AGENCY REPORTS ON S. 698 ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS, Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Intergovernmental Relations, Committee on Government Operations, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: This is in reply to your letter of February 28 requesting the Advisory Commission's views on S. 698, the "Intergovernmental Cooperation Act of 1967." The basic purpose of this legislation, as stated in its preamble, is to "achieve the fullest cooperation and coordination of activities among the levels of government in order to improve the operation of our federal system in an increasingly complex society." The proposed measure contains a number of the most significant recommendations for Federal action advanced by this Commission over the past seven years. Equally significant, it represents a distillation of the thinking and experience of a great many departments and agencies of the Federal Government. of State and local officials throughout the country, and of various national organizations of public interest groups on how some of the more severe impediments to effective intergovernmental collaboration and administration can be removed. These proposals include: more uniform administration of Federal grants to State governments; strengthening the hand of the governor in the administration of Federal grants going to State agencies; and Congressional review of new grant programs at a fairly early stage in their development. At the local level, they include favoring cities and counties over special districts as applicants for Federal grants; strengthening local and metropolitan planning; and providing more information and greater authority to local governments with respect to Federal land development decisions. Finally, the legislation would help to achieve greater equity and consistency in the treatment of the mounting number of families and businesses displaced by Federal and federally aided programs. The Commission strongly supports this legislation. Titles V and VIII implement key recommendations advanced in the Commission reports, Periodic Congressional Reassessment of Federal Grants-in-Aid to State and Local Governments (June 1961) and Relocation: Unequal Treatment of People and Businesses Displaced by Governments (January 1965). Title IV implements recommendations advanced in the ACIR reports, Impact of Federal Urban Development Programs on Local Government Organization and Planning (January 1964) and The Problem of Special Districts in American Government. All told, some 12 separate ACIR recommendations are incorporated in S. 698. S. 698 contains two new titles relating to grant consolidation plans and to land acquisition practices which the Commission has not had an opportunity to consider. Permit me, then, to explain in more detail the purposes of the titles that the Commission has considered and endorsed and to document the extent to which these provisions either represent current practice in certain grant programs or seek to correct significant deficiencies in present intergovernmental administration. Title I of S. 698 is limited to standardized definitions covering the remaining titles and functions. In effect, it combines and makes uniform the definitions used in S. 1681 (89th Congress) and S. 561 (89th Congress). Title II provides for more uniform administration of Federal grants to the States. Federal grants-in-aid now total over 175 general programs and are covered by more than 400 separate authorizations. Despite the increase in the number and size of direct Federal-local grants in recent years, approximately $10.8 billion out of a total of $14.6 billion for fiscal 1967 were accounted for by Federal grants going to the States. This title effects a number of basic changes in the procedural aspects of Federal-State grant-in-aid administration. It provides that, when requested, the governor will be informed by Federal departments and agencies of the pur poses and amounts of actual grants being received in the State. This procedura innovation would permit the governor to prepare a more suitable budget by giving him fuller information on the State's financial resources and need and would enable him to more effectively coordinate his executive department and agencies. Further, it would facilitate State legislative assessment of th impact of Federal programs on the State's budgetary and administrative pro esses. The title would make more uniform the handling of grant funds by elimi + nating any requirement that such funds be deposited in separate bank accounts apart from other funds administered by the State. Another section of Title IL would simplify Federal accounting requirements of Federal funds and schedule their transfer to better accord with their actual use by the State. This would. eliminate a long-standing controversy over the State's accountability for interest earned on Federal grant funds prior to their actual expenditure and, in effect, would provide a legislative basis for Treasury Circular 1075 whereby a line of credit is established for the State or other recipient unit of government with the area Federal Reserve Board, permitting States to draw upon grant funds as they are needed. The last section of Title II would alleviate another major point of FederalState friction by authorizing Federal departments and agencies to waive the requirement for "a single State agency" and to approve other forms of adminis trative organization, providing the objectives of the grant program are not endangered. The “single agency" requirement is found in about a quarter of the Federal grant programs and in certain, concrete instances, it has been used to shackle the States in their efforts to achieve administrative reorganization.. Title III authorizes Federal departments and agencies to provide specialized technical assistance and services to State and local governments on a reimbursable basis. This concept was formulated first and approved by the Commission in response to the expressed interest of individual Federal