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7/2/Pr. 6 DEVELOPMENT AND ATOMIC ENERGY

COMMISSION APPROPRIATIONS 144

GOVERNMENT 

Storage CUMENTS

'UG 10 1971

KANS4 STATE titsilVERSiT)r HEARINGS

KSU LIBRARIES 

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS

p

HOUSE OF REPRESENTATIVES

NINETY-SECOND CONGRESS

FIRST SESSION

SUBCOMMITTEE ON PUBLIC WORKS

JOE L. EVINS, Tennessee, Chairman

EDWARD P. BOLAND, Massachusetts JOHN J. RHODES, Arizona

JAMIE L. WHITTEN, Mississippi GLENN R. DAVIS, Wisconsin

GEORGE W. ANDREWS, Alabama HOWARD W. ROBISON, New York

JOHN M. SLACK, West Virginia

EUGENE B. WILHELM, GEORGE A. URIAN, and JOHN G. PLASHAL, Staff Assistants

Part 6

EFFECTS OF IMPOUNDMENT OF

PUBLIC WORKS FUNDS

Printed for the use of the Committee on Appropriations

PUBLIC WORKS FOR WATER AND POWER

DEVELOPMENT AND ATOMIC ENERGY

COMMISSION APPROPRIATIONS

HEARINGS

BEFORE A

SUBCOMMITTEE OF THE

COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

NINETY-SECOND CONGRESS

FIRST SESSION

SUBCOMMITTEE ON PUBLIC WORKS

JOE L. EVINS, Tennessee, Chairman

EDWARD P. BOLAND, Massachusetts JOHN J. RHODES, Arizona

JAMIE L. WHITTEN, Mississippi GLENN R. DAVIS, Wisconsin

GEORGE W. ANDREWS, Alabama HOWARD W. ROBISON, New York

JOHN M. SLACK, West Virginia

EUGENE B. WILHELM, GEORGE A. URIAN, and JOHN G. PLASHAL, Staff Asaistants

Part 6

EFFECTS OF IMPOUNDMENT OF

PUBLIC WORKS FUNDS

Printed for the use of the Committee on Appropriations

U.S. GOVERNMENT PRINTING OFFICE

64-300 WASHINGTON : 1071
COMMITTEE ON APPROPRIATIONS

GEORGE H. MAHON, Texas, Chairman

JAMIE L. WHITTEN, Mississippi

GEORGE W. ANDREWS, Alabama

JOHN J. ROONEY, New York

ROBERT L. F. SIKES, Florida

OTTO E. PASSMAN, Louisiana

JOE L. EVINS, Tennessee

EDWARD P. BOLAND, Massachusetts

WILLIAM H. NATCHER, Kentucky

DANIEL J. FLOOD, Pennsylvania

TOM STEED, Oklahoma

GEORGE E. SHIPLEY, Illinois

JOHN M. SLACK, West Virginia

JOHN J. FLYNT, JR., Georgia

NEAL SMITH, Iowa

ROBERT N. GIAIMO, Connecticut

JULIA BUTLER HANSEN, Washington

JOSEPH P. ADDABBO, New York

JOHN J. McFALL, California

W. R. HULL, JR., Missouri

EDWARD J. PATTEN, New Jersey

CLARENCE D. LONG, Maryland

SIDNEY R. YATES, Illinois

BOB CASEY, Texas

DAVID PRYOR, Arkansas

FRANK E. EVANS, Colorado

DAVID R. OBEY, Wisconsin

EDWARD R. ROYBAL, California

WILLIAM D. HATHAWAY, Maine

NICK GALIFIANAKIS, North Carolina

LOUIS STOKES, Ohio

J. EDWARD.ROUSH, Indiana

K. GUNN McKAY, Utah

WILLIAM GERALD BOLING

SAMUEL W. CROSBY

GEORGE E. EVANS

ROBERT B. FOSTER

JOHN M. GARRITY

HAROLD A. GRIFFIN

AUBREY A. GUNNELS

JAY B. HOWE

THOMAS J. KINGFIELD

KEITH F. MAINLAND

GERARD J. CHOUINARD

PAUL V. FARMER

DANIEL V. GUN SHOWS

FRANK T. BOW. Ohio

CHARLES R. JONAS, North Carolina

ELFORD A. CEDERBERG, Michigan

JOHN J. RHODES, Arizona

WILLIAM E. MINSHALL, Ohio

ROBERT H. MICHEL, Illinois

SILVIO 0. CONTE, Massachusetts

GLENN R. DAVIS, Wisconsin

HOWARD W. ROBISON, New York

GARNER E. SHRIVER, Kansas

JOSEPH M. McDADE, Pennsylvania

MARK ANDREWS, North Dakota

LOUIS C. WYMAN, New Hampshire

BURT L. TALCOTT, California

CHARLOTTE T. REID, Illinois

DONALD W. RIEGLE, JR., Michigan

WENDELL WYATT, Oregon

JACK EDWARDS, Alabama

DEL CLAWSON, California

WILLIAM J. SCHERLE, Iowa

ROBERT C. McEWEN, New York

JOHN T. MYERS, Indiana

PAUL M. WILSON, Clerk and Staff Director

STAFF. ASSISTANTS

MILTON B. MEREDITH

GARY C. MICHALAK

DEMPSEY B. MIZELLE

ENID MORRISON

ROBERT M. MOYER

PETER J. MURPHY, Jr.

HENRY A. NEIL, Jr.

BYRON S. NIELSON -

ROBERT C. NICHOLAS III

JOHN G. PLASHAL

ADMINISTRATIVE SUPPORT

GEMMA M. HICKEY

LAWRENCE C. MILLER

FRANCIS W. SADY

(n)

SAMUEL R. PRESTON

DONALD E. RICHBOURG

EARL C. SILSBY

G. HOMER SKARIN

CHARLES W. SNODGRASS

HUNTER L. SPILLAN

GEORGE A. URIAN

EUGENE B. WILFIELM

THAYER A. WOOD

DALE M. SHULAW

AUSTIN G. SMITH

RANDOLPH THOMAS
PUBLIC WORKS FOR WATER AND POWER DEVELOPMENT AND ATOMIC ENERGY COMMISSION APPROPRIATIONS

MONDAY, JUNE 28, 1971.

EFFECTS OF IMPOUNDMENT OF PUBLIC WORKS FUNDS

WITNESSES

CASPAR W. WEINBERGER, DEPUTY DIRECTOR OF THE OFFICE OF

MANAGEMENT AND BUDGET

SAMUEL M. COHN, ASSISTANT DIRECTOR FOR BUDGET REVIEW

Mr. EVINS. The committee will come to order.

Off the record.

(Discussion off the record.)

Mr. WEINBERGER. Mr. Chairman, for the record the only information I had was a memorandum from Mr. Gifford, who is the Legislative Relations Officer for our Budget Office, and he said thatt. I had

been asked to appear at 10 a.m. today to discuss budgetary reserves;

there was no indication that you had a special interest in water projects, but we will be glad to get into them.

Mr. EviNs. This is the subcommittee that handles appropriations

for public works for water and power projects and the Atomic Energy

Commission. •

Mr. WEINBERGER. Surely.

Mr. EVINS. Mr. Weinberger, we welcome you. to the committee. We

respect you, Mr. Director, and we respect the office that you hold.

The committee has looked forward for some time to meeting with you

to discuss problems of mutual interest and exchange ideas.

COMMITTEE ACTION ON 1971 BILL

Let me say that last year we began hearings on the Public Works

Appropriations Bill on March 3 and final action was not completed

until September 17.

During this 6 months' period the committee held about 3 months

of hearings, including testimony of over 1,600 witnesses from throughout the Nation. They came in here by planeloads in support of funding of urgent water resource projects. Numerous Members of Congress

also testified.

Despite the hundreds of imbudgeted actions requested—everybody

is requesting unbudgeted actions and we all understand that—of the

committee concerning urgent water and power resource items, the

committee adopted a very restrictive, a rather austere policy in making

its recommendations last year on the 1971 bill.

(1)
2

COMMITTEE MARKUP CRITERIA

The committee markup criteria were as follows:

The first priority was given to more adequate funding of ongoing

projects in an effort to restore slippage in construction schedules and

avoid cost escalation increases. This would serve the purpose of aiding

in the prevention of inflation.

The second priority was given to funding a very limited number of

new planning and construction starts with emphasis on low-cost local

flood control projects.

As a result of this policy, the final bill included only 18 new unbudgeted planning starts and 31 new construction starts for the

Corps of Engineers. Out of the hundreds of requests and the large

unfunded backlog of projects, this was all that was modestly added.

The total cost of the 31 new construction starts for the corps was

only $522 million, to be funded over a period of years, compared with

32 projects being completed during the current fiscal year involving

a total cost of $863 million. Now, this is $311 million less in terms of

the total cost of projects in the pipeline. So we had a very austere and

very restricted policy, and out of the hundreds of requests it amounted

to a total cost of $522 million for the 31 new construction starts Congress added.

This would be funded over about a 7-year period and it would

average only about $70 million annually.

The purpose of this hearing, Mr. Director, in a very informal way,

is to exchange ideas and let you see the point of view of this committee.

We feel that we are at arm's length and I wanted to present this as the

committee's picture of the situation. We felt we had a very limited

number of add ons under the circumstances.

In summary, the committee expended considerable effort and after

extensive analysis and discussion provided certain adjustments in the

budget priorities with a final product in which the new obligational

authority approved was $25 million under the budget.

Off the record.

(Discussion off the record.)

Mr. Evirrs. The committee is concerned that despite all of this sincere

effort by Congress its work was almost entirely negated by the placement of the funds involved in reserve. In the final analysis, the executive department determined that everything that had been budgeted

-was of high priority and that actions of the Congress were not.

We have now again completed, Mr. Director, over 3 months of hearings this year on the 1972 budget. We have had testimony from over

1,700 witnesses from across the country. I have never beard more urgent appeals in my 18 years on this committee from chambers of cornii water resource people, public officials, and Members of Congress.

Over 150 Members of Congress accompanied their witnesses before

the committee. As the committee now begins to make its recommendations on the bill for next year we are concerned that without some

chancre in the policies and attitudes of the OMB the committee's judgmentt's and determinations might again be nullified. So that is the reason for this hearing before the markup.

Mr. Director, let me ask you just a few questions. We have read your

statement and, without objection, it will be placed in the record.

