Page images
PDF
EPUB

it seems to me, the Secretary of Commerce might conceive it to be his obligation and his duty, since he comes from New England, and has great pride in that region, to place most of the business in the shipyards of New England, which, of course, other Senators, who come from the provinces, would not feel was being quite fair.

Mr. BUTLER. I have no objection to the amendment offered by the Senator from Delaware. I do not think it will harm the bill. I think it will carry out the purposes which the distinguished Massachusetts has in Senator from Massachusetts has in mind.

Mr. SALTONSTALL. I think, as the Senator from Florida has said, that this discussion will help the legislative history of the bill.

I have one more suggestion. I should like to have subparagraph (4) remain in the bill. I think it helps to carry out the purpose and intention of the bill.

Mr. BUTLER. I say to the Senator from Massachusetts it does help, in that it reemphasizes the importance of keeping these vital facilities in a standby position, ready for an emergency.

Mr. SALTONSTALL. If I may have the attention of the Senator from Delaware and the Senator from Maryland, would it meet with their approval if subparagraph 4 read as follows:

May only be negotiated without competitive bidding, in accordance with existing laws, and when such action is determined by the Secretary of Commerce to be necessary to carry out the purposes of this act, and in the interest of national defense.

In other words, that language would provide that such orders could not be issued without competitive bidding, except under existing laws, and then only when in the national interest.

Mr. BUTLER. I think that is an excellent suggestion. It ought to please the Senator from Delaware.

Mr. SALTONSTALL. I hope the suggestion will satisfy the Senator from Delaware, although he is very exacting in matters relating to the subject now under discussion. The suggested language would write into the bill an indication that we are trying to repair these ships, and that there may be some instances in which, in accordance with existing law, contracts cannot be let on a competitive-bid basis.

Mr. BUTLER. Also, we would not want the Secretary to do anything which he cannot now do.

Mr. SMATHERS. Mr. President, will the Senator yield?

The PRESIDING OFFICER (Mr. PAYNE in the chair). Does the Senator from Massachusetts yield to the Senator from Florida?

Mr. SALTONSTALL. I am happy to yield.

Mr. SMATHERS. I hope the Senator from Delaware will stand fast on his proposed amendment, because if there were written into the bill a provision which would require competitive bidding,

Mr. BUTLER. The Senator from Florida is correct.

Mr. SMATHERS. If the amendment of the Senator from Delaware were adopted, it would mean that in most instances there would be competitive bidding, which is the practice that should be followed, and there would be less criticism in the future.

Mr. WILLIAMS. All my amendment would do would be merely to spell out that the provisions of the bill would be carried out by the Secretary of Defense in exactly the same manner as I understand he testified before the committee he intended to, anyway.

Mr. BUTLER. That is correct.

Mr. WILLIAMS. The bill would not call upon the Secretary of Defense to do anything he has not already stated he is going to do. Assuming that to be true, as I do, my proposal would merely spell out that he shall not do otherwise. Much as I should like to agree with the proposal offered by the Senator from Massachusetts, I cannot accept his modification.

The PRESIDING OFFICER. The question is on agreeing to the amendment offered by the Senator from Delaware [Mr. WILLIAMS).

The amendment was agreed to.

The PRESIDING OFFICER. The bill is open to further amendment. If there is no further amendment to be offered, the question is on the engrossment and third reading of the bill.

The bill was ordered to be engrossed for a third reading, and was read the third time.

The PRESIDING OFFICER. The question now is on the final passage of the bill.

The bill (S. 3546) was passed, as follows:

Be it enacted, etc., That this act may be cited as the "Emergency Ship Repair Act of 1954."

STATEMENT OF PURPOSE

SEC. 2. It is the purpose of this act in the interests of national defense to provide for the immediate improvement and modernization of needed merchant-type vessels in the reserve fleet under the jurisdiction of the Secretary of Commerce, and thereby to provide a much-needed stimulus to the shipbuilding and ship repair industries of the Nation.

RESERVE FLEET MODERNIZATION AND REPAIR PROGRAM

SEC. 3. The Secretary of Commerce shall, after consulting the Secretary of Defense, formulate and carry out to the extent authorized under the provisions of this act a program of repairing, modernizing, or converting such merchant-type vessels in the national defense reserve under the jurisdiction of the Secretary of Commerce as may be necessary to provide for the purpose of national defense an adequate and ready reserve fleet of merchant and auxiliary vessels.

CONTRACTING AUTHORIZATION

SEC. 4. The Secretary of Commerce shall, within 12 months after the date of the enactment of this act, enter into such contracts for the repair, modernization, and conversion of vessels as may be necessary to carry out the provisions of this act. Such

and on the Great Lakes or other inland waterways. (3) shall be entered into in accordance with applicable provisions of the Federal Property and Administrative Services Act of 1949, and (4) in entering into such contracts the Secretary of Commerce shall not alter the present maritime administration policy of inviting split bids for drydock and nondrydock work. Bids on any such contract shall include any towage and insurance costs involved.

