(b) Section 158 of the Revised Statutes (5 U.S.C. 1) is amended by adding at the end thereof:

"Eleventh. The Department of Housing and Urban Development."

(c) The amendment made by subsection (b) of this section shall not be construed to make applicable to the Department any provision of law inconsistent with this Act.

ADMINISTRATIVE PROVISIONS

SEC. 7. (a) The personnel employed in connection with, and the assets, liabilities, contracts, property, records, and unexpended balances of appropriations, authorizations, allocations, or other funds held, used, arising from, or available or to be made available in connection with, the functions, powers, and duties transferred by section 5 of this Act are hereby transferred with such functions, powers, and duties, respectively.

(b) No transfer of functions, powers, and duties shall at any time be made within the Department in connection with the secondary market operations of the Federal National Mortgage Association unless the Secretary finds that the rights and interests of owners of outstanding common stock issued under the Federal National Mortgage Association Charter Act will not be adversely affected thereby. (c) The Secretary is authorized, subject to the civil service and classification laws, to select, appoint, employ, and fix the compensation of such officers and employees, including attorneys, as shall be necessary to carry out the provisions of this Act and to prescribe their authority and duties: Provided, That any other provision of law to the contrary notwithstanding, the Secretary may fix the compensation for not more than six positions in the Department at the annual rate applicable to positions in level V of the Federal Executive Salary Schedule provided by the Federal Executive Salary Act of 1964.

(d) The Secretary may delegate any of his functions, powers, and duties to such officers and employees of the Department as he may designate, may authorize such successive redelegations of such functions, powers, and duties as he may deem desirable, and may make such rules and regulations as may be necessary to carry out his functions, powers, and duties. The second proviso of section 101 (e) of the Housing Act of 1949 is hereby repealed.

(e) The Secretary may obtain services as authorized by section 15 of the Act of August 2, 1946, at rates not to exceed $100 per diem for individuals.

(f) The Secretary is authorized to establish a working capital fund, to be available without fiscal year limitation, for expenses necessary for the maintenance and operation of such common administrative services as he shall find to be desirable in the interest of economy and effiicency in the Department, including such services as a central supply service for stationery and other supplies and equipment for which adequate stocks may be maintained to meet in whole or in part the requirements of the Department and its agencies; central messenger, mail, telephone, and other communications services; office space; central services for document reproduction and for graphics and visual aids; and a central library service. In addition to amounts appropriated to provide capital for said fund, which appropriations are hereby authorized the fund shall be capitalized by transfer to it of such stocks of supplies and equipment on hand or on order as the Secretary shall direct. Such fund shall be reimbursed from available funds of agencies and offices in the Department for which services are performed at rates which will return in full all expenses of operation, including reserves for accrued annual leave and for depreciation of equipment.

(g) The Secretary shall cause a seal of office to be made for the Department of such device as he shall approve, and judicial notice shall be taken of such seal.

ANNUAL REPORT

SEC. 8. The Secretary shall, as soon as practicable after the end of each calendar year, make a report to the President for submission to the Congress on the activities of the Department during the preceding calendar year.

SAVINGS PROVISIONS

SEC. 9. (a) No cause of action by or against any agency whose functions are transferred by this Act, or by or against any officer of any such agency in his official capacity, shall abate by reason of this enactment. Such causes of action may be asserted by or against the United States or such official of the Department as may be appropriate.

(b) No suit, action, or other proceeding commenced by or against any agency who functions are transferred by this Act, or by or against any officer of any such agency in his official capacity, shall abate by reason of the enactment of this Act. A court may at any time during the pendency of the litigation, on its own motion or that of any party, order that the same may be maintained by or against the United States or such official of the Department as may be appropriate.

