[House Report 104-628]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-628
_______________________________________________________________________


 
DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND 
             INDEPENDENT AGENCIES APPROPRIATIONS BILL, 1997

                                _______
                                

 June 18, 1996.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


    Mr. Lewis, from the Committee on Appropriations, submitted the 
                               following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3666]

    The Committee on Appropriations submits the following 
report in explanation of the accompanying bill making 
appropriations for the Departments of Veterans Affairs and 
Housing and Urban Development, and for sundry independent 
agencies, boards, commissions, corporations, and offices for 
the fiscal year ending September 30, 1997, and for other 
purposes.

                        INDEX TO BILL AND REPORT

_______________________________________________________________________


                                                            Page number

                                                            Bill Report
Title I--Department of Veterans Affairs....................     2
                                                                      4
Title II--Department of Housing and Urban Development......    19
                                                                     23
Title III--Independent Agencies:...........................    58
                                                                     42
        American Battle Monuments Commission...............    58
                                                                     42
        Community Development Financial Institutions.......    60
                                                                     43
        Consumer Product Safety Commission.................    60
                                                                     44
        Corporation for National and Community Service.....    61
                                                                     44
        Court of Veterans Appeals..........................    63
                                                                     46
        Cemeterial Expenses, Army..........................    64
                                                                     46
        Environmental Protection Agency....................    64
                                                                     46
        Office of Science and Technology Policy............    72
                                                                     69
        Council on Environmental Quality and Office of 
            Environmental Quality..........................    73
                                                                     69
        Federal Emergency Management Agency................    73
                                                                     70
        Consumer Information Center........................    78
                                                                     77
        Office of Consumer Affairs.........................
                                                                     78
        National Aeronautics and Space Administration......    79
                                                                     79
        National Credit Union Administration...............    83
                                                                     85
        National Science Foundation........................    84
                                                                     85
        Neighborhood Reinvestment Corporation..............    86
                                                                     90
        Selective Service System...........................    86
                                                                     91
Title IV--General Provisions...............................    87
                                                                     92

                          Summary of the Bill

    The Committee recommends $84,286,060,000 in new budget 
(obligational) authority for the Departments of Veterans 
Affairs and Housing and Urban Development, and 17 independent 
agencies and offices. This is $1,894,094,000 above the 1996 
appropriations level.
    The following table summarizes the amounts recommended in 
the bill in comparison with the appropriations for fiscal year 
1996 and budget estimates for fiscal year 1997.

                                             SUMMARY OF BUDGET ESTIMATES AND AMOUNTS RECOMMENDED IN THE BILL                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Fiscal year--                                                                          
                                                  ------------------------------------------        House           House compared      House compared  
                                                       1996 enacted        1997 estimates                            with enacted       with estimates  
--------------------------------------------------------------------------------------------------------------------------------------------------------
American Battle Monuments Commission.............         $20,265,000          $20,400,000          $22,265,000          +$2,000,000         +$1,865,000
Cemeterial Expenses, Army........................          11,946,000           11,600,000           11,600,000             -346,000  ..................
Community Development Financial Institutions.....          45,000,000          125,000,000           45,000,000   ..................         -80,000,000
Consumer Information Center......................           2,061,000            2,060,000            2,260,000             +199,000            +200,000
Consumer Product Safety Commission...............          40,000,000           42,500,000           42,500,000           +2,500,000  ..................
Corporation for National and Community Service...         402,500,000          545,674,000          367,000,000          -35,500,000        -178,674,000
Council on Environmental Quality.................           2,150,000            2,436,000            2,250,000             +100,000            -186,000
Court of Veterans Appeals........................           9,000,000            8,795,000            9,229,000             +229,000            +434,000
Department of Housing and Urban Development......      19,127,122,000       21,963,813,000       19,710,563,000         +583,441,000      -2,253,250,000
Department of Veterans Affairs...................      38,372,807,000       38,838,849,000       38,798,588,000         +425,781,000         -40,261,000
Environmental Protection Agency..................       6,528,027,000        7,041,917,000        6,547,427,000          +19,400,000        -494,490,000
Federal Emergency Management Agency..............         678,610,000          780,049,000        1,791,316,000       +1,112,706,000      +1,011,267,000
National Aeronautics and Space Administration....      13,903,700,000       14,704,200,000       13,604,200,000         -299,500,000      -1,100,000,000
National Credit Union Administration.............  ...................  ...................           1,000,000           +1,000,000          +1,000,000
    (Limitation on direct loans).................        (600,000,000)        (600,000,000)        (600,000,000)  ..................  ..................
National Science Foundation......................       3,220,000,000        3,325,000,000        3,253,000,000          +33,000,000         -72,000,000
Neighborhood Reinvestment Corporation............          38,667,000           55,000,000           50,000,000          +11,333,000          -5,000,000
Office of Consumer Affairs.......................           1,800,000            1,811,000   ...................          -1,800,000          -1,811,000
Office of Science and Technology Policy..........           4,981,000            4,932,000            4,932,000              -49,000  ..................
Resolution Trust Corporation: Office of Inspector                                                                                                       
 General.........................................          11,400,000   ...................  ...................         -11,400,000  ..................
Selective Service System.........................          22,930,000           22,930,000           22,930,000   ..................  ..................
Budget scorekeeping adjustments..................         -51,000,000           25,000,000   ...................         +51,000,000         -25,000,000
                                                  ------------------------------------------------------------------------------------------------------
      Total......................................      82,391,966,000       87,521,966,000       84,286,060,000       +1,894,094,000      -3,235,906,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

                       Fiscal Year 1997 Rationale

    The fiscal year 1997 recommendations for the VA, HUD, and 
Independent Agencies Appropriations Bill continue down the path 
begun with the fiscal year 1996 enacted Bill and reflect a 
fundamental recognition that significant changes are required 
if the goal of a balanced budget is to be realized.
    Last year the Subcommittee conducted a zero-base review of 
each department, agency, and office under its jurisdiction. The 
goal of that review was to determine exactly what was being 
done by the government, why was it being done, how was it being 
done, and if it was a necessary activity, could it be done 
cheaper. The following report and accompanying Bill reflects an 
ongoing commitment to the basic premise of the work which was 
started in fiscal year 1996. The job was not completed in 
fiscal year 1996, nor will it be completed in fiscal year 1997, 
but a substantial amount of progress has been made toward 
controlling the growth in programs while maintaining essential 
government activity.
    The Subcommittee recognizes that many difficult decisions 
are still before us and that short-term measures such as 
``outlay enhancers'' will do little to address the long-term 
goal of a balanced budget. Therefore, to the extent possible, 
the Subcommittee has avoided the use of ``outlay enhancers'' 
and other mechanisms which merely postpone difficult decisions. 
The reductions contained in the Bill which accompanies this 
report are real reductions which present real challenges for 
various government offices if fundamental change is to be 
realized.

                                TITLE I

                     DEPARTMENT OF VETERANS AFFAIRS

Fiscal year 1997 recommendation......................... $38,798,588,000
Fiscal year 1996 appropriation..........................  38,372,807,000
Fiscal year 1997 budget request.........................  38,838,849,000
Comparison with fiscal year 1996 appropriation..........    +425,781,000
Comparison with fiscal year 1997 budget request.........     -40,261,000

    The Department of Veterans Affairs is the third largest 
Federal agency in terms of employment with an average 
employment of approximately 218,000. It administers benefits 
for 26,000,000 veterans, and 44,000,000 family members of 
living veterans and survivors of deceased veterans. Thus, 
70,000,000 people, comprising about 27 percent of the total 
population of the United States, are potential recipients of 
veterans benefits provided by the Federal Government.
    A total of $38,798,588,000 in new budget authority is 
recommended by the Committee for the Department of Veterans 
Affairs programs in fiscal year 1997. The funds recommended 
provide for compensation payments to 2,550,700 veterans and 
survivors of deceased veterans with service-connected 
disabilities; pension payments for 730,700 non-service-
connected disabled veterans, widows and children in need of 
financial assistance; educational training and vocational 
assistance to 488,407 veterans, servicepersons, and reservists, 
and 37,938 eligible dependents of deceased veterans or 
seriously disabled veterans; housing credit assistance in the 
form of 250,030 guaranteed loans provided to veterans and 
servicepersons; administration or supervision of life insurance 
programs with 5,135,956 policies for veterans and active duty 
servicepersons providing coverage of $516,868,000,000; 
inpatient care and treatment of beneficiaries in 173 hospitals; 
39 domiciliaries, 135 nursing homes and 404 outpatient clinics 
which includes independent, satellite, community-based, and 
rural outreach clinics involving 32,694,000 visits; and the 
administration of the National Cemetery System for burial of 
eligible veterans, servicepersons and their survivors.

                    Veterans Benefits Administration

                       compensation and pensions

                     (including transfer of funds)

Fiscal year 1997 recommendation......................... $18,497,854,000
Fiscal year 1996 appropriation..........................  18,331,561,000
Fiscal year 1997 budget request.........................  18,497,854,000
Comparison with fiscal year 1996 appropriation..........    +166,293,000
Comparison with fiscal year 1997 budget request.........               0

    This appropriation provides funds for service-connected 
compensation payments to an estimated 2,550,700 beneficiaries 
and pension payments to another 730,700 beneficiaries with non-
service-connected disabilities. The average cost per 
compensation case in 1997 is estimated at $6,035, and pension 
payments are projected at a unit cost of $4,034. The estimated 
caseload and cost by program for 1996 and 1997 are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                1996               1997            Difference   
----------------------------------------------------------------------------------------------------------------
Caseload:                                                                                                       
    Compensation:                                                                                               
        Veterans.......................................          2,240,200          2,247,400             +7,200
        Survivors......................................            305,300            303,300             -2,000
        Clothing allowance (non-add)...................           (65,600)           (65,800)             (+200)
    Pensions:                                                                                                   
        Veterans.......................................            421,800            409,000            -12,800
        Survivors......................................            341,100            321,700            -19,400
        Vocational training (non-add)..................              (100)               (50)              (-50)
    Burial allowances..................................            103,000            102,000             -1,000
                                                        ========================================================
Funds:                                                                                                          
    Compensation:                                                                                               
        Veterans.......................................    $11,987,023,000    $12,040,316,000       +$53,293,000
        Survivors......................................      3,215,000,000      3,317,700,000       +102,700,000
        Clothing allowance.............................         32,977,000         33,084,000           +107,000
        Payment to GOE (Public Laws 101-508 and 102-                                                            
         568)..........................................          2,105,000          2,098,000             -7,000
    Pensions:                                                                                                   
        Veterans.......................................      2,177,600,000      2,171,700,000         -5,900,000
        Survivors......................................        790,600,000        775,700,000        -14,900,000
    Vocational training................................            174,000             89,000            -85,000
    Payment to GOE (Public Laws 101-508, 102-568, and                                                           
     103-446)..........................................         11,630,000         10,078,000         -1,552,000
    Payment to medical care (Public Laws 101-508 and                                                            
     102-568)..........................................         11,445,000         14,241,000         +2,796,000
    Payment to medical facilities......................          2,893,000          3,124,000           +231,000
    Burial benefits....................................        113,488,000        115,824,000         +2,336,000
    Other assistance...................................          1,895,000          1,900,000             +5,000
    Unobligated balance and transfers..................        -15,269,000         12,000,000        +27,269,000
                                                        --------------------------------------------------------
        Total appropriation............................     18,331,561,000     18,497,854,000       +166,293,000
----------------------------------------------------------------------------------------------------------------

    The Administration has again proposed dividing the 
compensation and pensions appropriation into three separate 
accounts: compensation, pensions, and burial benefits and 
miscellaneous assistance. The Committee has again disapproved 
this proposal and recommends a single compensation and pensions 
appropriation in fiscal year 1997.
    The 1997 pension budget request includes funds for a 
proposed cost-of-living increase of 2.8 percent. Legislation 
will be proposed to provide a 2.8 percent increase for all 
compensation beneficiaries. The estimated cost of this 
compensation adjustment is $288,700,000.
    For fiscal year 1997, the Committee is recommending the 
budget estimate of $18,497,854,000 for compensation and 
pensions. The bill also includes requested language reimbursing 
$12,176,000 to the general operating expenses account and 
$14,241,000 to the medical care account for administrative 
expenses of implementing cost saving provisions required by the 
Omnibus Budget Reconciliation Act of 1990, Public Law 101-508, 
the Veterans' Benefits Act of 1992, Public Law 102-568, and the 
Veterans' Benefits Improvements Act of 1994, Public Law 103-
446. These cost savings provisions include verifying pension 
income against Internal Revenue Service and Social Security 
Administration (SSA) data; establishing a match with the SSA to 
obtain verification of Social Security numbers; and the $90 
monthly VA pension cap for Medicaid-eligible single veterans 
and surviving spouses alone in Medicaid-covered nursing homes. 
Also, the bill includes requested language permitting this 
appropriation to reimburse such sums as may be necessary to the 
medical facilities revolving fund ($3,124,000 estimated in 
fiscal year 1997) to help defray the operating expenses of 
individual medical facilities for nursing home care provided to 
pensioners as authorized by the Veterans' Benefits Act of 1992.
    The Administration has proposed language that would provide 
indefinite 1997 supplemental appropriations for compensation 
and pension payments. The Committee believes the current 
funding procedures are adequate and has not included the 
requested language in the bill. The Committee recognizes that 
additional funding may be necessary when the final disposition 
of proposed legislation is known.

                         READJUSTMENT BENEFITS

Fiscal year 1997 recommendation.........................  $1,227,000,000
Fiscal year 1996 appropriation..........................   1,345,300,000
Fiscal year 1997 budget request.........................   1,227,000,000
Comparison with fiscal year 1996 appropriation..........    -118,300,000
Comparison with fiscal year 1997 budget request.........               0

    This appropriation finances the education and training of 
veterans and servicepersons whose initial entry on active duty 
took place on or after July 1, 1985. These benefits are 
included in the All-Volunteer Force Educational Assistance 
Program. Eligibility to receive this assistance began in 1987. 
Basic benefits are funded through appropriations made to the 
readjustment benefits appropriation. Supplemental benefits are 
also provided to certain veterans through transfers from the 
Department of Defense. This law also provides education 
assistance to certain members of the Selected Reserve and is 
funded through transfers from the Departments of Defense and 
Transportation. In addition, certain disabled veterans are 
provided with vocational rehabilitation, specially adapted 
housing grants, and automobile grants with the approved 
adaptive equipment. This account also finances educational 
assistance allowances for eligible dependents of those veterans 
who died from service-connected causes or have a total and 
permanent service-connected disability as well as dependents of 
servicepersons who were captured or missing-in-action.
    The Committee recommends the budget estimate of 
$1,227,000,000 for readjustment benefits in fiscal year 1997. 
The estimated number of trainees and costs by program for 1996 
and 1997 are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                1996               1997            Difference   
----------------------------------------------------------------------------------------------------------------
Number of trainees:                                                                                             
    Education and training: dependents.................             38,668             37,938               -730
    All-Volunteer Force educational assistance:                                                                 
        Veterans and servicepersons....................            301,776            320,084            +18,308
        Reservists.....................................            114,825            109,243             -5,582
    Vocational rehabilitation..........................             54,459             59,080             +4,621
                                                        --------------------------------------------------------
      Total............................................            509,728            526,345            +16,617
                                                        ========================================================
Funds:                                                                                                          
    Education and training: dependents.................        $98,211,000        $96,267,000        -$1,944,000
    All-Volunteer Force educational assistance:                                                                 
        Veterans and servicepersons....................        843,907,000        902,867,000        +58,960,000
        Reservists.....................................        113,471,000        110,693,000         -2,778,000
    Vocational rehabilitation..........................        348,810,000        388,215,000        +39,405,000
    Housing grants.....................................         16,327,000         16,327,000                  0
    Automobiles and other conveyances..................          5,615,000          5,615,000                  0
    Adaptive equipment.................................         16,433,000         12,506,000         -3,927,000
    Work-study.........................................         34,045,000         38,243,000         +4,198,000
    Payment to States..................................         13,000,000         13,000,000                  0
    Jobs training (P.L. 102-484).......................           -518,000           -173,000           +345,000
    Unobligated balance and other adjustments..........       -144,001,000       -356,560,000       -212,559,000
                                                        --------------------------------------------------------
      Total appropriation..............................      1,345,300,000      1,227,000,000       -118,300,000
----------------------------------------------------------------------------------------------------------------

                   VETERANS INSURANCE AND INDEMNITIES

Fiscal year 1997 recommendation.........................     $38,970,000
Fiscal year 1996 appropriation..........................      24,890,000
Fiscal year 1997 budget request.........................      38,970,000
Comparison with fiscal year 1996 appropriation..........     +14,080,000
Comparison with fiscal year 1997 budget request.........               0

    The veterans insurance and indemnities appropriation is 
made up of the former appropriations for military and naval 
insurance, applicable to World War I veterans; national service 
life insurance (NSLI), applicable to certain World War II 
veterans; servicemen's indemnities, applicable to Korean 
conflict veterans; and the veterans mortgage life insurance, 
applicable to individuals who have received a grant for 
specially adapted housing.
    The budget estimate of $38,970,000 for veterans insurance 
and indemnities in fiscal year 1997 is included in the bill. 
The amount provided will enable VA to transfer more than 
$31,030,000 to the service-disabled veterans insurance fund, 
transfer $8,040,000 in payments for the 3,700 policies under 
the veterans mortgage life insurance program, as well as 
provide payments for the 1,436 policies under a small NSLI 
program called ``H.'' These policies are identified under the 
veterans insurance and indemnity appropriation since they 
provide insurance to service-disabled veterans unable to 
qualify under basic NSLI.

                 GUARANTY AND INDEMNITY PROGRAM ACCOUNT

                     (INCLUDING TRANSFER OF FUNDS)

------------------------------------------------------------------------
                                                         Administrative 
                                     Program account        expenses    
------------------------------------------------------------------------
Fiscal year 1997 recommendation...       $158,643,000       $105,226,000
Fiscal year 1996 appropriation....        504,122,000         65,226,000
Fiscal year 1997 budget request...        158,643,000        107,703,000
Comparison with fiscal year 1996                                        
 appropriation....................       -345,479,000        +40,000,000
Comparison with fiscal year 1997                                        
 budget request...................                  0         -2,477,000
------------------------------------------------------------------------

    The purpose of the VA home loan guaranty program is to 
facilitate the extension of mortgage credit on favorable terms 
by private lenders to eligible veterans. All operations of the 
loan guaranty program for loans closed on or after January 1, 
1990, except for manufactured home loans, are financed from the 
guaranty and indemnity program fund. The Federal Credit Reform 
Act of 1990 requires budgetary resources to be available prior 
to incurring a direct loan obligation or a loan guarantee 
commitment. In addition, the Act requires all administrative 
expenses of a direct or guaranteed loan program to be funded 
through a program account.
    The Committee recommends the budget estimate of such sums 
as may be necessary (estimated to be $158,643,000) for funding 
subsidy payments and $105,226,000 to pay administrative 
expenses. The reduction is to be taken at the VA's discretion, 
subject to normal reprogramming procedures. The appropriation 
for administrative expenses may be transferred to and merged 
with the general operating expenses account.

                     LOAN GUARANTY PROGRAM ACCOUNT

                     (INCLUDING TRANSFER OF FUNDS)

------------------------------------------------------------------------
                                                         Administrative 
                                     Program account        expenses    
------------------------------------------------------------------------
Fiscal year 1997 recommendation...        $14,091,000        $33,810,000
Fiscal year 1996 appropriation....         22,950,000         52,138,000
Fiscal year 1997 budget request...         14,091,000         33,810,000
Comparison with fiscal year 1996                                        
 appropriation....................         -8,859,000        -18,328,000
Comparison with fiscal year 1997                                        
 budget request...................                  0                  0
------------------------------------------------------------------------

    The loan guaranty program account provides for the costs of 
direct and guaranteed home loans, as well as necessary 
administrative expenses, for loans closed prior to January 1, 
1990, and for all manufactured home loans closed prior to 
September 30, 1991. This program also provides for the 
subsidies for all manufactured home loans guaranteed after 
September 30, 1991. The Federal Credit Reform Act of 1990 
requires budgetary resources to be available prior to incurring 
a direct loan obligation or a loan guarantee commitment. In 
addition, the Act requires all administrative expenses, 
including those arising from the servicing of loans obligated 
or committed prior to 1992, to be funded through a program 
account.
    The Committee has provided the budget requests of such sums 
as may be necessary (estimated to be $14,091,000) for the loan 
guaranty program account and $33,810,000 to pay administrative 
expenses. The appropriation for administrative expenses may be 
transferred to and merged with the general operating expenses 
account.

                      DIRECT LOAN PROGRAM ACCOUNT

                     (INCLUDING TRANSFER OF FUNDS)

----------------------------------------------------------------------------------------------------------------
                                                                      Program      Limitation on  Administrative
                                                                      account      direct loans      expenses   
----------------------------------------------------------------------------------------------------------------
Fiscal year 1997 recommendation.................................         $30,000        $300,000         $80,000
Fiscal year 1996 appropriation..................................          28,000         300,000         459,000
Fiscal year 1997 budget request.................................          30,000         300,000          80,000
Comparison with fiscal year 1996 appropriation..................          +2,000               0        -379,000
Comparison with fiscal year 1997 budget request.................               0               0               0
----------------------------------------------------------------------------------------------------------------

    The direct loan program account provides funds for 
subsidies to severely disabled veterans for specially adapted 
housing and for the administrative expenses to carry out the 
direct loan program. The budget also requests a limitation on 
direct loans for specially adapted housing. The Federal Credit 
Reform Act of 1990 requires budgetary resources to be available 
prior to incurring a direct loan obligation. In addition, the 
Act requires all administrative expenses of a direct loan 
program to be funded through a program account.
    The bill includes the budget requests of a $300,000 
limitation on specially adapted housing loans, such sums as may 
be necessary for program costs (estimated to be $30,000), and 
$80,000 for administrative expenses. The appropriation for 
administrative expenses may be transferred to and merged with 
the general operating expenses account.

                  EDUCATION LOAN FUND PROGRAM ACCOUNT

                     (INCLUDING TRANSFER OF FUNDS)

----------------------------------------------------------------------------------------------------------------
                                                                      Program      Limitation on  Administrative
                                                                      account      direct loans      expenses   
----------------------------------------------------------------------------------------------------------------
Fiscal year 1997 recommendation.................................          $1,000          $3,000        $195,000
Fiscal year 1996 appropriation..................................           1,000           4,000         195,000
Fiscal year 1997 budget request.................................           1,000           3,000         204,000
Comparison with fiscal year 1996 appropriation..................               0          -1,000               0
Comparison with fiscal year 1997 budget request.................               0               0          -9,000
----------------------------------------------------------------------------------------------------------------

    This appropriation covers the cost of direct loans for 
eligible dependents and, in addition, it includes 
administrative expenses necessary to carry out the direct loan 
program. The Federal Credit Reform Act of 1990 requires 
budgetary resources to be available prior to incurring a direct 
loan obligation. In addition, the Act requires all 
administrative expenses of a direct loan program to be funded 
through a program account.
    The bill includes the budget request of $1,000 for program 
costs and the current appropriation level of $195,000 for 
administrative expenses. The appropriation for administrative 
expenses may be transferred to and merged with the general 
operating expenses account. In addition, the bill includes 
language limiting program direct loans to $3,000, the requested 
limitation level.

            VOCATIONAL REHABILITATION LOANS PROGRAM ACCOUNT

                     (INCLUDING TRANSFER OF FUNDS)

----------------------------------------------------------------------------------------------------------------
                                                                      Program      Limitation on  Administrative
                                                                      account      direct loans      expenses   
----------------------------------------------------------------------------------------------------------------
Fiscal year 1997 recommendation.................................         $49,000      $1,964,000        $377,000
Fiscal year 1996 appropriation..................................          54,000       1,964,000         377,000
Fiscal year 1997 budget request.................................          49,000       2,822,000         507,000
Comparison with fiscal year 1996 appropriation..................          -5,000               0               0
Comparison with fiscal year 1997 budget request.................               0        -858,000        -130,000
----------------------------------------------------------------------------------------------------------------

    This appropriation covers the cost of direct loans for 
vocational rehabilitation of eligible veterans and, in 
addition, it includes administrative expenses necessary to 
carry out the direct loan program. Loans of up to $791 (based 
on indexed chapter 31 subsistence allowance rate) are available 
to service-connected disabled veterans enrolled in vocational 
rehabilitation programs when the veteran is temporarily in need 
of additional assistance. Repayment is made in 10 monthly 
installments, without interest, through deductions from future 
payments of compensation, pension, subsistence allowance, 
educational assistance allowance, or retirement pay. The 
Federal Credit Reform Act of 1990 requires budgetary resources 
to be available prior to incurring a direct loan obligation. In 
addition, the Act requires all administrative expenses of a 
direct loan program to be funded through a program account.
    The bill includes the budget request of $49,000 for program 
costs and the current appropriation level of $377,000 for 
administrative expenses. The administrative expenses may be 
transferred to and merged with the general operating expenses 
account. In addition, the bill includes language limiting 
program direct loans to $1,964,000, the current limitation 
level. It is estimated that VA will make 4,317 loans in fiscal 
year 1997, with an average amount of $455.

          NATIVE AMERICAN VETERAN HOUSING LOAN PROGRAM ACCOUNT

                     (INCLUDING TRANSFER OF FUNDS)

Administrative expenses:
    Fiscal year 1997 recommendation.....................        $205,000
    Fiscal year 1996 appropriation......................         205,000
    Fiscal year 1997 budget request.....................         434,000
    Comparison with fiscal year 1996 appropriation......               0
    Comparison with fiscal year 1997 budget request.....        -229,000

    This program is testing the feasibility of authorizing VA 
to make direct home loans to native American veterans who live 
on U.S. trust land. This program is a five-year pilot program 
which began in 1993. The bill includes $205,000 for 
administrative expenses, the current appropriation level, which 
may be transferred to and merged with the general operating 
expenses account.

                     Veterans Health Administration

                              MEDICAL CARE

Fiscal year 1997 recommendation......................... $17,008,447,000
Fiscal year 1996 appropriation..........................  16,564,000,000
Fiscal year 1997 budget request.........................  17,008,447,000
Comparison with fiscal year 1996 appropriation..........    +444,447,000
Comparison with fiscal year 1997 budget request.........               0

    This appropriation provides for medical care and treatment 
of eligible beneficiaries in VA hospitals, nursing homes, 
domiciliaries and outpatient facilities; contract hospitals; 
State domiciliaries, nursing homes and hospitals; contract 
community nursing homes; and outpatient programs on a fee 
basis. Hospital and outpatient care are also provided by the 
private sector for certain dependents and survivors of veterans 
under the civilian health and medical programs for the 
Department of Veterans Affairs. Funds are also used to train 
medical residents, interns, and other professional, paramedical 
and administrative personnel in health-science fields to 
support VA's medical programs.
    The bill includes the budget request of $17,008,447,000 for 
medical care in fiscal year 1997. The recommended amount is an 
increase of $444,447,000 above the current year appropriation. 
In addition, $14,241,000 is transferred from the compensation 
and pensions account for administrative expenses of 
implementing cost saving provisions required by the Omnibus 
Budget Reconciliation Act of 1990, and the Veterans' Benefits 
Act of 1992.
    The budget estimates that approximately 2,900,000 patients 
will receive medical treatment in 1997, the same number as 
treated in 1995 and estimated for 1996. However, employment is 
estimated to decrease by 4,294 in 1996 and 5,154 in 1997. 
Treating the same number of patients while employment decreases 
is only possible through various reengineering and 
reorganization efforts to increase efficiency and 
effectiveness. The Committee strongly supports these efforts to 
fundamentally change the system.
    The VA cannot maintain the status quo and remain a viable 
system. This is especially true given the budgetary constraints 
assumed by both the executive and legislative branches. Future 
funding levels for the medical care appropriation are not 
known. The Administration's estimates for medical care in 
fiscal years 1998-2002 total nearly $74,000,000,000. The 
House's 1997 Congressional Budget Resolution estimates a total 
of approximately $78,800,000,000 for the medical care account 
in the same five-year period. Thus, the Administration 
assumptions total $4,800,000,000 less for medical care in 
fiscal years 1998-2002 than does the House Budget Resolution. 
But these numbers are assumptions. Both the Administration and 
the Congress review the amounts to be requested and 
appropriated each year, as has been the long-standing practice.
    The Committee supports the VA's proposal to change the 
method for allocating resources. However, information from the 
VA continues to show that similar hospitals have different 
levels of staffing and resources to treat approximately the 
same number of veterans. Such data indicates that one hospital 
had nearly twice the staffing and resources as another hospital 
in the same grouping. Savings can and should be achieved by 
reallocating staffing and resources from less efficient 
hospitals to more efficient hospitals.
    The Committee also supports the VA's effort to shift funds 
to areas of the country where the veteran population has moved. 
Although reallocating limited resources is not easy, veterans 
should have equal access to VA medical treatment regardless of 
the part of the country in which they live.
    Other areas for potential savings include improving 
management and coordination at medical centers, as well as 
reductions in non-direct patient care activities. While 
training, education, and research activities are important, the 
level of support for these programs needs to be reviewed in 
light of the budgetary situation. Beneficiary travel has 
increased from $77,951,000 in fiscal year 1993 to $114,834,000 
estimated for fiscal year 1997. This is an area that the VA is 
again encouraged to examine for reduction. The proposal to 
consolidate and close underutilized services will permit a more 
effective and efficient use of resources. The primary purpose 
of these various savings proposals is to provide the 
opportunity for the treatment of more patients than would 
otherwise occur.
    Last year's report indicated that complaints were heard 
where veteran patients and their families were treated in an 
insensitive manner by VA staff. The subjects of these 
complaints, which are still being heard, cannot be tolerated. 
Veterans and their families should receive the best and most 
courteous medical treatment possible. Top management needs to 
ensure that local management promptly deals with all such 
problems.
    Eligibility reform is still being considered by the VA and 
the Congress. Such proposals have the potential to streamline 
the delivery of health services by shifting care from inpatient 
to more efficient outpatient settings. Any resulting savings 
will permit an increase in the number of veterans that can 
receive medical treatment above the level otherwise possible. 
The Committee supports budget neutral eligibility reform.
    To increase the availability and decrease the cost of 
medical care, the VA has proposed that a number of small 
medical clinics be established. The Committees on 
Appropriations have agreed that several of these so-called 
access points be established. During the hearings, the VA 
testified that it supported the current approval method. The 
Committee agrees. The proposal for each access point should 
include information on cost and staffing requirements, how the 
parent medical center will cover such requirements, anticipated 
workloads, proximity to surrounding VA facilities, and other 
pertinent information.
    The concept of joint venture federal hospitals is to 
promote greater sharing of health resources between the 
Department of Veterans Affairs and the Department of Defense. 
These agreements are a way of reducing the cost of health care, 
while increasing access to care for many DOD beneficiaries and 
veterans. For the most part, these projects have been 
successful, but specific problems relating to the hiring of 
personnel and the integration of services have hindered 
effective utilization at some of these hospitals. For example, 
the Nellis Federal Hospital has a few outstanding issues that 
the Committee expects that the VA and DOD will resolve. The 
Committee urges the authorizing committees to thoroughly 
examine 
the joint venture concept to determine if legislative changes 
are 
needed.
    The Committee understands that a number of the leading 
causes of morbidity and mortality are behavioral in origin. The 
VA is urged to continue its psychology internship program and 
use these health care professionals aggressively in primary 
care settings to counsel behavioral modifications to reduce 
mortality and morbidity and the need for hospital-based 
services.
    The Committee is aware of the collaborative work that has 
been taking place with the Office of the Chief Financial 
Officer of the Veterans Health Administration (VHA), university 
health management educators and leading private sector 
executives to improve the management of VHA facilities. The use 
of outside experts in health administration is a critically 
important component in the promotion of systemic improvements. 
These efforts hold great promise for bringing a new era of 
cost-effectiveness and efficiency to the VHA. Because of the 
Committee's strong interest in efficient management and quality 
service for veterans, the VA is urged to support the 
continuation and expansion of this relationship.
    The Committee believes all veterans want a modern and 
effective health care system, but is concerned that the 
Veterans Integrated Service Network (VISN) #3 proposal for New 
Jersey may impact the quality of care and accessibility of 
health care for veterans. The Secretary is urged to hold public 
hearings on the VISN #3 proposal and report back to the 
Committee on its scope, the status and plan for implementation 
and a summary of specific service-level increases and decreases 
that would occur at the Lyons and East Orange medical 
facilities.
    In the fiscal year 1996 process, $300,000 was provided for 
the operation of a veterans counseling medical center in 
Williamsport, Pennsylvania. It is the Committee's intention 
that funding be made available to continue the center in fiscal 
year 1997.
    The Committee requests that the VA conduct a feasibility 
study of establishing a VA health care facility in Alamogordo, 
New Mexico. This facility would provide accessible health care 
services to veterans in south central New Mexico who currently 
must travel 150 miles or more round trip to a VA outpatient 
clinic.
    The Committee directs the Department to expand services at 
the existing community-based outpatient clinic in Texarkana, 
Texas. It is expected that this expansion will utilize fully 
all available space in the current facility to meet the higher 
than expected demand for services.
    The Committee understands that there are benefits of 
utilizing a disposable sheath when physicians conduct 
procedures using a flexible sigmoidoscope on patients to detect 
colorectal cancer. The Committee also understands that 
disposable sheaths are widely used in private practice. The 
Veterans Health Administration is encouraged to explore the 
overall effectiveness of the single-patient, sterile, condom-
like protective coverings that may help protect veterans from 
the risk of cross-contamination.
    The Committee is aware that migratory veterans currently 
strain the budget of many VA medical facilities. The Committee 
is deeply concerned that the implementation of capitation 
funding may exacerbate this problem. The VA is directed to 
prepare a report on how capitation funding will sufficiently 
compensate facilities with a significant migratory veteran 
caseload.

                    medical and prosthetic research

Fiscal year 1997 recommendation.........................    $257,000,000
Fiscal year 1996 appropriation..........................     257,000,000
Fiscal year 1997 budget request.........................     257,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........               0

    This account includes medical, rehabilitative and health 
services research. Medical research is an important aspect of 
VA programs, providing complete medical and hospital service 
for veterans. The prosthetic research program is also essential 
in the development and testing of prosthetic, orthopedic and 
sensory aids for the purpose of improving the care and 
rehabilitation of eligible disabled veterans, including 
amputees, paraplegics and the blind. The health service 
research program provides unique opportunities to improve the 
effectiveness and efficiency of the health care delivery 
system. In addition, budgetary resources from a number of areas 
including appropriations from the medical care account; 
reimbursements from the Department of Defense; and grants from 
the National Institutes of Health, private proprietary sources, 
and voluntary agencies provide support for VA's researchers.
    The Committee recommends the budget request of $257,000,000 
for medical and prosthetic research in fiscal year 1997. This 
amount, together with an estimated $705,000,000 from other 
sources will provide for a total research program of 
$962,000,000.
    The fiscal year 1996 conference agreement included 
$1,250,000 to establish an Office of Veterans Affairs 
Technology and Commercialization. The Committee reiterates its 
intent that $1,250,000 of current year medical and prosthetic 
research funds be used to establish an Office of Veterans 
Affairs Technology and Commercialization at the National 
Technology Transfer Center.
    Last year, the Committee supported the fiscal year 1996 
budget request of $33,218,000 for health service research. The 
Committee supports this important research effort at that level 
of funding in fiscal year 1997.
    According to information from the VA, approximately 
$1,700,000 is being spent per year for research on Parkinson's 
Disease. The Committee strongly suggests that research on this 
debilitating disease be increased in 1997. The VA is to prepare 
a long range plan for research in this area and how it is 
coordinating such efforts with the Department of Defense and 
the National Institutes of Health.
    Previous reports have indicated support for the 
establishment and development of a Department of Veterans 
Affairs medical research service minority recruitment 
initiative in collaboration with minority health professions 
institutions. The Committee strongly supports the continued 
development of this program.
    The Committee understands there are potential benefits and 
cost savings associated with antibody-directed technology such 
as radioimmunodetection and radioimmunotherapy which utilizes 
anticancer antibodies to target and deliver to diseased tissues 
appropriate radioisotopes, pharmaceutical and/or biological 
agents for detection and/or therapy. The Committee recommends 
that VA establish a partnership with a private, independent, 
not-for-profit, research and treatment center that could serve 
as a Center of Excellence Network in the diagnosis, detection, 
and treatment of cancer utilizing such radioimmunodetection and 
radioimmunotherapy technology. The Committee notes that the 
Center for Molecular Medicine and Immunology has an 
international reputation in this field.
    Diabetes is a major health concern facing our nation's 
veterans. The Committee supports research efforts to reduce the 
cost of providing care to diabetic veterans. The VA is urged to 
explore forming a partnership with a nonprofit research and 
treatment center to develop a research program that could 
reduce the cost of providing care to diabetic veterans. The 
Committee understands that the Diabetes Institutes of Norfolk, 
Virginia, have made breakthroughs in diabetes research and 
treatment.
    Approximately two percent of the research budget is spent 
on prostate cancer research. Prostate cancer is a major health 
problem for aging males. Eighty percent of the meritorious 
proposals for prostate cancer research are denied funding. The 
Committee encourages the VA to consider additional funding for 
prostate cancer research.

      medical administration and miscellaneous operating expenses

Fiscal year 1997 recommendation.........................     $59,207,000
Fiscal year 1996 appropriation..........................      63,602,000
Fiscal year 1997 budget request.........................      62,207,000
Comparison with fiscal year 1996 appropriation..........      -4,395,000
Comparison with fiscal year 1997 budget request.........      -3,000,000

    This appropriation provides funds for central office 
executive direction (Under Secretary for Health and staff), 
administration and supervision of all VA medical and 
construction programs, including development and implementation 
of policies, plans and program objectives.
    The Committee recommends $59,207,000 for medical 
administration and miscellaneous operating expenses in fiscal 
year 1997, a reduction of $3,000,000 below the budget request. 
The reduction is to be taken at the VA's discretion, subject to 
normal reprogramming procedures.

                   transitional housing loan program

                     (including transfer of funds)

----------------------------------------------------------------------------------------------------------------
                                                                  Limitation on direct                          
                                           Program account               loans           Administrative expenses
----------------------------------------------------------------------------------------------------------------
Fiscal year 1997 recommendation......                   $7,000                  $70,000                  $54,000
Fiscal year 1996 appropriation.......                    7,000                   70,000                   54,000
Fiscal year 1997 budget request......                    7,000                   70,000                   54,000
Comparison with fiscal year 1996                                                                                
 appropriation.......................                        0                        0                        0
Comparison with fiscal year 1997                                                                                
 budget request......................                        0                        0                        0
----------------------------------------------------------------------------------------------------------------

    This program provides loans to nonprofit organizations to 
assist them in leasing housing units exclusively for use as a 
transitional group residence for veterans who are in (or have 
recently been in) a program for the treatment of substance 
abuse. The amount of the loan cannot exceed $4,500 for any 
single residential unit and each loan must be repaid within two 
years through monthly installments. The amount of loans 
outstanding at any time may not exceed $100,000.
    The bill includes the budget requests of $7,000 for the 
estimated cost of providing loans for this program, $54,000 for 
associated administrative expenses, and a $70,000 limitation on 
direct loans. The administrative expenses may be transferred to 
and merged with the general post fund.

