This statement requires, first, that the agency examine its federally assisted programs to ascertain if any discrimination exists. Secondly, it must say how it intends to correct any discrimination and to avoid discrimination in its programs. Also the State must establish an adequate procedure to receive and investigate complaints of discrimination. In addition, the regulation requires each State agency to undertake these procedural steps: One, make unknown to individuals ther rights to receive the benefits of the program on a nondiscriminatory basis; (sec. 80.6(d)) and, two, keep necessary compliance records and reports (sec. 80.6(b)).

Thus the statement of compliance required by our title VI regulation is not a new device developed by Federal civil rights officials. It is an adaptation of the standard Federal-State arrangement by which a State qualifies for Federal welfare assistance and has been in operation for many, many years.

The requirements for surveys of compliance, information dissemination, recordkeeping, reporting and complaint procedures all have counterparts in the regular administrative requirements for State participation in Fedeal welfare assistance. All State welfare officials are familiar with such provisions. All States-including Alabamahave included them in their regular welfare plans.

The basic fact of this matter is that Alabama alone, among all of the States, has refused to accept its responsibilities for developing a program for administering its welfare programs in compliance with title VI and the Federal standards issued thereunder. Its welfare agency has made various statements that it does not deny benefits on the basis of race, but it has never submitted an approvable plan for eliminating and avoiding discrimintion in the operation of its federally assisted welfare programs.

The Alabama agency has not been found in noncompliance simply for failing to complete and sign a form proposed in the "Handbook of Policy" issued by the Welfare Administration. Its noncompliance is based on its failure to submit a satisfactory assurance in any form. This it is specifically required to do by section 80.4(b) of the regulation approved by the President.

The handbook and the proposed form have not been approved by the President and title VI does not require this. Within the meaning of title VI, they do not have the force of regulations and were not intended as general orders. They were designed only to show the kind of undertaking that would be considered satisfactory under the regulation; they are a form of guidance.

The order terminating funds was issued only after we had spent 2 years in patient efforts to secure voluntary compliance.

On August 17, 1965, the Commissioner of Welfare determined, in writing, that her attempts to secure voluntary compliance were unsuccessful and a notice of opportunity for hearing was sent to the Alabama agency. This notice listed all members of fact and law constituting noncompliance and specified the programs which would be involved in any termination of funds. As I indicated earlier, the procedural requirements of a compliance hearing have been fully met. A special oral argument before the Commissioner of Welfare was also held at the request of the State agency.

At each stage of the proceeding we have continued to seek the voluntary compliance of the Alabama agency. Even as late as January 12 of this year, 22 months after the case was initiated, I sought in my decision to encourage the State agency to comply with respect to all or even parts of its program.

Unfortunately, none of these efforts to achieve voluntary compliance and to avoid having to terminate funds have been fruitful.

Governor Wallace and the Alabama Welfare Agency contend that I should not have ordered a termination of Federal welfare funds until they had had an opportunity to litigate fully their objections to our title VI regulation. But if Congress had wanted to allow State agencies to defer their performance under title VI until they had fully litigated any objections they might have, it could have easily done so. It could have provided that the only remedy for noncompliance be an action in the Federal courts to compel compliance with the law.

But this is not the pattern of title VI. It directs Federal agencies to withhold funds if voluntary compliance cannot be secured. It authorizes enforcement action before judicial consideration of the matters in dispute. A recipient denied grants may seek judicial review of such administrative action and indeed under title VI judicial review can most readily be obtained after an administrative agency orders a termination of Federal assistance.

As Senator Hartke noted, the actions of the State of Alabama compelled the order I have issued. The Alabama Welfare Agency refused to submit any acceptable plan for complying with title VI on any part of the $100 million in Federal funds it receives annually. Under traditional welfare procedures Federal funds are not provided unless a satisfactory State plan has been submitted for administering the program in compliance with Federal standards.

Senator Gore expressed his concern at your earlier hearing that the findings I have made might be used to cut off Federal assistance under other programs. I want to assure the Senator and your committee that we do not consider that such action would be either appropriate or authorized, and we have not so acted in this case.

Another issue raised at the previous hearing was my action denying the State's application for a stay of the original order.