(c) Except as may be otherwise expressly provided in this Act, all powers and authorities conferred by this Act shall be cumulative and additional to and not in derogation of any powers and authorities otherwise existing. All rules, regulations, orders authorizations, delegations, or other actions duly issued, made, or taken by or pursuant to applicable law, prior to the effective date of this Act, by any agency, officer, or office pertaining to any functions, powers, and duties transferred by this Act shall continue in full force and effect after the effective date of this Act until modified or rescinded by the Secretary or such other officer or office of the Department as, in accordance with applicable law, may be appropriate. With respect to any function, power, or duty transferred by or under this Act and exercised hereafter, reference in another Federal law to the Housing and Home Finance Agency or to any officer, office, or agency therein, except the Federal National Mortgage Association and its officers, shall be deemed to mean the Secretary. The positions and agencies heretofore established by law in connection with the functions, powers, and duties transferred under section 5(a) of this Act shall lapse.

SEPARABILITY

SEC. 10. Notwithstanding any other evidence of the intent of Congress, it is hereby declared to be the intent of Congress that if any provision of this Act, or the application thereof to any persons or circumstances, shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Act or its application to other persons and circumstances, but shall be confined in its operation to the provision of this Act, or the application thereof to the persons and circumstances, directly involved in the controversy in which such judgment shall have been rendered.

EFFECTIVE DATE AND INTERIM APPOINTMENTS

SEC. 11. (a) The provisions of this Act shall take effect upon the expiration of the first period of sixty calendar days following the date on which this Act is approved by the President, or on such earlier date as the President shall specify by Executive order published in the Federal Register, except that any of the officers provided for in sections 3(a), 4(a), and 4(b) of this Act may be nominated and appointed, as provided in such sections, at any time after the date this Act is approved by the President.

(b) In the event that one or more officers required by this Act to be appointed by and with the advice and consent of the Senate shall not have entered upon office on the effective date of this Act the President may designate any person who was an officer of the Housing and Home Finance Agency immediately prior to said effective date to act in such office until the office is filled as provided in this Act or until the expiration of the first period of sixty days following said effective date, whichever shall first occur. While so acting such persons shall receive compensation at the rates provided by this Act for the respective offices in which they act.

Senator RIBICOFF. We will also insert at this point in the record the letter from Budget Director Kermit Gordon to Vice President Humphrey transmitting a copy of the administration's proposal S. 1599, and a section-by-section analysis of the bill.

(The letter referred to follows:)

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington, D.C., March 23, 1965.

Hon. HUBERT H. HUMPHREY,
President of the Senate,
Washington, D.C.

DEAR MR. PRESIDENT: There is forwarded herewith a draft of a bill to establish a Department of Housing and Urban Development, and for other purposes. The bill would carry out the President's recommendation in various messages to the Congress, most recently in his message of March 2, 1965, on problems and future of the central city and its suburbs, that a Department of Housing and Urban Development be created to give greater force and effectiveness to our effort in the cities: In his message of March 2, the President stated:

"Our urban problems are of a scope and magnitude that demand representation at the highest level of government. The Housing and Home Finance Agency was created two decades ago. It has taken on many new programs. Others are proposed in this message. Much of our hopes for American progress will depend on the effectiveness with which these programs are carried forward. These problems are already in the front rank of national concern and interest. They deserve to be in the front rank of government as well."

This proposal in most respects is identical to legislation advanced by the administration during the 88th Congress. In addition to certain technical amendments, it is proposed that the name of the department be changed to the Department of Housing and Urban Development so as to describe its functions more accurately.

The proposal to establish a Department of Housing and Urban Development has as its major purpose the recognition of the importance of good housing and sound urban development to the social and economic development of the Nation. The creation of the new Department will strengthen the administration of those housing and community development programs now administered within the Housing and Home Finance Agency and provide a central mechanism for assisting the President in his task of coordinating all Federal programs affecting housing and urban development.