(The statement follows:)
3

STATEMENT OF CASPAR W. WEINBERGER

Mr. Chairman and members of the committee, I welcome this opportunity to

appear before you to discuss the practice of establishing reserves and deferring

the expenditure of appropriated funds. I understand that you do not expect an

extended statement, and I do not have one. I think, however, it would be useful

to the committee if I make a few general points concerning this matter, inasmuch as there has been considerable confusion and misunderstanding in some

of the recent public discussion of it. I would also like to bring the committee

up to date on the amount of withheld funds.

As of June 22, 1971, the total amount of funds in reserve was just under $12.1

billion. As we characterize these reserves, over $10 billion of this amount was

not being held up in any restrictive sense but merely being held for obligation

at a time when projects •are ready, or to meet possible contingencies, or to

comply with specific congressional reqhirements, while the remaining $2 billion has had to be withheld in order to meet general restrictions on spending

imposed by the Congress and to fulfill the President's responsibilities, including

his duty to combat inflation. Within these totals, funds are being reserved in

practically every major department for many different reasons peculiar to the

individual programs involved.

The committee will recognize that the $12.1 billion figure is significantly different from the $12.8 billion amount which we reported as being in reserve in

February. This illustrates an important point about the withholding process:

Withholding is essentially a management device which is used to regulate the

flow of the Government's funds in an orderly manner, not as an arbitrary obstruction to spending as some have said. The total amount being withheld fluctuates because funds are in reserve not to prevent their ever being spent but

because they have to be held somewhere until all the conditions which the Congress intended to attach to their being spent are fulfilled. Specific congressional

mandates limiting the money to be obligated within a certain time period must

be complied with; contingencies must be guarded against; projects must be

prepared and reviewed; disputes over locations must be resolved; occasionally

savings are possible in certain programs; or it may not be possible to obligate

all the money even if it were desired to do so, as is the case with the highway program. In any of these circumstances it may be that funds will be

placed in reserve for a time. This is good management practice, adopted in order

to be sure that the funds will be available for the purpose intended by the Congress when it is possible or appropriate to spend them.

As I have said, over $10 billion of the total amount of reserves are not being

held in any restrictive sense but rather for these management-type reasons just

referred to. Consistently over the last decade the amount of the budget in reserve

has been about 6 percent of total outlays, and in fiscal 1971, at 5.7 percent, we are

slightly below this level.

However, the amount withheld this year includes, in addition to those amounts

withheld as a routine part of managing expenditures. approximately $2 billion

which has had to be reserved in order to comply with general congressional

directions concerning total spending and the public debt. I would like to say just

a word about these general restrictions and their effect on the withholding

process.

The President feels that the proper economic course to follow is to hold total

Government expenditures down to a level that will not exceed the revenues that

would be received if the economy were operating at full employment. This has

been necessary in order to reduce the inflation which has been afflicting the

economy as a result of excessive spending above full-employment revenues under

the previous administration. To hold down spending, we believe the President

would have been justified in withholding funds in addition to those in reserve

for management purposes. Given the amount of spending that has been authorized, it is the only means available to him to fulfill his obligation to contain

inflation. Our view is that the power to withhold is inherent in the general

executive power of the President, a position for which there is ample precedent

in administrations of both parties.

As it happens, however, this particular issue involving the separation of legislative and executive power is not of great importance in the context of fiscal

1971 because the Congress itself has required the President to use the withholding mechanism as a means of complying with a general ceiling on expenditures

for the year and with the limit on the public debt.
4

The ceiling on expenditures for fiscal 1971 was established in the Second

Supplementary Appropriations Act, 1970. While the formula for computing the

ceiling is complex and requires reliance on estimates throughout the fiscal year,

suffice it to say that it is a binding legal requirement on the President and there

is no way of complying with it except by withholding funds unless we were to

refuse to pay the Government's bills as they come due. In our budget last January, we planned on the basis of ending the year within $2 billion of the limit,

which left less than a 1-percent margin for error. If the funds now being withheld had been released at the beginning of the fiscal year, we believe we would

have exceeded the ceiling by several billion dollars, which would be against the

law and the specific direction of Congress.

Likewise, the debt limit is a binding restraint on spending which assumes

that it will be complied with by exercise of the withholding power if necessary.

Thus, when the administration requested in February that the debt limit be

raised to $435 billion, the request was based on a calculation of the amount of

borrowing we thought would be necessary if spending followed the pattern recommended in the President's budget, which included plans for withholding funds.

If the Congress wished these funds to be released, it could have granted a higher

increase in the limit than requested. In fact, however, the Congress approved a

ceiling of only $430 billion, apparently assuming that the funds would be withheld and actually making it impossible to release them and stay within the

debt limit.

In conclusion, I would say only this: The administration regards withholding

as an essential management tool, necessary if we are to have the efficient and

effective control over Government expenditures we are sure Congress wishes

maintained. For the most part, it is used as a management device, as the figures

I have elven the committee demonstrate, and it is a good one. During fiscal 1971

it has been necessary also to use withholding to resolve inconsistent leigslative

directives concerning total Government spending and individual appropriations

bills. Perhaps there are 'better ways of resolving these inconsistencies; at this

time. however, the withholding device is the only means available to us to comply

with the congressional will.

Mr. EviNs. We know the tenor of your statement is about the congressional limitations with which we are familiar.

OMB POLICY ON IMPOUNDMENT

As a general policy, Mr. Weinberger, did OMB reserve all congressional add-ons in other appropriation bills for fiscal year 1971?

Mr. WEINBERGER. Mr. Chairman, do you mean other construction?

Mr. Evngs. Yes; and planning items in other bills besides the public

works appropriation bill.

Mr. WEINBERGER. Planning and construction. Well, my understanding is—and Mr. Cohn has been with the Office a lot longer than I

have and will be there long after I leave, so he will have to correct

me on any mistakes I might make—that there was a continuation in

fiscal year 1971 of the previously followed policy of deferring congressional add-ons in the construction and planning budgets in

favor of the projects which the President himself had recommended.

I noticed you said that the action had nullified the action of the committee. This, I think, is incorrect. What we did was defer it. It is our

intention to release on July 1, which is less than a week from now,

3 days actually, the projects that were added by the Congress to the

projects requested by the President, and the intention of doing this,

Mr. Chairman, was set forth at page 114 of our budget in which

we used the specific sentence: "Most of the projects added by the

Congress to the 1971 budget are expected to be started in 1972."

And that sentence is correct. They will be carried out.
5

Mr. EVINS. Mr. Director, you, in effect, negated the entire year's

action of this committee by deferral of projects and when you release

them on July 1 you haven't provided for any additional funds in the

1972 budget which makes for a year's delay. You have stopped them

for a year. We understood last year you were talking about inflation.

This year you are talking about the full employment budget.

Mr. WEINBERGER. We do have the problem, Mr. Chairman, and it

is a serious one, of the fact that only about a third—it varies from time

to time but about a third—of the total budget is in what can be called

the controllable category and, unfortunately, all of the construction

is in that one-third.

Mr. EviNs. Mr. Director, you didn't answer our first question. As

I said, as a general policy did OMB reserve all congressional add-ons

in other bills? You did in ours. Did you reserve all unbudgeted items

in other bills?

Mr. WEINBERGER. In other bills. I thought you were referring to

construction only.

Mr. EVINS. We are talking about other bills, planning and construction.

Mr. WEINBERGER. I don't think we reserved all of the congressional

add-ons in all other bills for the reason that we were not allowed to do

so in some. We were not able to do so.

EXAMPLES OF FUNDS NOT PLACED IN RESERVE

Mr. Evms. It me read you a few here where congressional add-ons

were provided and you didn't freeze them. We have, for example, six

Federal office buildings in the GSA budget:

FEDERAL OFFICE BUILDINGS

Courthouse and Federal office building at Frankfort, Ky., where a

$850,000 congressional add-on was released; courthouse and Federal

office building at Alton, Ill. for $1,500,000; Post Office and Federal

office building in Augusta, Ga., $2,694,000 Post Office and Federal

office building in Houma, La., $2,064,000; Post Office and Federal office

building in New Orleans, La., for $181,500, construction and alteration;

and Post Office and Federal office building in Providence, R.I., $1,355,-

600, which is a total of add-ons in the GSA bill of $8,645,100.

MILITARY CONSTRUCTION ITEMS

Here are some congressional add-ons for military construction which

were not frozen: the Lindsey Creek bypass extension (bridge and

road) , Fort Benning, Ga., $2.8 million; commissary for the naval

base in Charleston, S.C., $2,233,000; applied instruction building for

the Naval Construction Battalion Center at Gulfport, Miss., $772,000;

and enlisted men's club, Naval Construction Battalion Center, Gulfport, Miss., $462,000. These examples of military construction add-ons

total $6,267,000. They were not frozen. This committee feels that it has

been singled out and discriminated against and you have impounded

all the add-ons of this committee but not others.
6

1)EP.1 ITMENT filL INTERIOR ITEMS

Here are some congressional add-ons in the Department of the Interior bill: Restoration of facilities at Fort Scott National Historic Site,

Kans., $100,000. I didn't know that that was a high priority item. It

is a historical site. Construction of administration headquarters for

the Redwood National Park in California, $75,000, a small item, but

many of ours were very small, Mr. Cohn, involving urgent flood control projects.

Let me give some more examples involving the Bureau of Sport

Fisheries and Wildlife. Seven fish hatcheries, all congressional addons, including Meridian, Miss., $25,000; San Marcos, Tex., $250,000;

Allegheny National fish hatchery in Pennsylvania, $241,000; Warm

Springs National fish hatchery, Oregon, $295,000; fishery station in

Valentine, Nebr., $30,000, which is planning only; water supply intake.

Quinault fish hatchery, Washington, $90,000; and support facilities,

Western Gulf Marine Laboratory, Port Aransas, Tex., $700,000. These

add-ons total $1,806,000 and they were not frozen. They are small but

many of ours were low cost too, as I said earlier.

Without objection, I will place this list in the record.

(The list follows:)

GENERAL SERVICES ADMINISTRATION FISCAL YEAR 1971 CONGRESSIONAL ADD-ONS

NOT IMPOUNDED

In fiscal year 1971 Congress added funds on six GSA projects. None of these

funds were frozen. Contracts for two of the projects (see below) were awarded in

the final quarter of fiscal year 1971.

