Appropriations for FY1999: U.S. Department of Agriculture and Related Agencies
Released: 1998-12-21T00:00:00

Most Recent Developments

The Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 ( P.L. 105-277 , H.R. 4328 ) was signed into law on October 21, 1998. Contained within the measure was $55.9 billion in regular FY1999appropriations for the U.S. Department of Agriculture (USDA) and related agencies and an additional $5.9 billioninemergency supplemental spending for farm economic and disaster assistance. USDA appropriations were foldedinto theomnibus bill after the President vetoed the conference agreement ( H.R. 4101 ) on FY1999 funding for USDAand related agencies on October 7, because the emergency spending provisions in the bill did not include an increaseinloan rates (price guarantees) for farmers. P.L. 105-277 does not provide for an increase in loan rates, but the $5.9inemergency assistance provided is $1.7 billion above the amount provided in the vetoed bill.

USDA Spending at a Glance

The U.S. Department of Agriculture (USDA) carries out its widely varied responsibilities through approximately30separate internal agencies staffed by some 100,000 employees. USDA is responsible for many activities outsideof theagriculture budget function. Hence, spending for USDA is not synonymous with spending for farmers.

USDA net outlays (after adjustment for offsetting receipts) for the most recently completed fiscal year (FY1997) were$52.5 billion. By far the largest outlay within the Department, $35.9 billion (67%) of total outlays in FY1997, wasfor itsfood and nutrition programs, primarily the food stamp program (the costliest of all USDA programs), various childnutrition programs, and the Women, Infants and Children (WIC) program. Total FY1997 outlays also included $8.9billion(17%) for farm and foreign agricultural services. Within this mission area of USDA are the programs fundedthrough theCommodity Credit Corporation (e.g., commodity support payments, the conservation reserve program, and certaintradeprograms), crop insurance, farm loans, and foreign food aid programs. Another $4.2 billion (8%) was spent on anarray ofnatural resource and environment programs, nearly three-fourths of which funds the Forest Service (which is fundedthrough the Interior appropriations bill, not the agriculture appropriations bill), and the balance for a number ofconservation programs for farm producers.

USDA programs for research and education ($1.8 billion in outlays for FY1997), rural development ($1.35 billion),marketing and regulatory activities, $708 million), meat and poultry inspection ($574 million), and departmentalactivities($309 million) accounted for the balance of USDA spending.

Mandatory vs. Discretionary Spending

Approximately three-fourths of total USDA spending is classified as mandatory, which by definition occurs outside thecontrol of annual appropriations. Eligibility for mandatory programs is usually written into authorizing law, andanyindividual or entity that meets the eligibility requirements is entitled to the benefits authorized by the law. Currentlyaccounting for the vast majority of USDA mandatory spending are the food stamp program and child nutritionprograms;the farm commodity price and income support programs; the federal crop insurance program; and the conservationreserveprogram (CRP).

1. U.S. Department of Agriculture and Related Agencies Appropriations, FY1993 toFY1999 (budget authority in billions of dollars)

Note : Includes funding for the Food and Drug Administration and Commodity Futures Trading Commission. ExcludesUSDA Forest Service. Emergency supplemental spending of $5.89 billion is not included in the FY1999 total.

Sources: Congressional Budget Office and House Appropriations Committee.

Although they have mandatory status, the food and nutrition programs are funded by an annual appropriation based onprojected spending needs. Supplemental appropriations generally are made if and when these estimates fall shortofrequired spending. An annual appropriation is also made to reimburse the Commodity Credit Corporation for lossesitincurs in financing the commodity support programs and the various other programs it finances. Historically, thefarmcommodity support programs were a larger portion of the USDA budget than they are currently. Spending levelsamongthese programs were erratic and unpredictable, making total USDA spending highly variable. Some of thisunpredictabilitywas lessened by the enactment of the 1996 farm bill, which fixes the level of spending on direct payments toprogram cropproducers, and no longer ties these payments to market conditions.

The other 25% of the USDA budget is for discretionary programs, which are determined by funding in annual appropriations acts. Among the major discretionary programs within USDA that are funded by the annualagricultureappropriations act are its rural development programs, research and education programs, agricultural credit, thesupplemental nutrition program for women, infants, and children (WIC), the Public Law (P.L.) 480 internationalfood aidprogram, meat and poultry inspection, and food marketing and regulatory programs. FY1998 funding levels for allUSDAdiscretionary programs (except for the Forest Service) were provided by the FY1998 Agriculture, RuralDevelopment, Foodand Drug Administration and Related Agencies Appropriations Act ( P.L. 105-86 ), and by the FY1998 SupplementalAppropriations Act ( P.L. 105-174 ). For more information on FY1998 funding, see CRS Reports 97-201 and98-478.

Status of FY1999 Agriculture Appropriations

Table 2 tracks the key legislative steps necessary for the enactment of the Agriculture, Rural Development, Foodand DrugAdministration and Related Agencies Appropriations Act for FY1999.

2. Congressional Action on FY1999 Appropriations for the U.S. Department ofAgriculture and Related Agencies

*The conference report on H.R. 4101 was vetoed by the President on October 7, 1998. FY1999 appropriationsfor USDA and related agencies were ultimately included in the Omnibus Consolidated and EmergencyAppropriations Act,1999 ( P.L. 105-277 , H.R. 4328 ), which was approved by the House on 10/20/98 by a 333-95 vote, by theSenate on 10/21/98 by a vote of 65-29, and signed into law on October 21, 1998.

FY1999 Agriculture Appropriations Action

The conference agreement on the FY1999 omnibus appropriations bill ( P.L. 105-277 / H.R. 4328 ) wassignedinto law on October 21, 1998. The measure contains $55.9 billion in regular FY1999 appropriations for USDAand relatedagencies and $5.9 billion in emergency funding to help farmers recover from natural disasters and low crop prices.

The House and Senate earlier had approved a separate conference agreement for FY1999 USDA appropriations ( H.R. 4101 ) on October 2 and October 6, 1998, respectively. However, the President vetoed the measure onOctober 7, because the emergency spending provisions in the bill did not include a Senate Democraticleadership-supportedincrease in loan rates (price guarantees) for farmers. The vetoed measure included $55.9 billion in new budgetauthority, and $4.2 billion in emergency assistance.

Republican leadership opposed any increase in loan rates, but instead agreed to an increase in the amount of emergencyfarm assistance provided from $4.2 billion in the vetoed bill ( H.R. 4101 ) to $5.9 billion in P.L. 105-277 . Abudget emergency was declared for this amount, which by definition requires no budgetary offsets for the newspending.(See "Emergency Supplemental Farm Assistance" below for details.

The $55.9 billion in regular (non-emergency) FY1999 appropriations for USDA and related agencies in P.L. 105-277 isabout equal to the House-passed level of H.R. 4101 , $1.3 billion below the Senate-passed level( S. 2159 ), and nearly $3 billion below the Administration request. Of this amount, $42.25 billion is formandatory programs and $13.69 billion for discretionary spending.

With only a few exceptions, the $55.9 billion provided to USDA and related agencies in P.L. 105-277 is nearly identical to amounts provided in the vetoed conference agreement on H.R. 4101 . The major differences are that P.L.105-277 provides $23.3 million more for the President's Food Safety Initiative spread out among FDA and severalUSDAagencies, and $15 million more for rural empowerment zones and enterprise communities programs within USDA'sruraldevelopment programs.

Total non-emergency budget authority in P.L. 105-277 for USDA and related agencies is significantly higher than the$49.55 billion appropriated in FY1998, which is mainly attributable to a change in the formula for determining howmuchis required to reimburse the Commodity Credit Corporation for its net realized losses. (See "Farm CommodityPrograms"below for details.) A significant portion of the $1.1 billion difference between the total amounts provided in H.R. 4101 and S. 2159 is in the amount provided for food stamps. The House based itsprojections on more recent economic forecasts that show lower average participation and benefits than previouslywereprojected.

The following is a review of the major USDA and related agencies provisions of P.L. 105-277 , the House- and Senate-passed bills ( H.R. 4101 and S. 2159 ), and the Administration request for FY1999 funding. (See Table 3 at the end of this report for a program-by-program comparison of P.L. 105-277 with the House andSenatebills, the FY1999 request, and actual FY1998 appropriations.)

Emergency Supplemental Farm Disaster and Economic Assistance

Several regions of the country, have been experiencing low farm commodity prices (primarily for wheat, corn, soybeans,and cotton) and/or natural disasters this year (particularly in the Northern Plains and the South). This has had theeffect ofsignificantly reducing farm income. P.L. 105-277 provides $5.893 billion in supplemental assistance, primarilyto mitigatethe effects of low crop prices and natural disasters. Conferees included language which declares a budget emergencyforthis expenditure, which by definition means that no budgetary offsets will be required for this new spending.

The amount provided for farm assistance in P.L. 105-277 is similar to a proposal announced by House Republicanleadership on September 17, except that it contains an additional $1.7 billion more than what was originallyproposed. Included in the final total of $5.9 billion in emergency farm assistance provided by P.L. 105-277 are:

$3.057 billion in "market loss" payments to compensate grain, cotton and dairy farmers for loss of 1998 income caused by "regional economic dislocation, unilateral trade sanctions and the failure of the governmenttopursue trade opportunities aggressively." Of this amount $2.857 billion are for grain and cotton farmers who wereeligiblefor a 1998 production flexibility contract payment, and $200 million is reserved for dairy farmers. Among contractholders,the $2.857 billion is expected to be distributed in approximately the following proportions: corn contract holders ($1.3billion), wheat ($750 million), upland cotton ($332 million), rice ($242 million), and other feed grains ($212million.)These additional payments are about 50% higher than the $5.6 billion in contract payments farmers are scheduledto receivein FY1999. The Secretary of Agriculture will have to determine how the $200 million in dairy payments will bedistributedamong dairy producers, since milk is not a contract commodity;

$1.5 billion in disaster payments to farmers who have incurred significant losses to any crop in 1998 due to natural disasters;

an additional $875 million in direct disaster payments to producers who have experienced multiple years of natural disasters and crop diseases, particularly those in the Northern Plains and Upper Midwest.

