Mr. BINGMAN. This is more of an information gathering than an assisting responsibility.

Mr. HORTON. You didn't answer my question. It can be answered yes or no. If there is a blackout, does it go under GSA or HUD; which one?

Mr. BINGMAN. In the sense that I am portraying, it goes under GSA.

Mr. INK. That is right.

Mr. ROBACK. The answer is, "They really don't know.”

Mr. INK. The answer is "Yes."

Mr. HORTON. In other words, this language just relates to energy crises, it doesn't relate to flood disasters or other disasters such as earthquakes.

Mr. INK. It does not relate to natural disasters.

HUD LOAN PROGRAM ERRORS

Chairman HOLIFIELD. Now, the effects of the earthquake in California, and the loans under the special legislation that was passed to help these people get their homes rehabilitated, that was handled by HUD, was it not, the appraisal of the houses and the loans.

Mr. INK. That was done by HUD, yes.

Chairman HOLIFIELD. You are aware of all the scandals that resulted thereby because of greedy people. For every crack that they had in the plaster that may have been there for 10 or 15 years, they claimed it was done by the earthquake, and they got either some grant or low-interest loans to fix these things up. It was a scandal as reported in the local press out there, the Los Angeles Times and other papers in the area.

Mr. INK. HUD may want to comment on this further, but there have been problems under our existing system with respect to small business loans, with respect to functions that have been carried out by different agencies. And this has happened under our existing system. And I would like to think that they will all be corrected. And I suppose we will continue to have some.

FARM DISASTER LOANS

Mr. HORTON. But what I am concerned about is that I have a special problem. I don't have it before me right now, but I can certainly furnish it to you so that you can take a look at it. I have some potato farms up in my district, and they were flooded out. They lost their entire crop. SBA was in there willing to make some loans to them. But the Farmers Home Administration was not willing to do it.

Now, apparently there is some conflict between these two agencies, and they are going to end up with not getting anything because, as I understand it, SBA is backing off the situation now. The question I am asking is, Who is going to be responsible to coordinate these things? This is SBA and Farmers Home Administration, it is not HUD. But under this new system, who is going to handle that type of problem? Is it going to be coordinated? Who is going to be responsible for it? Is it GSA or HUD? Right now it is OEP, and I am not sure they are doing the job either.

Mr. INK. It does vary under the present system from one type of problem to another. But it is the responsibility of OMB to see that the machinery is in place, and that the responsibilities are established. And if you are encountering difficulty now between agencies, why, we ought to know about it and try to straighten it out.

Mr. HORTON. For example, I am planning to go to the Department of Agriculture and meet with someone there to talk about this specific problem that has come up. I have to go to SBA and to talk to them about some of the problems. I am not involved in it like Mr. Robison or Mr. Hastings, because their areas were directly affected by Agnes. And I am not talking about just these specific things, but I am talking about how the system that you are proposing here is going to resolve these problems. And is it going to be handled better, or is it going to be more complicated? Under the reorganization plan—and that is where I get back to the original question-under the reorganization plans that were submitted to us, we talked in terms of trying to put functions together and streamlining them, and putting the decisions out in the agencies and decentralizing them, and so forth. Here we are, we are taking OEP, which is a decentralized operation, which does have the responsibility at the executive level, and right next to the President, and we are breaking out some of these responsibilities, and we are putting it out in HUD. And the question is, Is HUD going to be able to coordinate SBA and the Agriculture Department, or are they going to be able to coordinate GSA when they get into the crisis? Are you going to have to have a coordinator appointed every time there is a disaster-you say a major disaster? What is a major disaster? A major disaster is going to be the flooding of these homes up on Lake Ontario as far as my people are concerned. Who is going to handle that? Is HUD going to handle it? The Corps of Engineers, who is going to put them in?

LARGE AND SMALL DISASTERS

Mr. MALEK. Mr. Horton, I think we have to distinguish between an agency disaster and a disaster of such proportions that it is a presidentially declared disaster.

Now, the agency declared disasters generally involve localized damages largely confined to privately owned property.