agencies and organizations of governmental officials. The title would establish, as a general authority, a practice of intergovernmental comity already enjoyed by several Federal agencies, including the Census Bureau, Bureau of Reclamation, and Internal Revenue Service of the Treasury Department. This discretionary authority would in no way modify the ability or practice of Federal agencies to provide special technical assistance and consultation services as a direct activity without reimbursement as might be authorized in their substantive legislation and appropriations. Further, the title is wholly permissive; under it, the requesting State or local agency and the affected Federal agency would have to agree on the scope and class of the services to be performed. Finally, the services provided would include only those that the Director of the Bureau of the Budget through rules and regulations determines may be provided by such Federal agencies and these rules must be in harmony with the government's policy of relying on the private enterprise to provide those services that are reasonably and expeditiously available through. ordinary business channels. The Commission is of the opinion that this title would encourage intergovernmental cooperation in the conduct of specialized and technical services and enable State and local governments to avoid unnecessary duplication of special service functions and to achieve genuine economies. Title IV establishes a coordinated intergovernmental policy regarding administration of grants for urban development. The first section of this title (1). authorizes the President to establish governmentwide guides in the formulation, evaluation and review of urban development programs and projects; (2) establishes as a matter of Congressional policy that agencies, to the extent feasible, take into account all viewpoints-national, regional, State and local-in the planning and administration of such programs; (3) declares it to be the intent of Congress that Federal departments and agencies consult with and seek advicefrom one another through interagency and other mechanisms in order to achieve fuller coordination in this critical area; and (4) requires, insofar as possible, that systematic planning stipulated under various individual Federal programs be geared to local and regional comprehensive planning. This section then seeks to come to grips with some of the basic difficulties impeding a more effective Federal role with respect to metropolitan America, including fragmented decisionmaking with respect to Federal aid for various urban facilities and projects. the absence of effective interagency coordinating machinery for such programs, and the failure to consider State, regional, and local comprehensive planning efforts that might relate to such projects. Regarding the planning problem, it might be noted that of the many Federal programs relating to planming, physical facilities and construction, a considerable number have no requirement for conformance with areawide or local comprehensive planning. Total Federal aid to urban areas (using the standard metropolitan statistical area as the basis for definition here) increased by nearly $6 billion or 165 percent since 1961. Approximately $10.3 billion of the $17.4 billion total for scal 1968 will be spent in SMSA's to help meet the mounting demand for increased services in these areas. If these funds are to be used wisely-especially those relating to physical development-the mechanisms provided in this title I will be needed. Section 402 of this title gives general units of local government preference as recipients of Federal grants and loans, in the absence of substantial reasons to the contrary. It would not affect the authority of special districts to receive such funds, however. This provision is in full accord with the Commission's position that the Federal Government, like the States, has a basic responsibility for helping to curb the growing fragmentation of local governmental jurisdictions and that part of this responsibility involves an unfreezing of the jurisdictional status quo. Title V of S. 698 provides for uniform policy and procedure for systematic Congressional review of any grant program established subsequent to the enactment of the legislation. In addition, it provides that new grant programs enacted without a designated termination date shall expire on June 30 of the fifth calendar year which begins after the effective date of the Act, and that each grant of three or more years, authorized in the 90th or any subsequent Congress, shall be reviewed by the Congress during the two years preceding the date upon which the program is to be terminated. As you know, Mr. Chairman, the Advisory Commission has found that the grants-in-aid to State and local governments thus far have been and are the National Government's principal mechanism for securing intergovernmental collaboration in achieving national legislative objectives. Reliance on the grant-in-aid mechanism has increased significantly during the past three years, with the passage of more than 55 new programs covered by more than 165 separate authorizations. With this have come mounting problems of manageability, coordination and fragmentation. In view of the paramount position of categorical grants in the American system of intergovernmental relations, the Commission has adhered to the position that the efficacy, value and public acceptability of this mechanism must be safeguarded and its usefulness as a collaborative device should be strengthened. The Commission's 1961 report entitled "Periodic Congressional Reassessment of Federal Grants-in-Aid to State and Local Governments" spelled out in depth the Commission's recommendations for systematic review and these proposals will be implemented by enactment of this title. The Commission endorsed the stand that there is a general need for providing systematic reassessment of new grant programs, having found that the review and redirection of grants thus far has been treated on