Appropriations to pay for practices under the 1973 program will be requested in the appropriations bill for the next fiscal year.

Since it is clear that neither the substantive legislation nor the appropriation act compels the obligation and expenditure of the full amount authorized but merely authorizes a program to be carried out, it is our opinion that the program may legally be terminated.

This is not the first time that a program carried out under the Soil Conservation and Domestic Allotment Act was of a lesser magnitude than that for which contract authority was provided in the annual appropriations act for the Department. For example, the appropriation act for fiscal year 1971 (Public Law 91-566) authorized a program amounting to $19,500,000 for 1971, but because of limitations placed on activities under the program by the Department, appropriations needed to pay for practices carried out under the program amounted to $150,000,000 (Public Law 92-73). In the appropriation act for fiscal year 1968 (Public Law 90-113) a program amounting to $220,000,000 was authorized for 1968 but again because of limitations placed by the Department on activities under the program, the appropriation act for the following year appropriated funds in the reduced amount of $190,000,000 (Public Law 90-463).

A similar situation exists with respect to the Water Bank Program. Section 3 of that Act provides:

"In effectuating the water bank program authorized by this Act, the Secretary shall have authority to enter into agreements with landowners and operators in important migratory waterfowl nesting and breeding areas for the conservation of water on specified farm, ranch, or other wetlands identified in a conservation plan developed in cooperation with the Soil and Water Conservation District in which the lands are located, under such rules and regulations as the Secretary may prescribe." (Italic supplied.)

This Act also authorizes but does not require a program to be carried out by the Secretray. Here, too, the Department will honor contracts already entered into with producers. What is terminated for the balance of the fiscal year is the approval of new contracts.

These cases are similar to other situations in which the Department of Justice ruled that the Executive may properly limit Federal aid which may be obligated during the fiscal year after examining authorizing legislation which did not use mandatory language to direct the expenditure of funds. See cases discussed in the Department of Justice Memoranum appearing at 116 Congressional Record 345, January 20, 1970, and 42 Ops. A.G. No. 32 (1967). For the foregoing reasons, we are of the view that the Department's action in terminating assistance under the REAP and Water Bank Program was legally authorized.

EDWARD M. SHULMAN,

General Counsel.

[U.S. Department of Agriculture News Release]

RURAL HOUSING PROGRAM PROCEEDS ON UNSUBSIDIZED BASIS

WASHINGTON, Jan. 10, 1973.-The Department of Agriculture announced today that its rural housing credit program, administered through the Farmers Home Administration, will continue on an unsubsidized basis.

The Department said several Federally-subsidized loan and grant programs for rural housing will be subjected to an 18-month evaluation study, during which the processing of new applications will be temporarily discontinued. This is a part of a government-wide program, previously announced by Secretary George Romney, Department of Housing and Urban Development.

Farmers Home Administration (FHA) will confine its subsidized housing loan program this fiscal year to applications that have been certified for approval between July 1, 1972 and Jan. 8, 1973. Most construction under those approvals will occur during the coming spring building season.

Unsubsidized home ownership loans will continue to be made. It is estimated that there will be more than 100,000 housing loans for the fiscal year. The current interest rate on unsubsidized loans is 74 percent.

The Department said the suspension in subsidized housing will be in effect for 18 months to allow time for a comprehensive evaluation of the programs. The study will seek to determine whether the programs in question are the most effective means available for providing benefits to low-income families,

whether the programs provide benefits to persons other than low-income borrowers, and whether the Government's role in the program is an appropirate Federal role.

Housing programs affected by the temporary discontinuance of new approvals

are:

Housing loans to low-income families that involve an interest subsidy. Subsidized interest rates to borrowers have ranged as low as one percent under the present program.

Rental and cooperative housing loans.

The farm labor housing program of grants plus loans at one percent interest.

