Legislative Notice #33

July 23, 1997

Calendar No. 116

Reported from the Senate Appropriations Committee on July 17, 1997, by a vote of 28-0. S. Rept. 105-51.

• S. 1033 provides $50.68 billion in new budget authority for agriculture, rural development and nutrition programs, and some related agencies. This is $3.2 billion less than FY97, and $1.6 billion less than the budget request [see attached chart]. It falls within the subcommittee's 602(b) allocation.
• The bill contains $36.7 billion in mandatory spending programs such as food stamps ($26.1 billion), child nutrition ($7.8 billion) and payments to the Federal Crop Insurance and Commodity Credit Corporations ($2.4 billion). The discretionary spending totals $13.8 billion.
• The domestic food assistance portion of the bill (food stamps, child nutrition, Women, Infants, and Children (WIC) nutrition program, commodity and other food assistance) totals $38 billion, approximately 75 percent of the total funding in the bill. This funding category is $2.3 billion below last year's level because of changes made in the 1996 welfare law.
• The Senate bill provides $202 million for reimbursements for sales commissions to private-sector crop insurance agents participating in the crop insurance program. This was funded by cutting the Export Enhancement Program (EEP) to $150 million.
• The Committee does not provide the administration request for $34 million for FDA's initiative to reduce under-age tobacco use, keeping the funding at the FY97 level of $4.9 million.

Breakdown by Title

(in millions)

Appropriation Account	FY 1997 Level	Pres. Request	Senate Committee
Title I - Agriculture Programs	$7,717.9	$6,943.7	$6,921.3
Title II - Conservation Programs	770.6	822.0	824.6
Title III - Rural Econ/Commun. Devlpmt	2,003.8	2,180.6	2,078.9
Title IV - Domestic Food Programs	40,491.0	39,823.0	38,146.1
Title V - Foreign Assistance Programs	1,593.2	1,645.1	1,729.8
Title VI - Related Agencies and FDA (plus payments, CFTC, &FCA)	953.0	887.9	981.0
Total, New Budget (obligational authority)	$53,529.4	$52,302.2	$50,684.7

(see detailed breakdown on attached chart)

• Commodity Credit Corporation (CCC). Provides such sums as necessary, which is estimated to be $783.5 million in FY98 to reimburse the CCC for farm subsidy payments, $716.5 million less than FY97 and the same as the request. This is a mandatory account. The Conservation Reserve Program (CRP) continues through FY 2002, with up to 36.4 million acres enrolled at any one time. The Wetlands Reserve Program is reauthorized through FY 2002, not to exceed 975 acres in total enrollment. A new cost-share assistance program, EQIP, is established to assist crop and livestock producers in dealing with environmental and conservation improvements on the farm. Program funding will be $200 million annually through 2002.
• Rural Development Programs. Consolidates funding for 12 housing and rural development programs into the Rural Community Advancement Program and places the ultimate decision for allocation of funding among these programs with State directors. No matching or mandatory funding grants are provided.
• Conservation Programs. Increases funds for conservation programs of the Natural Resources Conservation Service by $57 million over FY97, for a total of $826.9 million. The Committee does not touch the conservation reserve program and the wetlands reserve program.
• Conservation Operations. The bill enrolls watershed planning surveys and water resources assistance into Conservation Operations. Language is included in the bill to provide a minimum of $80,138,000 for water resources assistance.
• Housing Programs. Increases funds for housing, providing $3.5 billion in total rural housing insurance fund loan authorizations. This is an increase of $59.7 million over FY97, but $680.3 million under the budget request. Also, the Committee increases rental assistance $47.5 million over FY97, to $541.4 million..
• Agricultural Research Service. The Senate version would increase funding for agricultural research by $21.2 million over FY97 and $21 million more than requested. The bill limits any funding for buildings and facilities, including new projects..
• Farm Credit Programs. Provides $2.9 billion in loan levels for farm credit programs, an increase of $108 million over the request.
• Domestic food assistance. This portion of the bill (food stamps, child nutrition, Women, Infants, and Children (WIC) nutrition program, commodity and other food assistance) represents 75 percent of the total spending in the bill. This includes $26.1 billion for food stamps (a decrease of $2.5 billion in expenses and an increase of $700 million for the contingency reserve over FY97, and $1.5 billion less than the budget request for the contingency reserve), out of $884.2 million in child nutrition over last year, and $3.9 billion for the WIC nutrition program, $21.8 million above last year and $180.4 million below the administration.
• Adds new provisions to:

Agricultural Programs

• Total Funding: Appropriates a total of $6.9 billion for various agricultural programs ($796.6 million less than the FY97 enacted amount, and $22.3 million under the request). Of this total, $783.5 million goes to the Commodity Credit Corporation and $1.6 billion goes to the Federal Crop Insurance Corporation. The remainder funds the agricultural research, cooperative state research, extension service, animal and plant health inspection, and food safety and inspection.
• Commodity Credit Corporation (CCC): Recommends an appropriation of such sums as necessary, but not to exceed $783.5 million, to reimburse CCC for net realized losses incurred from the commodity price and farm income support activities ($716.5 million less than last year, but the same as the request).
• Federal Crop Insurance Corporation Fund: Recommends an appropriation of such sums as necessary, estimated to be $1.6 billion. This is the same as the budget request, and $200.9 million less than last year for this program which was designed to replace the combination of crop insurance and ad hoc disaster payment programs with a strengthened crop insurance program. All program costs for 1998, except for federal salaries and expenses, are mandatory expenditures subject to appropriations.

Conservation Programs

• Conservation Programs: The bill increases funding to $826.9 million for those conservation programs of the Natural Resources Conservation Service which require discretionary appropriations as a result of the Federal Agriculture Improvement and Reform Act of 1996 (FAIR Act). This is $57 million more than the 1997 level. Included in the Committee's recommendation for conservation operations is funding for the watershed planning surveys and water resources assistance. The Committee includes bill language to provide a minimum of $80,138,000 for this purpose.

Rural Economic and Community Development Programs

• Rural Development Programs: The bill consolidates funding for 12 rural development grant and loan programs into the Rural Community Advancement Program (RCAP), which was created in the 1996 Farm Bill. RECAP is made up of: direct and guaranteed water and waste disposal loans, water and waste disposal grants, emergency community water assistance grants, solid waste management grants, direct and guaranteed business and industry loans, rural business enterprise grants, and rural business opportunity grants. The bill implements the RCAP, providing $644.3 million, which is $644.3 million over FY97. Due to limitations of funding, the Committee includes language prohibiting the availability of funds to initiate RCAP grants to states.
• Rural Housing and Community Development Service Programs: The Rural Housing Service (RHS) was established in 1995. Its programs were previously administered by the Farmers Home Administration and the Rural Development Administration. The Senate bill provides a total of $4.1 billion for loans and grants, including $3.5 billion for the Rural Housing Insurance Fund, and $614.4 million for RHS grants and payments.
• Rural Business-Cooperative Service Programs (RBS): RBS was created in 1995. Its programs were previously under the Rural Development Administration and the Rural Electrification Administration. The Committee recommends $64.4 million for the Rural Business-Cooperative Service for loans and grants. Of this amount, a total loan level of $40 million is recommended for rural development loans and $12.9 million for rural economic development loans. An amount of $10 million is provided for the Alternative Agricultural Research and Commercialization Revolving Fund to develop and market new non-food, non-feed uses for agriculture commodities.
• Rural Utilities Service: The RUS was established under the Department of Agriculture Reorganization Act of 1994 to administer the electric and telecommunications programs of the former Rural Electrification Administration and the water and waste programs of the former Rural Development Administration. The bill provides a total loan authorization level of $1.3 billion for electric and telephone loan programs. Also, the bill provides $12 million for the distance learning and medical link grant program, which provides facilities and equipment to link rural education and medical facilities with urban facilities to provide better health care through technology and increasing educational opportunities for rural students.

