properties, exclusive of monthly payments which, like rent, should be treated as a living cost.

We share your concern about the families at Brookley Air Force Base and other installations which have been affected by base closure actions. A comprehensive study of this problem has been initiated. It will answer the questions I have discussed above, and will furnish the basis for appropriate recommendations to be presented to the Bureau of the Budget and to Congress at the earliest possible date.

Your interest in this matter is greatly appreciated, and I can assure you that we plan to take positive action.

Sincerely,

CYRUS R. VANCE.

Senator SPARKMAN. Mr. Reed, we are glad to have you here today. We appreciate your coming. We have had you at our committee before, and we are always glad to see you.

STATEMENT OF JOHN J. REED, DEPUTY ASSISTANT SECRETARY OF DEFENSE (FAMILY HOUSING)

Mr. REED. Thank you.

Senator SPARKMAN. I apologize for leaving, but I feel that I have to go. Senator Douglas has kindly agreed to preside over the meeting. I hope you will discuss this matter quite fully, quite frankly. And may I say I hope you bring some good news.

Mr. REED. Yes, sir.

Senator DOUGLAS. Mr. Chairman, we will see to it that Mr. Reed's reply will be conveyed to you almost immediately.

Senator SPARKMAN. Fine. I have a copy of his statement I am taking with me..

Senator DOUGLAS. Good.

Senator SPARKMAN. Thank you.

Senator DOUGLAS. Mr. Reed, will you commence?

Mr. REED. Yes, sir.

Mr. Chairman, members of the committee, it is a pleasure to appear before this committee this morning to discuss a subject which is not only of mutual interest to the Congress and the Department of Defense, but one which is of vital interest to thousands of people throughout the country.

First, please let me express to you the personal regrets of both Secretary McNamara and Secretary Ignatius that they were unable to be present today. Both have taken an active interest in formulating a solution to the problem of providing assistance to homeowners who have been affected by the base closure program.

As a point of reference-a benchmark so to speak-let me make clear the Department of Defense's position on the matter of providing some degree of assistance to those who are faced with major financial losses as a result of military base closure actions. We believe it is an obligation of the Government to provide financial and other help to those military personnel and Government employees who are subjected to potential monetary loss in the sale of their homes occasioned by a situation-that is, an act of Government-over which they had no control.

Deputy Secretary of Defense Vance in his letter of September 2, 1965, to Chairman Sparkman gave assurance of the Department's support of the principle and the intent of relief as set forth in section

108 of Public Law 89-117. In that letter he cited the need for a detailed fact-gathering study of the problem in order to (1) develop an appropriate formula for determining the amount of relief which it would be equitable to provide under various circumstances, and (2) provide data to support a sufficiently reliable estimate of the cost of this proposal in order to form the basis for a request for funds to the Appropriations Committees of the Congress.

In addition, the letter expressed our reservations about certain statutory and administrative problems which the language of section 108, as now written, posed for the Department.

A comprehensive study of the matter was initiated on an urgent basis. Following approval of the essential recommendations of the study, a legislative proposal was submitted to the Bureau of the Budget. That agency is now studying the proposed legislation and obtaining the views of other interested departments. It is our expectation that a legislative proposal will be submitted to the Congress in the very near future.

Senator DOUGLAS. Mr. Reed, I think at this point I should interrupt. Do I understand, therefore, that you refuse to carry out the legislative provision of Congress as passed last year, in effect saying that you will only act if additional legislation, which you recommend, is enacted?

Mr. REED. We will recommend, Mr. Chairman, that new legislation be enacted.

Senator DOUGLAS. What about carrying out the existing law?

Mr. REED. We do not feel it would be in the Government's interest to implement 108 as now written.

Senator DOUGLAS. I have great admiration for Secretary McNamara and I think he has assembled a very able group of assistants. As a matter of fact, I was one of the few Senators who approved his closings program. So I do not want you to think that I am unsympathetic to the Department.

But I think there is a very grave question of constitutional lawa fundamental principle of American Government-involved when a Department says, "We will not obey an act of Congress, and we will instead demand other legislation."

As long as this law is on the books, it is the law of the land, and I do not believe that a Department has the right to disregard it.

I think this is a fundamental violation of the powers and prerogatives of Congress.

Now, all over the world there has been an attrition of legislative powers and an increase in administrative and bureaucratic powers, and we are rapidly creating a bureaucratic, administrative state in which you have faceless administrators not representative of the people deciding whether or not they will obey laws passed by the representatives of the people.

I think this is an unjustifiable procedure, regardless of the merits of the case-I would be willing to listen to the merits of the caseand I am astounded really that you should advance it.

Now, you should be heard in your own defense I think.

Mr. REED. Well, sir, if I may go on with my statement, Mr. Chair

man

Senator DOUGLAS. No, I think you should reply to the point I raised. Mr. REED. Your point is well raised, Mr. Chairman.

I would say this: That we have studied the problem of providing assistance to these people which was, in fact, the intent of 108. We think section 108 needs improvement. Later on in my statement I give the reasons why we feel it must be improved.

Senator DOUGLAS. Do you think the Department has a right to disobey an act of Congress on the ground they know better? You are not the lawmakers of this Nation. You are the administrators of the laws. I do not like to use the term "servant," but you are the servant of Congress in a proper sense, as we are the servants of the people. But you are not the dictators to Congress.

Mr. REED. Yes, sir. I fully understand that position.

I would like to say I am not a constitutional lawyer, but I would say that under advice of counsel we were told that section 108 was permissive was permissive, sir-rather than mandatory legislation. Again, we have the same objective as the committees of Congress in this matter, sir.