                      Departmental Administration

                       general operating expenses

Fiscal year 1997 recommendation.........................    $823,584,000
Fiscal year 1996 appropriation..........................     848,143,000
Fiscal year 1997 budget request.........................     843,730,000
Comparison with fiscal year 1996 appropriation..........     -24,559,000
Comparison with fiscal year 1997 budget request.........     -20,146,000

    The general operating expenses appropriation provides for 
the administration of non-medical veterans benefits through the 
Veterans Benefits Administration and top management direction 
and support. The Federal Credit Reform Act of 1990 changed the 
accounting of Federal credit programs and required that all 
administrative costs associated with such programs be included 
within the respective credit accounts. Beginning in fiscal year 
1992, costs incurred by housing, education, and vocational 
rehabilitation programs for administration of these credit 
programs are reimbursed by those accounts. The bill includes 
$139,893,000 in other accounts for these credit programs. In 
addition, $12,176,000 is transferred from the compensation and 
pensions account for administrative costs of implementing cost 
saving provisions required by the Omnibus Budget Reconciliation 
Act of 1990 and the Veterans' Benefits Act of 1992. Section 107 
of the administrative provisions provides requested language 
which permits excess revenues in three insurance funds to be 
used for administrative expenses. The VA estimates that 
$32,000,000 will be utilized for such purposes in fiscal year 
1997. Prior to fiscal year 1996, such costs were included in 
the general operating expenses appropriation.
    The Committee recommends $823,584,000 for general operating 
expenses in fiscal year 1997. This amount represents a decrease 
of $20,146,000 below the budget request. The reduction is to be 
taken at the discretion of the Secretary, subject to normal 
reprogramming procedures. The Committee does not intend that 
any reduction be applied to the Board of Veterans Appeals.
    The VA lacks the authority to pay administrative costs of 
the Service Members Occupational Conversion and Training Act. 
The VA estimates that approximately $200,000 may be needed for 
these expenses. The bill includes requested language to 
continue allowing such costs to be funded in the general 
operating expenses account.
    The bill includes language identical to that carried in the 
1996 Act which limits funds for salary and travel in the Office 
of the Secretary to $3,206,000 and $50,000, respectively. The 
bill also includes language carried in the 1996 Act which 
limits the number of schedule C and non-career senior executive 
service positions in 1997 to 6 and 11, respectively.
    The 1997 budget proposes a reduction of 624 FTE in the 
Veterans Benefits Administration. This reduction in employment 
is due to decreases in workload and the impact of ten 
restructuring initiatives designed to improve service to 
veterans and reduce the overall cost of operation in the 
future. The request will support continued progress in reducing 
the time it takes to process veteran compensation and pension 
claims and improvement in the quality of rating and other 
actions. The first phase of the multi-year restructuring plan 
is proposed to be implemented beginning in 1997. The VA 
testified during the recent budget hearings that it supported 
the consolidation efforts because of the belief that such 
activities are the secret to continuing to improve services. 
The Committee endorses and supports these goals. Today's 
budgetary environment of constrained resources precludes 
maintaining quality service delivery at the status quo. The VBA 
must rapidly move forward to position itself to be a high 
performing organization with greater efficiency and economy of 
activities.
    One of the Veterans Benefits Administration's restructuring 
initiatives is to improve access by making personnel more 
available for contact by telephone. This proposal would improve 
access through the use of time-of-day routing and network call 
distribution features. Within the amount recommended is 
$3,000,000 to implement this initiative.

                        national cemetery system

Fiscal year 1997 recommendation.........................     $76,864,000
Fiscal year 1996 appropriation..........................      72,604,000
Fiscal year 1997 budget request.........................      76,864,000
Comparison with fiscal year 1996 appropriation..........      +4,260,000
Comparison with fiscal year 1997 budget request.........               0

    The National Cemetery System was established in accordance 
with the National Cemeteries Act of 1973. It has a fourfold 
mission: to provide for the interment in any national cemetery 
with available grave space the remains of eligible deceased 
servicepersons and discharged veterans, together with their 
spouses and certain dependents, and to permanently maintain 
their graves; to mark graves of eligible persons in national 
and private cemeteries; to administer the grant program for aid 
to States in establishing, expanding, or improving State 
veterans' cemeteries; and to administer the Presidential 
Memorial Certificate Program. This appropriation provides for 
the operation and maintenance of 148 cemeterial installations 
in 39 States, the District of Columbia, and Puerto Rico.
    The Committee recommends the budget request of $76,864,000 
for the national cemetery system in fiscal year 1997.

                      office of inspector general

Fiscal year 1997 recommendation.........................     $30,900,000
Fiscal year 1996 appropriation..........................      30,900,000
Fiscal year 1997 budget request.........................      31,175,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........        -275,000

    The Office of Inspector General was established by the 
Inspector General Act of 1978 and is responsible for the audit, 
investigation and inspection of all Department of Veterans 
Affairs programs and operations. The overall operational 
objective is to focus available resources on areas which would 
help improve services to veterans and their beneficiaries, 
assist managers of VA programs to operate economically in 
accomplishing program goals, and prevent and deter recurring 
and potential fraud, waste and inefficiencies.
    The Committee has provided $30,900,000 for the Office of 
Inspector General in fiscal year 1997, a decrease of $275,000 
below the budget request. The reduction is to be taken at the 
discretion of the VA, subject to normal reprogramming 
procedures.

                      CONSTRUCTION, MAJOR PROJECTS

Fiscal year 1997 recommendation.........................    $245,358,000
Fiscal year 1996 appropriation..........................     136,155,000
Fiscal year 1997 budget request.........................     249,900,000
Comparison with fiscal year 1996 appropriation..........    +109,203,000
Comparison with fiscal year 1997 budget request.........      -4,542,000

    The construction, major projects appropriation provides for 
constructing, altering, extending, and improving any of the 
facilities under the jurisdiction or for the use of the VA, 
including planning, architectural and engineering services, and 
site acquisition where the estimated cost of a project is 
$3,000,000 or more. Emphasis is placed on correction of life/
safety code deficiencies in existing VA medical facilities.
    A construction program of $249,900,000 is requested for 
construction, major projects, in fiscal year 1997. The bill 
includes $245,358,000 for the construction of major projects, 
an increase of $109,203,000 above the current appropriation 
level and a decrease of $4,542,000 below the budget request.
    The changes from the budget request are as follows:
    +$15,500,000 for the renovation of facilities and 
relocation of medical school functions project at the Mountain 
Home VA Medical Center. This completes the total Federal 
funding for this project which has been provided over a several 
year period.
    +$13,000,000 for the phase I development of a new national 
cemetery in the Albany, New York area.
    +$1,258,000 to complete the design of a new national 
cemetery in Guilford Township, Ohio.
    +$1,000,000 for planning of an ambulatory care addition at 
the Lyons, New Jersey VA Medical Center.
    +$2,300,000 for planning and design of a renovation/
reconstruction of psychiatric care facilities project at the 
Murfreesboro, Tennessee VA Medical Center.
    +$20,000,000 for the first phase of the spinal cord injury 
unit and energy center project at the Tampa VA Medical Center. 
These funds are for the energy plant and associated site work 
for both the energy plant and the spinal cord injury unit.
    -$42,600,000 requested for construction of phase I of a new 
medical center in Brevard County, Florida. To date, a total of 
$25,000,000 has been appropriated for the design and 
construction of an outpatient clinic in Brevard County. The 
1996 conference report stated that the VA was expected to 
commence construction of this project as soon as possible. The 
Committee directs the VA to immediately commence work on this 
project. By fast-tracking the project, veterans in the Brevard 
County area will start receiving medical care in the new 
outpatient clinic at the earliest possible date.
    -$5,000,000 of the $8,845,000 requested for the advance 
planning fund.
    -$5,000,000 of the $15,000,000 requested for asbestos 
abatement.
    -$5,000,000 requested for the judgment fund.
    The bill includes the $32,100,000 requested for the VA/Air 
Force Joint Venture at Travis Air Force Base in Fairfield, 
California. Last year's conference agreement provided 
$25,000,000 for an outpatient clinic at Travis, instead of the 
requested replacement hospital. The Committee has now been 
convinced to support phased funding for the hospital which is a 
replacement for the Martinez VA Medical Center that was closed 
in 1991 because it did not meet earthquake safety requirements. 
The Committee expects the VA to utilize the $32,100,000 in this 
bill, together with the $25,000,000 provided in the 1996 major 
construction appropriation, for the first phase of the full 
replacement hospital.
    The budget proposes changing the minor construction cost 
limitation from less than $3,000,000 to less than $10,000,000. 
This would increase the lower limit of the major construction 
appropriation accordingly. The bill does not include either of 
these two proposals.
    The budget also proposes eliminating language defining the 
timeframe for awarding design and construction contracts, and 
removing a report requirement on projects not awarded in those 
timeframes. The bill retains this language which has been 
carried for a number of years and is designed to ensure that 
major construction projects proceed in a timely manner.
    Funding was provided in a previous appropriations Act to 
convert the former Orlando Naval Training Center Hospital into 
a VA nursing home. The VA should not expend funds for that 
conversion until the Secretary can complete a comprehensive 
study of veterans health care delivery in Florida. The 
Committee notes that during the budget hearings the VA 
indicated that it had halted any further expenditure of funds 
for the nursing home project pending the examination of other 
options in Florida.
    The specific amounts recommended by the Committee are as 
follows:

                                            DETAIL OF BUDGET REQUEST                                            
                                            [In thousands of dollars]                                           
----------------------------------------------------------------------------------------------------------------
                                                                     Available                         House    
                    Location and description                       through 1996    1997 request   recommendation
----------------------------------------------------------------------------------------------------------------
Medical Program:                                                                                                
    Replacement and modernization:                                                                              
        Brevard County, FL, new medical center/nursing home.....         $25,000         $42,600               0
        Travis, CA, VA/Air Force joint venture..................          25,000          32,100         $32,100
                                                                 -----------------------------------------------
          Subtotal, replacement and modernization...............          50,000          74,700          32,100
                                                                 ===============================================
    Outpatient improvements:                                                                                    
        Honolulu, HI, ambulatory care/renovate ``E'' wing.......          27,000          16,000          16,000
        Wilkes-Barre, PA, ambulatory care/environmental                                                         
         improvements...........................................           5,000          42,700          42,700
                                                                 -----------------------------------------------
          Subtotal, outpatient improvements.....................          32,000          58,700          58,700
                                                                 ===============================================
    Patient environment:                                                                                        
        Marion, IN, replace psychiatric beds....................               0          17,300          17,300
        Pittsburgh (UD), PA, environmental improvements.........               0          17,400          17,400
        Salisbury, NC, environmental enhancements...............               0          18,200          18,200
                                                                 -----------------------------------------------
          Subtotal, patient environment.........................               0          52,900          52,900
                                                                 ===============================================
    Clinical improvements: Tampa, FL, spinal cord injury/energy                                                 
     plant......................................................           4,000               0          20,000
                                                                 ===============================================
    General: Mountain Home, TN, renovation of facilities/                                                       
     relocation of medical school...............................          13,500               0          15,500
                                                                 ===============================================
    Advance planning fund:                                                                                      
        Lyons, NJ, ambulatory care addition.....................               0               0           1,000
        Various stations........................................               0           8,845           3,845
                                                                 -----------------------------------------------
          Subtotal, advance planning fund.......................               0           8,845           4,845
                                                                 ===============================================
    Design fund:                                                                                                
        Murfreesboro, TN, psychiatric care facilities...........               0               0           2,300
        Various stations........................................               0           1,000           1,000
                                                                 -----------------------------------------------
          Subtotal, design fund.................................               0           1,000           3,300
                                                                 ===============================================
    Hazardous substance abatement: Various stations                            0             800             800
    Asbestos abatement: Various stations........................               0          15,000          10,000
    Less: FY 1996 Design fund...................................               0         (2,645)         (2,645)
                                                                 -----------------------------------------------
          Subtotal, major VHA...................................          99,500         209,300         195,500
                                                                 ===============================================
National Cemetery Program:                                                                                      
    Albany, NY, new cemetery....................................           1,750               0          13,000
    Chicago, IL, new cemetery...................................           1,500          18,400          18,400
    Dallas/Fort Worth, TX, new cemetery.........................           5,000          16,200          16,200
                                                                 -----------------------------------------------
      Subtotal, new national cemeteries.........................           8,250          34,600          47,600
                                                                 ===============================================
    Design fund:                                                                                                
        Cleveland, OH, new cemetery.............................             700               0           1,258
        Various stations........................................               0             500             500
                                                                 -----------------------------------------------
          Subtotal, design fund.................................             700             500           1,758
                                                                 ===============================================
          Subtotal, NCS.........................................           8,950          35,100          49,358
                                                                 ===============================================
Judgment Fund: Various stations.................................               0           5,000               0
                                                                 ===============================================
Claims Analyses: Various stations...............................               0             500             500
                                                                 ===============================================
      Total construction, major projects........................         108,450         249,900         245,358
----------------------------------------------------------------------------------------------------------------

                      CONSTRUCTION, MINOR PROJECTS

Fiscal year 1997 recommendation.........................    $160,000,000
Fiscal year 1996 appropriation..........................     190,000,000
Fiscal year 1997 budget request.........................     189,241,000
Comparison with fiscal year 1996 appropriation..........     -30,000,000
Comparison with fiscal year 1997 budget request.........     -29,241,000

    The construction, minor projects appropriation provides for 
constructing, altering, extending, and improving any of the 
facilities under the jurisdiction or for the use of the VA, 
including planning, architectural and engineering services, and 
site acquisition, where the estimated cost of a project is less 
than $3,000,000. Emphasis is placed on correction of 
environmental deficiencies in this appropriation request.
    The Committee recommends $160,000,000 for the construction, 
minor projects appropriation in fiscal year 1997. The amount 
recommended is $29,241,000 below the budget request. The 
reduction is to be taken at the discretion of the Secretary, 
subject to normal reprogramming procedures.
    The budget proposes increasing the minor construction cost 
limitation from less than $3,000,000 to less than $10,000,000. 
The budget also proposes bill language to allow the use of up 
to $3,000,000 per lease of minor construction funding for the 
enhanced-use leasing program. The bill does not include either 
of these two proposals.
    Within the amount recommended is up to $3,000,000 to 
renovate existing outpatient space for the development of 
modern managed care facilities at the Syracuse VA Medical 
Center. This project will improve clinic efficiency by 
facilitating the shift of treatment from inpatient services to 
outpatient managed care, and it will reduce the waiting time 
for appointments.
    Within the amount recommended is $2,900,000 for the 
expansion of an ambulatory care facility at the Chillicothe, 
Ohio VA Medical Center. The design work for this expansion was 
recently completed. The Veterans Integrated Service Network 
ranked this project as the highest priority in the network last 
year.
    In 1996, funds in the minor construction project account 
were awarded to the San Francisco VA Medical Center for the 
construction of a Neuroscience Center. The Committee urges the 
VA, prior to proceeding with this project, to work closely with 
the City of San Francisco to negotiate an option which would 
both alleviate the substandard conditions at the hospital and 
respond to local environmental concerns.

                         PARKING REVOLVING FUND

Fiscal year 1997 recommendation.........................     $12,300,000
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request.........................               0
Comparison with fiscal year 1996 appropriation..........     +12,300,000
Comparison with fiscal year 1997 budget request.........     +12,300,000

    This appropriation provides funds for the construction, 
alteration, and acquisition (by purchase or lease) of parking 
garages at VA medical facilities. The Secretary is required 
under certain circumstances to establish and collect fees for 
the use of such garages and parking facilities. Receipts from 
the parking fees are to be deposited in the revolving fund and 
can be used to fund future parking garage initiatives.
    No new budget authority is requested for the parking 
revolving fund in fiscal year 1997. Leases will be funded from 
parking fees collected. The Committee recommends $12,300,000 
for the parking structure component of the ambulatory care 
addition project at the Cleveland VA Medical Center. The bill 
includes the requested language permitting operation and 
maintenance costs of parking facilities to be funded from the 
medical care appropriation.

       GRANTS FOR CONSTRUCTION OF STATE EXTENDED CARE FACILITIES

Fiscal year 1997 recommendation.........................     $47,397,000
Fiscal year 1996 appropriation..........................      47,397,000
Fiscal year 1997 budget request.........................      39,909,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........      +7,488,000

    This program provides grants to assist States to construct 
State home facilities for furnishing domiciliary or nursing 
home care to veterans, and to expand, remodel or alter existing 
buildings for furnishing domiciliary, nursing home or hospital 
care to veterans in State homes. A grant may not exceed 65 
percent of the total cost of the project. Grants for State 
nursing facilities may not provide for more than four beds per 
thousand veterans in any State.
    The Committee recommends $47,397,000 for grants for 
construction of State extended care facilities in fiscal year 
1997. This amount represents the current appropriation level 
and is an increase of $7,488,000 above the budget request.
    The Committee understands that the current system under 
which projects are prioritized for funding appears to favor new 
construction. Projects like the one proposed for the D.J. 
Jacobetti Home for Veterans, which would replace a 50-year-old 
heating system, experience difficulties in receiving funding. 
The VA is to review the current funding prioritization system 
with the goal of allowing projects involving life or safety 
issues to take precedence.

        GRANTS FOR THE CONSTRUCTION OF STATE VETERANS CEMETERIES

Fiscal year 1997 recommendation.........................      $1,000,000
Fiscal year 1996 appropriation..........................       1,000,000
Fiscal year 1997 budget request.........................       1,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........               0

    Public Law 95-476 established authority to provide aid to 
States for establishment, expansion, and improvement of State 
veterans' cemeteries. States receive financial assistance to 
provide burial space for veterans which serves to supplement 
the burial services provided by the national cemetery system. 
The cemeteries are operated and permanently maintained by the 
States. A grant may not exceed 50 percent of the total value of 
the land and the cost of improvements. The remaining amount 
must be contributed by the State.
    The Committee recommends the budget request of $1,000,000 
for grants for the construction State veterans cemeteries in 
fiscal year 1997.

                             FRANCHISE FUND

                               (Language)

    The VA was chosen by the Administration as a pilot 
franchise fund agency under Public Law 103-356, the Government 
Management and Reform Act of 1994. Beginning in fiscal year 
1997, the Administration is proposing to formally establish the 
franchise fund as a revolving fund. The concept is intended to 
increase competition for government administrative services 
resulting in lower costs and higher quality.
    Administrative services included in the fund will be 
financed on a fee-for-service basis rather than through a VA 
appropriation. The fund will be used to supply common 
administrative services on the basis of services supplied. Such 
activities are expected to have billings of approximately 
$55,000,000 and employ 445 people.
    The bill includes language requested to establish the 
franchise fund, modified to more closely resemble pilot 
programs of other federal agencies. The Committee expects to be 
notified prior to the VA entering service areas beyond those 
listed in the budget. It is also expected that next year's 
budget justifications will include detailed information on the 
franchise fund.

                       ADMINISTRATIVE PROVISIONS

                   (INCLUDING THE TRANSFER OF FUNDS)

    The bill contains the seven administrative provisions 
requested by the Administration. These provisions were also 
carried in the 1996 Appropriations Act.

                                TITLE II

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Fiscal year 1997 recommendation......................... $19,710,563,000
Fiscal year 1996 appropriation..........................  19,127,122,000
Fiscal year 1997 budget request (revised)...............  21,963,813,000
Comparison with fiscal year 1996 appropriation..........    +583,441,000
Comparison with fiscal year 1997 budget request.........  -2,253,250,000

    The Department of Housing and Urban Development was 
established by the Department of Housing and Urban Development 
Act of 1965. In that Act, the Congress recognized the 
importance of housing and urban development to the Nation and 
tasked HUD to administer four major categories of programs: FHA 
mortgage insurance, subsidized housing, community and 
neighborhood development, and regulatory functions.
    The breadth and vagueness of these activities have 
contributed to the evolution of an agency that is clearly 
troubled. In an attempt to change this perception, HUD has 
offered various suggestions to ``reinvent'' itself into an 
agency that provides communities with power to design local 
strategies to deal with unique circumstances while providing 
adequate resources necessary to enable them to implement those 
strategies. While these proposals have increased the level of 
debate about how to reorganize the Department, unfortunately, 
they have not yielded substantial results towards improving 
HUD's management and programmatic weaknesses.
    One possible reason for this lack of performance is the 
fact that HUD lacks a cohesive mission. For example, the 
Department is responsible for administering a wide variety of 
programs, including the Federal Housing Administration mortgage 
insurance programs that help families become homeowners and 
facilitates the construction and rehabilitation of rental 
units; rental assistance programs for lower income families who 
otherwise could not afford decent housing; the Government 
National Mortgage Association mortgage-backed securities 
program that helps insure an adequate supply of mortgage 
credit; community and neighborhood economic development 
programs; and, programs that assist states in their efforts to 
combat housing discrimination and to further fair housing. In 
addition, HUD is currently one of the nation's largest 
financial institutions, with significant commitments, 
obligations, and exposure.
    This diversity of missions has resulted in a department 
that is intricately woven into the financial and social 
framework of the nation and that interacts with a diverse 
number of constituencies, including public housing authorities, 
private housing owners, and other governmental entities, such 
as state housing finance agencies, nonprofit groups, and state 
and local governments. All these factors have contributed to 
the serious disarray that exists at the agency.
    Complicating HUD's troubles are serious management and 
budget problems. Recently, the General Accounting Office (GAO) 
reported that HUD has an ineffective organizational structure, 
an insufficient mix of staff with the proper skills, weak 
internal controls, and inadequate information and financial 
management systems.
    This finding corroborates the findings of outside auditors 
who, in June, 1995, noted that HUD's internal controls and 
financial systems, primarily in the areas of grant and subsidy 
payments to public and Indian housing authorities, did not 
provide adequate assurance that amounts paid under these 
programs are valid and correctly calculated. Consequently, HUD 
is unable to state categorically that federally subsidized 
housing units are occupied by needy lower-income families and 
that those living in such units are paying the correct rents.
    Moreover, HUD's incoherent budget process does not enable 
it to justify its fiscal priorities to the Congress on a timely 
basis. This combination--a deficient budget process and weak 
internal controls and financial systems--has contributed to the 
perception that HUD is a failed institution, prompting many in 
Congress to consider eliminating it altogether.
    Another vexing programmatic and budget problem is the 
excessive housing subsidies and physical inadequacies of HUD's 
insured multifamily property portfolio. This portfolio includes 
approximately 8,500 properties with section 8 rental contracts 
that expire over the next seven years. Of these properties, 
about 63% have rents that are higher than market rents, a 
burden which is shouldered by the taxpayer. However, simply 
reducing rents or deciding against renewing section 8 contracts 
has significant consequences: the number of households HUD 
assists could be reduced and currently-assisted tenants could 
face sharp rent increases, forced displacement or eviction.
    While there are no easy solutions to this problem, HUD has 
requested authority to change the manner in which this 
portfolio is administered. This initiative, called portfolio 
reengineering, involves several components. First, prior to 
section 8 contract expiration, HUD would authorize third 
parties to negotiate with owners to restructure the property's 
mortgage so that it could be supported by market rents. Then, 
upon contract expiration, the above-market rents would be 
reduced to market rate levels. Concurrently, FHA's guarantee of 
the loan would be disconnected from the restructured mortgage. 
Finally, section 8 rental assistance contracts would be renewed 
only for a term of one year.
    Restructuring the mortgage so it can be supported by market 
rents will decrease the level of budget authority and outlays 
necessary to fund the program. Without portfolio reengineering, 
budget authority needs will skyrocket and outlay requirements 
will increase by $7,000,000,000 between now and 2002, 
jeopardizing each of HUD's other programs, including community 
development grants, homeless assistance, funding for the HOME 
program, and operating assistance for public housing 
authorities.
    Reducing section 8 contract terms to one year will enable 
budget authority and outlays to bear some relation to each 
other, thereby improving the ability of policymakers to manage 
the contract renewal process with more precise budget estimates 
and timely information. Moreover, one year renewals will place 
HUD programs on the same budget basis as virtually all other 
domestic discretionary programs.
    Because legislation has not been introduced to contend with 
the problem of expiring section 8 contracts, the Committee has 
been put in the position of crafting legislation to deal with 
those section 8 project-based contracts that expire in 1997. 
Unfortunately, this provision does not solve, but merely 
ameliorates, the problem for this fiscal year. Next year, HUD 
speculates that the level of budget authority it will require 
to renew expiring contracts could exceed discretionary budget 
caps. Therefore, it is the hope of this Committee that all 
appropriate parties in Congress will make a concerted effort to 
craft a solution to this problem prior to the 1998 fiscal year.
    This year, HUD requested $845 million in bonus funding for 
high-performing grantees in four of its six block grants, 
called ``performance funds.'' The Committee, however, has 
decided against funding any new programs, including these bonus 
pools. HUD believes these grants will provide communities with 
greater flexibility to craft local solutions for local 
problems. The Department plans to competitively award bonuses 
to grantees who exceed established performance measures and who 
submit project proposals.
    However, the Committee is concerned that the 
characteristics of the block grants themselves--their program 
breadth and the flexibility will--greatly complicate and add 
significant time to the development of uniform performance 
measures. Moreover, because HUD's information systems are 
inadequate to support performance measurement, HUD is likely to 
be unable to effectively use the requested funding.
    Program performance information comes from sound, well-run 
information systems that accurately and reliably track actual 
performance against standards, such as benchmarks. GAO, the 
Inspector General and outside auditors have expressed major 
concerns that HUD's information systems are inadequate to 
support current programs, much less support implementation of 
four bonus pools.
    Given these complications, the Committee is concerned that 
HUD is still in the midst of developing its bonus program and 
measures for its performance funds. In its fiscal year 1997 
budget, HUD is requesting $11 million for its office of Policy 
Development and Research to continue developing quantifiable 
measures for each program, a process for setting benchmarks 
with grantees and improvements in how program performance 
information is used by the Department. This means the measures 
and processes will not be in place and known to the grantees 
before HUD uses them to award bonuses with fiscal year 1997 
funds. The Committee believes that for the performance bonuses 
to have equity and merit, HUD needs to be able to specify prior 
to the year over which performance is measured what results and 
outcomes will be rewarded and how they will be measured.

               ANNUAL CONTRIBUTIONS FOR ASSISTED HOUSING

Fiscal year 1997 recommendation.........................  $5,372,000,000
Fiscal year 1996 appropriation..........................   9,818,795,000
Fiscal year 1997 budget request (revised)...............   5,597,000,000
Comparison with fiscal year 1996 appropriation..........  -4,446,795,000
Comparison with fiscal year 1997 budget request.........    -225,000,000

    The annual contributions for assisted housing account has 
been the principal appropriation at the Department for 
providing housing assistance to low-income families. Some of 
the programs in this account have included public housing, 
Indian housing, modernization, section 8 certificates and 
vouchers (rental assistance), housing for the elderly and 
disabled, preservation, lead-based paint grants, section 8 
contract amendments, and housing opportunities for persons with 
AIDS.
    Last year, the Committee recommended eliminating funding 
for 22 duplicative and/or unauthorized programs within this 
account in an attempt to improve HUD's ability to track and 
control subsidy payments. This year, the Committee has 
restructured the account again, retaining subaccounts for 
section 8 tenant-based and project-based contracts and section 
8 amendments. The amount made available for section 8 renewals 
is for 12-month contracts. Remaining funds should not be 
expended until September 15, 1997.
    Tracking expenditures should be a priority for HUD and 
ought to be possible through various automated systems. For 
example, the Tenant Rental Assistance Certification System 
(TRACS) gives HUD the capacity to determine the amount of funds 
appropriated in a given year and compare the number with what 
was spent on current contract amounts, amendments or renewals. 
Owners and PHAs, however, must supply the pertinent 
information. If they do not comply with this directive, the 
Committee believes they ought to be penalized. The goal of 
reaching a balanced budget by the year 2002 makes it imperative 
that HUD be in a position to account for every dollar provided 
to it by Congress.

         HOUSING FOR SPECIAL POPULATIONS: ELDERLY AND DISABLED

Fiscal year 1997 recommendation.........................    $769,000,000
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request (revised)...............     769,000,000
Comparison with fiscal year 1996 appropriation..........    -319,358,000
Comparison with fiscal year 1997 budget request.........               0

    The Housing for Special Populations program provides 
eligible private non-profit organizations with capital grants 
used to finance the acquisition, rehabilitation, or 
construction of housing intended for elderly people or people 
with disabilities. Twenty-five percent of the funding for 
supportive housing for the disabled is available for tenant-
based assistance under section 8 to increase program 
flexibility.
    The Committee recommends funding the section 202 housing 
for the elderly program at $595,000,000 and section 811 housing 
for the disabled program at $174,000,000, as requested by the 
President.
    The Committee recognizes the value of service coordination 
as an essential management tool in elderly housing. The average 
age of older persons in public and assisted housing is now in 
the late 70's and rising. These tenants have very high rates of 
disability which threaten their independence and create 
difficult management issues. The need for service coordinators 
is especially acute in public housing which often includes 
large numbers of younger tenants with mental and physical 
disabilities. The diversity of needs and the community tensions 
that sometimes result from housing these groups in the same 
buildings require staff who are trained in bringing relevant 
supportive services to address these problems. The Committee 
strongly urges the Department to routinely fund service 
coordinators as a part of operating budgets. These costs should 
also be assumed in future budget submissions by the Department 
to Congress.
    The Secretary currently has broad authority to reform the 
Section 202 Elderly Housing Program in order to expedite needed 
programmatic and financing changes. In this regard, the 
Committee is concerned about the program's long term financial 
viability, based on the decision to reduce the rental 
assistance contract by the amount of tenant contributions. Such 
action has the effect of defunding the reserves needed for 
modernization and major maintenance in the long term. Possible 
budgetary implications in the outyears must also be considered, 
given the likelihood that additional resources may be necessary 
for modernization and major repairs. The Committee directs the 
Secretary to provide a report no later than February 1, 1997, 
on the effects of this change on project reserves.

                         FLEXIBLE SUBSIDY FUND

    The Housing and Urban Development Act of 1968 authorized 
HUD to establish a revolving fund into which rental collections 
in excess of the established basic rents for units in section 
236 subsidized projects are deposited. Subject to approval in 
appropriations acts, the Secretary is authorized under the 
Housing and Community Development Amendment of 1978 to transfer 
excess rent collections received after 1978 to the Troubled 
Projects Operating Subsidy program, renamed the Flexible 
Subsidy Fund.
    The Committee recommends that the account continue to serve 
as a repository of excess rental charges appropriated from the 
Rental Housing Assistance Fund. Although these resources will 
not be used for new reservations, they will continue to offset 
Flexible Subsidy outlays and other discretionary expenditures.

                       RENTAL HOUSING ASSISTANCE

    The Housing and Urban Development Act of 1968, as amended, 
authorizes the section 236 rental housing assistance program 
which subsidizes the monthly mortgage payment that an owner of 
a rental or cooperative project is required to make. This 
interest subsidy reduces rents for lower income tenants. No new 
commitment activity has occurred in this program since 1973.
    The Committee recommends allowing a reduction of not more 
than $2,000,000 in uncommitted balances of contract authority.

