Secretary BUTZ. There is a difference with the two. Senator PERCY. Well, in this program, both of you speak with authority. But above the fact that, though the program is labeled a Rural Electrification Administration program, that funds are asked for country clubs and other activities. Secretary BUTZ. Dilettante. Senator PERCY. Subsidized funds being required for the expenditures of that type would be a little ludicrous in the light of our present crisis. Are these isolated cases, or is this a sizable proportion of funds that are used for something other than justification for programs such as providing telephones, electricity to rural communities that we all say they ought to have some assistance and help on? Secretary BUTZ. Yes, sir; REA has done a tremendous job of bringing electricity to rural America. When it came in in the midthirties something like 11 percent of our farms had electricity. Now over 48 percent have electricity. Of the 7-million meters on REA lines right now, only 20 percent are farm meters. 80 percent are nonfarm meters. Some of them are country clubs and dilettantes, whatever a dilettante is. The great bulk of them, however, are rural residents, retired people living outside of the cities. I think it is wonderful that the REA has brought electricity to country clubs which rural people can enjoy. The only point I make is, they should bear their own weight. Senator PERCY (presiding). These hearings will be recessed for 10 minutes during a rollcall vote during which time Senator Ervin and Senator Chiles want to return for some more questions. (Short recess taken.) Senator CHILES. Mr. Secretary, I appreciate your letting us inconvenience you this way. We had a vote and I think it is still going on so we may be getting some other members back. I will pick up until we get some other members in. I wanted to get your comments, Mr. Secretary, on the copy of a letter I received that our State director, Claude Green, State Director of the Farmers Home Administration in Florida, sent out on July 10 of 1972. He sent this out to a number of builders on July 10: DEAR MR. HODGES: We in Farmers Home Administration are pleased to announce we have just completed a most successful year in the rural housing program in Florida. There were 1,955 loans made last fiscal year in the amount of $28,440,140 to enable individuals to purchase or build new homes. Thirty-nine rare loans were made in the amount of $62,000, one rental housing loan was made for $18,350, two site loans in the amount of $123,450 were made, two labor housing loans in grants totaling $3,348,222 were also made. This makes a total of about $32 million. Plans have been made to more than double the production this year. Estimated numbers of loans to accomplish this have been given to each county supervisor. We need and solicit your active support and cooperation in the tremendous expansion of our rural housing program. Please accept this as your invitation to attend and participate in a meeting to be held at the following time and place. The meeting will be open to the public and feel free to invite or bring a friend. Based on this kind of letter, the particular builder that I talked with recently took it at face value and with this assurance that the program was going to be more than doubled, he borrowed money, he signed performance bonds, he began to purchase land that he could de velop, he began to try to carry out what was set forth in this letter. I had a hard time explaining to him how again a program that is passed by the Congress, he receives this kind of letter from the Farmers Home Administration as to what is going to be the program, and suddenly he is told that as of a particular date it is all cutoff, anything he has already okayed right then is fine, but anything else is gone. How do we expect government to kind of operate under that kind of basis? Secretary BUTZ. I presume, Senator, any time you cut off a program or substantially curtail it, somebody gets hurt. I have the figures here. Senator CHILES. Now, Mr. Secretary, before you get to the figures, you say any time you cutoff a program. Secretary BUTZ. Any time you make any program changes on ongoing programs, somebody gets caught in the middle of it. By the same token, if we substantially expand it, and had the foresight to have gotten in, I could be doing this too. Senator CHILES. What do you think an individual or citizen should be able to rely on? Should he be able to rely on a law passed by the Congress and a letter from the State Director of the FHA which would be the administration representative? Secretary BUTZ. That letter was dated in June or July? Senator CHILES. July 10. Secretary BUTZ. Last July 10 and for 6 months, up until December 29 when this cutoff date came, for 512 months the program had gone forward like that. As I said awhile ago, there was enough momentum back of it. It will continue going forward for a while. We estimate that in fiscal 1973 we are going to put out in housing