$200 million in cost-share assistance for livestock growers who lost to a natural disaster a significant amount of feed grown on the farm.

Disaster payments will be made to a producer regardless of whether the farmer had an active crop insurance policy. However, if a farmer waived crop insurance coverage in 1998, he would be required to obtain crop insurance in thenexttwo crop years as a condition for receiving a disaster payment. Because the federal government pays the entirepremium forthe farmer for the basic level of crop insurance coverage, this mandatory requirement to obtain insurance isestimated tocost the government an additional $66 million, which is factored into the $5.9 billion supplemental appropriation. Conditions of eligibility for the disaster payments were left to the discretion of the Secretary of Agriculture.

Other emergency farm assistance provisions in P.L. 105-277 include: $50 million in disaster assistance to help westernAlaska fishermen recover from poor salmon returns; $40 million in additional salaries and expenses for the FarmServiceAgency (FSA), the USDA agency that administers farm commodity, disaster and loan programs; and $31 millionin budgetauthority to support $540 million in additional direct and guaranteed FSA farm operating loans; and $3 million indairydisaster assistance.

A provision not included in the conference agreement, but strongly supported by the Administration and Senate Democraticleadership during the debate, was a temporary increase in the loan rate (price guarantees) for certain farmcommodities.One attempt to raise the loan rates for grains and cotton was defeated during Senate floor action on S. 2159 . Another attempt was defeated when the Senate tabled a similar amendment to the Interior appropriations bill( S. 2237 ). The President vetoed the conference agreement on FY1999 agriculture appropriations becauseitsemergency provisions did not include an increase in the loan rates. Senate Democrats supported an increase sayingit wasneeded to adequately address farm financial problems. Republican leadership opposed a proposed one-year increaseinloan rates because of its estimated cost ($5 billion) and because it believed that it would fundamentally underminethepolicy changes made by the omnibus 1996 farm law.

For more details on the implementation of the emergency provisions, see CRS Report 98-952(pdf) , The Emergency AgriculturalProvisions in the FY1999 Omnibus Appropriations Act.

Farm Commodity Programs

Outlays for the farm commodity programs, and certain farm export programs and conservation programs are fundedthrough USDA's Commodity Credit Corporation (CCC). The CCC is a revolving financing mechanism withinUSDA,through which it supports more than a dozen specified commodities, including grains, cotton, milk, sugar, peanuts,andtobacco. The formulas that determine payments under these programs are made by long-term farm legislation, andbenefitshave to be provided to any participating producer.

In past years, outlays of the CCC have been highly variable, and tended to fluctuate based on crop market conditions. TheFederal Agriculture Improvement and Reform Act of 1996 ( P.L. 104-127 , the 1996 farm bill) replaced the programofmaking direct payments to participating producers when market prices fall below a target level, with pre-determinedanddeclining market transition payments to eligible producers over a 7-year period. Consequently, CCC outlays havebeenmore predictable since 1996 than they were in previous years.

The Administration estimated earlier this year that total CCC outlays for FY1999 would be $9.0 billion for all CCC-fundedprograms, of which $5.5 billion would be for direct market transition payments to farmers. (1) (All estimates exclude the$5.6 billion in emergency FY1999 CCC spending provided by P.L. 105-277 .) The $9.0 billion estimate is downfrom anestimated $9.3 billion in FY1998 outlays of which $5.8 billion was in market transition payments. Because theseprogramsare funded through the CCC, they do not require annual appropriations. Instead, the CCC borrows funds from theTreasury to fund its operations. However, because CCC outstanding borrowing cannot exceed $30 billion, theannualappropriations bill usually contains funding for a "reimbursement of CCC net realized losses" so that the CCC canrepay itsdebt to the Treasury and not exhaust its borrowing authority. This reimbursement is also categorized as a mandatoryexpense and is not included toward the discretionary spending allocation given to the appropriations subcommittees.

The $8.439 billion requested by the Administration, and provided as a regular (non-emergency) appropriationin P.L.105-277 , for the FY1999 reimbursement to the CCC is up significantly (+$7.7 billion) from the $783.5 million thatwasappropriated in FY1998. Much of the difference can be explained by a change in methodology used by USDA fordetermining how much to request for net realized losses, rather than a change in farm policy. (In brief, the methodologyused before last year based the reimbursement request on an estimate of losses in the previous fiscal year, while thenewmethodology bases the request on actual losses from the second previous fiscal year.) The $783.5 million requestedinFY1998 was unusually low because it was a transition year for switching to the new methodology.

Although the farm commodity programs do not require an annual appropriation, per se, opponents of these programs havein the past offered floor amendments to agriculture appropriations bills in an attempt to effect changes in farmcommoditypolicy. Separate amendments which would have affected the peanut and sugar price support programs and cropinsurancefor tobacco farmers were offered and defeated on the House floor when H.R. 4101 was debated in June. Anadopted Senate amendment to S. 2159 would have required tobacco growers to be assessed for the cost ofUSDA to administer its tobacco price support programs and related activities, but was deleted in conference.

Civil Rights Provisions. P.L. 105-277 contains provisions somewhatsimilar to what was in the House-passed appropriations bill ( H.R. 4101 ) with respect to waiving the statuteoflimitations for certain allegations of discrimination against USDA. The Department has been under close scrutinyin recentyears for its treatment of minorities, for both its personnel actions and in its administration of its farmer programs. P.L.105-277 waives the statute of limitations on civil rights cases for eligible complaints made during the period January1,1981 through December 31, 1996. Eligible complaints included in the conference agreement are those pertainingto casesinvolving potential discrimination within USDA's farm commodity, farm credit, rural housing loan, and disasterassistanceprograms only. Conferees on P.L. 105-277 modified the civil rights provision in the vetoed bill ( H.R. 4101 )toinclude housing loan programs and to extend the statute of limitation back to 1981, instead of 1983 as in the vetoedbill. P.L. 105-277 also requires the Secretary of Agriculture to conduct an investigation, issue a written determination,andpropose a resolution, within 180 days.

Milk Marketing Order Reform. P.L. 105-277 contains a House-adoptedprovision that requires USDA to issue its final rule for federal milk marketing order reform between February 1,and April4, 1999, and extend the deadline for implementation from April 4, 1999 to October 1, 1999. No comparableprovision wasin the Senate-passed bill. Federal milk marketing orders regulate the farm price of milk in much of the country. USDA isin the process of consolidating the number of marketing orders, as required by the 1996 farm bill, and reformingdairypricing policy, which has been the center of controversy among dairy production regions, processors and consumers.

The conference provision to extend the deadline is supported by Northeast and Southeast dairy producer groups whosupport the current milk pricing system and are concerned that USDA might implement reforms that reduceminimum farmmilk prices while Congress is in recess later this year. Opponents of the provision (mainly Upper Midwest milkproducers)contend that the provision applies pressure on USDA to recommend the status quo, or else be faced with legislativeactionagainst a decision in favor of any reforms that would reduce minimum milk prices. The requirement that USDArelease itsfinal rule between February 1 and April 4, 1999, ensures that the rule will be released at a time when Congress isin sessionand can react to the ruling. An Obey amendment to H.R. 4101 would have removed this provision from thebill, but was defeated on the House floor on June 23 by voice vote.

The extension of the implementation deadline to October 1, 1999, effectively extends the life of the Northeast DairyCompact to October 1 as well. The Northeast compact establishes higher minimum price for the farm price ofbeveragemilk in New England, and under current law expires at the same time as implementation of order reform. Aproposed Petriamendment to H.R. 4101 would have kept the sunset date for the Northeast dairy compact at April 4, 1999,butthe amendment was not allowed to be considered on the House floor. The Chairman of the Rules Committee raiseda pointof order against the amendment on the floor stating that it was in violation of the rule ( H.Res. 482 ) whichprohibited the consideration of any amendments to H.R. 4101 that change existing law.

(For more on federal dairy policy reform, see CRS Issue Brief IB97011, Dairy Policy Issues .)

Crop Insurance

The federal crop insurance program is administered by USDA's Risk Management Agency (RMA). It offers basically freecatastrophic insurance to producers who grow an insurable crop. Any producer who opts for this coverage has theopportunity to purchase additional insurance coverage at a subsidized rate. Most policies are sold and completelyservicedthrough approved private insurance companies that are reinsured by USDA.

There are basically four sources of federal expenditures for the crop insurance program -- USDA absorbs a large percentage of the program losses, compensates the reinsured companies for a portion of their delivery expenses,subsidizesthe premium paid by participating producers, and pays the salaries and expenses of its administering agency withinUSDA.The program losses and premium subsidy are mandatory expenditures funded through USDA's Federal CropInsuranceFund. The salaries and expenses of the RMA agency are a discretionary expense, subject to annual appropriations.

The funding source for the federal reimbursement to the private insurance companies has been the subject of controversy inrecent years, and was recently addressed by legislation ( P.L. 105-185 , S. 1150 , the agriculture research bill).Prior to enactment of P.L. 105-185 , one-half of the reimbursement was funded as a mandatory account and the otherhalfwas funded through discretionary funds. Beginning in FY1999, P.L. 105-185 authorizes all of the reimbursementto befunded through the crop insurance fund (as a mandatory account), thus precluding the need for a specific annualappropriation. Crop insurance supporters had feared that if the expense had remained discretionary it would becomeatarget for cuts, which they say would lessen private sector participation in the program.

