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during fiscal year 1975. We are also assuming that the Congress will appropriate the $10 million included in the 1975 Appropriation Act. Should a major disaster occur, the amount deferred would be made available for obligations.

RURAL ELECTRIFICATION ADMINISTRATION

Mr. WHITTEN. We shall insert in the record at this point the pertinent section of House Document 93-361 relating to the Rural Electrification Administration.

[The document follows:]

PROPOSED RECISSION OF BUDGET AUTHORITY

Report Pursuant to Sec. 1012 of Public Law 93-344

Agriculture-Rural Electrification Administration

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Public Law 93-32, approved May 11, 1973, amended the Rural Electrification Act by establishing the Rural Electrification and Telephone Revolving Fund (RETRF). Insured electric and telephone loans are now financed from this fund. Public Law 93-32 recognized and dealt with two major objectives which were particularly essen

tial to the reform of the REA program. First, it limited the availability of Federally insured loans at the "special" 2% interest rate to those electric or telephone borrowers in rural areas with a definite need as defined explicitly in the legislation. Second, it provided that in those areas in which the borrowers are able and can afford to help themselves, credit and assistance will come from the private sector. The funds now proposed for recission, when appropriated, were for direct Government loans at 2% interest for all borrowers in rural areas for the purposes authorized in Sections 4 and 201 of the Act. We believe that the Congress in enacting Public Law 93-32, subsequent to this authorization, recognized that the need for the indiscriminate use of a 2% interest rate should now be limited to those borrowers meeting the criteria for need expressed in Section 305(b) of the Act, as amended by P.L. 93–32.

ESTIMATED EFFECTS

No effect is anticipated since use of the funds is not planned and the needs of the borrowers for insured loans at the special rate can be met within levels of funding to be provided when the Appropria

tion Act is enacted.

If the Department were to obligate these funds in 1975, they would be made available to borrowers that do not qualify under current law and added spending would result as follows:

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DEPARTMENT OF AGRICULTure, Rural ELECTRIFICATION
ADMIN SIRATION, LOAN AUTHORIZATIONS

Authorizations provided under this heading in the Act of August 22, 1972 (Public Law 92-399) are reduced in the following amounts: rural electrification program $66,466,000, and rural telephone program, $89,168,525.

Mr. WHITTEN. How long has this authority been held in reserve? Mr. HAMIL. The $455,634,525-$366,466,000 for electric loans and $89,168,525 for telephone loans-was placed in reserve by the Office of Management and Budget on January 26, 1973.

Mr. WHITTEN. Describe in detail why this authority has not been used.

Mr. HAMIL. This authority has not been used because it has not been needed since the enactment of Public Law 93-32 on May 11, 1973. This act amended the Rural Electrification Act of 1936 to establish a rural electrification and telephone revolving fund for the purpose of making insured loans to REA electric and telephone borrowers. The act also authorized REA to guarantee loans made by other qualified lenders. This we have used to good advantage in meeting the large capital needs of power supply borrowers. Since enactment of Public Law 9332, Congress has provided us with ample authority to meet all reasonable needs of the borrowers, so we have not requested the release of the funds held in reserve, since they have not been needed.

Mr. WHITTEN. Are you absolutely certain that funding provided under the Rural Electrification Act of 1973-Public Law 93-32-will be sufficient to finance all 2-percent loans qualifying under the provisions of that act?

Mr. HAMIL. I can only answer this, Mr. Chairman, by referring you to Secretary Butz' letter of May 8, 1973, to the chairman of the House Committee on Agriculture in which he stated that "we can assure you that, during each of the next 3 years, an REA program at levels of not less than budgeted for the fiscal year 1974 will be operated through the REA under the authority of S. 394 as finally passed and that not less than $105 million $80 million for the electric program and $25 million for the telephone program-of new loans will be made at the 2percent rate." The Secretary further stated "As you know, the Secre tary would, of course, have authority to exceed this minimum level for 2-percent loans."

I would like to point out that, during fiscal year 1974, we deter mined that an additional amount was required, and that $120,109,000 was actually loaned at the 2-percent rate. In view of this authority, and this history. I feel that sufficient funds will be made available to meet the needs of borrowers qualifying for loans at the special 2-percent

rate.

Mr. WHITTEN. Is there any possibility that any of this authority will be needed in the future in connection with direct loans which were made prior to the new REA legislation as a result of changes in conditions in pending loans or litigation?

Mr. HAMIL. We do not feel that there is any possibility that the lending authority proposed for rescission will be needed in the ftuure in connection with direct loans which were made prior to the new legislation as a result of changes in conditions. The rescission would not in any way diminish the purposes for which REA loans can be made. Any requirement for additional loan funds because of cost escalation or similar requirements, for projects originally financed under sections. 4 or 201 of the Rural Electrification Act, could be taken care of through use of the new insured loan authority provided in the May 11, 1973, amendment to the act.