loans $2.03 billion, and in fiscal 1974 $1.14 billion because of the momentum in the program. What is the pipeline? I presume individual builders will have gone out and made commitments for building sites and will not yet have the firm commitments from FHA and they may have to go and do their construction on a nonsubsidized basis, and money is not available on a nonsubsidized basis to do that. Senator CHILES. For these low-cost homes, do you think he is going to be able to find the funds for that? That was one of the reasons we were trying to work in rural development, was it not, trying to set up funds because it was not available under ordinary conditions? Secretary BUTZ. That is correct. Again we come back to my initial philosophy we had to curtail some place here because we were bumping into a debt ceiling if we did not curtail expenditures. Senator CHILES. I noticed that your General Counsel, I do not guess Secretary BUTZ. Jack Knebel. Senator CHILES. That is not Edmund M. Shulman? Secretary BUTZ. No; he is retired. Mr. Knebel became our General Counsel 3 weeks ago. Senator CHILES. We are using his opinion now to answer the legal ramifications, as I understand it. Secretary BUTZ. He is yours. Senator CHILES. I say Mr. Shulman, we are using his opinion. Senator CHILES. Well, I noticed in his opinion he uses the language on page 4, about the third paragraph of the opinion, if you want to look at it since it is clear that neither the substantive legislation nor the appropriation act compels the obligation and expenditure of the full amount authorized, but merely authorizes a program to be carried out; it is our opinion that the program may legally be terminated. Then he cites that this is not the first time a program carried out on the Soil Conservation and Domestic Allotment Act was of a lesser magnitude. He does not cite any example where anyone has been terminated, but there have been some done at a lesser amount. The question I wanted to ask you, Mr. Secretary, when your lawyer has made an opinion like that, and based on language in the appropriations that was designed to give you, as the Secretary, latitude in determining how moneys could more advisedly be spent, what do you think the Congress is going to do, what is left for the Congress to do if they do not want you to legally terminate a program, if they do not want you to terminate a program? Secretary BUTZ. I presume they could have a special ad hoc committee to hold hearings such as you are having this very day. Senator CHILES. They also could take away that discretion that they have been trying to grant to you over all the years, have they not, sir? Secretary BUTZ. I am not qualified to answer that. That is a constitutional question. I guess that is what the argument is about. Senator CHILES. Well, we have talked about whether this is a political issue or whether it is a legal issue and the only point, what I want your opinion as to is what you expect that the Congress is going to do to keep you from terminating a REAP program or any other program that they do not want to see terminated? Secretary BUTZ. Well, if the Congress passes legislation that mandates expenditure and assuming the President would veto that, and I understand that the White House has indicated it would be vetoed, and assuming the Congress overrides the veto, then I presume you have a case that the courts will decide. May I ask counsel to reply to that? Mr. KNEBEL. Mr. Chairman, the programs which have been impounded over which control is in the Department of Agriculture are, in our opinion, of a discretionary nature. I have recently reaffirmed the opinion rendered by Mr. Shulman to that effect. Senator CHILES. Mr. Counsel, are you not going to then give the Congress no alternative but to take away your discretionary power if you will not follow a broad intent that a program like REAP is a program of the Congress and we are giving you some discretion as to how the funds would be spent or how they would be allocated, then if you are going to use that discretion to say you can terminate the program, which is a little farfetched to the extent that over the almost 200 years of our Government it has never been used quite that way before, so it is a pretty unique opinion. Do you not leave the Congress with no discretion at all or in the position that they are not going to be able to leave you with any discretion, your department any discretion. Mr. KNEBEL. I will grant you you need discretion, however, I believe these are rather unique times and the ultimate responsibility for impounding funds rests with the President. Now if the Congress does pass mandatory legislation and we do get into a hiatus of that sort, as the Secretary has indicated, we will have a situation not unlike the Highray Trust Fund case. However, as the Deputy Attorney General testified previously before this committee, it is highly unlikely that the courts will attempt to resolve these economic matters. Senator CHILES. Well, as