Congressional

Building and location add-on

Courthouse and Federal office building, Frankfort, Ky $850, 000

Courthouse and Federal office building, Alton, Ill 1, 500,000

Contracts will be awarded in fiscal year 1972 for the other four fiscal year

1971 congressional add-ons. According to GSA, these conracts would have been

awarded in fiscal year 1971 if the design work for the buildings had been

complete. The buildings are:

Congressional

Building and location add-on

Post office and Federal office building, Augusta, Ga $2,694,000

Post office and Federal office building, Houma, La 2,064,000

Post office and Federal office building, New Orleans, La 1 181,500

Post office and Federal office building, Providence, R.I 1,355,600

1 Construction and alteration.

MILITARY CONSTRUCTION FISCAL YEAR 1971 (CONGRESSIONAL ADD-ONS

NOT IMPOUNDED)

Congressional

Project and location add-on

Lindsey Creek bypass-extension (bridge and road), Fort Benning,

Ga. $2,800. 000

Commissary, naval base, Charleston, S.0 

Applied Instruction Building, Naval Construction Battalion Center,

Gulfport, Miss 

Enlisted Men's Club, Naval Construction Battalion Center, Gulfport, Miss 

2,233, 000

772,000

462, 000

DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES FISCAL

SIONAL ADD-ONS NOT IMPOUNDED)

Project and location

Restoration of facilities, Fort Scott National Historic Site,

Construction of administration headquarters, Redwood

Park, Calif 

YEAR 1971 ( CONGRESCongressional

add-on

Kan____ $100,000

National

75, 000
7

BUREAU OF SPORT FISHERIES AND WILDLIFE

Oongreeeional

Project and location add-on

Meridian National Fish Hatchery, Meridian, Miss $25, 000

San Marcos National Fish Hatchery, San Marcos, Tex 250,000

Allegheny National Fish Hatchery, Pa 241,000

Warm Springs National Fish Hatchery, Oreg 295, 000

Fishery Station, Valentine, Nehr 1 30, 000

Water Supply Intake, Quinault Fish Hatchery 90,000

Support Facilities, Western Gulf Marine Laboratory, Port Aransas,

Tex. 700.000

1 Planning.

Mr. COHN. May I respond to that briefly, Mr. Chairman?

Mr. EVINS. Yes I wish you would.

Mr. Com.r. I don't think there was any such policy. In fact, I know

there was no policy to discriminate against this subcommittee or the

area that this subcommittee covers. There is one major distinction between the construction for which this subcommittee appropriates and

the projects you just read off. I don't mean to take either side of that

argument but let me say that the ones you read off, the construction

starts, are fully funded. The GSA buildings and the military construction are fully funded. The starts and the construction in the Corps and

the Bureau of Reclamation and some of the Atomic Energy projects

that this subcommittee handles are partially funded. When we looked

at the 1972 budget and the 1973 and further year follow-on of the 1971

starts we tried to take account of the trend in budget outlays over a

longer period of time than 1971. We looked at the 1972 impact, the 1973

impact, and so on. At that time many of the projects that this subcommittee had appropriated for starting even prior to the fiscal 1971

budget had not been started. After looking at many alternative paths

within the full employment context of the President's 1972 budget proposals, and full employment budgeting means that there is a limit as

well as an incentive to come up to full employment revenues 

Mr. EviNs. We will accept your word that there is no discrimination

against this committee. We will accept your word for that.

Mr. Comr. I would like to explain that we did make an effort, Mr.

Chairman, to start in the fiscal 1971 year all of the projects that had

been funded prior to 1971 that hadn't been started.

PUBLIC WORKS BILL FUNDS IMPOUNDED WITHOUT EXCEPTION

Mr. EVINS. But, Mr. Cohn, you didn't make an exception in this

committee. You made exceptions in other committees and, therefore,

this committee is concerned that you singled out the entire action of

this committee and your action meant a year's slowdown and a year's

stretchout and delay. Now, you have alluded to the fact that these projects are not funded all in 1 year like a Federal building, and that is

true. But many of these projects, I repeat, were small and there were a

number that would be completed in 1 year involving only a small

amount. I feel that your subordinates didn't take a look at them selectively. Let me read you a few of these. Here is the King Cove Harbor,

Alaska, a total Federal cost of $750,000. That was a small one. It would

have been the complete cost in 1 year.

Mr. WEINBERGER. The problem, Mr. Chairman, of pulling one or

two instead of having a uniform policy is that it would subject our

64-300----71 2
8

Office to substantial criticism. We thought an overall policy was better.

My understanding has been that this is not a new policy, that this

is the policy that has been followed by many previous administrations.

Mr. EVINS. This is the first time, Mr. Director, that the complete

action of a committee of Congress has been negated. Let me read

you some more of these. Here is the Little Rock, Ark.. levee

'

$290,000,

the total cost to complete the project, frozen and project delayed a

year. Here is the San Joaquin River in California, total cost $720,000.

Here is the Kaskaskia Levee District No. 23, Illinois, total cost $907,000.

Here is the Corpus Christi Intercoastal Waterway cutoff, $200,000

to complete it.

Mr. WEINBERGER. I think one of the points you made earlier is important here, and that is that the total cost of the continuation projects

added by the committee for the Corps of Engineers alone was half a

billion dollars. Furthermore, the total cost of all the projects added,

planning, land acquisition, and construction, was about 3 billion, and

that is not an inconsiderable sum, even by Federal standards. We had

to apply, we thought, a uniform policy with respect to deferring and

stretching out the add-ons.

Mr. EviNs. It has never, to my knowledge, been the policy to include

planning and land acquisition items in commitment figures, only construction starts. Regarding planning, you allowed other agencies to

go ahead with planning but even on planning von impounded all

funds and delayed our 18 new planning starts. It takes a long time

even to complete planning on a project but you stopped all planning.

Mr. WEINBERGER. Not all planning, Mr. Chairman; planning that

was in addition to the President's proposals.

Mr. EVINS. All of the committee's priorities on planning, and that

after many months of evaluation and testimony by many witnesses.

The committee would say to the Congressman, State water officials,

and others, "Which is your highest priority? Which is the most urgent?

Which is the most needed? "On a very restricted basis, we provided

funding for these priorities. To impound the funds, without exception,

appeared to be an arbitrary meat ax sort of approach.

Mr. WEINBERGER. It certainly was not that, Mr. Chairman, and I

regret that any impression of that kind may have been incorrectly

given.

Mr. RHODES. Mr. Chairman, would you yield?

Mr. EVINS. Yes, I yield.

Mr. RHODES. Mr. Weinberger, this subcommittee sits on a powder

keg really.

Mr. WEINBERGER. Oh, yes.

Mr. RHODES. We have pressures from Members of Congress for

projects that you probably—I was about to say you wouldn't believe

but you would believe because you have a pressure-packed position

yourself.

Mr. WEINBERGER. I do. I have had some familiarity with the work

this committee does because of similar work I did in California, and I

respect the difficulty of the job very much, Mr. Rhodes.

Mr. RHODES. We had thought we had done a good job last year. We

funded some starts which were above the budget but they were not of a

major nature. Also, the pipelines of both the Corps of Engineers and

the Bureau of Reclamation are going down. Even with these add-ons,
9

the pipelines are going down and this is in dollars, not in purchasing

power, so you know full well and I don't need to elaborate that if they

are going down in actual dollars the purchasing power which is represented by those dollars is even less. Therefore, since we felt that we had

done a good job, when the bill was signed and the President made that

remark about "this was sure full of pork," it didn't sit very well with

the committee.

Then to have the Office of Management and Budget take all of the

congressional add-ons and without any explanation whatsoever deferring them, we just felt that our work had been held up for scorn and

ridicule when we had actually done what appeared to us at least to be

a creditable job.

Mr. WEINBERGER. There was no intention, I am sure of that, Congressman Rhodes, and that certainly is not my feeling and, I am sure,

is not the President's. He has been part of the congressional process

and is very familiar with it and understands it.

Mr. RHODES. Oh, yes.

Mr. WEINBERGER. He did have concern because of the out-year effects

of the additions, $3 billion. The first year rises in geometrical progression in the out-years, and this is something he has to be concerned

about because he has not only the responsibilities of looking over the

work this committee does but overall responsibilities for the entire

Government, and the effects of small outlays the first year can be enormous in future years.

Mr. RHODES. This is true, but I think that we have to make the

point also that the areas of public works must not be neglected, particularly the flood control projects. Practically all the add-on projects

were flood control projects in which the need had been demonstrated

by the fact that there had been recent floods and more were expected.

Even so, we certainly understand your position and the President's

position, and I think your statement makes the point very well about

the congressional ceiling.

What we are really asking you to do is to give our work a little more

credibility than I think you did last year and to realize that we are

not trying to put a lot of pork in this barrel. We are trying to do the

best job possible for the country.

Mr. WEINBERGER. I don't have any doubt about that, knowing the

personnel of the committee and being familiar with the legislative

process myself, and I think, Congressman Rhodes, there are two problems. You have the need to make SOIlle reductions. You have the fact

that because of the controllability factors all of the reductions. practically speaking, have to be in the construction area. You have the

fact that the President gets advice, as he must, from his staff people

and from the executive branch as to the priorities that he has put in

his budget. Finally, you have, along with the urgent necessity to

make some reductions, the fact that the President would feel that the

priorities he had selected for his budget should come first. This does

not in any sense imply any disrespect. for the committee.

Mr. EVINS. Mr. Director, this is one of the points we wanted to make.

We respect Rogei4Morton who served in the Congress. We think he

is a fine man and we welcome him to this committee. He is in charge.

of course, of the Bureau of Reclamation and the power agencies of

Interior. We felt he might have some standing influence with the
10

President, and you said that the President must rely upon the advice

of his associates and advisers arid this is one reason why we wanted

to discuss the question with you. We know you are an important man,

an influential man, and you advise the President and we wanted some

of the full facts to be known. We feel that you have sort of taken a onesided point of view on some of these things and have missed some of

the points of view that we have learned and have heard over the years

in the committee. Maybe you can present some of these other facts,

some of the planning items, some of the land acquisition items that have

been stopped.

Mr. WEINBERGER. I think that is a very valid hope and assumption,

Mr. Chairman. We certainly feel that we need to learn a great deal

more about all of these things, and I am personally very glad indeed

to have the opportunity for this hearing and to have the opportunity

to present to the President the viewpoint that the committee has. I

don't have any doubt at all that he will be glad to have the additional

viewpoints before him and certainly would be greatly concerned, as

I am, at any feeling that there is any discrimination against a particular committee of the Congress, which there certainly is not.

REVIEW OF EFFECTS ON INDIVIDUAL PROJECTS

Mr. Evilsrs. We accept your word on that. Let me ask you this: To

what extent, Mr. Cohn, was the effect of impoundment reviewed in

connection with individual projects? None at all, apparently.

Mr. COHN. During the reviews last fall and into December, Mr.

Chairman, a number of alternative paths or policies of public works

construction were reviewed and, as Mr. Weinberger pointed out, the

decision was made then to adopt a uniform policy that did cover all

the new public works starts that this committee had added.

