The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program. Sincerely, Enclosure. WILBUR J. COHEN, Under Secretary. MEMORANDUM OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE RE TECHNICAL REVISIONS IN S. 1681 (89TH CONG., 1ST SESS.) 1. The terms "contract or agreement" used throughout the bill could be construed technically to exclude certain grant-in-aid construction programs which do not involve a contract or agreement with the State agency grantees, and we therefore recommend the following changes: (a) Revise the first portion of section 8(c) (p. 11, line 9) to read as follows: "(c) Any grant to or contract or agreement with a State agency which was made or executed before the effective date of this Act, under which * * * (b) Revise the heading on p. 12 (lines 13 and 14) to read as follows: "SEC. 9. Notwithstanding any other provision of law, on and after the effective date of this Act, no grant to or contract or agreement with a State agency, under which Federal financial ***" 2. Page 3, line 6, the word "immediately" is misspelled. 3. Page 7, line 9, the reference to section 2 should be "section 3". 4. Page 7, line 13, the reference to section 2(a) should be "section 3(a)". 5. Page 9, line 21, the word "location" should be "relocation". COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., April 13, 1965. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, DEAR MR. CHAIRMAN: Your letter of February 25, 1965, invites our comments on S. 1201, a bill to provide for equitable acquisition practices, fair compensation, and effective relocation assistance in real property acquisitions for Federal and federally assisted programs, and for other purposes. The bill primarily involves matters of policy which are properly for the consideration of the Congress. For this reason we have no comments as to the merits of the bill. However, there are several matters which we would like to bring to the attention of the committee. Sections 102 (b) (1) (A) and 112 (c) (2) of the bill set forth certain criteria for establishing the value of property to be acquired for Federal and federally assisted programs. Section 102 (b) (1), which is generally applicable to Federal programs provides, in pertinent part, as follows: "(1) the term 'fair value' means— "(A) the highest cash price which a property could reasonably be expected to bring if exposed for sale in the open market for a reasonable time, taking into consideration all lawful uses to which such property is adapted and could reasonably be put: Provided, That any change in such price prior to the date of valuation caused by the public improvement for which the property is acquired, and any decrease in such price caused by the likelihood that the property would be acquired for the proposed public improvement, other than that caused by physical deterioration within the reasonable control of the owner, shall be disregarded in determining such price; It appears that under this section, in establishing a fair value for property to be acquired, increases or decreases in such value that are attributable to the public improvement for which the property is acquired, would be disregarded. However, it is noted that section 112 (c) (2) of the bill, which is applicable to federally assisted programs, seems to be silent with respect to disregarding increases in value of the property attributable to the public improvement, but provides that decreases in value of the property attributable to the public improvement will be disregarded. Also, it is noted that the Select Subcommittee on Real Property Acquisition of the House of Representatives in the report on its "study of compensation and assistance for persons affected by real property acquisition in Federal and federally assisted programs" in committee print No. 31, 2d session of the 88th Congress, on page 64, reported that at least six States require the taking agency to pay the enhanced value of the property as of the time of the taking. In view of the foregoing, your committee may wish to consider the desirability of placing the valuation requirement under the two types of programs on the same basis. Section 118 of the bill which provides for the repeal of certain laws and parts of laws does not provide for the repeal of the Land Acquisition Policy Act of 1960, enacted as title III of the Act of July 14, 1960, Public Law 86-645, 74 Stat. 502. The Land Acquisition Policy Act of 1960 governs the Corps of Engineers (civil functions) in its realty acquisitions, and permits the Corps to negotiate for and acquire property at a price lower than the appraised value. Section 101(a)(3) of S. 1201 would limit the negotiator's initial offer to at least the appraised value of the property to be acquired. Therefore, to avoid possible misunderstanding or administrative conflicts, we suggest that S. 1201 specifically provide for the amendment or repeal of title III of the Land Acquisition Policy Act of 1960. Section 401 (f) of S. 1201 provides, in pertinent part, as