Since P.L. 105-185 created new mandatory spending of $1 billion over 5 years for this reimbursement, a comparable offsethad to be made as required by budget law. To partially offset the cost of this new mandatory expenditure, P.L.105-185 made statutory changes to the federal crop insurance program, which achieve $530 million in savings over 5 years. Thisincludes increasing the fee charged farmers for catastrophic coverage ($205 million in 5-year savings) and reducingthereimbursement rate to the private insurance companies from 27% of collected premiums to 24.5% ($188 millioninsavings). The balance of $485 million comes out of administrative cost savings in the food stamp program. Aprovision inthe FY1999 omnibus appropriations act ( P.L. 105-277 ) overturns the increase in the fee charged farmers forcatastrophiccoverage, so that farmers will pay no more than $50 per crop per county for catastrophic coverage, instead of 10%of theGovernment-paid premium for coverage.

As is customary, the Administration requests "such sums as may be necessary" for the Federal Crop Insurance Fund,which it estimates to be $1.504 billion for FY1999. (This estimate excludes any emergency supplemental benefitsprovided the emergency package described in the above section.) P.L. 105-277 concurs with this estimate. TheAdministration alsorequested $66 million for the salaries and expenses of the RMA for FY1999. P.L. 105-277 freezes this account attheFY1998 level of $64 million.

For more on the mechanics of the crop insurance program, see CRS Report 97-572 Managing Farm Risk in a New PolicyEra.

Agricultural Credit

USDA serves as a lender of last resort for family farmers unable to obtain credit from a commercial lender through its FarmService Agency (FSA). USDA provides direct farm loans and also guarantees qualified loans from commerciallenders,which are used to finance the purchase of farm real estate, help producers meet their operating expenses, andfinanciallyrecover from natural disasters.

Under budget rules adopted in 1990, federal agencies are required to estimate the cost of making a direct or guaranteed loanand record that cost as a budget outlay for the loan. The cost of making a loan is directly related to any interest ratesubsidyprovided by the government, as well as a projection of anticipated loan losses caused by farmer non-repayment ofthe loans.

The Administration requested an appropriation of $105.7 million to fund nearly $3.0 billion in total farm loans for FY1999. H.R. 4101 , as passed by the House in June, recommended a somewhat smaller appropriation ($91.4 millioninloan subsidy to support $2.299 billion total loans) than S. 2159 ($96.5 million in subsidy to support $2.365billion in loans). The final amount provided in P.L. 105-277 contains a two-part appropriation for farm loans: aregularFY1999 appropriation of $89.7 million to support $2.285 billion in direct and guaranteed loans, and an emergencysupplemental appropriation of $31.4 million to provide $440 million in additional direct and guaranteed operatingloans. The supplemental appropriation was made to remedy the backlog of applications for operating loans, which occurredbecause of a shortage of FY1998 funds.

P.L. 105-277 also adopted many of the credit provisions in the Senate bill, which modify farmer eligibility for future FSAfarm loans when the farmer has been forgiven outstanding debt. Under current law, a farmer borrower cannotreceive asubsequent direct or guaranteed FSA farm loan if the borrower has been forgiven debt on a delinquent loan. Oneadoptedprovision would allow a borrower to have up to three debt forgivenesses and still remain eligible for a newguaranteed loanas long as the debt was forgiven before April 4, 1996. A borrower with up to one debt forgiveness that occurredbeforeApril 4, 1996, would also remain eligible for an emergency disaster loan. A separate provision requires theSecretary to usehis discretion in determining whether a producer is eligible for an emergency disaster loan, and not to automaticallydisqualify the applicant if he lacks a certain amount of collateral.

A separate farm credit provision in P.L. 105-277 changes the individual loan limits for FSA farm loans. Current law limitsa borrower to total outstanding indebtedness of no more than $300,000 for farm ownership loans and $400,000 forfarmoperating loans to a combined limit of $700,000 per borrower. The level of the loan limit will be allowed to rise bytheannual change in the consumer price index, beginning in FY2000. Another provision reduces the statutory cashflowrequirement on a restructured delinquent farm loan from 110% of the amount needed by the borrower to meetexpenses to100% of that amount.

Agricultural Trade and Food Aid Programs

The omnibus FY1999 appropriations act ( P.L. 105-277 ) provides a program level of $5.8 billion, which entails anappropriation of $1.2 billion, for USDA's international activities. Those activities include export credit guarantees,exportsubsidies and market promotion programs, and foreign food aid. The final appropriation for agricultural export andfoodaid programs is very near the Administration's budget request, which called for a program level of $5.7 billion forUSDA'sagricultural trade and food aid programs. The difference between program level and outlays is attributable to thelarge partplayed by export credit guarantees ($4.6 billion proposed for FY1999) in the Department's international activities.For suchcredit programs, only costs represented by administrative expenses and loan subsidies, not the value of theguarantees,require an appropriation. The FY1999 appropriation is $1.1 billion lower than the FY1998 level. Proposedreductions inthe value of CCC export credit guarantees and concessional food aid account for most of the decline in FY1999requestedprogram level and outlays. P.L. 105-277 also amend the Arms Export Control Act to allow Pakistan to regain accesstoUSDA's agricultural export credit guarantees.

CCC Export Credit Guarantees. CCC export credit guaranteesguarantee the repayment of commercial loans to finance the sale of U.S. agricultural exports to developing andmiddle-income countries that would otherwise have difficulty securing credit. The Administration's budget requestforFY1999 differs from previous budgets in that the estimate for CCC export credit guarantees ($4.6 billion) isintended toreflect the actual level of sales expected to be registered under the programs rather than the level authorized in the1996farm bill ($5.5 billion). P.L. 105-277 reflects the Administration's estimate. For several years, actual programlevelsunder CCC export credit guarantees have been less than the authorized amounts. For example, for FY1997, theAdministration requested $5.5 billion for these programs, but actual guarantees were $2.876 billion. Guaranteeswere $4.4billion in FY1998. The actual level of guarantees in FY1999 could differ from the budget request, and will dependon thedemand for guarantees, market conditions, and USDA decisions about using the programs.

Of the $4.6 billion proposed, $4.3 billion will be allocated to the GSM-102 program which provides short-term commercialexport credit guarantees (up to 3 year repayment terms). $100 million will be allocated to the GSM-103 programwhichprovides guarantees for intermediate-term credit (3 to 10 year repayment terms). Two other guarantee programs,thesupplier credit guarantee and the facilities financing guarantee, receive $150 million and $50 million respectivelyinFY1999. Under the supplier credit guarantee, CCC guarantees payments due on financing extended directly byexporters toimporters (due in up to 180 days) for the purchase of U.S. agricultural products. Under the facilities financingguarantee,CCC guarantees the financing of manufactured goods and services exported from the United States to improve orestablishagricultural related facilities, such as port improvements, in emerging markets.

Agricultural Trade Sanctions. Farm state members voiced concerns inJune 1998 that the imposition of sanctions on Pakistan and India following their nuclear weapons tests would resultin lostagricultural sales, particularly of wheat to Pakistan. This led to efforts to include amendments in the FY1999agricultureappropriations measures reported out by both the House and Senate Appropriations Committees to allow Pakistanto regainaccess to USDA's agricultural export credit guarantees. Pakistan, the third largest market for U.S. wheat, has usedthisprogram extensively since the early 1990s to facilitate its sizable purchases of U.S. wheat. When Pakistanannounced thatit would be purchasing a large quantity of wheat on July 15, 1998, Congress approved and the President signedseparatelegislation ( P.L. 105-194 , S. 2282 ) to exempt USDA credits, guarantees, and financial assistance from thenonproliferation sanctions mandated under the Arms Control Act. This action helped facilitate the sale of over600,000metric tons of white wheat to Pakistan during the remainder of 1998. (For more information, see CRS Report 98-770, U.S.Agricultural Exports and the Nuclear Nonproliferation Sanctions on India and Pakistan .)

Growing recognition of the adverse impact that U.S. trade sanctions have on U.S. agricultural exports prompted considerable debate on this issue during floor consideration of the Senate version of FY1999 agricultureappropriations( S. 2159 ). However, conferees dropped language adopted during Senate floor debate, offered by Dodd andamended by Torricelli, that would have exempted the sale of food, fertilizer, medicine and medical equipment fromcurrentand future U.S. unilateral sanctions, except for those imposed on countries that support terrorism or use food andmedicinefor coercion or punishment.

Country of Origin Labeling for Agricultural Products. P.L. 105-277 does not contain separate Senate-adopted amendments to require country of origin labeling on fresh cuts of importedmeatsand for imported produce. Instead, it requires further studies on these issues -- imported meat labeling issues bytheSecretary of Agriculture and imported produce labeling by the General Accounting Office.

Market Access Program. The FY1999 agricultural appropriations actplaces no funding limitations on the Market Access Program. The FY1999 budget estimate of $90 million isunchangedfrom FY1998 and is the maximum authorized under the 1996 farm bill. MAP supports, on a cost-sharing basis,foreignmarket development and promotion efforts of non-profit agricultural trade organizations, state and regional tradegroups,and private companies. The 1996 farm bill prohibits providing direct assistance to foreign firms for the promotionofforeign-produced products and to any firm that is not recognized as a small business under the Small Business Act. Popular in the agricultural community, the program is often targeted for elimination as "corporate welfare" byopponents inCongress, some consumer organizations, and fiscally conservative groups.

MAP is a mandatory program, funded through the Commodity Credit Corporation (CCC), and does not require annualappropriations. Amendments to eliminate MAP spending in FY1999 were defeated in both chambers. P.L. 105-277 doescall for the Secretary to carry out a study of the economic costs and benefits of the MAP program.

Export Subsidies. P.L. 105-277 does not provide for any changes in theEEP program and places no limits on the FAIR Act authorized levels for EEP. That means that the full amountauthorizedfor EEP for FY1999, $550 million, will be available. The FY1999 estimated program level is $170 million abovetheFY1998 level, which was capped at $150 in the FY1998 agricultural appropriations act. Like MAP, USDA's exportsubsidy programs are funded through the CCC, and are not subject to direct annual appropriations. Twoprograms--theExport Enhancement Program (EEP) and the Dairy Export Incentive Program (DEIP)--offer bonuses to exportersof U.S.agricultural commodities to make them price competitive in markets that are also targets of competitors' countriessubsidies. Only $5 million in EEP bonuses were awarded in FY1996 and none were awarded in FY1997. InFY1998, theavailability of EEP bonuses for 20,000 tons of poultry meat and 30,000 tons of barley were announced.