Section 2 of the bill provides in a declaration of purpose that the establishment of an executive department is desirable to achieve the best administration of the principal programs of the Federal Government which provide assistance for housing and for the development of the Nation's communities; to assist the President in achieving maximum coordination of the various Federal activities which have a major effect upon urban, suburban, or metropolitan development; to encourage the solution of problems of housing and urban development through State, county, town, village, or other local and private action, including promotion of interstate, regional, and metropolitan cooperation; and to provide for full and appropriate consideration, at the national level, of the needs and interests of the Nation's communities and of the people who live and work in them.

To further this purpose, the bill establishes the Department of Housing and Urban Development, headed by a Secretary appointed by the President by and with the advice and consent of the Senate. An Under Secretary, four Assistant Secretaries, a General Counsel, and an Assistant Secretary for Administration are provided to assist the Secretary in the performance of his duties. Specifically, the Secretary is directed to (1) advise the President with respect to Federal programs and activities relating to housing and urban development; (2) develop and recommend to the President policies for fostering the orderly growth and development of the Nation's urban areas; (3) exercise leadership at the direction of the President in coordinating Federal activities affecting housing and urban development; (4) provide technical assistance and information including a clearinghouse service to aid State, county, town, village, or other local governments in developing solutions to urban and metropolitan development problems; (5) encourage comprehensive planning by the State and local governments with a view to coordinating Federal, State, and local urban development activities; and (6) conduct continuing comprehensive studies, and make available findings, with respect to the problems of housing and urban development.

The functions, powers, and duties of the Housing and Home Finance Agency, including the Federal Housing Administration and the Public Housing Administration, and their heads and officers, would be transferred to and vested in the Secretary along with the personnel, property, funds, and other resources of those agencies. The positions and agencies heretofore established by law in connection with the functions, powers, and duties thus transferred would lapse. The Federal National Mortgage Association would be transferred intact to the Department, and the Secretary would assume those authorities with respect to the Association which are now held by the Housing and Home Finance Administrator. Safeguards are provided to protect the interest of holders of capital stock of the Federal National Mortgage Association.

Provisions for the internal administration of the Department conform to those of most other executive departments and will enable the Secretary to administer the complex but closely interrelated programs under his direction in a wellbalanced, coordinated, and efficient manner. Thus, he is given, subject to civil service laws and regulations, authority to appoint such officers and employees as are necessary and to delegate his powers among them as he sees fit for the most efficient functioning of the Department.

The Bureau of the Budget urges early and favorable consideration of the proposed legislation.

Sincerely,

KERMIT GORDON, Director.

EXHIBIT 1

SECTION-BY-SECTION SUMMARY OF A BILL TO ESTABLISH DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

SHORT TITLE

Section 1 provides that the act would be cited as the "Department of Housing and Urban Development Act."

DECLARATION OF PURPOSE

Section 2 sets forth the purpose of the bill and that the Congress finds that establishment of an executive department is desirable to carry out the purpose. Congress would declare that the general welfare and security of the Nation and the health and living standards of its people require, as a matter of national purpose, sound development of the Nation's urban communities and metropolitan areas in which the vast majority of its people live and work.

To carry out the purpose, Congress would find that establishment of an executive department is desirable to (1) achieve the best administration of the principal programs of the Federal Government which provide assistance for housing and for the development of the Nation's communities; (2) assist the President in achieving maximum coordination of Federal activities which have a major effect upon urban, suburban, or metropolitan development; (3) encourage the solution of problems of housing and urban development through State, county, town, village, or other local and private action (including promotion of interstate, regional, and metropolitan cooperation); and (4) provide for full consideration, at the national level, of the needs and interests of the Nation's communities and their people.

ESTABLISHMENT OF DEPARTMENT-RESPONSIBILITIES OF THE SECRETARY

Section 3(a) establishes the Department of Housing and Urban Development and provides that it would be headed by a Secretary of Housing and Urban Development, who would be appointed by the President with Senate confirmation. The Department would be administered under the supervision and direction of the Secretary. The Secretary would receive compensation at the rate now or hereafter prescribed by law for the heads of executive departments. (At present, under sec. 303 (a) of the Federal Executive Salary Act of 1964, the secretaries of departments receive $35,000 per annum.)

