[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
HEARINGS TO EXAMINE USDA ORGANIZATION AND PROGRAM ADMINISTRATION
=======================================================================
HEARINGS
BEFORE THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MARCH 17, 18, 2016
__________
Serial No. 114-47
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COMMITTEE ON AGRICULTURE
K. MICHAEL CONAWAY, Texas, Chairman
RANDY NEUGEBAUER, Texas, COLLIN C. PETERSON, Minnesota,
Vice Chairman Ranking Minority Member
BOB GOODLATTE, Virginia DAVID SCOTT, Georgia
FRANK D. LUCAS, Oklahoma JIM COSTA, California
STEVE KING, Iowa TIMOTHY J. WALZ, Minnesota
MIKE ROGERS, Alabama MARCIA L. FUDGE, Ohio
GLENN THOMPSON, Pennsylvania JAMES P. McGOVERN, Massachusetts
BOB GIBBS, Ohio SUZAN K. DelBENE, Washington
AUSTIN SCOTT, Georgia FILEMON VELA, Texas
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHELLE LUJAN GRISHAM, New Mexico
SCOTT DesJARLAIS, Tennessee ANN M. KUSTER, New Hampshire
CHRISTOPHER P. GIBSON, New York RICHARD M. NOLAN, Minnesota
VICKY HARTZLER, Missouri CHERI BUSTOS, Illinois
DAN BENISHEK, Michigan SEAN PATRICK MALONEY, New York
JEFF DENHAM, California ANN KIRKPATRICK, Arizona
DOUG LaMALFA, California PETE AGUILAR, California
RODNEY DAVIS, Illinois STACEY E. PLASKETT, Virgin Islands
TED S. YOHO, Florida ALMA S. ADAMS, North Carolina
JACKIE WALORSKI, Indiana GWEN GRAHAM, Florida
RICK W. ALLEN, Georgia BRAD ASHFORD, Nebraska
MIKE BOST, Illinois
DAVID ROUZER, North Carolina
RALPH LEE ABRAHAM, Louisiana
JOHN R. MOOLENAAR, Michigan
DAN NEWHOUSE, Washington
TRENT KELLY, Mississippi
______
Scott C. Graves, Staff Director
Robert L. Larew, Minority Staff Director
(ii)
C O N T E N T S
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Page
Thursday, March 17, 2016
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 1
Prepared statement........................................... 2
Peterson, Hon. Collin C., a Representative in Congress from
Minnesota, opening statement................................... 2
Witnesses
Concannon, Hon. Kevin W., Under Secretary, Food, Nutrition, and
Consumer Services, U.S. Department of Agriculture, Washington,
D.C.; accompanied by Audrey Rowe, Administrator, Food and
Nutrition Service, USDA; Angela Tagtow, M.S., R.D., L.D.,
Executive Director, Center for Nutrition Policy and Promotion,
USDA........................................................... 3
Prepared statement........................................... 5
Submitted questions.......................................... 81
Almanza, Alfred V., Deputy Under Secretary, Food Safety, U.S.
Department of Agriculture, Washington, D.C.; accompanied by
Philip S. Derfler, Deputy Administrator, Food Safety and
Inspection Service, USDA....................................... 41
Prepared statement........................................... 42
Submitted questions.......................................... 83
Mensah, Hon. Lisa, Under Secretary, Rural Development, U.S.
Department of Agriculture, Washington, D.C.; accompanied by
Brandon McBride, Administrator, Rural Utilities Service, USDA;
Tony Hernandez, Administrator, Rural Housing Service, USDA;
Samuel H. Rikkers, Acting Administrator, Rural Business--
Cooperative Service, USDA...................................... 57
Prepared statement........................................... 59
Submitted questions.......................................... 84
Friday, March 18, 2016
Conaway, Hon. K. Michael, a Representative in Congress from
Texas, opening statement....................................... 111
Witnesses
Bonnie, Hon. Robert, Under Secretary, Natural Resources and
Environment, U.S. Department of Agriculture, Washington, D.C.;
accompanied by Mary Wagner, Associate Chief, U.S. Forest
Service, USDA; Jason Weller, Chief, Natural Resources
Conservation Service, USDA..................................... 112
Prepared statement........................................... 113
Submitted questions:
Bonnie, Hon. Robert...................................... 211
Weller, Jason............................................ 216
Taylor, Alexis, Deputy Under Secretary, Farm and Foreign
Agricultural Services, U.S. Department of Agriculture,
Washington, D.C.; accompanied by Val Dolcini, J.D.,
Administrator, Farm Service Agency, USDA; Suzanne Palmieri,
Associate Administrator and General Sales Manager, Foreign
Agricultural Service, USDA; Brandon Willis, Administrator, Risk
Management Agency, USDA........................................ 142
Prepared statement........................................... 143
Submitted questions:
Taylor, Alexis........................................... 220
Willis, Brandon.......................................... 223
Woteki, Ph.D., Hon. Catherine E., Under Secretary, Research,
Education, and Economics, U.S. Department of Agriculture,
Washington, D.C.; accompanied by Chavonda Jacobs-Young, Ph.D.,
Administrator, Agricultural Research Service, USDA; Sonny
Ramaswamy, Ph.D., Director, National Institute of Food and
Agriculture, USDA; Joseph T. Reilly, Administrator, National
Agricultural Statistics Service, USDA; Mary Bohman, Ph.D.,
Administrator, Economic Research Service, USDA................. 170
Prepared statement........................................... 171
Avalos, Hon. Edward M., Under Secretary, Marketing and Regulatory
Programs, U.S. Department of Agriculture, Washington, D.C.;
accompanied by Elanor Starmer, Acting Administrator,
Agricultural Marketing Service, USDA; Kevin Shea,
Administrator, Animal and Plant Health Inspection Service,
USDA; Larry Mitchell, Administrator, Grain Inspection, Packers
and Stockyards Administration, USDA............................ 190
Prepared statement........................................... 191
Submitted questions:
Avalos, Hon. Edward M.................................... 223
Shea, Kevin.............................................. 225
HEARINGS TO EXAMINE USDA ORGANIZATION AND PROGRAM ADMINISTRATION
(Part 1)
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THURSDAY, MARCH 17, 2016
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 1:00 p.m., in Room
1300 of the Longworth House Office Building, Hon. K. Michael
Conaway [Chairman of the Committee] presiding.