                       Public and Indian Housing

                       housing certificates fund

Fiscal year 1997 recommendation.........................    $166,000,000
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request (revised)...............     290,000,000
Comparison with fiscal year 1996 appropriation..........    +166,000,000
Comparison with fiscal year 1996 budget request.........    -124,000,000

    The Housing Certificates Fund consolidates the existing 
section 8 voucher and certificate rental assistance programs. 
The Committee has recommended providing funding sufficient to 
prevent tenant displacement due to preservation activities, 
property disposition, portfolio reengineering and other 
activities.
    The Committee recommends that $50 million be set-aside to 
fund section 8 tenant-based rental assistance for people with 
disabilities displaced as a result of P.L. 104-120, legislation 
that enables PHAs to designate public housing buildings for 
elderly residents. Clearly, in virtually every part of the 
United States, people with mental retardation, mental illness 
and other disabilities face an extreme crisis in the 
availability of affordable housing. Hundreds of people with 
disabilities live in seriously substandard housing conditions, 
paying 50-75% or more of their limited income for rent, live at 
home with elderly parents who fear for the future or remain in 
inappropriate institutional settings because there is no 
housing available to them in the community. Therefore, this 
set-aside should help disabled persons to have access to 
housing--a cornerstone to independence, integration, and 
productivity.
    Finally, the Committee recommends providing for a three-
month delay in reissuing section 8 rental assistance, limits 
the annual adjustment factor for high cost units and reduces 
the annual adjustment factor by 1% on those units that do not 
experience turnover due to attrition.

               PUBLIC AND INDIAN HOUSING OPERATION FUNDS

Fiscal year 1997 recommendation.........................  $2,850,000,000
Fiscal year 1996 appropriation..........................   2,800,000,000
Fiscal year 1997 budget request.........................   2,900,000,000
Comparison with fiscal year 1996 appropriation..........     +50,000,000
Comparison with fiscal year 1996 budget request.........     -50,000,000

    Operating subsidies are provided to public housing 
authorities as a supplement to tenant rental contributions and 
other income to assist in financing the operation of public 
housing projects. Operating subsidies are required to maintain 
operating and maintenance services and to provide for minimum 
project reserves. The performance funding system (PFS) formula 
is the primary system for determining operating subsidy 
amounts.
    The Committee recommends funding operating subsidies at 
$2,850,000,000, and notes that reforms contained in the 1996 
rescissions package and appropriations measure have enabled 
PHAs to operate more efficiently and more economically. These 
reforms, however, expire at the end of the 1996 fiscal year 
unless permanent authorizing language is adopted.
    Both the House of Representatives and the Senate have 
passed legislation, H.R. 2406 and S. 1260, that contains 
significant reform measures. The Committee urges the 
authorizing committees to reconcile the differences between 
these two pieces of legislation so that the reforms can become 
permanent law.

                public and indian housing capital funds

Fiscal year 1997 recommendation.........................  $2,700,000,000
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request.........................   2,700,000,000
Comparison with fiscal year 1996 appropriation..........  +2,700,000,000
Comparison with fiscal year 1997 budget request.........               0

    The public and Indian housing capital fund consolidates all 
current public housing capital programs into one account, 
including public housing development, modernization, and 
amendments, as well as major reconstruction of public housing, 
severely distressed public housing, and Indian housing 
development and modernization activities. In fiscal year 1996, 
modernization was funded at $2,500,000,000 in the annual 
contributions account.
    The Committee recommends funding the Public and Indian 
housing capital fund account at $2,700,000,000, which is the 
level requested by the President, to enable PHAs/IHAs to 
continue making both capital and management improvements.
    $2,415,000,000 is set-aside for long-range capital 
improvement programs and ordinary modernization programs. Other 
set-asides include: $200,000,000 for Indian housing development 
which will lead to 2,100 units of newly constructed homes on 
Indian reservations; $50,000,000 for supportive services to 
promote self-sufficiency of residents; $20,000,000 for 
technical assistance funds; $10,000,000 for the Tenant 
Opportunity Program; and $5,000,000 for the Jobs-Plus 
Demonstration program.
    HUD intends to use the funds provided for technical 
assistance to support more inspections of public housing units, 
and to contract with real estate management experts who can 
assist the Department in turning-around troubled PHA/IHAs. 
While the Committee agrees with this use of funds, the 
Committee recommends that HUD create performance targets for 
the use of these funds and provide a final report to Congress 
next year on how the funds are spent and whether the targets 
are achieved.
    The Committee recommends reducing the President's request 
for the Tenant Opportunity Program by $5,000,000. This program 
has come under intense scrutiny because of wasteful spending 
practices and allegedly fraudulent activities. Therefore, the 
Committee has decided against fully funding the program until 
an investigation has been completed.
    The Committee has funded the Jobs-Plus Demonstration 
program at the President's request, recognizing the importance 
of increasing the number of public housing residents who are 
employed. This demonstration is designed to establish 
innovative and replicable strategies for increasing and 
retaining the number of public housing residents who are 
employed. It will focus on four to six urban PHAs in developing 
tailored, locally-based approaches to providing employment 
opportunities and job access to working-age residents in at 
least one family development in the selected PHA.
    The Committee is pleased to note that legislative reforms 
initiated by this subcommittee last year have yielded very 
positive results. For example, to date, at least 13,800 units 
of nonviable, overly-dense and obsolete public housing have 
been demolished. By the end of fiscal year 1996, HUD estimates 
that approximately 10,000 more units of dilapidated public 
housing will be eliminated from the inventory. Other reforms 
have empowered PHAs to make substantial improvements to their 
public housing facilities quickly with little interference from 
HUD.

               public housing capital fund bonus program

Fiscal year 1997 recommendation.........................               0
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request.........................    $500,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1996 budget request.........    -500,000,000

    The Public Housing Capital Fund Bonus program would be 
available to those PHAs that score 90 or higher under HUD's 
Public Housing Management Assessment Program, and that have 
made substantive efforts to link public housing residents with 
education, job training or similar self-sufficiency 
initiatives, including HUD's ``Campus of Learners'' initiative. 
The bonus pool would be split among eligible PHAs based on the 
Capital Fund formula, and bonus funds would be used for any 
uses eligible under the Capital Fund.
    Additional funding for new, unauthorized programs is not 
available.

    revitalization of severely distressed public housing (hope vii)

Fiscal year 1997 recommendation.........................    $550,000,000
Fiscal year 1996 appropriation..........................     480,000,000
Fiscal year 1997 budget request.........................     650,000,000
Comparison with fiscal year 1996 appropriation..........     +70,000,000
Comparison with fiscal year 1996 budget request.........    -100,000,000

    The Revitalization of Severely Distressed Public Housing 
program awards competitive grants to public housing authorities 
to enable them to demolish obsolete projects, or to revitalize 
where appropriate, the sites on which the projects are located. 
In addition, the grants may provide replacement housing for 
those families displaced by demolition to avoid or lessen 
concentrations of very low-income families.
    The Committee recommends funding this program at 
$550,000,000 with a set-aside of $2,500,000 for technical 
assistance. Of the amount made available, up to 50% of the 
funds may be used for reconstruction of demolished projects or 
replacement units for displaced families. The balance will be 
used for demolition or tenant-based assistance for relocation.
    The Severely Distressed Public Housing Program was created 
in 1992 and has received appropriations of more than 
$2,038,240,000. The Committee is requesting that GAO review the 
results of the program, how the appropriations have been 
expended, including the number of units constructed or 
renovated, the number of units demolished, the costs associated 
with the program, and the number of families assisted. To 
enable the Committee to make future spending recommendations, 
the study should be presented to the Committee by February 1, 
1997.
    The Committee is extremely troubled by ongoing attempts to 
rebuild on the site of Desire Homes in New Orleans, Louisiana, 
without an unbiased recommendation that the site is safe and 
viable, and the surrounding neighborhood provides adequate 
services for families who remain on the Desire site. Therefore, 
the Committee is withholding the HOPE VI grant made to HANO for 
the Desire Homes project until the Committee has reviewed an 
independent recommendation that the units can be rebuilt cost-
effectively, that the site is suitable for low-income housing 
and that the quality of life for residents will be improved.

             drug elimination grants for low-income housing

Fiscal year 1997 recommendation.........................    $290,000,000
Fiscal year 1996 appropriation..........................     290,000,000
Fiscal year 1997 budget request.........................     290,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1996 budget request.........               0

    Drug elimination grants are provided to public housing 
agencies and Indian housing authorities to eliminate drug-
related crime in housing developments. PHAs may use funds to 
employ security personnel and investigators, provide physical 
project improvements to enhance security, support tenant 
patrols in cooperation with local law enforcement agencies, 
develop innovative programs to reduce drugs, and provide 
resident groups with funds to develop security and drug abuse 
prevention programs.
    The Committee recommends funding this program at the level 
requested by the President, and provides a $10,000,000 set-
aside for Operation Safe Home, a program administered by HUD's 
Office of the Inspector General. This set-aside will enable 
residents to be moved to safe buildings when they identify drug 
dealers to aid police officers.

                    violent crime reduction programs

Fiscal year 1997 recommendation.........................               0
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request.........................      $3,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1996 budget request.........      -3,000,000

    Amounts for Public and Indian Housing's portion of the 
Crime Control Programs are derived from transfers from the 
Violent Crime Reduction Trust Fund, authorized by the Crime 
Control and Law Enforcement Act of 1994. These funds are 
provided to pay for census surveys required in development of 
formulae needed to distribute funds to units of local 
governments.
    The Committee recommends against transferring $3,000,000 to 
the Census Bureau for these purposes.

           INDIAN HOUSING LOAN GUARANTEE FUND PROGRAM ACCOUNT

------------------------------------------------------------------------
                                                         Limitation on  
                                     Program account      direct loans  
------------------------------------------------------------------------
Fiscal year 1997 recommendation...         $3,000,000        $36,900,000
Fiscal year 1996 appropriation....          3,000,000         36,900,000
Fiscal year 1997 budget request...          3,000,000         36,900,000
Comparison with fiscal year 1996                                        
 appropriation....................                  0                  0
Comparison with fiscal year 1996                                        
 budget request...................                  0                  0
------------------------------------------------------------------------

    Section 184 of the Housing and Community Development Act of 
1992 establishes a loan guarantee program for Native Americans 
to build or purchase homes on trust land. This program provides 
access to sources of private financing for Indian families and 
Indian housing authorities who otherwise could not acquire 
financing because of the unique legal status of Indian trust 
land. This program provides the financial vehicle for 
approximately 20,000 families to construct new homes or 
purchase existing properties on reservations. The budget 
requests $3,000,000 to support loan guarantees totaling 
$36,900,000. The bill includes the requested program subsidy 
and loan guarantee limitation.
    Continued deplorable housing conditions for low-income 
Native American families greatly concerns the Committee. In 
many cases, these deplorable conditions are attributable to 
several factors: the unique nature of Native American Trust 
lands, private industry's inability to understand the special 
Trust land status, and the lack of cost-effective ways to build 
on Indian lands. Nevertheless, considerable money is 
appropriated annually to address these concerns with little 
result. Therefore, the committee is requesting that the General 
Accounting Office (GAO) survey the Native American programs 
administered by HUD, provide an analysis of which programs are 
working well and make recommendations to improve them and to 
make them more cost-effective.

                   Community Planning and Development

                      COMMUNITY DEVELOPMENT GRANTS

Fiscal year 1997 recommendation.........................  $4,300,000,000
Fiscal year 1996 appropriation..........................   4,600,000,000
Fiscal year 1997 budget request.........................   4,600,000,000
Comparison with fiscal year 1996 appropriation..........    -300,000,000
Comparison with fiscal year 1997 budget request.........    -300,000,000

    Title I of the Housing and Community Development Act of 
1974, as amended, authorizes the Secretary to make grants to 
units of general local government and states for local 
community development programs. The primary objective of the 
block grant program is to develop viable urban communities and 
to expand economic opportunities, principally for persons of 
low- and moderate-income.
    The Committee recommends appropriating $4,300,000,000 for 
community development grants in fiscal year 1997, a 
$300,000,000 decrease from fiscal year 1996, but a $600,000,000 
increase from the recommendation of the House Budget 
Resolution. Though the Committee is aware that the CDBG program 
is extremely popular, it is necessary to improve controls to 
ensure that CDBG grantees fund eligible activities and provide 
the required level of activities for the benefit of low- and 
moderate-income persons.
    Since 1991, section 107 grants have provided funds for 
various purposes including providing assistance for community 
development for insular areas; historically black colleges and 
universities, work study; funding for states and units of 
general local government to correct any miscalculation of their 
share of funds under section 106; joint community development; 
regulatory barrier removal; community outreach; and technical 
assistance in planning, developing and administering programs 
under Title I.
    Bill language earmarks $49,000,000 for section 107 grants, 
including: $7,000,000 for insular areas; $6,500,000 for 
Historically Black Colleges and Universities; $4,000,000 for 
Community Development Work Study, with a $1,500,000 set-aside 
for Hispanic-serving institutions and $500,000 set-aside for 
continuing a seven site effort to develop revitalization 
strategies through the National Center for the Revitalization 
of Central Cities; $7,500,000 for the Community Outreach 
Partnership program; $9,000,000 for technical assistance to 
States, communities, and Native American tribes to plan, 
develop and administer Title I assistance; and, not less than 
$14,000,000 to develop, implement, and refine management 
information system for purposes of establishing a national 
database on local needs and program performance.
    The Committee continues to encourage the Department to 
support joint projects between units of local government and 
the historically black colleges and universities. The Committee 
believes that progress is being made in developing expanded 
opportunities of joint community development projects that 
serve both public and subsidizing housing residents, especially 
the elderly; but also in bringing institutional local 
government and private sector funds together that result in the 
development of capital projects that serve the campus and the 
community.
    Other set-asides within the CDBG account include: 
$61,400,000 for Native Americans; $2,100,000 for the Housing 
Assistance Council; $1,000,000 for the National American Indian 
Housing Council; and $20,000,000 for Youthbuild. This year the 
Committee recommends funding the Lead-based Paint Hazard 
Reduction program with a $60,000,000 set-aside in this account. 
The program, however, shall continue to be administered by the 
Office of Lead-based Paint.
    Included in the legislation is a $40,000,000 set-aside 
within the CDBG program for Economic Development Initiatives 
(EDI), to finance efforts that generate economic revitalization 
and link people to jobs and social services. Of this amount, 
$11,000,000 is targeted to address local examples of need as 
follows:
          $1,000,000 to renovate the Valentine Theatre, which 
        will serve as a magnet in attracting new business and 
        support existing businesses in Toledo, Ohio's, 
        continuing downtown revitalization efforts;
          $900,000 to expand services and facilities for high 
        risk youths in Suffolk County, New York;
          $3,100,000 for Ball State University in Indiana to 
        create a Housing Futures Institute that will use 
        environmentally sound materials and systems to build 
        affordable housing using local partnerships in 
        Columbus, Indiana, Bloomington, Indiana, Terre Haute, 
        Indiana, Gary, Indiana, and Indianapolis, Indiana;
          $2,250,000 for economic revitalization and community 
        development activities, and to provide counseling 
        services to low-income families in San Bernardino 
        County, California;
          $1,000,000 to complete the Multi-Agency Visitor 
        Center in Cibola County, New Mexico, to improve 
        economic opportunities in that area;
          $1,000,000 to enable the City of Scranton, 
        Pennsylvania, to continue revitalizing the downtown 
        area by demolishing the Casey Hotel;
          $750,000 to pursue infrastructure improvements for 
        assisting in constructing low- and moderate-income 
        housing in Osceola, Iowa.

          $1,000,000 for the East Texas and Ark-Texas and Ark-
        Tex Council of Governments in Texas, to operate an 
        economic development revolving loan fund for creating 
        jobs and improving the economic environment of East 
        Texas.
    The bill also includes language limiting guaranteed loans 
under section 108 to $1,500,000,000, with credit subsidy needs 
at $31,750,000.

                  HOME INVESTMENT PARTNERSHIPS PROGRAM

Fiscal year 1997 recommendation.........................  $1,400,000,000
Fiscal year 1996 appropriation..........................   1,400,000,000
Fiscal year 1997 budget request.........................   1,400,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........               0

    The HOME investment partnerships program provides 
assistance to states, units of local government, Indian tribes, 
and insular areas, through formula allocation, for the purpose 
of expanding the supply and affordability of housing. Eligible 
activities include acquisition, rehabilitation, tenant-based 
rental assistance, and new construction. Jurisdictions 
participating in the program are required to develop a 
comprehensive housing affordability strategy.
    The Committee recommends funding the HOME program at the 
President's request. This program provides resources to 
nonprofits to build affordable homes economically and 
efficiently. Furthermore, the program is well-monitored, making 
it possible to determine whether low- and moderate-income 
families are receiving the benefit of the assistance.

                HOME FUND CHALLENGE GRANT BONUS PROGRAM

Fiscal year 1997 recommendation.........................               0
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request.........................    $150,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........    -150,000,000

    The HOME Fund Challenge Grant program would be used to 
create Homeownership Zones and would be available on a 
competitive basis to high performing jurisdictions in targeted 
areas. HUD would administer the funding as a Challenge Grant, 
requiring localities to compete for funds by proposing 
creative, cost-effective homeownership strategies using a 
combination of their own resources, private capital and Federal 
program incentives.
    The Committee recommends against funding this new, 
unauthorized program.

                       HOMELESS ASSISTANCE GRANTS

Fiscal year 1997 recommendation.........................    $823,000,000
Fiscal year 1996 appropriation..........................     823,000,000
Fiscal year 1997 budget request.........................   1,010,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........    -187,000,000

    The homeless assistance grants account provides funding for 
four homeless programs under title IV of the McKinney Act: (1) 
The emergency shelter grants program; (2) the supportive 
housing program; (3) the section 8 moderate rehabilitation 
(single room occupancy) program; and (4) the shelter plus care 
program. This account also supports activities eligible under 
the innovative homeless initiatives demonstration program. 
Consolidating the McKinney Act homeless programs has improved 
their operation and administration, and the Committee 
recommends that HUD include performance targets that can be 
measured and assessed as part of the Consolidated Plan. The 
Committee will consider funding a homeless set-aside within the 
Homeless assistance grant account for Indian tribes, as 
requested by the President, pending enactment of authorizing 
legislation.
    The Committee recommends funding homeless programs at the 
1996 level.

                      homeless grant bonus program

Fiscal year 1997 recommendation.........................               0
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request.........................    $110,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........    -110,000,000

    The Homeless/Innovations program would be available on a 
competitive basis to applicants who propose innovative programs 
or solutions to addressing homelessness through ``continuum of 
care'' efforts. HUD would administer the program as a challenge 
grant, requiring localities to compete for funds by proposing 
creative strategies using a combination of their own resources, 
private capital, and Federal program incentives.
    The Committee recommends against funding this new, 
unauthorized program.

              housing opportunities for persons with aids

Fiscal year 1997 recommendation.........................    $171,000,000
Fiscal year 1996 appropriation..........................               0
Fiscal year 1997 budget request.........................     171,000,000
Comparison with fiscal year 1996 appropriation..........    +171,000,000
Comparison with fiscal year 1997 budget request.........               0

    The Housing Opportunities for Persons with AIDS (HOPWA) 
program, which was previously funded as part of the annual 
contributions account, is authorized by the Housing 
Opportunities for Persons with AIDS Act, as amended. The 
purpose of the program is to provide states and localities with 
resources and incentives to devise long-term comprehensive 
strategies for meeting the housing needs of persons with HIV/
AIDS and their families. Government recipients must have a HUD-
approved Comprehensive Plan/Comprehensive Housing Affordability 
Strategy (CHAS), with funds allocated among eligible grantees 
based on section 854(c) of the National Affordable Housing Act.
    The Committee recommends funding this program at the level 
requested by the President. Additionally, the Committee 
requests the General Accounting Office (GAO) review the 
mechanics of this program, how it is operating and the level of 
efficiency within the program, the services provided and 
whether the services are adequate to address the needs of the 
recipients.

                     Federal Housing Administration

             fha-mutual mortgage insurance program account

                     (including transfers of funds)

----------------------------------------------------------------------------------------------------------------
                                                      Limitation of        Limitation of        Administrative  
                                                       direct loans       guaranteed loans         expenses     
----------------------------------------------------------------------------------------------------------------
Fiscal year 1997 recommendation..................         $200,000,000     $110,000,000,000         $341,595,000
Fiscal year 1996 appropriation...................          200,000,000      110,000,000,000          341,595,000
Fiscal year 1997 budget request..................          200,000,000      110,000,000,000          350,595,000
Comparison with 1996 Appropriation...............                    0                    0                    0
Comparison with fiscal year 1997 budget request..                    0                    0           -9,000,000
----------------------------------------------------------------------------------------------------------------

    Beginning in 1992, the Federal Housing Administration (FHA) 
was split into two separate accounts. One account is the FHA-
mutual mortgage insurance program account and includes the 
mutual mortgage insurance (MMI) and cooperative management 
housing insurance (CMHI) funds. The other account is the FHA-
general and special risk program account and includes the 
general insurance (GI) and special risk insurance (SRI) funds.
    The mutual mortgage insurance program account covers the 
unsubsidized programs. The MMI fund consists of the basic 
single-family home mortgage program, the largest of all the FHA 
programs. The CMHI fund contains the cooperative housing 
insurance program which provides mortgages for cooperative 
housing projects of more than five units which are occupied by 
members of a cooperative housing corporation.
    The Committee recommends limiting the commitments in the 
FHA-MMI program account to $110,000,000,000 in fiscal year 1997 
and provides an appropriation of $341,595,000 for 
administrative expenses. Of the amount for administrative 
expenses, $532,782,000 is transferred to the salaries and 
expenses appropriation and $36,567,000 is transferred to the 
Office of Inspector General appropriation. The bill also 
includes the requested direct loan limitation of $200,000,000.

              fha-general and special risk program account

                     (including transfers of funds)

----------------------------------------------------------------------------------------------------------------
                                     Limitation of       Limitation of      Administrative                      
                                     direct loans      guaranteed loans        expenses          Program costs  
----------------------------------------------------------------------------------------------------------------
Fiscal year 1997                                                                                                
 recommendation.................        $120,000,000     $17,400,000,000        $202,470,000         $85,000,000
Fiscal year 1996 appropriation..         120,000,000      17,400,000,000         202,470,000         $85,000,000
Fiscal year 1997 budget request.         120,000,000      17,400,000,000         207,470,000        $160,000,000
Comparison with 1996                                                                                            
 Appropriation..................                   0                   0                   0                   0
Comparison with 1997 budget                                                                                     
 request........................                   0                   0          -5,000,000         -75,000,000
----------------------------------------------------------------------------------------------------------------

    The general and special risk insurance funds contain the 
largest number of programs administered by the FHA. The GI 
funds cover a wide variety of special purpose single and 
multifamily programs, including loans for property 
improvements, manufactured housing, multifamily rental housing, 
condominiums, housing for the elderly, hospitals, group 
practice facilities, and nursing homes. The SRI fund includes 
insurance programs for mortgages in older, declining urban 
areas which would not be otherwise eligible for insurance, 
mortgages with interest reduction payments, those for 
experimental housing, and for high-risk mortgagors who would 
not normally be eligible for mortgage insurance without housing 
counseling.
    The budget proposes to limit loan guarantee commitments for 
the FHA-general and special risk insurance program account to 
$17,400,000,000 in fiscal year 1997. The Committee recommends 
$85,000,000 for credit subsidy and $202,470,000 for 
administrative expenses.
    HUD requested an additional $100,000,000 in credit subsidy 
for originations of multifamily mortgages by transferring 
receipts from the sale of notes. The Committee, however, has 
appropriated credit subsidy at the 1996 level of $85,000,000, 
and would recommend against increasing credit subsidy levels 
until such time as the multifamily programs are self-
sustaining. Moreover, the Committee is concerned about the 
tenuous financial position of the FHA Hospital Mortgage 
Insurance and the Nursing Home Insurance programs, and 
recommends that HUD fully address the concerns raised in the 
reports issued by the General Accounting Office (GAO). Finally, 
it is important to note that the portfolio reengineering 
provision will result in a large drain upon the FHA multifamily 
insurance fund, making the creation of a self-sustaining 
insurance program even more important.

                government national mortgage association

                guarantees of mortgage-backed securities

                     loan guarantee program account

                     (including transfer of funds)

------------------------------------------------------------------------
                                   Limitation of        Administrative  
                                  guaranteed loans         expenses     
------------------------------------------------------------------------
Fiscal year 1997                                                        
 recommendation...............     $110,000,000,000           $9,101,000
Fiscal year 1996 appropriation      110,000,000,000            9,101,000
Fiscal year 1997 budget                                                 
 request......................      110,000,000,000            9,383,000
Comparison with 1996                                                    
 appropriation................                    0                    0
Comparison with 1997 budget                                             
 request......................                    0             -282,000
------------------------------------------------------------------------

    The guarantees of mortgage-backed securities program 
facilitates the financing of residential mortgage loans insured 
or guaranteed by the Federal Housing Administration (FHA), the 
Department of Veterans Affairs (VA) and the Farmers Home 
Administration (FmHA). Funds are provided through investments 
in and securities guaranteed by the Government National 
Mortgage Association (GNMA) which are backed by pools of such 
mortgages. The investment proceeds are used in turn to finance 
additional mortgage loans. Institutions which provide and 
service mortgages (such as mortgage companies, commercial 
banks, savings banks, and savings and loan associations) 
assemble pools of mortgages and issue securities backed by the 
pools. The program has attracted nontraditional sources of 
credit into the housing market. Approximately 70 percent of the 
funds used to purchase GNMA securities come from nontraditional 
mortgage investors, including pension and retirement funds, 
life insurance companies and individuals.
    The budget proposes language to limit loan guarantee 
commitments for mortgage-backed securities of the Government 
National Mortgage Association to $110,000,000,000 in 1996. In 
addition, an appropriation of $9,101,000 is provided to fund 
administrative expenses. The amount for administrative expenses 
is transferred to the salaries and expenses appropriation.

                    Policy Development and Research

                        research and technology

Fiscal year 1997 recommendation.........................     $34,000,000
Fiscal year 1996 appropriation..........................      34,000,000
Fiscal year 1997 budget request.........................      45,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........     -11,000,000

    The Housing and Urban Development Act of 1970 directs the 
Secretary to undertake programs of research, studies, testing, 
and demonstrations related to the HUD mission. These functions 
are carried out internally; through contracts with industry, 
nonprofit research organizations, and educational institutions, 
and through agreements with state and local governments and 
other federal agencies.
    The bill includes $34,000,000 for research and technology 
in fiscal year 1997. Though this level of funding is not an 
increase from fiscal year 1996, the Committee is aware that 
over half of PD&R's budget is consumed by large-scale national 
surveys and publications, like ``U.S. Housing Market 
Conditions.'' The research conducted by the office, however, 
has paid off in big dividends to the Department. Therefore, 
while budget constraints do not allow for increases in this 
account at this time, the Committee encourages HUD to consider 
including PD&R as a set-aside within the Secretary's reserve 
fund, or providing PD&R with funding from the many technical 
assistance set-asides contained within program accounts, to 
supplement research activities.

                   Fair Housing and Equal Opportunity

                        fair housing activities

Fiscal year 1997 recommendation.........................     $30,000,000
Fiscal year 1996 appropriation..........................      30,000,000
Fiscal year 1997 budget request.........................      33,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........      -3,000,000

    The Fair Housing Act, title VIII of the Civil Rights Act of 
1968, as amended by the Fair Housing Amendments Act of 1988, 
prohibits discrimination in the sale, rental and financing of 
housing and authorizes assistance to state and local agencies 
in administering the provisions of the fair housing law.
    The bill provides $30,000,000, of which $15,000,000 is for 
the fair housing assistance program (FHAP) and $15,000,000 is 
for the fair housing initiatives program (FHIP). Additionally, 
the Committee requests the GAO to study the Fair Housing 
Initiatives Program (FHIP) to evaluate its financial 
accountability systems and its general effectiveness in 
combating housing discrimination.
    The Committee intends that funds appropriated to the Fair 
Housing Initiatives Program (FHIP) for enforcement of title 
VIII of the Civil Rights Act of 1968, as amended, which 
prohibits discrimination in the sale, rental, and financing of 
housing and in the provision of brokerage services, be used 
only to address such forms of discrimination as they are 
explicitly identified and specifically described in title VIII. 
Recognizing that there are limited resources available for FHIP 
activities, the Committee believes that FHIP funds should serve 
the purposes of Congress as reflected in the express language 
of title VIII.
    The Committee notes that HUD's Office of Fair Housing and 
Equal Opportunity has undertaken a variety of activities 
pertaining to property insurance under the authority of the 
Fair Housing Act. HUD recently testified that, due to 
Congressional concern about such activities, it does not intend 
to focus its regulatory initiatives on property insurance. The 
Committee is encouraged by this statement, but remains 
concerned about HUD's use of funds for other fair housing 
activities aimed at property insurance practices.
    HUD's insurance-related activities duplicate state 
regulation of insurance. Every state and the District of 
Columbia have laws and regulations addressing unfair 
discrimination in property insurance and are actively 
investigating and addressing discrimination where it is found 
to occur. HUD's activities in this area create an unwarranted 
and unnecessary layer of federal bureaucracy.
    The Fair Housing Act makes no mention of discrimination in 
property insurance. Moreover, neither it nor its legislative 
history suggests that Congress intended it to apply to the 
provision of property insurance. Indeed, Congress' intention, 
as expressly stated in the McCarran-Ferguson Act of 1945 and 
repeatedly reaffirmed thereafter, is that, unless a federal law 
``specifically relates to the business of insurance,'' that law 
shall not apply where it would interfere with state insurance 
regulation. HUD's assertion of authority regarding property 
insurance contradicts this statutory mandate.

                     Management and Administration

                         salaries and expenses

                     (including transfers of funds)

----------------------------------------------------------------------------------------------------------------
                                                                    By transfer                                 
                                 -------------------------------------------------------------------------------
                                   Appropriation     FHA funds      GNMA funds          CPD            Total    
----------------------------------------------------------------------------------------------------------------
FY 1997 recommendation..........    $420,000,000    $532,782,000      $9,101,000        $675,000    $962,558,000
FY 1996 appropriation...........     420,000,000     532,782,000       9,101,000         675,000     962,558,000
FY 1997 budget request..........     430,718,000     546,782,000       9,383,000         675,000     987,558,000
Comparison with 1996                                                                                            
 appropriation                                 0               0               0               0               0
Comparison with 1997 budget                                                                                     
 request........................     -10,718,000     -14,000,000        -282,000               0     -25,000,000
----------------------------------------------------------------------------------------------------------------

    The Administration requests a single appropriation to 
finance all salaries and related costs associated with 
administering the programs of the Department of Housing and 
Urban Development, except the Office of Inspector General and 
the Office of Federal Housing Enterprise Oversight. These 
activities include housing, mortgage credit, and secondary 
market programs; community planning and development programs; 
departmental management; legal services; and field direction 
and administration.
    The Committee recommends funding salaries and expenses at 
fiscal year 1996 levels.

                      office of inspector general

                     (including transfer of funds)

----------------------------------------------------------------------------------------------------------------
                                                                                    Drug elim.                  
                                                   Appropriation     FHA funds        grants           Total    
----------------------------------------------------------------------------------------------------------------
FY 1997 recommendation..........................     $36,567,000     $11,283,000      $5,000,000     $52,850,000
FY 1996 appropriation...........................      36,567,000      11,283,000               0      47,850,000
FY 1997 budget request..........................      36,567,000      11,283,000       5,000,000      52,850,000
Comparison with 1996 appropriation..............               0               0               0      +5,000,000
Comparison with 1997 budget request.............               0               0               0               0
----------------------------------------------------------------------------------------------------------------


    This appropriation provides agency-wide audit and 
investigative functions to identify and correct management and 
administrative deficiencies which create conditions for 
existing or potential instances of fraud, waste and 
mismanagement. The audit function provides internal audit, 
contract audit, and inspection services. Contract audits 
provide professional advice to agency contracting officials on 
accounting and financial matters relative to negotiation, 
award, administration, repricing, and settlement of contracts. 
Internal audits review and evaluate all facets of agency 
operations. Inspection services provide detailed technical 
evaluations of agency operations. The investigative function 
provides for the detection and investigation of improper and 
illegal activities involving programs, personnel, and 
operations.
    The bill includes $36,567,000 for the Office of Inspector 
General in 1997, as well as $11,283,000 from the various funds 
of the FHA. These are the same amounts as provided in 1996. 
This funding level, together with $5,000,000 transferred from 
Drug Elimination Grants, result in $52,850,000 for OIG 
activities in 1997.
    The Committee believes the functions carried-out by the 
Inspector General's office are extremely important and commends 
the Inspector General for focusing greater attention on public 
housing problems, including waste and abuse; creating and 
successfully implementing the Operation Safe Home program; and 
pursuing equity skimming litigation aggressively.

             Office of Federal Housing Enterprise Oversight

                         salaries and expenses

                     (including transfer of funds)

Fiscal year 1997 recommendation.........................     $14,895,000
Fiscal year 1996 appropriation..........................      14,895,000
Fiscal year 1997 budget request.........................      15,751,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........        -856,000

    The Office of Federal Housing Enterprise Oversight (OFHEO) 
was established in 1992 to regulate the financial safety and 
soundness of the two housing government-sponsored enterprises 
(GSEs)--the Federal National Mortgage Association (Fannie Mae) 
and the Federal Home Loan Mortgage Corporation (Freddie Mac). 
The Office was authorized in the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, and gave the 
regulator enhanced authority to enforce these standards. In 
addition to financial regulation, the OFHEO monitors the GSEs 
compliance with affordable housing goals that were contained in 
the Act.
    The bill funds OFHEO at 1996 levels. These funds will be 
collected from Fannie Mae and Freddie Mac.

                       administrative provisions

    The bill contains a number of administrative provisions.
    Section 201 imposes minimum rents of up to $25 in the 
public housing and section 8 housing programs. A waiver for 
hardship cases is unnecessary because PHAs can choose to charge 
less than $25 for minimum rents.
    Section 202 includes a provision changing the manner in 
which section 8 administrative fees are calculated.
    Section 203 extends for one year the FHA Assignment 
Reforms;
    Section 204 provides authority to HUD to restructure 
multifamily apartment mortgages that are subsidized with 
section 8 project-based rental assistance contracts that expire 
in 1997. To be eligible for this program, the property must be 
FHA-insured and have rents that are higher than comparable 
market rents for the area. In 1997, HUD estimates that 
approximately 83,000 units will fall into this category.
    Because HUD does not have the capacity to carry out a 
program of this magnitude, the legislation authorizes the 
department to enter into agreements with third parties who can 
assume the insurance risk and economic liability of the federal 
government, while keeping in mind the broad public purposes of 
the underlying program. These public purposes are to:
          minimize involuntary displacement and other adverse 
        impacts on residents;
          protect the property owner's rights;
          restructure the mortgages in a manner that decreases 
        the chance of default in the future; and
          decrease the burden on the taxpayer by lowering rents 
        to levels that reflect the market.
    Local governments are provided the option of utilizing 
project-based assistance or tenant-based assistance to minimize 
the possibility of resident displacement. If the local 
government opts to use tenant-based assistance, the families 
may choose to use the assistance in the current apartment or 
may choose to move if the apartment is not being maintained 
appropriately.
    The third parties, called qualified liability managers, 
which will engage in workout agreements with the owners of 
eligible projects shall be chosen using competitive processes. 
The selection provisions require that the state housing finance 
agency have the financial and operational capacity to carry out 
all of the responsibilities of a qualified liability manager. 
In the absence of a suitably qualified housing finance agency, 
an alternative qualified liability manager shall consist of a 
State housing finance authority that partners with one or more 
public and private-sector entities to partnership to carry out 
these responsibilities. Moreover, the qualified liability 
manager must have the capacity to work cooperatively with the 
owner, and to negotiate in good faith to prevent a default of 
the mortgage to the extent economically practicable.
    This provision is applicable only for fiscal year 1997.
    Section 205 authorizes HUD to renew any expiring section 8 
contracts at rent levels that reflect comparable market rents 
but only if the current rent is above market levels. If the 
rent is lower than market, the rent must remain at the lower 
level. Section 8 contracts attached to projects that are 
uninsured under the National Housing Act, and for which the 
original financing was provided by a public agency, shall have 
contract rents renewed at current levels.
    Section 206 includes permanent reforms to the HUD 
multifamily property disposition program.
    HUD is directed to extend the previously authorized loan 
forgiveness for the Homeownership Turnkey III Program to the 
Cuyahoga Metropolitan Housing Authority (CMHA) retroactive to 
the inception of the program. Additionally, the Committee notes 
that HUD and the CMHA have engaged in ongoing discussions with 
regard to outstanding reimbursable of development funds for 
various properties. The Committee encourages HUD to continue 
with these discussions in order to resolve this outstanding 
issue. Finally, the Committee directs HUD to forgive any 
outstanding debt from issuance of bonds and notes, as provided 
in P.L. 99-272, that HUD still considers open for CMHA.