The announcement specified that all applications in these categories that have been certified for approval prior to the suspension will be processed through to loan or grant disbursement

Housing programs of the Farmers Home Administration not affected by the discontinuance announcement are:

Housing loans to families of low and moderate income that do not involve interest subsidies.

Housing repair loans to low-income families (loan maximum $3,500). Mutual self-help housing loans under the program whereby low-income families perform much of the labor in building their own homes.

Grants to provide technical aid organizations that assist in organizing and carrying out self-help housing projects.

Loans to nonprofit organizations for development of rural homesite areas. Farmers Home Administration housing programs are administered in rural areas, including the countryside and towns of up to 10,000 population, and serve people of low and moderate income who find no other housing credit available.

[U.S. Department of Agriculture News Release]

TERMINATE FHA WATER AND WASTE DISPOSAL GRANTS

WASHINGTON, Jan. 10, 1973.-As a result of an across-the-board review of federal programs to hold 1973 budget outlays to $250 billion, the U.S. Department of Agriculture today announced termination of planning and development grants in the water and waste disposal programs of Farmers Home Administration. The action will also help keep the outstanding public debt within the statutory limit of $465 billion.

Grant funds are still available to rural communities, officials said, under other programs. The Federal Water Pollution Control Act (FWPC) of 1972 and the revenue sharing program make substantial amounts of funds available through the Environmental Protection Agency (EPA) as well as directly to state and local communities. These funds are for use in developing highest priority projects as determined by local officials.

The FWPC Act also authorizes EPA to provide substantial amounts in the form of grants for waste disposal purposes.

Farmers Home Administration will continue the water and waste disposal loan program for those communities unable to obtain the necessary financing to repair or develop urgently needed facilities.

Termination of the FHA water and waste disposal grant program became effective Jan. 1.

Water and waste disposal grants were initiated in 1965 to supplement the FHA's loan program for planning and development of community water and waste disposal projects in rural areas, when funds were not available from other

sources.

U.S. DEPARTMENT OF AGRICULTURE, RURAL ELECTRIFICATION ADMINISTRATION, FACT SHEET ON NEW REA FINANCIAL RESOURCES-JANUARY 11, 1973

ACTION

REA has an additional $200 million in increased loan authority. This 42 percent incease is available under a new REA system of insured and guaranteed loans, replacing the former system of direct loans.

Total loan authority for Fiscal Year 1973 is increased to $618 million for rural electric loans, and to $145 million for rural telephone loans.

BACKGROUND

The Rural Development Act of 1972 provides the authority under which all REA loans approved after December 31, 1972 will be made as insured or guaranteed loans.

Insured loans to rural electric or telephone cooperatives will be made at 5 percent interest. Any interest cost above 5 percent will be met from appropriated funds. The Government will insure the loan.

REA is authorized to guarantee loans to commercial power companies and commercial telphone companies at market rates of interest-and to electric cooperatives where private capital is offered at advantageous terms.

Changing to insured and guaranteed loans brings REA more in line with present day costs of borrowing. When REA was created, the 2 percent interest rate on REA loans was in line with the 1.9 percent rate charged in the money market. The new 5 percent interest rate is in line with current borrowing costs.

This action makes REA's more financially independent, in line with the cooperative bank financing they provided for themselves.

Long-range, borrowers are expected to be able to obtain more capital from private sources to meet their expanding needs than previously was available under the Rural Electrification Act.

Of the 7 million meters on REA lines, 1.4 million are farm meters, lines financed by REA in 1972 averaged 14 meters per mile. Obviously the bulk of these customers were rural residents, retirees, urban workers and industries, rather than bona fide operating farms.

U.S. DEPARTMENT OF AGRICULTURE, AGRICULTURAL STABILIZATION AND CONSERVATION SERVICE, FACT SHEET ON TERMINATION OF REAP-JANUARY 11, 1973

ACTION

Federal cost sharing for conservation practices installed by farmers under the Rural Environmental Assistance Program (REAP) has been terminated. The Department of Agriculture will honor commitments made through December 22, 22, 1973.