an irregular, uncoordinated basis. The findings of the Joint Committee on the oganization of the Congress in this area only confirm the Commission's earlier recommendations. The Commission's position then is that the proposed title would be beneficial on a number of counts. It would stimulate development of more uniform criteria with which Congressional committees could critically assess the effectiveness of grants-in-aid in important subject fields. Further, the provision for systematic committee review would give State and local governments a regular forum for expressing their views concerning problems that have arisen in connection with the administration of individual programs. Finally, the five-year termination provision relating to certain future grants is a salutory feature of the legislation although much confusion has arisen concerning this point. In this connection, it should be noted that this section obviously would in no way affect those grants that have a termination date or those that are specifically exempted from its application. This means that the termination provision merely affects those few programs each session that Congress fails to designate as short-term or long-term joint undertakings. In such cases, this provision along with the review process that in most instances would result are needed safeguards of Congress' legisla tive oversight role. With respect to Sections 504, 505, and 506, the Advisory Commission has not taken a formal position. These embody amendments which were adopted by the Senate Subcommittee on Intergovernmental Relations during its deliberations on S. 2114, 88th Congress, and which appeared in Title II of S. 561, 89th Congress as enacted by the Senate. The Commission also has not had an opportunity to consider the new Title VI relating to consolidation of grant-in-aid programs. Title VII amends the Federal Administrative Property Services Act of 1949 and provides a uniform policy and procedure for the General Services Adminis tration relating to its acquisition, use and disposition of land within urban areas in conformance with local governments' land utilization programs. This title car ries out specific resolutions of major organizations representing the municipali ties, including the U.S. Conference of Mayors and the National League of Cities Further, it is consistent with the findings and the recommendations of the Com-mission's report on the "Impact of Federal Urban Development on Local Government Organization and Planning." The language of this title is in large part based on legislation enacted by the 89th Congress establishing similar procedures for the sale and disposition of public lands by the Department of the Interior (78 Stat. 986). Further, it incorporates suggestions of the Comptroller General regarding predecessor legislation whereby Federal interests are protected in the acquisition and disposal by giving the Administrator the authority to shorten the period of advanced notice or to eliminate it entirely when in his judgment such action is needed to avoid such things as land speculation, payment by the Government of higher prices, or time consuming and costly condemnation proceedings. In short, this title would appear to strike a good balance between the administrative needs of GSA and the planning and development objectives of the localities affected. Title VIII of the proposed legislation establishes a uniform policy of relocation payments and assistance for all persons, businesses, nonprofit organizations, and farm operations displaced by direct Federal programs and by programs conducted through Federal grants-in-aid to State and local governments. It requires all such grant-in-aid programs to assure that standard housing is provided or is being provided for those displaced and provides for full Federal reimbursement of the first $25,000 of any relocation payment and Federal sharing of any costs. beyond that amount on the basis of the regular cost-sharing formula of the individual grant programs. During the latter part of 1964, the Advisory Commission probed the general topic of Federal relocation policies and the intergovernmental problems generated by their lack of consistency and equity. In its January 1965 report on “Relocation: Unequal Treatment of People and Businesses Displaced by Governments" the Commission reached certain major conclusions: It found that governmental displacement of persons and businesses is substantial and that all indicators suggest that the pace of the displacement will accelerate with increased urbanization and the accompanying mounting demands for more urban services. It found that over the next four to eight years displacement under Federal and federally aided programs will affect annually an average of 111,000 families and individuals and 18,000 business and nonprofit organizations. It discovered great inconsistencies among Federal and federally assisted programs with respect to the amount and scope of relocation payments, advisory assistance and assurance of standard housing. As your Subcommittee hearings on S. 1681 (89th Congress) again demonstrated, even a cursory examination of the existing programs indicates that the quality and quantity of relocation assistance and payments, both figuratively and literally, depend on what development program hits the displacee. The Commission report documented the fact that the adverse effects of relocation hit most severely those families and individuals least able to withstand it. The worst problem in relocating families and individuals is the shortage of standard housing for low income groups. Minority groups have the greatest relocation problems in terms of population classifications. Large families and the elderly present other special housing problems and among business displacees, small businesses, particularly those owned and operated by the elderly, are the main relocation casualties. On the basis of these findings the Commission made 14 recommendations for State, local, and Federal action to meet the problems of those