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Reserves may be established as a result of changes and requirements, greater efficiency of operations or other developments subsequent to the date on which the budget authority was enacted.
Reserves may also be established to provide for contingent or for subsequent apportionment.
But then it also says in the next paragraph there: Reserves must not be used to nullify the intent of the Congress with respect to specific projects or levels of programs.
That was the interpretation by the Budget Bureau itself following the General Appropriation Act, 1951.
Senator Javits. I think, Mr. Staats, this is extremely revealing.
In short, you say the words "other developments” mean substantive good faith postappropriation developments ?
Mr. STAATS. That is correct.
Senator Javits. So that just to take an example, if we had inflation before in appropriations, we continue to have it after appropriation, you would have to judge the state of facts as to whether you would say that is or is not another development.
I am not trying to prejudge it, I am saying that would be a criterion you would have to judge, is this substantively a good faith “other development ?"
Mr. STAATS. It is a savings that you would achieve because of some subsequent development.
I think that if we go through the legislative history, that is the purpose of this attachment. It is abundantly clear that the Congress did not intend that that other development be used to hold up the project or cancel a project or lower a program level or cancel a program that had been approved.
Senator Javits. I have just one other question. I do not want to intrude on your time. But you mentioned something about rescission. You are acquainted with what went on this morning about the possibility of supplemental rescissions rather than supplemental propositions. Mr. STAATS. Right.
Senator JAVITS. Are those so numerous it would be a burden to submit for the record a historical list of when that was done?
Mr. Staats. I think this could be pulled together. I put together quite a few of them myself.
Senator Javits. Shall we limit in time, 10 or 20 years?
Senator Javits. Give us a time whenever you say, 20 years, whatever you think, postwar, say beginning in 1945, whether there were any rescissions, and could we have the history of each without burdening you too much?
Mr. STAATS. I think we could.
Senator Javits. I ask unanimous consent that it be included in the record.
Senator CHILES. Without objection.
(The following was supplied for the record :)
RESCISSIONS SPECIFICALLY REQUESTED BY THE PRESIDENT FOLLOWING END OF WORLD WAR II
1 Rescinded by 1st Supplemental Surplus Appropriation Rescission Act, 1946, Feb. 18, 1946, 60 Stat. 6.
Rescinded by 3d Supplemental Surplus Appropriation Rescission Act, 1946, July 23, 1946, 60 Stat. 624.
Senator Javits. And I reiterate my request for a meeting of the committee to make a request of the Comptroller General for a legal opinion on these specific impoundments which have been announced by the President.
Senator CHILES. Thank you.
Mr. Staats, your testimony is that you think that the antideficiency statute should be an exclusion to the legislation that is now pending before us because you feel that there hasn't been an abuse under that statute.
I think the committee would like to have any kind of information we could to determine the facts of that."
Our concern, I think, is that it has been broadly cited as being authority for impoundment requests. Now for impoundments. It has been used from time to time by administrative people when they were asked why they impounded or what was their authority, they would cite the statutes as they have cited some of the others. We have talked about the full employment statute and some of the others. If the practice is that it has not been used, then I think that would be interesting to the committee to know and to be able to have that in the record.
As I understand from what you are saying, that is something that is kind of used daily on small items or on items over a period of time to set aside, but you do not think those would really be policy considerations that the Congress would want to deal with.
Mr. Staats. That is correct. Increase productivity personnel making it possible to do the same job with fewer people, install a computer, be able to reduce people that way. These are routine kinds of actions taken to achieve economies which do not really affect the program level.
Senator CHILES. What if we had something in the legislation that required notification even in areas under the Antideficiency Act or something we would know it was not being used as a tool or device to do what we are trying to get to?
1 See p. 105.
* * *
Mr. Staats. This could be done on a reporting basis.
Senator CHILEs. But would it be possible, anyway, for us to get the information as to whether major items had been used under this as a means of impounding?
Mr. Staats. You mean what kind of action, how much savings and so forth?
Senator CHILES. Yes.
Senator CHILES. I think that it would be helpful because I think this committee would be reluctant to exclude that unless we really felt it was purely being used for the kind of functions that you get forth.
Mr. ŜTAAts. The President over a period of time has, for example, put freezes on promotions and has taken actions to avoid filling vacancies and things of that type which I would not think you would want to or need to go through the full process as contemplated under S. 337.
However, it might be of interest to the Congress to know what savings have been achieved through those types of actions.
Senator CHILES. I think it is something we definitely would like to see.
Mr. EDMISTEN. I would like to address this question to the General Counsel. You are no doubt aware of a memorandum of December 1, 1969, by Mr. William Rehnquist, then Assistant Attorney General, with respect to the suggestion that the President has a constitutional power to decline to spend appropriated funds. Mr. Rehnquist stated" we must conclude that the existence of such
a broad power
is supported neither by reason nor precedent.” 1
Do you suppose they have changed their minds at the Department of Justice; have you seen any legal document which contravenes the 1969 memo?
Mr. DEMBLING. I haven't seen any more recent memo, no, sir. I am not aware of any document that has been written by the Office of Legal Counsel at the Justice Department since that one was issued.
Mr. STAATS. I might add President Truman's decision on the 70– group Air Force was taken as Commander in Chief because his Attorney General advised him it was very doubtful he had authority otherwise to take this action.
I recall a case President Eisenhower asked his Attorney General with respect to reserving funds for the National Institutes of Health and he got the same advice.
Senator CHILEs. Do you know if any of those were written opinions?
Mr. Staats. No; he asked that it not be put in writing. I think you will find very little by way of support from any Attorney General that the President has this kind of broad authority.