                               TITLE III

                          INDEPENDENT AGENCIES

                  American Battle Monuments Commission

                         Salaries and Expenses

Fiscal year 1997 recommendation.........................     $22,265,000
Fiscal year 1996 appropriation..........................      20,265,000
Fiscal year 1997 budget request.........................      20,400,000
Comparison with fiscal year 1996 appropriation..........      +2,000,000
Comparison with fiscal year 1997 budget request.........      +1,865,000

    The Commission is responsible for the administration, 
operation and maintenance of cemetery and war memorials to 
commemorate the achievements and sacrifices of the American 
Armed Forces where they have served since April 6, 1917. In 
performing these functions, the American Battle Monuments 
Commission maintains twenty-four permanent American military 
cemetery memorials and twenty-nine monuments, memorials, 
markers and offices in fifteen foreign countries, the 
Commonwealth of the Northern Mariana Islands, and the British 
dependency of Gibraltar. In addition, four memorials are 
located in the United States: the East Coast Memorial in New 
York; the West Coast Memorial, The Presidio, in San Francisco; 
the Honolulu Memorial in the National Memorial Cemetery of the 
Pacific in Honolulu, Hawaii; and the American Expeditionary 
Forces Memorial in Washington, D.C. A new memorial in 
Washington, the Korean War Veterans Memorial, was dedicated in 
July, 1996.
    The Committee recommends $22,265,000 for fiscal year 1997 
to administer, operate and maintain the Commission's monuments, 
cemeteries, and memorials throughout the world. This amount 
represents an increase of $2,000,000 above the current 
appropriation level and is for the foreign currency 
fluctuations account. The $2,000,000 for foreign currency 
fluctuations in fiscal year 1997 is necessary to avoid a 
serious degradation in the appearance of the cemeteries. These 
funds will support a staffing level of 367, a decrease of four 
below the 1996 level.

                       Department of The Treasury

              Community Development Financial Institutions

   community development financial institutions fund Program Account

Fiscal year 1997 recommendation.........................     $45,000,000
Fiscal year 1996 appropriation..........................      45,000,000
Fiscal year 1997 budget request.........................     125,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 request................     -80,000,000

    The CDFI fund provides grants, loans, and technical 
assistance to new and existing community development financial 
institutions such as community development banks, community 
development credit unions, revolving loan funds, and micro-loan 
funds. Recipients must use the funds to support mortgage, small 
business, and economic development lending in currently 
underserved, distressed neighborhoods. The CDFI fund also 
operates as an information clearinghouse for community 
development lenders.
    The Committee recommends an appropriation of $45,000,000 
for the program in fiscal year 1997. The recommendation is the 
same as provided in fiscal year 1996 and $80,000,000 below the 
fiscal year 1997 President's budget request.
    The Committee's recommended funding level includes 
$3,600,000 for Management and Administration, $14,000,000 for 
Incentives for Depository Institutions, $8,000,000 for Direct 
Loan Subsidies, and $19,400,000 for assistance to CDFI's.
    The Committee is concerned that rapid growth in this new 
program is being promoted prior to an effective management 
structure being implemented. For example, the Committee has yet 
to receive a staffing plan for the office which would explain 
how the office will be organized and what personnel resources 
will be required to carry out various functions. Until such a 
staffing plan is in place it is difficult to understand how 
lines of responsibility and authority can be effectively 
established to safeguard the taxpayers money and avoid 
embarrassing mistakes.

                   Consumer Product Safety Commission

                         salaries and expenses

Fiscal year 1997 recommendation.........................     $42,500,000
Fiscal year 1996 appropriation..........................      40,000,000
Fiscal year 1997 budget request.........................      42,500,000
Comparison with fiscal year 1996 appropriation..........      +2,500,000
Comparison with fiscal year 1997 request................               0

    The Consumer Product Safety Act established the Consumer 
Product Safety Commission, an independent Federal regulatory 
agency, to reduce unreasonable risk of injury associated with 
consumer products. Its primary responsibilities and overall 
goals are: to protect the public against unreasonable risk of 
injury associated with consumer products; to develop uniform 
safety standards for consumer products, minimizing conflicting 
State and local regulations; and to promote research into 
prevention of product-related deaths, illnesses, and injuries.
    The Committee recommends an appropriation of $42,500,000 
for fiscal year 1997, the same as the President's budget 
request and an increase of $2,500,000 to the fiscal year 1996 
level.

             Corporation for National and Community Service

       National and Community Service Programs Operating Expenses

Fiscal year 1997 recommendation.........................    $365,000,000
Fiscal year 1996 appropriation..........................     400,500,000
Fiscal year 1997 budget request.........................     543,549,000
Comparison with fiscal year 1996 appropriation..........     -35,500,000
Comparison with fiscal year 1997 budget request.........    -178,549,000

    The Corporation for National and Community Service was 
established by the National and Community Service Trust Act of 
1993 to enhance opportunities for national and community 
service and provide national service educational awards. The 
Corporation makes grants to States, institutions of higher 
education, public and private nonprofit organizations, and 
others to create service opportunities for a wide variety of 
individuals such as students, out-of-school youth, and adults 
through innovative, full-time national and community service 
programs. National service participants may receive educational 
awards which may be used for full-time or part-time higher 
education, vocational education, job training, or school-to-
work programs. Funds for the Volunteers in Service to America 
and the National Senior Service Corps are provided in the 
Labor-Health and Human Services-Education Appropriations bill.
    The Corporation was first funded in fiscal year 1994 at the 
$365,000,000 level. The fiscal year 1995 appropriation of 
$575,000,000 was reduced by a $105,000,000 rescission to 
$470,000,000. The fiscal year 1996 appropriation is 
$400,500,000. The fiscal year 1997 budget request is 
$543,549,000. The second round of participants is just now 
completing its service. The Committee believes that there is a 
need for further independent evaluations of the actual 
experiences in the AmeriCorps programs and recommends 
$365,000,000 for the Corporation for National and Community 
Service in fiscal year 1997.
    The bill continues most of the program limitations carried 
in the 1996 Act, adjusted to reflect the amount appropriated 
and current cost estimates. The bill also continues language 
prohibiting grants to Federal agencies; and, to the extent 
practicable, encourages an increase in matching funds and in-
kind contributions, expands educational awards, and reduces the 
cost per participant.
    One of the concerns with the AmeriCorps program has been 
the cost per participant. The average cost per participant from 
Corporation funds has been approximately $18,000 per year. The 
Corporation recently announced that in program year 1997-1998, 
the budgeted average cost per member in the AmeriCorps programs 
will be reduced to $17,000. In the next year, the average 
Corporation cost will be reduced to $16,000 per member, and the 
following year to $15,000. These figures include the education 
award, the Corporation's share of the living allowance and 
benefits, the grant for program support, and state commission 
and Corporation administration, training, recruitment and other 
costs directly attributable to the grants program. The 
Committee supports these cost reductions.
    The Corporation is developing a plan to expand the number 
of sponsors who receive no direct funding, but whose members 
earn education awards from the National Service Trust. This 
arrangement should enable religious organizations, higher 
education institutions, and other organizations with 
alternative funding sources to expand. The $40,000,000 
earmarked for the National Service Trust in fiscal year 1997 
includes approximately $9,500,000 for 2,000 such ``education 
award only'' grants.

                      office of inspector general

Fiscal year 1997 recommendation.........................      $2,000,000
Fiscal year 1996 appropriation..........................       2,000,000
Fiscal year 1997 budget request.........................       2,125,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........        -125,000

    The Office of Inspector General is authorized by the 
Inspector General Act of 1978, as amended. This Office provides 
an independent assessment of all Corporation operations and 
programs, including those of the Volunteers in Service to 
America and the National Senior Service Corps, through audits, 
investigations, and other proactive projects.
    The bill includes $2,000,000 for the Office of Inspector 
General in fiscal year 1997. This is the amount provided in the 
current year and $125,000 below the budget request.

                       Court of Veterans Appeals

                         salaries and expenses

Fiscal year 1997 recommendation.........................      $9,229,000
Fiscal year 1996 appropriation..........................       9,000,000
Fiscal year 1997 budget request.........................       8,795,000
Comparison with fiscal year 1996 appropriation..........        +229,000
Comparison with fiscal year 1997 budget request.........        +434,000

    The Veterans Benefits Administration Adjudication Procedure 
and Judiciary Review Act established the Court of Veterans 
Appeals. The Court reviews appeals from Department of Veterans 
Affairs claimants seeking review of a benefit denial. The Court 
has the authority to overturn findings of fact, regulations and 
interpretations of law.
    The bill includes $9,229,000 for the Court of Veterans 
Appeals in fiscal year 1997, an increase of $434,000 above the 
budget request. The recommendation includes $8,595,000 for the 
operations of the Court and $634,000 for the pro bono 
representation program. This amount will permit both activities 
to be continued at the fiscal year 1996 level. The bill also 
includes language earmarking $634,000 for the pro bono 
representation program.

                      Department of Defense--Civil

                       Cemeterial Expenses, Army

                         salaries and expenses

Fiscal year 1997 recommendation.........................     $11,600,000
Fiscal year 1996 appropriation..........................      11,946,000
Fiscal year 1997 budget request.........................      11,600,000
Comparison with fiscal year 1996 appropriation..........        -346,000
Comparison with fiscal year 1997 budget request.........               0

    The Secretary of the Army is responsible for the 
administration, operation and maintenance of Arlington National 
Cemetery and the Soldiers' and Airmen's Home National Cemetery. 
At the close of fiscal year 1995, the remains of 255,758 
persons were interred/inured in these cemeteries. Of this 
total, 223,352 persons were interred and 18,107 remains inured 
in the Columbarium in Arlington National Cemetery, and 14,299 
remains were interred in the Soldiers' and Airmen's Home 
National Cemetery. There were 3,500 interments and 1,700 
inurnments in fiscal year 1995. It is projected that there will 
be 3,500 interments and 1,800 inurnments in fiscal year 1996; 
and 3,500 interments and 1,900 inurnments in fiscal year 1997. 
In addition to its principal function as a national cemetery, 
Arlington is the site of approximately 1,900 nonfuneral 
ceremonies each year and has approximately 4,000,000 visitors 
annually.
    The Committee recommends the budget request of $11,600,000 
and 121 full-time equivalents to administer, operate, maintain 
and provide ongoing development at the Arlington National and 
Soldiers' and Airmen's Home National Cemeteries in fiscal year 
1997.

                    Environmental Protection Agency

Fiscal year 1997 recommendation.........................  $6,547,427,000
Fiscal year 1996 appropriation..........................   6,528,027,000
Fiscal year 1997 budget request.........................   7,041,917,000
Comparison with fiscal year 1996 appropriation..........     +19,400,000
Comparison with fiscal year budget request..............    -494,490,000

    The Environmental Protection Agency was created by 
Reorganization Plan No. 3 of 1970, which consolidated nine 
programs from five different agencies and departments. Major 
EPA programs include air and water quality, drinking water, 
hazardous waste, pesticides, radiation, toxic substances, 
enforcement and compliance assurance, pollution prevention, oil 
spills, Superfund and the Leaking Underground Storage Tank 
(LUST) program. In addition, EPA provides Federal assistance 
for wastewater treatment, drinking water facilities, and other 
water infrastructure projects. The agency is responsible for 
conducting research and development, establishing environmental 
standards through the use of risk assessment and cost-benefit 
analysis, monitoring pollution conditions, seeking compliance 
through a variety of means, managing audits and investigations, 
and providing technical assistance and grant support to states 
and tribes, which are delegated authority for actual program 
implementation. Finally, the Agency participates in some 
international environmental activities.
    Among the statutes for which the Environmental Protection 
Agency has sole or significant oversight responsibilities are:
    National Environmental Policy Act of 1969, as amended.
    Federal Insecticide, Fungicide, and Rodenticide Act, as 
amended.
    Toxic Substances Control Act, as amended.
    Federal Water Pollution Control Act, as amended.
    Marine Protection, Research, and Sanctuaries Act of 1972, 
as amended.
    Oil Pollution Act of 1990
    Public Health Service Act (Title XIV), as amended.
    Solid Waste Disposal Act, as amended.
    Clean Air Act, as amended.
    Comprehensive Environmental Response, Compensation, and 
Liability Act of 1980, as amended.
    Emergency Planning and Community Right-to-Know Act of 1986.
    Pollution Prevention Act of 1990.
    Resource Conservation and Recovery Act, as amended.
    For fiscal year 1997, the Committee has recommended a total 
program and support level of $6,547,427,000, an increase of 
$19,400,000 from the fiscal year 1996 level and a decrease of 
$494,490,000 from the budget request.
    Of the amounts approved in the following appropriations 
accounts, the Agency must limit transfers of funds between 
programs and activities to not more than $500,000, except as 
specifically noted, without prior approval of the Committee. No 
changes may be made to any account or program element, except 
as approved by the Committee, if it is construed to be policy 
or a change in policy. Any activity or program cited in the 
report shall be construed as the position of the Committee and 
should not be subject to reductions or reprogramming without 
prior approval of the Committee. It is the intent of the 
Committee that all carryover funds in the various 
appropriations accounts are subject to the normal reprogramming 
requirements outlined above. The Agency is expected to comply 
with all normal rules and regulations in carrying out these 
directives. Finally, the Committee wishes to continue to be 
notified regarding reorganizations of offices, programs, or 
activities prior to the planned implementation of such 
reorganizations.

                         SCIENCE AND TECHNOLOGY

Fiscal year 1997 recommendation \1\.....................    $540,000,000
Fiscal year 1996 appropriation..........................     525,000,000
Fiscal year 1997 budget request.........................     578,748,000
Comparison with fiscal year 1996 appropriation..........     +15,000,000
Comparison with fiscal year 1997 budget request.........     -38,748,000

\1\ Total does not include transfer of $35,000,000 from the Hazardous 
Substance Superfund.

    The Science and Technology account funds all extramural 
Environmental Protection Agency research (including Hazardous 
Substances Superfund research activities) carried out through 
grants, contracts, and cooperative agreements with other 
Federal agencies, states, universities, and private business, 
as well as on an in-house basis. This account also funds 
supplies and operating expenses for all Agency research. 
Research addresses a wide range of environmental and health 
concerns across all environmental media and encompasses both 
long-term basic and near-term applied research to provide the 
scientific knowledge and technologies necessary for preventing, 
regulating, and abating pollution, and to anticipate merging 
environmental issues.
    The Committee has recommended an appropriation of 
$540,000,000 for Science and Technology for fiscal year 1997, 
an increase of $15,000,000 above the fiscal year 1996 level, 
and a decrease of $38,748,000 from the 1997 budget request.
    The Committee's recommended appropriation includes the 
following increases to the budget request:
    $1,250,000 for the Mickey Leland National Urban Air Toxics 
Research Center.
    $1,500,000 for the Water Environment Research Foundation.
    $4,000,000 for the American Water Works Association 
Research Foundation.
    $700,000 to continue the study of livestock and 
agricultural pollution abatement.
    $750,000 for oil spill remediation research at the 
Louisiana Environmental Research Center at McNeese State 
University.
    $1,250,000 to continue the PM-10 clean air study in the San 
Joaquin Valley, California.
    $1,250,000 for continuation of the Resource and Agriculture 
Policy Systems program at Iowa State University.
    $1,000,000 for EPSCoR.
    $1,000,000 for the development of a study by the University 
of Redlands on salinity of the Salton Sea.
    $1,000,000 for research on the health effects of arsenic in 
drinking water, to be contracted with groups such as AWWARF so 
as to maximize the leverage of research dollars.
    Reductions from the budget request include the following:
    $27,619,000 for the Environmental Technology Initiative. 
Again this year, the Committee believes that a great many 
grants issued under this program are duplicative of work being 
done or work already completed through research grants issued 
by other Federal and State agencies or universities. Moreover, 
many of these grants, though small in dollar amount, fund 
``research'' which is suspect at best in the context of 
developing good environmental science for application in 
focusing on and resolving real environmental concerns. In the 
fiscal year 1996 Appropriations Act, $10,000,000 was provided 
to complete technology verification activities, and it was 
intended that this amount would be sufficient to close out the 
program.
    $1,000,000 from enforcement activities.
    $4,000,000 from low priority global climate and climate 
change action plan programs.
    $2,200,000 for the Environmental Monitoring and Assessment 
Program, bringing the 1997 program level to $42,897,000.
    $17,629,000 general reduction to be applied to lower 
priority activities throughout the Science and Technology 
account.
    In addition to the funds provided through appropriations 
directly to this account, the Committee has recommended that 
$35,000,000 be transferred to Science and Technology from the 
Hazardous Substance Superfund account for ongoing research 
activities consistent with the intent of the Comprehensive 
Environmental Response, Compensation, and Liability Act of 
1980, as amended.
    Within the funds provided for Science and Technology, the 
Committee urges the adoption of a $1,000,000 pilot initiative 
to transfer technology developed in federal laboratories to 
meet the environmental needs of small companies in the Great 
Lakes region. This initiative should be accomplished through a 
NASA sponsored midwest regional technology transfer center 
working in collaboration with an HBCU from the region.
    Again this year, the Committee notes that the Experimental 
Program to Stimulate Competitive Research (EPSCoR) is designed 
to improve the scientific and technological capacity of states 
with less developed research infrastructure. Developed with 
NASA and the National Science Foundation as partners, the 
Committee strongly urges EPA's continued participation in this 
program.
    The Committee again wishes to express its continued support 
for the new direction the Agency has chosen to take its 
research program. With peer reviewed, meaningful, and quality 
research, the Agency will be better prepared to scientifically 
support its rulemaking activity, which has been criticized in 
recent years as often being deficient of a sound science base. 
Moreover, this new direction will foster a better foundation 
for the development of longer-term environmentally and 
scientifically sound policies and statutes for the 
consideration of the Congress. The Committee expects the 
program offices of the Agency to make extensive use of the 
Office of Research and Development (ORD) so that its programs 
and actions on an Agency-wide basis are justified with sound 
and credible science. To this end, bill language has been 
included under Administrative Provisions which will allow the 
use of funds appropriated to any EPA account to be transferred, 
following certain guidelines, to the Science and Technology 
account for necessary research purposes. In effect, EPA's 
program offices will be able to ``buy'' science or research and 
development activities during the fiscal year which was not 
anticipated when the budget request was developed or approved 
through the legislative process. This flexibility should permit 
the Agency to help avoid delays of important ongoing 
programmatic activities which may need the assistance of ORD.
    As part of the peer review process, the Committee expects 
the ORD to continue to place more reliance on oversight and 
review of its ongoing research by the Science Advisory Board, 
as well as by outside sources such as the National Academy of 
Sciences. The Board was created to offer scientific guidance in 
the development of research and policies of the Agency, and 
better use of the Board and the Academy throughout the Agency 
would likely enhance the credibility of much of what is 
suggested by the program offices.
    In this vein, the Committee is also aware of the 
publication, ``A National R&D Strategy for Toxic Substances and 
Hazardous and Solid Waste,'' which was developed by 
representatives of the Environmental Protection Agency, Office 
of Management and Budget and Office of Science and Technology 
Policy within the Executive Office of the President, the 
National Science Foundation, the Consumer Product Safety 
Commission, the Tennessee Valley Authority and the Departments 
of Agriculture, Commerce, Defense, Energy, Health and Human 
Services, Housing and Urban Development, the Interior, Justice, 
and Transportation. This document does much to outline the 
parameters of an effective research strategy across the broad 
spectrum of interests and the Committee suggests that this type 
of long term, inclusive policy development will generally 
provide greater and less contentious results. ORD and the 
Assistant Administrator deserve a job well done for their 
efforts in this regard.
    The Committee directs ORD to maintain its on-going 
commitment to the Middle Atlantic Region in terms of funding 
and FTEs to complete the demonstration and evaluation of the 
EMAP approach in a specific geographic area.
    The Committee is aware of many concerns regarding the 
relationship of the environment to the incidence of breast 
cancer. While most of the research conducted by the EPA is 
directly related to health issues, the Committee is not aware 
of those on-going research efforts which also have a direct or 
indirect benefit in gaining more knowledge in the fight against 
such cancer. The Agency is thus asked to review this matter and 
report to the Committee on that research which does have a 
direct or an indirect association. Further, EPA is asked to 
provide an analysis of how a directed EPA breast cancer 
research program can be coordinated with other on-going 
research efforts of other governmental and non-governmental 
agencies, and whether such a program is an appropriate 
expenditure for EPA.
    Finally, the Committee last year suggested that the Agency 
actively review the possibility of utilizing DOE's National 
Laboratories for all appropriate research. These are generally 
excellent facilities with fine personnel, and could offer 
budget savings in lieu of building new or repairing current 
facilities. The Committee had asked that ORD submit a report by 
April 1, 1996 outlining the results of this review with a 
recommendation by the Agency of what, if any use of these 
National Labs is appropriate and the time-frame for any such 
proposed use. Because of the delay in passage of the 1996 
appropriation, that report could not be completed by the 
requested date. However, the Committee remains interested in 
this concept and asks that said report be provided no later 
than December 15, 1996.

                 ENVIRONMENTAL PROGRAMS AND MANAGEMENT

Fiscal year 1997 recommendation.........................  $1,703,000,000
Fiscal year 1996 appropriation..........................   1,677,300,000
Fiscal year 1997 budget request.........................   1,894,329,000
Comparison with fiscal year 1996 appropriation..........     +25,700,000
Comparison with fiscal year 1997 budget request.........    -191,329,000

    The Environmental Programs and Management account 
encompasses a broad range of abatement, prevention, and 
compliance, and personnel compensation, benefits, and travel 
expenses for all media and programs of the Agency except 
Hazardous Substance Superfund, Leaking Underground Storage Tank 
Trust Fund, Oil Spill Response, and the Office of Inspector 
General.
    Abatement, prevention, and compliance activities include 
setting environmental standards, issuing permits, monitoring 
emissions and ambient conditions and providing technical and 
legal assistance toward compliance and oversight. In most 
cases, the states are directly responsible for actual operation 
of the various environmental programs. In this regard, the 
Agency's activities include oversight and assistance in the 
facilitation of the environmental statutes.
    In addition to program costs, this account funds 
administrative costs associated with the operating programs of 
the Agency, including support for executive direction, policy 
oversight, resources management, general office and building 
services for program operations, and direct implementation of 
all Agency environmental programs--except those previously 
mentioned--for Headquarters, the ten EPA Regional offices, and 
all non-research field operations.
    For fiscal year 1997, the Committee has recommended 
$1,703,000,000 for Environmental Programs and Management, an 
increase over the 1996 level of $25,700,000, and a decrease 
from the budget request of $191,329,000. This account 
encompasses most of those activities previously conducted 
through the Abatement, Control and Compliance and Program and 
Research Operations accounts. In 1996, these accounts, except 
for certain research operations and the state categorical grant 
program, were merged in order to provide greater spending 
flexibility for the Agency. Bill language is included which 
makes this appropriation available for two fiscal years and, 
for this account only, the Agency may transfer funds of not 
more than $500,000 between programs and activities without 
prior notice to the Committee, and of not more than $1,000,000 
without prior approval of the Committee. But for this 
difference, all other reprogramming procedures as outlined 
earlier shall apply.
    The Committee's recommended appropriation includes the 
following increases to the budget request:
    $3,000,000 for environmental justice activities, including 
grants to small communities ($2,000,000) and community/
university partnership grants ($1,000,000).
    $4,500,000 for rural water technical assistance activities. 
Of the Committee's recommendation, which is an increase of 
$4,000,000 above the fiscal year 1996 level, $3,000,000 is to 
increase and expand the groundwater protection program in all 
50 states and $1,000,000 is to increase the continuing programs 
of the Small Flows Clearinghouse, the Rural Community 
Assistance Program, and the National Underground Injection 
Council.
    $3,000,000 for the Southwest Center for Environmental 
Research and Policy.
    $325,000 for the Long Island Sound Office.
    $300,000 for a study of EPA's Mobile Source Emission Factor 
Model to be conducted by the National Academy of Sciences.
    $500,000 for ongoing programs of the Canaan Valley 
Institute.
    $1,000,000 for continuing work on the water quality 
management plan for the Skaneatles, Owasco, and Otisco Lake 
watersheds.
    $300,000 for continuing work on the Cortland County, New 
York aquifer protection plan.
    $3,000,000 for the National Institute for Environmental 
Renewal for development of an integrated environmental 
monitoring and data management system to assist businesses to 
participate in voluntary compliance monitoring.
    $5,000,000 for a sludge to reactor (STORS) and nitrogen 
removal system demonstration project in the San Bernardino 
Valley Municipal Water District.
    $14,500,000 for three cost-shared environmental technology 
demonstrations, including the South Shore Tahoe Transportation 
demonstration, Lake Tahoe, Nevada and California ($2,500,000); 
Lake Hollingsworth lake dredging technology demonstration, 
Lakeland, Florida ($4,500,000); and West Palm Beach, Florida 
potable water reuse demonstration project ($7,500,000). The 
Committee is considering development of a multi-year, science-
based, peer-reviewed demonstration program which will make 
federal funds available to demonstrate environmental 
technologies which have a national application, are ready for 
commercialization, and which have been heavily cost-shared by 
private or non-federal government sponsors. The aforementioned 
projects are representative of what the Committee is 
contemplating, and it is expected that a more definitive plan 
will be in place prior to the 1998 budget hearings for the 
Agency.
    $290,000 for an analysis of the perennial yield of good 
quality groundwater in the Wadsworth Sub-basin for the town of 
Fernley, Nevada.
    $2,000,000 for continuing work on the New York and New 
Jersey Dredge Decontamination Project pursuant to section 405 
of the Water Resources Development Act of 1992.
    $1,000,000 for continuation of the Sacramento River Toxic 
Pollutant Control program, to be cost shared.
    Reductions from the budget request include the following:
    $5,000,000 for low priority international programs.
    $11,650,000 from the enforcement program, approximately a 
5% reduction from the budget request.
    $43,487,000 from the EPM portion of the Environmental 
Technology Initiative. The Committee intended that funding in 
fiscal year 1996 would complete this program.
    $16,000,000 from global climate and climate action plan 
programs, including capture of unused fiscal year 1996 
carryover funds.
    $1,500,000 from funds designated to expand the toxic 
release inventory to an unauthorized toxic use inventory.
    $1,200,000 from low priority activities within the Gulf of 
Mexico Program. The Committee's proposed reduction nevertheless 
leaves over $23,500,000 for the Gulf of Mexico Program, an 
increase of more than $2,000,000 from the 1996 level. In 
applying the proposed reduction, EPA is directed to provide the 
budget request for the program office.
    $2,000,000 from low priority indoor air programs.
    $1,000,000 from low priority programs specifically 
associated with NAFTA.
    $5,000,000 from non-specific regulatory projects as 
outlined in the budget request.
    $26,712,000 from management and support activities, 
approximating a 5% reduction from the budget request. Included 
in the total amount is $2,000,000 from the communication, 
outreach and liaison programs. Except as noted, this reduction 
should be spread proportionately throughout all programs at 
Headquarters, the Regional Offices, and in the field.
    $1,000,000 from the GLOBE program.
    $115,495,000 general reduction to be applied to lower 
priority activities throughout the account.
    As in fiscal year 1996, the Committee continues to strongly 
support the EPA Finance Centers and urges that they be fully 
funded. Similarly, the Committee supports funding for the 
Environmental Justice Advisory Council at $400,000 and 
continues to urge full support for the Agency's EarthVision 
program.
    Within available funds, the Committee strongly suggests 
that EPA provide two additional FTE's to the Office of Small 
and Disadvantaged Business and, likewise within available funds 
to Region II, fully endorses the continuation of EPA's 
helicopter survey activity along the New York-New Jersey 
coastline.
    The Committee notes that the Great Lakes program office has 
been fully funded within this account, and similarly notes its 
support for the Estuary Program, including full funding for the 
Chesapeake Bay program. Within the funds provided for the 
Estuary Program, $1,000,000 shall be made available to support 
the Federal share of the recently approved Bay-Delta Agreement 
in Northern California.
    The Committee has provided $500,000 to continue efforts to 
ensure smooth implementation of notification of lead-based 
paint hazards during real estate transactions. This program is 
a joint effort between EPA, the Departments of Health and Human 
Services and Housing and Urban Development, and the National 
Association of Realtors, and is, in the Committee's judgment, a 
prime example of how cooperative efforts can produce excellent 
results. The Committee applauds EPA, HHS, HUD and the Realtors 
for their joint efforts and expresses its support for continued 
outreach to ensure that housing consumers get good information 
about lead hazards, which can help prevent many poisonings.
    In its fiscal year 1996 Report, the Committee expressed 
concern with the process by which EPA was developing its 
proposed maximum achievable control technology (MACT) standard 
for hazardous waste combusters. On April 19, 1996, EPA proposed 
this rule. The Committee is disappointed that the proposal may 
have inappropriately set standards above the MACT floor and has 
failed to consider appropriate subcategories within the 
proposal. The Committee requests that EPA reconsider this 
proposal on a basis more consistent with past MACT precedents 
and corrected for methodological errors. The Committee further 
requests that EPA report back on its actions within 120 days of 
enactment of this Act. The Committee would also note that EPA 
has stated publicly that its use of applicable statutory 
authority must be accompanied by site-specific findings of risk 
in the administrative record supporting a permit and that any 
conditions in the permit are necessary to ensure protection of 
human health and the environment (56 Federal Register 7145). 
The Committee strongly urges the Agency to fully comply with 
its own regulations in any invocation of omnibus permitting 
authority and, in furtherance of the record in this matter, 
directs EPA to report to the Committee as to how the Agency 
intends to implement these requirements in connection with its 
Combustion Strategy.
    Given the importance of maintaining an adequate and 
wholesome food supply to ensure good public health, the 
Committee again this year expresses its support for a 
continuation of sufficient funding and full time equivalent 
personnel for the Office of Pesticide Programs.
    In the Committee's fiscal year 1996 Report as well as in 
the Conference Report accompanying H.R. 2009 and Public Law 
104-134, the Agency was asked to review its rulemaking 
activities with respect to the use of acrylamide and n-
methylolacrylamide (NMA) grouts. The Committee is disappointed 
that EPA has taken over five years to decide whether to issue a 
rule under the Toxic Substances Control Act, as amended (15 
U.S.C. 2601-2692) banning the use of these grouts. The 
Committee believes that the Agency has been provided ample time 
and opportunity to render a decision on this issue. Although 
the Committee does not believe the Agency has justified the 
need for such drastic action with regard to these chemical 
grouts, it nevertheless wishes to bring this matter to a close. 
Therefore, the Committee strongly urges the Agency to publish 
either a notice of withdrawal of the rule or a final rule no 
later than October 2, 1996.
    The Committee is aware that the EPA has proposed 
regulations that would require public water systems to monitor 
for and provide protections from pathogens, disinfectants, and 
disinfection byproducts (D/DBPs). Stage 1 of the D/DBP rule was 
intended to be promulgated concurrently with the proposed 
Enhanced Surface Water Treatment Rule (ESWTR) nine months after 
the completion of the monitoring requirements of the 
Information Collection Rule (ICR). Unfortunately, there has 
been a significant delay in the promulgation of the ICR and, 
accordingly, the Committee is concerned about the time frame 
for promulgating Stage 1 of the D/DBP rule. Because of the ICR 
delay, it appears to the Committee that there may be a lack of 
data upon which to rely in development of the ESWTR. In order 
to remedy this situation without negatively impacting the 
delicate balance between microbial and D/DBP risk, the 
Committee believes that EPA should extend the implementation 
period of Stage 1 of the D/DBP rule until after the results of 
the ICR monitoring are obtained and the ESWTR is promulgated. 
To do otherwise will very likely mean that public water systems 
will be forced to invest large sums for retrofitting to comply 
with Stage 1 of the D/DBP, only to turn around very soon 
thereafter and invest additional capital to install alternative 
treatment techniques as a result of the ICR. Rulemaking that 
results in this type of situation certainly should be avoided 
at all costs.
    Last year, the Committee and the conferees on the 1996 
appropriation bill spoke firmly in opposition to the EPA 
expanding the Toxics Release Inventory to include toxic use 
data. While the Committee questions the benefit of EPA's plan 
to expand the TRI list to additional chemicals as well as to 
additional industries--which the Committee understands has been 
challenged in court--that is not the issue in this case. Stated 
very plainly again this year, the Committee can identify no 
statutory authority for EPA to expand from toxic release 
inventory into the area of toxic use inventory. Moreover, the 
Agency has to date not been able to produce the legal citation 
which gives them such specific authority to collect this use 
data. Until such specific authorization has been provided under 
law, the Committee expects the Agency will spend no funds to 
expand the TRI to include use inventory.
    Aside from the statutory question, the Committee remains 
concerned that all of the regulations produced by EPA continue 
to add to the phenomenal expense of doing business in this 
country. In 1994, for example, EPA estimated that the paperwork 
burden of just 308 of its reporting requirements mandated by 
its regulations generated 4,530,000 reports from industry and 
state and local governments. This paperwork took 85.8 million 
hours to prepare--an increase of 15 million hours from the 
previous year--and, by EPA's own data, such reporting for the 
eight major environmental statutes alone cost an estimated $2.9 
billion.
    There is significant evidence that current reporting 
requirements are also inefficient and unnecessarily burdensome 
for businesses and governments. For example, 37 lists created 
by ten major environmental, health and safety statutes under 
EPA's jurisdiction mandate 6,986 reporting requirements on 
2,554 individual chemicals. Many of the chemicals appear 
multiple times on these lists, and some appear on as many as 21 
of the lists. With respect to the TRI mentioned above, some 
79,987 reports were generated in 1993. As EPA's plan calls for 
increasing the list of chemicals for reporting from 364 to 650, 
it is estimated that some 108,000 reports costing an additional 
$331,000,000 each year will be required. The Committee has 
difficulty understanding how this type of regulatory 
requirement generates truly meaningful benefits to our 
environment.
    Even though EPA has pledged to reduce the paperwork burden 
for industry and state and local governments, it is difficult 
to see how they can possibly meet their goals. Nevertheless, 
costs to business and government are real, and they are 
ultimately borne by our economy as a whole. The Committee 
expresses in the strongest possible terms the need for EPA to 
take all appropriate steps to greatly reduce this burden on our 
economy and requests that regular monitoring be performed so as 
to make available validated, cumulative reports on the results 
of such reduction efforts to the Committee on a quarterly 
basis.
    As was discussed during the fiscal year 1997 budget 
hearings for the Agency, the Committee is concerned with 
activities of the Agency's public affairs office which at times 
appear to be blatantly political in nature and more than 
occasionally raise the specter of illegal lobbying. While the 
Committee fully endorses the practice of providing meaningful 
information to the public, even an appearance of political 
activity on the part of the Agency has and will continue to 
lead to an atmosphere that is wholly unacceptable from the 
standpoint of working together to improve our environment. The 
press activities surrounding plans for Earth Day is a prime 
example of the kind of atmosphere that should be avoided. The 
Committee has taken a dim view of this overall situation and 
strongly urges the Agency to improve its performance in this 
regard.
    Similarly, much discussion at the aforementioned hearings 
centered on EPA's role regarding the commercial marketing of 
MMT. While opinions vary as to whether various products should 
be acceptable for commercial use, the courts have clearly 
spoken in this instance. The Committee therefore expects EPA to 
take no further action to slow the use of this product or to 
intimidate or assist in the intimidation of any users of this 
product. In addition, the Committee expects that the Agency 
will take no similar actions which will negatively impact the 
commercialization of other products.
    With regard to the Agency's convening of a federal advisory 
committee to address water pollution issues related to wet 
weather, the Committee wishes to restate the position of the 
conferees on the fiscal year 1996 legislation that EPA should 
take advantage of the many stakeholders concerned about 
stormwater ``at the table'' and use this opportunity to see if 
these participants can reach consensus on a simplified, 
environmentally protective, workable, cost effective stormwater 
program for municipalities regardless of population and all 
entities whether or not they are already covered under the 
Phase I NPDES program.
    While the use of federal advisory committees is obviously a 
useful tool for the Agency, the Committee noted during the 1997 
budget hearings that, despite the Administration's directive to 
reduce FACA expenses, very little progress had been made in 
reducing the number of FACA committees and the cost of such 
committees at EPA has actually increased dramatically over the 
past three years. Although the agency has convinced the 
Committee of the particular value of the use of these 
committees at EPA, the Committee nevertheless asks the Agency 
to continue to monitor this situation regularly and make 
reductions in committee and subcommittee numbers, costs of 
committees and subcommittees, and numbers of EPA personnel 
assigned to such FACA activities wherever and whenever 
possible.
    The Committee is aware of the progress made by the Agency 
regarding contract management improvements over the past two 
years and commends it for its efforts. As EPA itself has said, 
however, significant measures remain to be taken. The Committee 
stands ready to provide the Agency with any additional tools 
necessary to remove this weakness from the next EPA Federal 
Managers Financial Integrity Act report, due out during fiscal 
year 1997.
    In fiscal year 1996, the Committee encouraged EPA to 
consider conducting a study of the need for a national ozone 
transport zone. Because of the delay in receiving 1996 
appropriations, the review of this proposal requested by the 
Committee had not yet been completed by the Agency. The 
Committee thus reiterates its request for review of this matter 
and asks EPA to respond no later than December 1, 1996.
    The Committee has oftentimes expressed its strong support 
for the precepts of the environmental self-audit laws passed by 
some 17 states. Self-audit laws are designed to encourage 
companies to voluntarily self-evaluate their compliance with 
environmental regulations as a means of improving our nation's 
compliance with environmental laws, as a means of establishing 
cooperative relationships between regulators and the regulated 
community, and as a means of redirecting our limited 
enforcement resources to the most flagrant and serious 
problems. The greatest burden of environmental enforcement 
rests in the states, yet testimony received by the Committee 
suggests that the states may be threatened with the loss of 
delegation of this responsibility if they do not conform their 
self audit laws in ways to meet the specific approval of EPA. 
The Committee would take a very dim view of such a response on 
the part of EPA. States should be encouraged to create and 
implement new, non-adversarial and cost effective alternatives 
to the traditional ``command and control'' approach for 
environmental enforcement, such as the self-audit. The 
Committee strongly urges EPA to allow states--indeed, assist 
the states--to go forward in implementing their self-audit 
laws, giving states the opportunity to demonstrate whether 
greater flexibility and cooperation will in fact lead to 
lowering the overall cost of achieving a clean and healthy 
environment while assuring that legal action remains for those 
not willing to meet the law.
    Like every other federal agency or department, EPA has 
developed a system for providing employees awards and bonuses 
for superior performance. The Committee strongly supports the 
use of bonuses and awards by the Agency, but testimony received 
from the Agency suggests that the system in place is excessive 
and may in fact minimize the individual value of each award or 
bonus. Although there are just over 17,000 employees at EPA, 
some 21,425 awards or bonuses totaling over $15,000,000 were 
given by the Agency in 1995, including over 10,000 Sustained 
Superior Service Awards to employees, level GS-15 and below, 
who ``demonstrate high quality performance as documented by the 
employee's current performance record.'' This and other 
examples obviously raise legitimate concerns over the criteria 
utilized in determining which individuals are truly deserving 
of such awards and bonuses. The Committee directs the Agency to 
fully review this matter and either justify why the current 
system should be retained or propose a new system which 
mitigates the various concerns. A report on this matter should 
be provided no later than March 1, 1997.
    Through testimony received following the fiscal year 1997 
budget hearings, the Committee is aware of and applauds the EPA 
for its commitment to continue to foster a spirit of 
competition with respect to further controls on the use of CFCs 
within metered dose inhalers (MDIs). While phasing out CFCs is 
an important ongoing commitment, the Agency is correct to take 
a go-slow approach in this regard to make sure that users of 
MDIs are not adversely affected while the marketplace moves 
from the use of CFCs as a propellant to other, safe 
alternatives.
    In fiscal years 1994, 1995, and 1996, bill language was 
included which prohibited the Administrator from expending 
funds to sign or publish a rule concerning new drinking water 
standards for radon. This action was taken based partly on 
EPA's own admission that their research effort did not yet 
support specific rulemaking. Additionally, the costs of a 
premature rule such as this for the water community--that is, 
those people who use water in their homes or business--would 
run into the hundreds of millions of dollars. Despite these 
concerns, however, the Committee has agreed to include no 
funding limitations or administrative provisions for EPA which 
might prove to be controversial. Nevertheless, pending 
reauthorization of the Safe Drinking Water Act, the Committee 
urges the Agency not to sign or publish for promulgation a 
final rule concerning any new drinking water standard for 
randon or arsenic. The Committee further urges that, in 
litigation affecting the schedules for promulgation of drinking 
water rules, the Agency seek to ensure that promulgation of 
final rules for arsenic and radon will not be required during 
fiscal year 1997. It is not the intent of the Committee to 
discourage or prevent the Agency from carrying out research or 
other activities that may be preparatory to signing and 
publishing for promulgation final drinking water rules for 
arsenic or radon.
    Similarly, the fiscal 1995 and 1996 bills contained 
language which denied funding for the implementation and 
enforcement of an independent foreign refiner baseline rule 
proposed in 1994 by EPA. Although the Committee has likewise 
determined to not continue this language at this time, the 
Agency should not mistake this action for lack of Congressional 
intent. To the contrary, the Committee felt very strongly that 
the language in 1995 and 1996 was a sincere expression that the 
Agency's proposed rule constituted a step backward with respect 
to environmental protection. The Committee has not wavered from 
this view, and urges in the strongest possible terms that the 
Agency take no further steps to move this proposed rule 
forward.
    It has come to the Committee's attention that a renewed 
effort to achieve international harmonization of environmental 
regulations and test procedures has been initiated in a 
Transatlantic Business Dialogue process organized last year by 
European and U.S. industries with support from the United 
States and European Union governments. Further, high level 
officials of the Administration participated in an automotive 
regulatory conference in April and endorsed the need for such 
harmonization as a means to foster growth of automotive exports 
and reduce regulatory costs to industry and the consumer. As 
part of that endorsement, the Administration committed to 
developing and formally submitting a proposal by which the 
United States could become a signatory to the existing 1958 
United Nations ECE Agreement on the adoption of uniform 
standards for automobiles.
    The Committee endorses these efforts and encourages EPA to 
work with the Department of State and other appropriate 
agencies to become an official participant in the U.N. 
harmonization process. It is understood that fundamental to 
this participation is the requirement that harmonization 
efforts not lead to any degradation in environmental quality in 
the United States.
    The Committee has for some time been concerned with the 
adoption of consent agreement or decrees negotiated through the 
judiciary which have the affect of creating a mandatory duty 
where otherwise discretionary authority had existed. Such 
agreements in essence permit the courts to establish working 
and spending priorities over those proposed by the Agency or 
approved by the Congress. Moreover, because such agreements are 
oftentimes developed in the midst of ongoing litigation, they 
do not become known until just before or, more typically, after 
approval of the parties and ratification by the court. This 
circumstance only adds to the frustration of all those 
interested in the issues before the Agency and/or the court.
    Although the Committee encourages the Agency to minimize 
its involvement in such agreements, it is of course recognized 
that consent agreements sometimes constitute the best means of 
resolving litigation. So that the Committee can better 
understand the planned and ongoing activities of the Agency in 
this regard, the Agency is requested to provide brief reports 
on each consent decree which converts into a mandatory duty the 
otherwise discretionary authority of the Administrator to 
revise, amend or promulgate regulations. Such reports are 
requested prior to the beginning of negotiations, at six month 
intervals once negotiations have commenced, and upon completion 
of negotiations, and should include an outline of the reasons 
for primary issues involved with the negotiation, a list of all 
parties, the expected timetable of the negotiation, any special 
instructions of the court, any international implications of 
the negotiations, and the budget impact the negotiation may or 
will have on the Agency.
    Finally, a significant portion of the 1997 budget hearings 
were dedicated to discussion of the need for improved science 
and the use of science at EPA as well as on the new joint CSIS/
NAPA project, ``Enterprise for the Environment.'' The Committee 
wishes to express its full support for and commends the 
sponsors as well as the Agency and all other parties for their 
support and active participation for this very worthwhile 
project. The Committee looks forward with great anticipation as 
this project begins to actively pursue meaningful alternatives 
that will, with wiser use of financial resources, nevertheless 
bring us real, measurable environmental results.