AUTHORIZATION OF APPROPRIATION

SEC. 5. There are hereby authorized to be appropriated such sums not in excess of $45 million as may be necessary to carry out the provisions of this act.

SALE OF WAR-BUILT PASSENGERCARGO VESSELS

Mr. CARLSON. Mr. President, I move that the Senate proceed to the consideration of Calendar No. 1756, which is House Joint Resolution 534.

The motion was agreed to; and the Senate consider proceeded to the joint resolution (H. J. Res. 534) to authorize the Secretary of Commerce to sell certain war-built passenger-cargo vessels, and for other purposes.

Mr. BUTLER. Mr. President, House Joint Resolution 534 would authorize the Secretary of Commerce to sell to the American President Lines, Ltd., the passenger-cargo vessels President Cleveland and President Wilson. That company has been chartering those vessels since they were built in 1947 and 1948, respectively, and has been using them on its trans-Pacific passenger service.

The bill was introduced at the request of the Department of Commerce, and its passage is recommended by the Maritime Administration and the General Accounting Office. The Bureau of the Budget believes it should be enacted.

Both vessels were available for sale under the Ship Sales Act. In view of the fact that the American President Lines had lost so much of its tonnage during the war-17 vessels-section VII of the Ship Sales Act gave that company a preference in purchasing these two vessels. However, due to two sets of circumstances, in large measure beyond APL's control, it did not offer to buy them before the Ship Sales Act terminated on January 15, 1951. Those circumstances were, first, extensive litigation concerning ownership of the company; and, second, inability of the Maritime Administration and APL to determine the details of APL's subsidy.

In any event, the fact is that no other company sought to buy the vessels. Now, after months of negotiations, APL has offered a price for the vessels which the Secretary of Commerce, the Comptroller General, and other agencies mentioned, believe is fair, proper, and should be accepted in the best interest of the Government.

Last year APL offered $5,363,866 for each of the vessels. The General Accounting Office refused to approve that transaction on the ground that the price was too low. Subsequent negotiations

I think possibly some other legislation contracts (1) may provide for the expenditure participated in by the Department of

could be utilized in the event of some sort of emergency, which would allow the Secretary to negotiate, if it were deemed to be in the national interest.

by the United States of not more than $45 million, (2) shall be with private shipbuilding or ship repair yards on the Atlantic, Pacific, and gulf coasts of the United States,

Commerce, the Maritime Administration, the General Accounting Office, and APL resulted in an understanding that APL would pay $6,500,000 per vessel, less

depreciation of $1,225 per day, per vessel from April 1, 1954, to the date of the execution of the contract of sale. It is on that basis that H. J. Res. 534 is drawn.

A well-publicized public hearing was held by the Water Transportation Subcommittee, at which no opposition was heard from any quarter. Labor and shipping industry representatives urged the enactment of this bill. The Shipbuilders' Council stated that it does not oppose it.

Aside from the unanimous conclusion that the price was fair, probably the factor which was most stressed during the hearings was that the sale of these vessels to the American President Lines was in keeping with the spirit of the Ship Sales Act and other merchantmarine laws, all of which are designed to encourage and foster the maintenance and operation of a privately owned merchant marine.

The three main questions the subcommittee considered were: First, should the Government sell these ships? Second, if so, should they be sold on the negotiated price basis contained in the bill? Third, is the price agreed upon fair?

The conclusions reached were:

First. That the Government should sell these ships, on the ground that the proposed sale is in keeping with basic merchant-marine policy, and would have been made under the Ship Sales Act but for circumstances beyond APL's control. Second. That sale on a negotiated price basis is proper and in keeping with the practice under the Ship Sales Act. There was no competitive bidding under that statute, prices being set by law.

Third. That the testimony of the GAO, the Bureau of the Budget, and the Department of Commerce shows beyond doubt that the price is fair.

Mr. President, during the course of the hearings certain questions were asked. I have stated those questions and have prepared answers to them. I ask unanimous consent to have printed in the body of the RECORD at this point in my remarks the questions as propounded and the answers to them.

There being no objection, the questions and answers were ordered to be printed in the RECORD, as follows:

Question. Why is legislation necessary? Answer. There has been no satutory authority to sell vessels such as these since the Merchant Ship Sales Act of 1946 expired on January 15, 1951. Without this legislation the Government must continue to own, and American President Lines to charter, these vessels into the indefinite future.

Question. Why didn't APL buy the vessels under the 1946 Ship Sales Act?