follows: "Whenever feasible the Administrator, on behalf of the United States shall enter into agreements by which local public housing or urban renewal authorities or other appropriate State or local public bodies may make rental adjustment payments as authorized in this section as agents of the United States. *** Except as provided in such an agreement, or in rules or regulations of the Administrator, determinations of any duly designated officer or agency as to the eligibility for assistance or the amount of assistance under this section shall be final and conclusive for all purposes." In a letter to the chairman of the Committee on Banking and Currency, U.S. Senate, dated March 12, 1964, B-119343, we commented on language similar to the foregoing contained in S. 2468, 88th Congress, 2d session, pertaining to relocation payments. In the letter it was pointed out that the referred-to language appeared to preclude, unless provided for by contractual arrangements or regulations, a determination by the Administrator or any Federal agency of the correctness and propriety of relocation payments by a local public agency. We stated that since such costs are borne 100 percent by the Federal Government, review authority by the Administrator should be retained in order to provide adequate assessment of the propriety of payments made by local public agencies in carrying out the provisions of the pertinent section of S. 2468. We suggested that the proposed language be revised as follows: "The Administrator is authorized to establish such rules and regulations as he may deem appropriate in carrying out the provisions of this section and may provide in any contract between the Administrator and a local public agency, or in regulations promulgated by the Administrator that determinations by any duly designated officer or agency as to eligibility for and the amount of relocation assistance authorized by this section shall be final and conclusive for any purpose and shall not be subject to determination by any court or any other officer." The suggested language was adopted and included in the Housing Act of 1964, approved September 2, 1964, Public Law 88-560, 78 Stat. 769, 789. We suggest that consideration be given to providing for similar language in section 401 of S. 1201 regarding rental adjustment payments. Sincerely yours, JOSEPH CAMPBELL, Comptroller General of the United States. COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., June 7, 1965. Hon. EDMUND S. MUSKIE, Chairman, Subcommittee on Intergovernmental Relations, U.S. Senate. DEAR MR. CHAIRMAN: By letter dated May 11, 1965, you requested our comments on S. 1681, 89th Congress. The stated purpose of this measure is to provide for uniform, fair, and equitable treatment of persons, businesses, or farms displaced by Federal and federally assisted programs. We have no special information as to the desirability of the proposed legislation and, therefore, make no comments regarding its consideration. Sincerely yours, JOSEPH CAMPBELL, Comptroller General of the United States. COMPTROLLER GENERAL OF THE UNITED STATES, Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, DEAR MR. CHAIRMAN: By letter dated May 7, 1965, you requested our comments on S. 1681, 89th Congress. The stated purpose of this measure is to provide for uniform, fair, and equitable treatment of persons, businesses, or farms displaced by Federal and federally assisted programs. We have no special information as to the desirability of the proposed legislation and, therefore, make no comments regarding its consideration. DEAR SENATOR MCCLELLAN : This is in response to your request for our views on S. 1201, a bill to provide for equitable acquisition practices, fair compensation, and effective relocation assistance in real property acquisitions for Federal and federally assisted programs, and for other purposes. We support wholeheartedly the objectives of the bill, which are in accord with the objectives of TVA's existing land acquisition and relocation assistance programs. It is our view, however, that in the following respects the specific procedures provided by the bill lack the flexibility required to achieve these objectives: (1) Subsection (a) of section 102 states that "fair value" shall be paid as compensation for real property acquired either by purchase or condemnation, and subsection (b), paragraph (1)(A), defines "fair value" as, in effect, the top of the range of fair market value as the latter concept has been applied by the courts. This section could thus be construed as precluding an offer for the voluntary conveyance of property which is in excess of the top of the range of market value. The bill is ambiguous on this point, however, since the second sentence of section 101(a)(3) provides that in no event shall the price offered for a voluntary conveyance be less than the appraised fair value-thereby implying that the "fair and reasonable consideration" which must be offered may be more than the "appraised fair value" of the property. From TVA's standpoint, it would be undesirable to limit the amount which may be offered to "fair value" as defined in the bill. In appraising land to be acquired for a project, TVA does not undertake initially to determine the price which the property would bring on the market. Instead, it appraises on a more liberal basis by assigning to each element of value-the buildings, fences, timber, various types of land, etc.