House Report 104-628 - DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES APPROPRIATIONS BILL, 1997

[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.