HR 4104 -- 06/24/98
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June 24, 1998


(Sponsors: Livingston (R), Louisiana; Kolbe (R), Arizona)

This Statement of Administration Policy provides the Administration's views on the Treasury and General Government Appropriations Bill, FY 1999, as reported by the House Appropriations Committee. Your consideration of the Administration's views would be appreciated.

The Administration appreciates efforts by the Committee to accommodate the President's priorities within the 302(b) allocation. The President's FY 1999 Budget proposes levels of discretionary spending for FY 1999 that conform to the Bipartisan Budget Agreement by making savings in mandatory and other programs available to help finance this spending. In the recently enacted Transportation Equity Act, Congress -- on a broad, bipartisan basis -- took similar action in approving funding for surface transportation programs paid for with mandatory offsets. We encourage the Congress to take advantage of such additional offsets, or to reduce appropriations for programs or projects not requested by the President in order to fund requested levels for items discussed below.

Below is a discussion of our specific concerns with the Committee-reported bill. We look forward to working with you to resolve these concerns as the bill moves forward.

Year 2000 Computer Conversion

The Administration appreciates the emphasis that the Committee has placed on year 2000 (Y2K) computer conversion activities. OMB will continue to assist all agencies in ensuring that adequate resources are available to address this critical issue. In the FY 1999 Budget, the President has requested more than $1 billion for Y2K computer conversion. In addition, the budget anticipated that additional requirements would emerge over the course of the year and included an allowance for emergencies and other unanticipated needs.

As we learn more about how to address this problem, we expect that ensuring Government-wide compliance will require flexibility to respond to unanticipated requirements. To the extent such unanticipated requirements are identified, it will be essential to make that funding available quickly. It will truly be emergency funding. The emergency mechanism recently approved by the House Appropriations Committee provides such flexibility.

Yesterday, the Rules Committee approved a rule that would strip the emergency funding mechanism from the bill. This regrettable action will not help agencies move forward in addressing this problem. We note that the Committee bill allocates funds from the emergency reserve for Treasury and other agency Year 2000 (Y2K) needs. If the emergency reserve is not funded, the Congress will need to find other ways to fund Treasury's critical Y2K needs.

The value of the emergency mechanism approved by the House Appropriations Committee is the flexibility it provides in the event that we determine that additional resources are required. We have only 555 days until January 1, 2000. We want to solve this problem as soon as possible. Delaying approval of emergency funding and reopening the issue of the use of the emergency spending authority would create controversy and delay. We hope that the House will reconsider.

Exchange Stabilization Fund

The Administration has serious concerns that an amendment to restrict severely the use of the Exchange Stabilization Fund (ESF) may be considered as part of the bill. Such an amendment would constitute an unacceptable limitation on the executive branch's ability to protect critical U.S. economic interests. The Secretary of Treasury would recommend a veto if the provision is included in the bill.

Federal Election Commission

The Administration strongly objects to language included in the bill that would limit the term of the Federal Election Commission's staff director and general counsel to four years and require a vote of four commissioners to reappoint them. This procedure is a departure from current practice, established in statute, whereby the Commission appoints a staff director and general counsel for an unlimited term. As with all Commission decisions under current practice, removal of the staff director and general counsel requires a vote of four commissioners. The Administration strongly urges the House to eliminate this unacceptable provision from the bill. Furthermore, because the provision effectively could remove the current occupants of the positions, it would raise serious constitutional questions under the separation of powers.

Executive Office of the President

The Administration is strongly concerned with a number of provisions related to the Executive Office of the President. It is our hope that any differences that exist concerning these provisions will be resolved as the bill moves through the process.

Internal Revenue Service

The Administration appreciates the Committee's efforts to fund the President's budget request for the IRS. However, if resources for Y2K are struck from the bill, IRS would be significantly underfunded. We look forward to working closely with the House to identify ways in which full funding of the President's request can be achieved.

The Administration appreciates congressional support for IRS information technology investments. However, tying obligation of funds to GAO review of expenditure plans is objectionable since the Administration has no control over the nature or timing of any prospective GAO review.

