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Bureau of Reclamation, Department of the Interior. These funds have been made available by the Congress in realization of the simple fact that the water resource development programs, as indeed any other public works development, are non-contributing to the Nation's economic strength until they have been completed and placed in service. Stated otherwise, Congress has attempted, through its enactments, to bring certain programs to completion in order to achieve the goals intended at the time enabling legislation was enacted.

The effect of withholding appropriated funds is reflected two ways: (1) ultimate increases in cost, and (2) delay in realization of benefits and public

revenues.

Cost increases take a number of forms, i.e., (a) actual increases in cost due to attenuation of overhead expense, (b) inflation, (c) interest on the foregoing, and (d) interest on investment in partially completed plant facilities. Studies available to the Committee on Interior and Insular Affairs show that the delay in completion of any given program by as much as one year will usually result in ultimate increased costs of five per cent or more. Time lags of one year in the completion of a given project can frequently result from Executive withholding of appropriated funds for a few months. Many reclamation projects are located in areas where construction activities are very seasonal, and it is often the case that inability to award construction contracts on a timely basis can cause a full year of delay. Accordingly, it can be seen that fairly modest withholding actions can stimulate future investments many times greater than the amount of money actually withheld. This is a most grievious form of public fiscal mismanagement.

Our studies also show that substantial delays occur in the realization of public income from the sale of water and power developed at Federal reclamation projects when completion is postponed through Executive withholding or other forms of budgetary constraint. A general rule of thumb, deriving from earlier studies, shows that revenues approaching two percent of the cost of the projects may be realized from the overall reclamation program. At any given time, construction is in progress on about $2.0 billion worth of work. It therefore follows that budgetary management practices having the effect of retarding completion of this array of work would result in deferral of revenues in the magnitude of $40 million dollars for each year of delayed completion. Executive withholding has not been to the degree that would delay the entire program by a full year, but in the past two or three years it has been utilized to slow down final completion of a substantial percentage of the on-going program.

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DEAR SENATOR ERVIN: I congratulate you on your efforts to explore the extent and nature of the impounding of funds by the Executive for programs voted by Congress. This is a matter that calls for illumination and Congressional action. It is a practice that has developed to a serious degree and yet apparently very few citizens are aware of it.

My particular concern is with a modest program of grants to assist college and university libraries to develop their book collections. This program was established by Title II, Part A of the Higher Education Act of 1965.

For fiscal 1971, the Administration recommended $9.9 million for this program, approximately 10 percent of the authorized amount. Congress voted an appropriation of $15.325 million. This was vetoed by the President, but the veto was over-ridden by the Congress.

This would seem to be a clear and strong directive to the Executive to carry out the will of Congress.

Subsequently, the Secretary of H.E.W. has announced that no more than $9.9 million will be released for this program and the guidelines for applications have been drawn in these terms.

Although we realize that the amount is small and the program modest in the total Federal picture, this would appear to be a flagrant example of the Executive's disregard of the will of Congress.

Mr. Caspar Weinberger is quoted in today's New York Times as saying "Any action to prevent or defer the expenditure of funds which have been appropriated by law is obviously not one to be taken lightly, nor do we take it lightly."

It is difficult to reconcile Mr. Weinberger's statement with the action of the Secretary of H.E.W.

Sincerely yours,

STEPHEN A. MCCARTHY,
Executive Director.

U.S. ATOMIC ENERGY COMMISSION,
Washington, D.C., June 18, 1969.

HON. SAM J. ERVIN, JR., Chairman,
Subcommittee on Separation of Powers,
Committee on the Judiciary,

U.S. Senate.

DEAR SENATOR ERVIN: I am enclosing the information requested in your letter of February 5, 1969, concerning instances since 1945 in which funds appropriated for the Atomic Energy Commission have been withheld by the Bureau of the Budget.

Our review of funds held in Bureau of the Budget reserve dates from the establishment of the Atomic Energy Commission in 1947 through June 6, 1969. You will note from the information contained in the enclosure that the bulk of the reserve actions represented construction funds which were held in reserve because firm plans for construction projects had not been formulated for the use of such funds until later in this fiscal year. Such reserve actions were, of course, taken without prejudice.

In the accompanying enclosure we have listed construction projects by number starting in 1956 to facilitate identification. The year referred to was the first in which AEC construction projects were subject to the authorization of appropriations.

With respect to your request that we indicate the relevancy of these reserves to fiscal year 1969 appropriation rescission legislation, the Bureau of the Budget determined that savings resulting from the fiscal year 1969 cutbacks should be applied to reduce the fiscal year 1970 appropriation request. rather than be rescinded. Accordingly, the Atomic Energy Commission's Operating Expenses Appropriation request for fiscal year 1970 was submitted to the Congress on this basis.

The Atomic Energy Commission will cooperate fully with you and your Subcommittee in this endeavor. Please do not hesitate to call on us for any additional information desired.

Cordially,

GLENN S. SEABORG,

Chairman.

U.S. ATOMIC ENERGY COMMISSION

ANALYSIS OF BUREAU OF THE BUDGET RESERVE

FISCAL YEAR 1947 THROUGH JUNE 6, 1969

1. Asterisks identify amounts reserved at the time of initial apportionment. 2. The "Reserve Code" column numerical designations are in accordance with the instructions in your letter. It will be noted that no reserves were established in categories 1, 2 and 4; however, there was one classification of reserves established that did not correspond to any of the categories set forth in your letter. We have designated the latter classification as Code 5.

The "Reserve Code" column designations identify information in the following categories:

Code 3-Instances in which reserves were established by the Bureau of the Budget under the Anti-Deficiency Act affecting a specific program or project. Code 5-Instances in which reserves were established by the Bureau of the Budget under the President's FY 1968 and FY 1969 cutback programs.

The following quote from a memorandum dated January 10, 1951, to AEC from the BOB indicates that AEC was exempt from the Anti-Deficiency Act at that time and it remained so during the balance of that year. The quote is as follows:

"... in connection with the normal apportionment procedures subsequent to a confidentiality determination by the President, we are returning unsigned the original copy of your Form 132 dated October 24, 1950. We have noted the change in fund availability there indicated, and we are returning the carbon copy of this submission as a memorandum of this change."

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