Members present: Representatives Conaway, Goodlatte, Lucas,
King, Thompson, Austin Scott of Georgia, Gibson, Hartzler,
LaMalfa, Davis, Yoho, Walorski, Rouzer, Moolenaar, Newhouse,
Kelly, Peterson, Walz, McGovern, Lujan Grisham, Kuster,
Aguilar, Graham, and Ashford.
Staff present: Bart Fischer, Jadi Chapman, John Goldberg,
Mary Nowak, Mollie Wilken, Patricia Straughn, Stephanie
Addison, Lisa Shelton, Liz Friedlander, Mary Knigge, Robert L.
Larew, Nicole Scott, and Carly Reedholm.
OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
IN CONGRESS FROM TEXAS
The Chairman. Part 1 of this hearing of the Committee on
Agriculture, examining USDA organization and program
administration, will come to order. Please join me in a brief
prayer.
Heavenly Father, we thank You, Lord, for the multitude of
blessings you have bestowed upon us as a country. Lord, we ask
Your wisdom and guidance as we make decisions and hear this
testimony, and understand its impact on the various programs
that we are responsible for and working with.
Forgive us, Lord, our failings. We ask this in Jesus's
name. Amen.
Today and tomorrow, we have before us most of the Under
Secretaries of the Department of Agriculture. Each of these
witnesses is responsible for an important mission area within
USDA. Accompanying our witnesses are the Administrators who
manage the agencies and programs within these larger mission
areas. These folks lead the network of nearly 100,000 USDA
employees who carry out the laws that this Committee works to
enact.
We welcome each of you here today. I know that preparing
for these hearings can be time consuming for the witnesses who
already have plenty on their plate. Please know that your
commitment of time and knowledge does not go unnoticed and
unappreciated, and we do appreciate you and the work that you
do.
The primary purpose behind these hearings is to connect the
Members of this Committee with the full bench at USDA. It
provides an opportunity for our Members to see in one setting
how all of the various pieces of USDA fit together. It is an
opportunity for our Members to gain an even stronger
understanding of the policies and issues they focus on by
getting under the hood to see how all, or at least more, of the
parts work. It is also an opportunity for our witnesses to gain
a better understanding of our responsibilities and the issues
and policies our constituents care about. In short, this is a
good opportunity for constructive dialogue between Members of
this Committee and the Department.
With the implementation of the 2014 Farm Bill largely
complete and with growing concern in the countryside about a
sustained drop in commodity prices, it is important that the
Committee fulfill its vital oversight role to see what is
working well and what needs improvement. The hearings we will
hold over the next 2 days are a vital part of that work. They
build on a similar series we held last fall, and I intend for
them to become an annual component of our oversight efforts.
[The prepared statement of Mr. Conaway follows:]
Prepared Statement of Hon. K. Michael Conaway, a Representative in
Congress from Texas
Today and tomorrow, we have before us most of the Under Secretaries
of the Department of Agriculture. Each of these witnesses is
responsible for an important mission area within USDA. Accompanying our
witnesses are Administrators who manage agencies and programs within
these larger mission areas. These folks lead the network of nearly
100,000 USDA employees who carry out the laws that this Committee works
to enact.
We welcome each of you here today. I know that preparing for these
hearings can be time consuming for witnesses who already have plenty on
their plate. So, please know that your commitment of time and knowledge
does not go unnoticed or unappreciated. We do appreciate you and the
work that you do.
The primary purpose behind these hearings is to connect the Members
of this Committee with the full bench at USDA. It provides an
opportunity for our Members to see--in one setting--how all of the
various pieces of USDA fit together. It is an opportunity for our
Members to gain an even stronger understanding of the policies and
issues they focus on by getting under the hood to see how all, or at
least more, of the parts work. It is also an opportunity for our
witnesses to gain a better understanding of our responsibilities and
the issues and policies our constituents care about. In short, this is
a good opportunity for constructive dialogue between Members of this
Committee and the Department.