In such situations-and I think these are the ones you are talking about-the SBA administration or the Secretary of Agriculture are authorized to declare a disaster and provide agency loans to affected homeowners and businesses. These would continue as they have, the reorganization plan really does not affect these.

It is the presidentially declared disasters which generally involve damage of a more widespread nature to public and private property. State Governors request it at the present time through the OEP, and in the future, if the plan is accepted, will request it through HUD, and the President declares it a disaster-it is these major far-reaching disasters that are affected under the reorganization plan.

It would have these beneficial effects, that where in the past it was incumbent upon OEP to coordinate the role of the various agencies in addressing the Federal Government response to the measures of disaster, there would now be one less coordinating point, since HUD was one of the major coordinating points, and you are putting together

the coordinator with one of those major entities that worked with the OEP in addressing itself to these disasters.

So from that point of view, you should get a more effective response in putting them together.

But it will not have an impact on the agency disasters that I think you are concerned with.

Mr. HORTON. The agency disasters-I understand the distinction. HUD would coordinate. But how about a Presidential emergency; who would be responsible, HUD or the coordinator appointed by the President?

Mr. MALEK. The presidentially declared disasters, if those disasters can be handled in the ordinary scope of activities of HUD, they would coordinate it. There would be specific instances which we hope would not occur, but which may occur, such as Agnes, where the dimensions of the problem are so great that the President would decide that someone in his immediate office would coordinate it, and then he would turn to his assistants for executive management to insure that all the resources of the Federal Government are brought to bear with the utmost urgency on solving the particular problem.

Mr. INK. That is the pattern of the past.

The bulk of these would be handled by HUD. There are very few that would not be handled by them.

Agnes is an example of one which probably would not be handled by HUD, but would have to be handled separate.

The Alaskan one, some years ago, was handled a separate way.

I would think we are at the point now where in conjunction with the regional council machinery, that one probably could be handled by HUD.

In other words, I think, as we move forward, the number that would have to be handled outside are decreasing.

Mr. HORTON. I asked that there be included the letters from my two colleagues, Mr. Robison and Mr. Hastings, who could not be here.

(See p. 13.)

Mr. HORTON. And I would like to ask that you supply answers for the record for the questions that they have in those letters, so that we could have answers. They had planned to be here to ask these questions.

(The answers provided for the record follow the letters, p. 14.)

Mr. HORTON. This is not necessarily the way I feel, because I have had good cooperation from HUD. And I have been working closely with HUD in connection with the reorganization plan and the community development plan.

But just to show you some of the thoughts of some of the members, this is what Mr. Robison said in his letter:

To be honest

And he is talking about putting this authority of OEP in HUD— the layers of authority that exist at HUD, despite three major reorganizations and efforts at decentralization, leads me to question the wisdom of transferring OEP's disaster functions to that department.

Important, I believe, is to obtain, before approval of the reorganization plan, ironclad assurances and such written guarantees as can be evidenced in regulations and other appropriate documents, that this government's response to disaster situations will be the direct responsibility of the President.

While this may sound extreme, my own experience leads me to conclude that traditional interagency rivalry and bureaucratic inertia can only be overcome with the direct intervention of the Office of the President.

While this may be regrettable, it is a fact of life. This is why I seriously doubt that a HUD disaster office will be able to command the respect and cooperation to be able to be responsive in the event of a disaster.

Perhaps you might like to make some comment about that. But that enunciates what some members think with regard to this transfer. Mr. MALEK. The responsibility for declaring the disaster will remain with the President. He will declare a disaster upon review of the request by a State's Governor.

The responsibility for coordinating assistance to that disaster will reside in either the regional administrator of HUD in that particular region, or the senior disaster relief person who is an OEP employee transfer to HUD, and would be the same person as would have done it in the past, or in those cases of a very major

Mr. HORTON. Could I interrupt right there?

Mr. MALEK. Yes, sir.

Mr. HORTON. You are not going to have separate offices, are you? It will be a HUD office and it will eliminate the OEP office, wouldn't it?