                      OFFICE OF INSPECTOR GENERAL

Fiscal year 1997 recommendation \1\.....................     $28,500,000
Fiscal year 1996 appropriation..........................      28,500,000
Fiscal year 1997 budget request.........................      30,744,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........      -2,244,000

\1\ Total does not include transfer of $11,000,000 from the Hazardous 
Substance Superfund account and $577,000 from the Leaking Underground 
Storage Tank Trust Fund account.

    The Office of Inspector General (OIG) provides EPA audit 
and investigative functions to identify and recommend 
corrective actions of management, program, and administrative 
deficiencies which create conditions for existing and potential 
instances of fraud, waste, or mismanagement. The appropriation 
for the OIG is funded from three separate accounts: Office of 
Inspector General, Hazardous Substance Superfund, and the 
Leaking Underground Storage Tank trust fund.
    For fiscal year 1997, the Committee recommends a total 
appropriation of $40,077,000 for the Office of Inspector 
General, an increase of $77,000 from the 1996 level and a 
decrease of $2,667,000 from the budget request. Of the amount 
provided, $11,000,000 shall be derived by transfer from the 
Hazardous Substance Superfund account, and $577,000 by transfer 
from the Leaking Underground Storage Tank trust fund. All funds 
within this account are to be considered annual monies.

                        buildings and facilities

Fiscal year 1997 recommendation.........................    $107,220,000
Fiscal year 1996 appropriation..........................     110,000,000
Fiscal year 1997 budget request.........................     209,220,000
Comparison with fiscal year 1996 appropriation..........      -2,780,000
Comparison with fiscal year 1997 budget request.........    -102,000,000

    This activity provides for the design and construction of 
EPA-owned facilities as well as for the operations, 
maintenance, repair, extension, alteration, and improvement of 
facilities utilized by the agency. The funds are to be used to 
pay nationwide FTS charges, correct unsafe conditions, protect 
health and safety of employees and Agency visitors, and prevent 
serious deterioration of structures and equipment.
    The Committee is recommending $107,220,000 for Buildings 
and Facilities, a reduction of $2,780,000 from the fiscal year 
1996 level and $102,000,000 from the budget request. This 
recommendation provides the budget request of $25,220,000 for 
necessary maintenance and repair costs at Agency facilities as 
well as ongoing renovation costs associated with EPA's new 
headquarters.
    The remaining $82,000,000 is for construction costs 
associated with EPA's new consolidated research facility at 
Research Triangle Park, North Carolina. Coupled with 
$50,000,000 appropriated in fiscal year 1996, this 
recommendation will provide $132,000,000 of the $232,000,000 
maximum appropriation authorized for this necessary project. 
Bill language has been included which specifically authorizes 
construction of this facility as a consolidated research 
facility and in a fashion which will permit EPA to provide 
funds for construction on a multi-year basis.

                     hazardous substance superfund

                     (including transfers of funds)

Fiscal year 1997 recommendation.........................  $2,200,000,000
Fiscal year 1996 appropriation..........................   1,313,400,000
Fiscal year 1997 budget request.........................   1,394,245,000
Comparison with fiscal year 1996 appropriation..........    +886,600,000
Comparison with fiscal year 1997 budget request.........    +805,755,000

    The Hazardous Substance Superfund (Superfund) program was 
established in 1980 by the Comprehensive Environmental 
Response, Compensation, and Liability Act to clean up emergency 
hazardous materials, spills, and dangerous, uncontrolled, and/
or abandoned hazardous waste sites. The Superfund Amendments 
and Reauthorization Act (SARA) expanded the program 
substantially in 1986, authorizing approximately $8,500,000,000 
in revenues over five years. In 1990, the Omnibus Budget 
Reconciliation Act extended the program's authorization through 
1994 for $5,100,000,000 with taxing authority through calendar 
year 1995.
    The Superfund program is operated by EPA subject to annual 
appropriations from a dedicated trust fund and from general 
revenues. Enforcement activities heretofore employed were used 
to identify and induce parties responsible for hazardous waste 
problems to undertake clean-up actions and pay for EPA 
oversight of those actions. In addition, responsible parties 
have been required to cover the cost of fund-financed removal 
and remedial actions undertaken at spills and waste sites by 
Federal and state agencies. The Office of Inspector General 
also receives funding from this account.
    For fiscal year 1997, $2,200,000,000 has been recommended 
by the Committee, an increase of $886,600,000 from the fiscal 
year 1996 level, and an increase of $805,755,000 from the 
amount included in the budget request. The Committee expects 
EPA to prioritize resources to the actual cleanup of sites on 
the National Priority List and, to the greatest extent 
possible, limit resources directed to administration, 
oversight, support, studies, design, investigations, 
monitoring, assessment, and evaluation.
    Noting its support for the efforts of the authorizing 
committees of the Congress to reform and reauthorize the 
Superfund program, the Committee has provided on a contingency 
basis additional funding for the program totaling $861,000,000. 
This provision is in accordance with provisions of the budget 
resolution and, once triggered by appropriate language 
contained in a future authorization bill, will permit the total 
program to remain at a funding level consistent with the 
Resolution and comparable to that provided the past few fiscal 
years.
    The Committee's recommendation includes the following 
program level:
    $903,335,000, the budget request, for Superfund response/
cleanup actions. Included in this amount is the budget request 
of $36,754,000 for Brownfields program activities. Also 
included in this amount are funds, up to the 1996 level, for 
transfer to the Department of Justice. The Department's legal 
action associated with the Superfund program generates over 
$200,000,000 annually which is deposited in the Superfund Trust 
Fund, as well as annual cleanup responses by parties valued at 
over $500,000,000.
    $162,694,000 for enforcement activities.
    $124,874,000 for management and support, including a 
transfer of $11,000,000 to the Office of Inspector General. 
Bill language is included which provides for this transfer.
    $35,000,000 for research and development activities, to be 
transferred to Science and Technology as proposed in the budget 
request.
    $113,097,000 for interagency activities, including 
$59,000,000 for ATSDR; $48,500,000 for NIEHS--$27,000,000 for 
research activities and $21,500,000 for worker training; and 
$5,597,000 for necessary reimbursable expenses with OSHA, FEMA, 
NOAA, the Coast Guard, or with the Department of the Interior.
    Within available funds, the Agency is directed to pay the 
costs of an ATSDR health effects study, up to $3,500,000, 
associated with a contaminated waste incineration site located 
in Caldwell County, North Carolina.
    Through adoption of the full budget request, the Committee 
signals its strong support for an active and aggressive 
Superfund site response action/cleanup effort, including strong 
and bi-partisan support for an enhanced Brownfields program as 
an integral part of the overall program. The Committee commends 
EPA for actively pursuing Brownfields remediation at this 
level. Further, the Committee supports the national pilot 
worker training program which recruits and trains young persons 
who live near hazardous waste sites or in the communities at 
risk of exposure to contaminated properties for work in the 
environmental field. The Committee directs EPA to continue 
funding this effort in cooperation and collaboration with 
NIEHS. The research activities of NIEHS can compliment the 
training and operational activities of EPA in carrying out this 
program. Moreover, an expanded focus to Brownfield 
communities--identified as the growing number of contaminated 
or potentially contaminated vacant or abandoned industrial 
sites--is critical in order to actively engage and train the 
under-served populations that are the focus of this effort. 
While the number of National Priorities List sites is remaining 
fairly static, there is rapid growth of assessment, cleanup, 
and remediation activities occurring at Brownfield sites across 
the country.
    The Committee again this year directs that $4,000,000 of 
the funds provided to the ATSDR be used for minority health 
professions, and up to $3,000,000 be used for continuation of a 
health effects study on the consumption of Great Lakes fish. 
And of the funds provided for transfer from Hazardous Substance 
Superfund to Science and Technology, the Committee directs that 
the Agency adequately fund the hazardous substance research 
centers, including $2,500,000 for the Gulf Coast center. 
Finally, the Committee is aware of the circumstances 
surrounding the Pepe Field, New Jersey Superfund site and urges 
that appropriate response actions begin as soon as is 
practicable.
    In this regard, it was noted during the Committee's fiscal 
year 1997 budget hearings for the EPA that the Superfund 
program has adopted a new system for prioritizing sites for 
response/cleanup actions. The Committee strongly endorses this 
approach as a means of responding to those sites deserving of 
quicker response as well as from the standpoint of giving some 
assurance to local communities that ``their'' site will receive 
attention within a set time-frame. The Agency is to be 
commended for moving to this improved system.
    Similarly, the Committee acknowledges the Agency's efforts 
to better utilize non-time critical responses as well as 
various innovative technologies which can serve to speed the 
cleanup of Superfund sites and save financial resources while 
maintaining high, environmentally acceptable standards. The 
Committee requests that EPA provide a report on how these 
approaches will be utilized during fiscal year 1997, how they 
can be used to a greater extent in coming years, and what 
statutory impediments may need to be removed before the Agency 
can better utilize these alternatives.
    Over the last several years, much of the criticism which 
has been directed toward the Superfund program has focused on 
the costs associated with administrative expenses or 
``overhead.'' Many feel these costs have been excessive, and 
the Congress has responded in the past by imposing several 
limitations, including a statutory provision in the fiscal year 
1995 appropriation that capped administrative expenditures. 
This provision eventually had the unintended result of shutting 
down the program for four days during fiscal year 1996.
    While the EPA has taken significant steps to reduce such 
expenditures, there nevertheless are major differences of 
opinion as to what does or does not constitute proper or 
legitimate administrative costs or overhead. Although there are 
acknowledged differences between the government's Superfund 
program and programs operated by private business, there are 
also significant similarities which may assist the Committee in 
grappling with a fair and reasonable response to this question. 
The Committee is therefore requesting that the General 
Accounting Office perform a thorough analysis of the current 
Superfund accounting system from the perspective of both a for-
profit and a non-profit business, and determine on this basis 
which expenses would be considered acceptable program costs and 
which would be considered unacceptable. In reporting its 
findings, GAO should note any special circumstances relative to 
the operation of the Superfund program which might justify 
necessary differences between the current program's accounting 
practices and what might be considered standard business 
practice.
    The Committee is concerned about an imminent decision by 
the Administrator regarding the Boerke site in Oak Creek, 
Wisconsin. Since the site is adjacent to a developing 
recreational area and bordered by Lake Michigan, high levels of 
arsenic and other contaminants pose serious health and safety 
concerns. The Committee is concerned that capping the 
contaminants may be the preferred option being considered, and 
would expect the EPA to consult with the Committee regarding 
other possible options for cleanup before rendering a decision.
    Finally, the Committee is aware that currently the EPA uses 
the Army Corps of Engineers approximately 35% of the time for 
preparing and overseeing construction contracts under the 
Superfund program. The Committee urges the Agency to consider 
increasing the use of the Corps in executing the Government's 
responsibilities for conducting remedial actions under the 
Superfund program. Such action is, however, not intended to 
reduce the utilization of the private sector.

              LEAKING UNDERGROUND STORAGE TANK TRUST FUND

                     (including transfer of funds)

Fiscal year 1997 recommendation.........................     $46,500,000
Fiscal year 1996 appropriation..........................      45,827,000
Fiscal year 1997 budget request.........................      67,119,000
Comparison with fiscal year 1996 appropriation..........        +673,000
Comparison with fiscal year 1997 budget request.........     -20,619,000

    Subtitle I of the Solid Waste Disposal Act, as amended by 
the Superfund Amendments and Reauthorization Act, authorized 
the establishment of a response program for clean-up of 
releases from leaking underground storage tanks. Owners and 
operators of facilities with underground tanks must demonstrate 
financial responsibility and bear initial responsibility for 
clean-up. The Federal trust fund was funded through the now-
expired imposition of a motor fuel tax of one-tenth of a cent 
per gallon, which generated approximately $150,000,000 per 
year. Most states also have their own leaking underground 
storage tank programs, including a separate trust fund or other 
funding mechanism, in place.
    The Leaking Underground Storage Tank Trust Fund provides 
additional clean-up resources and may also be used to enforce 
necessary corrective actions and to recover costs expended from 
the Fund for clean-up activities. The underground storage tank 
response program is designed to operate primarily through 
cooperative agreements with states. However, funds are also 
used for grants to non-state entities including Indian tribes 
under Section 8001 of the Resource Conservation and Recovery 
Act. The Office of Inspector General also receives funding, by 
transfer from the trust fund, through this appropriation.
    For fiscal year 1997, the Committee has provided 
$46,500,000, an increase of $673,000 from the 1996 appropriated 
level and a decrease of $20,619,000 from the fiscal year 1997 
budget request. Bill language has been included which limits 
administrative expenses during the fiscal year to $7,000,000, 
and $577,000 has been provided from the fund, by transfer, to 
the Office of Inspector General. Bill language is included 
which provides for this transfer.
    The Committee is aware of concerns expressed by several 
states that LUST funds not be used in a disproportionate manner 
for federal projects instead of state projects as anticipated 
by the authorizing statutes. The Committee concurs in this 
position of predominate use in the states and notes that its 
recommendation will allow for approximately 85% of the total 
appropriation to be used in the states.

                     (INCLUDING TRANSFER OF FUNDS)

Fiscal year 1997 recommendation.........................     $15,000,000
Fiscal year 1996 appropriation..........................      15,000,000
Fiscal year 1997 budget request.........................      15,305,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........        -305,000

    This appropriation authorized by the Federal Water 
Pollution Control Act and amended by the Oil Pollution Act of 
1990, provides funds for preventing and responding to releases 
of oil and other petroleum products in navigable waterways. EPA 
is responsible for directing all clean-up and removal 
activities posing a threat to public health and the 
environment; conducting site inspections; providing for a means 
to achieve cleanup activities by private parties; reviewing 
containment plans at facilities; reviewing area contingency 
plans; and pursuing cost recovery of fund-financed clean-ups. 
Funds are provided through the Oil Spill Liability Trust Fund 
which is composed of fees and collections made through 
provisions of the Oil Pollution Act of 1990, the Comprehensive 
Oil Pollution Liability and Compensation Act, the Deepwater 
Port Act of 1974, the Outer Continental Shelf Lands Act 
Amendments of 1978, and the Federal Water Pollution Control 
Act. Pursuant to law, the fund is managed by the United States 
Coast Guard.
    The Committee recommends $15,000,000 for fiscal year 1997, 
the same as that provided for fiscal year 1996, and a reduction 
of $305,000 from the budget request. Bill language is included 
which limits administrative expenses to $8,000,000.

                   STATE AND TRIBAL ASSISTANCE GRANTS

Fiscal year 1997 recommendation.........................  $2,768,207,000
Fiscal year 1996 appropriation..........................   2,813,000,000
Fiscal year 1997 budget request.........................   2,852,207,000
Comparison with fiscal year 1996 appropriation..........     -44,793,000
Comparison with fiscal year 1997 budget request.........     -84,000,000

    The State and Tribal Assistance Grant account was created 
in fiscal year 1996 in an effort to consolidate programs, and 
provide grant funds for those programs, which are operated 
primarily by the states. This new structure includes the Water 
Infrastructure/SRF account, which was intended to help 
eliminate municipal discharge of untreated or inadequately 
treated pollutants and thereby maintain or help restore this 
country's water to a swimmable and/or fishable quality, and 
miscellaneous state grant programs formerly included within the 
Abatement, Control and Compliance account.
    The largest portion of the STAG account, over $1.3 billion, 
is State Revolving Funds (SRF) water infrastructure grants 
which for more than a decade have been made to municipal, 
intermunicipal, state, interstate agencies, and tribal 
governments to assist in financing the planning, design, and 
construction of wastewater facilities. This account funds state 
revolving funds for wastewater as well as various grant 
programs to improve water quality, including the non-point 
source program under Section 319 of the Federal Water Pollution 
Control Act, as amended, as well as Public Water System 
Supervision grants.
    Funds appropriated in previous years for a Safe Drinking 
Water State Revolving Fund, pending such a funds' 
authorization, have also been made through this account.
    For fiscal year 1997, the Committee recommends a total of 
$2,768,207,000, a decrease of $44,793,000 from the fiscal year 
1996 level, and $84,000,000 from the level proposed in the 
budget request.
    The Committee's recommendation includes the following 
program level:
    $1,350,000,000, the budget request, for Clean Water State 
Revolving Funds.
    $450,000,000 for Safe Drinking Water State Revolving Funds, 
subject to authorization by June 1, 1997. Bill language is 
included which transfers these funds to the Clean Water SRF if 
appropriate authorization is not provided before this date.
    $674,207,000, the budget request, for state and tribal 
program/categorical grants.
    $294,000,000 for special needs project grants, including--
          $100,000,000, the budget request, for high priority 
        U.S./Mexico border projects;
          $50,000,000, the budget request, for Texas Colonias;
          $15,000,000, the budget request, for Alaska rural and 
        Native Villages;
          $3,000,000, the budget request, for continued 
        wastewater needs in Bristol County, Mass.;
          $50,000,000 for continued wastewater needs in Boston, 
        Mass.;
          $10,000,000, the budget request, for continued 
        wastewater needs in New Orleans, La.;
          $20,000,000 for continued water development needs of 
        the Mojave Water Agency, Calif.;
          $10,000,000 for continuing development of the Des 
        Plaines River system TARP activity in Chicago, Ill.;
          $20,000,000 for continuation of the Rouge River 
        National Wet Weather Project; and
          $16,000,000 for continuing clean water improvements 
        at Onandaga Lake.
    For fiscal year 1997, the Committee expects the Agency to 
work closely with the governments or entities receiving such 
special needs grants and develop and agree upon an appropriate 
non-federal cost share for each of the projects.
    As noted above, the Committee has provided the full budget 
request for state and tribal program assistance/categorical 
grants. This recommendation includes the following programs 
with the appropriated amount for each: (1) air--state and local 
assistance, $153,190,000; (2) air--tribal assistance, 
$5,882,200; (3) air--indoor environments/radon, $8,158,000; (4) 
water--section 106 control agency resource supplemental grants, 
$80,700,000; (5) water--non-point source management grants, 
$100,000,000; (6) water--wetlands program development grants, 
$15,000,000; (7) water--water quality cooperative agreements, 
$20,000,000; (8) drinking water--public water systems 
supervision program grants, $90,000,000; (9) water--underground 
injection control program grants, $10,500,000; (10) 
pesticides--pesticides program implementation grants, 
$12,814,600; (11) toxic substances--lead state grants, 
$12,500,000; (12) hazardous waste--hazardous waste financial 
assistance grants, $98,298,200; (13) hazardous waste--
underground storage tanks state grants, $10,544,700; (14) 
multimedia--pollution prevention state grants, $5,999,500; (15) 
multimedia--pesticides enforcement grant, $16,133,600; (16) 
multimedia--toxic substances enforcement grants, $6,486,200; 
and (17) multimedia--tribal environmental general assistance 
program grants, $28,000,000. Just as was noted in the Report 
accompanying the fiscal year 1996 bill, it is the Committee's 
intention that activities previously conducted under the Clean 
Lakes program qualify for funding under the requirements of the 
section 319 non-point source pollution grants fully funded at 
$100,000,000. As was the case in fiscal year 1996, no 
reprogramming requests associated with States and Tribes 
applying for Partnership grants need to be submitted to the 
Committee for approval should such grants exceed the normal 
reprogramming limitations.
    The U.S./Mexico Foundation for Science was founded in 1992 
as a means to support joint research projects benefiting both 
nations. The Foundation has been supported by grants of both 
the United States and Mexican governments which is then 
leveraged with the use of donations from private sources. To 
date, the Foundation has focused its research on health, 
environmental and agricultural problems. The Committee believes 
that this type of cooperative effort is an important and 
effective way to enhance necessary research, and urges the 
Agency to allocate up to $1,500,000 of the Committee's 
recommended level for high priority border projects for this 
purpose.
    The Committee continues to grapple with the funding 
requirements of the SRF. First, current need for new 
infrastructure capacity exceeds the amount of funding that can 
reasonably be provided each year by the Congress. Second, as 
existing wastewater treatment infrastructure nears or reaches 
the end of useful design life, the need for additional funding 
will increase. To meet this challenge, the Committee sees no 
better alternative than to encourage the use of innovative, 
free market approaches which do not add to the financial burden 
of federal, state, or local governments.
    If given the opportunity, the private sector can provide 
the necessary capital investment for improvements, expansions, 
and upgrades which are desperately needed by many local 
governments to meet public health and environmental standards. 
However, this approach can only be encouraged by eliminating 
barriers to private ownership and long-term private operation. 
In this regard, the Committee is aware that provisions of the 
House-passed Clean Water Act reauthorization provided certain 
incentives for an enhanced role for the private sector. 
Unfortunately, it is unclear at this time whether there are 
sufficient legislative days remaining to secure passage of this 
legislation prior to adjournment of the 104th Congress.
    Therefore, if qualified and experienced private sector 
entities can finance, build, own, operate and/or maintain 
wastewater treatment facilities in an equal or more cost 
effective manner and with the same or better environmental 
results, the Committee strongly urges the Agency to do 
everything it can administratively to remove impediments to 
such public/private partnerships and encourage the state and 
local governments to look to the private sector instead of the 
Federal government as the financial source of choice.
    In the same vein, the Committee is aware that the policies, 
regulations, and enforcement practices of the Agency over the 
years with respect to water pollution control have essentially 
``locked in'' a technology of centralized sewer collection 
pipes and treatment plants at the expense of what would be 
considered more decentralized systems. While doing much to 
benefit this nation's environment, we now know that the use of 
such centralized systems are sometimes not the best solution 
from the standpoint of both pollution control and cost.
    Alternatives that are better suited for the environment and 
cost considerably less include targeted upgrades of treatment 
systems failing at individual homes; innovative, high 
performance technologies for pretreatment on lots characterized 
by shallow soils or other adverse conditions; small satellite 
treatment plants or leaching fields in high-density areas; 
detailed watershed planning to specify precise standards for 
sensitive versus non-sensitive zones; and maintenance, 
inspection, and water quality monitoring programs to detect 
failures in on-site systems.
    While movement to such decentralized alternatives will 
obviously require appropriate and adequate education and 
training of state and local officials as well as contractors, 
installers, and maintenance personnel, the Committee believes 
the first step must be concurrence by EPA that the use of 
decentralized technologies can be appropriate alternatives.
    To this end, the Committee requests that EPA review the 
entire subject area of private sector and centralized versus 
decentralized wastewater alternatives and report by January 1, 
1997 on: (1) the Agency's analysis of the benefits of these 
alternatives compared to current systems; (2) the ability of 
the Agency to implement these alternatives within the current 
statutory and regulatory structure; (3) the potential savings 
and/or costs associated with the use of these alternative 
wastewater measures; and (4) the plans of the Agency, if any, 
to implement any such alternative measures using funds 
appropriated in fiscal year 1997.
    The Committee understands there is significant interest on 
the part of nationwide rural electric cooperatives to expand 
their current role of delivering electricity to the delivery to 
rural communities of clean water and safe drinking water 
improvement technologies as well. While the Committee 
acknowledges the unique role that electric coops have played in 
electrifying the great expanses of this nation, it is uncertain 
whether expansion into this new field is an appropriate means 
of upgrading rural drinking and wastewater facilities to meet 
federal requirements. Accordingly, the Committee requests that 
the Agency fully review this matter and report on its findings 
prior to the Committee's fiscal year 1998 budget hearings for 
EPA.
    Finally, the Committee is aware of and sympathetic to the 
critical infrastructure needs of the Village of Angel Fire, New 
Mexico, which is managing a deteriorating and overloaded water 
and wastewater system. However, funding for infrastructure 
upgrades to this system has been deferred this year without 
prejudice by the Committee due to severe budgetary constraints. 
The Committee encourages EPA to work with the Village of Angel 
Fire to solve this community's infrastructure deficiencies and 
prevent potential environmental hazards.

                          WORKING CAPITAL FUND

    Bill language has been included at the request of the 
Agency to create a Working Capital Fund. Because of the 
inappropriate use of such Funds in past years by many federal 
departments and agencies, the Committee has heretofore been 
reluctant to permit the creation of such a Fund at the 
Environmental Protection Agency. However, the Committee has 
been assured that processes for monitoring and controlling the 
flow of funds have been vastly improved and that the use of 
such a Fund can generate significant savings. The Committee has 
thus agreed to create a Working Capital Fund for fiscal year 
1997, and requests that the Agency provide a report on a 
quarterly basis outlining the use and disposition of the Fund.

