Section 104 ——— Section 104 states that © . . . Federal programs shall not caase to apply to the T-ust Territory of the Pacific Islands either before or after the term-nation of the trusteeship, without =he express ' approval of Congress.” We presume that this section is directed, at least in part, toward "a policy concerning Federal programs in the Trust Territory that this Department adopted in November 1978. That pelicy was in tun based upon the expectation that, upon termination : the Trusteeship, which the President has targeted for 1981, the many Federal grant Programs now applicable to the Trust Territory would, for the mst part, cease. That is the basis upon which the future political status of the Trust Territory is being negotiated. The Pederal programs in question are now of major significance in texms of revenue resources in the Trust Territory. They have totaled about $25 million per year in recent years (with the figure excluding a controversial feeding program, which is now largely terminated except for emergencies). It was this Department's view in Novenber 1978, and it remains our view, that the Federal assistance level Needs to be phased down, so that the post-trusteeship entities in Micronesia are not required to absorb the shock of a siden © termination of Federal aid of that magnitude. That November 1978 policy has, however, been criticized. It has been argued, for example, that under it this Department would be violating the Impoundment Control Act, because Federal funds i would be prohibited fram flowing to the Trust Territory the Congress had made such flow mandatory. That was not then is it now our purpose. We do not intend that any Federal program that is, by law, required to be implemented in theTrust Territory be terminated without appropriate natitication to the Congress through the authorization/appropriation process, or . oo Control Act. However, Gur Noverber1978 policy was mainly directed at 8 “discretionary” programs, those that the grantor or the grantee apply if they so choose, as a matter of policy. It has also been argued that our November 1978 policy interferes with economic Gevelopment, by foreclosing the aptilication™in the Trust Territory of Federal prigrams directed to that end. Ag∈ that was not and is not om -purpose. «rj ~ ' ween . -- . _ Because of the controversy that has developed'an this question, we are engaged now in a revision of that November 1978 policy statement. We shall share the new statement with the interested Committees when we have completed our consultations within the Executive Branch. - EEE ‘CUTER ‘ ~ MERE “hee se ee

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