office operations and customer service. The Administration urges the House to include funding for Info Share at the requested level.
  
  
• Office of the Chief Financial Officer. The Administration has requested an increase of $819 thousand to support policy improvement activities required by the Chief Financial Officers Act. This increase has not been provided by the Committee, consequently, preparation and review of audited financial statements might be delayed beyond their statutory deadlines, quality implementation of GAO and Inspector General audit recommendations would be at risk, and Departmental support for implementation of major new policies, such as installing performance measures in bureau systems, would remain nominal. The Administration urges the House to fund this program fully.
  
  
• Financial System Management. The Committee has included language in the bill regarding the management of USDA financial systems that would intrude on necessary Departmental prerogatives to decide systems architecture and sources of software supply by requiring Committee review of these operating decisions. Furthermore, the Committee report asserts that certain systems solutions are viable without citing any analysis in support of those conclusions. The Administration urges the House to delete this bill language.
  
  
• Food Safety and other user Fee Proposals Denied. The Committee has not provided appropriations language for user fees proposed in the marketing and regulatory programs area- In particular, the committee has not adopted the $107 million in requested overtime fees for meat, poultry, and egg inspection. Committee action would reduce program levels for the Food Safety and Inspection Service by $50 million, further jeopardizing needed improvements in the Nation's food safety system. In addition, the Administration has proposed fees of $8 million in the Animal and Plant Health Inspection service, $4 million in the Agricultural Marketing Service (AMS), and $17 million in the Grain Inspection, Packers and Stockyards Administration. Although the Committee bill would continue to allow the collection of fees for AMS standardization activities, it would not allow the collections to be credited to the appropriations account, as requested in the FY 1996 Budget. The Administration urges the House to reverse this action.