U.S. Customs Service

The Administration is concerned about the funding level for Customs' Automated Commercial Environment (ACE). Without major revisions to the existing system, Customs cannot keep up with increasing trade volumes nor can it be responsive to the requirements stated in the 1993 Modernization Act and the needs articulated by industry. The Committee has funded only $8 million of the requested $56 million level, which would cause the modernization effort to come virtually to a halt. To accommodate the full amount requested, the Administration has proposed funding the majority of ACE requirements through a user fee paid by those who stand to benefit most from this system, the trade community.

Bureau of Alcohol, Tobacco and Firearms

The Administration appreciates the efforts of the Committee to fully fund the President's Youth Crime Gun Interdiction Initiative (YCGII). This initiative is an important part of the Administration's overall strategy to curb youth gun violence. The Administration welcomes an opportunity to report on the performance of the YCGII.

The Administration requests reconsideration of the Violent Crime Coordinator initiative, as the U.S. Attorneys have requested additional ATF support for bringing cases involving violent criminals to the Department of Justice for prosecution.

We are pleased that the Committee shares the Administration's view that relocation of the Bureau of Alcohol, Tobacco and Firearms headquarters staff remains a key concern due to inadequate security at the present headquarters site. We hope that the Congress will continue to consider funding for this priority when the review process is completed.

Federal Employees Health Benefits Program

The Administration strongly opposes sections 514 and 515 of the bill. These provisions would restrict Federal Employees Health Benefits Program (FEHBP) coverage for abortions except in situations where the life of the mother is endangered or the pregnancy is the result of rape or incest. While the President believes that abortion should be safe, legal, and rare, the Administration does not believe that Federal employees and their families should be precluded from choosing to purchase health insurance that includes broader coverage. The Administration believes that the decision to cover abortion should be left to each health plan participating in the FEHBP. Thus, Federal employees who wish to purchase health coverage that does not include abortion services would have that choice. The provision in the Committee bill does not allow Federal employees and their families to make that choice.

The Administration supports the Committee reported provision which requires coverage of prescription contraceptives by health plans participating in the Federal Employees Health Benefits Program (FEHBP) and would oppose an amendment to strike it. We support improvements in basic health care coverage for women and the goal of the amendment -- to reduce unwanted pregnancies and the need for abortion. However, the Administration urges the Congress to give authority to the Office of Personnel and Management to waive the requirement for plans that are sponsored by organizations whose religious beliefs do not support artificial methods of contraception.

The rule under which the bill will be considered by the House makes in order an amendment that would restrict the definition of contraceptives to exclude any drug, device, or procedure "which has as one of its known effects the interference with the implantation of a fertilized human ovum or embryo." The Administration would strongly oppose such an amendment, which could result in the denial of safe and legal contraceptive options to Federal workers. Further, such an amendment would interfere with physician decision-making and communication with patients, as it may restrict the ability of physicians to discuss such treatment options with patients.

Pay Raises

The Administration shares the Committee's concern with the current system for setting and adjusting Federal pay. However, the potential costs and programmatic disruptions should section 644 of the Committee bill be enacted are significant. A Federal employee pay raise of about 15 percent would be automatically triggered in January 2000. Therefore, the Administration urges that this provision be dropped. Under the leadership of the Office of Personnel Management, the Administration is working expeditiously on a reform proposal and, as part of this process, will consult with appropriate stakeholders, including the Congress.

The Administration is disappointed that the bill includes a proposal to eliminate the 1999 pay raise for Federal judges and employees paid under the Executive Schedule. Failure to provide pay raises for senior executives is eroding the value of their pay, causing severe pay compression in the executive ranks. Pay adjustments have been made for such individuals only once in the last five years. If continued, this failure will affect the Government's ability to attract and retain the executive talent that it needs. We urge the House to restore the pay raise for Federal judges and the Executive Schedule.