Answer. The Merchant Ship Sales Act of 1946 permitted the sale of the Cleveland and Wilson at any time in the period March 8, 1946 to January 15, 1951. No application to purchase these vessels was made by any

one.

APL could not buy the vessels during the life of the act because:

(a) Its postwar operating-differential subsidy contract, without which the vessels could not be operated, was not awarded for this service until September 25, 1952.

(b) About 92 percent of its voting stock was held by the Government and was the subject of bitter and complex litigation by its former owners. Until this was compromised and the stock was sold on Novem

[blocks in formation]

(a) The policy of the Congress, as expressed in the basic Merchant Marine Acts, and of this administration, is to encourage private rather than Government ownership.

(b) Charter hire at the current rate if continued over the remaining 14 years life would be about 30 percent higher than the sale price plus interest on deferred payments. But under the charter the vessel can be handed back to the Government on 90 days notice whenever APL should choose.

(c) The operator will make more improvements on owned vessels and will more surely keep them in service in this critical area

than if chartered.

Question. What safeguards are in the bill? Answer. (a) The vessels are sold on an "as-is where-is basis" insuring that the Government is not responsible for class repairs or inventory deficiencies.

(b) The deferred payments, over the 25 percent down, under the traditional ship sales terms, are secured by a first mortgage on the vessels.

(c) The book-value ceiling upon just compensation in the event of Government requisition is taken from the Merchant Marine Act of 1936; it is not applicable to the many vessels sold under the Merchant Ship Sales Act of 1916, but is imposed here.

(d) United States-flag documentation is required for the remainder of the 20-year economic life of the vessels, this requirement running with the title.

(e) American President Lines is required to act promptly, for authority to sell the vessels lapses after 6 months.

(f) No witness before the committee suggested any further safeguard which might be included.

(f) If the vessels were sold for operation anywhere else, the vital Pacific area would be left with only one passenger liner in operation. This would jeopardize defense and Asian evacuation plans in the event of emergency.

Question. Is the price adequate?

Answer. The price is believed to be fair and to be adequate for the Government because:

(a) The General Accounting Office, having blocked a lower price of $5,340,000, participated in the further negotiations and has specifically approved the present price of $6,500,000 per vessel.

(b) Frank S. Martin & Co., a leading ship surveyor, in February 1954 appraised the vessels for insurance purposes at $6 million. This was done independently, without any knowledge of the sale negotiations.

(c) The $6,500,000 price as of April 1, 1954, represents the depreciated equivalent of $7,944,544 as of January 15, 1951, the last day of the Ship Sales Act. That $7,944,544 is the so-called floor price, or 35 percent of the actual cost of the vessels. This floor price is much the highest, in relation to the prewar domestic cost fixed for each vessel, of any vessel priced under the Ship Sales Act. The floor price averaged 92 percent of the statutory sales price; the ClevelandWilson floor price is 144 percent of the statutory sales price.

(d) The floor price, which APL is paying as of January 15, 1951, was so high because the vessels were tail-end construction in an expensive yard, with the job interrupted both by the redesign from troopers and by a lengthy strike.

(e) The only concession given APL for this abnormally high price was to recognize that the vessels have been depreciating, and that APL has been paying the Government depreciation, since the authority to sell the vessels lapsed on January 15, 1951.

Question. Why is depreciation allowed since April 1, 1954?

Answer. American President Lines is paying charter hire on these vessels which covers depreciation. The depreciation after April 1 is more than offset by the charter hire. If, for example, the price is reduced by about $150,000 because sale is as of August 1, the Government will have received over $200,000 in charter hire for this period.

If the price had not been fixed at a given date, the Government and APL would in effect have each been gambling on whether a long or short period intervened between the agreement and enactment and sale.

Mr. WILLIAMS. Mr. President, will the Senator yield?

Mr. BUTLER. I am very happy to

Question. Why should not the vessels be yield to the Senator from Delaware. offered for competitive bidding?

Answer. There are many reasons why the vessels should not be put up for sale under competitive bid:

(a) The policy of the 1920 act, of the 1936 act, and of the Merchant Ship Sales Act of 1946 has uniformly been against competitive sale of Government-owned vessels, as it has always been considered more important to get them into the right hands on the right route.

(b) No other operator has expressed an interest in the vessels.

(c) The price was a negotiated price and would in fairness have to be lowered if it were after the agreement converted into an upset price for a competitive sale.

(d) APL lost all but 3 of its 20 vessels in the war, and all 3 of its newly built vessels in the Korean hostilities. The equitable policy of the Ship Sales Act, giving a preference to the applicant with the largest wartime losses, should also be applied here.

(e) The Government couldn't sell these vessels, which can't be operated without subsidy, without in effect also offering for sale a subsidy contract.

