Statement of Administration Policy: H.R. 3603 - Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1997

(Senate Floor)
(Sponsors: Hatfield (R), Oregon; Cochran (R), Mississippi)

This Statement of Administration Policy provides the Administration's views on H.R. 3603, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1997, as reported by the Senate Appropriations Committee.

The Administration has previously communicated its strong objection to the overall discretionary funding levels assumed in the House- and Senate-passed Budget Resolutions. While the Administration appreciates the increases over the House-passed bill provided by the Senate Committee, the Committee-reported bill would still reduce discretionary budget authority by $750 million from the President's request and $550 million from the FY 1996 level. Actions proposed by the Committee to achieve this restrictive level of spending include reductions to high-priority programs. As a result, the Administration has concerns with the bill that must be addressed.

WIC

The Administration appreciates the Committee's adoption of the Administration's new provision to maintain the successful cost containment efforts in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). By ensuring competitive contracting of infant formula based on the lowest net wholesale cost, the Committee joins the Administration in promoting competition and efficient government.

The Committee bill reduces WIC funding $150 million below the FY 1997 request. The Committee and the Administration have shared the bipartisan goal of reaching full participation in WIC. The Committee's cut would prevent WIC from reaching the full participation level of 7.5 million women, infants, and children.

Of the reduction, $50 million would reduce participation directly. The Committee agrees with the House that this cut would not reduce participation rates. The Administration believes that this is unrealistic. Due to the inherent uncertainties in program participation and costs, States must act prudently during the year to avoid overspending their allocation. Each year, unspent funds from one year (about two to three percent of the appropriation) are recovered from the States and reallocated in the following fiscal year so that no funds are wasted. Without the additional $50 million, some States may drop caseload or allow caseload to grow more cautiously rather than risk overspending their allocation. In either case, full participation is threatened.

Preliminary data also shows that FY 1996 food costs may be higher than estimated in the FY 1997 Budget. The uncertain estimates of food costs underscores the need for both the $50 million increase and the $100 million contingency fund that the Committee cut. The contingency fund would only be used if food costs were to exceed budget estimates, so that participation levels would not be reduced.

Food Stamps

The Administration strongly urges the deletion of section 719, which would freeze the Food Stamp standard deduction at the FY 1995 level. The Committee anticipates savings in excess of $300 million in FY 1997 due to this action. The Administration is concerned that this proposal is similar to one included in the welfare reform bill (H.R. 3734 and S. 1956). If this appropriations bill is enacted first, including section 719 in this bill would put pressure on the authorizing committees to replace the lost mandatory savings by making further unacceptable cuts in agricultural programs or assistance to needy individuals.

Unlike other major Federal entitlement programs such as Supplemental Security Income and Medicaid, the Food Stamp appropriation does not include an indefinite authority that provides funding in case of an economic recession or estimating errors. Instead, the Congress has traditionally provided a benefit reserve, or "cushion." The Administration applauds the Committee's recognition of the need for a meaningful benefit reserve and encourages the Senate to adopt the Administration's proposed level of $2.5 billion.

Rural Development and Housing

The Administration commends the Committee for increasing funds and flexibility for certain rural development programs. In particular, the Committee recommendation provides the significant increases in water and wastewater loan and grant funds requested by the Administration, as well as the authority to transfer up to 10 percent of funds provided for the three new rural development mission area funding streams. These changes represent major improvements over the House-passed bill.

However, the Administration continues to object to funding reductions in the rural housing area. While authority to obligate multi-family housing loans for new construction is provided in the Committee bill, the bill does not provide additional funds above the House bill, which prohibits new construction loans. In addition, the Committee bill, as the House bill, reduces the Administration's request for single-family loan authority from $1.3 billion to $1 billion, which would deprive 7,000 low- and very-low income rural families the opportunity for homeownership. Resources from the 1996 Farm Bill's Fund for Rural America that can be used for housing programs would be insufficient to make up this shortfall. When coupled with the unacceptable $24 million cut in Rural Housing Service salaries and expenses, which would result in an additional 600 reductions-in-force, housing services to rural families and protection of taxpayer liability would erode.

Food Safety and Inspection Service (FSIS) Funds and Regulations

The Administration objects to the Committee's $16 million reduction to the request and House-passed level for FSIS salaries and expenses. The Committee action would deny funding for activities that are critical to the successful transition to an inspection system that more broadly and effectively addresses food safety hazards associated with meat and poultry products. Deferring funding for the agency's field automation initiative would deny inspectors rapid access to information needed to make timely and accurate decisions. In addition, current inspectors will be trained to implement new, more complicated techniques such as microbiological testing, and should be compensated for their greater responsibilities. The Administration urges the Senate to restore funds for these critical purposes.

