Section 104 SS Section 104 states that ° . . . Pederal programs shall not cease 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 policy was in turn 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, oease. That is the basis upon which the future political status of the Trust Territory is being negotiated. The Federal 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 thepost-trusteeship entities in Micronesia are not required toabsorb the shock of a sudden | termination of Federal aid of that magnitude. That Noverber 1978 policy has, however, been criticized. It has been argued, for example, that under it this Departrent would be violating the Impoundment Control Act, because Federal funds would be prohibited fram flowing to the Trust Territory when the Congress had made such flowmandatory. That was not then nor is it now our purpose. We do not intend that any Federal program that is, by law, required to be implementedin theTrust Territory be terminated without appropriate natitication $9 theCongress through the authorization/appropriation process, or in .- a Control Act. However, Gur November’1978 policy was mainly directed at "discretionary" programs, those that the grantor or the grantee can apply if they so choose, as a matter of policy. It has also been argued that our November 1978 policy interferes with economic development, by foreclosing the aptilicaticn™in the Trust Territory of Federal prigrams directed to that end. Again, thatwas not and Ln ary 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. +.