No action was taken on the President's proposal to set EEP spending at $1.2 billion over FY1999 through FY2003 with anallocation of up to $320 million as a first installment of a "flexible, multi-year program authorization for EEP." Under theAdministration proposal, any funding not used in one fiscal year would remain available for use in a subsequentyear, butannual program levels would remain subject to export subsidy reduction commitments made in the Uruguay RoundAgreement on Agriculture. Savings from the proposed multi-year EEP program were estimated at approximately$1.4billion, the difference between the proposed program levels and the amounts authorized in the 1996 farm bill. Authorizingthis multi-year program would have required new authorizing legislation.

For DEIP, the President's budget anticipated a lower level of program activity in FY1999 because of a tighter domesticmarket for dairy products. The $82 million proposed is $17 million less than the estimated $99 million for FY1998. Actual levels of DEIP will be determined by market conditions, subject to reduction commitments in the UruguayRoundAgricultural Agreement.

Public Law 480 or Food for Peace. The FY1999 appropriations act essentially maintains spending for P.L. 480 at the level of last year's appropriation, approximately $1.1 billion. P.L.480 isthe U.S. Government's primary means of providing food assistance to foreign countries. Title I of P.L. 480 fundslong-termconcessional sales of U.S. agricultural products, primarily to develop markets in low-income countries. Title II isa programof humanitarian food donations for both emergencies and non-emergency feeding programs. Title III provides grantfoodaid for development projects in low-income developing countries. USDA administers Title I; the Agency forInternationalDevelopment (AID) administers Titles II and III.

For FY1999, the Administration proposed a total budget authority of $967 million for P.L. 480, estimated toprovide 2.8million metric tons of commodities. The FY1998 appropriation was $1.063 billion which will provide 3.2 millionmetrictons of commodity assistance. The new budget request thus represents a reduction of $96 million in budgetauthority and700,000 metric tons of commodities, all of it coming from Title I. Agricultural appropriators rejected efforts by theAdministration in FY1997 and FY1998 to cut Title I spending. Similarly, previous Administration efforts to reduceoreliminate Title III were rebuffed. Commodity groups whose products figure prominently in the Title I program(wheat,wheat flour, vegetable oil, rice, among others) have opposed any reductions in Title I; supporters in Congress ofusing foodfor development assistance oppose reducing further or eliminating Title III.

Food for Progress. FFP provides commodities to governments, privatevoluntary organizations, cooperatives or intergovernmental organizations for use in developing countries andemergingdemocracies committed to free enterprise in their agricultural economies. FFP can use Title I funds to procurecommodities and pay transport costs. It can use commodities, if any, in CCC inventories under Section 416(b) oftheAgricultural Act of 1949; or it can use CCC funds to procure and ship commodities when Section 416(b)commodities areunavailable. Annual programming is limited to not more than 500,000 metric tons and not more that $30 millionfornon-commodity costs of the program. The Administration budget assumes that $109 million of CCC funds will beused tosupport FFP in FY1999--$79 million for the purchase of commodities by CCC and $30 million for transportationand othernon-commodity costs. P.L. 105-277 provides an emergency appropriation to allow an additional $25 million inspendingfor FFP.

Foreign Agricultural Service. FAS administers the agricultural exportand food aid programs. It is also responsible for other market development and export promotion efforts,formulatingagricultural trade policy, conducting agricultural trade negotiations, gathering foreign market information, andcarrying outprograms of international cooperation. The FY1999 budget requested $141 million in appropriated funds for FAS,but P.L.105-277 provides for an appropriation of $136.2 million which includes funds ($4.4 million) for internationalcooperativeadministrative support to cover costs of FAS' overseas operations. Included in FAS's appropriated funding is around$60million for market development, which includes funding to support the Foreign Market Development (orCooperator)Program (FMDP).

For more information on agricultural trade and food aid programs, see CRS Issue Brief IB98006, Agricultural Export andFood Aid Programs.

Conservation

P.L. 105-277 provides $793.1 million for conservation programs in FY1999, slightly more than the FY1998 appropriationof $786.5 million. Conservation programs are administered by both USDA's Natural Resources ConservationService(NRCS) and its Farm Service Agency (FSA). However, all of the appropriated funds go to the NRCS. TheAdministrationhad requested $826.3 million, an increase of $40 million from the preceding year. The Senate-passed appropriationbill( S. 2159 ) would have provided $792 million, while the House-passed bill ( H.R. 4101 ) wouldhave provided $784.4 million.

The balance of funding for conservation programs was made mandatory in the 1996 farm act and is funded through theCommodity Credit Corporation (CCC). P.L. 105-277 allows just under $2 billion in funding for those programsinFY1999, a savings of more than $100 million from the Administration proposal and more than $300 million fromFY1998.

Natural Resources Conservation Service. Within NRCS, the coreconservation program and the primary source of technical assistance to producers and landowners is ConservationOperations (CO). P.L. 105-277 provides $641 million for CO, $99 million less than the Administration request of$742million. This request included a transfer of $50 million from the Watershed and Flood Prevention OperationsProgram(the portion that pays for the technical assistance under this program) into the CO account. Other major requestedincreases included $23 million for activities associated with the Clean Water and Watershed Restoration Initiative,and $20million to be used as incentive payments to encourage state and local conservation efforts. These increases wouldhavebeen partially offset by $10 million from user fees (to be charged for the first time in conservation), and eliminationof $6.9million in prior congressional earmarks that do not have a federal or national impact. Both chambers rejected theserequests. The House-passed bill had recommended funding at $641 million for CO, while the Senate-passed billprovided$638.6 million.

In the reports accompanying the legislation, both chambers included numerous recommendations for specific activities orprojects (mostly of $1 million or less), and some involve policy changes. The House report expressed concern aboutaccountability for how these funds are spent and identified several Administration initiatives on which they cannotbe spentwithout prior approval by the House Appropriations Committee. It also called on NRCS to submit a reportjustifying thecreation of regional offices with its FY2000 budget submission. The Act is silent on most items in the reportlanguage thateither chamber had adopted. Where one chamber had earmarked funds, the earmark was accepted, but some of thefundinglevels were changed.

Beyond CO, P.L. 105-277 rejects most of the Administration proposals and makes changes in other programs. It adoptslanguage on the Watershed and Flood Prevention Program inserted by the House that limits Technical Assistanceunderthat program to a maximum of $47 million, and provides $6.3 million for the Forestry Incentives Program, as passedby theSenate. (The House and Administration had both recommended no funding.) The House and Senate had smalldisagreements on two other programs; the Senate provided level funding for two NRCS programs that are line items,Watershed Surveys and Planning and Resource Conservation and Development, while the House provided adecrease of$1.6 million for Watershed Surveys and Planning, and an increase of less than $1 million for the ResourceConservationand Development Program.

Five conservation programs administered by NRCS are funded as mandatory spending (not subject to annual appropriations) through the CCC as a result of provisions in the 1996 farm act. P.L. 105-277 makes changes to threeofthese mandatory programs and claimed nearly $100 million in budget savings, which was then applied towardsmeeting theallocation for all discretionary programs. It limits the Environmental Quality Incentives Program (EQIP), whichsupportsstructural and land management practices under multi-year agreements, to $174 million for savings of $26 million;concurswith the Senate in limiting Wetland Reserve Program (WRP) enrollment to 120,000 acres for savings of $47million, andincludes language passed by the Senate supporting greater flexibility for enrolling land into the WRP. It concurswith bothChambers in prohibiting any funding for the Conservation Farm Option (CFO), which provides payments toproducersreceiving market transition payments, for savings of $25 million. But, P.L. 105-277 rejected the House-passedprohibitionon funding the Wildlife Habitat Incentives Program (WHIP), which provides payments to farmers who implementapproved plans.

The Administration had proposed adding $100 million to the EQIP and increasing the CFO by $10 million. A proposedreduction in the WRP by $95 million, to $124 million, would have allowed USDA to enroll an additional 164,000acresunder permanent easements, temporary easements and long-term agreements. Also in the Administration request,theWHIP would have declined from $30 to $20 million and the Farmland Protection Program (FPP) would not havebeenfunded. These changes reflect the approaching of the enrollment cap for the WRP, and the allocation of allauthorizedfunds for the FPP in FY1998 and for the CFO and WHIP in FY1999.

The Senate bill had limited WRP enrollment to 120,000 acres (for $47 million in savings), changed how land can beenrolled and when payment limits would not apply for the WRP, and prohibited any funding for the CFO ($25million insavings). The House bill had prohibited funding for the WHIP ($20 million in savings), limited WRP enrollmentto130,000 acres ($37 million savings), and limited funding for the EQIP to $174 million ($26 million savings). It alsohadprohibited funding for the CFO ($25 million savings).

Farm Service Agency Conservation Programs. FSA operates the largestconservation program, the Conservation Reserve Program (CRP). Under the CRP, landowners can enter intocontracts,usually 10 years in duration, to retire environmentally sensitive lands from production in return for annual paymentsandtechnical assistance. CRP is a mandatory program funded through the CCC as a result of provisions enacted in the1996farm act. Estimated funds needed for the CRP decline from $1.798 billion in FY1998 to $1.694 billion in FY1999,according to the Administration. No funds were requested for two other programs, both responding to naturaldisasters, theEmergency Conservation Program (ECP) and the Flood Risk Reduction Program. Conferees rejected a Senateprovision toadd a pilot program for haying and grazing on CRP acreage in 7 states in no more than 1 in 4 years in return forreducedpayments. The House-passed bill provides some directions for administering the Conservation ReserveEnhancementProgram, a subset of the CRP.