                        ADMINISTRATIVE PROVISION

    Bill language has been included under section 301 which 
permits the transfer of funds appropriated to any EPA account 
to the Science and Technology account for necessary research 
purposes. This provision will in effect allow any office funded 
under any account at EPA to ``buy'' science or research and 
development during the fiscal year on an as-needed basis from 
the Office of Research and Development. Currently, transfers 
from one account to another are not permitted unless otherwise 
provided for with specific statutory language. While this is a 
useful tool in maintaining necessary controls over the 
expenditures of funds, it also serves to prohibit the 
expenditure of funds when such expenditure was not anticipated 
either in creation of the budget request or through the 
legislative process. This provision is intended to provide the 
flexibility the Agency may need when a particular program must 
have the unanticipated but necessary assistance of ORD on a 
timely basis.
    In the use of this provision, the Committee expects to be 
notified and will respond in the same manner and to the same 
extent as under the established reprogramming guidelines.

                   Executive Office of the President

                OFFICE OF SCIENCE AND TECHNOLOGY POLICY

Fiscal year 1997 recommendation.........................      $4,932,000
Fiscal year 1996 appropriation..........................       4,981,000
Fiscal year 1997 budget request.........................       4,932,000
Comparison with fiscal year 1996 appropriation..........         -49,000
Comparison with fiscal year 1997 request................               0

    The Office of Science and Technology Policy (OSTP) was 
created by the National Science and Technology Policy, 
Organization, and Priorities Act of 1976. OSTP advises the 
President and other agencies within the Executive Office on 
science and technology policies and coordinates research and 
development programs for the Federal Government.
    The Committee recommends an appropriation of $4,932,000 for 
fiscal year 1997, a reduction of $49,000 from the fiscal year 
1996 enacted level and the same amount as the President's 
budget request.
    The Committee also recommends a modification to the Bill 
language for this account as it relates to the reimbursement of 
expenses for detailees. The current Bill language requires at 
least 50% reimbursement for detailees from other agencies of 
the government who are assigned to the Office, regardless of 
the duration of the detail. The modification will eliminate 
this requirement and enable the Office to more easily tap into 
experts throughout the government for short-term projects by 
decreasing the administrative workload associated with short-
term detailees.

  council on environmental quality and office of environmental quality

Fiscal year 1997 recommendation.........................      $2,250,000
Fiscal year 1996 appropriation..........................       2,150,000
Fiscal year 1997 budget request.........................       2,436,000
Comparison with fiscal year 1996 appropriation..........        +100,000
Comparison with fiscal year 1997 budget request.........        -186,000

    The Council on Environmental Quality (CEQ) was established 
by Congress under the National Environmental Policy Act of 1969 
(NEPA). The Office of Environmental Quality (OEQ), which 
provides professional and administrative staff for the Council, 
was established in the Environmental Quality Improvement Act of 
1970. The Council on Environmental Policy has statutory 
responsibility under NEPA for environmental oversight of all 
Federal agencies and is to lead interagency decision-making of 
all environmental matters.
    For fiscal year 1997, the Committee has recommended 
$2,250,000 for the CEQ and OEQ, an increase of $100,000 from 
the fiscal year 1996 level and a decrease of $186,000 from the 
budget request. The increase provided by the Committee is 
intended to first be used for the purchase of new word 
processing, computing, and other necessary equipment as 
outlined in the budget request.
    Just as was stated last year, the Committee remains 
concerned that greater oversight, coordination, and consistency 
of environmental policy and actions of the many federal 
departments and agencies is necessary. Far too often, 
environmental policy as articulated by the White House bears no 
relationship to the actual implementation of that policy. At 
other times, agency or departmental personnel are assigned a 
decision-making role by the White House and then are told 
abruptly that they can make no decisions. Both situations 
create a working atmosphere of great mistrust and make a 
mockery of any stated desire to ``work closely with the 
Congress.'' The Committee hopes the CEQ will be an advocate for 
better oversight, better coordination, better consistency and 
better relationships.
    In addition, the Committee remains concerned with the 
apparent disregard of the clear statutory reading of Section 
202 of NEPA, which states in part, ``The Council shall be 
composed of three members who shall be appointed by the 
President to serve at his pleasure, by and with the consent of 
the Senate.'' While the Committee does not necessarily advocate 
that there be three members, it nevertheless notes again this 
year that there has been no effort to either adhere to the 
statute or request that the statute be amended to require just 
one Council member. The Committee is saddened that the 
Executive has once again chosen to ignore the law and would 
hope that this situation is remedied prior to next year's 
budget submission.

                  Federal Emergency Management Agency

Fiscal year 1997 recommendation.........................    $791,316,000
Fiscal year 1996 appropriation..........................     678,610,000
Fiscal year 1997 budget request.........................     780,049,000
Comparison with fiscal year 1996 appropriation..........    +112,706,000
Comparison with fiscal year 1997 budget request.........     +11,267,000

    The Federal Emergency Management Agency (FEMA) was created 
by reorganization plan number 3 of 1978. The Agency carries out 
a wide range of program responsibilities for emergency planning 
and preparedness, disaster response and recovery, and hazard 
mitigation under the following authorities:
    Under the Defense Production Act of 1950, as amended, 
responsibility for maintaining the nation's emergency training 
and exercises, and preparedness, response and recovery, and 
information technology services.
    Under the Earthquake Hazards Reduction Act of 1977, as 
amended, programs designed to identify and reduce earthquake 
vulnerability and consequences.
    Under Executive Order 12148, responsibility for oversight 
of the national dam safety program.
    Under the Atomic Energy Act of 1954, as amended, and in 
accordance with provisions set forth in the 1980 Act making 
appropriations for the Nuclear Regulatory Commission and other 
statutes, Executive Order 12657, and by Presidential Directive, 
responsibility for offsite emergency preparedness for fixed 
nuclear facilities.
    Under the National Security Act of 1947, as amended, 
programs to provide for continuity of government as well as 
emergency resources assessment, management, and recovery.
    Under the Federal Fire Prevention and Control Act of 1974, 
as amended, programs to reduce national fire loss, including 
training and prevention.
    Under the National Flood Insurance Act of 1968, as amended, 
and the Flood Disaster Protection Act of 1973, administration 
of a national program to provide flood insurance and to 
encourage better flood plain management.
    Under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, as amended, programs to provide assistance to 
individuals and State and local governments in Presidentially-
declared major disaster or emergency areas.
    Under the Inspector General Act of 1978, as amended, 
agency-wide audit and investigative functions to identify and 
correct management and deficiencies which create conditions for 
existing or potential instances of fraud, waste, and 
mismanagement.
    Under the Agency Chief Financial Officers Act of 1990, 
systems of accounting, financial management, and internal 
controls to assure the issuance of reliable financial 
information and to deter fraud, waste, and abuse of government 
resources.
    Under the Comprehensive Environmental Response, 
Compensation, and Liability Act, as amended, and Executive 
Order 12580, responsibility for specific emergency response 
activities.
    Under the Hazardous Materials Transportation Act, as 
amended, programs designed to provide training to prepare for 
and respond to hazardous materials incidents.
    Under Title III of the Stewart B. McKinney Homeless 
Assistance Act of 1987, as amended, a program to provide food 
and shelter to the homeless through a National Board chaired by 
FEMA and composed of representatives of various charities.
    Under Executive Orders 12472, 12656, 12699 and 
Reorganization Plan No. 3 of 1978, miscellaneous responsibility 
for response and recovery, preparedness, training and 
exercises, information technology services, executive 
direction, operations support, and mitigation.
    For fiscal year 1997, the Committee recommends 
$791,316,000, which represents an increase of $112,706,000 from 
the fiscal year 1996 appropriation and $11,267,000 from the 
1997 budget request.
    Of the amounts approved in the following appropriations 
accounts, the Agency must limit transfers of funds between 
programs and activities to not more than $500,000 without prior 
approval of the Committee. Further, no changes may be made to 
any account or program element if it is construed to be a 
change in policy. Any program or activity mentioned in this 
report shall be construed as the position of the Committee and 
should not be subject to any reductions or reprogrammings 
without prior approval of the Committee. Finally, the Committee 
expects that the Agency will fully consult with the Committee 
prior to the implementation of any reorganization, moving of 
regional office locations, and adoption of any new programs or 
activities.

                            DISASTER RELIEF

Fiscal year 1997 recommendation.........................  $1,320,000,000
Fiscal year 1996 appropriation..........................     222,000,000
Fiscal year 1997 budget request.........................     320,000,000
Comparison with fiscal year 1996 appropriation..........  +1,098,000,000
Comparison with fiscal year 1997 budget request.........  +1,000,000,000

    The Federal Emergency Management Agency has responsibility 
for administering disaster assistance programs and coordinating 
the Federal response in Presidentially declared disasters. 
Major activities under the disaster assistance program are 
human services which provides aid to families and individuals; 
infrastructure which supports the efforts of State and local 
governments to take emergency protective measures, clear debris 
and repair infrastructure damage; hazard mitigation which 
sponsors projects to diminish effects of future disasters; and 
disaster management, such as disaster field office staff and 
automated data processing support.
    For fiscal year 1997, the Committee has provided 
$1,320,000,000 for disaster relief, an increase of 
$1,098,000,000 above the fiscal year 1996 level and an increase 
of $1,000,000,000 above the budget request.
    Because of the large number and severity of natural 
disasters which have occurred over the past decade, the 
Congress has responded regularly by appropriating relatively 
large supplemental requests for disaster relief. The nature of 
much of the destruction that occurs in a disaster event 
necessarily requires considerable time between the approval of 
such supplementals and the actual expenditure of funds needed 
to replace or repair facilities in a manner consistent with 
law. Nevertheless, the Committee remains concerned with both 
the time involved in resolving outstanding mitigation 
requirements as well as the amounts of unobligated disaster 
relief funds carried forward from one fiscal year to the next. 
During fiscal year 1997, the Agency is directed to provide by 
the last day of each month a report to the Committee which 
updates the disposition of all ongoing mitigation activities, 
the amounts necessary to carry-out such mitigation, and the 
remaining unobligated balance of disaster relief funds.
    In addition to the annual appropriation of $320,000,000 as 
requested in the budget submission, the Committee has restored 
the $1,000,000,000 of necessary disaster relief funds rescinded 
in fiscal year 1996. Just as was requested in the budget 
submission for the $320,000,000 annual appropriation, these 
additional funds will also not become available for obligation 
until September 30, 1997.

            DISASTER ASSISTANCE DIRECT LOAN PROGRAM ACCOUNT

                            state share loan

Fiscal year 1997 recommendation.........................      $1,385,000
Fiscal year 1996 appropriation..........................       2,155,000
Fiscal year 1997 budget request.........................       1,385,000
Comparison with fiscal year 1996 appropriation..........        -770,000
Comparison with fiscal year 1997 budget request.........               0


------------------------------------------------------------------------
                                      Limitation on      Administrative 
                                       direct loans         expenses    
------------------------------------------------------------------------
Fiscal year 1997 recommendation...      ($25,000,000)           $548,000
Fiscal year 1996 appropriation....       (25,000,000)             95,000
Fiscal year 1997 budget request...       (25,000,000)            548,000
Comparison with fiscal year 1996                                        
 appropriation....................                (0)           +453,000
Comparison with fiscal year 1997                                        
 request..........................                (0)                (0)
------------------------------------------------------------------------

    Beginning in 1992, loans made to States under the cost 
sharing provisions of the Robert T. Stafford Disaster Relief 
and Emergency Assistance Act were funded in accordance with the 
Federal Credit Reform Act of 1990. The Disaster Assistance 
Direct Loan Program Account, which was established as a result 
of the Federal Credit Reform Act, records the subsidy costs 
associated with the direct loans obligated beginning in 1992 to 
the present, as well as administrative expenses of this 
program.
    For fiscal year 1997, the Committee has provided $1,385,000 
for the cost of State Share Loans, the same as the President's 
request and a decrease of $770,000 from the fiscal year 1996 
level. In addition, the Committee has provided $25,000,000 for 
the limitation on direct loans pursuant to Section 319 of the 
Stafford Act, as well $548,000 for administrative expenses of 
the program.

                         SALARIES AND EXPENSES

Fiscal year 1997 recommendation.........................    $168,000,000
Fiscal year 1996 appropriation..........................     168,900,000
Fiscal year 1997 budget request.........................     166,733,000
Comparison with fiscal year 1996 appropriation..........        -900,000
Comparison with fiscal year 1997 budget request.........      +1,267,000

    This activity encompasses the salaries and expenses 
required to provided executive direction and administrative 
staff support for all agency programs in both the headquarters 
and field offices. The account funds both program support and 
executive direction activities.
    The bill includes $168,000,000 for salaries and expenses, a 
decrease of $900,000 from the fiscal year 1996 level and an 
increase of $1,267,000 from the budget request.

                      office of inspector general

Fiscal year 1997 recommendation.........................      $4,533,000
Fiscal year 1996 appropriation..........................       4,673,000
Fiscal year 1997 budget request.........................       4,533,000
Comparison with fiscal year 1996 appropriation..........        -140,000
Comparison with fiscal year 1997 budget request.........               0

    The Office of Inspector General (OIG) was established 
administratively within FEMA at the time of the Agency's 
creation in 1979. Through a program of audits, investigations 
and inspections, the OIG seeks to prevent and detect fraud and 
abuse and promote economy, efficiency and effectiveness in the 
Agency's programs and operations. Although not originally 
established by law, FEMA's OIG was formed and designed to 
operate in accordance with the intent and purpose of the 
Inspector General Act of 1978. The Inspector General Act 
Amendments of 1988 created a statutory Inspector General within 
FEMA.
    For fiscal year 1996, the Committee has recommended 
$4,533,000 for the Office of Inspector General, a decrease of 
$140,000 below the fiscal year 1996 appropriation and the same 
as the 1997 budget request.

              EMERGENCY MANAGEMENT PLANNING AND ASSISTANCE

Fiscal year 1997 recommendation.........................    $209,101,000
Fiscal year 1996 appropriation..........................     203,044,000
Fiscal year 1997 budget request.........................     199,101,000
Comparison with fiscal year 1996 appropriation..........      +6,057,000
Comparison with fiscal year 1997 budget request.........     +10,000,000

    This appropriation provides program resources for the 
majority of FEMA's ``core'' activities, including, response and 
recovery; preparedness, training and exercises; mitigation 
programs, fire prevention and training; information technology 
services; operations support; and executive direction. Costs 
for the floodplain management component are borne by 
policyholders and reimbursed from the National Flood Insurance 
Fund.
    A fiscal year appropriation of $209,101,000 has been 
recommended, an increase of $6,057,000 over the 1996 level and 
$10,000,000 over the fiscal year 1997 budget request. From 
within this appropriated level, $500,000 is for a comprehensive 
analysis and plan of all evacuation alternatives for the New 
Orleans metropolitan area, and $500,000 is for the start-up 
costs associated with the development of at least one 
additional Urban Search and Rescue team. While the Committee 
suggests that FEMA strongly consider placing such a team within 
the State of Texas, the Committee also expects that placement 
of such an additional team at any location be completed only 
after full competition, if appropriate and necessary, and after 
consideration of all qualifications of the proposed new team or 
teams, including, but not limited to, the willingness to cost-
share establishment of the team and the willingness and ability 
to provide continued maintenance of the team.
    Finally, an additional $5,000,000 above the budget request 
is provided for FEMA to begin replacement and upgrade of 
equipment and vehicles used during emergency response actions, 
particularly the Mobile Emergency Response Support (MERS) and 
Mobile Air Transportable Telecommunications Support (MATTS) 
equipment. While FEMA has done an exemplary job maintaining and 
upgrading this equipment when possible, the Committee also 
realizes it is very heavily used in the most extreme of 
circumstances, and is oftentimes quickly outmoded due to the 
advance of technology.
    In the replacement of necessary equipment and vehicles, the 
Committee urges FEMA to consider the need for placement of 
vehicles in additional strategic locations as well as the 
purchase of equipment such as the MIDAS system which offer 
additional emergency response alternatives which may be 
appropriate for many regions of the nation. The Committee 
requests that FEMA provide regular reports outlining the use of 
these additional funds during fiscal year 1997.
    The Committee notes that the budget request for the 
Emergency Management Planning and Assistance account has been 
fully funded. This activity encompasses all of the mitigation, 
technology and training programs operated under FEMA's 
jurisdiction, including the Fire Prevention and Training 
programs--such as the National Fire Academy--which received the 
full budget request of $27,558,000.
    With regard to the fire training programs, the Committee is 
aware of concerns that, even though there are several state-run 
programs, there currently is no national training program for 
chief officers. The Committee thus directs FEMA to conduct a 
study to determine whether a training program for chief 
officers--making sure they are fully prepared before being 
thrust into major decision-making roles--would be an 
appropriate means of raising the standards of effectiveness for 
fire departments. Such study should include an analysis of 
whether effective training of this nature is being conducted on 
the state or local level and whether or not this training can 
or should be adopted for national level training. The Agency is 
directed to submit this study to the Committee no later than 
January 31, 1997.
    During and prior to fiscal year 1996, certain planning 
positions in state emergency management agencies had been 
funded with a 100% federal share. In the Statement of Managers 
accompanying the 1996 legislation, however, the conferees 
directed FEMA to begin notifying states, if necessary, that 
this share would be reduced to no more than 50%. The Committee 
stands by this agreement of the 1996 Conference, and reiterates 
its commitment to a 50-50 federal/state cost share for these 
positions.
    The Committee shares the views expressed in testimony by 
FEMA's Director that pre-disaster mitigation is perhaps the 
most effective method of reducing disaster damages, saving 
disaster relief expenditures and, most important, preventing 
loss of life. To this end, the Committee urges FEMA's 
development of a program that would put into place a national 
pre-disaster mitigation plan. The initial phase of this project 
should outline for the Committee the extent of need for such a 
plan, the scope of work and time necessary to implement the 
plan, and the approximate costs associated with implementation 
of such a plan.
    As part of the development of such a pre-disaster 
mitigation plan, the Committee strongly encourages the Agency 
to work closely with the International Multi-Hazard Mitigation 
Partnership, which is made up of industries, insurers, building 
code officials, government agencies, engineers, and 
researchers. One of the primary missions of this partnership is 
the full-scale testing of various structures under conditions 
representative of disaster circumstances. Such testing is a 
necessary component of an effective pre-disaster mitigation 
program, but is unfortunately something that is not now widely 
done. The Committee will look favorably on the Agency's use of 
available funds to develop this important relationship during 
fiscal year 1997.
    The Committee notes that the mission of FEMA's Mt. Weather 
Emergency Assistance Center has expanded over the years to 
provide a broad range of training and conferences to address 
the spectrum of hazards emergency management. The number of 
participants in programs conducted at Mt. Weather has increased 
almost threefold since 1993 to the point that there is now 
insufficient available capacity to conduct all necessary 
activities as well as meet requests for additional programs. 
The Committee therefore directs the Agency to review this 
situation and develop suitable plans for the expansion of 
existing buildings in a manner which is consistent with the 
continuing and planned mission of the Center.
    Finally, the Committee is aware of work performed for the 
Department of Defense by the Institute for Simulation and 
Training (IST) in Orlando, Florida. Using computer simulation 
technology, IST may offer a useful training tool available to 
FEMA as well. The Committee urges FEMA to look closely at IST 
and determine whether their training systems can enhance those 
activities currently offered through FEMA's preparedness, 
mitigation, and training programs.

                   emergency food and shelter program

Fiscal year 1997 recommendation.........................    $100,000,000
Fiscal year 1996 appropriation..........................     100,000,000
Fiscal year 1997 budget request.........................     100,000,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........               0

    The Emergency Food and Shelter Program within the Federal 
Emergency Management Agency originated in the 1983 Emergency 
Jobs legislation. Minor modifications were incorporated in the 
Stewart B. McKinney Homeless Assistance Act. The program is 
designed to help address the problems of the hungry and 
homeless. Appropriated funds are awarded to a National Board to 
carry out programs for sheltering and feeding the needy. This 
program is nationwide in scope and provides such assistance 
through local private voluntary organizations and units of 
government selected by local boards in areas designated by the 
National Board as being in highest need.
    The Committee has recommended $100,000,000 for the 
Emergency Food and Shelter Program, the same as the budget 
request and the fiscal year 1996 funding level. The Committee 
continues to believe this is a well run and very worthwhile 
program and acknowledges and appreciates the support and 
commitment to the program by many religious and charity 
organizations.
    Once again this year, bill language is included which 
limits administrative costs to 3.5% for fiscal year 1997.

                     national flood insurance fund

                          (transfers of funds)

    The Flood Disaster Protection Act of 1973 requires the 
purchase of insurance in communities where it is available as a 
condition for receiving various forms of Federal financial 
assistance for acquisition and construction of buildings or 
projects within special flood hazard areas identified by the 
Federal Emergency Management Agency. All existing buildings and 
their contents in communities where flood insurance is 
available, through either the emergency or regular program, are 
eligible for a first layer of coverage of subsidized premium 
rates.
    Full risk actuarial rates are charged for new construction 
or substantial improvements commenced in identified special 
flood hazard areas after December 31, 1974, or after the 
effective date of the flood insurance rate map issued to the 
community, whichever is later. For communities in the regular 
program, a second layer of flood insurance coverage is 
available at actuarial rates on all properties, and actuarial 
rates for both layers apply to all new construction or 
substantial improvements located in special flood hazard areas. 
The program operations are financed with premium income 
augmented by Treasury borrowings.
    The Committee has included bill language proposed in the 
budget request for salaries and expenses to administer the 
fund, not to exceed $20,981,000, and for mitigation activities, 
not to exceed $78,464,000, including a limitation of 
$35,000,000 for the repayment of interest as required under 
Section 1366 of the National Flood Insurance Act of 1968, as 
amended. Bill language has also been included which prohibits 
the charging of flood insurance rates beyond the level 
established for such rates as of June 1, 1996.

                        administrative provision

    The Committee has once again this year included bill 
language proposed in the budget request which provides for the 
assessment and collection of fees in an amount that 
approximates the amount anticipated by the Federal Emergency 
Management Agency to be obligated for its radiological 
emergency program during the fiscal year. This amount is 
estimated to be $12,251,000 in fiscal year 1997.
    In addition, the Committee has included bill language which 
permits the creation of a Working Capital Fund at FEMA. 
Although the Committee remains concerned with multiple problems 
surrounding the use of such Funds by other federal agencies and 
departments, it nevertheless has determined at this time to 
permit FEMA to move forward with the use of their Fund. FEMA is 
expected, however, to report quarterly to the Committee 
regarding the use and disposition of the Fund.

                    General Services Administration

                      consumer information center

Fiscal year 1997 recommendation.........................      $2,260,000
Fiscal year 1996 appropriation..........................       2,061,000
Fiscal year 1997 budget request.........................       2,060,000
Comparison with fiscal year 1996 appropriation..........        +199,000
Comparison with fiscal year 1997 request................        +200,000

    The Consumer Information Center (CIC) helps Federal 
departments and agencies promote and distribute consumer 
information and promotes public awareness of existing 
government publications through dissemination of a consumer 
information catalog and other media programs.
    The Consumer Information Center Fund, a revolving fund 
established by Public Law 98-63, provides for the efficient 
operation of the Consumer Information Center. The revolving 
fund finances CIC activities through annual appropriations, 
reimbursement from agencies for distribution costs, fees 
collected from the public, and incidental income.
    The Committee recommends an appropriation of $2,260,000 for 
fiscal year 1997. This is an increase of $199,000 from the 
fiscal year 1996 level and an increase of $200,000 to the 
fiscal year 1997 President's budget request. The bill also 
includes a limitation of $7,500,000 on the availability of the 
revolving fund. Any revenues accruing to this fund during 
fiscal year 1997 in excess of this amount shall remain in the 
fund and are not available for expenditure except as authorized 
in appropriations Acts.
    In addition, the Committee has included language limiting 
administrative expenses to $2,602,000, which is the same as the 
fiscal year 1996 level and the fiscal year 1997 budget request.
    The Committee notes that it has transferred to the Consumer 
Information Center certain functions currently performed by the 
Office of Consumer Affairs, which is to be terminated. These 
functions include production of the Consumer Resource Handbook 
and organizing the Consumer Resource Exposition. The Committee 
recommendation includes funding to perform these functions and 
inclusion of a provision in the Bill which will allow the CIC 
to solicit, accept, and deposit gifts to defray the costs of 
printing, publishing, and distributing consumer information. 
This provision was previously included as part of the Bill 
language for the Office of Consumer Affairs.

                Department of Health and Human Services

                       OFFICE OF CONSUMER AFFAIRS

Fiscal year 1997 recommendation.........................               0
Fiscal year 1996 appropriation..........................      $1,800,000
Fiscal year 1997 budget request.........................       1,811,000
Comparison with fiscal year 1996 appropriation..........      -1,800,000
Comparison with fiscal year 1997 request................      -1,811,000

    The Office of Consumer Affairs (OCA) strives to assure that 
consumer viewpoints are represented within the Federal 
government and seeks to inform and educate individual citizens 
to deal more effectively in the marketplace.
    The Committee recommends no funding for this activity for 
fiscal year 1997. The Committee has included language in the 
Bill allowing for the orderly closure of the Office and 
transfer of some of its functions to the Consumer Information 
Center.
    During hearings on the fiscal year 1997 appropriations 
request the Committee had questions for the Office of Consumer 
Affairs regarding the distribution of the Consumer Resources 
Handbook which in the past had been distributed by the Consumer 
Information Center (CIC). In response to the question of why 
the CIC was used only on a limited basis in the past year, OCA 
responded that by distributing the handbook from their offices 
they could save a significant amount of money.
    OCA cited a cost of $1.54 for distribution through the CIC, 
in fact the CIC billed the OCA a unit cost of $.48 in 1995. In 
addition, a copy of the handbook ordered via OCA's Helpline was 
mailed out of the OCA offices at a cost of $3.00 in postage. 
This is not a savings even from the erroneous cost benchmark of 
$1.54 per copy. It appears that this was a very expensive and 
misguided management mistake that cost the Office money and put 
service to the consumers on the back burner. The Committee can 
only speculate as to the real reason for reducing the 
participation of the CIC in the distribution of the Consumer 
Resources Handbook, obviously saving money was not the reason. 
The Committee expects that with transfer of this function to 
the Consumer Information Center the needs of the consumers will 
again be at the forefront of management decisions and other 
factors will not interfere.

             National Aeronautics and Space Administration

Fiscal year 1997 recommendation......................... $13,604,200,000
Fiscal year 1996 appropriation..........................  13,903,700,000
Fiscal year 1997 budget request.......................\1\ 14,704,200,000
Comparison with fiscal year 1996 appropriation..........    -299,500,000
Comparison with fiscal year 1997 request................  -1,100,000,000

\1\ Includes $900,000,000 in budget authority requested in government-
wide general provision sec. 621, Department of Treasury.

    The National Aeronautics and Space Administration was 
created by the National Space Act of 1958. NASA conducts space 
and aeronautics research, development, and flight activity that 
is designed to ensure and maintain U.S. preeminence in space 
and aeronautical endeavors.
    The Committee has recommended a total program level of 
$13,604,200,000 in fiscal year 1997, which is a $1,100,000,000 
below the budget request and $299,500,000 below the fiscal year 
1996 enacted appropriation.

            NASA COOPERATION WITH OTHER GOVERNMENT AGENCIES

    The Committee urges NASA to continue cooperative programs 
with other government agencies which can result in budget 
savings and elimination of duplicative programs. Specifically, 
as NASA and the Department of Defense face reductions in 
personnel and budgets, programs which allow NASA and DOD to 
further increase their coordination within specific technology 
areas such as aeronautics technology programs will be supported 
by the Committee.

                          property disposition

    The Committee recognizes the successful working 
relationship between the City of Downey, California and NASA to 
arrange for the disposition of the excess property in Downey 
once necessary environmental studies are completed, and 
anticipates hearing from NASA at that time.

                           HUMAN SPACE FLIGHT

Fiscal year 1997 recommendation.........................  $5,362,900,000
Fiscal year 1996 appropriation..........................   5,456,600,000
Fiscal year 1997 budget request.........................   5,362,900,000
Comparison with fiscal year 1996 appropriation..........     -93,700,000
Comparison with fiscal year 1997 request................               0

    This appropriation provides for human space flight 
activities, including development of the space station, and 
operation of the space shuttle. This account also includes 
support of planned cooperative activities with Russia, upgrades 
to the performance and safety of the space shuttle, and 
required construction projects in direct support of the space 
station and space shuttle programs.
    The Committee recommends a total of $5,362,900,000 for the 
human space flight account. The recommendation is the same as 
the budget request and $93,700,000 below the fiscal year 1996 
enacted appropriation.

                PROCUREMENT OF COMMERCIAL SPACE SERVICES

    The Committee commends NASA's use of commercial space 
services in supporting human space flight missions under firm, 
fixed price contracts. However, the Committee notes that 
negotiating firm, fixed price contracts on the contractor cost 
basis defeats the incentive for innovation and profit 
fundamental to commercial ventures being promoted by NASA. 
Accordingly, the Committee urges NASA to develop and utilize 
alternate methods for determining the appropriate value and 
price of commercial services offered under firm, fixed price 
contracts.

            CENTERS FOR THE COMMERCIAL DEVELOPMENT OF SPACE

    The Committee recognizes the positive contributions of 
Centers for the Commercial Development of Space including the 
Center for Space Power, the University of Alabama in 
Huntsville, the University of Alabama in Birmingham, and Auburn 
University and NASA is urged to continue to support this 
activity.
    The Committee continues to support adequate funding for the 
Space Vacuum Epitaxy Center at the same level as the previous 
fiscal year to fully accomplish its objectives for the Wake 
Shield Facility.

                        SPACE SHUTTLE CONTRACTS

    Consistent with its direction last year, the Committee 
welcomes NASA's initiative to transition operation of the Space 
Shuttle system to the private sector joint venture of United 
Space Alliance (USA). The Committee believes that this 
transition can be accomplished while achieving the twin 
objectives of reduced program costs and continued safety of 
flight. The Committee views favorably recent novation of 
existing Shuttle contracts in order to facilitate the 
transition to USA under a negotiated Space Flight Operations 
contract. The Committee recommends full funding for NASA's 
fiscal year 1997 shuttle budget request to ensure a stable 
restructuring of the Shuttle workforce under USA management.

                      SHUTTLE SAFETY AND UPGRADES

    The Committee strongly supports NASA's on-going assessment 
of upgrades and modifications designed to address safety, 
performance, and obsolescence issues relative to the Space 
Shuttle system. In that spirit, the Committee recommends full 
funding in fiscal year 1997 for NASA activities in this area 
and believes that it is prudent to sustain a program of system 
upgrades for the shuttle to enhance safe and efficient 
operation of this unique national asset. The Committee believes 
that the nation's investment in technology development related 
to a future, operational Reusable Launch Vehicle should be 
leveraged for maximum effect by applying it to existing space 
launch vehicles. The Committee, therefore, directs NASA to 
report on its plans to exploit RLV technologies for the purpose 
of reducing cost and increasing the safety of current space 
launch vehicles.

                       COMMERCIAL USE OF SHUTTLE

    The Committee is concerned that NASA is seeking on the one 
hand to encourage commercialization of shuttle operation while 
on the other hand policies are in place which may have the 
opposite effect. Following the Challenger accident in 1986, a 
policy directive was issued which prohibits the use of the 
space shuttle for commercial payloads. That directive is still 
a major component of the space policies of the United States. 
NASA has initiated a number of measures to increase the 
commercial aspects of space transportation but to date there 
does not appear to have been a comprehensive review of the 
original rationale for the prohibition on commercial payloads 
to determine if it should be retained. Accordingly, the 
Committee urges NASA to work with the Office of Science and 
Technology Policy to determine if the policy should be changed 
in light of the systemic changes being instituted for the 
shuttle.

                  SCIENCE, AERONAUTICS AND TECHNOLOGY

Fiscal year 1997 recommendation.........................  $5,662,100,000
Fiscal year 1996 appropriation..........................   5,928,900,000
Fiscal year 1997 budget request.........................   5,862,100,000
Comparison with fiscal year 1996 appropriation..........    -266,800,000
Comparison with fiscal year 1997 request................    -200,000,000

    This appropriation provides for the research and 
development activities of the National Aeronautics and Space 
Administration. These activities include: space science, life 
and microgravity science, mission to planet earth, aeronautical 
research and technology, advanced concepts and technology, 
launch services, and academic programs. Funds are also included 
for the construction, maintenance, and operation of 
programmatic facilities.
    The Committee recommends $5,662,100,000 for Science, 
Aeronautics and Technology in fiscal year 1997. The amount 
recommended is $200,000,000 below the budget request and 
$266,800,000 below the fiscal year 1996 appropriation. The 
recommended changes from the budget request include a decrease 
of $220,000,000 for Mission to Planet Earth, an increase of 
$4,000,000 for the application of electronic imaging 
technologies in the exploration and development of cardiac 
imaging at the Cleveland Clinic, $4,000,000 for continuation of 
NASA's Space Radiation Health program, $2,000,000 for High 
Speed Civil Transport research into shock-free supersonic 
technology, and $10,000,000 for education programs.

                        mission to planet earth

    The reduction of $220,000,000 includes a reduction of 
$5,000,000 from the GLOBE program. Within the funds provided 
for the Office of Mission to Planet Earth, $13 million is to be 
made available to the American Museum of Natural History/
national center for science literacy, education and technology, 
to support federal participation in the further development of 
the American Museum of Natural History/national center for 
science literacy, education and technology, including the Hall 
of the Universe and the Hall of Life's Diversity. Funds are to 
be utilized to defray the costs of design and development, 
related research and science education activities, and the 
development of their science technology initiative.

           LOCAL GOVERNMENT APPLICATIONS OF SATELLITE IMAGERY

    From within the funds provided for Mission to Planet Earth, 
NASA is directed to undertake a pilot program that develops 
local government applications of satellite imagery in Cayuga 
County, New York. Cayuga County is uniquely located 
geographically and experienced with Geographic Information 
Systems (GIS) applications which would facilitate the use of 
satellite imagery and data. It is expected that the pilot 
program will coordinate GIS work over a broad array of urban 
planning and agricultural applications and the resulting 
knowledge would help local and state decision makers.

                   nasa/sdb/osdbu technology transfer

    The Committee commends NASA's innovative initiatives in the 
area of technology transfer. This important work has 
significant potential for the expansion and creation of 
business opportunities. The Committee is interested in the 
application of technology transfer to small and disadvantaged 
business development and urges NASA to implement a more 
coordinated effort with these companies.

               SOFTWARE OPTIMIZATION AND REUSE TECHNOLOGY

    The Committee notes that for the past three years NASA has 
supported the Software Optimization and Reuse Technology (SORT) 
program. The Committee urges NASA to continue on-going efforts 
to develop new system development and acquisition processes 
based upon the software reuse product line technologies.

                    COMMERCIAL AND GENERAL AVIATION

    The Committee has provided the budget request for 
aeronautics research and technology and shares NASA's 
commitment to this vital segment of the budget. The Committee 
recognizes the critical role aeronautics research and 
technology plays in NASA's mission and urges NASA to maintain 
its support in regaining the world's marketplace of commercial 
aviation. Likewise, the Committee strongly endorses NASA's 
leadership and support of the general aviation community and 
encourages further development and expansion in this area.

                        MICROGRAVITY INSTITUTES

    The Committee is pleased with the direction NASA is taking 
in establishing science institutes. These centers provide an 
opportunity for private-public partnerships that facilitate the 
transfer of technology to the private sector. The Committee, 
however, urges NASA to ensure continuous cooperation and 
integration of NASA centers in all of the institutes' research.