Mr. Evils's. In other words, you didn't take a look at individual projects to see whether it was a small project or a small amount, or the

degree of urgency?

Mr. COHN. It was a feeling, Mr. Chairman, that we were being impartial and the alternatives were set before the President. Mr. Weinberger and Mr. Shultz reviewed them, reviewed them with various

agency heads, and this was set before the President. I was not there.

But the feeling that I got during the later discussion with Mr. Weinberger and Mr. Shultz had with us was that this was really impartial

because we were not picking out projects in certain districts or that

were initiated by certain Congressmen.

Mr. WEINBERGER. There was a real worry about that

Mr. COHN. We were worried if we picked and chose we would be

subject to charges of discrimination and, of course, there was a tendency, and I have been there with both Republican and Democratic administrationsMr. Evusrs. You had the criterion of priority to small projects?

Mr. COHN. We might have had that.

Mr. EVINS. Small amounts, small costs, small projects, planning only.

Mr. COHN. We discussed tho possibility and it lriay be we came to

the wrong judgment, Mr. Chairman, but having sat through Republican and Democratic administrations in approximately m,y same seat 1

know there is the tendency for advisers to the President to always push
projects in districts that they are interested in. The career staff, if you

will, sir, have always been warned against this, and that we should

adopt a consistent policy and not pick particular projects of interest

to whatever administration it is. The career staff has adopted this

policy consistently.

Mr. EVINS. We can understand that point of view, but at the same

time we considered primarily small projects and small costs. I note you

followed a similar policy in the limited number of new starts in the 1972

budget. Let's go on with the hearing. We see your policy and you didn't

get in on the top decisionmaking. You are a career man.

Mr. WEINBERGER. Mr. Cohn is saying that his recommendation saved

me from having to come here this morning and defend against having

released all of the California projects, Mr. Chairman.

FREEZING OF PLANNING FUNDS

Mr. EVINS. Considering the very small amounts involved and the requirement of 3 to 4 years for planning of water resource projects, why

were the planning funds frozen?

Mr. WEINBERGER. The overall necessity of making reductions and

the decision to do it on an overall basis for the deferral—not the nullification but the deferral—of the congressional add-ons led to projects

in both categories being put into the "withheld" list, and I emphasize

that most of them are being released for the fiscal year beginning in 3

days.

LITTLE- GOOSE POWER PROJECT

Mr. EVINS. Mr. Director, for example, Congress added $130,000

to initiate planning on the Little Goose generating units on the Snake

River in Washington. Considering the serious power shortage in the

Northwest, why was the $130,000 for planning delayed?

Mr. WEINBERGER. For the same basic reason, Mr. Chairman. There

was a general feeling that given the necessity for the reductions it was

fairer and less discriminatory in every sense to do it on an overall basis.

IMPOUNDMENT OF LAND ACQUISITION FUNDS

Mr. EVINS. Mr. Director, on a very selective basis we added $2.5

million to initiate land acquisition on seven corps projects because of

the rapidly escalating land costs in the area as well as individual

hardship cases. Now, the committee could have added 60 or 70 land

acquisition cases but they only chose seven. Why, again, were these

funds impounded without exception when the very basis for the action

was to avoid inflation in land costs. Millions can be saved by acquiring

project lands in advance in rapidly developing areas.

Mr. WEINBERGER. Again for the same basic reason. The value of the

money, the value and importance of not having additional problems

in borrowing funds, staying within the congressional limitations, and

so on, dictated a reduction, and given this fact it seemed fairer to do it

on an overall basis. If we tried, Mr. Chairman, as I think you can

appreciate, to pick and choose we would perhaps have satisfied some. In

the present position, we are in a, position of not having satisfied anybody, but at least we were on a uniform basis.
12

LANDS IN GREATER OMAHA AREA

Mr. Ey'Ns. Let me refer to some of the individual considerations.

One of the seven projects was the Papillion Creek flood control project in Nebraska. The project is in the Greater Omaha area with rapidly

escalating land costs. This is a most urgent flood control project with

construction certainly imminent in the foreseeable future. Why is it

not good business to at least provide for the land acquisition in an

area that is rapidly growing and when land costs are going up? You

would save money and prevent inflation.

Mr. WEINBERGER. You have to appreciate the difference between the

value of the present available use of the funds in a given fiscal year

for a particular purpose against the need for compliance with overall

congressional limitations, public debt limitations, the President's desire to avoid inflationary spending in any 1 year. It is not an easy decision but. as I mentioned, the decision was taken to defer all of the

congressional add-ons the fact that they were not lightly regarded

is evident from the fact that they are planned to be funded in the next

fiscal year.

INCREASED PROJECT COSTS AND LOSS OF BENEFITS

Mr. EviNs. Without exception, the additions by the committee were

impounded and, in general, schedules were slipped further back in

the 1972 estimates. The Corps of Engineers and the Bureau of Reclamation now estimate increased project costs of over $73 million and

loss of annual benefits estimated at $170 million for a total of $243

million in increased costs due to impoundment of the $63 million added

by the committee. In other words, to save $63 million, not our testimony, the Corps of Engineers and the Bureau of Reclamation estimate, it will cost $73 million more in construction with a loss of $170

million in annual benefits for a total loss of $243 million. We will insert this summary tabulation in the record.

(The information follows:)

SUMMARY OF EFFECTS OF IMPOUNDMENT

Estimated Estimated Total,

increase in loss of increased cost

Number of Amounts project cost annual and loss of

projects reserved due to delay benefits benefits

Corps of Engineers:

Construction funds '65 $31,035,000 $62,128,000 $80,881, 800 $143,009,800

New planning starts 18 2,018,000 (2) 42,364,000 42,364, 000

New land acquisition starts 

Subtotal, corps 

7 2,500,000 (2) (2)

90 35,553,000 62,128,000 123,245, 800 185,373,800

Bureau of Reclamation 

Total, above 

838 27,862,000 11,286,000 46,276, 000 57,562,000

128 63,415,000 73,414,000 169,521, 800 242,935,800

1 Includes 31 new starts and $7,975,000 in reserve; balance involves congressional increases (523,060,000) to restore

schedule on 34 budgeted projects.

2 Not available.

3 Includes $3,020,000 for 3 new construction starts, 3 new loans, 1 planning start, and 1 new land acquisition item;

balance, $19,793,000, involves congressional increases on going construction projects.

Note: The figures were prepared at committee request by the Corps of Engineers and the Bureau of Reclamation based

on a review of the contracts that would have been let on each project where the funds had not beeh impounded.
13

Mr. WEINBERGER. Again, Mr. Chairman, it is simply a matter of

trying to measure the difference between that increase—and I think

the loss of benefits is always an item about which a great many arguments can be made—the difference between saving that extra cost and

spending more than seems to be proper in the given fiscal year.

Mr. RHODES. Mr. Chairman, would you yield at that point?

Mr. EVINS. Yes.

FUTURE OMB POLICY

Mr. RHODES. Mr. Weinberger, can you give us any feel for the

probable action of the Office of Management and Budget with reference to congressional add-ons for the appropriation bill for fiscal

1972?

Mr. WEINBERGER. Well, Congressman Rhodes, I certainly could not

be in the position of encouraging congressional add-ons to the President's budget.

Mr. RHODES. No; I understand that.

Mr. WEINBERGER. We have not seen any final figures because very

few appropriation bills have even been acted on, so we would not know

anything about the necessity for withholding. It is my understanding

that Congress does not plan to impose a spending ceiling in the fiscal

year 1972. I don't know if this is final action or not, but it is my

understanding they do not.

Mr. Evixs. Mr. Director, the Congress feels that they don't want

to give you a flexible ceiling which you could use as a tool to freeze

and impound funds as you did in the past.

Mr. WEINBERGER. Well, Mr. Chairman on that point we have 'asked

for an inflexible ceiling that applies both 

Chairman,

Congress and the executive

branch.

Mr. EVINS. We had one and, Mr. Director, you are knowledgeable

in this matter as are • we in the Congress. I believe your ceiling has

not been given to you to provide you with another tool to use to freeze

funds.

Mr. WEINBERGER. An inflexible ceiling that is a ceiling and is applicable to both branches would, I think, be something that the President

not only has requested but would request again.

Mr. EVINS. I would like to say I appreciate the President thanking

me for voting against the Whalen-Nedzi cutoff date.

Mr. RHODES. I want to thank you, too.

Mr. EVINS. And I appreciate the letter.

Mr. WEINBERGER. I am glad. To complete the answer, naturally

we could not be in a position of encouraging add-ons to the budget

which the President submitted.

Mr. RHODES. There will be add-ons.

Mr. WEINBERGER. But there will be add-ons as there always have

been in the past, and the question arises as to whether the same necessity prevails in 1972 that prevailed in 1971, which led us to go into

the need for overall general reductions. We certainly hope it would

not. The President would like to give full expression to the intent

of Congress, I am sure, at any time he feels it is consistent with his

economic policy, and with the public debt limits and the other things

which led us and have, incidentally, led e- ery administration since
14

Thomas Jefferson to find the necessity for making some withholdings.

Mr. RHODES. I hope you will consider the pipeline. As I have mentioned before, the pipeline is going down in both the Corps of Engineers and the Bureau of Reclamation, and this, I think, is likely to be counterproductive in the years to come.

Mr. WEINBERGER. I think the pipeline is diminishing but the spending each year is rising. The immediate outlook and the years we have

to be most concerned with, of course, are 1973, 1974, and 1975, and

so on. Those immediate years show very substantial total increases

based upon prior-year commitments and while the pipeline may be

going down, the immediate year outlay effects that we do face are

very substantial. We would certainly want to utilize the reservation

of congressional add-ons as a last resort, and that is all that was done

this year.

Mr. RHODES. Thank you.

Mr. EviNs. Let me finish these questions and then I want all the

members to have further time to question within the time limitations.

DIVERSION OF RECLAMATION FUNDS

Mr. Director, the committee is especially concerned that in the instance of the Bureau of Reclamation a total of $16 million which was

added by Congress for eight projects was impounded and is nowscheduled for release in fiscal year 1972 but is being reprogramed

for other work. It is a small amount, but it is beino; allocated to other

work, not to the items which the committee directed.

1VESTLANDS DISTRIBUTION SYSTEM, CALIF.

For example, for the Westlands distribution system in the Central

Valley project, California, Congress provided $8.5 million to initiate

two contracts to provide water to two additional project areas. These

funds are now scheduled in the 1972 budget to finance other work, thus

vetoing the priorities established by the Congress.

