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STATEMENT OF CHARLES A. ROBINSON, JR., STAFF COUNSEL, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION, ACCOMPANIED BY JOHN D. HAWKE, JR., ATTORNEY, AND DON SMITH, STAFF ECONOMIST

Mr. ROBINSON. My name is Charles A. Robinson, Jr. I am staff counsel to the general manager of the National Rural Electric Cooperative Association. NREČA is the national trade association of nonprofit cooperatives which provide central station electric service throughout the rural areas of 46 States and which, until recently, were financed via loans from the Rural Electrification Administration. I have two people with me today, Mr. Chairman, on my right a very distinguished lawyer, Mr. John D. Hawke, Jr., a partner in the Washington, D.C., law firm of Arnold & Porter, which was formerly known as Arnold, Fortas & Porter, which firm did a considerable amount of work for us on the question about which I will speak with you briefly, and on my left is Mr. Don Smith, our staff economist.

On December 29, 1972, the U.S. Department of Agriculture terminated the REA 2 percent direct loan program and announced that thereafter:

All REA loans will be made as guaranteed and insured loans under the authority of Section 104 of the Rural Development Act of 1972 (section 306 (a) (1) of the Consolidated Farm and Home Development Act).

With all of the formality and due process of a one-page, back-toback, double-spaced press release, the Secretary of Agriculture unilaterally terminated a Federal program which has been operated successfully and continuously for 36 years pursuant to a specific statute enacted by Congress, and for the operation of which Congress has during all of those years continuously appropriated funds in response to Presidential budget requests.

In addition to the resulting higher interest cost ($990 million during the next 10 years assuming a $600 million annual loan program), the "conversion" of REA to an insured and guaranteed loan program under the Consolidated Farm and Home Development Act creates several other difficulties for borrowers. As examples:

1. All loans are subject to review by sub-State multijurisdictional general purpose planning and development commissions, and by the jurisdictional unit of local government (county or municipality), and may not be approved if inconsistent with the areawide plan of the multijurisdictional planning commission (7 U.S.C. 1926 (a) (3)). No such requirement is found in the Rural Electrification Act.

2. Loan applicants must certify to the Secretary in writing and the Secretary must determine that credit to finance their needs is not available elsewhere at reasonable rates and terms. (7 U.S.C. 1983 (a).) No such requirement is found in the Rural Electrification Act.

3. Each borrower must agree that if at any time it appears to the Secretary that he may be able to obtain a loan from other credit sources at reasonable rates and terms, he will, upon request of the Secretary or the insured lender, thereupon refinance the loan. [7 U.S.C. 1983 (c).] No such requirement is found in the Rural Electrification Act.

4. Final authority for the continuance and funding level of loan programs under the Consolidated Farm and Home Development Act

is vested in the executive branch (OMB) rather than in the Congress as with the Rural Electrification Act.

As of this time, Mr. Chairman, we do not know what the rate will be on these guaranteed loans. The interest rate in all cases we do not know what the ratio will be between guaranteed and insured loans under the program proposed in this press release. It is very general and nonspecific.

We do not know when the new program will start. We do not know whether or not the restrictions of the Rural Electrification Act will attach and be in addition to those found in the new act.

We think they will. We do not know which system will get insured loans and which system will get guaranteed loans. The program is very much in the dark and I am advised that as of this time the REA Administrator does not even have a general delegation to proceed with his new loan authority. If he has received it it is in the very last few days.

Let me respectfully emphasize that in our judgment this action by the Secretary of Agriculture on December 29, 1972, constitutes a great deal more than an impoundment of appropriated funds. It constitutes nothing less than a refusal by the executive branch to carry out the terms of a duly enacted Federal statute. In effect and in reality the Rural Electrification Act of 1936, has been repealed by a one-page Department of Agriculture press release.

To determine whether or not NRECA and its member rural electric system borrowers of REA might have a judicially enforceable remedy to reverse this administrative repeal of the Rural Electrification Act, we retained the Washington, D.C. law firm of Arnold & Porter. This firm has now completed a memorandum of law on the subject, which was submitted to our board of directors on January 22.

With the permission of the chairman, I will offer a copy of this memorandum of law, which is 74 pages in length, on the record, for whatever use the subcommittee may desire.