When I issued the termination order of January 12, I delayed the effective date of that order 6 weeks. Whether the State chose to come into compliance or to seek a court injunction and appropriate judicial review, 6 weeks seemed ample, and indeed, the deadline has not arrived,

For this reason, and with due consideration of all surrounding circumstances, the application for a stay was denied.

The Alabama Welfare Agency refuses to accept any responsibility for assuring that the doctors, hospitals, and nursing homes whom it pays with Federal funds provide care to welfare beneficiaries on a nondiscriminatory basis.

The Alabama welfare commissioner admitted in this proceeding that there is segregation in the care which such third parties provide. There can be no doubt that such segregation by third parties is a violation of title VI. The fact that other titles of the Civil Rights Act do not cover doctors, hospitals, and nursing homes in the care which they provide to their private patients, does not insulate them

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from coverage when they provide care to federally assisted beneficiaries under an arrangement with State agencies.

Secretary Celebrezze specifically stated that such practices were covered by the administration's bill in his testimony before the House Judiciary Committee. The language of section 601 makes this a necessary consequence. Section 80.3(b) of our regulation expressly provides for it.

The Alabama agency contends that there can be no State responsibility for third party action because the State cannot compel third party compliance. But it, like all other State welfare agencies, does have the power to cease using or paying those who insist on treating patients on a discriminatory basis-and this is the limit to which it is expected to go if it is unable to secure nonsegregated care by voluntary means.

The Alabama agency says this would reduce still further already scarce facilities for welfare beneficiaries. The State commissioner, however, claims to have significant new evidence of the extent to which hospitals and nursing homes have already come into compliance with title VI in order to qualify for other Federal aid programs. This suggests that additional compliance could be obtained if the Alabama agency would help secure it.

Finally, Governor Wallace need not be concerned that title VI coverage of the federally subsidized services provided by doctors, hospitals, and nursing homes will lead to Federal reglulation of those, such as grocers, who are paid by welfare beneficiaries. Section 80.2 (c) of the Department's regulation states categorically that coverage ends once the Federal assistance is received by the ultimate beneficiary.

In addition, the Alabama agency contends that section 601 does not prevent it from continuing to assign caseworkers to beneficiaries on the basis of their color, from maintaining local offices in segregated buildings and from providing services in connection with segregated child care facilities.

Each of these practices is noted in the record of this proceeding and seems clearly contrary to section 601. We have asked that each be eliminated by State welfare agencies. All State agencies but those in Alabama have agreed to do so.

We do not know the full extent of the discrimination in the Alabama welfare program. Under our procedures we have asked each State agency to identify any existing discrimination and to indicate how they propose to eliminate it in the future. The agencies themselves are in the best position to evaluate their noncompliance and all of the State welfare agencies except Alabama did so more than 18 months ago.

We do know, however, that the problem in Alabama is more than a matter of segregated waiting rooms in doctor's offices. There was uncontradicted testimony before the hearing examiner in this case that there are nursing homes receiving Federal funds which refuse to accept Negro patients and both nursing homes and hospitals which segregate Negro patients from white patients. In some cases Negro beneficiaries are apparently forced to go to facilities in other towns or counties even though there is a nearby facility which treats white patients.

Such practices are contrary to title VI regardless of whether or not beneficiaries have complained about them. The State commissioner has offered to show that some institutions in Alabama which formerly discriminated against Negroes have come into compliance but the discrimination of others continues and Alabama refuses to do anything about it unless ordered to do so by the courts.

All of the State welfare agencies, other than that of Alabama, have taken steps to comply with title VI. Statements of compliance have been signed and methods of administration adopted and implemented. Undoubtedly some beneficiaries of welfare programs are still subjected to discrimination in one form or another, but progress is being made. For instance, in Georgia, a county welfare office was removed from a segregated building to protect welfare clients from discrimination; segregated caseloads have been eliminated; nursing homes have been informed of their obligation to provide nondiscriminatory services; and several hospitals which refused to eliminate discrimination are no longer used.