Mr. WILLIAMS. I understand that since the bill has been on the calendar the Senator from Maryland has obtained an opinion from the Legislative Counsel to the effect that the accelerated amortization provisions of H. R. 8300 would not be applicable to this particular case. Is my understanding correct?

Mr. BUTLER. The is true. I have in my hand an opinion signed by Harry B. Littell, Assistant Counsel, which I ask unanimous consent to have printed in the body of the RECORD at this point in my remarks.

There being no objection, the memorandum was ordered to be printed in the RECORD, as follows:

MEMORANDUM FOR SENATOR BUTLER You have requested our opinion with respect to the applicability of the new depreciation provisions contained in the proposed new Internal Revenue Code of 1954 to the vessels to which Senate Joint Resolution 161 pertains.

The new depreciation provisions, found in section 167 of the proposed new Internal Revenue Code of 1954 apply only to new property acquired or constructed after December 31, 1953.

The limitation on the use of this new method is contained in subsection (c) of section 167 which, as amended by the Senate, reads as follows:

"(c) Limitations on use of certain methods and rates: Paragraphs (2), (3), and (4) of subsection (b) shall apply only in the case of property (other than intangible property) described in subsection (a) with a useful life of 3 years or more

"(1) the original use of which commences after December 31, 1953, and commences with the taxpayer, and

"(2) the acquisition, construction, reconstruction, or erection of which is made or completed after such date."

You may also be interested in the statement contained on page 25 of the report

of the Senate Committee on Finance accompanying H. R. 8300 which reads as follows: "Your committee accepted, with some modifications, the basic provisions of the House bill liberalizing depreciation allowances, primarily through the extension of the use of the declining-balance method at double the corresponding straight-line rate, applicable to new property acquired or constructed after December 31, 1953."

Inasmuch as the provisions of section 167 as passed by the House and as amended by the Senate both restrict the applicability of the new depreciation provisions to new property acquired after December 31, 1953, it would not be within the power of the conference committee on this bill to apply such provisions to any other property (without thereby subjecting the conference report to a point of order).

Respectfully,

HARRY B. LITTELL,

Assistant Counsel.

Mr. BUTLER. I may say to the Senator from Delaware that I understand that the opinion expressed by Mr. Littell is concurred in by Colin Stam.

Mr. WILLIAMS. That is my understanding. I further understand that the committee report so indicates.

Mr. BUTLER. Yes.

Mr. WILLIAMS. Mr. President, I wish to ask a further question of the Senator from Maryland. I notice that this sale is being made effective as of April 1, 1954. Mr. BUTLER. That is true.

Mr. WILLIAMS. In the bill depreciation charges are allowed to the company, retroactive as of that date, which pinpoints the date of the sale as being April 1, 1954. However, on page 2, in spelling out the rate of the interest charges which will be paid, we find they are not retroactive. I wonder whether the Senator from Maryland will agree to have adopted an amendment which will make the interest charges on this sale retroactive likewise to the same date, namely, April 1, 1954.

Mr. BUTLER. Yes, I think that should be done. If there is to be a settlement date, everything should be adjusted as of that date.

Mr. WILLIAMS. Either that, or the depreciation charges should likewise be carried forward.

Mr. BUTLER. That is correct.

Mr. WILLIAMS. Then, Mr. President, I offer the following amendment: On page 2, in line 8, after the words "per annum", strike out the period and insert a comma and the words "such interest

charges to be retroactive to April 1, 1954."

Mr. BUTLER. Mr. President, I accept the amendment.

The PRESIDING OFFICER. The question is on agreeing to the amendment of the Senator from Delaware [Mr. WILLIAMS].

The amendment was agreed to.

Mr. SMATHERS. Mr. President, will the Senator from Maryland yield, in order that I may ask several questions? Mr. BUTLER. Certainly.

Mr. SMATHERS. Did the Senator state, in the course of his remarks, how much it cost to build the ships?

Mr. BUTLER. They originally cost They originally cost $20 million and $22 million, respectively; but the price, as established under the Ship Sales Act, was $7,900,000.

Mr. SMATHERS. Is there in the law previously passed a provision requiring that if the ships are disposed of, they must be disposed of to this particular line?

Mr. BUTLER. No; there is no such provision of law.

Mr. SMATHERS. Did the Senator from Maryland or did the committee give any thought, then, as to why these ships were not offered to some of the other lines?

Mr. BUTLER. They were offered for a number of years, under the Ship Sales Act.

The hearings were widely publicized. We received no objection from anyone; and everyone interested approved of the sale on a negotiated basis.

Mr. SMATHERS. Then is it the belief of the Senator from Maryland that the other ship lines, which might or might not have been interested, at least had notice that the ships were to be disposed of?