BACKGROUND

Farmers are better able to pay for conservation practices than ever before. Farm income for 1972 set an all-time record of nearly $19 billion, up about $3 billion from 1971.

REAP, begun in the 1930's, was conceived as an incentive program to help farmers discover the benefits of conservation farming and encourage them to install soil and water conservation practices on their land.

Today soil and water conservation practices are an accepted part of sound, efficient farm operations. The cost-share incentive is no longer needed as it was in earlier years.

Only about 20 percent of the total U.S. farms participate in any given year. The average annual payment per participant is only $239.

Nearly half of the 1971 cost-sharing was for practices related to livestock production, a sector of agriculture in relatively solid economic condition.

About 30 percent of cost sharing was for practices directly related to crop production: drainage, irrigation and liming. Such practices pay for themselves in increased production and land value.

Critical, local conservation needs can be met through Revenue Sharing funds provided to States for use according to locally determined priorities.

Funds for Emergency Conservation Measures will continue to be available for farmers when natural disasters cause severe erosion problems.

U.S. DEPARTMENT OF AGRICULTURE, FARMERS HOME ADMINISTRATION-JANUARY 11,

1973

ACTION

The United States Department of Agriculture has expanded its operating loan program to help meet the financial needs of farmers in disaster areas. Farm operating loans are now available to many operators of family-sized farms who

have suffered loss from natural disaster, are unable to secure emergency assistance, and cannot obtain credit from other sources.

The regular farm operating loan program of 5% percent credit has been expanded by the Farmers Home Administration to accommodate these needs previously met by the FHA emergency loan program which is being gradually curtailed as announced on December 27, 1972.

BACKGROUND

The Secretary of Agriculture established cutoff dates for accepting applications for rural emergency loans and expanded the regular operating loan program because of the unprecedented and unanticipated demand for emergency loans. That demand was caused partially by the extremely attractive provisions of the Agnes/Rapid City Act (P.L. 92-385) which provided that up to $5,000 of the loan may be forgiven to cover actual loss with a one percent interest rate on the balance of the loan. The critical factor, however, was that the $5000 forgiveness and one percent interest features of the Act were extended to all emergencies declared between July 1, 1971, and July 1, 1973. Prior to this time, only Presidentiallydsignated disaster areas had been eligible for the special provisions.

Loans designated already for emergency areas for the first six months of Fiscal Year 1973 are expected to double the annual record of $127.6 million approved in 1971. Cost could have reached $800 million this year. To continue the Agnes/Rapid City Act provisions for that many countries would have required considerably more funds than could be made available.

AMERICAN ASSOCIATION OF STATE HIGHWAY OFFICIALS,

To: The Members of the 90th Congress,
Washington, D.C.

Washington, D.C., September 17, 1968.

Please find enclosed, herewith, a resolution unanimously adopted by the Executive Committee of the American Association of State Highway Officials, meeting in Cheyenne, Wyoming, in a special meeting yesterday, to hear an explanation of the most recent highway cutback ordered on September 6th of this year.

We believe that this resolution, although of considerable length, is self-explanatory and explains the problem and dilemma facing the State highway departments at this time.

We, as public officials, request your earnest consideration of this resolution and we would like your support in specifically exempting the highway program from the Revenue and Expenditure Control Act of 1968, inasmuch as we do not believe it is a genuine reduction in expenditures, but only a deferral until the coming fiscal year.