The Administration objects to a new rider inserted by the Committee governing a USDA regulation for labeling of fresh and frozen chicken. The Committee provision could result in consumers being misled, by eliminating USDA's proposed requirement that chicken stored at less than 26 degrees but more than zero degrees be labeled "hard chilled." While such products could not be labeled as "fresh" under the Committee's provision, it is not clear what label could be attached. In addition, the tolerance of one to two degrees on average from 26 degrees for chicken labeled as "fresh", could result in a significant portion of "fresh" chicken to appear frozen, causing confusion in consumers as to the meaning and accuracy of Federally-mandated labels. The Administration urges the Senate to strike this provision and permit USDA to issue its regulation.

Everglades/South Florida Ecosystem Restoration Research

The Committee has not included the $6 million requested for research to strengthen the South Florida Ecosystem Restoration Initiative. This research would include activities and facilities for biological control of aquatic weeds, and for sustainable production of sugar cane in high water table areas. This research is vital to the Everglades restoration effort and is strongly supported by the interagency South Florida Ecosystem Restoration Task Force. Because the facility will be operated by USDA's Agricultural Research Service, it is appropriate that funds for the facility be provided to USDA, not the Army Corps of Engineers. The Administration urges the Senate to include funds for this important research.

Conservation Programs

The Administration appreciates the Committee's deletion of House-passed restrictions on Farm Bill conservation programs.- However, the bill would still restrict new enrollments for the Wetlands Reserve Program to 130, 000 acres in FY 1997. The Senate is urged to permit the Administration's requested enrollment of 226, 000 acres, and to give more farmers the option to choose permanent easements.

Packer Market Competition

The Administration is very concerned that the Committee has not provided the additional $1.3 million requested for the Grain Inspection, Packers and Stockyards Administration. Specifically, the Committee has eliminated the requested increases of $0.6 million for Industry Structure and Performance Surveillance, $0.5 million for Packer Market Competition, and $0.2 million for electronic filing procedures. These requested increases are critical to the Department's ability to expand its industry analysis and investigative activities in the concentration and livestock pricing areas.

Funding for Low-priority Projects in Lieu of Advancing High-priority Items

The Administration objects to the Committee's increase in funding for earmarked university research projects, adding $25 million over the House-passed level. The President's request proposes to eliminate these low-priority projects for parochial interests". The Administration urges the Senate to re-direct these funds to high-priority needs noted above, as well as to the National Research Initiative (NRI) and the initiative to encourage the adoption of Integrated Pest Management systems. The Administration is also concerned that the Committee has earmarked $3 million of the NRI plant systems grants to a specific research program and strongly objects to any earmarking of the highly competitive, peer-reviewed NRI grants.

Electronic Benefits Transfer (EBT)

Section 738 would exclude Food Stamp benefits delivered by States through EBT from consumer liability and protection provisions under Federal Reserve Board Regulation E. The Administration supports a compromise that would relieve States of concerns about their potential liability while assuring basic protections to EBT recipients due to any unauthorized withdrawal of their benefits.

Food and Drug Administration (FDA)

The Administration is concerned that the Committee has not funded the level requested in the FY 1997 Budget to operate FDA and has not included all of the proposed user fees, some of which would help further reduce FDA review times for medical devices.

The Administration also objects to bill language that would interfere with the rule- making process regarding a proposed rule that would ensure that consumers receive important information regarding prescription drugs. The Administration notes that the House-passed bill also includes language on this topic, which the Administration does not oppose. The Administration would not object to the Senate passing a comparable provision that would promote the purpose of the regulation — to provide full, accurate, and comprehensive information to consumers about their prescription drugs.

Other Issues

Section 389 of P.L. 104-127 (1996 Farm Bill) established an 18-month moratorium on bypass flow requirements as a condition to renewal or reissuances of a Forest Service land use authorization permit. A task force was also established to study the issue of water rights on Federal lands and to make recommendations to the Secretary of Agriculture and Congress. USDA is in the process of finalizing the 7-member task force. The Administration strongly opposes any amendments that would extend the moratorium. Such an extension would not allow the recommendations of the task force to be acted upon and would be unacceptable to the Administration.