-the highest price which can be justified. These separate items are then totaled and the resulting figure, which is the price offered to the owner, is usually higher than "fair value" as defined in section 102. Section 101 (a) (3) appears to require a "fair value" appraisal before an offer is made. This would necessitate two separate appraisals initially if our present liberal appraisal policy is followed. We agree that the "fair and reasonable consideration" should not be less than fair value but we think a determination 51-896-65-4 can be made that the amount offered on the basis of a liberal appraisal is not less than fair value, without making a separate fair value appraisal. If TVA is unable to purchase at the appraised price, the property is reappraised on a market value basis, and appraisals are also obtained from several competent independent appraisers, whose testimony will be relied on in condemnation. Usually, reappraisal on a market value basis results in a condemnation deposit lower than the price originally offered. Occasionally, however, the reappraisal may disclose that some element of value received inadequate consideration in the original appraisal, in which case the amount of the offer is increased. The objective of this liberal appraisal policy is to encourage voluntary conveyance of the land needed. It is not costly to TVA, and its success is demonstrated by the fact that in over 95 percent of the cases involving reservoir tracts the landowners have accepted TVA's appraisal. We are satisfied that the savings in litigation expense more than offset the higher payments for the land. If TVA were required to change this policy, we feel certain that the result would be more condemnations and less public confidence in the fairness of our land acquisition practices. Removal of the ambiguity of S. 1201 on this point and assurance of the right to continue such a liberal appraisal policy could be provided by deleting the words "purchase or" in subsection 102(a) and by revising the second sentence of subsection 101 (a) (3) to read as follows: "In no event should such price be less than the fair value of such property." The reference to "purchase" in 102 (a) is not needed, in any event, since 101 (a) (3) makes clear that not less than fair value must be paid for a voluntary conveyance. (2) Section 101 (a) (4) would require an agency acquiring a part of or an interest in a tract of land to provide the owner, to the greatest extent practicable, with a complete breakdown of the offer, including the amount of damages, if any, ascribed to the severed remainder, and the amount of benefits, if any, accruing to the remainder that have been credited against the appraised value of the part taken. We believe this provision should be eliminated in its entirety. The disclosure of such information could serve no useful purpose and would simply proliferate areas of dispute and increase the number of condemnations. (3) Section 101 (a) (5) could be construed as prohibiting the deposit in condemnation of an amount less than that originally determined by the agency to be the "fair value" of the property. Without regard to the basis for the original offer, we think a deposit of less than the amount offered should be allowed if a new appraisal of the property prior to condemnation establishes that the fair value of the property is in fact less than the offer. Accordingly, we suggest that subsection (5) be revised to read as follows: "(5) No owner should be required to surrender possession of real property until the head of the Federal agency concerned pays the agreed purchase price, or deposits with the court, in accordance with the Declaration of Taking Act (40 U.S.C. 258a), the amount estimated to be just compensation for the property taken, or the amount of the award of compensation in the condemnation proceeding for such property." As thus revised, we believe that subsection (5) could not be misconstrued as prohibiting a new appraisal of property to be condemned and a possible deposit in condemnation of less than the previous offer, where such action is justified. (4) The second sentence of section 101(a)(9) provides that condemnation proceedings shall be instituted promptly upon the failure of negotiations for a voluntary conveyance. On a project involving the acquisition of substantial amounts of land, it is often desirable to commence negotiations for the purchase of property rights far in advance of actual need in order to use available personnel with maximum efficiency, but not to institute condemnation proceedings