With implementation of the 2014 Farm Bill largely complete and with
growing concern in the countryside about a sustained drop in commodity
prices, it is important that the Committee fulfill its vital oversight
role to see what is working well and what might need improvement. The
hearings we will hold over the next 2 days are a vital part of that
work. They build on a similar series we held last fall, and I intend
for them to become an annual component of our oversight efforts.
With that, I recognize my friend, the Ranking Member, for any
remarks he may wish to offer.
The Chairman. With that, I recognize my friend, the Ranking
Member, for any remarks that he would like to offer.
OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
Mr. Peterson. Thank you, Mr. Chairman.
This is the second time the Committee has held a 2 day
hearing to take a deeper look into USDA's organization and
program administration, and given the fact that we have so many
new Members, like every Congress, it is probably a good thing
to have the ability to look through all the different parts of
the USDA programs. And for a lot of people, on the part of the
public, have no idea how much stuff there is at USDA and how
complicated it is.
So this will give the opportunity for Members to have a
better understanding. So, with that I look forward to the
testimony and yield back.
The Chairman. I thank the gentleman.
The chair would request that other Members submit their
opening statements for the record so that the witnesses may
begin their testimony and to ensure that there is ample time
for questions.
The chair would like to remind Members that they will be
recognized for questioning in order of seniority for Members
who were here at the start of the hearing. After that, Members
will be recognized in order of arrival. I appreciate Member's
understanding.
I would ask the witnesses to limit your oral presentations
to 5 minutes. All written statements, of course, will be
included in the record. Over the course of today's hearing,
following the testimony of each witness, everyone at the table
will be available to answer any questions.
Now after each panel, in order to transition and keep us on
time, we have allotted about 10 minutes for that. What I would
like to do is ask that the panel immediately recess over to
1302 and give us a brief couple of minutes. There may be some
Members who would like to individually talk to you one-on-one
about something that is going on. So if you could, while we are
shuffling around, do that right as we finish, that way we can
get the other panel and we can start on time while you are
having those brief or longer meetings that you might want. If
you all could accommodate us with that, we would appreciate it.
With that, I would like to welcome our first set of
panelists. The Honorable Kevin Concannon, who is the Under
Secretary, Food, Nutrition, and Consumer Services of the USDA.
Mr. Concannon is accompanied by Ms. Audrey Rowe, the
Administrator of Food and Nutrition Service, and Angie Tagtow,
the Executive Director, Center for Nutrition Policy and
Promotion.
With that, Under Secretary Concannon, please begin when you
are ready.
STATEMENT OF HON. KEVIN W. CONCANNON, UNDER
SECRETARY, FOOD, NUTRITION, AND CONSUMER SERVICES, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY
AUDREY ROWE, ADMINISTRATOR, FOOD AND NUTRITION SERVICE, USDA;
ANGELA TAGTOW, M.S., R.D., L.D., EXECUTIVE DIRECTOR, CENTER FOR
NUTRITION POLICY AND PROMOTION, USDA
Mr. Concannon. Thank you, Mr. Chairman, for the opportunity
to join you today. I truly appreciate the Committee's ongoing
support for Federal nutrition programs, and value our
continuing partnership.
While the economy improves, we must remember that full
opportunity still eludes too many Americans, and poverty is a
reality. SNAP lifts millions out of poverty. Census analysis
shows that in 2014, SNAP had the largest child poverty
reduction impact of any safety net program, other than
refundable tax credits. It also benefits all those involved in
producing, processing, delivering, and marketing food that
recipients buy, and nearly \1/4\ of SNAP spending in grocery
stores and supermarkets reaches American farmers.
I want to address concerns about the proposal to implement
the farm bill SNAP retail standards provisions. While it is
driven by the law, it is a proposed rule, and we will consider
all comments seriously, detailed comments the most helpful.
As framers of the farm bill, this provision is intended to
ensure that every participating retailer truly advances SNAP's
mission. The rule is a measured but critical response to the
threats posed by diet-related disease.
Let me also address a proposal raised by some that would
significantly erode SNAP's effectiveness, converting it into a
block grant. This would be a step backwards in the fight
against hunger. My experience as a State Commissioner showed me
that block grants cannot respond timely to economic changes,
natural disasters, and other unforeseen circumstances, as SNAP
can and does. Block grants limit states when need increases
they are forced to choose between benefit reductions and
waiting lists for eligible citizens.
Some argue for block grants to allow states to tailor SNAP
to specific needs, but as described at the Committee's recent
state options hearing, SNAP already strikes a careful balance
between national consistency and state and local flexibility.
We should preserve and strengthen this proven structure.
Though SNAP remains essential, we would all prefer that
fewer families need to utilize it. The projected 2.3 percent
participation drop in 2017 is encouraging, but some ask why
progress is slow. The fact is that employment gains have not
reached all of our citizens. Low-skilled workers face tough job
prospects, and some have trouble because of problems in their
past. SNAP is the only resource for many workers unable to get
hours and wages that meet their families' food needs.