                    SPACE COMMERCIAL COMMUNICATIONS

    The Committee is concerned with the further reductions in 
the research portion of space commercial communications. NASA 
has been the catalyst for development of space commercial 
communication and the Committee recommends NASA continue to be 
instrumental in the development of these critical technologies.

                       SPACE ACCESS AND TECHNOLOGY

                        REUSABLE LAUNCH VEHICLES

    The Committee recommends full funding of the budget request 
for the Advanced Space Transportation program which includes 
funding for the X-33 and X-34 reusable launch vehicle programs. 
As in the past, the Committee endorses these programs because 
of the significant investment being made by the private sector 
partners and the Committee's belief that these programs have a 
fundamental commercial objective which needs to be fostered. 
However, the Committee is disappointed that the NASA associate 
administrator for space access and technology believes the 
government will likely have to shoulder the research and 
development costs of the reusable launch vehicle, according to 
recent press accounts. If in fact these press accounts are 
accurate and NASA is changing its strategy regarding industry 
financial participation in the programs, the Committee may be 
forced to reevaluate its support of the programs in light of 
the change in strategy.

                           ACADEMIC PROGRAMS

    The Committee recommends $110,800,000 for Academic Programs 
in fiscal year 1997, an increase of $3,900,000 from the fiscal 
year 1996 appropriation level and $10,000,000 more than the 
President's budget request.
    The Committee strongly supports NASA educational programs, 
which expand opportunities and enhance diversity in the NASA 
sponsored research and education community. The increased 
funding provided by the Committee for academic programs in 
fiscal year 1997 is to be used to achieve a balance between the 
proportion of NASA funding received by minority institutions of 
higher education and other institutions of higher education.
    Of the additional funding provided, $300,000 is for 
upgrades to the Mobile Aeronautics Education Laboratory, 
$250,000 is provided for a feasibility study to create a 
national residential high school at Lewis Research Center, and 
$250,000 is provided to begin replication of the Science, 
Engineering, Mathematics, and Aeronautics Academy program.
    The appropriated funds for the minority university research 
and education programs should continue to be centrally 
administered by the Headquarters Office of Equal Opportunity 
Programs. The nurturing of these institutions and programs by 
the Equal Opportunity office is essential to assure their 
continued maturation and viability.

                            MISSION SUPPORT

Fiscal year 1997 recommendation.........................  $2,562,200,000
Fiscal year 1996 appropriation..........................   2,502,200,000
Fiscal year 1997 budget request.........................   2,562,200,000
Comparison with fiscal year 1996 appropriation..........     +60,000,000
Comparison with fiscal year 1997 request................               0

    The appropriation provides for mission support, including: 
safety, reliability, and quality assurance activities 
supporting agency programs; space communication services for 
NASA programs; salaries and related expenses in support of 
research in NASA field installations; design, repair, 
rehabilitation, and modification of institutional facilities 
and construction of new institutional facilities; and other 
operational activities supporting the conduct of agency 
programs.
    The Committee recommends a total of $2,562,200,000 for the 
mission support account. The recommended amount is the same as 
the budget request and $60,000,000 above the fiscal year 1996 
appropriation.
    While the amount provided in this account is above the 
fiscal year 1996 level, for the most part the increase is in 
the non-salaries and expenses portion of this account. For 
example, the contract for acquisition of the Tracking and Data 
Relay Satellite spacecraft and related launch services has a 
requirement of $185,100,000 in fiscal year 1997 compared to 
$156,700,000 in fiscal year 1996, an increase of $28,400,000. 
The Committee further notes that the fiscal year 1997 budget 
full-time equivalent personnel level is at 21,030, a reduction 
of 525 from the fiscal year 1996 full-time equivalent level.

                      OFFICE OF INSPECTOR GENERAL

Fiscal year 1997 recommendation.........................     $17,000,000
Fiscal year 1996 appropriation..........................      16,000,000
Fiscal year 1997 budget request.........................      17,000,000
Comparison with fiscal year 1996 appropriation..........      +1,000,000
Comparison with fiscal year 1997 request................               0

    The Office of the Inspector General was established by the 
Inspector General Act of 1978 and is responsible for audit and 
investigation of all agency programs.
    The Committee recommends $17,000,000 for the Office of the 
Inspector General in fiscal year 1997, the same amount as 
requested in the President's budget. The funding provided is 
$1,000,000 above the amount provided in fiscal year 1996.

                  National Credit Union Administration

                       CENTRAL LIQUIDITY FACILITY

------------------------------------------------------------------------
                                        Limitation of    Administrative 
                                        direct loans        Expenses    
------------------------------------------------------------------------
Fiscal year 1997 recommendation.....      $600,000,000          $560,000
Fiscal year 1996 appropriation......       600,000,000           560,000
Fiscal year 1997 budget request.....       600,000,000           560,000
Comparison with 1996 appropriation..                 0                 0
Comparison with 1997 request........                 0                 0
------------------------------------------------------------------------

    The National Credit Union Central Liquidity Facility Act 
established the National Credit Union Administration Central 
Liquidity Facility (CLF) on October 1, 1979 as a mixed-
ownership Government corporation within the National Credit 
Union Administration. It is managed by the National Credit 
Union Administration and is owned by its member credit unions. 
Loans may not be used to expand a loan portfolio, but are 
authorized to meet short-term requirements such as emergency 
outflows from managerial difficulties, seasonal credit, and 
protracted adjustment credit for long-term needs caused by 
disintermediation or regional economic decline.
    The Committee recommends the requested limitations of 
$600,000,000 on new loans and $560,000 on administrative 
expenses. In addition the Committee recommends an appropriation 
of $1,000,000 for the Community Development Revolving Loan 
Program for Credit Unions as authorized by public law 103-325. 
The Committee notes that in the past this revolving loan 
program has granted 96 loans with only one loss and as such 
represents a very successful program with a goal of improving 
the capability of low-income credit unions. The Committee 
encourages the National Credit Union Administration to ensure 
that the high standards used in the past for evaluation of loan 
applications continue so that loan losses are kept to a 
minimum.

                      National Science Foundation

Fiscal year 1997 recommendation.........................  $3,253,000,000
Fiscal year 1996 appropriation..........................   3,220,000,000
Fiscal year 1997 budget request.........................   3,325,000,000
Comparison with fiscal year 1996 appropriation..........     +33,000,000
Comparison with fiscal year 1997 request................     -72,000,000

    The National Science Foundation was established in 1950 and 
received its first appropriation of $225,000 in 1951. The 
primary purpose behind its creation was to develop a national 
policy on science, and support and promote basic research and 
education in the sciences filling the void left after World War 
II.
    The Committee recommends a total of $3,253,000,000 for 
fiscal year 1997. The amount recommended is $33,000,000 above 
the fiscal year 1996 appropriation and $72,000,000 below the 
President's budget request.
    Of the amounts approved in the following appropriations 
accounts, the Foundation must limit transfers of funds between 
programs and activities to not more than $500,000 without prior 
approval of the Committee. Further, no changes may be made to 
any account or program element if it is construed to be policy 
or a change in policy. Any activity or program cited in this 
report shall be construed as the position of the Committee and 
should not be subject to reductions or reprogramming without 
prior approval of the Committee. Finally, it is the intent of 
the Committee that all carryover funds in the various 
appropriations accounts are subject to the normal reprogramming 
requirements outlined above.

                    RESEARCH AND RELATED ACTIVITIES

Fiscal year 1997 recommendation.........................  $2,422,000,000
Fiscal year 1996 appropriation..........................   2,314,000,000
Fiscal year 1997 budget request.........................   2,472,000,000
Comparison with fiscal year 1996 appropriation..........    +108,000,000
Comparison with fiscal year 1997 request................     -50,000,000

    The appropriation for Research and Related Activities 
covers all programs in the Foundation except Education and 
Human Resources, Salaries and Expenses, NSF Headquarters 
Relocation, Major Research Equipment, and the Office of 
Inspector General. These are funded in other accounts in the 
bill. The Research and Related Activities appropriation 
includes United States Polar Research Programs and Antarctic 
Logistical Support Activities and the Critical Technologies 
Institute, which were previously funded through separate 
appropriations. Beginning with fiscal year 1997, the 
President's budget provided funding for the instrumentation 
portion of Academic Research Infrastructure in this account.
    The Committee recommends a total of $2,422,000,000 for 
Research and Related Activities in fiscal year 1997, a 
reduction of $50,000,000 from the budget request. The Committee 
recommendation includes approval of the National Science 
Foundation proposal to include within the Research and Related 
Activities account, $50,000,000 for acquisition of 
instrumentation which was previously funded in the Academic 
Research Infrastructure account. Taking into consideration the 
increase to this account caused by the transfer of 
instrumentation funds, the remaining increase of $108,000,000 
would have represented a growth of approximately 5% over the 
fiscal year 1996 level. While this is not an excessive amount 
of growth, and while the Committee remains a strong supporter 
of scientific research, the Committee can not fund the budget 
request within its current allocation of budget authority and 
outlays. The reduction recommended by the Committee is taken 
without prejudice and is to be allocated by the Foundation in 
accordance with internal procedures, subject to approval by the 
Committee.

                        ACADEMIC RESEARCH FLEET

    The Committee is concerned with the possibility of new 
Navy-owned, university-operated, Class I Oceanographic Research 
vessel being added to the academic fleet. There is no existing 
academic fleet planning to incorporate a new vessel at this 
time. The addition of new ships without corresponding increases 
in ship operations funding and in the funding for research 
programs that require ship time threatens the health of 
oceanography. NSF is directed to report to the Committee by 
August 30, 1996, the ramifications, fiscal and otherwise, of 
such an addition, with particular attention to the overall 
balance between research funding and ship operations funding. 
The Committee is concerned about a funding shortfall for the 
operations of the academic fleet and supports NSF's efforts to 
work with other agencies to broaden usage of the fleet.

                        MAJOR RESEARCH EQUIPMENT

Fiscal year 1997 recommendation.........................     $80,000,000
Fiscal year 1996 appropriation..........................      70,000,000
Fiscal year 1997 budget request.........................      95,000,000
Comparison with fiscal year 1996 appropriation..........     +10,000,000
Comparison with fiscal year 1997 request................     -15,000,000

    This account provides funding for the construction of major 
research facilities that provide unique capabilities at the 
cutting edge of science and engineering.
    The Committee recommends a total of $80,000,000 for the 
major research equipment account for fiscal year 1997. This 
level reflects $55,000,000 for construction of the Laser 
Interferometer Gravitational Wave Observatory (LIGO) and 
$25,000,000 for maintenance of facilities in Antarctica.
    The Committee recommendation for LIGO funding is the same 
amount that was projected as a fiscal year 1997 requirement 
when the fiscal year 1996 budget was presented to the Congress. 
The amount recommended is $15,000,000 below the request in the 
fiscal year 1997 budget, but based upon information provided 
with the fiscal year 1996 budget and briefings provided by the 
program managers the reduction should have no effect on the 
program schedule.
    The Conference Report accompanying H.R. 2099 directed that 
there be a government-wide review of activities in the 
Antarctic region and the results of the review reported to the 
Committees on Appropriations of the House and Senate. That 
report was submitted in April and concluded that ``. . . from a 
policy perspective the NSTC [National Science and Technology 
Council] finds that maintaining an active and influential 
presence in Antarctica, including year-round operation of South 
Pole Station, is essential to U.S. interests.'' The report also 
concluded that the National Science Foundation planning for 
replacement of the South Pole Station will greatly benefit from 
further cost-benefit analyses. The Committee acknowledges the 
conclusions contained within the report and provides 
$25,000,000 for correcting critical health, safety, and 
environmental issues at the current South Pole station while 
awaiting further information from the NSF on how it will 
structure a long-term solution to the problems of the current 
station. The Committee recommends that the funds provided be 
used for the heavy maintenance facility, power plant upgrade, 
and fuel storage facilities.

                    ACADEMIC RESEARCH INFRASTRUCTURE

Fiscal year 1997 recommendation.........................               0
Fiscal year 1996 appropriation..........................    $100,000,000
Fiscal year 1997 budget request.........................               0
Comparison with fiscal year 1996 appropriation..........    -100,000,000
Comparison with fiscal year 1997 request................               0

    This program is a consolidation of academic research 
facility modernization and support of academic research 
instrumentation.
    The Committee agrees with the President's budget proposal 
to transfer the instrumentation portion of this program to the 
Research and Related Activities account and provide no funding 
for buildings and facilities.

                     EDUCATION AND HUMAN RESOURCES

Fiscal year 1997 recommendation.........................    $612,000,000
Fiscal year 1996 appropriation..........................     599,000,000
Fiscal year 1997 budget request.........................     619,000,000
Comparison with fiscal year 1996 appropriation..........     +13,000,000
Comparison with fiscal year 1997 request................      -7,000,000

    The Foundation's Education and Human Resources activities 
are designed to encourage the entrance of talented students 
into science and technology careers, to improve the 
undergraduate science and engineering education environment, to 
assist in providing all precollege students with a level of 
education in mathematics, science, and technology that reflects 
the needs of the nation and is the highest quality attained 
anywhere in the world, and extend greater research 
opportunities to underrepresented segment of the scientific and 
engineering communities.
    For fiscal year 1997, the Committee recommends 
$612,000,000, a reduction of $7,000,000 from the President's 
budget request and $13,000,000 above the fiscal year 1996 
appropriation.
    The Committee recommendation includes a reduction of 
$2,000,000 in the grants for graduate fellowships and 
$5,000,000 from undergraduate curriculum development.

                          SYSTEMIC INITIATIVE

    The National Science Foundation has made considerable 
progress with its state, urban, and rural systemic initiatives 
designed to promote reform of K-12 math and science education. 
Early results show significant math and science student 
achievements in NSF funded sites. The Committee believes each 
program should be sustained as appropriate and in particular, 
the Urban Systemic Initiative should be fully funded in fiscal 
year 1997.

                ADVANCED TECHNOLOGICAL EDUCATION PROGRAM

    Although only established within the past few years, the 
Advanced Technological Education program is viewed as crucial 
to ensuring a highly competent technical workforce. The 
Committee is pleased that the Foundation has forged effective 
partnerships with the relevant, local scientific and technical 
business sector to further expand the scope and significance of 
the program. The Committee encourages continued growth of this 
important activity.

                          TEACHER PREPARATION

    Efforts to achieve high quality math and science 
performance in the K-12 sector is highly dependent upon the 
quality of the teacher workforce and, especially in urban and 
rural school systems, there is a growing inadequacy of highly 
qualified math and science teachers. Accordingly, the Committee 
strongly urges the National Science Foundation to strengthen 
and significantly expand its math and science teacher 
preparation programs.

                          TECHNOLOGY EDUCATION

    Increasingly the purposeful applications of technology is 
regarded as an integral and value-added component of high 
quality math, science, engineering and technology education. 
The National Science Foundation is urged to increase its 
investments in research and development that undergird learning 
technologies and their application in math, science, 
engineering, and technology education sites at the K-12, two 
year and community colleges, and undergraduate levels.

         EXPERIMENTAL PROGRAM TO STIMULATE COMPETITIVE RESEARCH

    The Committee is pleased with the efforts which the 
Foundation has made to ensure that the Experimental Program to 
Stimulate Competitive Research (EPSCoR) is part of the broader 
systemic reform initiatives pursued in recent years. These 
efforts have formed a solid base for education and human 
resource development activities in many of the EPSCoR states.
    The Committee has recommended the budget request for the 
Experimental Program to Stimulate Competitive Research 
(EPSCoR). As the National Science Foundation research funding 
increases, new efforts should be undertaken to ensure that the 
participating jurisdictions, which are working diligently to 
enhance their infrastructure and become truly competitive, 
participate fully in NSF's programs. Of the funding the 
Committee has recommended, $5,000,000 is available to assist 
EPSCoR institutions to participate in the new advanced 
computing infrastructure with high bandwidth connections that 
support advanced applications, distributed computing, remote 
visualization and imaging, and telecollaboration. The Committee 
also recommends that funds be made available to assist EPSCoR 
institutions to facilitate their competitiveness by engaging in 
joint projects between EPSCoR institutions, or between EPSCoR 
and non-EPSCoR institutions. Both efforts are important to 
ensuring that EPSCoR states are in the mainstream of science 
and technology efforts. The participation of representatives 
from EPSCoR states on peer review panels and on advisory 
committees. In addition, the Committee expects NSF to initiate 
a planning process for full participation of states which 
generally meet EPSCoR criteria but that are not currently 
participating in the EPSCoR program.

                       Informal science education

    The Committee is concerned with the nearly 28% reduction in 
funding for Informal Science Education. In many instances, 
science education received through exposure to museums, parks, 
libraries, television, and community groups is the most 
important spark to stimulate greater interest in science. The 
Committee has not been able to add money to this account, but 
encourages the National Science Foundation to reevaluate the 
priorities which caused the current sub-allocation of Education 
and Human resources funding to determine if the cut of 28% in 
this program is justified.

                         SALARIES AND EXPENSES

Fiscal year 1997 recommendation.........................    $134,310,000
Fiscal year 1996 appropriation..........................     127,310,000
Fiscal year 1997 budget request.........................     134,310,000
Comparison with fiscal year 1996 appropriation..........      +7,000,000
Comparison with fiscal year 1997 request................               0

    The Salaries and Expenses activity provides for the 
operation, support and management, and direction of all 
Foundation programs and activities and includes necessary funds 
that develop, manage, and coordinate Foundation programs. Also 
included in this account beginning in fiscal year 1997 is 
funding for NSF headquarters relocation.
    The Committee recommends an appropriation of $134,310,000 
for salaries and expenses and headquarters relocation in fiscal 
year 1997, the same as the President's budget request. The 
amount provided is $1,800,000 above the fiscal year 1996 
appropriation when adjusted for the change to incorporate 
funding for the NSF headquarters relocation.

                      OFFICE OF INSPECTOR GENERAL

Fiscal year 1997 recommendation.........................      $4,690,000
Fiscal year 1996 appropriation..........................       4,490,000
Fiscal year 1997 budget request.........................       4,690,000
Comparison with fiscal year 1996 appropriation..........        +200,000
Comparison with fiscal year 1997 request................               0

    This account provides National Science Foundation audit and 
investigation functions to identify and correct management and 
administrative deficiencies which could lead to fraud, waste, 
or abuse.
    For fiscal year 1997, the Committee has recommended 
$4,690,000 for the Office of Inspector General. This amount is 
$200,000 above the fiscal year 1996 level and is the same as 
the President's budget request.

          NATIONAL SCIENCE FOUNDATION HEADQUARTERS RELOCATION

Fiscal year 1997 recommendation.........................               0
Fiscal year 1996 appropriation..........................      $5,200,000
Fiscal year 1997 budget request.........................               0
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 request................               0

    This account provides reimbursement to the General Services 
Administration (GSA) for expenses incurred by GSA pursuant to 
the relocation of the National Science Foundation.
    The National Science Foundation proposed including this 
funding within the Salaries and Expenses Account beginning in 
fiscal year 1997. The Committee recommendation endorses the 
account change.

                 Neighborhood Reinvestment Corporation

          payment to the neighborhood reinvestment corporation

Fiscal year 1997 recommendation.........................     $50,000,000
Fiscal year 1996 appropriation..........................      38,667,000
Fiscal year 1997 budget request.........................      55,000,000
Comparison with fiscal year 1996 appropriation..........     +11,333,000
Comparison with fiscal year 1997 budget request.........      -5,000,000

    The Neighborhood Reinvestment Corporation, established by 
title VI of Public Law 95-557 in October 1978, is committed to 
promoting reinvestment in older neighborhoods by local 
financial institutions working cooperatively with community 
people and local government. This is primarily accomplished by 
assisting community-based partnerships (NeighborWorks 
organizations) in a range of local revitalization efforts. 
Increases in home ownership among lower-income families is a 
key revitalization tool. Neighborhood Housing Services of 
America (NHSA) supports lending activities of the NeighborWorks 
organizations through a national secondary market that 
leveraged over $125,000,000 last year in private sector 
investment.
    The Committee recommends an appropriation of $50,000,000 
for fiscal year 1997, an increase of $11,333,000 above the 
fiscal year 1996 level, and a decrease of $5,000,000 below the 
budget request.

                        Selective Service System

                         SALARIES AND EXPENSES

Fiscal year 1997 recommendation.........................     $22,930,000
Fiscal year 1996 appropriation..........................      22,930,000
Fiscal year 1997 budget request.........................      22,930,000
Comparison with fiscal year 1996 appropriation..........               0
Comparison with fiscal year 1997 budget request.........               0

    The Selective Service System was reestablished by the 
Selective Service Act of 1948. The basic mission of the System 
is to be prepared to supply manpower to the Armed Forces 
adequate to ensure the security of the United States during a 
time of national emergency. Since 1973, the Armed Forces have 
relied on volunteers to fill military manpower requirements. 
However, the Selective Service System remains the primary 
vehicle by which men will be brought into military if Congress 
and the President should authorize a return to the draft.
    The Committee notes that in November 1994, the Department 
of Defense provided the National Security Council and the 
Director of the Selective Service updated and revalidated 
scenarios, mobilization requirements, and timeframes of 
personnel needs. Reflecting realistic, post-Cold War thinking, 
these new requirements of the Department of Defense would 
require the Selective Service to deliver untrained registrants 
within 199 days of a declared event--up from 13 days--and would 
require the delivery of health care personnel in 222 days, up 
from just 42 days. Under this scenario, such a declared event 
would be a major military event with a major world power, not a 
military event such as the Gulf War conflict.
    Moreover, testimony indicates that in the event of such a 
major conflict, the Department of Defense would rely first on 
Reserve and National Guard units, then volunteers recruited by 
the Armed Forces and then, finally, registrants through the 
Selective Service System. Questions remain whether current 
training facilities of the Armed Forces are sufficient to 
properly train the number of personnel first called to duty in 
a time frame that would realistically make it necessary to call 
Selective Service registrants before several months beyond the 
updated minimum time scenario suggested by DOD. Many feel that 
by the time a registration system was truly needed, a Selective 
Service System could easily be reinstated and become fully 
operational.
    Despite these concerns, the Committee acknowledges the 
excellent work performed by the many employees and volunteers 
of the Selective Service System and has provided $22,930,000 
for fiscal year 1997, the same as for fiscal year 1996 and as 
the budget request.

                                TITLE IV

                           GENERAL PROVISIONS

    The Committee recommends that eighteen general provisions 
carried in the fiscal year 1996 Appropriations Act (Public Law 
104-134) be continued in fiscal year 1997. The Committee 
recommends three new general provisions for fiscal year 1997. 
Section 419 provides for the orderly termination of the Office 
of Consumer Affairs. Section 420 incorporates as a general 
provision the Bill language associated with ``Corporations'' 
carried in title IV of Public Law 104-134. Section 421 
prohibits the payment of salaries of personnel who approve 
acquisition of supercomputing equipment when the Department of 
Commerce has determined that the equipment is being offered at 
other than fair value.

              House of Representatives Report Requirements

    The following items are included in accordance with various 
requirements of the Rules of the House of Representatives:

                     Inflationary Impact Statement

    Clause 2(l)(4) of rule XI of the House of Representatives 
requires that each Committee report on a bill or resolution 
shall contain a statement as to whether enactment of such bill 
or resolution may have an inflationary impact on prices and 
costs in the operation of the national economy.
    Some individuals would suggest that practically any 
spending by Government is inflationary. If that were true, then 
the funds proposed in this bill would be inflationary. However, 
all Federal spending is not inherently inflationary. It should 
be analyzed in the context of the economic situation in which 
it occurs, the financial condition of Government at the time, 
and the sectors of the economy which the spending may affect.
    The amount proposed for appropriation totals 
$84,286,060,000. This is $3,235,906,000 below the President's 
budget request. Included in the total recommended are funds for 
veterans benefits, assisted housing, community development 
grants, and environmental programs. Other funds will support 
advanced technology and science that directly and indirectly 
increase productivity and national competitiveness.
    It is the considered opinion of the Committee that 
enactment of this bill will not have an inflationary impact on 
prices and costs in the operation of the national economy. 
Further information on the purpose of the spending proposed in 
this bill can be obtained in other parts of this report. Also, 
a large amount of detailed statistical and financial 
information can be obtained in the hearings conducted in 
developing this bill.

                          Rescission of Funds

    Pursuant to clause 1(b), rule X of the Rules of the House 
of Representatives, the following statements are made 
describing the rescission of funds provided in the accompanying 
bill.
    The Committee recommends a rescission of up to $2,000,000 
under the rental housing assistance program in the Department 
of Housing and Urban Development.
    The Committee provides for the rescission of 50% of the 
budget authority recaptured from projects described in section 
1012(a) of the Stewart B. McKinney Homeless Assistance 
Amendments Act of 1988 under the annual contributions for 
assisted housing account in the Department of Housing and Urban 
Development.

                           Transfer of Funds

    Pursuant to clause 1(b), rule X of the Rules of the House 
of Representatives, the following statements are made 
describing the transfers of funds provided in the accompanying 
bill.
    The Committee has included language transferring not to 
exceed $26,417,000 from compensation and pensions to general 
operating expenses and medical care. These funds are for the 
administrative costs of implementing cost-saving proposals 
required by the Omnibus Budget Reconciliation Act of 1990 and 
the Veterans' Benefits Act of 1992. Language is also included 
permitting necessary sums to be transferred to the medical 
facilities revolving fund to augment funding of medical centers 
for nursing home care provided to pensioners as authorized by 
the Veterans' Benefits Act of 1992.
    The Committee recommends transferring the following amounts 
to the VA's general operating expenses appropriation pursuant 
to the Federal Credit Reform Act of 1990: the guaranty and 
indemnity program account ($105,226,000), the loan guaranty 
program account ($33,810,000), the direct loan program account 
($80,000), the education loan fund program account ($195,000), 
the vocational rehabilitation loans program account ($377,000), 
and the Native American veteran housing loan program account 
($205,000). In addition, the bill provides for transfers of 
$7,000 for program costs and $54,000 for the administrative 
expenses of the transitional housing loan program from the 
general post fund.
    The Committee has included language under the Department of 
Veterans Affairs, franchise fund, permitting certain excess 
funds to be transferred to the Treasury.
    The Committee recommends providing authority under 
administrative provisions for the Department of Veterans 
Affairs for any funds appropriated in 1997 for compensation and 
pensions, readjustment benefits, and veterans insurance and 
indemnities to be transferred between those three accounts. 
This will provide the Department of Veterans Affairs 
flexibility in administering its entitlement programs. Language 
is also included permitting the funds from three life insurance 
funds to be transferred to general operating expenses for the 
costs of administering such programs.
    The Committee has included language under the Department of 
Housing and Urban Development transferring all uncommitted 
prior balances of excess rental charges and all collections 
made during fiscal year 1997 to the flexible subsidy fund.
    The Committee recommends a provision under the Public 
Housing Capital Fund which transfers all obligated and 
unobligated balances as of the end of fiscal year 1996 from 
various accounts into the Public and Housing Capital Fund 
Account.
    The Committee recommends a transfer of $5,000,000 from the 
Drug Elimination Grants for Low-Income Housing to the Office of 
Inspector General for Operation Safe Home.
    The Committee has included language transferring $673,000 
of funds appropriated for administrative expenses to carry out 
the section 108 loan guarantee program to the departmental 
salaries and expenses account.
    The Committee recommends transferring prior year 
appropriations for the Housing Opportunities for Persons With 
AIDS program from the ``Annual Contributions for Assisted 
Housing'' account to the ``Housing Opportunities for Persons 
With AIDS'' account newly established in fiscal year 1997.
    The Committee recommends transferring a total of 
$532,782,000 from the various funds of the Federal Housing 
Administration (not to exceed $334,483,000 from the FHA-mutual 
mortgage insurance program account and $198,299,000 from the 
FHA-general and special risk program account) for salaries and 
expenses of the Department of Housing and Urban Development.
    The Committee has included language transferring a total of 
$11,283,000 from the various funds of the Federal Housing 
Administration (not to exceed $7,112,000 from the FHA-mutual 
mortgage insurance program account and $4,171,000 from the FHA-
general and special risk program account) to the Office of 
Inspector General.
    The Committee has included language transferring $9,101,000 
from the Government National Mortgage Association's guarantees 
of mortgage-backed securities loan guarantee program account to 
HUD's salaries and expenses account.
    The Committee recommends language allowing a transfer of 
$14,895,000 from the federal housing enterprise oversight fund 
to the office of federal housing enterprise oversight account.
    The Committee has included language under the Corporation 
for National and Community Service account which transfers not 
more than $40,000,000 to the National Service Trust account.
    The Committee has included language under the Environmental 
Protection Agency transferring funds from the hazardous 
substance superfund trust fund ($11,000,000) and the leaking 
underground storage tank trust fund ($577,000) to the Office of 
Inspector General. In addition, $35,000,000 is transferred from 
the hazardous substance superfund trust fund to the science and 
technology account.
    The Committee recommends transferring $15,000,000 from the 
oil spill liability trust fund to the oil spill response 
account.
    The Committee has included language under the Environmental 
Protection Agency, working capital fund, permitting certain 
excess funds to be transferred to the Treasury.

                  Compliance With Rule XIII, Clause 3

                               (RAMSEYER)

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

    Section 8(c)(2)(A) of the United States Housing Act of 1937 
is to be amended as follows:
    (2)(A) The assistance contract shall provide for adjustment 
annually or more frequently in the maximum monthly rents for 
units covered by the contract to reflect changes in the fair 
market rentals established in the housing area for similar 
types and sizes of dwelling units or, if the Secretary 
determines, on the basis of a reasonable formula. However, 
where the maximum monthly rent, for a unit in a new 
construction, substantial rehabilitation, or moderate 
rehabilitation project, to be adjusted using an annual 
adjustment factor exceeds the fair market rental for an 
existing dwelling unit in the market area, the Secretary shall 
adjust the rent only to the extent that the owner demonstrates 
that the adjusted rent would not exceed the rent for an 
unassisted unit of similar quality, type, and age in the same 
market area, as determined by the Secretary. The immediately 
foregoing sentence shall be effective only during fiscal year 
1995 and fiscal year 1997. For any unit occupied by the same 
family at the time of the last annual rental adjustment, where 
the assistance contract provides for the adjustment of the 
maximum monthly rent by applying an annual adjustment factor 
and where the rent for a unit is otherwise eligible for an 
adjustment based on the full amount of the factor, 0.01 shall 
be subtracted from the amount of the factor, except that the 
factor shall not be reduced to less than 1.0. The immediately 
foregoing sentence shall be effective only during fiscal year 
1995 and fiscal year 1997.

    Section 916 of the Cranston-Gonzalez National Affordable 
Housing Act is to be amended as follows:

SEC. 916. CDBG ASSISTANCE FOR UNITED STATES-MEXICO BORDER REGION.

          * * * * * * *
    [(f) Applicability.--This Act shall apply only with respect 
to fiscal years 1991, 1992, 1993, and 1994.]

    Title IV of Public Law 104-99, as amended, is to be amended 
as follows:

              fha single-family assignment program reform

    Sec. 407.
          * * * * * * *
    (c) Applicability of Amendments.--Except as provided in 
subsection (e), the amendments made by subsections (a) and (b) 
shall apply only with respect to mortgages insured under the 
National Housing Act that are executed before [October 1, 1996] 
October 1, 1997.

          * * * * * * *

    Section 8 of the United States Housing Act of 1937 is to be 
amended as follows:
    (u) * * *
          * * * * * * *

          (3) the Secretary shall allocate assistance for 
        certificates or vouchers under this section to ensure 
        that sufficient resources are available to address the 
        physical or economic displacement, or potential 
        economic displacement, of existing tenants pursuant to 
        paragraphs (1) and (2).
    [The Secretary may extend expiring contracts entered into 
under this section for project-based loan management assistance 
to the extent necessary to prevent displacement of low-income 
families receiving such assistance as of September 30, 1996.]
    (w) * * *
          * * * * * * *

    Chapter VII of Public Law 104-6 is to be amended as 
follows:
          * * * * * * *

             National Aeronautics and Space Administration

                    national aeronautical facilities

    Public Law 103-327 is amended in the paragraph under this 
heading by striking ``March 31, 1997'' and all that follows, 
and inserting in lieu thereof: ``[September 30, 1997] September 
30, 1998 : Provided, That not to exceed $35,000,000 shall be 
available for obligation prior to October 1, [1996] 1997.''.