We believe this is also true with respect to litigation. Since loan purposes have not been reduced in scope, the only foreseeable result from litigation might be a requirement to cover a loan at a 2-percent interest rate, and this could be done under the new insured loan authority.

Mr. WHITTEN. We shall also insert in the record at this point Secretary Butz' letter of October 31, 1974, in response to my inquiry regarding the proposed rescission.

Hon. JAMIE L. WHITTEN,

Chairman, Appropriations Subcommittee on Agriculture, Environmental and Consumer Protection, House of Representatives.

DEAR MR. WHITTEN: In your letter of October 15, 1974, you indicated that you would appreciate my comments on the adequacy and availability of 2-percent loans under Public Law 93-32.

The proposed rescission of $455,635,000 of loan authorizations of the Rural Electrification Administration applies, as you know, to direct loans authorized under the Rural Electrification Act as it was before its amendment by Public Law 93-32 on May 11, 1973. It seems quite clear that in the future REA should operate under the amended act, utilizing the revolving fund created in the May 11 amendment as its source of funds for insured loans.

I feel that your question as to the availability of adequate 2-percent loan funds is basically covered in my letter of May 8, 1973, to the chairman of the House Committee on Agriculture. In that letter I stated that, "We can assure you that during each of the next 3 years an REA program at levels not less than budgeted for fiscal year 1974 will be operated through the REA under the authority of S. 394 as finally passed and that not less than $105 million-$80 million for the electric program and $25 million for the telephone loan program (of new loans)-will be made available at the 2-percent rate." I further stated "As you know, the Secretary would, of course, have authority to exceed this minimum for 2-percent loans."

I would like to emphasize this statement as to my authority to exceed the $105 million minimum, and to point out that during fiscal year 1974 I determined that an additional amount was required, and a total of $120,109,000 was in fact provided for 2-percent electrification and telephone loans under Public Law 93-32.

In view of this authority, and this history, I feel that it is quite clear that there is no further need for the funds provided by the 1973 Appropriation Act in order to meet the requirements of borrowers qualifying for the special 2-percent rate under the provisions of Public Law 93-32.

Sincerely,

EARL L. BUTZ, Secretary.

Mr. WHITTEN. Describe in detail exactly what the Department will be required to do if the Congress denies this request and requires obligation of these funds.

Mr. HAMIL. We would request apportionment of these funds from the Office of Management and Budget and obligate them for loans to qualified borrowers who request them.

Mr. WHITTEN. What effect would these required obligations have on expenditures?

Mr. HAMIL. Expenditures from these obligations would most likely be about evenly distributed at approximately $152 million per year over the next 3 years.

Mr. WHITTEN. What effect would these required obligations have on program accomplishments?

Mr. HAMIL. Assuming that the electric loan funds would be for distribution purposes, approximately 33,000 miles of line and 400,000 consumers would be added with these funds. The telephone loan funds would provide for almost 16,000 miles of line and 41,000 subscribers. Whether these would be additional to, or merely in substitution for,

facilities provided through revolving fund loans would depend on such factors as Appropriation Committees' actions each year, the amount of funds requested by borrowers, and the scope of facilities which could be constructed in these periods.

AGRICULTURAL RESEARCH SERVICE

Mr. WHITTEN. On page 14 of House Document 93-361 you recommend the deferral of four agricultural research projects. We shall insert the pertinent section of House Document 93-361 in the record at this point.

[The information follows:]

DEFFERAL OF BUDGET AUTHORITY

Report Pursuant to Sec. 1013 of Public Law 93-344

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At the present time, the research facilities of the ARS are not fully utilized-a recent review indicated that the 3,352 laboratories operated nationwide are staffed at 85 percent of their capacity in terms of scientific man-years, 73 percent with ARS personnel and 12 percent with non-ARS personnel.

Although this situation is due, in part, to efforts to hold down Federal employment, it also is due to the agency's efforts to optimize such staffing by terminating projects which have served their purpose and relocating and consolidating similar lines of work at the various locations.

The Department, with the support of the Congress, is continuing to improve utilization by further sharing of the resources with other Federal agencies.

In view of this situation and the need to continue efforts to hold down Federal employment and budgetary costs during the fiscal year 1975, the use of funds for the following projects have been deferred through June 30, 1975:

1. Beckley, W. Va.; $700,000 for construction of a soil and water research laboratory.

2. Ithaca, N.Y.; $40,000 for planning a soil and water conservation research facility.

3. Albany, Calif.; $15,000 for updating the planning of a wool research laboratory. Initial planning has been completed.

4. Riverside, Calif.; $15,000 for updating the planning of a soil and water conservation laboratory. Initial planning has been completed.

ESTIMATED EFFECTS

No significant impact. Outlay savings would be approximately $250,000 annually over a 3-year period or until the year the construction is initiated.

Mr. WHITTEN. Do you have any further comments in addition to those contained in your general statement in connection with these four agricultural research projects?

Mr. CAMPBELL. I have nothing further to add.

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