Mr. 1VEINBERGER. Mr. Chairman, I think in that, connection the

problem was that the contractor worked more rapidly than he had

scheduled with the Bureau; for that reason the additional funds will

be used up sooner and the balance will be available for other programing. I am not sure, but that is my impression. We have had a great deal

of correspondence concerning the, Westlands water project.

Mr. EVINS. I don't believe that was the case. You not only deferred

the money we added for 1971 until 1972 but then you put it on other

items in 1972, for going contracts on the Westlands project. Here is

some information from this year's hearing during the testimony of

Ellis L. Armstrong, the Commissioner of the Bureau of Reclamation:

and I quote the record:

Mr. EVINS. I understand in some cases the funds will not be applied to the

purposes for which it was appropriated. We are most concerned that such

action was taken and I assume it will not occur again. Specifically, indicate these

diversions of funds in the reserve table you are furnishing for the record.

For example, $8,500.000 was appropriated for the Westlands distribution system. We understand this has been used for some other purpose than was intended

by the Congress.
15

Mr. Armstrong. No. It is being used for the Westlands distribution system.

You supplied $85 million, and in the discussions accompanying the appropriation, I think you specified that would be for two new contracts. We did not have

enough money to cover these additional contracts, and so it is being applied this

year along with another $1.5 million, making a total of $10 million to cover ongoing work, on construction contracts that have already been let.

Mr. EVINS. You have taken the money which we appropriated for new work on

the project and scheduled it for ongoing contracts. If you had not diverted the

$8.5 million, you would have had to have an additional appropriation request

for going contracts in fiscal year 1972?

Mr. ARMSTRONG. That is true.

Mr. EVINS. This is the gimmick. They had ongoing contracts and

used this extra money for them instead of requesting new appropriations for fiscal year 1972.

Mr. WEINBERGER. This is usually the Bureau's or the corps' own

recommendation, Mr. Chairman, because it is very much more economic

and effective in every way to complete the ongoing contract than to

stop half way through that and start a new one.

Mr. Ey'Ns. We are not advocating stopping it, Mr. Director. Please

understand we are not advocating stopping it. The representative of

the people in the area asked for the two new contracts and this committee supplied funds for the two new contracts, and somehow the

two new contracts were deferred and the funds diverted to other

work.

Mr. WEINBERGER. I think the problem was, Mr. Chairman, that the

old contract cost more than originally estimated and rather than leave

the project dangling the available funds were reprogramed to complete that project. That is my understanding of Westlands.

Mr. EVINS. It is not my understanding the old contract cost more.

You saved $8.5 million in the 1972 budget request by using the money

appropriated by Congress for 1971 and you exercised an item veto of

Congress which is unconstitutional.

1‘17. WEINBERGER. I think we finished some existing contracts on that

existing project. That one I have some small familiarity with because

of the amount of discussion we had about it.

Mr. RHODES. We ought to finish that Westlands project. The way

that project has been kicked around through the years, Mr. Weinberger, is absolutely scandalous. It is badly needed. The water table

is going down. They have ground subsidence. They have everything

imaginable that can happen to a district that is out of water. We really

ought to go ahead and complete this project.

Mr. WEINBERGER. Let me check on that.

CENTRAL UTAH PROJECT

Mr. EVINS. - I am advised, Mr. Director, that the same action was

taken with respect to the tunnel and the Jordan aqueduct on the

Bonneville Unit of the Central Utah project. We provided money for

the Jordan aqueduct. You took the money and put it on to ongoing

contracts and again vetoed the action of the Congress.

Mr. WEINBERGER. I am not familiar with that one, Mr. Chairman.

but we do give the Bureau and the corps flexibility, so that if there

had been cost overruns as there nearly always seem to be on these estimates they can complete ongoing work.
16

Mr. Ems's. These are not cases of cost overruns, Mr. Director. For

years when the corps and the Bureau write a letter to this committee

and state that they would like to have a transfer of funds for a project

it has usually been approved.

Mr. WEINBERGER. I think in this case it probably was, too Mr.

Chairman, because I don't think we can move without the committee's

approval and we would not want to.

Mr. EVINS. It wasn't submitted. You compliment the committee, Mr.

Director, by saying you don't move without considering the committee. We don't feel the committee has been given any consideration at

all.

Mr. RHODES. If you will yield, this particular item I remember well.

It was not in the budget and was put in the bill over the budget at the

specific request of the people of Utah.

Mr. WEINBERGER. This was the Bonneville project?

Mr. RHODES. Part of the Bonneville project. It was $1,200,000 and,

as I recall 

Mr. EVINS. The Jordan aqueduct.

Mr. RHODES (continuing) . There was a matter of relocation of a

highway. The total project provides water for Salt Lake City. The

case was made and made well that this was an emergency situation

and we put the money in for that particular purpose, and it was diverted to some other purpose.

Mr. WEINBERGER. I have no personal knowledge of that as I did with the Westlands. I will certainly look it up and see what the current

status of that is.

Mr. EVINS. This is one of the matters that we wanted you to become familiar with. We feel on many of these matters you don't have per- sonal knowledge and certainly the President doesn't have knowledge. Nobody is charging the President but it is his advisers and those around him.

Mr. RHODES. The main point we are trying to make is that we usually do have some reason for congressional add-ons.

Mr. WEINBERGER. I don't have any doubt about that whatever.

OMB PRACTICE OF DIVERSION OF FUNDS

Mr. EVINS. Do you believe, Mr. Director, as an individual, that it is

an appropriate practice for OMB to divert funds from the purposes specified by Congress?

Mr. WEINBERGER. Mr. Chairman, I don't believe in diverting the funds from the purpose for which provided. I do believe completely in the necessity for the President to have the ability to manage the flow of Federal expenditures, which is 'all that is really involved in impounding. If there were no constraints, if we didn't have infla- tionary problems

'

if we didn't have a debt ceiling, et cetera, et cetera,

we probably would not have to do that, but given the necessity and those contraints I think he does have to manage the flow. To the ex- tent that he is not always able to release funds at the time the Congress

would like to have them released, this may well involve a difference of viewpoint between the Executive and the Congress. I don't think this is diversion and I don't think the President or the executive branch

engage in diversion of funds.
17

Mr. EVINS. We certainly consider it di version when we appropriate

money for a specific project, for a specific purpose, within a time

frame and that project is not only deferred for another year but a

year beyond then, and then to another purpose. I can't consider it

anything but diversion.

Mr. WEINBERGER. Well, the matters that involve other purposes, so

far as I know, are usually, and I assume regularly, submitted to the

committee by the corps or the Bureau which are the operating agencies. We do not deal with that particular phase of it. We do not have

operational authority.

Mr. EviNs. Mr. Director, we are just giving you some examples in

the Bureau of Reclamation.

Mr. WEINBERGER. I will have to discuss them with the Bureau because my understanding was that diversion or shift of funds from

programed activities as approved by the Congress did require the

committee's approval, and that is the assumption under which we have

been operating; but we are not an operating agency in that sense.

INDEFINITE DEFERRAL OF FUNDS

Mr. EVINS. We have been talking about diversion. Now I want to

talk about deferrals and reallocations. -With respect to the Corps of

Engineers, funds were placed in reserve for nine projects which are

not scheduled for release until after 1972. We understand that one

reason for this is that they were considered by OMB of low priority.

Now, what criteria does OMB follow in establishing project priorities?

OMB CRITERIA ON PROJECT PRIORITIES

Mr. WEINBERGER. One thing that we have to be concerned with,

Mr. Chairman, is when the cost estimate of the total project has very

sharply risen or when we are advised by, in this case the corps, in

some eases the Bureau, of changes in conditions and other matters and

other factors that lead to that. We also have to be concerned with the

cost-benefit ratio and we ordinarily cannot send a favorable report to

the Congress—in fact, I don't know of a single instance where we

have—when there is an unfavorable cost-benefit ratio.

On the deferral of projects which are necessitated by money management problems that I mentioned a moment ago and in the statement, we naturally try to select for deferral projects that the corps or

the Bureau advise us have a lower priority and by definition those

projects that are not included in the budget 

Mr. EVINS. In other words you are advised by either the Bureau of

Reclamation or the Corps Of Engineers as to what constitutes low

priority?

Mr. WEINBERGER. Normally we would look to that, but if there is a

situation in which a project's ultimate cost has very sharply increased,

not by reason of calling it lower priority but because the project now

needs a reexamination, we would recommend for deferral that particular project given the necessity to defer some.
18

DEFINITION OF LOW PRIORITY

Mr. EviNs. We are trying to find out what is your definition of "low

priority."

Mr. WEINBERGER. That is what I was trying to give you, Mr. Chairman.

Mr. EVINS. You are saying that you are advised by the Bureau or the

oorps as to what constitutes low priority?

Mr. WEINBERGER. In some cases but I question the entire use of the

term "low priority."

Mr. EvusTs. There must be a little gap here because we get testimony

before this committee of the urgency, of the importance, of high priority, and then we find a label tagged on it by OMB of low priority. So

there is a gap here somewhere.

Mr. ComsT. Mr. Chairman, my recollection may be wrong, but I don't

recall low priority being attached to those particular projects, the few

that are deferred beyond 1972. That might be so interpreted, but I think

in each of those cases, and I don't know the specific projects, the general policy that I remember had to do with specific problems that were

involved in each of those projects. There was some difficulty in getting

water contracts signed. There was some difficulty and delay in getting

cost-sharing contracts agreed to, and in each of those cases it was our

understanding from the corps and the Bureau of Reclamation that

these were going to take time to complete.

CHARITON AND LITTLE CHARITON, MO., PROJECT

Mr. EVINS. Mr. Cohn, let me cite a few in this category. One project

on which a low priority tag was placed was the Chariton and Little

Chariton River flood control project in Missouri. The total cost of this

project is only $7.3 million, with a benefit-cost ratio of 1.6 to 1. Congress added $400,000 to initiate construction because it was considered

an urgent small flood control project with damaging floods which have

occurred on an average of more than once a year for the last 50 years.

They had floods in the area in May and September of this year, 1970,

which caused damage estimated at $1,148,000. In other words, they

had at least one flood a year for 50 years and it was of high priority,

of great urgency, with a benefit-cost ratio of 1.6 to 1. I think this is

probably one of our star examples, but this one was deferred because

it was considered of low priority. The funds provided by Congress

were frozen and are not even scheduled for release until after fiscal year

1972.

Mr. WEINBERGER. Let me 

again, 

Mr. Chairman, if I might interpose

the statement, say that we do not defer them because of low priority.

Mr. EVINS. That was the testimony of the Corps of Engineers. They

cited this one among four projects considered to be low priority and

are being deferred for that reason."