Mr. BUTLER. That is correct.

Mr. SMATHERS. And that they did have an opportunity to bid, if they wished to bid?

Mr. BUTLER. That is correct.

Mr. SMATHERS. Is the Senator from Maryland and is the committee convinced that the Federal Government and the taxpayers are not losing an inordinate amount of money by means of the disposal of the ships to this particular line?

Mr. BUTLER. They are getting exactly what they would have gotten under the Ship Sales Act; and this company would have bid for the ships under that act, had it not been that the company was involved in litigation regarding the ownership of the company, and was not able to get together with the Government on the terms of its subsidy contract.

Mr. SMATHERS. I thank the Senator.

Mr. BUTLER. In the meantime, the company paid in excess of $10 million charter-hire.

Mr. SMATHERS. Am I further to understand that this entire transaction has been approved by the Comptroller General and the various other agencies of the Government that have been contacted about it?

Mr. BUTLER. Yes, that is correct.

[blocks in formation]

MESSAGE FROM THE HOUSE

A message from the House of Representatives, by Mr. Maurer, its reading clerk, announced that the House had insisted upon its amendment to the bill (S. 2408) to amend the Merchant Marine Act, 1936, to provide a national defense reserve of tankers and to promote the construction of new tankers, and for other purposes, disagreed to by the Senate; agreed to the conference asked by the Senate on the disagreeing vote of the two Houses thereon, and that Mr. TOLLEFSON, Mr. ALLEN of California, Mr. SEELEY-BROWN, Mr. BONNER, and Mr. SHELLEY were appointed managers on the part of the House at the conference.

The message also announced that the House had passed the bill (S. 2759) to amend the Vocational Rehabilitation Act so as to promote and assist in the al rehabilitation services, provide for a extension and improvement of vocation

more effective use of available Federal funds, and otherwise improve the provisions of that act, and for other purposes, with an amendment; that the House insisted upon its amendment to the bill, asked a conference with the Senate on the disagreeing votes of the two Houses thereon, and that Mr. McCONNELL, Mr. GWINN, Mr. SMITH of Kansas, Mr. BARDEN, and Mr. KELLEY of Pennsylvania were appointed managers on the part of the House at the conference.

The message further announced that the House had disagreed to the amendment of the Senate to the bill (H. R. 4854) to authorize the Secretary of the Interior to construct, operate, and maintain the irrigation works comprising the Foster Creek division of the Chief Joseph Dam project, Washington, asked a conference with the Senate on the disagreeing votes of the two Houses thereon, and that Mr., D'EWART, Mr. RHODES of Arizona, Mr. HosMER, Mr. ENGLE, and Mr. ASPINALL were appointed managers on the part of the House at the conference.

The message also announced that the House had agreed to the amendments of the Senate to the bill (H. R. 8247) to

[ocr errors]

provide for the restoration and maintenance of the United States ship Constitution and to authorize the disposition of the United States ship Constellation, United States ship Hartford, United States ship Olympia, and United States ship Oregon, and for other purposes.

The message further announced that the House had severally agreed to the amendment of the Senate to the following bills of the House:

H. R. 4496. An act to authorize and direct the conveyance of certain lands to the Board of Education of Prince Georges County, Upper Marlboro, Md., so as to permit the construction of public educational facilities urgently required as a result of increased defense and other essential Federal activities in the District of Columbia and its environs; and

H. R. 7125. An act to amend the Federal Food, Drug, and Cosmetic Act with respect to residues of pesticide chemicals in or on raw agricultural commodities.

AMENDMENT OF VOCATIONAL

REHABILITATION ACT

Mr. SMITH of New Jersey. Mr. President, the House passed, with an amendment in the nature of a substitute, the bill (S. 2759) to amend the Vocational Rehabilitation Act so as to promote and assist in the extension and improvement of vocational rehabilitation services, provide for a more effective use of available Federal funds, and otherwise improve the provisions of that act, and for other purposes. I ask that the amendment of the House and the message from that body be laid before the Senate.

The PRESIDING OFFICER (Mr. PAYNE in the chair) laid before the Senate the following amendment of the House of Representatives to the bill (S. 2759) to amend the Vocational Rehabilitation Act so as to promote and assist in the extension and improvement of vocational rehabilitation services, provide for a more effective use of available Federal funds, and otherwise improve the provisions of that act, and for other purposes, together with a message from the House insisting upon its amendment and requesting a conference with the Senate thereon:

Resolved, That the bill from the Senate (S. 2759) entitled "An act to amend the Vocational Rehabilitation Act so as to promote and assist in the extension and improvement of vocational rehabilitation services, provide for a more effective use of available Federal funds, and otherwise improve the provisions of that act, and for other purposes," do pass with the following amendment:

Strike out all after the enacting clause, and insert:

That this act may be cited as the "Vocational Rehabilitation Amendments of 1954." AMENDMENTS TO THE VOCATIONAL REHABILITATION ACT

SEC. 2. The Vocational Rehabilitation Act (29 U. S. C. ch. 4) is amended to read as follows:

"AUTHORIZATION OF APPROPRIATIONS FOR GRANTS; PURPOSES FOR WHICH AVAILABLE "SECTION 1. For the purpose of assisting the States in rehabilitating physically handicapped individuals so that they may pre

pare for and engage in remunerative employment to the extent of their capabilities, thereby increasing not only their social and economic well-being but also the productive capacity of the Nation, there are hereby authorized to be appropriated for the fiscal year ending June 30, 1955, the sum of $30 million, for the fiscal year ending June 30, 1956, the sum of $45 million, for the fiscal year ending June 30, 1957, the sum of $55 million, for the fiscal year ending June 30, 1958, and each fiscal year thereafter, the sum of $65 million, for grants to carry out the purposes of this act. The sums so appropriated for any fiscal year shall be available for

"(1) grants to States under section 2 to assist them in meeting the costs of vocational rehabilitation services;

"(2) grants to States under section 3 to assist them in initiating projects for the extension and improvement of their vocational rehabilitation services; and

"(3) grants to States and to public and other nonprofit organizations and agencies under section 4 to assist in meeting the costs of projects for research, demonstrations, training and traineeships, and special projects, which hold promise of making a substantial contribution to the solution of vocational rehabilitation problems common to a number of States, including temporary assistance in initiating a substantial nationwide expansion of vocational rehabilitation programs in the States.

The portion of such sums which shall be available for each of such three types of grants shall be specified in the act appropriating such sums, except that the first $23 million of the aggregate sums so appropriated for any fiscal year shall be available for grants to States under section 2 to assist them in meeting the costs of vocational rehabilitation services.

"GRANTS TO STATES FOR VOCATIONAL
REHABILITATION SERVICES

"SEC. 2. (a) (1) From the sums available for any fiscal year for grants to States to assist them in meeting the costs of vocational rehabilitation services, each State shall be entitled to an allotment of an amount which bears the same ratio to such sums as the product of (A) the population of the State and (B) the square of its allotment percentage (as defined in section 11 (h)) bears to the sum of the corresponding products for all the States.

"(2) The allotment to any State for any fiscal year, as computed under paragraph (1) which is less than such State's base allotment, shall, notwithstanding such provisions, be increased to the amount of such base allotment.

"(3) For the purposes of this section, a State's base allotment is an amount equal to the amount allotte to such State for expenditures, under its State plan approved under this act, for the fiscal year ending June 30, 1954 (which, in the case of the District of Columbia, shall be the amount appropriated to the Secretary for such fiscal year for providing rehabilitation services in the District of Columbia), increased by a uniform percentage which, if applied to the amounts so allotted to all the States, would increase the total of such allotments to $23 million.

"(4) The allotment to any State, as computed under the provisions of paragraph (1) for any fiscal year, which is greater than such State's base allotment by a percentage in excess of 11⁄2 times the percentage by which the sums available for allotments under this section for such year exceed $23 million, shall be reduced by the amount of such excess.

"(5) Sums equal to the reductions effected under paragraph (4) for any fiscal year shall be added to the allotments of other States

as computed under paragraph (1) for such years as follows:

"(A) The allotment of any State as so computed which is less than such State's base allotment, shall be increased to the amount of such base allotment.

"(B) The remainder of such sums shall be used to increase by a uniform percentage the allotment of each of the States whose allotments were not subject to reduction under paragraph (4), but with such adjustments as may be necessary to prevent the allotment of any of such States from being so increased as to require reduction under paragraph (4).

"(b) (1) A portion of each State's allotment available under this section for any fiscal year equal to the State's base allotment shall be available for payment to such State of an amount equal to its 1954 Federal share of the cost of vocational rehabilitation services under the plan of such State approved under section 5, including expenditures for the administration of the State plan.

"(2) After such portion has been paid in full, any remaining portions of a State's allotment shall be available for payment to such State of an amount equal to its Federal share (determined as provided in section 11 (i) of such cost for which payments have not been made under paragraph (1)).

"(3) For the purposes of this section, a State's 1954 Federal share means the percentage which (A) the base allotment of such State is of (B) the sum of such allotment and the amount of 1954 State funds. The 1954 State funds for any State shall be the amount of State and other non-Federal funds available for expenditures, under such State's plan approved under this act, for the fiscal year ending June 30, 1954, as estimated by the Secretary for purposes of determining such State's allotment for such year for such expenditures, except that the 1954 State funds for the District of Columbia shall be the amount appropriated for such fiscal year out of the general fund of the District of Columbia for vocational rehabilitation.