Our priority is to reduce the need for SNAP by helping
participants secure stable, good-paying jobs, while also
getting benefits to families in need. And let me be clear. SNAP
has work requirements and has always had some. Furthermore,
states have access to substantial employment and training
resources, including 100 percent Federal funding. But too many
states leave these resources unused for ideological and
political reasons. It is both cynical and an affront to decency
to fail to help SNAP recipients find jobs, and then force them
off the program.
We actively partner with states to meet their E&T
responsibilities. USDA recently selected ten states for the
SNAP to Skills project to improve their SNAP E&T programs by
drawing on best practices. We are also working to support
healthy food choices in SNAP with increases in farmers' markets
accepting SNAP benefits, and the farm bill FINI grants to
incentivize food and vegetable purchases.
Let me turn now to the farm bill. We move to implement the
law promptly with many key changes in effect soon thereafter.
Rulemaking is now underway. We added funding and 2 year
spending flexibility for TEFAP in 2015. The multi-agency task
force now convenes quarterly to improve USDA Foods. The Food
Distribution Program on Indian Reservations now offers bison
and blue cornmeal, and we are working to improve more
traditional local foods.
The Administration remains committed to improving program
integrity. SNAP payment error rates are among the lowest in the
government. We are building on that progress. We recently
strengthened oversight of quality control, as mentioned in the
recent OIG report. FNS has already identified many of the
issues in OIG's report, and initiated actions to effectively
correct them.
FNS has zero tolerance for fraud, and has made tremendous
strides in rooting out violating retailers. In 2015, we issued
2,693 sanctions against violators, permanently removing 1,900
store owners. We will continue to improve to maintain the
public's confidence in Federal stewardship of tax dollars. All
of these nutrition programs for meal standards, to WIC foods,
to nutrition promotion in SNAP are grounded in the Dietary
Guidelines for Americans. They are not only the cornerstone of
the USDA and HHS nutrition programs, but also inform nutrition
standards for our nation's military, its veterans, and other
Federal needs. I am proud of the Center for Nutrition Policy
and Promotion's work on the recently released Dietary
Guidelines.
Thank you again for the opportunity to join you, and I look
forward to your questions.
[The prepared statement of Mr. Concannon follows:]
Prepared Statement of Hon. Kevin W. Concannon, Under Secretary, Food,
Nutrition, and Consumer Services, U.S. Department of Agriculture,
Washington, D.C.
Thank you, Mr. Chairman, and Members of the Committee for the
chance to update you on USDA's Food, Nutrition, and Consumer Services
(FNCS) accomplishments and priorities. With me today are Audrey Rowe,
Administrator of the Food and Nutrition Service (FNS), and Angela
Tagtow, Executive Director of the Center for Nutrition Policy and
Promotion (CNPP).
Let me begin by expressing my appreciation to you, Chairman Conaway
and Ranking Member Peterson, along with other Members of this
Committee, for your ongoing support for Federal nutrition programs, as
expressed in the Agricultural Act of 2014. As you know, the history of
these programs is one of bipartisan leadership from both Congress and
the Executive Branch. I am proud of the accomplishments of this
Administration in preserving and strengthening the programs, but I am
profoundly conscious of the fact that they would not have been possible
without the steadfast commitment of the Committee to keeping these
programs available to help those who truly need them to put food on the
table.
As we continue to see progress in the economic recovery, we must
remain mindful that for too many Americans, full opportunity remains
elusive, and many families still cannot be certain of enough food
throughout the year for an active, healthy life. Often those Americans
who are most at risk of food insecurity also face obesity and related
health conditions, in part because factors that contribute to these
problems are interrelated--limited access to healthy food sources,
inconsistent incomes, and other challenges. This is especially
concerning because the typical American diet falls substantially short
of nutrition recommendations. The Federal nutrition programs, which
operate as partnerships with tens of thousands of state and local
service providers, work together as a nutrition safety net to prevent
hunger and improve nutrition, while also supporting local economies.
They touch one in four Americans each year.
The Supplemental Nutrition Assistance Program, or SNAP, is the
foundation of this system of programs. I know that SNAP has been a
focus of the Committee's work in recent months. I appreciate the series
of hearings you have conducted on SNAP, and their focus on the strong
evidence of its effectiveness. Studies have shown that participating in
SNAP is associated with a significant decrease in food insecurity and,
in turn, helps to address a range of negative health outcomes that are
associated with food insecurity.
SNAP also lifts millions of people out of poverty. Recent Census
data indicate that 4.7 million people, including 2.1 million children,
were lifted out of poverty due to SNAP benefits in 2014. The impact is
greatest for the most poor, moving 13 percent of participating
households from below to above 50 percent of the poverty line as it
improves their well-being with better access to food resources. The
Supplemental Poverty Measure shows that SNAP reduced child poverty by
almost three percentage points in 2014--the largest child poverty
impact of any safety net program other than refundable tax credits.