The Forest Service, with requested outlays of $3.378 billion in FY1999, is another agency in USDA with natural resourceprotection responsibilities. Appropriations for the Forest Service are within the jurisdiction of the interiorsubcommitteesof the House and Senate Appropriations Committees. Forest Service funding issues are addressed with the othermajorfederal land management agencies in the CRS report on the Interior appropriations bill (see CRS Report 98-206 .)

For more information on USDA conservation issues, see CRS Issue Brief IB96030, Soil and Water Conservation:Implementing the 1996 Farm Bill.

Agricultural Research, Education, and Economics

The FY1999 omnibus appropriations act ( P.L. 105-277 ) contains $1.930 billion in spending to support the programs ofUSDA's research, education, and economics (REE) agencies in FY1999. The House-passed version of H.R. 4101 contained $1.838 billion, and the Senate bill, S. 2159 , contained $1.843 billion for the REE agencies.The vetoed conference agreement on H.R. 4101 would have provided $1.923 billion. Its research provisionsare virtually identical to those in P.L. 105-277 , except that P.L. 105-277 provides $7 million more to the researchagenciesfor the President's Food Safety Initiative. The level in P.L. 105-277 is almost 7% higher than the Administration'srequestof $1.808 billion and 3% above the FY1998 funding level of $1.870 billion. The conference agreement's allocationoffunds among the various research and education programs differs significantly from the Administration's, as did theearlierHouse and Senate measures.

Four agencies carry out USDA's REE function. The Department's in-house research agency is the Agricultural ResearchService (ARS), which provides scientific support to USDA's action and regulatory agencies and conducts long term,highrisk, basic and applied research on subjects of national and regional importance. The National Agricultural Librarymergedwith ARS in the 1994 USDA reorganization. The Cooperative State Research, Education, and Extension Service(CSREES) is USDA's liaison with state-level research, education and extension programs at the land grant CollegesofAgriculture. The Economic Research Service (ERS) provides economic analysis of agriculture issues using itsdatabases aswell as data collected by the National Agricultural Statistics Service (NASS). ARS, CSREES, ERS, and NASS areunderthe Under Secretary for Research, Education, and Economics.

Agricultural Research Service (ARS). P.L. 105-277 provides $842million for ARS in FY1999. Of that amount, $786 million would be allocated to ARS research programs (a $42millionincrease from the FY1998 level of $744 million), and $56.4 million would be allocated to the construction andrepair ofARS buildings and facilities (compared to $80.6 million in FY1998). P.L. 105-277 provides more for ARS thaneither theSenate measure ( S. 2159 -- $809 million), the House-passed version ( H.R. 4101 -- $817.2million), or the conference agreement on H.R. 4101 ($838.4 million) .

The Senate-passed version of S. 2159 contained a $13.5 million reduction in the ARS buildings and facilitiesfunds that the Senate used to partly offset a $66 million increase in support for the President's Food Safety Initiativeoverthe amount contained in the bill as originally reported by the Senate Appropriations Committee. Of the $66 million,theSenate designated $9 million for ARS food safety research (the Administration requested $14 million). P.L.105-277 provides a total of $59.3 million for the Initiative for research and increases the ARS allocation by $3.6 million to$12.6million, but the offset is no longer coming from ARS's construction funds. The final appropriation of $56.4 millionforARS buildings and facilities exceeds the Senate-passed level by $24.5 million and is only $5 million less than theHouse-passed level of $61.4 million.

Two other titles of P.L. 105-277 , not related to agriculture, also provide funds to ARS for specific research. Under Title III,the Office of National Drug Control Policy is to transfer $4.5 million to ARS for anti-drug research. Under TitleVIII, theWestern Hemisphere Drug Elimination Act of 1998, $23 million is appropriated for ARS to do research on drugcroperadication technologies, narcotics plant biochemistry, alternative crops, and development of herbicides for aerialsprayingprograms to eradicate narcotic plants.

Cooperative State Research, Education, and Extension Service(CSREES). P.L. 105-277 provides $919.2 million for cooperative research, education, and extensionprograms in the states, an amount that is $71.3 million higher than the House-passed version of H.R. 4101 ,$44 million higher than S. 2159 , $88 million above the Administration request, and $3.9 million more thanthe vetoed conference agreement on H.R. 4101 .

The Administration requested a $23.5 million decrease in CSREES funding for FY1999, which included controversialreductions in Hatch Act funds for research at the state agricultural experiment stations, Smith-Lever Act formulafunds forExtension programs, and McIntire-Stennis funds for cooperative forestry research. P.L. 105-277 reverses all of theseproposals and actually provides more than contained in either S. 2159 or the House-passed version of H.R. 4101 (with the exception of formula funds for extension programs, where the conferees agreed withwhatthe Senate had provided in S. 2159 ). P.L. 105-277 contains $180.5 million for Hatch Act formula funds (a7%increase over FY1998); $276.5 million for Smith-Lever formula funds (a 3% increase); and $21.9 million forforestryresearch (a 7% increase). P.L. 105-277 also increases funding for research at the 1890 historically black land grantcollegesby 7%, to $29.7 million, and for 1890's extension programs by 3%, to $25.8 million.

P.L. 105-277 provides $119.3 million for the National Research Initiative (NRI) competitive grants program. This amountis higher than either the House or Senate bills and higher than the FY1998 level of $112.5 million, but less than theAdministration's $130 million request. Of the six research categories under the NRI, food safety receives an $8millionincrease over the FY1998 level for a total of $16 million, as part of the Food Safety Initiative. Conference reportlanguagedirects USDA to consult with the Food and Drug Administration (FDA) regarding its research needs and to use $5millionof the $8 million increase to meet those needs. P.L. 105-277 also provides an additional $4.1 million to CSREESfor otherresearch programs addressing food safety, for a total increase of $12.1 million in cooperative food safety research.

P.L. 105-277 provides a 23% increase (to $63.1 million) over the FY1998 level of $51.5 million. S. 2159 would have reduced funding for special grants to $51.4 million and the House-passed version of H.R. 4101 to$49.3 million. P.L. 105-277 also provides an additional $633,000 in funding for Extension special projects overtheFY1998 level of $11.1 million. Extension's Expanded Food and Nutrition Education Program will receive levelfunding of$58.7 million.

Congress directed in the FY1996 agricultural appropriations report that no new funds should be appropriated forconstructing research facilities at land grant Colleges of Agriculture after FY1997. No such funds were appropriatedforFY1998. The Administration did not request any funds for facilities construction in FY1999, and P.L. 105-277 likewisecontains none. It is expected that such funding may resume once Congress and Department officials have examinedacongressionally mandated 10-year strategic plan for agricultural research facilities that is due to be completedshortly.

CSREES administers a competitive grants program under the Fund for Rural America, a program focused on research anddevelopment projects of benefit to farm and rural communities that was authorized and given mandatory fundingin the1996 farm act ( P.L. 104-127 ). In FY1998, CSREES had $36.1 million available in funds to award to researchprojectsrelated to rural needs. The recently enacted Agricultural Research, Extension, and Education Reform Act ( P.L.105-185 , S. 1150 ) extended the authority for the Fund for Rural America through FY2003 and allocated an additional$100 million in mandatory funds to it over 5 years. This would make a total of $60 million available annually toUSDA forall the activities of the Fund, with somewhat less than half of that amount being available for research grants. P.L.105-277 reflects provisions in both the House- and Senate-passed FY1999 funding measures that prohibit the use of anyfunds topay the salaries and expenses of personnel to carry out Fund for Rural America activities. This effectively puts theprogramon hold until FY2000.

Similarly, P.L. 105-277 adopts a provision in the House-passed version of H.R. 4101 that prohibits outlays ofthe first year's allocation of $120 million for the Initiative for Future Agriculture and Food Systems. The Initiativewasauthorized by the new research reauthorization act ( P.L. 105-185 ) and would provide $600 million in mandatoryfunds over5 years to support research on the genetics of food crops and livestock, food safety, human nutrition, alternative usesforagricultural commodities, biotechnology, and site-specific farming using satellite technology (precision agriculture). Thewithholding of the first year's funds puts the program on hold until FY2000.

Economic Research Service (ERS) and National Agricultural Statistics Service(NASS). P.L. 105-277 provides $65.8 million in funding for ERS. This is slightly below theHouse-passed level of $67.3 million and significantly higher than the Senate level of $54.0 million. The FY1998appropriation of $71.6 million reflected a decision to give ERS the responsibility for all USDA research and analysisoffood programs and food policy issues. P.L. 105-277 adopts the House provision to keep those responsibilities inERSrather than to transfer them to the Food and Nutrition Service as the Administration requested and the Senateproposed. P.L. 105-277 stipulates that $12.2 million will be used for studies and evaluations of the food stamp, child nutrition,andWomen, Infants, and Children (WIC) programs, and also includes language that directs that $2 million of the $12.2millionbe transferred to the Food Program Administration account of the Food and Nutrition Service for conductingprogramevaluations. Also as part of ERS's total funding, the conferees directed $453,000 to be spent on studies to estimatethebenefits of food safety. S. 2159 had provided $900,000 for that purpose and the House-passed bill contained$704,000. The conferees also reiterated Senate report language directing ERS not to reduce the frequency of itscommoditysituation and outlook reports.

P.L. 105-277 adopts the Senate provision to provide $104 million for NASS, reflecting the Administration's position thatthe agency will not require as much funding in FY1999 to continue its work on the 1997 Census of Agriculture. TheFY1998 appropriation was $118 million, and the Administration's budget request for FY1999 was $107.2 million.TheHouse measure would have provided $105.1 million. P.L. 105-277 provides that $23.6 million be spent for NASS'scontinuing work on the census, and reiterates Senate report language requiring USDA to streamline the censusapplicationby reducing redundant questions.

For more information on agricultural research issues, see CRS Issue Brief 97032, Agricultural Research, Education, andExtension Issues in the 105th Congress .