The interruptions and the uncertainties that have been injected into the highway program makes it almost impossible for the State highway departments to plan and for the program to be carried out efficiently and serve the public interest. Respectfully yours,

A. E. JOHNSON,
Executive Director.

RESOLUTION ON THE SUBJECT OF THE FEDERAL-AID HIGHWAY PROGRAM

Adopted September 16, 1968

Whereas the economic well-being and safety of this Nation is dependent upon an adequate and safe highway transportation system now and in the future, and Whereas documented highway needs are of such magnitude as to require a continuous all-out effort utilizing all available funds to prevent such needs from becoming irretrievably out of balance with available facilities, and

Whereas within recent years tampering with the Federal-aid highway program through the imposition of cutbacks and other restrictive fiscal controls has introduced serious uncertainty in the program to the degree that it is impossible for the State highway departments to schedule their construction activities in advance, fully utilize the services of skilled personnel, or plan their matching fund requirements, and

Whereas the most recent cutback announced on September 6th of this year is imposed on top of one that had already been imposed for the calendar year, with

certain assurances to the State highway departments that they would be allowed to obligate a certain amount of funds during the calendar year, and

Whereas this uncertainty is seriously damaging the efficiency and health of the highway industry which must be maintained to serve the public interest, and Whereas the basic and primary highway responsibility to the people in this Nation rests with the States and the Federal-aid program now is of such size and importance that it controls and dominates the program of the several States which, in turn, places a share of this responsibility for safe and adequate highways on the Congress, and

Whereas the Highway Trust Fund which must be considered a covenant and a contract between the Federal Government, the States, and the highway users who pay the taxes, that such funds will be used for highway improvements as they accrue and not be used to temporarily and artificially correct national budget deficits and, in effect, the most recent highway program cutback is not a genuine reduction of expenditures in line with the intent of the Congress but is only a deferral of such expenditures. Now therefore be it

Resolved, That the Executive Committee of the American Association of State Highway Officials, speaking for the several State highway departments, and meeting in Cheyenne, Wyoming, on September 16th, 1968, respectfully requests the Chairmen of the Senate and House Public Works Committees of the Congress to reconvene the joint Committee hearings on the effect of cutbacks on the Federal-aid highway program that were recessed in 1967, in order to check the magnitude of essential highway needs, the present rate of highway development, the adequacy of available highway funding, and the undesirable impact and effects resulting from highway program interruptions, and be it further

Resolved, that such hearings assess the cost attributable to such cutbacks caused by the inefficiency resulting from turning on and off this large public works program throughout its wide spectrum of influence, and be it further

Resolved, That the Senate and House Public Works Committees be requested to initiate action in the Congress of the United States to specifically exempt the highway program from the Congressional ordered reduction in Federal expenditures, and be it further

Resolved, That the Secretary of Transportation immediately announce the apportionment of the 1970 fiscal year Federal-aid highway funds to the several States and permit the program to proceed on the basis of the full capabilites of the Highway Trust fund, and be it further

Resolved, That copies of this resolution be sent to the President of the United States, the Director of the Bureau of the Budget, the Secretary of the Treasury, the Secretary of Transportation, the Federal Highway Administrator, the Director of Public Roads, the Governors of the several States, and the Members of Congress.

AMERICAN ASSOCIATION OF STATE HIGHWAY OFFICIALS

CHRONOLOGY

November 23, 1966: First Cutback of Highway Funds.

November 26, 1966: Meeting of Chief Administrative Officers of AASHO to discuss cutback.

February 17, 1967: Meeting of Executive Committee to draft testimony on Joint Hearings.

February 27, 28; March 1-2, 1967: Joint Public Works Committee hearings on cutback (recessed on February 28 subject to call after hearing Administration witnesses).

October 8, 1967: Telegrams from Secretary Boyd to Governors advising of further cutback.

January 23, 1968: Cutback officially announced in IM 30-2-68.

September 2, 1968: Vice President Agnew discussed cutback at Governors Conference.

September 6, 1968: Additional cutback announced.

September 16, 1968: Meeting between Federal Highway Administrator and Executive Committee to discuss cutback. Executive Committee resolution requesting that Joint Hearings be reconvened.

June 19, 1972: A decision rendered by the U.S. District Court for the Western District of Missouri, Central Division, issued a restraining order enjoining further withholding of funds by Volpe and Weinberger and ordered release of

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