H.R. 2160 -- AGRICULTURE, RURAL DEVELOPMENT,
FOOD AND DRUG ADMINISTRATION,
AND RELATED AGENCIES APPROPRIATIONS BILL, FY 1998
(Sponsors: Livingston (R), Louisiana; Skeen (R), New Mexico)

The Committee has developed a bill that provides requested funding for many of the Administration's priorities. As discussed below, the Administration will seek restoration of certain of the Committee's reductions to the President's requests. We recognize that it will not be possible in all cases to attain the Administration's full request and will work with the Committee toward achieving acceptable funding levels.

The Administration is committed to working with the House to identify reductions in the bill in order to find offsets for the restoration of funds that the Administration seeks. For example, unrequested funds have been provided to the P.L. 480 Title I account, and the Administration's proposed user fees for meat and poultry inspection and new user fees for the Food and Drug Administration have not been adopted. In addition, while we commend the Committee for including additional funds to operate the Crop Insurance program, the Committee has added $36 million more than requested for this purpose. The increase above the request would result in lower administrative expense reimbur sement payments from the mandatory side of the program. Instead of reducing payments from the mandatory account, these discretionary resources could be used to fund higher priority programs. We urge the House to reduce funding for lower priority programs, or for programs that would be adequately funded at the requested level, and to redirect funding to programs of higher priority.

Women, Infants, and Children Program

The Committee bill would fund the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) at $3.9 billion, $184 million below the President's request. The Committee's mark is intended to support a participation level of 7.4 million women, infants, and children, the anticipated FY 1997 end-of-year caseload level. The President's FY 1998 Budget request would allow program participation to grow modestly -- to 7.5 million by September 1998 -- and fulfills the bipartisan commitment to fully fund WIC. It also includes a $100 million contingency reserve to ensure that unanticipated food price increases do not cause participation decreases.

The Administration appreciates the recent action by the Congress to provide supplemental funding to ensure stable WIC participation in FY 1997. We also appreciate that the Committee bill provides needed flexibility in allocating WIC funding to States. However, we are disappointed that the Committee mark does not provide funding for the contingency reserve and for the modest increase in participation proposed in the President's budget. These two provisions would allow WIC to reach and maintain the bipartisan commitment to full program participation.

The Administration shares the Committee's concern that WIC be able to maintain its successful cost containment efforts. The Administration strongly supports the Committee's inclusion of a provision to ensure competitive contracting of infant formula based on the lowest net wholesale cost. Without such a provision, infant formula costs could rise dramatically, increasing WIC's total costs and putting budgetary pressure on other programs funded by Agriculture appropriations.

Food and Drug Administration

The Committee action would result in a total program level for the Food and Drug Administration (FDA) of $1.0 billion: $926 million in budget authority and $113 million in user fees. This level of fees is, in total, a net $132 million below the President's request. On March 28, 1997, the Administration transmitted to the Congress legislation for the authorization of $237 million in new and reauthorized fees. It is appropriate that regulated industries that derive valuable benefits from some FDA activities contribute an appropriate share of FDA's cost of ensuring the safety and effectiveness of their products. The Administration urges the House to fund FDA at the requested program level of $1.1 billion, offset by the proposed user fees.

The Committee would provide $24.3 million for the costs associated with implementing the FDA's final rule for the regulation of nicotine-containing tobacco products, $9.7 million below the President's request. The tobacco regulation promotes and protects the health of the Nation's youth by reducing the easy access and appeal of tobacco products to children. Full funding is essential to meet the Administration's goal of significantly reducing under-age tobacco use.

Rental Housing Programs

The Committee has reduced requested funding for the Rental Assistance Program (RAP) by $99 million. The Committee has failed to include RAP funds needed to subsidize rents for new or rehabilitated units constructed through the Section 515 multi-family housing loan program. Without these rental subsidies, more than 3,500 low- and very low-income rural households would be unable to afford the rents in new projects, and the projects themselves might not be viable. In addition, we ask the House to restore, to the extent possible, the $52 million requested for RAP to convert expiring HUD Section 8 rental assistance in USDA-financed rental properties to RAP assistance. While Section 8 assistance is renewed annually, RAP generally provides five-year contracts for rental assistance. On an annualized basis, RAP assistance costs less than Section 8 assistance, and over five years the conversion of these units in FY 1998 would save taxpayers $46 million.

While the Administration appreciates the increase in single-family housing loans over the FY 1997 level, the House is urged to include funding, to the extent possible, for the full $1 billion in direct loans requested. This program has experienced a significant reduction in recent years, and additional funds are required to meet some of the backlogged demand for homeownership assistance to low-income rural Americans. The $50 million reduction made by the Committee bill would deny over 1,000 rural families the opportunity to become homeowners.

Rural Development Programs

The Administration appreciates the Committee's efforts to provide adequate funding for rural development programs. However, we are concerned that the Committee has reduced funding for the rural water and wastewater program from the level provided by the Subcommittee. Further, the Committee has not adopted the Administration's request to implement the Rural Community Advancement Program, as authorized in the 1996 Farm Bill. This flexible delivery mechanism would allow States and localities to tailor rural development assistance more effectively to meet unique local conditions and needs. We urge the House to permit this innovative funding mechanism to go forward.