I asked the Assistant Attorney General, if the courts do not resolve it, then that means they will not resolve the question of the legislation that Congress might pass setting requirements on impoundments. So that issue would not be justifiable either. You cannot have it both ways, can you, counselor? Mr. KNEBEL. It is not an easy dilemma that has a ready solution. As you know, it is a matter, very frankly, of pragmatic application. Each impoundment gets looked at in a set of circumstances upon which the decision is made ultimately by the President for the impoundment itself. Senator CHILES. Do you have a question? Mr. MILLER. Yes. I may pose a couple of questions to the Secretary, please? Senator CHILES. Yes, sir. Mr. MILLER. I might pick up first, if I may, something Senator Chiles mentioned a moment ago about the termination of programs. You mentioned, I think I am accurate in saying, many examples of when Presidents have terminated programs in the past absent emergencies and so on. Just for the information of the committee, could you give us a half-dozen? Secretary BUTZ. I do not think I could give you a half dozen. Secretary BUTZ. You want specific illustrations? Well, I think in the case the President mentioned the other night in the press conference when he talked about President Truman, in the case of the number of wings in the Air Force. Mr. MILLER. Let me interrupt you. Mr. Secretary. President Truman merely cut back the number of wings, he did not say the Air Force is not going to have any more airplanes. Secretary BUTZ. But he did Mr. MILLER. That is not a precedent for you, sir. I respect fully disagree. Secretary BUTZ. You are talking about the complete stoppage of a program. Mr. MILLER. Do you have any precedents? Secretary BUTZ. I presume there are. I cannot supply them now. Mr. MILLER. Does your counsel have any? Mr. KNEBEL. As the counsel for the committee has indicated, complete elimination of a program is one thing. However, as the Secretary testified previously, there is a standby procedure under which some of the REAP-type practices will be continued by virtue of the Rural Development Act. Mr. MILLER. I am merely asking— Mr. KNEBEL. Do you want something where there is a total and complete elimination versus previous precedents? Mr. MILLER. I am just merely asking for illumination on the Secretary's statement that there are many instances of this in the past. I know of none except one prior to this administration. That was the aquarium which Congress authorized for the Potomac River. There may have been others and I think the committee would be interested in when BOB, OMB. or any department or any case of the Chief Executive having done it. I am merely asking as a point of information. In the hearing which Senator Ervin's committee held 2 years ago there was only the aquarium instituted in those hearings, and I know of no other in the history of this country. Now I think we ought to also get on the public record, Mr. Secretary, something about the history of impoundment. Secretary BUTZ. I might say the impoundments have been general. Whether or not they have actually stopped programs I am not prepared to say. Mr. MILLER. That is what you say, that is why I wanted you to elaborate a bit on it to inform the Congress and the committee. Secretary BUTZ. I am not aware that I said they had stopped programs. I said impounding had been practiced in many, many administrations. Mr. MILLER. You sent a letter dated February 5 to Senator Ervin using the word "terminate." You approved a memorandum by Mr. Shulman which ends up. "We are of the view that the Department's action is terminating the assistance under the REAP and water bank program is legally authorized." I do not know what that means, if it does not mean that you are abrogating, scuttling, or otherwise killing a program. Does it mean anything else other than that? Secretary BUTZ. It means that funding of that particular program is being terminated, it doesn't mean we are terminating the pollution program. Mr. MILLER. REAP is being terminated? Secretary BUTZ. That particular program, yes, sir. Mr. MILLER. Then you had no historical precedents; is that correct? Secretary BUTZ. I am not prepared to answer that; I don't know. Mr. MILLER. Well, you said a moment ago you had lots of them. Secretary BUTZ. Yes, I indicated where funds were impounded. Mr. MILLER. Well, as I understand it. then, there is no historical precedent other than the one I mentioned and the Secretary is unable to furnish any examples. Secretary BUTZ. At the moment. Mr. MILLER. I think the committee would, if I may speak for Senator Ervin, would be interested in a list of examples that you have complete terminations of programs by impoundment action, by any type. Senator, if I may, I think it would be very useful for the committee to have that. Senator CHILES. If they had such a list, we would be delighted to have it. (The following was subsequently supplied for the record by Secretary Butz:) |