Mr. MALEK. Yes; but they will be reporting to the HUD regional administrator of disaster relief agencies in that region and the head of that office in most cases will be the coordinator of Federal assistance for dealing with that particular disaster.

Mr. HORTON. You mean there will be a disaster office?

Mr. INK. It will be a unit in the regional office.

Mr. MALEK. In other words, it is the same unit that exists today in the OEP-instead of reporting to somebody in the OEP he will be reporting to the regional administrator of HUD.

And you will have that same capability that you have today to deal with it, except that he will also have the ability to tie in more closely with the other HUD programs.

So the faster the President personally is acting on these and making these decisions, the fact that there are several levels of people who have been named as coordinators of the Federal assistance role, leads me to believe that we do have sufficient flexibility and the capability to handle these varying levels of disasters without the kind of problems that your colleagues are concerned about.

Mr. INK. I think too we can check this for the record, Mr. Chairman. But I believe most of the problems you were referring to out in Los Angeles may have dealt with other agencies. We can check that out for

you.

I do know that in Rapid City and several others we have had very good experience with HUD in the lead role.

(The information referred to follows:)

RESPONSE TO CALIFORNIA EARTHQUAKE

During the disaster relief efforts following the San Fernando earthquake of 1970, HUD activities were limited to the provision of emergency temporary housing and mortgage and rental subsidies as provided in section 226 of the Disaster Relief Act of 1970. The program of loans for repair and rehabilitation of damaged businesses and houses was not administered by HUD. It was this program which received the brunt of criticism referenced in Chairman Holifield's earlier remarks.

Mr. HORTON. What about the disaster relief fund? Who administers that now?

Mr. INK. OEP. And that would be transferred to HUD.

Mr. HORTON. Then they will have the responsibility for administering it-HUD?

Mr. MALEK. Yes, sir.

DISASTER RELIEF FUND

Mr. HORTON. Is there some contemplation from OMB with regard to the size of that fund?

Mr. MALEK. The size of

Mr. HORTON. That disaster relief fund.

I was a little bit concerned because we got a cutoff on disaster relief in those places affected by Agnes; it was summarily cut off without any notice.

And a lot of people found themselves in a position where they couldn't make any applications.

Are we going to have a very tight policy with regard to assistance, or are we going to have a rather liberal policy to try to help these people that get affected by these things?

Mr. MALEK. Mr. Horton, the reorganization plan itself would not affect the size of that fund.

I think that it might be the representative of OEP, who I believe will be talking to you later, might be in a better position to diseuss the actual funding level.

Mr. HORTON. I think OMB is the one, because you are the ones that make these judgments with regard to when you cut off applications. And the point I am making is that I think there ought to be some reasonable notice to people in a disaster area, so that they have another week or 10 days, or something like that to apply.

And just not say, as of last Friday, that is the end of it; we won't take any more after that.

It creates a very difficult situation. And I can tell you, frankly, that it creates a bad situation as far as the Congress is concerned.

Mr. INK. With respect to the matter of notification, I don't think either Mr. Malek or I are enough familiar with that problem. I gather you had a problem in New York with respect to the lack of notification of funds that were not available.

I guess we would have to answer that for the record. (The statement supplied for the record follows:)

CUTOFF OF DISASTER FUNDS

There has been no general cutoff of Federal disaster funds as may be suggested in the testimony. However, there has been a curtailment of the Farmers Home Administration and Small Business Administration disaster loan programs. Public Law 92-385, passed after the "Agnes" disasters, broadened the emergency loan provisions of Public Law 91-606 in two ways. First, it lowered loan interest rates and increased the amount of "forgiveness." Second, it applied these additional benefits to a major disaster as determined by the President or a disaster as determined by the Secretary of Agriculture or the Administrator of the Small Business Administration.

Prior to Public Law 92-385, lower interest rate and "forgiveness" features were applicable only to Presidentially declared disasters. SBA and FHA had separate authority to make disaster declarations which triggered emergency loans without any "forgiveness" and at the Treasury rate of interest.