Senator DOUGLAS. Our attorney says he thinks there is a good deal of merit to your contention. But the question of whether an authorization is binding upon an administratíve body-well, go ahead. We can argue this constitutional question. But to my mind it is a very serious one, and I object to the general tendency that is taking place of a faceless bureaucracy making the decisions, the legislative decisions, which are more properly the matters for those elected by the people to make.

We may not make them correctly, and I have some doubts about this legislation myself. But when we do make them, I believe they should be carried out.

Go ahead.

Mr. REED. Sir, I would like to reiterate that I think this committee and the Department of Defense have exactly the same objective, and what we would suggest is that we, working with the Congress, come up with a better solution to the problem.

Senator DOUGLAS. Go ahead.

Mr. REED. Thank you, sir.

A comprehensive study of the matter was initiated on an urgent basis. Following approval of the essential recommendations of the study, a legislative proposal was submitted to the Bureau of the Budget. That agency is now studying the proposed legislation and obtaining the views of other interested departments. It is our expectation that a legislative proposal will be submitted to the Congress in the near future.

Before explaining to the committee the highlights of the proposed legislation, I believe it might be beneficial to discuss section 108 and our reasons for objecting to its language which, in our opinion, makes its implementation as now written impractical.

1. First, the assistance afforded by section 108 would be based entirely on the concept of Government acquisition. There are no alternative provisions for partial compensation for the costs of private sales where such compensation might be both in the interest of the Government and satisfactory to the property owners.

62-551 0-66-pt. 1-12

2. Acquisition costs would be based on the average prices of comparable properties during a representative period prior to base closure announcements. This broad wording could lead to protracted disputes. Moreover, no latitude or discretion is permitted in the determination of acquisition prices.

3. Section 108 contemplates that the Government will absorb 100 percent of all losses. Whereas the Department of Defense believes that its personnel should be protected from catastrophic losses, we do feel strongly that any program for assistance should be based on the concept of loss sharing between employer and employee. In other words, a floor should be placed under the qualified individual's loss. 4. We believe the matter of eligibility must be more precisely defined. For example, it does not appear appropriate to extend assistance to temporary civilian employees; we would restrict eligibility to career or career-conditional employees and military personnel. With certain specified exceptions, eligible personnel should be employed or performing duty at the installation at the time of the closure announcement and at that time be the owner-occupants of the dwelling for which assistance is claimed. For the most part we believe that assistance should be etxended only to civilian employees who accept employment out of the commuting area.

5. Section 406 of Public Law 85-241, as amended (42 U.S.C. 15941) prohibits, with certain specific exceptions, the construction or acquisition of family housing units "at or in support of military installations or activities" unles specifically authorized by an annual military construction authorization act. There is a substantial question as to whether the Secretary of Defense could proceed with the acquisitions authorized by section 108 unless such line item authorizations were obtained.

Our proposed homeowners assistance legislation reflects the foregoing comments, minimizes problems of administration, and provides a solution which is equitable both to the individual and to the Gov

ernment.

Our recent study of the problem of DOD-connected homeowners affected by base closure actions during the period since November 1, 1964, indicates that a substantial number of people are involved. Military and civilian personnel whose employment or service has been or will be terminated at the various installations or activities announced for closure during this period as scheduled for closure total 203,280, broken down as follows:

We have attempted to estimate how many of these people might be homeowners eligible for assistance under the criteria discussed above, and we find that the gross figures are subject to considerable reduction.

Based on sample survey data obtained during our study, we estimated that some 73 percent of the civilian employees are homeowners. Records indicate that some 54.7 percent of the civilian employees will probably leave the impacted areas to take employment elsewhere. Accordingly, some 39.9 percent of the total civilian group are homeowners who will relocate and would therefore be eligible for consideration under proposed DOD criteria. A comprehensive study of military personnel at activities announced for closure indicates that 10.4 percent are homeowners, all of whom will relocate.

Application of these percentages to the above table indicates that a total of some 44,353 homeowners, 31,373 civilian, and 12,980 military, might be eligible for relief consideration.

Our studies further show that many of the smaller closure actions will have only marginal impact on local housing markets, and homeowners in such localities would not be eligible for assistance, nor in fact need assistance, under a cost-sharing formula which carries a deductible feature such as is employed in casualty insurance policies. A realistic assistance program must be primarily directed to those areas which have experienced or will experience a major impact; areas such as Mobile, Ala.; Salina, Kans.; and Amarillo, Tex., to mention just a few.

Since 1961 the Department of Defense has energetically pursued an economic adjustment program to assist communities in attracting new industries and in finding new uses for the real property and facilities of the installation slated for closure, and in other ways to mitigate the economic impact upon a community and its citizens resulting from the closure of a military base.

Senator DOUGLAS. Mr. Reed, I am very happy to endorse that paragraph. The Department of Defense has done excellently on

this.

Mr. REED. Thank you.

As successful as these actions have been, we recognize that something more is needed in the form of assistance to dislocated Government-connected homeowners. When housing values drop significantly as a direct result of a closure action, personnel relocating to another area frequently find they cannot dispose of their homes at reasonable prices. Our recent studies have indicated that these people have three primary requirements. They need:

Relief from outstanding mortgage obligations.

Some funds with which to acquire a new home in a new area. Restoration of at least a portion of accumulated equities which may represent life savings.

We find that there is a trend in private industry toward greater assistance for transferred employees. At the same time there is a similar trend in Government. We have followed with interest the progress of H.R. 10607 which recently passed the House of Representatives. It is a bill which provides additional benefits for Federal civilian employees, including:

Expenses of travel to new location to seek a home prior to moving. Up to 30 days' temporary living expenses at a new location in the continental United States.

Per diem expenses during move for family members as well as the employee.