Mr. WEINBERGER. I don't know from whom, certainly not from

me, because we don't use that kind of categorization. We have to defer

some. A lot of what we defer has to be in construction. In making the

decisions as to which should be deferred, as you pointed out a moment

ago, we deferred all congressional add-ons on the theory that the ideas

that were in the President's budget represented the highest priorities

stated by the Bureau and the Corps. We didn't attempt to assess further priorities, but if there have been drastic changes in the cost
19

estimates of a project or the time for completion or other factors

which change the cost-benefit ratio we would certainly recommend that

that particular project be deferred until there is an opportunity to

look at it again. But we do not thereby attach a low priority tag to it.

Mr. EvusTs. Mr. Director, in view of your multiplicity of duties on

the overall budget and of the importance of your office and the lack of

time for details, could you not consider as Mr. Rhodes says, the expertise and judgment of this committee and Congress in determinin

some urgency or high priority in the funding of certain projects.

Wouldn't you give some evaluation to the work of this committee?

Mr. WEINBERGER. Yes, sir; I think definitely that would be done.

The problem that we faced in considering that is the difficulty of choice

and the problem of criticism that we have favorite districts, favorite

Congressmen, et cetera, et cetera, and in order to avoid the serious

problems involved in charges of discriminatory action of that kind it

seemed best that, faced with the need to make some retrenchment and

some deferrals, an overall policy of utilizing the recommendations that

had been given to the President by. the Bureau and the corps be followed and that the President's budget be followed and the congressional add-ons deferred.

Mr. EVINS. You are saying that you are following the recommendations of the Bureau of Reclamation and the Corps and that you really

don't exercise 

Mr. WEINBERGER. That is how they got into the budget.

Mr. EviNs. We think that you exercise '''°Teat judgment in your office. We hear testimony from the corps and the Bureau, from Members

of Congress and from public witnesses and we make evaluation of

relative needs. We think you exercised your judgment on these matters

in, I won't use the word, cavalier fashion, but I am saying that I believe we go into greater depth and greater study and we have valid

reasons for our funding recommendations.

Mr. WEINBERGER. Mr. Chairman, there is no question about that, and

the very point that I have made demonstrates that you do go into

much greater depth. The point I made is that the discretion we exercise is done on a single basis, the idea that the President's budget

should stand and that all of the congressional add-ons be deferred,

when a deferral is necessary in this amount, rather than exercising a

cavalier or an independent judgment on individual projects. We don't

feel qualified to do that.

DEFERRAL OF CHARITON AND LITTLE CHARITON PROJECT

Mr. Evu•rs. Let me get back to this Chariton project in which there

has been a flood every year for 50 years and they had one last year

that caused damage of almost $1.5 million. You put this over until

after 1972. Could you tell the committee why?

Mr. WEINBERGER. No sir; I could not, but I could certainly find out

and to find out I would got to the corps. Maybe Mr. Cohn has an idea.

Mr. CoHN. No I don't!

Mr. WEINBERGER. Chariton

'

and what is the State?

Mr. EviNs. C-h-a-r-i-t-o-n, Chariton and Little Chariton River project in Missouri with a benefit-cost ratio of 1.6 to 1, and they have had

a flood every year for 50 years.
20

Mr. WEINBERGER. It sounds like a project that the corps might well

have recommended.

Mr. EVINS. And you put it off until after 1972.

Mr. COHN. I don't understand this, Mr. Chairman.

Mr. EviNs. We don't, either.

Mr. Comq. Unless there is some local problem that has to be solved.

That is the only basis that I understand for deferring them that long,

and if that is not the case here we certainly will look into it and do

something about it.

Mr. WEINBERGER. Because this has a good benefit-cost ratio and we

would be guided on a matter of this kind by the corps. They may have

some reasons, but what they are I couldn't tell you at this moment.

I will certainly try to find out.

(The information follows:)

CHARITON-LITTLE CHARITON BASINS, Mo.

The $350,000 appropriated by the Congress in 1971 for the Chariton-Little

Chariton Basins project was initially included in a group of projects planned

to be reserved through 1972 because of local contracting problems, needs for

restudy, or relative urgency. Further analysis and consultation with local interests determined that the need for the Chariton project was sufficient to justify release of funds on July 1, 1971. Governor Hearnes of Missouri was informed of this decision on April 20, 1971, by Vice President Agnew.

Mr. Evixs. We have testimony here on page 856 by General Morris

that it is a favorable project. Let me talk about reallocation here for

a minute.

REALLOCATION OF FUNDS TO OTHER PURPOSES

In the case of two projects for which funds were added by Congress for AEC in the 1971 bill the funds were not only placed in reserve

but are being reallocated for entirely different purposes in fiscal

year 1972. To what extent and under what criteria do you believe, Mr. Director, that the OMB has the prerogative to exercise item veto of congressional actions in this manner?

Mr. WEINBERGER. In one of those projects, Mr. Chairman, there had been a very substantial increase in the cost of the project, and

whereas the $600,000 sum was asked for a start, it was not asked by the AEC. The total project would run in excess of $15 million, and guided by the AEC's budget presentation and their request to its this seemed to be an item that, given the need to defer some items, could be and should be deferred. It was on that basis that that was done.

The Cascade Improvement Program was deferred simply for an opportunity to examine more carefully the needs, alternative means

of providing for these needs, and the ultimate cost, and that Cascade

Improvement Program money will be released in the fiscal year beginning in 3 days.

Evi-Ns. I noted that, and I put a statement in the Record as of Friday of approval.

Mr. WEINBERGER. Good.

Mr. Evirrs. You may see it in the Record. I commend you for it.

In reference to the other project, I want to reemphasize that. the Joint

Committee on Atomic Energy and Congress authorized this project

after deliberation and much study, and the Appropriations Committee

after hearings added the $600,000 for just the planning on the project.
You are stating by your action in reallocating the funds that "We will

not approve the authorized action of the Congress. We will not approve the appropriation of Congress. We will item veto this and allocate the funds for other purposes." I think this is going too far. I

think this is excessive and I think it borders on being unconstitutional

if it is not unconstitutional.

Mr. WEINBERGER. I should at this point note in the record, Mr. Chairman, the Director's statement about this project that it did not seem

prudent to proceed with the first stage of the project, that funding is

not available within the desired outlay limit to complete the effort.

Mr. EviNs. You could have held it in reserve and not given it an

item veto.

Mr. WEINBERGER. An item veto is not within the President's power,

so there was no item veto.

RECENT BUDGET AMENDMENT FOR RECLAMATION PROGRAM

Mr. EVINS. Mr. Director, recently OMB recommended to the President and he submitted a budget amendment for $500,000 to initiate

construction on the China Meadows Dam of the Lyman reclamation

project in Wyoming. Considering that OMB has held in reserve items

on which Congress placed a high priority affecting numerous projects

and in turn with the reduced funding levels reflected in the estimates

for many of these same projects, why was the Lyman project considered of such high priority to receive such favored treatment?

Mr. WEINBERGER. Mr. Chairman, as I recall it, and I would have

to verify my memory on that, there was a flood problem in that area

which was conveyed to us and which led us in that particular instance

to feel it was important to make the request. I think the Congress has

not acted on this so that it will be in the same category as the others

and released after the start of the fiscal year.

Mr. EVINS. Our justification data sheet submitted by the Bureau

of Reclamation says it has a benefit-cost ratio of only 0.88 to 1. It is

less than unity.

Mr. WEINBERGER. The Bureau of Reclamation people discussed the

project with me personally and certainly their feeling was there was

some urgency to it at that time.

(The following information was subsequently submitted for the

record:)

LYMAN PROJECT, WYOMING

The $500,000 amendment for the Bureau of Reclamation's Lyman project

is to provide funds for starting construction of China Meadows Dam.

China Meadows Dam is one of several features comprising the Lyman project

and is the only significant feature remaining to be completed. Without this

amendment, this will be the only Bureau of Reclamation project that is underway where funds will not be sufficient to finance any construction activity what.

soever during fiscal year 1972.

Mr. EviNs. We are not saying that it shouldn't go forward but this

committee has funded many projects of higher urgency and with

higher cost-benefit ratios which have been deferred by OMB.

Mr. WEINBERGER. As I mentioned, we do feel that we necessarily

have to rely on the recommendations of the Bureau and the corps, and

my memory of this—and I can certainly verify it—is that they made

a specific representation as to the importance of this one. This, how-
22

ever, I might say illustrates some of the problems involved in piecemeal releases as opposed to an overall policy.

Mr. EVINS. This committee considered additions primarily for urgent small projects, low-cost projects. This is the priority that we set.

This is the level that we set.

RELATIVE PROJECT PRIORTIES

In conclusion, the general policy of OMB seems to be that any projects provided for in the budget are of higher priority while any projects provided by Congress are considered of lower priority. With that

policy we strongly disagree.

Mr. WEINBERGER. I could not agree with that characterization, Mr.

Chairman, because that is not the feeling that prevails in our office

or I am sure in the President's mind. We do start with the necessity

for some reductions: That is not a condition that prevails every year.

When that condition does prevail, and given the controllability problems of the budget and the fact that construction is entirely in the

controllable section, we do have to have certain guidelines and those

guidelines are the ones that led us to include projects in the President's

budget, in the first place.

Mr. EVINS. Mr. Director, 18 new planning starts that Congress

added were frozen and the 31 new construction starts that Congress

added were frozen. You did freeze some budgeted projects temporarily but later all of those were released.

Mr. WEINBERGER. The budgeted items, as I said, Mr. Chairman,

are those on which the President has received guidance and recommendations and which he has concluded should be done. Given the

necessity for retrenchment in some areas. I think it is inevitable that

the President would feel that the items he included were items that

should be released first.

RIGHT OF CONGRESS TO ESTABLISH BUDGET PRIORITIES

Mr. EVINS. Mr. Director, under what conditions would you recognize or advise the President that Congress has the right to establish

priorities either in substitution for or in addition to those reflected

in the budget estimates?

Mr. WEINBERGER. I am sure he is thoroughly familiar with this

constitutional provision and needs no advice from me on it.

Mr. EVINS. Yo do advise him. You said before the budget is based

on your advice to the President.

Mr. WEINBERGER. Our advice to the President is as to the original

construction of his budget, and he necessarily makes up a budget based

on advice from the operating agencies, the bureaus, and the Corps of

Engineers. Those recommendations, as viewed and examined by us,

form the basis for his budget.

