Statement of Administration Policy: H.R. 5487 - Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1993

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

The purpose of this Statement of Administration Policy is to express the Administration's views on the Agriculture, Rural Development/Food and Drug Administration, and Related Agencies Appropriations Bill, FY 1993, as reported by the Committee.

The Administration has serious concerns about several provisions of this bill as discussed below.

The Administration regrets that the Committee has provided unwarranted increases in the loan levels for the Farmers Home Administration and the Rural Electrification Administration. These increases, have been provided at the expense of several high priority environmental, food safety, and research programs, for which the Committee has provided funding below the President's request. In addition, the Committee has rejected the Administration's proposals for new user fees for the Food and Drug Administration and several agricultural marketing services that would reduce spending by over $200 million.

The Committee bill does not fund important environmental programs that are designed to protect and conserve vulnerable farmland. The President has proposed funding of $161 million for the Wetlands reserve program to protect up to 200,000 acres of wetlands in FY 1993. No funding for this program is included in the Committee bill, and section 728 would prohibit the enrollment of additional acres in the reserve during FY 1993.

The President also has proposed enrolling 381,000 acres in FY 1993 in the Conservation reserve program to remove highly erodible cropland from production. Section 729 of the Committee bill would forbid any additional cropland enrollment in FY 1993. The Administration urges the House to permit the enrollment of additional acreage in these important environmental protection programs.

The Committee bill represents a retreat from needed improvements in ensuring food safety for the country's consumers. Analyses from the National Academy of Sciences and other sources have highlighted the need to go beyond the current labor intensive, visual inspection system. The Committee bill does not include funding for the microbiological baseline study, which is a key component of the President's Food Safety Initiative. This study would provide needed data to measure the effectiveness of current inspection programs. In addition, the bill would prohibit the continuation of the pilot Streamlined Inspection System for cattle, which was initiated as a way to modernize meat inspection. The Administration urges the House to fund these vital steps toward improving the inspection system.

The Committee bill would fund the National Research Initiative (NRI) at $97.5 million, the same level as FY 1992 and $52.5 million below the President's request. An additional $34.5 million is included for special research grants listed in the Committee report. These grants address local, parochial research problems, whereas the NRI is a competitively-awarded grant program that targets top priority national research needs. The Administration believes that eliminating earmarks and funding NRI at the requested level would represent the most appropriate use of scarce research dollars.

The President's budget proposes new user fees for the Food and Drug Administration (FDA) and several agricultural marketing services in the Department of Agriculture. The Committee bill would prohibit the FDA from developing and implementing these fees and does not include the agricultural marketing fee proposals. The Administration urges the House to allow the FDA to collect fees to recoup the private benefit derived by industry through FDA regulation. The Administration also urges the House to require beneficiaries, rather than the taxpayers, to pay for agricultural services currently provided free of charge. These fees would reduce taxpayer financed spending by over $215 million.

On the basis of OMB's initial scoring of the bill, the Committee's recommendations are within the House 602(b) allocations for both domestic and international discretionary budget authority and outlays. The House 602(b) allocations are consistent with the statutory spending limits enacted in the Budget Enforcement Act.

Additional Administration comments regarding the Committee bill are contained in the Attachment. Also attached is a table that provides OMB's preliminary scoring of the Committee bill.

Attachments

(House Floor)

ADDITIONAL CONCERNS
H.R. 5487 -- AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1993

MAJOR PROVISIONS OPPOSED BY THE ADMINISTRATION

A. Funding Levels

Rural Housing Insurance Fund. Farmers Home Administration (FmHA). The Committee has constrained the options available for financing low-income housing by failing to fund FmHA's subsidized guaranteed home loan program and the voucher program for rural rental assistance.

For FY 1993, the Administration has requested a $400 million increase over FY 1992 for subsidized loan guarantees.. Although the Committee has chosen to fund both unsubsidized direct and guaranteed loans, it has not funded subsidized guarantees. With the rural housing market in need of credit, the subsidized guaranteed loans fill a gap for low-income home borrowers who need modest Federal assistance to qualify for commercial loans. The Administration urges the House to fund these subsidized guarantees.

The Administration urges the House to restore the President's $140 million request for housing vouchers. Vouchers are a proven, cost-effective alternative to providing housing assistance to rural Americans, especially those who cannot afford FmHA home purchase loans at even one percent interest. The successful rural voucher demonstration program in FY 1988 underscored the demand for and the effectiveness of vouchers in rural areas.

Farm and Rural Loans. The Committee bill would undermine farm and rural loan program reforms enacted in the Omnibus Budget Reconciliation Act of 1990 (OBRA). These reforms represent an agreement between the Congress and the Administration, not only on funding priorities in agriculture, but on the form of financial assistance to farm and utility borrowers.

The Committee bill does not adopt the reductions in five-percent loans and the shift to private guarantees for the Rural Electrification Administration (REA) electric and telephone borrowers, as contained in section 1201 of OBRA. The vast majority of these borrowers are fully able to afford private financing, especially if assisted by OBRA's 90-percent guarantees, without significant changes in subscriber rates.

Many current REA telephone borrowers are subsidiaries of major telephone corporations or have excessive amounts of cash on hand — some in excess of twice the value of their physical assets. The Administration strongly believes these borrowers should be directed to private financing, with or without Federal guarantee assistance, and that the level of five-percent loans should be reduced.

Farm operating and ownership direct loans of the Farmers Home Administration (FmHA) are funded in the Committee bill at $575 million in excess of OBRA's prescribed levels for FY 1993. OBRA directed that authority for these direct loans be shifted to subsidized guarantees, wherein the Federal government buys-down the interest rate on private guarantees to the point that borrowers can afford them. Subsidized guarantees provide borrowers the necessary assistance that direct loans provide, but at a reduced Federal cost and through a process that enables borrowers to establish needed relations with local banks.

General Accounting Office studies have shown that FmHA direct farm loans have become a subsidy that many farmers depend upon, rather than being the temporary credit source they were designed to be. The Administration urges the House to adopt farm and rural loan assistance at OBRA levels.

Commodity Futures Trading Commission (CFTC). The Committee bill has frozen the CFTC's budget authority for FY 1993 at the FY 1992 level. This freeze comes at a time when the futures industry is rapidly expanding, as are enforcement demands. The Administration urges the House to fund the CFTC at the President's requested level of $52.8 million.

In addition, the Administration supports a futures transaction fee to offset the CFTC's budget authority. Such a fee is not incorporated into the Committee bill.

B. Language Provisions

Section 722. Section 722 of the Committee bill would prohibit the use of private debt collection agencies to collect delinquent payments from FmHA borrowers. At the end of FY 1991, FmHA had over $56 billion in outstanding loans. Of this, almost $14 billion represented expected losses, net of recoveries and fees. The use of debt collection agencies for seriously delinquent debt is a proven 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 FmHA borrowers from the effective debt collection authority available under the Act. The Administration urges the House to delete this provision.

Micro-management. The Committee bill includes a number of micro-management provisions that would prohibit the ability of agencies to respond to changing circumstances. These include a requirement that at least $81.7 million of the Extension Service budget be spent on Home Economics; extensive directives on the pest and disease eradication programs of the Animal and Plant Health Administration; a prohibition in section 713 on phasing out the Resource Conservation and Development Program; full-time equivalent staffing floors in section 718; and a prohibition on the establishment of new offices in section 724.

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