In Florida, clients are assigned to caseworkers without regard to race and payments have been terminated to certain hospitals, physicians, and nursing homes unwilling to eliminate discrimination. South Carolina terminated the use of several hospitals practicing discrimination.

The Tennessee Welfare Agency is actively recruiting Negroes for employment in local welfare offices on a nondiscriminatory basis and has discontinued use of several segregated nursing homes.

Other States including Pennsylvania, North Carolina, and Virginia have taken similar action to assure that institutions and facilities providing services to welfare beneficiaries are operated on a nondiscriminatory basis.

Again with the exception of Alabama, all of the States have participated in joint Federal-State training seminars on programs to eliminate discrimination in nursing homes, and have developed procedures to acquaint beneficiaries with their rights under title VI.

Mr. Chairman, in passing the Civil Rights Act of 1964, the Congress placed certain responsibilities upon all of us who administer programs of Federal assistance. To meet our responsibilities under title VI of that act, we prepared-and the President approved-a regulation governing our welfare programs.

The statement of compliance which we have developed in order to carry out that regulation was not a new device but simply an adaptation of the standard Federal-State arrangement by which a State qualifies for Federal welfare assistance, in fact, an arrangement which has been in effect for 30 years.

Forty-nine out of the fifty States found it possible to submit such a statement. Alabama did not.

Faced with that fact, the Department of Health, Education, and Welfare engaged in a very long period of negotiation. At every state of the proceeding we moved deliberately and with sober concern for the responsibilities that had been placed upon us.

Given the consistent refusal of Alabama to comply with the requirements of the law, the outcome seems to have been inevitable. No one regrets it more than I.

Mr. Chairman, I shall be glad to answer questions. I have at the table with me Joseph Meyers of the Welfare Administration; Mr. Libassi, my special assistant on civil rights; Slim Barrett of the Department of Justice; Ralph Huitt, my Assistant Secretary for LegisÎation.

The CHAIRMAN. Thank you very much, Mr. Secretary.

Mr. Secretary, I have here a statement that is part of the legislative history of title VI of the Civil Rights Act of 1964. It was carefully prepared, I am sure, and the Department, I believe, was aware of it when it was entered by Senator Pastore on April 7, 1964, when he was floor managing the civil rights bill. As you know there is no committee report to show any other construction of the act. I believe this has been quoted before. He said:

There is finally one additional feature of title VI which demonstrates beyond doubt that it is not intended to be vindictive or punitive. I am referring to the fact that the authority contained in the title to cut off funds is hedged about with a number of procedural restrictions and requirements. These would hardly be necessary or appropriate if the bill were designed as a punitive or vindictive measure. These restrictions have already been briefly described but let me here again summarize what must be done before funds can be cut off.

I am not going to read all those, but here is the eighth :

The aid recipient can obtain judicial review and may apply for a stay pending such review.

Now, that legislative history would appear to me to be contrary to your statement over here on page 9, where you say that—

But if Congress had wanted to allow State agencies to defer their performance under title VI until they had fully litigated any objections they might have, it could have easily done so. It could have provided that the only remedy for noncompliance be an action in the Federal courts to compel compliance with the law.

I would ask you if this stipulation has been recognized as a part of the legislative history and part of the intent of Congress that the aid recipient can obtain judicial review and may apply for a stay pending such review. Do you recognize that as having been the purpose and intention of Congress in passing title VI?

Secretary GARDNER. It appears to me that we have followed these procedures. There is now in effect a stay of the termination, and we have recognized that. As I understand it, the judicial review will proceed.

The CHAIRMAN. That is where we stand. I have been informed that there is a contest between the Department and the State with regard to the jurisdiction of the district court for the northern portion of Alabama. But there should be no contest as to the question that judicial review is appropriate before the aid is terminated. Let me say that I am not interested in the political aspects between Governor Wallace and the Department. What I am interested in is our responsibility to 200,000 needy people. If it is agreed that prior to the time that the aid to these people is discontinued, the judicial review would proceed and the court would decide the issue as to whether Alabama is in fact discriminating, it seems to me that that might resolve the question.

Now, that is what is happening right now and I just wonder if you agree that that is appropriate and that it should proceed on that basis, whether it is the fifth circuit or whether it is the district court. In