URGENCY OF PLANNING PROJECTS DEFERRED

Mr. EVINS. In the planning field, I want to include for the record

the Little Goose project on the Snake River, with a cost-benefit ratio

of 3.9 to 1. Congress added funds for initiating planning because of the

serious power shortage in the Pacific Northwest. These funds were

frozen and the planning delayed.
23

Then we have the Cucamonga Creek flood control in the Santa Ana

River Basin, Calif. This has a benefit-to-cost ratio of 1.7 to 1 and

is considered of the highest priority in California because of recent

floods.

Planning funds for flood control on the Yonkers, project, with

a 2.1-to-1 benefit-to-cost ratio, were also impounded. N.Y.,e have testimony of its urgency.

IMPOUNDMENT OF LAND ACQUSITION FUNDS

Here are some of the urgent land acquisition projects for which

funds were frozen. The Papillian Creek project is in the Greater Omaha

area where land costs are escalating. The same is :true of the Big Pine

Lake project area in Warren County, Ind. There are five other projects

where Congress added land acquisition funds to save on land costs

and alleviate hardship cases involving property owners. All these funds

were impounded without exception and the purchases delayed. It will

cost considerably more next year.

CONSTRUCTION FUNDS IMPOUNDED

LAKE PONTCHARTRAIN, LA. PROJECT

Here are some of the construction items for which funds were frozen.

'Jost urgent is the Lake Pontchartrain and vicinity, Louisiana project,

which has a 11.6-to-1 benefit-to-cost ratio. They have had extensive

hurricane damage in the New Orleans area, as you know. 11.6 to 1 is

one of the highest benefit-to-cost ratios for a project brought before the

committee.

Mr. WEINBERGER. I never heard of one that high.

Mr. EvirTs. The average annual benefit is estimated to be $101,083,-

000. We have testimony that if the Corps of Engineers had been permitted to proceed and let contracts with the $3 million congressional

add-on, $4,200,000 of the price level increase would have been avoided.

That is in the General's testimony. But the funds were frozen by OMB.

Mr. WEINBERGER. We will certainly take a look at that one. That

sounds as if it should be reexamined.

MINOT, N. DAR.

Mr. EviNs. The Minot, N. Dak., flood control project has a benefitto-cost ratio of 5.4 to 1. There is repeated history of costly floods in

the area; 11,800 persons had ,.to be evacuated in 1969 with flood costs

of $10,900,000 at Minot and $1,600,000 in the rest of the Souris Valley.

There was another flood threat in 1970 which necessitated emergency

flood projection works at a cost of $1,200,000.

Had these protective measures not been taken, damages would have

amounted to $8,700,000. Because of the urgeincy, Congress added funds

to initial construction, but again this action was negated by the impoundment of the appropriation.

GILA RIVER, ARIZ.

Another very urgent project is on the Gila River in Arizona. It has a

benefit cost ratio of 3.1 to 1.

Representatives of the Department of State and the International

Boundary and Water Commission have stated that the project is vitally

needed because of its international importance.

In our diplomatic relations with our friends in Mexico we tell them

that the salinity problem on the Gila River is to be taken care of. Yet
24

funding provided by Congress is frozen and the project deferred just

because it was not budgeted. Both the State Department and the International Boundary and Water Commission recommended going for.

ward with that project.

Mr. WEINBERGER. Again the list from which you are reading obviously is quite properly a list of projects all of which are desirable to

do sometime. The question is just when do the available funds and the existing constraint permit us to do them.

Mr. EVINS. In summary, Mr. Director, this committee, as I think

you know, has a serious problem. We spent considerable time hear- ing testimony from hundreds of witnesses considering relative priori- ties, and mali-ing recommendations. Don't you think some consideration should be given to the viewpoint of Congress?

Mr. WEINBERGER. I think that very definitely, and I think it is. We certainly don't have any feeling that the point of view of Congress

should be disregarded, and I think that is evidenced by the fact that

most of the congressional add-ons are scheduled for release in a few days.

DEFERRAL OF ITEMS UNTIL AFTER FY 1972

Mr. EVINS. We are told that 14 items are put over at least until

1973. Actually, we are told deferred until after 1972, but not specifically when the funds will be released.

Mr. CoHN. I thought it was fewer than that. On the ones deferred

we thought there were local problems, local cost sharing or things of

that sort.

Mr. WEINBERGER. I should have said all of the projects about which

there is no question raised by the operating agencies.

Mr. Ev-nsis. That would be any number or all of them.

Mr. WEINBERGER. We are planning to release $41 million to the

Corps of Engineers and $26 million to the Bureau of Reclamation.

There are some that can't be released because of either local problems

or problems with the operating agencies.

Mr. EVINS. Our committee has a total of 14 items that are deferred

over 

Mr. 

beyondWEINBERGER. Beyond 1972?

Mr. EVINS. Yes.

Mr. WEINBERGER. Let me find out the status of those.

EXAMPLES OF EFFECTS OF FUND IMPOUNDMENTS

Mr. EVENS. We will insert in the record at this point the fact sheets covering the projects which we have discussed as examples of the

serious effects of the delay caused by the impoundment of funds. There

are numerous others we could include.

(The material follows:)

LITTLE GOOSE Loos AND DAM, SNAKE RIVER, WASH. (ADDITIONAL

GENERATING UNITS)

Benefit-cost-3.9-1.

Total appropriations required.—$27 million.'

Congressional add-on.—$130,000 to initiate planning.

Urgency of project.—Load-souree studies prepared by the Bonneville Power Administration show development of a precarious power shortage situation in

the region. Installation of three additional power units will reduce spillage at

Future non-Federal reimbursement: $27,000,000 (power revenues).
25

the dam. Spillway discharge is harmful to fish as the water becomes supersaturated with nitrogen.

Effect of impoundment.—Latest cost estimate is $2 million over the previous

estimate. Increase is due to higher price levels. Average annual benefits of $7,-

174,000 have been delayed.

CUCAMONGA CREEK, SANTA ANA RIVER, BASIN, CALIF. ( FLOOD CONTROL)

Cost-benefit.-1.6-1.

Total Federal cost.—$35,100,000.

Congressional add-on: $190,000 for planning.

Urgency of project.— Project would protect an area where 34,000 people live.

Value of lands and improvements in the area is $520,000,000. The Ontario International Airport complex is in the area and it will become second in importance to the Los Angeles International Airport. Under present conditions the

flood of 1938 would cause damage amounting to $19,400,000. The flood of JanuaryFebruary 1969 caused $12,780,000 of damages in the area. Estimated averaged

anual benefits are $2,379,000.

Local cooperation.—Local people have constructed $8,100,000 of flood control

and drainage facilities. Board of Supervisors of San Bernadino County Flood

Control District has indicated its willingness to assume responsibility for the

local interests' requirements.

Effect of impoundment.—Current Federal cost estimate is an increase of $2,-

300,000 over latest estimate. Increase is due entirely to price level increase.

NEBRASKA (PAPILLION CREEK AND TRIBUTARIES) (FLOOD CONTROL)

Benefit-cost.-1.7-1.

Total Federal cost.—$38,100,000.

Congressional add-on.—$1,310,000 added to initiate land acquisition because

of rapidly escalating land costs in greater Omaha area.

Urgency of project.—Flood protection is badly needed for the expanding metropolitan area of Omaha. The flood problem is expected to intensify threefold in

future years because of predicted population growth and urban expansion. A

flood in June 1964 cost seven lives and $4,962,000 in damages A flood in September 1965 caused an estimated $529,00 in damages. Potential average annual flood

damages are estimated at $2,332,000 (1970 prices). Ultimately, recreation development will support an annual visitors level of 1,552,000 visitor-days.

Local cooperation.—State of Nebraska has indicated its intent to sponsor

recreation requirements. Reimbursement will total $2,645,000.

Effect of impoundment.—Current Federal cost estimate is an increase of $4,-

700,000 over the previous estimate; $4,481,000 of increase is due to higher price

levels.

GILA RIVER AND TRIBUTARIES DOWNSTREAM FROM PAINTED ROCK DAM, ARIZ.

(FLOOD CONTROL AND LOWERING SALINITY OF THE WATER)

Benefit-oost.-3.1 to 1.

Estimated Federal oosts.—$35,100,000.

Congressional add-on.—$1 million to initiate construction.

Urgency of project. —Average annual flood control benefits are estimated at

$4,016,000. Project will also significantly improve the salinity problem of these

waters which flow into Mexico. Representatives of the Department of State and

the International Boundary and Water Commission have stated that the project

is vitally needed because of its international importance.

Status of local cooperation.—Local interests have expended $525,000 for channel clearing and local protection works. The Board of Supervisors of Yuma

County indicated that it will assume the obligations of local cooperation.

Effect of impoundment.—Current Federal cost estimate is an increase of

$4,500,000. Increase is due to higher price levels.

BEAR CREEK, JEFFERSON COUNTY, COLO. (FLOOD CONTROL)

Benefit-cost.-2.2 to 1.

Estimated Federal cost.—$41,900,000.1

Congressional add-on.—$400,000 to initiate construction.

Future non-Federal reimbursement: $2,030,000.
26

Urgency of project.—Bear Creek has flooded 22 times in the last 91 years.

Forty-five people have been killed in these floods. Project is essential to the

security of Metropolitan Denver against major floods. Estimated average annual

benefits are $3,919,200.

Local cooperation.—The State of Colorado has written a letter of intent to

furnish the appropriate cooperation.

Effect of imepowndment—The current Federal cost estimate is an increase of

$2,400,000 over previous estimate. Increase is due to price level increases.

MINOT, N. DAR. (FLOOD CONTROL)

'Benefit-cost. —5.4 to 1.

Total Federal cost—$6,200,000.

Congressional add-on.—$100,000 to initiate construction.

Urgency of project.—The 1969.flood caused damages, including flood-fighting

costs, of about $10,900,000 at Minot and $1,600,000 in the rest of the Souris Valley.

11,800 persons had to be evacuated. There was another flood threat in 1970 which

necessitated emergency flood protection works at a cost of $1,200,000. Had these

protective measures not been taken, damages would have amounted to $8,700,000.

Average annual benefits are estimated at $2,339,000.

Status of local cooperatiton.—On November 12, 1969, voters of Minot approved

a $1,300,000 city bond issue to finance local flood protection by a 9 to 1 margin.

Effect of impoundment.—Higher price levels have caused an increase of $330,000 in the cost of the project.

LAKE PONTCHARTRAIN AND VICINITY, LOUISIANA (HURRICANE PROTECTION)

Cost-benefit.--11.6 to 1.

Estimate Federal cost.—$148,838,000.