Food Safety and Inspection

Improved food safety is among the three goals that Secretary Glickman has set forth for USDA under the GovernmentPerformance and Results Act. In order to elevate the Department's role in this mission area, the Administration in1995established an Office of the Under Secretary for Food Safety. The Food Safety and Inspection Service (FSIS) is theonlyagency in USDA's food safety mission area. FSIS is responsible for the mandatory inspection of meat, poultry andprocessed egg products to ensure their safety, wholesomeness, and proper labeling.

FSIS and the industry are now implementing a comprehensive new system to reduce pathogens in meat andpoultryproducts through a preventive approach known as hazard analysis critical control point, or HACCP. This systemis tosupplement, not replace, existing inspection procedures. One budget issue related to HACCP implementation isFSIS'sability to properly implement and enforce the new procedures while still meeting its traditional inspectionobligations. Some observers maintain that the agency could be hard pressed to keep both systems operating optimally with theannualappropriation it receives from Congress.

Food Safety and Inspection Service. For several years theAdministration has proposed requiring the meat packing industry cover a greater portion of the full cost of federalmeat,poultry, and egg inspection by paying increasing amounts of user fees. Congress rejected the Administration's userfeeproposal last year, as it has rejected previous (and more modest) ones, and both the Senate and House appropriationsmeasures reject the Administration's user fee proposal for FY1999.

For FY1999, P.L. 105-277 provides a $617.0 million appropriation for FSIS. This level is $8 million higherthan thevetoed conference agreement on H.R. 4101 . It is estimated that the amount of user fees collected for overtimeinspection services will remain at about the FY1998 level ($86 million), bringing the total program level to $704million,about a 4% increase from the 1998 fiscal year. The FY1998 appropriation for FSIS was $589 million, with a totalprogramlevel of $675 million. The $8 million increase is designated entirely to FSIS activities related to the Food SafetyInitiative,bringing the agency's total allocation for the Initiative to $16 million in FY1999. Conferees adopted a Senateprovision toprovide separate funding of $446,000 for the Office of the Under Secretary for Food Safety rather than a Houseproposal tofund the Office from the FSIS appropriation. Congress provided separate funding for the Office in FY1998.

Conferees adopted language directing the Secretary to report to the Committees on Appropriations by March 1, 1999, withrecommendations on lifting the ban on interstate shipment of state inspected meat. The committee also rejected aSenateprovision to require country-of-origin labeling on imports of beef and lamb, but requires a comprehensive study onitspotential effects and several other related issues. The explanatory statement attached to P.L. 105-277 also directsFSIS toredo a report on the potential merits and effectiveness of a mandatory inspection program for meat from ratites (e.g.,ostrich, emu, rhea), and to include in the revision the cost-benefit analysis and health risk assessment that Congresshadoriginally asked for. (For more information, see CRS Issue Brief 95062, Meat and Poultry InspectionIssues .)

Marketing and Regulatory Programs

The mission of USDA's marketing and regulatory programs -- administered by three agencies, the Agricultural MarketingService (AMS), the Animal and Plant Health Inspection Service (APHIS), and the Grain Inspection, Packers, andStockyards Administration (GIPSA) -- is to "facilitate the domestic and international marketing of U.S. agriculturalproducts and to ensure the health and care of animals and plants while improving market competitiveness and theeconomyfor the overall benefit of both consumers and American agriculture," according to USDA. APHIS spendingaccounts formost of the marketing and regulatory program budget.

P.L. 105-277 contains $521.3 million for these agencies' programs, with an additional $195.3 million authorized to becollected through user fees, for a total program level of $716.6 million (27% user fee supported). The total programlevelin FY1998 was $708.6 million, of which approximately $195 million (or about 27%) came from user fees. TheAdministration's FY1999 budget proposal would have set a program level of $712.7 million for these agencies'programs,of which $207 million (about 29%) would have come from user fees.

Agricultural Marketing Service. P.L. 105-277 provides $61.0 million inappropriations to AMS ($3.0 million more than FY1998) and authorizes the collection of $64.7 million in user fees($1.2million more than the current year) for a total FY1999 program level of $124.7 million. The Senate measure, S. 2159 , would have provided $57.8 million in budget authority to AMS and authorized the collection of$63.5million in user fees. The House-passed bill allocated virtually level funding for FY1999 and adopted theAdministration'srequest to allow $64.7 million to be collected in user fees. The Administration had requested $70.7 million for AMSandwould have allocated most of the increase to broadening the scope of the Pesticide Data Program (PDP), whichcollects andanalyzes data on pesticide residues in fruits, vegetables, and other foods.

P.L. 105-277 adopts a Senate provision that amends the Agricultural Marketing Act of 1946 to make it illegal to grade andrepack eggs in USDA-stamped cartons if they have already been in commerce without having gone through theUSDAvoluntary egg grading program. Conference language also requires USDA and FDA to submit a status report toCongresson the agencies' efforts to improve the safety of shell eggs.

Animal and Plant Health Inspection Service. P.L. 105-277 provides$425.8 million in budget authority for APHIS programs ($0.5 million less than FY1998) and authorizes theexpenditure of$88 million (same as FY1998) in collected user fees, for a total program level of $513.8 million for FY1999. S. 2159 would have provided a program level of $514.5 million, and the House version of H.R. 4101 would have provided $512.5 million. P.L. 105-277 also provides $7.7 million for APHIS building projects,anamount that is $2.5 million higher than the budget request and the House-passed bill, and $3.5 million higher than S. 2159 . Conferees also adopted language directing USDA to publish rules regarding the compensation ofArizona wheat producers and others for their economic losses on the 1997-1998 crop due to karnal bunt disease.

The budget request, which called for an $8.1 million decrease for APHIS programs in FY1999, assumed less demand forsome APHIS programs and increased cost-sharing for predator control and boll weevil eradication programs. Inaddition,the Administration's FY1999 budget proposed new user fees to recover some of the costs for administering animalwelfare,biotechnology, veterinary biologic, pink bollworm, and Swine Health Protection Act programs. P.L. 105-277 reflects thefact that neither the Senate nor the House bill adopted this proposal.

A floor amendment (Bass) to the House version of H.R. 4101 that would have reduced funding by $10 millionfor APHIS's livestock predator control operations through its Wildlife Services program was adopted on June 23,and thenvoted down on June 24. After the amendment was adopted, many members were concerned that the wording oftheamendment would actually reduce Wildlife Services spending by $21 million instead of the intended $10 million,andrequire reductions in Wildlife Services research spending as well as operations. When the amendment was revisedthe nextday, it was defeated, thus maintaining the funding level at $28.7 million for operations and $10.3 million forresearch, asoriginally reported by the House Appropriations Committee.

P.L. 105-277 provides $28.8 million for predator control operations and $10.4 million for research. Conferees alsoadopted provisions that would provide: $400,000 to be used to prevent the inadvertent introduction of brown treesnakes inHawaii; $300,000 to establish a Wildlife Services office in Hawaii; $450,000 for trap testing to meet U.S.obligations underinternational standards; and an additional $175,000 for coyote and wolf control in the Rocky Mountain region.

Grain Inspection, Packers, and Stockyards Administration. P.L.105-277 provides $26.8 million for GIPSA and authorizes the collection of $42.6 million in user fees for a totalprogramlevel of $69.3 million. S. 2159 would have appropriated $26.4 million and the House-passed measure $27.5million for GIPSA. The amount provided in P.L. 105-277 is slightly higher than the current appropriation ($25.4million)and substantially higher than the Administration request of $11.8 million. The budget request assumed enactmentofauthority for $21.5 million in additional user fees (which the House and Senate did not adopt) for grain inspectionactivitiesand to administer the Packers and Stockyards Act. A provision added in conference on P.L. 105-277 requires theSecretaryof Agriculture to conduct a 12-month pilot investigation to require certain large buyers, sellers or marketers ofdomestic orimported cattle for fresh beef, or sheep for frozen lamb, to report to the Secretary the prices they paid. A similarpilotinvestigation is also required for the collection of export data for fresh or frozen muscle cuts of beef.

Rural Development

USDA rural development programs are intended to improve the quality of rural life through the development of decent andaffordable housing; the creation and retention of jobs; expanded and improved access to electric andtelecommunicationsservices, and modern and affordable water and waste disposal services. Funds are awarded and technical assistanceprovided by one of three USDA rural development services charged with carrying out the department's ruraldevelopmentstrategy: Rural Housing Service (housing and community facilities), Rural Business-Cooperative Service, and RuralUtilities Service (telecommunications, electricity, water quality, and solid and wastewater disposal). Funds areawarded tostates and local governments, rural businesses and cooperatives, and nonprofit organizations and individuals.

In the aggregate, the amount appropriated by P.L. 105-277 for rural development activities totals $2.175 billion forassistance to the three rural development service agencies and for the Rural Community Advancement Program(RCAP). A portion of total rural development funding is targeted to direct subsidy support of $6.169 billion in loan authority. P.L.105-277 includes a total of $657 million in grants, and $1.5 billion in loan subsidies, salaries, and expenses. ThePresident's FY1999 budget proposal included a request for an appropriation of $2.220 billion for rural developmentprograms, much of which would have supported $5.797 billion in loan authority for rural development initiatives.

Rural Community Advancement Program. In addition to grants, loans,and loan guarantees awarded under one of the three service divisions of the Rural Development Administration,ruraldevelopment assistance may also be available through the Rural Community Advancement Program (RCAP), whichwasauthorized by the Federal Agriculture Improvement and Reform Act of 1996. RCAP consolidated twelve programsintothree distinct funding streams dedicated to rural community facilities, rural utilities, and rural business andcooperativedevelopment. State development officers may transfer up to 25% of the program's total budget authority among thethreeaccounts, provided that no more than 10% of the funds are transferred from any one of the three accounts nationally. Astate may control up to 10% of its RCAP funds through the creation of a state administered block grant.