Evidence is clear that food-focused SNAP benefits increase household
food expenditures more than an equal cash benefit would. But SNAP does
not just help relieve short-term hardship. SNAP's benefits are
especially evident and wide-ranging for those who receive food
assistance as children, including long-run improvements in health,
educational attainment, and economic self-sufficiency.
SNAP also benefits local businesses and economies through its
countercyclical economic impacts. During economic downturns, every $1
in new SNAP benefits generates up to $1.80 in economic activity. Every
time a family uses SNAP benefits to put food on the table, it benefits
the store and the employees where the purchase was made, the truck
driver who delivered the food, the warehouses that stored it, the plant
that processed it, and the farmer who produced the food. Nearly \1/4\
of all SNAP spending in grocery stores and supermarkets reaches
American farmers.
As this Committee continues to review SNAP, I want to speak
candidly about the proposal raised by some to change SNAP into a block
grant provided to states; such a change would have significant and
negative consequences for the SNAP program. A block grant structure
would significantly erode SNAP's responsiveness to those it serves and
ultimately be a step backwards in the national fight against hunger. As
a former Commissioner in three states, I would like to share my
concerns about converting one of the most effective programs we have
for addressing hunger, particularly among children, into a block grant:
Currently, SNAP offers a national nutrition safety net. Its
design recognizes that poor and low-income households need help
affording food in every region of the country and a national
program ensures that no matter what state or community a family
lives in, if the family doesn't have enough money, it can get
the help it needs to put food on the table.
Moreover, SNAP responds to changing economic circumstances
efficiently, effectively and immediately, expanding when and
where the economy is weak with benefits that flow to
communities, states, or regions of the country that face rising
unemployment or poverty. A block grant would not be able to
respond in this way, or even meet the needs of families
affected by natural disasters and other unforeseen
circumstances. A fixed block of money, even with some mechanism
to adjust for changes with need, will never respond without
costly delays that leave hard-hit communities without the
resources they need to help families afford food. As important,
under a block grant sagging local economies would also lose the
automatic countercyclical boost that SNAP offers. Evidence from
the Great Recession shows just how important the current
structure is to ensuring that SNAP benefits go where they are
needed during a downturn. The recession was deep and affected
every state, but some states saw their economy flounder earlier
than others. No formula had to be used and no decision had to
be made by the Federal Government to ensure that Texas had the
resources necessary to cope with rising SNAP caseloads in March
2008 while Massachusetts' caseload did not begin to rise
dramatically until January 2009.
SNAP allows benefits to be redeemed across state lines.
National standards for retail store approval and monitoring
protect integrity. Block grants could lead to differences in
retail store and food eligibility that would limit participant
access to food, cause confusion among retailers and clients, be
costly to food retailers, and negatively impact local
economies.
Block grants tied to past spending levels leave no room to
address low participation rates among eligible working families
or elderly. States could not encourage participation among
vulnerable groups without cutting benefits for others to
accommodate increased caseload.
Some have argued that block grants are needed to allow states
flexibility to tailor SNAP to specific needs. These arguments fail to
consider the significant flexibilities that states already have
available for this purpose. These SNAP flexibilities, many described
earlier this month at the Committee's hearing on state options, have
made the program more efficient, accurate, and effective. States have a
wide array of options under existing SNAP rules to simplify operations,
meet special needs, and design locally-responsive employment and
training programs. By streamlining reporting requirements, adjusting
certification periods, standardizing deductions for certain living
expenses, and aligning SNAP with other Federal programs, states can
target resources and better serve eligible households. Additionally,
states may choose to uphold, eliminate, or modify the drug felon ban,
including requiring that persons with drug felony convictions be tested
for drug use as a condition of eligibility; and they may opt to include
a photo on the household's EBT card. During my tenure at the
Department, I have not had one commissioner or governor ask that we
block grant the program, as they realize the current partnership and
options work, and work well.
States may also pursue regulatory waivers that further the purpose
of the Program, often using creative strategies, while maintaining the
needed balance between access and integrity. Many of these innovative
solutions leverage technology and provide good customer service, while
ensuring that the basic protections and standards required by law are
maintained. For example, sixteen states have been approved for a waiver
to provide secure electronic notices to clients who opt to receive them
that way, rather than on paper. Fourteen states are operating under
waivers to conduct unscheduled SNAP eligibility interviews, where,
rather than prescribing a set time that may not work for the client,
the household is provided with a notice and number to call at their
convenience to complete the interview. These innovations through the
waiver process allow us to test improvements that can, if they work, be
expanded nationwide, but if they do not work, we have an opportunity to
learn from that and not repeat the same mistake in other communities.
While flexibility is critical to ensuring that states can meet the
needs of their residents facing difficult circumstances, Members of
this Committee have criticized states for how they have used their
flexibility, and sought to constrain it in certain areas. The most
notable of these is states use of broad-based categorical eligibility,
an option by which states extend eligibility to households that receive
a non-cash benefit funded by TANF. Conversely, there are examples where
states are not taking options favored by the Committee. The
Agricultural Act of 2014 codified existing FNS rulemaking that allows
states the option to withhold issuing replacement cards to households
with excessive requests, defined as five or more in a year. FNS
provided states this option as excessive card replacements may be an
indicator of potential benefit trafficking. To date, only three
states--Iowa, Massachusetts, and Michigan--have adopted this state
option. Conversion to a block grant would weaken the ability to ensure
consistency across states in areas of interest to Congress. SNAP is
designed to strike the right balance between national standards and
state and local flexibility. Its national structure, which is
fundamental to its success, should be preserved and strengthened.