until possession of the property is needed. We feel that the timing of condemnation should be geared to the need for possession rather than to the length of time that negotiations have been conducted. Therefore, we recommend that the second sentence of subsection (9) be deleted. We believe that the interests of the landowners, as well as those of the Government, will be better served thereby. (5) Section 104 of H.R. 3421, which is the companion bill to S. 1201, differs from the corresponding section of the Senate bill. We feel that the Senate provision would cast the Government in the role of debt adjuster for the benefit of improvident landowners whose property is needed for a Federal project and would favor them unduly over persons similarly situated whose land happens not to be needed. Their financial plight is not due in any way to the Government's acquisition. For this reason, we would prefer the House version. (6) The provisions of section 105 for reimbursement of the landowner for recording fees, penalty costs relating to mortgage prepayments, and a pro rata share of property taxes, to the extent deemed fair and reasonable by the acquiring agency, would provide for equitable adjustments for the benefit of owners who must sell their land to the Government and would bring Federal land acquisition practices in these respects into line with a longstanding custom in private real estate transactions. However, the time limitation provided by this section for making reimbursement "not later than the date of payment of the purchase price or the date of deposit of funds to satisfy the award of compensation in a condemnation proceeding to acquire real property, whichever is the earlier," may present difficulties of administration, in that it may not always be possible to determine the amount to be reimbursed by the specified date. Therefore, we recommend that this limitation be removed by deleting the portion quoted above and leaving the time of reimbursement to the discretion of the acquiring agency. (7) Section 107 would set up alternative systems for determining the amounts of relocation payments, the one established by subsection (a) to be in accordance with regulations made by the President, and the other with inflexible maximum cash limitations established by subsections (b), (c), and (d) to be at the option of the displaced person. We recommend, in view of the difficulties in the field administration of alternative systems with respect to each individual displaced person, that only one system for determining the amount of relocation payments be established. Since economic conditions differ greatly in various sections of the Nation, it does not seem feasible for the President to establish uniform regulations for payments that will be fair and reasonable in all areas. We suggest that the goal of fairness and reasonableness could best be achieved by providing that relocation payments be made in accordance with schedules established by the acquiring agency for its various projects, with no alternative fixed payments at the option of the displaced person. However, if the fixed payment of $1,000 provided by subsection (d) is to be retained, we believe the subsection should be revised to make clear that this payment is for each farm on which a farm operation is discontinued, so that dual payments of $1,000 each will not be required, for example, when a tenant has conducted a farm operation for his landlord. The Bureau of the Budget advises that although it has no objection to the submission of this report, it believes that S. 1201, with the exception of the relocation provisions, raises important and complex questions of policy and procedure which require further study within the executive branch before the administration will be in a position to make any detailed recommendations. Sincerely yours, AUBREY J. WAGNER, Chairman. TENNESSEE VALLEY AUTHORITY, Knoxville, Tenn., July 20, 1965. Hon. JOHN L. MCCLELLAN, Chairman, Committee on Government Operations, Washington, D.C. DEAR SENATOR MCCLELLAN: This is in response to your letter of May 7 requesting our views with respect to S. 1681, a bill "to provide for uniform, fair, and equitable treatment of persons, businesses, or farms displaced by Federal and federally assisted programs.' This bill incorporates, with minor changes, the provisions for relocation payments and relocation assistance to persons displaced by land acquisitions for Federal and federally assisted programs which were recommended in the recent report of the Select Subcommittee on Real Property Acquisition of the House Committee on Public Works (Committee Print No. 31, House Committee on Public Works, 88th Cong., 2d sess., 1954). Essentially the same provisions have been included in sections 107-118 of S. 1201, with respect to which we have already given your committee our comments. Subsection (a) of section 3 provides for establishment of a system of payments in accordance with regulations issued by the President, while subsections (b), |