"(c) If in any State there is, during the fiscal year ending June 30, 1954, a State agency administering or supervising the administration of the part of the State plan under which vocational rehabilitation services are provided for the blind, separate from the State agency administering or supervising the administration of the remainder of the State plan

"(1) for each consecutive fiscal year during which there are such separate agencies, the portion of such State's allotment which is equal to such State's base allotment shall be divided between the two agencies in the same proportion as the amount allotted to the State under this act for expenditures during the fiscal year ending June 30, 1954, was divided between such agencies;

"(2) for each such consecutive fiscal year, separate Federal shares shall be established for such agencies for purposes of subsection (b) (1), and for such purposes

"(A) the 1954 Federal share for each shall be the percentage which (i) the portion of the State's allotment for the fiscal year ending June 30, 1954, which was made available to each, is of (ii) the portion of the sum of such allotment and the amount of 1954 State funds available to each for expenditures, under the State plan approved under this act, during such year; and

"(B) the portion of the allotment referred to in subsection (b) (1) for each shall be the portion of the State's allotment allocated to each pursuant to paragraph (1) of this subsection.

"GRANTS TO STATES FOR EXTENSION AND IMPROVEMENT PROJECTS

"SEC. 3. (a) (1) From the sums available for any fiscal year for grants to States to

assist them in initiating projects for the extension and improvement of vocational rehabilitation services, each State shall be entitled to an allotment of an amount bearing the same ratio to such sums as the population of such State bears to the population of all the States. The allotment to any State under the preceding sentence for any fiscal year which is less than $5,000 (or such other amount as may be specified as a minimum allotment in the act appropriating such sums for such year) shall be increased to that amount, the total of the increases thereby required being derived by proportionately reducing the allotments to each of the remaining States under the preceding sentence, but with such adjustments as may be necessary to prevent the allotment of any of such remaining States from being thereby reduced to less than that amount.

"(2) From each State's allotment available for such purpose for any fiscal year, the Secretary shall pay to such State a portion of the cost of approved projects for the extension and improvement of vocational rehabilitation services (including their administration) under the State plan. The Secretary shall approve any project for purposes of this section only if the plan of such State approved under section 5 includes such project or is modified to include it and only if he finds the project constitutes an extension or improvement of vocational rehabilitation services under the State plan or will contribute materially to such an extension or improvement.

"(b) Payments under this section with respect to any project may be made for a period of not to exceed two years beginning with the commencement of the first fiscal year for which any payment is made with respect to such project from an allotment under this section. To the extent permitted by the State's allotment under this section, such payments wih respect to any project shall be equal to 75 percent of the cost of such project, except that, at the request of the State, such payments may be less than such percentage of the cost of such project.

"(c) No payment may be made from an allotment under this section with respect to any cost with respect to which any payment is made under section 2.

"GRANTS FOR SPECIAL PROJECTS "SEC. 4. (a) From the sums available therefor for any fiscal year, the Secretary shall make grants to States and public and other nonprofit organizations and agencies (1) for paying part of the cost of projects for research and demonstrations, projects for the establishment of special facilities and services, which, in the judgment of the Secretary, hold promise of making a substantial contribution to the solution of vocational rehabilitation problems common to all or several States, and (2) for planning, preparing for, and initiating, during the fiscal year ending June 30, 1955, and the fiscal year ending June 30, 1956, a substantial nationwide expansion of vocational rehabilitation programs in the States, including training and traineeships for individuals for a period of not to exceed 12 months for any one individual. Any grant of funds under this section which will be used for direct services to physically handicapped individuals or for establishing facilities which will render direct services to such individuals must have the prior approval of the appropriate State agency.

"(b) Payments under this section may be made in advance or by way of reimbursement for services performed and purchases made, as may be determined by the Secretary; and shall be made on such conditions as the Secretary finds necessary to carry out the purposes of this section.

"GRANTS FOR TRAINING OF HOMEBOUND
HANDICAPPED PERSONS

"SEC. 5. (a) There is hereby authorized to be appropriated, out of any moneys in the

Treasury not otherwise appropriated, the sum of $5 million for the fiscal year ending July 1, 1955, and $2 million annually thereafter, and, from the amounts hereunder appropriated the Secretary is authorized and empowered, on the recommendation of State agencies, to make grants to local school boards and local nonprofit educational groups providing special services to handicapped; organized with the objective of affording a means of teaching and training handicapped persons, commonly known as shut-ins, whose disabilities confine them to their homes or beds.