As vital as the program is to so many, we can all agree that it
would be better if fewer families needed to utilize SNAP because
poverty and need were lower. And while the trends are pointing in the
right direction--we are currently projecting a 2.3 percent decrease in
participation for Fiscal Year 2017--some ask, why haven't we made more
progress in reducing the need for SNAP, given the reductions in
unemployment in recent months?
While overall unemployment has declined, unemployment rates for
some workers remain far higher than average. Bureau of Labor Statistics
data show that unemployment rates for high school graduates are
substantially higher than for college graduates. Workers without high
school diplomas are even more likely to be unemployed, and their wages
are likely to be far lower than those with more education. Furthermore,
some citizens have trouble entering the labor force because of criminal
records or other problems from years past. And, many who have jobs do
not get the hours and wages they need to meet their food needs but may
not be eligible for many other forms of assistance. SNAP is also
serving more eligible people because of state and USDA efforts to
streamline the program to ensure that those who need benefits are able
to access the program with less hassle and paperwork.
As a senior Federal official responsible for this program, and as a
former State Commissioner, I can tell you without reservation that the
best way to reduce the number of low-income people on SNAP is to
connect them with better paying jobs and support them with employment
and training. Our objective is to reduce the need for SNAP by helping
adults able to work to secure stable, good-paying employment, while at
the same time ensuring that those who do need help are able to get it.
One criticism heard repeatedly in some quarters is that SNAP
discourages work. This claim does not hold up under close scrutiny.
Work is important not only to household economic success, but also to
the well-being of families more generally. The claim that SNAP does not
support work reflects more ideology than evidence:
In contrast to commonly heard rhetoric, SNAP does have work
requirements. In general, those who are able to work must
register to do so, accept a job if offered, and not voluntarily
quit or reduce work hours in order to get SNAP. This
requirement is not waivable. In FY 2015, 13.6 million SNAP
participants were registered for work.
Many of those who receive SNAP and can work, do work--the
latest data shows that among SNAP households headed by an adult
who is not elderly or disabled, more than \1/2\ work. Studies
show that more than \2/3\ of new SNAP participants are in
households with earnings. Among SNAP households with at least
one working-age, non-disabled adult, more than 75 percent work
in the year before or after receiving SNAP.
SNAP's benefit structure is designed to support and
encourage work by mitigating the benefit ``cliff''. When a SNAP
participant increases their earnings, their SNAP benefits
decline gradually by 24 to 36 for each dollar earned--a
strong incentive to work longer hours or prepare and search for
higher-paying employment.
SNAP's Employment and Training (E&T) program helps
participants prepare for and secure good paying jobs, serving
about 600,000 SNAP participants in FY 2014 and more than one
million participants in FY 2015. FNS recently established the
Office of Employment and Training to better target E&T
resources to the most effective strategies.
States have considerable flexibility in designing E&T
programs. They may target specific populations or geographic
areas, operate mandatory or voluntary programs, partner with
other state or local agencies to provide services, develop
third-party reimbursement models, and decide which services to
offer to E&T participants.
We are also working with ten states to implement the E&T
pilot projects authorized by the 2014 Farm Bill. These projects
were awarded in March 2015 through a competitive selection,
along with a rigorous evaluation to determine their
effectiveness in helping participants prepare for and secure
good paying jobs. We look forward to encouraging results from
these pilots, to help participants improve their prospects for
self-sufficiency with good paying jobs and long-term career
aspirations to help them achieve and maintain independence.
And earlier this month, the Department selected ten states--
Arizona, Arkansas, California, Maryland, Massachusetts,
Michigan, Minnesota, Missouri, North Carolina and Tennessee--to
take part in the SNAP to Skills project, a peer-to-peer effort
to help state agencies improve their SNAP E&T programs by
drawing on best practices from other states. This project,
which we propose to continue in the FY 2017 budget request,
underscores the critical role of Federal oversight and
technical assistance in helping states improve their
effectiveness.
In addition, able-bodied adults without dependents (ABAWDs) are
only eligible for SNAP for 3 months in any 3 year period unless they
are working or participating in qualifying education and training
activities. Some have argued that states should end the practice of
seeking waivers of the ABAWD time limit in areas of high unemployment.
The law already makes this a state choice. To me, it is unwise to
impose time limits in places where ABAWDs seeking work are unable to
obtain jobs because the economic conditions are particularly difficult.
Moreover, all states should be utilizing their E&T resources to help
ABAWDs prepare for and find employment so these individuals are able to
both move toward self-sufficiency and continue receiving SNAP while
preparing to obtain stable, good-paying jobs. Unfortunately, too many
states do not take this responsibility seriously and leave substantial
E&T resources, including 100 percent Federal funding, unused. In FY
2015, states returned $18 million in 100 percent Federal funding, and
21 states did not take advantage of any of the Federal matching funds
that are available to them. It is both cynical and an affront to
decency to fail to use the tools available to make SNAP effective in
supporting work.