Congressional add-on.—$3,750,000 to accelerate construction.1

Urgency of project.—There have been several hurricanes in the recent past

which have caused extensive damage in New Orleans and the surrounding area.

Average annual benefits are estimated at $101,083,000.

Local cooperation.—Current Federal estimate is an increase of $23,913,000 over previous estimate. This change includes $12,494,000 for higher price levels.

Effect of impoundment. —If Corps of Engineers had gone forward and let contracts with the $3,000,000 congressional add-on, $4,200,000 of the level increase

would have been avoided.

Includes congressional add-on in 1970 also placed into budgetary reserve.

OMB CONSIDERATION OF 1972 BILL

Mr. EVINS. Mr. Director, as we said earlier we have just concluded

months of hearings and as we go into our markup on the 1972 Public

Works appropriation bill we are concerned about ground rules. Is our

work again to be negated? Will OMB give consideration to the committee's actions in the evaluation it gives to the projects?

Mr. WEINBERGER. We certainly will give consideration, Mr. Chairman. I have no idea what the overall fiscal situation will be. We don't

have the numbers yet for 1971 final, and we have no appropriation

bills yet for 1972. But we certainly will give consideration to the actions

of this committee, as indeed to all of the committees of Congress,

and that will be before the President at the time any decision may

be necessary, and I hope it will not be, to make specific reservations

such as.we had to last year.

Mr. EVINS. We hope so, too, Mr. Director, particularly in view of

the full employment budget this year. We tried to give consideration

to the inflation factors, and our add-ons were very limited. They were

austere.

Mr. Rhodes.

Mr. RHODES. Mr. Chairman, I have nothing really to add except to

thank the Director for coming today and being candid with us. as-he
always is. We recognize he has his problems, and I feel sure he recognizes we have problems, too.

Mr. WEINBERGER. Yes.

Mr. RHODES. It is my hope, Mr. Director, in considering the congressional add-ons—and I am sure there will be some for 1972—that the

Office of Management and Budget will take into consideration the

priorities which we might express, through our hearings or in some

other manner, as well as the priorities of the operating agencies. Sometimes I am not sure we agree with them.

Mr. WEINBERGER. I wonder if I might ask a question that would be

helpful to us, Congressman Rhodes?

Mr. RHODES. Yes.

ESTABLISHMENT OF PRIORITIES

Mr. WEINBERGER. We have assumed, given the need for reductions

and for constraints, that it was a better course to follow to withhold

and defer all congressional add-ons. Does the committee submit its

projects in any kind of list of its own priorities so we would not be

put to the necessity of picking and choosing between Congressmen

sponsors, districts, and so on? Is there any possibility that if the need

to defer is there but it is not a need to defer all congressional add-ons,

anything of that could be done?

'Other than that, we have the same kind of problem raised a moment

ago with this project—I don't know what State—where we had a special representation from the Bureau of Reclamation or the corps

and requested that it go a couple months ahead. If we are put to the

necessity of picking and choosing between congressional add-ons,

I am sure you can appreciate we will be in even more trouble than

we are this morning. That is a difficulty that is a real one.

Mr. RHODES. As I am sure you are aware, we make no official list

of priorities. However, I think that the actions of this subcommittee

in the past would indicate rather strongly that we feel a great sense

of urgency about small flood control projects.

Mr. WEINBERGER. Quite properly.

Mr. RHODES. And that would be fairly safe to assume in looking at

congressional add-ons we would certainly approve of any action which

gave priority to that type of project. In fact, I think you will note

there are very few add-ons except for flood control projects. I doubt

there would be any possibility of our giving you any official guidance

along those lines except perhaps by reference in the report.

(Discussion off the record.)

Mr. EviNs. I think priority should be given to the action of this

committee.

Mr. WEINBERGER. That does raise a problem we had last year and

caused many of the questions this morning. It was an overall policy we

adopted. We certainly would want to give full consideration and try

to consider the actions of the Congress at all times.

Mr. RHODES. Again, Mr. Director, I appreciate your coming and appreciate the fine work you do. I have known you for many years and

am very proud of the fine reputation you have made in the work you

have done.

Mr. WEINBERGER. Thank you very much, sir.

Mr. EVINS. Mr. Slack.
28

Mr. SLACK. You have covered the subject matter extremely well, Mr.

Chairman, and I just wish to say I agree wholeheartedly with your

comments and observations, and at the same time I would want tk

thank the Director for his appearance here this morning.

Thank you.

Mr. Ey'Ns. Mr. Davis.

Mr. DAVIS. I think the Director should understand we appreciate

you have a problem too, and that in some years past our skirts aren't

as clean as we would like to have them too. We get sometimes pushed

around in conference with the other body so that some things are put

in that we don't always approve of, too. This is a part of the difficulty

of the legislative process.

I don't know what the chairman would like to suggest here in the

way of establishing some set of priorities that would give you some

guidance as to what to do with some of these congressional add-ons.

I think if I were sitting in the spot where you are sitting, I would have

done exactly the same thing you did—say that here we have a situation

where we had serious fiscal constraints from an overall point of view,

and that in order to protect yourself from charges of political favor- itism you simply used the method of simply freezing all the congressional add-ons that were made. I don't know of a better thing to advise

you.

Maybe we do have a responsibility of listing add-ons in some sort of

a priority for them in the event of the necessity for reserve. I think,

when we sit here as the Congress and provide expenditure limitations,

if we are to add things that have not been in the original budget,

maybe we have a responsibility to provide a system of priority for their

guidance. I don't know. I have to look at it from their standpoint as

well as from our own. I am just throwing this out here as to what we

could do to be of greater assistance to Mr. Weinberger.

Mr. EviNs. Judge Davis, you are very judicial and I think von

will make a great judge. I do know you are familiar with the law

which provides that the expenditure ceiling is adjusted upward or

downward, based on actions taken by Congress in the individual appropriation bills.

Mr. WEINBERGER. That is really not the problem Mr. Chairman.

We do have a ceiling here that has several phases to it. As Congress

adds appropriations, that part of the ceiling does indeed increase, but

we don't have any increase in the ceiling based on possible changes

in our original estimated total of expenditures. If our estimates are

wrong or if the information upon which the estimates have been made

vary so as to require higher expenditures, for example, public assistance grants or veterans pensions and compensation, we have to go

higher. and there is no provision in the ceiling for expansion for those

items sufficient to cover the expense we have. If we had released all

the money at the beginning of the fiscal year, we would have been, we

were very much afraid, well over the total ceiling imposed by the

Congress. So the ceiling objection is a very real one.

The other problem, and it is no one's fault, is inherent in the appropriation process because there is no one—I say this completely respectfully—there is no one in the Congress who has the opportunity

at any given point to see the overall effect of what a particular -appropriation bill is going to do to the whole budget. That is our job and

we have to do it, and we have that opportunity, or vantage point, if you
29

like, all the time. Congress, because it considers 13 or 14 separate appropriation bills, can't have that. There is no way on a given day such

as this morning you know all that is going to have an effect on the overall total. This is another real difficulty involved in all of this. It is not

an arbitrary desire to oppose Congress that leads us to make reservations. It causes us more trouble and takes more time than any single

action all year, but it does have to be done. If something along the

lines you are mentioning, Congressman Davis, could be proposed, it

might be very 'useful.

SUMMARY OF COMMI1 ITEE REACTION TO IMPOUNDMENT ACTIONS

Mr. EVINS. Mr. Director, we have given you some guidelines and

some priorities, including planning items land acquisition, construction primarily on small projects, including control, beach erosion,

water supply, water quality, commercial navigation, and power generation. Some of the larger multi-purpose projects are urgent because of

the power and water supply shortages.

I think we had an austere bill for fiscal year 1971 considering the requirements. In total it was $26 million under the President's 'budget. It

set our own priorities within the large authorized backlog of water

resource projects.

We are very concerned that every funding action of this committee,

which was not budgeted, was impounded, whereas the same policy did

not apply for Federal buildings of GSA, the fish hatcheries in Interior, and others. This is the one committee that was singled out for

its entire action. It was a good target, a choice one, to pick on. But

OMB didn't follow the same policies with respect to other bills of the

Congress.

Mr. WEINBERGER. Mr. Cohn has expressed the differences that exist

between full funding and the partial funding that did make a definite

difference.

Mr. COEIN. I would like to add another difference Mr. Chairman.

Again let me repeat, and I am very happy you agreed so quickly with

me, there is no attempt, we never even thought of this subcommittee

as a subcommittee in these actions when the President decided to

limit his budget.

As I said, it was not only 1971, but 1971 and 1972, and thinking. of

1973 which was considered almost at the same time. There are terrible

choices that have to be made. Certainly as Mr. Weinberger said, first

there are uncontrollable programs which under basic law we cannot

and should not try to touch, social security benefits, public assistance

grants, verterans' pensions, where the law sets the rates. Then you look

at on-going programs, and it is a question of whether you stop services

that are currently being provided to the people. It was felt this was

a poor place to go, to cut bask services and benefits that are currently

being provided, even though they are controllable. Unfortunately,

from your viewpoint, in the public -works area the Government completes a project and starts another one. Each new project is a project

that has not yet been started and it is not providing services currently to a certain clientele or group of the public.

Therefore, per force, you come down to public works starts as

something which does less harm to the public service generally to

defer, because they are not currently providing service. It just so happens these are the projects this subcommittee deals with.
30

Mr. Eviisrs. We take your word again that we were not singled out

or discriminated against. We do hope in the future this committee

will not be the target of all of your actions. We don't want this committee to be the target of the cuts and slowdowns and deferrals and

delays 1 year and 2 years and more. Take into consideration the actions

of this committee which does not take its responsibilities lightly.

SERIOUS EFFECTS OF IMPOUNDMENT ACTIONS

I would like to emphasize again what I think are the most serious

effects of the impoundment action which was taken. As .I indicated

earlier, based on detailed review compiled by the agencies involved,

it is estimated that there will be increases in project costs totaling over

$73 million and loss of annual benefits of about $170 million. In other

words, because about $63 million was frozen and the land that would

be acquired and the contracts that would have been let have been delayed, we are now faced with additional costs and loss of benefits totalin about $243 million. I just do not think this is good business:

We appreciate your coming. We wanted you to understand our

point of view. We understand your point of view. We don't think all

of our point of view permeates your staff and certainly doesn't get

through to everyone. We appreciate your coming and hope this will

make for better understanding.

Mr. WEINBERGER. I appreciate very much the opportunity to testify

and the very cordial reception and very penetrating questions that

have been asked today. I think they have been extremely helpful.

Mr. EVINS. We respect you very much, Mr. Weinberger, and wanted

to have a visit with you.

Thank you very much.