The FY1999 omnibus appropriations act includes $722.7 million in budget authority to support RCAP loan and grant activities. This is $22.5 million less than recommended by the House, $20.1 million more than approved by theSenate, $7.5 million more than requested by the Administration, and $70.5 million more than appropriated for FY1998. A majorportion ($68 million) of the $70.5 million increase in appropriations will be allocated to support water and wastedisposalgrants and loans. The increase in grants and loans for water and waste disposal projects is consistent with thePresident'sWater 2000 Initiative to provide all rural households with clean running water by the year 2000.

P.L. 105-277 includes a provision originally included in the Senate bill that would permit the USDA to transfer up to $26million in discretionary funds not otherwise appropriated for a specific purpose or location for activities in theLowerMississippi Delta Region. It also includes a proviso that would count any funds made available from ongoingprograms ofthe Department for use in the Lower Mississippi Delta as part of the $26 million targeted to the region.

P.L. 105-277 directs the Undersecretary for Rural Development to give particular consideration to specific projects oractivities in various locations, but the report stops short of earmarking RCAP funds for these projects. Instead,reportlanguage states that the Department is "to apply established review procedures when considering applications." Suchlanguage contrasts with the recent practice of allocating funds for the Department of Housing and UrbanDevelopment'sEconomic Development Initiative (EDI), where funds are routinely earmarked for specific projects identified inreportsaccompanying bills appropriating funds for HUD programs. (For additional discussion of the increasing use ofset-asidesunder the EDI program, see CRS Issue Brief 98026, Community Development Block Grants: Funding andOther Issues inthe 105th Congress. )

P.L. 105-277 includes provisions found in the original House- or Senate-passed versions of the bill, including earmarks of:

$16.2 million in technical assistance for water and sewer funding;

$5.3 million for the circuit rider program;

$33.9 million for assistance to empowerment zones and enterprise communities (EZ/EC);

$500,000 in transportation related technical assistance; and .

$24 million in water and waste disposal assistance.

Rural Housing Service. P.L. 105-277 provides a total appropriation of$1.14 billion, of which $197.3 million supports $4.25 billion in total housing loans ($1.15 billion in direct loansand $3.0billion in loan guarantees). Included in this amount is $116.8 million appropriated to support $3 billion inguaranteedloans and $965 million in direct loans for single family housing in support of the Administration's National HousingInitiative. Loan authority provided for single family housing is $35 million more than approved by the House and$35million less than what was approved by the Senate, requested by the Administration, and appropriated in FY1998. On anumber of other RHS funding items, the Senate conferees receded in favor of the recommendations of the House. Theseincluded funding for the: Section 504 housing repair program ($25 million in loan level supported by $8.8 millioninsubsidies); Section 514 farm labor housing program ($20 million loan level supported by $10.4 million subsidy);multifamily credit sales program ($2.3 million in subsidy in support of a $5 million loan level); and credit sales ofacquiredproperty program ($3.5 million in loan subsidy in support of $16.9 million in loan authority.)

Provisions of P.L. 105-277 reflect House and Senate compromises on assistance for Section 515 rental housingloans andSection 538 multifamily housing guarantees. The Act provides a loan subsidy of $55.2 million to support $114.3million ofSection 515 activities. It also provides $100 million for Section 538 multifamily housing loan guarantees, asignificantincrease from the $20 million program level in FY1998. In addition, P.L. 105-277 includes a Senate provision thatearmarks $10.4 million in RHS assistance to existing empowerment zones and enterprise communities (EZ/EC)authorizedunder P.L. 103-66 . The Administration had sought to provide $100 million in grants, over 5 years, for five newlydesignated empowerment zones. P.L. 105-277 also includes a general provision, which was in neither the Housenor theSenate bill, which appropriates an additional $15 million in assistance to previously designated empowerment zones($10million) and 20 additional rural enterprise communities ($5 million).

The FY1999 appropriations act also includes a Senate provision that earmarks $1 million in mutual and self help housinggrants for use in EZ/EC communities with the proviso that such assistance must be obligated by June 30, 1999. Itincludes a provision that appropriates $41 million for the Rural Housing Assistance Grant Program. This is $4.7 millionless thanappropriated in FY1998. It includes language that reauthorizes a number of rural housing programs through the year2000. A Senate provision would have reauthorized these programs through FY1999, but was deleted in conference. Aprovisionreauthorizing such programs was included in separate legislation.

Rural Business-Cooperative Service. Total funding of $56.4 million forRB-CS programs in FY1999 includes $3.3 million in grants, $25.7 million in salaries and expenses and $23.9million inloan subsidies. P.L. 105-277 provides an appropriation of $56.4 million to fund salaries and expenses of RB-CS andtosupport a loan level of $48 million. Total funding for FY1999 is $5.7 million below FY1998, $10.6 million belowtheAdministration request, $5 million below the Senate level, but $2.5 million above the proposed House level. Withintheseamounts are:

$16.6 million in Rural Development Loan Fund subsidies in support of a loan level of $33 million, which is consistent with the amount proposed by the Senate;

$3.8 million in Rural Economic Development loan subsidies in support of a $15 million loan level as proposed by the House; and

$3.3 million in Rural Cooperative Development Grants, with $1.3 million earmarked for technology transfer to rural areas program as proposed by the House, and $250,000 earmarked for a cooperative developmentprogramas proposed by the Senate.

P.L. 105-277 also includes language that directs the Secretary to give special consideration to several projects requestingRural Cooperative Development Grant assistance. These projects are located in Missouri, Pennsylvania, and Iowa. Further, the FY1999 act appropriates $3.5 million for the Alternative Agricultural Research and Commercialization Revolving Loan Fund. This is $3.5 million less than approved by the Senate or appropriated in FY1998, and $6.5millionless than requested by the Administration. The House version of the bill provided no funding for the program.

Rural Utilities Service. P.L. 105-277 provides a total appropriation of$126.2 million to the Rural Utilities Service to support $1.87 billion in FY1999 lending authority. It includes $300millionin authority for Treasury-rate telecommunications loans and $158 million for the Rural Telephone Bank Program. The Actallocates $12.7 million in distance learning and telemedicine grants, and $180,000 in loan subsidies in support ofa $150million loan level for distance learning and telemedicine loans

Fund for Rural America. The Act prohibits any funds from being used toadminister the Fund for Rural America for FY1999. The Fund, which was created in 1996, provides grantsassistance insupport of rural economic development projects. An annual appropriation is not required for the Fund since itreceives itsfunding directly from the U.S. Treasury. The Act in effect prohibits the spending of the $60 million that isauthorized forthe program in FY1999.

Food and Nutrition Programs

Food and nutrition programs are administered by the U.S. Department of Agriculture (USDA). They include the food stampprogram, child nutrition programs, the special supplemental nutrition program for women, infants, and children(WIC), andseveral commodity donation programs serving low-income mothers and children, Indians, the elderly, and needyfamiliesand individuals. Total spending approved for these programs for FY1999 is $36.07 billion, or about two-thirds oftotalspending for the USDA. The Administration requested a total of $38.4 billion (+$1.2 billion from the FY1998enactedlevel) in spending for food and nutrition programs in FY1999.

The final omnibus FY1999 appropriations act ( P.L. 105-277 ) contains identical provisions for food and nutrition programsto those in the earlier vetoed conference agreement on H.R. 4101 . As finally enacted, P.L. 105-277 providesatotal of: (1) $22.6 billion for the food stamp program; (2) $3.924 billion for the WIC program, the same as FY1998funding; (3) $5.38 billion for the school lunch program; (4) $1.6 billion for the child and adult care food program,and (5)just under $1.4 billion for the school breakfast program. Funding and responsibility for nutrition program studiesandevaluations is maintained within the Economic Research Service (ERS), instead of the Food and Nutrition Service(FNS) asproposed by the Administration.

Food Stamps. P.L. 105-277 essentially adopted the House-proposedspending levels for food stamps -- $22.58 billion in total funding, and $90 million for EFAP commodities. TheAdministration food stamp request for FY1999 was $24.7 billion, a decrease of $439 million from FY1998projectedspending. The request included funding for Nutrition Assistance to Puerto Rico and for the food distributionprogram onIndian Reservations; $100 million to buy commodities for food banks and soup kitchens participating in theemergencyfood assistance program (EFAP); and a $1 billion contingency reserve fund.

Senate appropriations provided a total of $23.8 billion for food stamp and related programs for FY1999, or $920 millionless than the Administration request. This allowed for a contingency reserve of $100 million (instead of the $1billionrequested by the Administration), and called for a reduction of $20 million from the $100 million in food stampfundsrequired to be used to buy commodities for the EFAP. As passed by the House, H.R. 4101 recommended$22.6 billion for food stamps in FY1999. The difference is due largely to the fact that the House used more recentestimatesof food stamp spending needs than either the Administration or Senate. These showed lower than previouslyprojectedparticipation and benefit costs, and thus, the need for less spending. The finally enacted measure cut theAdministration's$1 billion contingency fund request down to $100 million, the same as last year. It also provided $10 million lessto buycommodities for the EFAP than the $100 million of food stamp funds that are supposed to be used to buycommodities forthis program. The Administration requested the full $100 million; the Senate proposed $80 million.

Child Nutrition Programs. These programs include school lunch andbreakfast, summer food, child and adult care and special milk programs, and related support activities. P.L. 105-277 provides a total of $9.177 billion, which is less than both the House and Senate-passed measures. This is becauseofacceptance of a Senate provision that will lessen mandatory FY1999 spending by about $40 million for commodityprocurement for the school lunch program. This provision, originally added as a floor amendment to provide roomfor anincrease for the WIC program (see below), requires that the USDA use bonus commodities to help meet therequirementthat not less than 12% of federal support for the school lunch program be in the form of commodity assistance. (2) TheAdministration proposed total funding of $9.2186 billion for child nutrition programs in FY1999. The Senateappropriation for FY1999 would have funded these programs at a total of $9.2199 billion, slightly less ($13 million)thanthe Administration request. The House bill recommended $9.2186 billion for child nutrition programs.