Senator CHILES. Without objection we will receive the memorandum.1

Mr. ROBINSON. In its 74-page memorandum, Arnold & Porter summarizes its views with respect to the termination of the REA loan program as follows (p. 3):

.. it is our view that a strong case can be made for the proposition that the Department has exceeded its legal authority in taking that action. We find no constitutional basis for the Department's action and we are of the view that Congress has not delegated to the Department the discretion to take such action. Without going into the detail of its work, Arnold & Porter reasoned along approximately the following line:

1. Authorization for presidential actions must stem from either an act of Congress or the Constitution, because the lawmaking power is entrusted by the Constitution to the Congress alone [Steel Seizure case, Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952)].

2. The Constitution does not confer power on the Executive to terminate statutorily established programs. Kendall v. United States ex rel. Stokes, 37 U.S. 522 (1838). See also Spaulding v. Douglas Aircraft Co., 60 F. Supp. 985; 154 F. 2d 419 (1946) and hearings before this sub

1 See p. 594.

committee in 1971. Also, United States v. Price, 116 U.S. 43 (1885), and United States v. Louisville, 169 U.S. 239 (1898)].

3. Congress has not expressly or impliedly delegated power to the Executive to terminate the Rural Electrification Act loan program in the Rural Electrification Act, itself, in any of the appropriations requested by the Secretary and approved by the Congress under that act, or in the Anti-Deficiency Act [31 U.S.C. 655 (c) (2)].

4. The Rural Development Act of 1972, was clearly not intended by Congress as a substitute for the Rural Electrification Act of 1936, but was intended rather to provide facilities such as community centers, firehouses, industrial parks, and fire and rescue equipment, including ambulances.

It was abundantly clear on the floor and in the committee reports at the time the Rural Development Act was passed last year the chairman of both the Senate committee, Senaor Talmadge and Congressman. Poage did not intend this act to replace any of the programs for which authorities then existed, which would be in addition to and not in lieu of. Therefore, it certainly cannot be assumed that act conferred power on the Administrator or Secretary to terminate the rural electrification program.

It, therefore, implied no authority to terminate the Rural Electrification Act loan program. (H. Rept. 1129, 92d Cong., second sess. (1972); 118 Congressional Record S13928-32 (daily ed.) Aug. 17, 1972. Also 118 Congressional Record H1333 (daily ed. Feb. 23, 1972.))

5. The Senate, during its consideration of the public debt and expenditure limitation legislation of 1972 (Public Law 92-599), twice refused to grant the President authority requested by him to cut specific budget items without limit. (118 Congressional Record S18529, S18510, S18527 daily ed. Oct. 17, 1972.)

This came the second time on rejection of the conference report on that legislation.

6. It is doubtful that even under authority provided by the Reorganization Act of 1959 (5 U.S.C. 901-913), which was not invoked in this case, the President could initiate the complete terminations of a statutory program. (95 Congressional Record 916 daily ed. 27/7/ 49.)

That is the procedure by which the President sets up a reorganization procedure, gives it a number, transmits to the Congress, to the House and Senate simultaneously and it becomes law unless either the House or Senate passes a resolution in opposition to it. It was the opinion of Arnold & Porter that even under this kind of procedure by which the President can initiate a reorganization plan, he could not so do with a plan which entirely replaced a statutory program without providing that it be continued by some other agency.

In the broader sense, we view the entire matter as an overt challenge to the constitutional lawmaking power of Congress by the Executive; a challenge in which the Executive refuses to carry out certain selected statutory programs enacted through regular constitutional procedures and, by so doing, completely frustrates the power and the intent of Congress.

In enacting legislation over the years, Congress has proceeded on the assumption that a law once duly enacted would be carried out in good faith by the executive branch. Its statutes, therefore, have spoken

permissively in terms of "authorizing" and "empowering" the Erecutive to perform certain acts, and of "making available" or "appropriating" money for specified purposes. Certainly, the Congress has not usually enacted laws in contemplation of situations created by a willful refusal of the executive to perform its constitutional responsibility. It seems to us that unless the Congress is willing to accept this challenge and to reassert its constitutional authority, it cannot avoid a serious deterioration of stature in the eyes of the American people.