Section 3(b) directs the Secretary, among his other responsibilities, to advise the President with respect to Federal programs and activities relating to housing and urban development; to develop and recommend to the President policies for fostering the orderly growth and development of the Nation's urban areas: exercise leadership at the discretion of the President in coordinating Federal

activities affecting housing and urban development; provide technical assistance and information (including a clearinghouse service) to aid State, county, town, village, or other local governments in developing solutions to urban and metropolitan development problems; encourage comprehensive planning by State and local governments with a view to coordinating Federal, State, and local urban development activities; and to conduct continuing studies of housing and urban development problems.

Section 3(c) provides that nothing in the bill shall be construed to deny or limit the benefits of any program, function, or activity to any community on the basis of its population or corporate status, except as may be expressly provided by law.

UNDER SECRETARY AND OTHER OFFICERS

Section 4 (a) provides that there shall be in the Department an Under Secretary, four Assistant Secretaries, and a General Counsel, all of whom would be appointed by the President and confirmed by the Senate. These officers would perform the functions, powers, and duties prescribed by the Secretary. They would receive the same compensation as the Under Secretaries, Assistant Secretaries, and General Counsels of other departments. (At present, under sec. 303 (c) of the Federal Executive Salary Act of 1964, Under Secretaries receive $28,500 per annum, and under sec. 303 (d) of that act, Assistant Secretaries and General Counsels receive $27,000 per annum.)

Section 4(b) provides that there shall be in the Department an Assistant Secretary for Administration who would be appointed by the Secretary with the approval of the President. The Assistant Secretary would receive the same compensation as is provided by law for Assistant Secretaries for Administration of executive departments ($26,000 per annum). He would perform the functions, powers, and duties prescribed by the Secretary.

TRANSFERS TO DEPARTMENT

Section 5(a) transfers to the Secretary all the functions, powers, and duties of the Housing and Home Finance Agency, the Federal Housing Administration, and the Public Housing Administration, and the functions, powers, and duties of heads and other officers and offices of those agencies.

Section 5(b) transfers the Federal National Mortgage Association, together with its functions, powers, and duties, to the Department. The Secretary of the Department would be vested with the functions, powers, and duties of the Housing and Home Finance Administrator with regard to FNMA. The Secretary would, therefore, become the Chairman of the Board of Directors of FNMA. FNMA would be an entity within the Department, and the rights and interests of the owners of outstanding common stock issued under the FNMA Charter Act would not be affected by the transfer.

Section 5(b) would also repeal language in section 308 of the FNMA Charter Act (12 U.S.C. 1723), which was superseded by a subsequent provision in the Federal Executive Salary Act of 1964. Section 308 provided that the President of FNMA received compensation at the rate established for the heads of the constituents of the Housing and Home Finance Agency. The Federal Executive Salary Act of 1964 listed the salary for the President of FNMA separately. Under the provisions of section 5(b) of the bill the separate listing in the Salary Act would be repealed, and the President of FNMA would be one of the six positions provided in section 7 (c) of the bill with compensation at the annual rate applicable to level V of the Federal executive salary schedule provided by the Executive Salary Act of 1964 ($26,000).

CONFORMING AMENDMENTS

Section 6(a) would amend section 19 (d)(1) of title 3 of the United States Code to place both the Secretary of Health, Education, and Welfare, and the Secretary of Housing and Urban Development in the line of succession to the Office of the President of the United States. They would be eligible to act as President only if the Vice President, Speaker of the House, President pro tempore of the Senate, and the heads of other executive departments having precedence over them by law are unable to serve as President.

Sections 6(b) and 6(c) are technical provisions which would extend to the new Department the provisions of title IV of the Revised Statutes, except to the extent inconsistent with the bill. Those provisions deal with such matters as departmental vacancies, regulations, duties of clerks, details and employment of personnel, oaths, subpenas, and witness fees.

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