The final law provided $10 million for the School Meals Initiative, the amount proposed by the Senate, and $2 millionmore than the House proposal. Committee report language in both chambers' initially-approved bills recommendedthat $4million of the funds appropriated for the School Meals Initiative be used to fund food service training grants tostates, withthe remainder used for technical assistance materials ($1.6 million), print and electronic resource systems($400,000), andother unspecified activities ($3.2 million). No funding for the Nutrition Education and Training (NET) program,asproposed by the Senate, was contained in the final law. This program was funded at $3.75 million in FY1998, thelevelrequested by the House for FY1999. The Administration requested $10 million for the NET.

WIC. The final amount provided in P.L. 105-277 for WIC is the sameas the House-recommended level ($3. 924 billion). P.L. 105-277 did not approve funding for a WIC contingencyreserveproposed by the Administration ($20 million). It did approve the $15 million recommended by the AdministrationandSenate for the WIC farmers' market nutrition program but did not accept the Administration proposal that this befundedwith Commodity Assistance Program (CAP) funds, instead of WIC funds. Of the $15 million in WIC appropriationsfor thefarmers' market program, the conferees directed that USDA obligate $10 million within 45 days of enactment, andallow anadditional $5 million from any funds not needed to maintain the WIC caseload level. The Administration budgetproposedWIC program funding of $4.16 billion in FY1999, $157 million more than FY1998 appropriations. This reflecteda $20million contingency reserve and the assumption that no WIC funds will be used to fund the WIC Farmers MarketCoupon(FMC) program, which would be funded elsewhere (see section on Commodity Donation Programs). AccordingtoAdministration estimates, its FY1999 WIC funding proposal was necessary to maintain the FY1998 monthlyaverageparticipation level of 7.5 million persons. Legislators agreed to maintain FY1999 WIC funding at the FY1998 levelbecauseof lower projected participation than that assumed by the Administration, and the assumption of programefficienciesgrowing out of child nutrition reauthorization legislation ( H.R. 3874 ) passed at the end of the session. TheSenate-passed bill recommended $3.948 billion for WIC in FY1999, or $24 million more than FY1998 funding.Theadditional $24 million was added by a floor amendment that also reduced federal funding for commodityprocurement forthe school lunch program to pay for the WIC increase.

Commodity Donation Programs. The final amount in P.L. 105-277 provides $272.1 million in FY1999 for commodity donation programs -- the emergency food assistance program(EFAP),the commodity supplemental food program (CSFP), the elderly nutrition (commodities) program, and the NeedyFamilyprogram. Of this total, $45 million is for grants to states to help with the cost of distributing commodities for theEFAP (3) ;$86 million is for the CSFP, $140 million is for elderly commodities, and $1.1 million is for commodities for theneedyfamily program. The $86 million provided for the CSFP is $10 million less than the amount provided last year.Unspentcarryover funds from FY1998 are expected to be available to the program in FY1999 to maintain the caseload forthisprogram, which provides monthly food packages to low-income mothers, young children and elderly.

The Administration budget proposed a total of $317.1 million for all of these programs. Of this amount, $96 million wasfor the commodity supplemental food program (CSFP) and $45 million for EFAP state administrative grants, fora total of$141 million. The Administration also proposed $15 million for the WIC farmers market coupon (FMC) program(normally funded with WIC appropriations), and $20 million for a new gleaning/food recovery initiative under thiscategoryof programs. Food donation programs were to receive $141.1 million.

(For more information, see CRS Report 98-582, Food and Nutrition Programs: FY1999 Budget and Appropriations. )

Food and Drug Administration

The Food and Drug Administration (FDA) is funded through both congressional appropriations and user feeswhose totallevel of collections is set each year by the appropriations committees. The most contentious provisions are in thefundinglevels for salaries and expenses (S&E) and in one user fee program. The omnibus FY1999 appropriations act( P.L.105-277 ) increases FDA's S&E program level to $970.9 million, a 13% increase over FY1998, and allows$132.3 millionfor Prescription Drug User Fee Act (PDUFA) collections, also a 13% increase over FY1998. The total programlevel (S&Eplus user fees) for FY1999 is $1.117 billion.

Included for the first time in the S&E account is $83 million for rental payments to be paid to the General ServicesAdministration (GSA). The act includes a provision that will allow $5.428 million of PDUFA funds to betransferred andmerged in the S&E account and used for payment of GSA rentals. Thus, a total of $88 million will be madeavailable forrental payments in the S&E account. Separately, P.L. 105-277 provides $11.35 million for FDA buildings andfacilities.

P.L. 105-277 maintains the FY1998 appropriation level of $34 million to fund tobacco outreach and enforcement activities,and also continues support for the President's Food Safety Initiative (FSI). The President had requested an additional$50million in direct appropriations for FDA for FSI activities. The act appropriates a $25 million increase. Theconfereesexpect FDA to use $24.5 million of this total amount for increased food inspections, and $500,000 for research bytheNational Center for Toxicological Research.

The FY1999 appropriations act also includes $250,000 for the Office of Seafood Inspection. Within this amount,$200,000 is to be used to continue the grant to the Interstate Shellfish Sanitation Committee. It also directs FDAto use$500,000 to develop the system and regulations necessary to implement a new food packaging materials notificationprogram by May 1999. The conferees strongly urge FDA to finalize a rule within one year after receiving a citizen'spetition on the use of "and/or" in the labeling of types of fish contained in surimi. Conferees increased theappropriation by$2.5 million for the cosmetic and color regulatory program.

Conferees also expect FDA to publish by June 1, 1999, a proposed rule concerning the use of foreign marketingdata in thereview of new sun-screen active ingredients in the over-the-counter drug monograph on sun-screen products. Alsoincludedin the bill is $3 million in construction funds for the third phase of construction of FDA Arkansas RegionalLaboratory(ARL) in Jefferson, Arkansas. The project will need approximately $13.3 million to be completed.

P.L. 105-277 prohibits FDA from closing or relocating its Division of Drug Analysis in St Louis, MO, appropriates $1million for the Office of Generic Drugs, and appropriates $700,000 for competitive grants under the clinicalpharmacologyprogram.

P.L. 105-277 urges FDA to issue new regulations and guidance for the generic drug industry manufacturers who file anAbbreviated New Drug Application (ANDA) which relies on the FDA's previous determination that the drug is safeandeffective, thus avoiding submitting new safety and effectiveness studies. The act also refines the definition ofantibacterialingredients to exempt a certain class in animal drugs.

Not included in P.L. 105-277 is Senate bill language on metered-dose inhalers (MDIs), which are used to treat asthma andother chronic lung diseases. Under the Montreal Protocol, the FDA is required to phase out the use of chlorofluorocarbons(CFCs) in MDIs and approve new devices that use a less environmentally damaging propellent compound. TheSenatedirected FDA to gather information on safe and effective non-CFC MDIs, which meet patients needs, before phasingoutCFC devices.

Another Senate provision that was not included in the final act is a requirement for country of origin labeling for freshproduce. Instead, the bill directs the General Accounting Office (GAO) to study the potential effects of mandatorycountryof origin labeling of fresh produce and submit a report to Congress no later than 6 months after enactment of thisAct.

Commodity Futures Trading Commission

Regulatory jurisdiction over derivative financial contracts -- contracts whose value depends on changes in theprice ofsome underlying commodity or financial instrument -- has been a contentious issue for several years. TheCommodityFutures Trading Commission (CFTC) has jurisdiction over derivative contracts (futures contracts and some options)tradedon the futures exchanges. However, several other forms of derivatives (e.g., certain contracts based on foreigncurrenciesor U.S. Treasury securities) are exempted by law from CFTC regulation. Currently, attention focuses on swapcontracts,which are the basis of a booming international market in off-exchange, or over-the-counter, derivatives. Swapsresemblefutures in their economic function, but the major dealers -- banks and affiliates of securities firms -- are notinstitutionsthat have traditionally been regulated by the CFTC. No agency has overall regulatory jurisdiction, and there is someconcern that the present fragmented regulatory structure might have difficulty responding to a crisis in the swapsmarket,which might have wide repercussions throughout the international financial system.

In May 1998, the CFTC published a "concept release" announcing its intention to evaluate current regulation of swaps andto consider whether they should be subject to some or all of the requirements of the Commodity Exchange Act,whichgoverns exchange-traded futures. The Securities and Exchange Commission and the banking regulators objectedto thisCFTC initiative, stating that 1) existing regulation of over-the-counter derivatives was adequate, and 2) that if newregulation was necessary, it should be formulated by the various financial regulators as a group, rather than byunilateralaction of a single agency. The swaps industry argued that even raising the possibility of CFTC regulation might castdoubtover the legal enforceability of swaps contracts and drive the business offshore.

In response to these concerns, the FY1999 omnibus appropriations act ( P.L. 105-277 ) imposes a "restraint period" on theCFTC, directing it not to issue or propose any new rule or regulation affecting swaps or "hybrid" financialinstrumentsbefore March 30, 1999.

3. U.S. Department of Agriculture and Related AgenciesAppropriations, BudgetAuthority ($ in millions)

Note : An item with an asterisk (*) represents the total amount of direct and guaranteed loans thatcan be made given therequested or appropriated loan subsidy level. Only the subsidy level is included in the totals.

(1) FY1998 enacted levels include supplemental spending and rescissions provided by the FY1998 emergencysupplemental appropriations act ( P.L. 105-174 ).

(2) The Senate amendment which would provide $66 million to fund the President's food safety initiative is distributedamong the recipient agencies in this table: USDA Chief Economist=$98,000; ERS=$906,000; ARS= $8.92 million; CSREES=$11.2 million; FSIS=$8.347 million; FDA= $37 million.

(3) Federal reimbursement to crop insurance agents for their administrative expenses was converted by statute to amandatory expense beginning in FY1999, and thus no longer requires an appropriation.

(4) The Senate and conferees did not include the mandatory spending for export credit loan guarantees.

(5) Scorekeeping adjustments reflect the savings or costs of provisions that affect mandatory programs.

Source : House and Senate Appropriations Committees.