Senator Javits. I add a unanimous consent request. This morning we put in the record section 406 of the vocational educational amendments which related to this issue. I now find there is another section of another law, section 6 on one of the Hill-Burton Amendments of 1970, having the same effect.
Senator CHILES. Thank you very much. We appreciate your attendance, Mr. Dembling and Mr. Moore.
We will hear now Mr. Charles Robinson, Jr., of the National Rural Electric Cooperative Association.
1 See memo, p. 390.
STATEMENT OF CHARLES A. ROBINSON, JR., STAFF COUNSEL, NA
TIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, ACCOMPANIED BY JOHN D. HAWKE, JR., ATTORNEY, AND DON SMITH, STAFF ECONOMIST
Mr. ROBINSON. My name is Charles A. Robinson, Jr. I am staff counsel to the general manager of the National Rural Electric Cooperative Association. NREČA is the national trade association of nonprofit cooperatives which provide central station electric service throughout the rural areas of 46 States and which, until recently, were financed via loans from the Rural Electrification Administration.
I have two people with me today, Mr. Chairman, on my right a very distinguished lawyer, Mr. John D. Hawke, Jr., a partner in the Washington, D.C., law firm of Arnold & Porter, which was formerly known as Arnold, Fortas & Porter, which firm did a considerable amount of work for us on the question about which I will speak with you briefly, and on my left is Mr. Don Smith, our staff economist.
On December 29, 1972, the U.S. Department of Agriculture terminated the REA 2 percent direct loan program and announced that thereafter:
All REA loans will be made as guaranteed and insured loans under the authority of Section 104 of the Rural Development Act of 1972 (section 306 (a) (1) of the Consolidated Farm and Home Development Act).
With all of the formality and due process of a one-page, back-toback, double-spaced press release, the Secretary of Agriculture unilaterally terminated a Federal program which has been operated successfully and continuously for 36 years pursuant to a specific statute enacted by Congress, and for the operation of which Congress has during all of those years continuously appropriated funds in response to Presidential budget requests.
In addition to the resulting higher interest cost ($990 million during the next 10 years assuming a $600 million annual loan program), the "conversion of REA to an insured and guaranteed loan program under the Consolidated Farm and Home Development Act creates several other difficulties for borrowers. As examples:
1. All loans are subject to review by sub-State multijurisdictional general purpose planning and development commissions, and by the jurisdictional unit of local government (county or municipality), and may not be approved if inconsistent with the areawide plan of the multijurisdictional planning commission (7 U.S.C. 1926 (a)(3)). No such requirement is found in the Rural Electrification Act.
2. Loan applicants must certify to the Secretary in writing and the Secretary must determine that credit to finance their needs is not available elsewhere at reasonable rates and terms. (7 U.S.C. 1983 (a).) No such recuirement is found in the Rural Electrification Act.
3. Each borrower must agree that if at any time it appears to the Secretary that he may be able to obtain a loan from other credit sources at reasonable rates and terms, he will, upon request of the Secretary or the insured lender, thereupon refinance the loan. [7 U.S.C. 1983(c).] No such requirement is found in the Rural Electrification Act.
4. Final authority for the continuance and funding level of loan programs under the Consolidated Farm and Home Development Act days.
is vested in the executive branch (OMB) rather than in the Congress as with the Rural Electrification Act.
As of this time, Mr. Chairman, we do not know what the rate will be on these guaranteed loans. The interest rate in all cases we do not know what the ratio will be between guaranteed and insured loans under the program proposed in this press release. It is very general and nonspecific
We do not know when the new program will start. We do not know whether or not the restrictions of the Rural Electrification Act will attach and be in addition to those found in the new act.
We think they will. We do not know which system will get insured loans and which system will get guaranteed loans. The program is very much in the dark and I am advised that as of this time the REX Administrator does not even have a general delegation to proceed with his new loan authority. If he has received it it is in the very last few
Let me respectfully emphasize that in our judgment this action by the Secretary of Agriculture on December 29, 1972, constitutes a great deal more than an impoundment of appropriated funds. It constitutes nothing less than a refusal by the executive branch to carry out the terms of a duly enacted Federal statute. In effect and in reality the Rural Electrification Act of 1936, has been repealed by a one-page Department of Agriculture press release.
To determine whether or not NRECA and its member rural electric system borrowers of REA might have a judicially enforceable remedy to reverse this administrative repeal of the Rural Electrification Act, we retained the Washington, D.C. law firm of Arnold & Porter. This firm has now completed a memorandum of law on the subject, which was submitted to our board of directors on January 22.
With the permission of the chairman, I will offer a copy of this memorandum of law, which is 74 pages in length, on the record, for whatever use the subcommittee may desire.
Senator Chiles. Without objection we will receive the memo randum.
Mr. ROBINSON. In its 74-page memorandum, Arnold & Porter summarizes its views with respect to the termination of the REA loan program as follows (p. 3):
... it is our view that a strong case can be made for the proposition that the Department has exceeded its legal authority in taking that action. We find no constitutional basis for the Department's action and we are of the view that Congress has not delegated to the Department the discretion to take such action.
Without going into the detail of its work, Arnold & Porter reasoned along approximately the following line:
1. Authorization for presidential actions must stem from either an act of Congress or the Constitution, because the lawmaking power is entrusted by the Constitution to the Congress alone [Steel Seizure case, Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952)].
2. The Constitution does not confer power on the Executive to terminate statutorily established programs. [Kendall v. United States ex rel. Stokes, 37 U.S. 522 (1838). See also Spaulding v. Douglas Aircraft Co., 60 F. Supp. 985; 154 F. 2d 419 (1946) and hearings before this sub
i See p. 594.