Conservation Programs

The Committee bill does not include $18 million requested for the Resource Conservation and Development Program for local coordinators to assist communities in preparing watershed and rangeland plans. The goal of the new funding is to implement successful, locally-led rangeland and watershed planning efforts, such as by the Malpais Borderland Group in the Southwest, the Quincy Library Group in California, and the Big Darby Watershed in Ohio, in environmental-priority areas, including the salmon recovery area of the Pacific Northwest. The Committee bill also reduces funds for Conservation Operations, which could seriously impair USDA's ability to carry out critical conservation programs, including those enacted in the 1996 Farm Bill. The Committee level w ould also constrain improvements in conservation program implementation such as through the Geographic Information Systems and the digitizing of soils maps.

Agricultural Research Programs

The Committee bill does not provide sufficient funding for a number of important agricultural research initiatives. Only $5 million of the $12 million requested is included for the Administration's Human Nutrition Research Initiative, a multi-year initiative to improve the understanding of the nutrition needs of diverse populations, notably children, but also including the elderly, pregnant women, and healthy adults. The Committee bill provides $106.7 million for the National Research Initiative (NRI) competitive grants program, a $12.5 million increase over FY 1997 but a $23.3 million reduction from the President's request. The bill also includes inappropriate programmatic earmarks within the NRI, a program from which grants are to be awarded based on scientific merit and a peer-review process. We urge the House to allow the NRI to function in the manner authorized. In order to provide funding for these important activities, the Administration urges the House to reduce the $37 million in funding included for over 75 unrequested, earmarked research grants.

Food Safety Initiative

While we commend the Committee's action to fully fund the FDA portion of the request for the President's Food Safety Initiative that is within the Committee's jurisdiction, only $3 million of the $9 million requested through the Department of Agriculture (USDA) has been funded. In May, the Vice President announced the Administration's detailed plan to strengthen America's food safety through this initiative, including establishing a national early warning system for outbreaks of food-borne illnesses; improving meat, poultry, and seafood inspections; increasing research to develop new tests to detect food-borne pathogens and to assess risks in the food supply; and, establishing public-private partnerships to improve the public's understanding of safe food p ractices. We urge the House to fully fund this important initiative.

Food and Consumer Service Studies and Evaluations

The Committee has transferred all funding ($18.5 million in FY 1998) for studies and evaluations from the Food Stamp, Child Nutrition, and WIC programs to the Economic Research Service (ERS). ERS is directed to manage all studies and evaluations in consultation with the Food and Consumer Service. The Administration strongly opposes the proposed transfer of functions and funding.

The challenge of ensuring the success of welfare reform has increased the importance of practical, applied, and timely research. This research is most appropriately managed by the Food and Consumer Service, the organization closest to and most knowledgeable of Federal nutrition programs. The Food and Consumer Service has highly skilled professional career researchers with a well-recognized track record of conducting and managing effective, objective program evaluations. The Committee proposal is an inappropriate congressional intrusion into the Administration's prerogative to manage programs in the most effective manner.

Outreach for Socially Disadvantaged Farmers and Ranchers

The Committee bill would severely limit USDA's initiative to improve efforts to ensure equal access for all clientele to training, technical assistance, and other agriculture-related services intended to assist low-income farm families in becoming successful producers. The Secretary of Agriculture has stated his commitment to improving the Department's outreach to and relations with its minority and socially disadvantaged clientele. The Committee has provided only $1 million of the requested $4 million increase for this important component of USDA's Civil Rights initiative. We urge the House to increase funds for this priority program to the extent possible.

Department of Agriculture Micromanagement

The Administration objects to the inappropriate micromanagement of Executive Branch authorities that the Committee bill would impose, which would impede the ability of the Department to operate effectively. In this regard, we strongly object to the Committee's action to delete funding for the immediate office of the Deputy and Assistant Deputy Administrators for Farm Programs. Disagreements over program management and implementation should not be addressed by targeting for elimination those positions involved in the decision-making process. In addition, the Committee bill would terminate the authority of the Secretary of Agriculture to have a Western Director and a special assistant in the West, who facilitate the resolution of complex issues and provide important feedback to the Secretary about concerns of Western States and citizens. The Committee bill would further micromanage by blocking facility closings of the Agricultural Research Service and transferring research functions from the Food and Consumer Service to the Economic Research Service. The bill also limits funds for advisory committees, task forces, panels, and commissions to $1 million, which is insufficient to support ongoing and new committees, including those required by the 1996 Farm Bill. We recommend that the limitation on expenditures for these purposes be lifted.

The Administration strongly opposes the Committee's action to designate Galt, California, arbitrarily as "non-rural" in order to make it ineligible for USDA housing programs. There is a backlog of 400 very-low and low-income housing applicants in Galt, which meets USDA's definition of a rural area. Denying a community's eligibility status in order to exclude low-income individuals from the community is counter to the Administration's -- and, we believe, the Congress' -- goal of expanding opportunities for equal access to quality housing for all Americans. We urge the House to delete this provision.

Packer Concentration

The FY 1998 Budget proposes a $1.6 million increase for monitoring and analyzing meat packer market competition and the implications of structural changes and behavioral practices in the meat-packing industry. We appreciate the Committee's action to provide a portion of the requested funding. We urge the House to increase funds to the maximum extent possible so that USDA can maintain continuous, systematic collection and analysis of data along with aggressive investigative activities to address these issues effectively.

Nutrition Education and Training

The FY 1998 Budget proposes $10 million for the Nutrition Education and Training program. The Welfare Reform bill enacted last year replaced mandatory funding for this program with an authorization for discretionary appropriations. The Administration appreciates the Committee's action to provide $5 million of the requested funding for this valuable resource to the child nutrition programs. We urge the House to fund this important program to the maximum extent possible.