The present situation, we suggest, indicates a very clear need for Congress to reappraise the language of its statutory pronouncements so that in those cases where Congress so intends, the mandatory nature of its actions will be inescapably clear to even a reluctant Executive. Specially, with respect to rural electrification, we are asking the Congress to enact S. 394 by Senators Humphrey, Aiken and 48 other Senators which would reaffirm the mandatory intent of Congress expressed in the Rural Electrification Act of 1936 by substituting the words "authorized and directed" in lieu of "authorized and empowered" in the operative language of the act, and would require expenditure of all funds appropriated by Congress in the year to which such appropriations are made. It would additionally provide that the authority contained in the Rural Development Act of 1972 is in addition to and not in lieu of any authority contained in the Rural Electrification Act.

Inasmuch as a great deal of the present controversy centers on the asserted discretion of the Executive to impound appropriated funds, the Congress, if it desires to cure the problem, might well begin writing its appropriation bills in terms of "directing", "mandating" and "requiring" the expenditure by the Executive of whatever portion of specific appropriation items the Congress feels should be beyond impoundment. That, I think, is the same thought expressed by Mr. Staats, the Comptroller General, that a great deal could be accomplished by Congress in using stronger language in its appropriation legislation.

Not only will the more liberal use of mandatory language in its legislative acts place a much heavier burden on the Executive who seeks to assert a discretionary power of nonexecution, but it will also give to the intended beneficiaries of such legislative acts a much clearer judicial remedy in a suit to require performance by the Executive of programs directed by the Congress.

There have been two cases decided so far under the impoundment proceedings by at least district courts. One of them involved a housing authority of the city and county of San Francisco versus the U.S. Department of HUD. The court concluded in that case that the underlying legislation included no mandate to use the entire amount of funds appropriated and the remedy was denied.

And as I am sure the chairman is well aware, the Missouri Highway Department brought a similar suit but since the Highway Trust Fund contains much stronger language with respect to restrictions on impoundments, the State of Missouri was successful at least in the trial court in that suit which is now on appeal.

As a general preventative measure against impoundment of appropriated funds under circumstances which thwart the will of Congress,

S. 373 introduced by the chairman of this subcommittee and other Senators would also go along way toward solving the problem.

I think with respect to that legislation also Mr. Staats had some excellent suggestions, namely, a suggestion that it be amended to avoid recycling, as he phrased it, of impoundment by the President, namely, sending up the same impoundment several times in series, which would defeat the purpose of the act.

We know the hour is late and we are most grateful for your staying with us.

Senator CHILES. Thank you, sir.

Senator ERVIN. Mr. Robinson, I just invite your attention to the opening words of the proposed legislation that whenever the President impounds any funds appropriated or otherwise obligated for a specific purpose or project or approves impoundment, such officers or employees of the United States shall within 10 days after, transmit to the Senate and House of Representatives a special message specifying certain things.

Now, it is true, is it not, in the case of many of the authorization bills which precede the appropriation bills, that in many cases Congress makes it more or less to the discretion of the President as to whether or not funds shall be expended.

Mr. ROBINSON. That is correct.

Senator ERVIN. And this proposed legislative program would not have application to bills which specifically give the President the discretionary power to expend or not to spend, or to contract for the expenditure, or not to contract for expenditure.

Mr. ROBINSON. You are speaking of your bill, Senator Ervin?
Senator ERVIN. Yes.

Mr. ROBINSON. Mr. Hawke says you are correct. I don't know the answer to that.

Senator ERVIN. Well, I think that is clear from the opening statement, and from the opening provision of the bill. I want to make that clear because it would have no application where the discretionary powers are specifically given to the President. It is only where Congress appropriates funds or provides for the obligation of funds for a specific purpose, that the bill would apply. That is the objective of it. Mr. Robinson. Senator, are you saying that if your bill passes it would then be still necessary to write appropriation bills in terms of mandating, requiring, and directing, rather than merely appropriating?

Senator ERVIN. No, I do not think so, because this bill would apply to any appropriation which was made by Congress as the bill says, for a specific purpose or project.

Mr. ROBINSON. Well, then I assume

Senator ERVIN. Of course it would be very helpful for Congress to put mandatory provisions in the appropriation bill to make it clear it is a bill of that nature.

Mr. ROBINSON. Yes, sir.

Senator ERVIN. And so your suggestion to that effect is very valuable because inclusion of mandatory language would make it very clear that it was a bill for a specific purpose or project within the purview of this act.

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