"Such grants shall be made for the purpose of providing general ameliorative and vocational training in addition to that now provided by law for such handicapped persons. The total grants to school boards or educational groups in any one State shall bear the same ratio to the total grants, made, pursuant to this section, as the population of the State bears to the total population of the United States: Provided, That not less than 20 percent of all grants in any fiscal year shall be made to groups functioning in rural areas. ('Rural areas' are to be defined by the Secretary.)

"STATE PLANS

"SEC. 6. (a) To be approvable under this act, a State plan for vocational rehabilitation services shall—

"(1) designate the State agency administering or supervising the administration of vocational education in the State, or a State rehabilitation agency (primarily concerned with vocational rehabilitation), as the sole State agency to administer the plan, or to supervise its administration in a political subdivision of the State by a sole local agency of such political subdivision, except that where under the State's law the State blind commission, or other agency which provides assistance or services to the adult blind, is authorized to provide them vocational rehabilitation services, such State blind commission or other State agency may be designated as the sole State agency to administer the part of the plan under which vocational rehabilitation services are provided for the blind (or to supervise the administration of such part in a political subdivision of the State by a sole local agency of such political subdivision) and the State vocational education agency or the State rehabilitation agency shall be designated as the sole State agency with respect to the rest of the State plan;

"(2) provide that the head of the vocational rehabilitation bureau, division, or other unit of a State vocational educational

agency designated pursuant to paragraph (1), shall be subject only to the supervision and direction of such agency or its executive officer;

"(3) provide for financial participation by the State, and provide that the plan shall be in effect in all political subdivisions of the State;

"(4) show the plan, policies, and methods to be followed in carrying out the work under the State plan and in its administration and supervision, and in case vocational rehabilitation services cannot be provided all eligible physically handicapped individuals who apply for such services, show the order to be followed in selecting those to whom vocational rehabilitation services will be provided;

"(5) provide such methods of administration, other than methods relating to the establishment and maintenance of personnel standards, as are found by the Secretary to be necessary for the proper and efficient administration of the plan;

"(6) contain (A) provisions relating to the establishment and maintenance of personnel standards, including provisions relating to the tenure, selection, appointment, and qualifications of personnel, and (B) provisions relating to the establishment and

maintenance of minimum standards govern ing the facilities and personnel utilized in the provision of vocational rehabilitation services, but the Secretary shall exercise no authority with respect to the selection, method of selection, tenure of office, or compensation of any individual employed in accordance with such provisions;

"(7) provide that, in addition to training, maintenance, placement, and guidance, physical restoration services will be provided under the plan;

"(8) provide that the State agency will make such reports, in such form and containing such information, as the Secretary may from time to time reasonably require to carry out his functions under this act, and comply with such provisions as he may from time to time find necessary to assure the correctness and verification of such reports;

"(9) provide for cooperation by the State agency with the State agency administering the State's public assistance program, the State's workmen's compensation agency, and the Bureau of Old-Age and Survivors Insurance (Department of Health, Education, and Welfare) and other Federal, State, and local public agencies providing services relating to vocational rehabilitation services, and provide for the utilization of the services of such agencies insofar as practicable;

"(10) provide for entering into cooperative arrangements with the system of public employment offices in the State and the maximum utilization of the job placement and employment counseling services and other services and facilities of such offices; and

"(11) provide that vocational rehabilitation provided under the State plan shall be available to any civil employee of the United States disabled while in the performance of his duty on the same terms and conditions as apply to other persons.

"(b) The Secretary shall approve any plan which the Secretary finds fulfills the conditions specified in subsection (a) of this section.

"(c) Whenever the Secretary, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of the State plan approved under this section, finds that

"(1) the plan has been so changed that it no longer contains any provision required by subsection (a) of this section to be included in the plan; or

"(2) in the administration of the plan there is a failure to comply substantially with any such provision;

the Secretary shall notify such State agency that no further payments will be made to the State under section 2 or 3 (or, in his discretion, that further payments will not be made to the State for projects under or parts of the State plan affected by such failure), until he is satisfied that there is no longer any such failure. Until he is so satisfied the Secretary shall make no further payments to such State under section 2 or 3 (or shall limit payments to projects under or parts of the State plan in which there is no such failure).

"(d) If any State is dissatisfied with the Secretary's action under subsection (c) of this section, such State may appeal to the United States district court for the district

where the capital of such State is located and judicial review of such action shall be on the record in accordance with the provisions of the Administrative Procedure Act. "METHOD OF COMPUTING AND MAKING PAYMENTS

"SEC. 7. The method of computing and paying amounts pursuant to section 2 or 3 shall be as follows:

"(1) The Secretary shall, prior to the beginning of each calendar quarter or other period prescribed by him, estimate the amount to be paid to each State under the provisions of such section for such period, such estimate to be based on such records of the State and information furnished by

« PreviousContinue »