displaced by government. Title VIII of this legislation carries out most of those recommendations for remedial action at the Federal level. It provides that Congress establish a uniform policy of relocation payments and advisory assistance for persons and businesses displaced by Federal and federally aided programs. Hence, under Section 802, heads of Federal agencies are required to make relocation payments in direct Federal programs causing displacement, such as those of the Post Office Department, GSA, or the Defense Department, in accordance with regulations established by the President. Section 804 requires the same agencies to provide advisory assistance programs and specifies that these include determining the needs for assistance; assisting businesses and farm operators in relocating; supplying information regarding Federal Housing Administration, Small Business Administration and ther assistance programs; helping to minimize readjustment problems: and ordinating relocation with other project activities and governmental efforts in the community or nearby areas. Section 807 extends the requirements of Sections 802 and 803 covering payments and advisory assistance to federally assisted programs conducted by State and local governments. Section 805(c) carries out the Commission recommendation that the Executive Branch encourage Federal agencies causing displacement in urban areas to establish in each major urban jurisdiction a focal point of responsibility for relocation administration; it provides that the President may require any Federal agency to make relocation payments or provide other relocation services by entering into contracts or agreements with any State or local agency for use of its relocation facilities, personnel, and services. Section 807(a) (4) carries out the ACIR recommendation that Congress apply to all federally aided programs a requirement as strict as that in the urban renewal and public housing programs that States and local governments administering Federal grant programs assure the availability of standard housing before proceeding with any property acquisition that displaces people. The language here is comparable to that presently contained in Federal urban renewal legislation. Section 807(b) provides that the Federal Government fully reimburse State and local governments for relocation payments up to $25,000 in federally aided programs and on a formula cost-sharing basis for any portion above $25,000 per displacement. The Federal reimbursement would be contingent on the State or local agency's agreeing to provide relocation payments and advisory assistance as prescribed by Federal law and regulation. The Housing and Urban Development Act of 1965 and the administrative practices of the Department of Housing and Urban Development, covering such programs as urban renewal, public housing, mass transit, community facilities, and open space, along with the relocation provisions of the Model Cities legislation, now utilize the cost-sharing formula for relocation payments up to and above $25,000 as provided in this title. This title, then, merely extends these standards to other Federal grant-in-aid programs. The various provisions of Title VIII constitute a meaningful answer to those who call for a more uniform, fair, and equitable treatment of owners, tenants and others displaced by the government's acquisition of real property. Equally important, they will not necessitate huge outlays of Federal dollars. Based on the annual displacement figures cited earlier, the total cost would come to approximately $136 million annually or only $63 million more than the relocation payments authorized under present legislation-a small price to pay for the benefits of this title. Like other provisions of S. 698, this relocation title is a good management measure. It clarifies a confusing condition, simplifies the administration of existing relocation programs, and promulgates rules that can be easily applied. Equally important, it humanizes government at a stage when it appears most cold and calculating. Title IX which establishes a uniform land acquisition policy for Federal and federally assisted programs is a new feature in the legislation, and the Commission has not yet had an opportunity to develop a formal position on the subject. S. 698 is designed to correct obvious weaknesses in our federal system and to round out our national policies as they relate to regional and local planning, urban development, and relocation. The legislation seeks these objectives, because the largest unit of government in our federal system has a prime responsibility for assisting and strengthening the smaller units and for instituting needed reforms in the area of intergovernmental administration. Simplified and more flexible administration of Federal grants to the States, strengthening the traditional services-in-aid device, promulgation of a Coordinated intergovernmental urban assistance policy, systematic review by Congress of new federal grant programs, establishment of a uniform GSA policy and procedure for urban land transactions and use, and provision for a uniform relocation assistance policy-these are among the critical concerns of this legislation. These implement concrete recommendations of the Advisory Commission. When viewed separately, each appears to be a modest attempt to cope with some of the difficulties facing us in certain conflict areas. But when combined, as they are in this omnibus bill, they constitute a meaningful move towards achieving greater productivity and rationality in intergovernmental relationships, better administrative use of Federal grants-in-aid, more meaningful metropolitan and local planning, and a more equitable relocation program. These are basic needs that must be met now if the vitality of our federal system is to be sustained. These are goals that have been endorsed by the National League of Cities, the National Association of Counties, the Council of State Governments, U.S. Conference of Mayors, the Governors' Conference, and the |