               Changes in the Application of Existing Law

    The Committee submits the following statements in 
compliance with clause 3, rule XXI of the House of 
Representatives, describing the effects of provisions proposed 
in the accompanying bill which may be considered, under certain 
circumstances, to change the application of existing law, 
either directly or indirectly.
    Language is included in various parts of the bill to 
continue ongoing activities and programs where authorizations 
have not been enacted to date.
    In some cases, the Committee has recommended appropriations 
which are less than the maximum amounts authorized for the 
various programs funded in the bill. Whether these actions 
constitute a change in the application of existing law is 
subject to interpretation, but the Committee felt that this 
should be mentioned.
    The Committee has included limitations for official 
reception and representation expenses for selected agencies in 
the bill.
    Sections 401 through 418 of title IV of the bill, all of 
which are carried in the fiscal year 1996 Appropriations Act, 
are general provisions which place limitations or restrictions 
on the use of funds in the bill and which might, under certain 
circumstances, be construed as changing the application of 
existing law. The bill also includes new general provisions 
which provide that termination costs for the Office of Consumer 
Affairs be made available from funds appropriated to the 
Department of Health and Human Services (Sec. 419); language, 
contained in title IV of the 1996 bill, to require the release 
in appropriations Acts of loans and mortgage purchase authority 
not otherwise required by law (Sec. 420); and a limitation on 
the use of funds for the approval of contracts without a 
specific determination of the Department of Commerce (Sec. 
421).
    The bill includes, in certain instances, limitations on the 
obligation of funds for particular functions or programs. These 
limitations include restrictions on the obligation of funds for 
administrative expenses, the use of consultants, and 
programmatic areas within the overall jurisdiction of a 
particular agency.
    Language is included under the Department of Veterans 
Affairs, Environmental Protection Agency, and Federal Emergency 
Management Agency which creates a working capital fund subject 
to certain conditions and in accordance with law.
    Language is included under the Department of Veterans 
Affairs, readjustment benefits, allowing the use of funds for 
payments arising from litigation involving the vocational 
training program.
    Language is included under the Department of Veterans 
Affairs, medical care, earmarking and delaying the availability 
of certain equipment and land and structures funds.
    Language is included under the Department of Veterans 
Affairs, general operating expenses, providing for the 
reimbursement to the Department of Defense for the costs of 
overseas employee mail. This language has been carried 
previously and permits free mailing privileges for VA personnel 
stationed in the Philippines. Language is included which 
permits this appropriation to be used for administration of the 
Service Members Occupational Conversion and Training Act in 
1997, limits salary and travel funds for the office of the 
Secretary, and limits the number of non-career employees.
    Language is included under the Department of Veterans 
Affairs, construction, major projects, establishing time 
limitations and reporting requirements concerning the 
obligation of major construction funds, limiting the use of 
funds, and allowing the use of funds for program costs.
    Language is included under the Department of Veterans 
Affairs, construction, minor projects, providing that 
unobligated balances of previous appropriations may be used for 
any project with an estimated cost of less than $3,000,000, 
allowing the use of funds for program costs, and making funds 
available for damage caused by natural disasters.
    Language is included under the Department of Veterans 
Affairs, parking revolving fund, providing for parking 
operations and maintenance costs out of medical care funds.
    Language is included under the Department of Veterans 
Affairs, administrative provisions, permitting transfers 
between mandatory accounts, limiting and providing for the use 
of certain funds, and funding administrative expenses 
associated with VA life insurance programs from excess program 
revenues. These seven provisions have been carried in previous 
appropriations Acts.
    Language is included under the Department of Housing and 
Urban Development, annual contributions for assisted housing, 
which provides the Secretary authority to waive law with 
respect to housing vouchers, provides for the rescission of 
certain recaptured funds, and permits the sharing of savings 
from bond refunding.
    Language is included under the Department of Housing and 
Urban Development, housing for special populations: elderly and 
disabled, which earmarks funds for tenant-based rental 
assistance for the disabled, and which permits waivers of 
certain program provisions under the disabled and elderly 
programs.
    Language is included under Department of Housing and Urban 
Development, flexible subsidy fund, which permits the use of 
excess rental charges.
    Language is included under Department of Housing and Urban 
Development, rental housing assistance, which reduces the 
uncommitted balances of previous provided authority by not more 
than $2,000,000.
    Language is included under Department of Housing and Urban 
Development, housing certificate fund, which limits the use of 
funds for specific housing activities, delays the issuance and 
reissuance of vouchers and certificates, and maintains and 
reduces annual adjustment factors.
    Language is included under the Department of Housing and 
Urban Development, public housing capital fund, which earmarks 
funds for specific housing programs and transfers prior year 
balances for use in a new account.
    Language is included under Department of Housing and Urban 
Development, revitalization of severely distressed public 
housing (HOPE VII), which places restrictions on the use of 
funds for a housing authority.
    Language is included under Department of Housing and Urban 
Development, drug elimination grants for low-income housing, 
which specifies the use of certain funds and gives authority to 
redefine the term ``drug related crime.''
    Language is included under the Department of Housing and 
Urban Development, community development block grants fund, 
which earmarks funds for specific housing organizations and 
programs, limits the expenses for planning and management 
development and administrative activities, and modifies and 
repeals certain provisions of the CDBG program.
    Language is included under Department of Housing and Urban 
Development, home investment partnerships program, which 
earmarks funds for a counseling program.
    Language is included under Department of Housing and Urban 
Development, FHA-mutual mortgage insurance program account, 
regarding the sale of assigned mortgage notes.
    Language is included under Department of Housing and Urban 
Development, FHA-general and special risk program account, 
regarding the sale of assigned mortgage notes, and which 
provides for the use of prior year funds and the earmarking of 
funds for various purposes.
    Language is included under Department of Housing and Urban 
Development, administrative provisions, which establishes 
minimum rents, limits administrative fees, extends the FHA 
single family assignment program for one year, establishes a 
reengineered portfolio for insured housing projects receiving 
section 8 assistance at reduced levels, and provides 
flexibility to dispose of insured properties.
    Language is included under the Court of Veterans Appeals, 
salaries and expenses, permitting the use of funds for a pro 
bono program.
    Language is included under the Environmental Protection 
Agency, buildings and facilities, which authorizes the 
construction of a new building, limits the maximum cost of the 
new building, and provides for the use of multi-year contracts 
in its construction.
    Language is included under the Environmental Protection 
Agency, hazardous substance superfund, limiting the 
availability of funds for toxicological profiles performed by 
the Agency for Toxic Substances and Disease Registry.
    Language is included under the Environmental Protection 
Agency, state and tribal assistance grants, which provides 
grants to states and tribal governments and which provides 
funds upon authorization of a safe drinking water state 
revolving fund, but transfers such funds to the clean water 
state revolving fund if authorization does not occur prior to 
June 1, 1997.
    Language is included under the Environmental Protection 
Agency, administrative provision, which permits the transfer of 
funds between appropriated accounts for specific purposes and 
under established criteria and procedures.
    Language is included under the Federal Emergency Management 
Agency, disaster relief, which delays the expenditure of funds 
until September 30, 1997 and exempts the provision from the 
requirements of 42 U.S.C. 5203 so as to be scored as a non-
emergency.
    Language is included under the Federal Emergency Management 
Agency, emergency food and shelter program, limiting 
administrative expenses.
    Language is included under the Federal Emergency Management 
Agency, national flood insurance fund, which limits 
administrative expenses, program costs, and the amount 
available for repayment of debt, and which sets the rate for 
flood insurance for fiscal year 1997 at the level that was in 
effect on June 1, 1996.
    Language is included under the Federal Emergency Management 
Agency, administrative provision, promulgating a schedule of 
fees concerning the radiological emergency preparedness 
program.
    Language is included under the General Services 
Administration, Consumer Information Center, limiting certain 
fund and administrative expenses, and permitting the acceptance 
of gifts for the purpose of defraying the costs of printing, 
publishing and distributing consumer information.
    Language is included under the National Aeronautics and 
Space Administration, administrative provisions, extending the 
availability of construction of facilities funds, permitting 
funds for contracts for various services in the next fiscal 
year, and transferring of prior year appropriations to the 
appropriate new appropriation accounts.
    Language is included under the National Credit Union 
Administration, central liquidity facility, limiting new loans 
and administrative expenses.
    Language is included under the National Science Foundation, 
research and related activities, providing for the use of 
receipts from other research facilities, and requiring under 
certain circumstances proportional reductions in legislative 
earmarkings.
    Language is included under the National Science Foundation, 
education and human resources activities, requiring under 
certain circumstances proportional reductions in legislative 
earmarkings.
    Language is included under the National Science Foundation, 
salaries and expenses, permitting funds for contracts for 
various services in the next fiscal year and permitting 
reimbursement of funds to the General Services Administration 
for relocation activities.
    Language is included under the Selective Service System, 
salaries and expenses, permitting the President to exempt the 
agency from apportionment restrictions of the Budget and 
Accounting Act of 1921 and prohibiting the use of funds for 
activities related to the induction of individuals into the 
Armed Forces of the United States.

                  Appropriations Not Authorized by Law

    Pursuant to clause 3 of rule XXI of the House of 
Representatives, the following lists the appropriations in the 
accompanying bill which are not authorized by law:
    Department of Veterans Affairs:
          Construction, Major projects.
    Department of Housing and Urban Development: All programs.
    Consumer Product Safety Commission.
    Corporation for National and Community Service.
    Environmental Protection Agency:
          Science and Technology (except the Clean Air Act).
          Environmental Programs and Management (except the 
        Clean Air Act).
          Hazardous Substance Superfund.
          State and Tribal Assistance Grants.
    Office of Science and Technology Policy.
    Federal Emergency Management Agency:
          Emergency Food and Shelter Program.
          Emergency Management Planning and Assistance (with 
        respect to the Federal Fire Prevention and Control Act 
        of 1974, Defense Production Act of 1950 and the Urban 
        Property Protection and Reinsurance Act).
    General Services Administration--Consumer Information 
Center.
    National Aeronautics and Space Administration: All 
programs.
    National Science Foundation: All programs.
    Neighborhood Reinvestment Corporation.

           Balanced Budget and Emergency Deficit Control Act

    During fiscal year 1997 for purposes of the Balanced Budget 
and Emergency Deficit Control Act of 1985 (Public Law 99-177), 
the following information provides the definition of the term 
``program, project, and activity'' for departments and agencies 
carried in the accompanying bill. The term ``program, project, 
and activity'' shall include the most specific level of budget 
items identified in the 1997 Departments of Veterans Affairs 
and Housing and Urban Development, and Independent Agencies 
Appropriations Act, the accompanying House and Senate reports, 
the conference report of the joint explanatory statement of the 
managers of the committee of conference.
    In applying any sequestration reductions, departments and 
agencies shall apply the percentage of reduction required for 
fiscal year 1997 pursuant to the provisions of Public Law 99-
177 to each program, project, activity, and subactivity 
contained in the budget justification documents submitted to 
the Committees on Appropriations of the House and Senate in 
support of the fiscal year 1997 budget estimates, as amended, 
for such departments and agencies, as subsequently altered, 
modified, or changed by Congressional action identified by the 
aforementioned Act, resolutions and reports. Further, it is 
intended that in implementing any Presidential sequestration 
order, (1) no program, project, or activity should be 
eliminated, (2) no reordering of funds or priorities occur, and 
(3) no unfunded program project, or activity be initiated. 
However, for the purposes of program execution, it is not 
intended that normal reprogramming between programs, projects, 
and activities be precluded after reductions required under the 
Balanced and Emergency Deficit Control Act are implemented.

                   Comparison With Budget Resolution

    Section 308(a)(1)(A) of the Congressional Budget and 
Impoundment Control Act of 1974 (Public Law 93-344) requires 
that the report accompanying a bill providing new budget 
authority contain a statement detailing how the authority 
compares with the reports submitted under section 602(b) of the 
Act for the most recently agreed to concurrent resolution on 
the budget for the fiscal year. This information follows:
    The bill provides no new spending authority as described in 
section 401(c)(2) of the Congressional Budget and Impoundment 
Control Act of 1974 (Public Law 93-344), as amended.

----------------------------------------------------------------------------------------------------------------
                                                   602(b) allocation                       This bill            
                                         -----------------------------------------------------------------------
                                          Budget authority       Outlays      Budget authority       Outlays    
----------------------------------------------------------------------------------------------------------------
Comparison with budget resolution:                                                                              
    Discretionary.......................            64,354            78,803            64,349            78,798
    Mandatory...........................            19,816            19,511            19,937            19,024
                                         -----------------------------------------------------------------------
      Total.............................            84,170            98,314            84,286            97,822
----------------------------------------------------------------------------------------------------------------

                      Five-Year Outlay Projections

    In accordance with section 308(a)(1)(C) of the 
Congressional Budget and Impoundment Control Act of 1974 
(Public Law 93-344), as amended, the following information was 
provided to the Committee by the Congressional Budget Office:

                                                              (Millions)
Budget authority..............................................    84,286
Outlays:
    1997......................................................    49,184
    1998......................................................    18,911
    1999......................................................     8,658
    2000......................................................     4,016
    2001 and beyond...........................................     2,816

          Financial Assistance to State and Local Governments

    In accordance with section 308(a)(1)(D) of the 
Congressional Budget and Impoundment Control Act of 1974 
(Public Law 93-344), as amended, the Congressional Budget 
Office has provided the following estimates of new budget 
authority and outlays provided by the accompanying bill for 
financial assistance to state and local governments:

                                                              (Millions)
Budget authority..............................................    18,920
Fiscal year 1997 outlays resulting therefrom..................     3,126

                          Full Committee Votes

    Pursuant to the provisions of clause 2(l)(2)(b) of rule XI 
of the House of Representatives, the results of each roll call 
vote on an amendment or on the motion to report, together with 
the names of those voting for and those voting against, are 
printed below:

                            roll call no. 1

    Date: June 13, 1996.
    Measure: Fiscal Year 1997 VA-HUD, Independent Agencies 
Appropriations Bill.
    Motion by: Mr. Durbin.
    Description of motion: En bloc amendment to increase 
Community Development Block Grants by $300,000,000 and to 
reduce FEMA Disaster Relief by $300,000,000.
    Results: Rejected 16 to 33.
        Members Voting Yea            Members Voting Nay
Mr. Bunn                            Mr. Bevill
Mr. Coleman                         Mr. Bonilla
Mr. Dicks                           Mr. Callahan
Mr. Durbin                          Mr. Chapman
Mr. Fazio                           Mr. Dickey
Mr. Foglietta                       Mr. Forbes
Mr. Hefner                          Mr. Frelinghuysen
Mr. Hoyer                           Mr. Hobson
Mr. Obey                            Mr. Istook
Ms. Pelosi                          Ms. Kaptur
Mr. Sabo                            Mr. Kingston
Mr. Serrano                         Mr. Knollenberg
Mr. Skaggs                          Mr. Kolbe
Mr. Stokes                          Mr. Lewis
Mr. Torres                          Mr. Lightfoot
Mr. Visclosky                       Mr. Livingston
                                    Mr. Miller
                                    Mr. Mollohan
                                    Mr. Murtha
                                    Mr. Myers
                                    Mr. Nethercutt
                                    Mr. Neumann
                                    Mr. Packard
                                    Mr. Parker
                                    Mr. Porter
                                    Mr. Rogers
                                    Mr. Skeen
                                    Mr. Thornton
                                    Mrs. Vucanovich
                                    Mr. Walsh
                                    Mr. Wicker
                                    Mr. Wolf
                                    Mr. Young

                            roll call no. 2

    Date: June 13, 1996.
    Measure: Fiscal Year 1997 VA-HUD, Independent Agencies 
Appropriations Bill.
    Motion by: Mr. Durbin.
    Description of motion: Amend the report to delete language 
reducing $1,500,000 from the budget request to expand the toxic 
release inventory to an unauthorized toxic use inventory and 
increase the general reduction by $1,500,000.
    Results: Rejected 14 to 32.
        Members Voting Yea            Members Voting Nay
Mr. Bevill                          Mr. Bonilla
Mr. Coleman                         Mr. Bunn
Mr. Dicks                           Mr. Callahan
Mr. Durbin                          Mr. Chapman
Mr. Foglietta                       Mr. Dickey
Mr. Hoyer                           Mr. Forbes
Mr. Obey                            Mr. Frelinghuysen
Ms. Pelosi                          Mr. Hobson
Mr. Sabo                            Mr. Istook
Mr. Skaggs                          Ms. Kaptur
Mr. Stokes                          Mr. Kingston
Mr. Thornton                        Mr. Knollenberg
Mr. Torres                          Mr. Kolbe
Mr. Visclosky                       Mr. Lewis
                                    Mr. Lightfoot
                                    Mr. Livingston
                                    Mr. Miller
                                    Mr. Mollohan
                                    Mr. Murtha
                                    Mr. Myers
                                    Mr. Nethercutt
                                    Mr. Neumann
                                    Mr. Packard
                                    Mr. Parker
                                    Mr. Porter
                                    Mr. Rogers
                                    Mr. Skeen
                                    Mrs. Vucanovich
                                    Mr. Walsh
                                    Mr. Wicker
                                    Mr. Wolf
                                    Mr. Young
                                    
                                    
               ADDITIONAL VIEWS OF MR. OBEY AND MR. SABO

should tax dollars appropriated to enhance american competitiveness in 
  the computer industry be used to buy a dumped foreign supercomputer?

    For decades the National Science Foundation has argued that 
our public investment in science was closed linked to the 
future growth of the nation's economy. Just a few months ago 
the agency's director told this committee, ``There is a general 
consensus among economists and policy researchers that public 
investments in science and engineering yield a very high annual 
rate of return to society * * * research and development have a 
significant and important positive effect on economic growth 
and living standards.''
    NSF makes this argument not only with respect to the 
overall economy but with specific sectors of the U.S. economy. 
In the agency's fiscal 1997 budget justification, $277 million 
is requested for Computer and Information Science Engineering, 
a $22 million of 8.6% increase above the previous year. The 
goals of this activity, according to the agency justification, 
are ``to promote fundamental research and education in the 
computer and information sciences and engineering, and to 
maintain the nation's preeminence in these fields.'' (emphasis 
added)
    Some in the scientific community would prefer that the 
argument for research funding be based solely on the need for 
expanding human knowledge and argue that nationalistic concerns 
such as economic growth, international security and the 
competitiveness of the nation's industries be excluded from the 
debate over federal support of agencies such as NSF. Wisely, 
NSF Directors have chosen to ignore that advice and, as a 
result, the Foundation has been spared the deep cuts which have 
been imposed on most other areas of the domestic discretionary 
budget.

                          the ncar procurement

    But there is real doubt as to how seriously NSF weighs 
broader national goals once its leadership has left the witness 
table. We fear that a recent incident involving the procurement 
of a supercomputer by the Foundation's National Center for 
Atmospheric Research (NCAR) may be very revealing as far as 
defining NSF's true commitment to broader national goals in its 
day to day expenditure of public funds.
    NCAR, which was organized by NSF and receives the 
overwhelming share of its budget from NSF, uses supercomputers 
for complex weather simulation analysis. Over the years, NCAR 
has been working to build one of the world's largest complexes 
of supercomputers used for purposes other than national 
security. As part of that effort, NCAR attempted to negotiate 
the donation of a supercomputer by Fujitsu Ltd. of Japan but 
that effort was thwarted by the realization that U.S. anti-
dumping laws would prohibit such a donation.
    More recently, NCAR published a request for proposals to 
provide the most capable supercomputer possible for a fixed 
price of $35 million--to be operational by October, 1998. More 
than 90% of the funding for the new computer was to be provided 
by NSF--principally through NSF's High Capacity Computing 
Program.
    Three companies made proposals, NEC Ltd. of Japan, Cray 
Research of the United States and Fujitsu Ltd. also of Japan. 
The architecture and capabilities of the U.S. machine differed 
from that of the two machines proposed by the Japanese. The 
U.S. machine ran at a faster ``clock speed'' and would 
therefore be considered a faster machine on a pound for pound 
or chip for chip basis. But one of the Japanese companies, NEC, 
proposed to provide NCAR with about three times the amount of 
equipment--thereby providing a significantly faster overall 
machine. (The content of the Fujitsu bid is unknown.)
    Despite the very clear likelihood that such a generous 
offer of equipment on the part of NEC might involve unfair 
trade practices and constitute ``dumping'' under U.S. law, NCAR 
decided to proceed solely on the basis of cost. The Los Angeles 
Times reported on May 20:

          Lawrence Rudolf, NSF general counsel, said the only 
        criterion important to the Center was which computer 
        could calculate its set of equations fastest, thereby 
        making U.S. climate research preeminent in the world.
          ``We were not weighing national interest here, but we 
        were evaluating the singular interest of our scientists 
        to be at the cutting edge of climatological research,'' 
        Rudolf said.

    The Times further indicated that Rudolf has told them ``* * 
* federal laboratories--the biggest customers for 
supercomputers--are under such tremendous budget pressure that 
they are not inclined to do any favors for U.S. corporations.'' 
The article quoted a ``senior federal technology official,'' 
saying, ``It is a very surprising situation. These people don't 
have any loyalty to brand or country. * * *''
    Because of concern that enforcers of U.S. ``anti-dumping'' 
laws might look harshly on the generous Japanese offer and 
interfere with the procurement, NCAR hired a consultant to 
defend their decision. The consultant was provided details on 
the NEC proposal and based on those details estimated the true 
value of the NEC equipment to be less than the price permitted 
by the NCAR proposal request.
    Further analysis of the work done by the NCAR consultant, 
however, demonstrated that he had in fact documented a clear 
case of dumping. The consultant had omitted consideration of 
development costs, full costs and full general and 
administrative expenses. Even the most modest estimates of 
these costs indicate that NEC was bidding to sell the NCAR 
computer at a significant loss.
    Cray indicates that their most conservative estimate of the 
total cost to NEC of the NCAR deal is $90 million. There are 
indications that other estimates of the true value of the NEC 
offer may exceed Cray's.
    Prior to announcing that they were proceeding with the NEC 
proposal, the National Science Foundation was warned by the 
U.S. Department of Commerce that the NEC computer was being 
dumped. Before the Commerce Department could deliver that 
warning in writing, however, NSF sent word to NCAR to proceed 
with the procurement, stating that they were ``to be 
complimented on the care and professionalism with which this 
procurement has been managed from the initial conception * * 
*'' and faxed a press release to the New York Times announcing 
that the NEC proposal ``is best suited to meet its technical 
requirements.''
    Following NSF's procurement announcement, the Commerce 
Department warned NSF Director Neal Lane in a formal letter, 
``We have significant concerns that importation of the NCAR 
supercomputer system would threaten the U.S. supercomputer 
industry with material injury * * *'' The letter further 
stated, ``* * * using standard methodology prescribed by the 
antidumping law, we estimate that the cost of production of one 
of the foreign bidders is substantially greater than the 
funding levels projected by NCAR's request proposals * * * the 
amount by which the fair value of the merchandise to be 
supplied exceeds the export price, is likely to be very high.'' 
(emphasis added)

  the u.s. supercomputer industry is critical to economic growth and 
national security--it is also highly vulnerable to foreign mercantilism

    To fully understand this story, it is necessary to have 
some background on the supercomputer industry, its financial 
structure and its strategic importance to other industries with 
respect to competition in international trade. The Los Angeles 
Times May 20th article on the NCAR procurement provided a 
succinct discussion of the critical place supercomputer 
production holds with respect to international economic 
competition:

          Although the supercomputer industry is a relatively 
        small and obscure sector of the U.S. electronics 
        business--dwarfed by the market for personal computers, 
        for example--it is widely regarded as a cornerstone of 
        U.S. competitiveness * * *
          Supercomputers are crucial to the design of aircraft 
        and jet engines, not to mention other computers. The 
        nation with the best supercomputers can decode other 
        nation's (sic) secrets, predict the weather with 
        greater accuracy and better unravel the mysteries of 
        genetics.
          Moreover, the ability to design supercomputers--the 
        fastest computers--has always been assumed to create a 
        trickle-down effect that benefits leadership of 
        everything from microprocessors to personal computers.

    The Times might have also mentioned the emerging role of 
supercomputers in the design, simulation, testing and 
manufacture of new products ranging from automobiles to fighter 
aircraft and new fabrics. There are few observers of the world 
automobile industry who do not give the intensive application 
of supercomputers a measurable share of the credit for the 
resurgence of the U.S. automotive industry. Any cursory review 
of the direction of commercial air craft production equally 
demonstrates the emerging role of supercomputers in 
manufacturing and production. The entire production process of 
the new Boeing 777 is centered around the supercomputer--a fact 
that has not been lost on Mitsubishi and other would be 
entrants into the world commercial aircraft market.
    Financial analysts of the supercomputer industry have 
questioned the long term viability of U.S. supercomputer 
producers for some years. These questions are not directed at 
the technology possessed by U.S. firms, the compensation of 
their workforce or their commitment to future research and 
development. Rather, analysts have been concerned that the 
extraordinary expenditures required for research in this 
industry provides an inordinate advantage to firms with very 
deep pockets. Because of the more fluid and open demand for 
capital in the United States, it if difficult to find investors 
willing to sustain large losses over extended periods of time 
in order to dominate any particular market. The difficult path 
which U.S. producers have faced is demonstrated by the fact 
that 10 of the 15 U.S. companies that have produced 
Supercomputers are now out of business, two others remain in 
business but have ceased producing supercomputers and each of 
the remaining three have merged with larger companies. The 
major remaining producer, Cray Research, now a subsidiary of 
Silicon Graphics, does not have deep pockets, even by U.S. 
standards. Although it presently maintains more than a 60% 
share of the world supercomputer market, it finances its 
research and development of future generations of 
supercomputers out of profits on current sales.
    That stands in sharp contrast to the financial situation 
enjoyed by both Fujitsu and NEC. Subsidiaries of two of the 
largest capitalized companies in the world, both producers are 
beneficiaries of their parent company's membership in two of 
the most powerful Japanese Keiretsu and the almost limitless 
credit that relationship implies from the mega banks that lead 
those keiretsu. (NEC is a member of the Sumitomo industrial 
group which includes the Sumitomo Bank with assets of more than 
half a trillion U.S. dollars--more than twice the size of the 
largest U.S. bank.)
    Laura Tyson, chairman of the President's National Economic 
Council described the situation in her book, ``Who's Bashing 
Whom'':

          At the root of the ability of Japanese firms to 
        compete aggressively on price, even when it means 
        selling products below cost and running losses, are the 
        unique structural features of the Japanese economy. The 
        companies competing with Cray and Motorola have deep 
        pockets and long time horizons. They can afford to 
        cross-subsidize losses in one market with profits from 
        another. They continue to benefit from a variety of 
        promotional policies and from lax enforcement of 
        regulations on restrictive business practices. They 
        also continue to benefit from the insulated nature of 
        the Japanese market, fostered by these and other 
        structural impediments. In short, the pricing behavior 
        of Japanese companies is a natural outgrowth of Japan's 
        business and government environment.

    Both NEC and Fujitsu supercomputer operations have lost 
significant amounts of money every single year since their 
inception in the early 1970s. Their annual sales have averaged 
less than $50 million, while their annual research costs alone 
are likely to have exceeded $100 million. But the prize is the 
potential opportunity to eliminate a competitor who cannot 
sustain losses for an extended period of time and who currently 
holds 60% of the world market. Once that competitor is 
eliminated, pricing could become highly advantageous. The 
business partners who have helped NEC and Fujitsu sustain their 
business through more than a decade of heavy losses would not 
only benefit from this long term opportunity for profitability, 
but also from the strategic advantage of controlling a 
technology that will be critical to future generations of 
manufacturing processes and to the security efforts of the U.S. 
and other nations.

                   ACTION IN THE APPROPRIATIONS BILL

    Section 421 of the Veterans, HUD and Independent Agency 
Appropriation contains language which provides:

          None of the funds appropriated or otherwise made 
        available by this Act may be used to pay the salaries 
        of personnel who approve a contract for the purchase, 
        lease, or acquisition in any manner of supercomputing 
        equipment or services after a preliminary 
        determination, as defined in 19 U.S.C. 1673b, or final 
        determination, as defined in 19 U.S.C. 1673d, by the 
        Department of Commerce that an organization providing 
        such supercomputing equipment or services has offered 
        such product at other than fair value.

    We believe this language should remain in the bill for all 
of the reasons outlined above. Failure to retain the language 
will seriously damage a small but critical U.S. industry. It 
will result in the use of taxpayer funds appropriated to 
strengthen U.S. competitiveness in supercomputing for the 
purchase of a foreign made product sold at below market price. 
That would ultimately not only damage the industry that the 
funds were targeted to assist, but the good name and future 
funding prospects of the National Science Foundation as well.
    Contrary to the arguments being put forth by the NEC 
lobbyists, the language does not violate any U.S. trade 
agreement. There is no agreement that binds any government to 
buy dumped goods. While the U.S. and Japanese governments 
signed agreements in 1993 aimed at opening up government 
procurement, those agreements are aimed at forcing a more open 
and above board procurement process on the part of purchasers, 
not as an opportunity for unfair pricing on the part of 
sellers.
    It should also be pointed out that contrary to the 
arguments being put forward by the NEC lobbyists, Japan's 
compliance with the agreement has been so poor as to require 
comment in the most recent ``Foreign Trade Barriers'' report of 
the U.S. Special Trade Representative. In the area of 
supercomputers, the report notes:

          The positive trend in Japanese Government 
        supercomputer procurement witnessed in JFY 1993 and 
        1994 was reversed in JFY 1995, during which U.S. firms 
        won only one of 11 Japanese Government procurements. 
        Moreover, the United States has serious concerns about 
        the conduct of the procurement process in two specific 
        procurements.

    While the 1990 U.S.-Japan Supercomputer Arrangement set 
forth a process by which dumping practices can be remedied, 
neither that arrangement nor any agreement signed by the United 
States stipulates that this process is the only option 
available to governments who have encountered dumping in their 
contract procedures. To make such an agreement would constitute 
a profound abdication of national sovereignty. It should also 
be noted, that this arrangement does not even extend to 
government grantees, and neither NCAR nor its counterparts in 
Japan are affected by the agreements.
    Finally, it should be noted that the standard remedy for 
dumping provides a far more effective deterrent to predatory 
pricing of consumer products and most capital goods than it 
does for supercomputers. A foreign producer that is willing to 
deliberately take a loss of $50 to $80 million in order to make 
a single computer sale certainly may be willing to also absorb 
a $50 to $80 million tariff on top of that loss. Further, if 
the computer arrives in the U.S. prior to a determination of 
dumping by the Commerce Department, no tariff will be charged 
against that machine and if NEC can demonstrate that future 
machines differ from the one provided to NCAR, no tariff will 
be livied against those machines, irrespective of the Commerce 
ruling on the first machine. Ultimately, the unusual 
characteristics of supercomputer development and marketing may 
make the normal trade remedies for dumping weak, and possibly 
meaningless, deterrents.
    In previous instances in which concerns were raised about 
the impact of foreign government procurements on critical 
domestic industries, the Congress has elected to simply specify 
that such procurements were to be made from American producers. 
This language is much more restrained than that. It does allow 
foreign purchases if they are not based on predatory pricing 
practices, but would ban the use of tax dollars when a foreign 
producer has made an offer at less than fair market value. In 
our estimation, that is the very least the Congress and this 
government should do.

                                   Martin Olav Sabo.
                                   David Obey.
                 ADDITIONAL VIEWS OF HON. LOUIS STOKES

    Overall, the 1997 VA-HUD-Independent Agencies 
Appropriations Bill is an improvement when compared to the 
measure reported from this Committee last year. Funding for the 
Veterans Health Administration is virtually identical to the 
President's request, compared to the reduction of $440 million 
recommended last year. Good faith efforts have been made to 
fund the most critical programs of the Department of Housing 
and Urban Development at levels close to the budget request, 
including Public Housing Operating Subsidies, Drug Elimination 
Grants for Low-Income Housing, and Revitalization of Severely 
Distressed Public Housing (HOPE VII). The Environmental 
Protection Agency is funded at 93 percent of the budget 
request, compared with 67 percent of the request recommended 
last year. And, in an important concession to the ill-advised 
attempt last year to roll back and limit several provisions of 
environmental law, this bill includes no anti-environmental 
riders.
    Although the bill is much improved compared to the original 
1996 measure, there are several provisions that are troublesome 
and hopefully will be changed as the bill moves forward. Among 
the most serious of problematic provisions are the following:
    Section 8 Portfolio Re-engineering. While there is general 
agreement that HUD's section 8 program is in serious need of 
restructuring, there is no unanimity of opinion on exactly how 
to proceed. In today's budget climate, renewing expiring 
section 8 contracts at current rates is not a viable long-term 
option. Also, the fact that many section 8 properties require 
rents above market rates to avoid foreclosure is a situation 
demanding a fiscally sensible solution. However, any 
comprehensive legislative proposal to revamp the section 8 
program should be developed by the authorization committees of 
jurisdiction--not the Appropriations Committees. This bill 
includes 16 pages of substantive legislation providing the 
Secretary of Housing and Urban Development with considerable 
authority to waive existing law and delegate vast power to 
``qualified liability managers'', including private, for-profit 
businesses, to accomplish the goals of the legislation. Such 
major changes in the law governing our Nation's assisted 
housing programs is properly under the purview of the Committee 
on Banking and Financial Services in the House and the 
Committee on Banking, Housing and Urban Affairs in the Senate.
    The fiscal year 1996 VA-HUD-Independent Agencies Act 
included a provision allowing the Secretary of HUD to conduct a 
demonstration program ``re-engineering'' up to 15,000 units of 
section 8 assisted housing. The Department is still studying 
the demonstration concept and no regulations have been drafted 
yet for its implementation. Notwithstanding this fact, the 
Committee in this legislation is authorizing HUD to restructure 
85-90 percent of the expiring section 8 assisted housing units 
with rents above market (at least 70,000 units). If this 
concept is implemented on all expiring section 8 contracts in 
the future, the potential claims on the Federal Housing 
Administration Fund are staggering in their magnitude. The 
scorekeeping issues of the Committee's proposal are complex and 
not fully understood. Although the Congressional Budget Office 
has scored a small discretionary credit for the portfolio re-
engineering language included in the bill, a more complete 
analysis is required. Before enacting such a major change in 
existing law, the Congress should be fully aware of the long-
term effect of the proposal on both the discretionary and 
mandatory parts of the budget, including tax implications.
    While one of the stated reasons for including the portfolio 
re-engineering provision is to protect the tenants from 
dislocation, concerns remain that there still will be too much 
involuntary dislocation. However, the proposal appears to 
address the major concerns of property owners, including their 
potential tax liability. According to HUD officials, the 
provision as reported would allow HUD to charge off to the FHA 
Fund the amount of mortgages written down to a level 
supportable by market rents and the tax liability of property 
owners for their debt reduction. Once again, the 
appropriateness of such a recommendation should be developed by 
the legislative committees, in this case the tax writing panels 
of the House and the Senate.
    Community Development Block Grant Funding Level. One of the 
most popular HUD activities of both Republicans and Democrats 
in Congress and the Executive Branch for the past twenty years 
has been the Community Development Block Grant Program. The 
program is also a favorite with mayors and city councils across 
the country. The program has enjoyed such success and been so 
stable that many communities routinely build into their budgets 
anticipated CDBG funding levels. Consequently, it is dismaying 
to see the Committee recommend a reduction in the CDBG program 
of $300 million below the 1996 level and the request of the 
Administration, not counting the additional $300 million 
requested for the CDBG economic development bonus program.
    Money from the CDBG program leverages even greater 
resources from state, local and private sources. The 
significant reduction recommended by the Committee will have 
undesirable and far reaching effects in hundreds of cities and 
towns. I am committed to continuing to work with the Chairman 
of this subcommittee toward increased funding for this 
important program, as this bill proceeds to the floor and to 
conference. In fact, a $100 million increase occurred at the 
full committee mark-up when the Chairman's amendment included 
this increase over the subcommittee mark.
    Superfund Funding. As recommended by the VA-HUD 
subcommittee, this bill contained approximately $1.3 billion 
for the Superfund program, roughly the amount of the budget 
request and the total made available in fiscal year 1996. 
During consideration of the bill by the Full Committee last 
week, an omnibus manager's amendment was adopted. Included in 
that amendment was an ``ostensible'' increase of $861 million 
for the Superfund program. This apparent increase, however, is 
negated by a proviso which was also adopted as part of the 
manager's amendment. That proviso reads in full: Provided 
further, that $861,000,000 of the funds appropriated under this 
heading shall become available for obligation only upon the 
enactment of future legislation that specifically makes these 
funds available for obligation. Under the scorekeeping 
rationale used by the Congressional Budget Office for this 
account, that language means there is no cost in either budget 
authority or outlays in this bill for the $861,000,000.
    This legislative maneuver is in marked contrast to the 
recommendation made by the Committee for the Safe Drinking 
Water Program, another important environmental effort currently 
lacking authorization. In that instance, the Committee provided 
real money which scores against discretionary budget targets. 
To address the eventuality that authorizing legislation may not 
become enacted in a timely manner, language has also been 
included that provides for the use of drinking water funding by 
the clean water program after a certain date.
    Given the limited number of legislative days remaining in 
the 104th Congress, it is improbable that an authorizing bill 
will be enacted this year. In short, this promise of additional 
Superfund funding is more illusory than real.
    Toxic Release Inventory. The Committee has reduced funding 
in the EPA's Environmental Programs and Management account by 
$1,500,000 and included language in the report directing the 
Agency not to take any action to expand the toxic release 
inventory to include toxic use data. The toxic release 
inventory has been an invaluable tool in providing communities 
information regarding toxic chemicals that are in use in their 
neighborhoods. The TRI has also had a positive environmental 
impact as industry has frequently elected to eliminate the use 
of toxic pollutants rather than meet the disclosure 
requirements.
    The Administration is seeking to broaden reported data 
regarding toxic chemicals to include information on the use of 
these chemicals. This information is vital for conducting risk 
assessments and other analyses required for sound regulatory 
decisions. The majority believes this expansion lies outside of 
EPA's authority and thus is reducing funding to block expansion 
of this right-to-know database. The Administration deems this 
reduction to be particularly objectionable.
    As I stated earlier, this bill is much improved compared to 
the original 1996 measure. It is my intention to work to 
improve the troublesome provisions in the bill as we proceed 
through the legislative process.

                                   Louis Stokes.