USDA is also working to support healthy food choices in SNAP:
We have made great progress in providing better access to
farmers' markets and farm stands, with nearly 6,500 of these
outlets now capable of redeeming SNAP benefits. We are working
to expand this reach even further. In 2015, FNS equipped
approximately 1,770 farmers' markets and farm stands with
wireless SNAP EBT equipment. Redemptions at farmers' markets
reached $19 million in FY 2015, and we hope to see that number
continue to grow.
We recently published a proposed rule to implement the 2014
Farm Bill provision that increases the range and depth of
healthful foods that SNAP-authorized stores must offer.
In 2015, USDA awarded $31 million through the farm bill-
authorized Food Insecurity Nutrition Initiative (FINI) grants
for projects to incentivize fruit and vegetable purchases among
SNAP participants; more grants will be awarded very soon.
And we continue to advance and improve the effectiveness of
SNAP's Nutrition Promotion and Obesity Prevention grant
program, more commonly known as SNAP-Ed, by working to ensure
that funded strategies are based in strong and emerging
evidence, and increasing focus on policy, systems, and
environmental approaches as endorsed by public health experts.
The Department has moved energetically to implement the nutrition
provisions of the 2014 Farm Bill promptly. Non-discretionary provisions
affecting eligibility and benefits in SNAP and the Commodity
Supplemental Food Program were implemented immediately upon enactment
in Spring 2014. Today, rulemaking continues. Many rules will codify
changes that are already implemented; several dealing with SNAP
retailer issues are still under development. As I noted, USDA recently
proposed a rule implementing changes to SNAP retailer requirements
mandated by the Act. Other farm bill accomplishments include:
USDA utilized the increased funding provided by the farm
bill and added new 2 year spending flexibility for TEFAP in
Fiscal Year 2015; the President's Fiscal Year 2017 budget
requests additional TEFAP funding.
The multi-agency Task Force on USDA Foods now convenes
quarterly to explore potential improvements in USDA Foods.
We worked closely with a group of Tribal program operators
and nutritionists to select and directly procure traditional
and locally-grown foods for the Food Distribution Program on
Indian Reservations (FDPIR). The program now offers bison and
blue cornmeal, and more traditional local foods are in the
process of being approved. The President's budget requests
additional funds for this effort.
The Department has increased the purchase of Kosher and
Halal foods, adding Kosher canned salmon to TEFAP options in
2014, and Kosher and Halal certified tomato sauce and Kosher
peanut butter in 2015. States have ordered over $13 million of
these foods to date.
We have launched most of the pilot projects authorized by
the Act, including the SNAP E&T pilots, the pilot to offer all
forms of fruits and vegetables in the Fresh Fruit and Vegetable
Program, and the pilot to allow schools to procure unprocessed
fruits and vegetables with their USDA Foods funds.
The studies authorized by the Act are complete or nearing
completion. A study of the impact of eliminating cash issuance
in the Puerto Rico Nutrition Assistance Program is complete,
and studies on the feasibility of operating SNAP in the
Commonwealth of the [Northern] Mariana Islands, and nutrition
assistance administration by Indian Tribal Organizations, will
be released in the next several weeks.
As the Child Nutrition reauthorization process is underway,
although not under the jurisdiction of this Committee, I know there is
great interest here, so I would like to provide an update on the school
meals programs. Schools around the country have made tremendous
progress in improving the nutritional quality of school meals, working
hard to effectively implement the meal standards FNS finalized in 2012.
Today, over 97 percent of schools have met the meal patterns. For those
few that are still working to reach this goal, USDA is supporting
implementation with its robust Team Up technical assistance program,
and providing flexibilities to those schools with specific challenges.
Following the standards literally pays off for schools, as they receive
an additional 6 for each meal that meets them--the first non-
inflationary reimbursement rate increase in over 30 years.
Participation in the school lunch program has returned to levels near
those before the patterns were implemented, and participation in school
breakfast has grown robustly. Many schools are sourcing fresh, high-
quality, local ingredients through Farm to School programs, which
operate in school districts of all types--large and small, rural and
urban--to connect local farmers with their local schools and help them
implement the meal improvements--a clear ``win-win.''
Updated school meals standards were endorsed by over 350 nutrition
and health organizations as the right thing to do for children's
health. And we are seeing hard evidence of success: recent studies from
Harvard and the University of Connecticut are showing positive outcomes
from these standards, including evidence from a number of schools that
students are eating more fruits and vegetables and that there has been
no increase in plate waste.
Making healthful school meals accessible to low-income families
continues to be a priority for our agency. The Community Eligibility
Provision (CEP) is an option that allows school districts in high
poverty areas to offer free school meals to all of their students. It
reduces the administrative burden on schools and families associated
with collecting and processing household applications, but retains the
sharing of cost between USDA and local and state authorities that is
central to the traditional certification and reimbursement approach. In
just its second year of nationwide implementation, CEP is now reaching
more than eight million students nationwide in about 17,000 schools and
3,000 school districts.