Domestic Food Programs

• Food Stamp Program: Appropriates $26.1 billion, $1.6 billion less than FY97 and $1.5 billion less than the budget request. Of the amount provided, $1 billion is available as a contingency reserve, which is $1.5 billion less than the contingency reserve level proposed in the budget and $900 million more than the FY97 level.
• Women, Infants and Children (WIC) Feeding Program: Recommends an appropriation of $3.9 billion for WIC, which is $121.8 million more than FY97, but $180.4 million less than the budget request. The Committee does not provide the $100 million included in the budget request to create a program contingency reserve. Also, bill language requested in the budget request is included to authorize the Secretary to adjust the funds allocation process in FY98.
• Child Nutrition Programs: To improve the health and well-being of the nation's children, the child nutrition programs include school breakfast and lunch programs, child and adult care food programs, summer food services, and nutrition education and training programs. In addition, the special milk program provides funding for milk service in schools, nonprofit child care centers, and camps which have no other federally assisted food programs. For these programs, the Committee provides an appropriation of $2.6 billion, plus transfer from section 32 of $5.2 billion, for a total program level of $7.8 billion, which is $884.2 million less than last year and $13.7 million less than the request.

Foreign Assistance and Related Programs

• Foreign Agricultural Service: Provides $132.4 million, $1.1 million more than FY97, and $14.2 million less than the request. The Committee continues funding at the FY97 level ($29 million) for the Foreign Market Development Cooperator Program. In report language, the Committee strongly urges the Secretary to fully utilize the Dairy Export Incentive Program and requests quarterly progress reports to the Committee.

• Public Law 480 (Food for Peace): Recommends a total program level of $1.1 billion for the three main programs under P.L. 480, which serve as the primary means for the U.S. provision of food assistance overseas. This level is $7.2 million more than FY97, and $124.4 million more than the request. The bulk of the funds ($837 million) is for grants under Title II for food aid for humanitarian relief through private voluntary organizations or through multilateral organizations like the World Food Program.

Related Agencies

• Food and Drug Administration (FDA): For salaries and expenses, provides a direct appropriation of $844 million. This amount is $24 million more than last year and $93 million more than the request. The recommendation also provides $105.1 million in user fees authorized by the Prescription Drug User Fee Act and $13.96 million for the Mammography Quality Standards Act. The Committee provides increased funding of $24 million, as requested, to fund FDA's proposed initiatives to increase the safety of the nation's food supply.

The Committee recommended continued funding at the FY97 level ($4.9 million) for costs associated with FDA's final rule for the regulation of nicotine-containing tobacco products. Although the administration's budget request includes $34 million to fund implementation of its August 28, 1996, final rule entitled "Regulations Restricting the Sale and Distribution of cigarettes and Smokeless Tobacco to Protect Children and Adolescents," the Committee did not provide the increase because of the ongoing litigation regarding the FDA's tobacco rule. The Committee expects the FDA's funding needs may be more limited than when it submitted its request, which was based on the implementation of all the provisions of the FDA's rule. Moreover, the Committee notes that the results of settlement discussions on the tobacco issue, which have been presented to Congress for consideration, would cover FDA's costs rather than placing this burden on the taxpayer.

• Commodity Futures Trading Commission: Appropriates $60.1 million, which is the same as the budget request, and $5 million above FY97.

• Farm Credit Administration: Recommends a limitation of $34.4 million on administrative expenses, the same as the request.

CBO estimates that the bill would result in outlays of $41.8 billion in FY 98, $6.3 billion in FY 99, $582 million in FY 2000, $287 million in FY 2001, and $455 million in FY 2002 and future years.

No official Administration position was available at press time.

Harkin. Increase funding for the tobacco initiative to the level requested by the Administration ($34 million) by changing the current 1-percent marketing assessment that is split between tobacco companies and tobacco farmers to 2.1 percent, to be paid entirely by tobacco companies.

Santorum. Re peanuts.

Gregg. Re sugar.

Durbin. Elimination of crop insurance for tobacco with the savings put into RCAP water and waste loans and grants.

Grams. Re Northeast Dairy Compact study.