Firefighter's Pay

The Administration commends the Committee for including a provision (section 639) in the bill to reform the overtime pay system for Federal firefighters. A more rational, understandable, and uniform system for calculating the overtime pay of Federal firefighters is long overdue. The Committee provision would accomplish this important and much-needed legislative change and reflects a consensus agreement among the various stakeholders, such as affected executive branch agencies and employee organizations.

United States Trade Representative

The Administration opposes the provision that would make the U.S. Trade Representative the United States representative to the Universal Postal Union. The U.S. Trade Representative lacks the resources and expertise in postal administration to take on this responsibility. In addition, this provision would repeal the authority of the Postal Service to establish international postage rates. We urge that this provision be dropped.

United States Postal Service

The Administration is concerned that the Committee bill would prohibit the Postal Service from initiating new non-postal commercial activities or pack and send services. An appropriations bill should not be used to legislate such restrictions on Postal Service operations.

Office of National Drug Control Policy (ONDCP)

The Administration appreciates the support the Committee has provided for drug control efforts in general, and for ONDCP in particular. The Administration encourages the House to provide the full amount requested for the Special Forfeiture Fund as anything less would adversely impact our ability to continue moving towards our mutual goal of reducing drug use. Failing to fully fund this request would negatively impact the National Drug Control Strategy and our efforts to meet the targets established in the Performance Measures of Effectiveness system. The House could fund this spending, in part, by reducing amounts earmarked by the Committee for an unrequested technology transfer program.

Federal Buildings Fund

The Committee has not provided $14 million requested for the design of a new Department of Transportation (DOT) Headquarters. Instead, the Committee urges GSA to enter into a lease transaction, as authorized by the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee. The Administration requests that the House provide funding for the design of a new DOT Headquarters. Providing for a government-owned building would save taxpayers approximately $190 million, in present value terms, compared to the cost of entering into a lease.

The Committee bill would delay the availability of funding until September 30, 1999, for the repair and alterations program ($19 million) and building operations program ($223 million). The Administration is concerned that a delay in obligations of this amount for buildings operations would impede GSA's ability to operate and maintain Federal facilities under its control.

The Administration is also concerned that the Committee bill has approved over $500 million for 15 unrequested courthouse construction projects.

National Bioethics Advisory Commission

The Administration objects to section 628 of the Committee bill, which would prevent interagency funding of the National Bioethics Advisory Commission. The work of the Commission affects at least 15 Federal agencies. Access to interagency funding is essential for continued operations of this small, but important commission.

Bureau of Engraving and Printing

The Administration objects to section 116 of the Committee bill, which would prevent the Bureau of Engraving and Printing from awarding a contract for currency paper under an ongoing competitive procurement without prior congressional approval. The Administration will interpret such provisions to require notification only, since any other interpretation would contradict the Supreme Court ruling in INS vs. Chadha.

Potential Amendment Related to Peer Review

The Administration strongly opposes an amendment that may be offered mandating peer review of "scientific data" supporting final regulations. The Administration is committed to using the best possible science and peer review for rule-making. However, this amendment is unnecessary, inappropriate and wasteful. Peer review is currently incorporated in the Government-wide rule-making process where it is needed through extensive outreach, public comment, and scientific advisory boards. This amendment as drafted mandates a one-size-fits-all requirement that would serve only to delay important government action, in particular, rules designed to protect health safety and the environment. It would impose a costly additional step in the regulatory process and would cover a large heterogeneous set of rules, as diverse as meat and poultry inspection rules, airplane and automobile safety standards, FDA drug and device approvals, and rules to ensure safe drinking water and clean air. This would impose an undue burden on numerous final rules by requiring substantial personnel and other resources and could result in significant delays on important public health and safety rules.

Potential Amendment Related to Presidential Executive Order

The Administration would oppose an amendment that may be offered that would prohibit the use of funds in the Act for implementing the May 28, 1998, Presidential Executive Order which provides a uniform policy for the Federal Government to prohibit employment discrimination based on sexual orientation in the federal civilian workforce.

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