Statement of Administration Policy: H.R. 3581 - Rural Economic Development Act

(House)
(English (D) OK and 11 others)

The Administration strongly opposes the enactment of H.R. 3581. The bill contains a large number of highly objectionable and costly provisions. These provisions would provide additional Federal subsidies to financially healthy telephone borrowers that already receive substantial subsidies. The provisions would also violate sound credit management policies in a number of ways, including allowing REA borrowers to defer scheduled debt payments if they make loans for rural development purposes. Finally, H.R. 3581 includes provisions that would violate the Appointments Clause of the Constitution.

The Administration urges that H.R. 3581 be amended, as recommended below, so that acceptable legislation can be presented to the President:

—  Delete section 302 which would require REA to allow borrowers to defer payments on certain outstanding loans for up to ten years, interest-free. Such deferments would violate the terms of the loan contracts and create new indirect rural development subsidies.

—  Delete title VII which would increase Federal outlays by approximately $570 million over FYs 1990-1995, and inappropriately increase subsidies to financially healthy rural telephone borrowers. Title VII would also unconstitutionally restrict the President's authority to appoint members of the Rural Telephone Bank Board. To be consistent with the Appointments Clause of the Constitution, the President must be authorized to appoint all members of the Board, and to appoint REA employees to the Board if he so chooses.

—  Delete section 806 which would establish a new $30 million Farmers Home Administration (FmHA) loan program for water and waste treatment facilities. This section, which in addition to being unnecessary, would establish a bad precedent by authorizing such loans to individuals instead of communities.

—  Delete title IX which would establish Forest Service "action teams" to plan economic diversification for communities dependent on National Forests. This would inappropriately expand the mission of the Forest Service — a land management agency — to include economic development activities.

—  Amend section 201 which provides authority to State rural development review panels — comprised almost entirely of non-Federal officials — to determine Federal funding priorities for rural development programs. Under the Appointments Clause of the Constitution, non-Federal officials may not be empowered to approve plans or disapprove applications involving Federal assistance. Moreover, the Secretary of Agriculture should be provided greater discretion to review and approve any such panel's priority list for development assistance.

If amended as recommended above, the Administration would support the provisions of H.R. 3581 that reorganize the Department of Agriculture and establish a Rural Development Administration. The Administration also supports the intent of Title II, which is to provide greater State and local involvement in Federal rural development programs. Such involvement must, however, be provided for in a manner consistent with the Constitution.