Because hunger does not take a vacation during the summer months
when school meals are unavailable, we have expanded the Summer
Electronic Benefit Transfer (EBT) for Children demonstration pilots
over the last 2 years, and the President's FY 2017 Budget proposes to
stand up a permanent, nationwide program. Rigorous evaluations of
Summer EBT pilots demonstrate the program effectively reduces food
insecurity and improves nutrition. In tandem, we have expanded the
Summer Food Service Program. In total, summer meals sites have served
over 1.2 billion meals to low-income children since 2009.
The Child Nutrition reauthorization process also provides an
opportunity to build on the success of WIC, which uses science-based
nutrition standards to ensure its food packages contribute effectively
to meeting the nutrition needs of low-income pregnant and postpartum
women, infants, and young children. Several studies found the food
package changes we made may have had positive impacts on early
childhood obesity and have increased preschoolers' consumption of
fruits, vegetables, whole grains, and low fat milk. We are making great
strides in transitioning to EBT, which will improve the shopping
experience for both participants and vendors.
Finally--as we have done since the beginning of this
Administration--we are committed to continually improving the integrity
of nutrition programs. Good stewardship of tax dollars is one of our
most important objectives;. USDA has long recognized that the programs
cannot succeed without strong public confidence. That is why we
continually strive to improve program oversight and to identify,
penalize, and exclude those who seek to defraud the programs, in order
to preserve benefits for the vast majority of participants who play by
the rules and genuinely need help ensuring their families have access
to adequate, nutritious food.
We are proud that SNAP maintains one of the lowest payment error
rates in the Federal Government and continue to build on our progress
in this area. FNS works directly with states to offer guidance and
develop corrective action plans in cases where the payment error rates
are above six percent. We recently issued new policy to further
strengthen oversight of the quality control process in light of the
recent OIG audit. USDA had already identified many of these issues and
initiated action on our own reviews, which indicates that our controls
and policies are working as intended. FNS is already implementing
measures to effectively correct these issues.
FNS has also made tremendous strides in rooting out bad actors on
the retail side of SNAP. In Fiscal Year 2015, we issued 2,693 sanctions
against retailers that had committed violations. Overall traditional
investigative and analytic investigation outcomes increased by 21
percent during the same time period. We continue to work to identify
and eliminate fraud, waste and abuse.
We are also working aggressively to limit improper payments in the
child nutrition programs. The latest school meal integrity study found
applicant misreporting, though sometimes unintentional, to be a
significant source of payment error, in addition to other sources of
error that are not related to applicants. Strategies such as direct
certification and Community Eligibility reduce reliance on household
applications while also expanding access and reducing administrative
burden on families and schools. For times when applications are needed,
we are working to improve the application process in order to minimize
the chance of errors by applicants and reviewers. Some such efforts
include the development of a prototype electronic application and the
implementation of new, tested strategies to improve the process of
verifying information on applications without discouraging
participation of eligible children. As required by the Healthy, Hunger-
Free Kids Act, we have developed a uniform accountability system for
state oversight of school meal programs.
The American public believes in helping individuals and families in
need put healthy food on the table--but they want to know it is being
done in an efficient and wise way. That is why we will continue to
battle error and abuse in all of our programs to assure these vital
programs will continue to be there for those who truly need them.
As I hope I have underlined throughout the testimony today, we are
making enormous efforts to further a healthier America. It's important
to note that the nutrition programs--from meal standards, to WIC foods,
to nutrition promotion in SNAP--are grounded in scientific evidence and
nutritional recommendations, including the Dietary Guidelines for
Americans (DGA). Every 5 years since 1980, a new edition of the DGA is
released in order to promote health and prevent chronic diet-related
disease for current and future generations. The Dietary Guidelines is
the nutrition policy backbone for this country. It not only is the
cornerstone of USDA and U.S. Department of Health and Human Services
nutrition programs, it also informs nutrition standards for our
nation's military and other Federal needs. In addition, it is essential
to the work of nutrition and health practitioners and serves to inspire
sectors and industries that are all part of what our nation consumes
daily. The 2015-2020 DGA focuses on the importance of achieving healthy
eating patterns. The current body of evidence shows that a healthy
eating pattern as a whole package is more than the sum of its parts and
may be more predictive of overall health and disease risk than
individual foods or nutrients. As with previous editions, the latest
DGA provides information for policymakers and health professionals to
help everyday Americans make sound decisions. It also notes,
importantly, that healthy eating patterns are not one-size-fits-all.
The 2015-2020 DGA embodies the idea that a healthy eating pattern is
not a rigid prescription, but rather, an adaptable framework in which
individuals can enjoy foods that meet their personal, cultural, and
traditional preferences and fit within their budget. As we move into
implementation, we look forward to improving the nutritional value in
our various programs to reflect the most current body of science
pertaining to healthy eating and to doing our part to help the public
achieve healthy eating patterns.
Thank you for the opportunity to join you today. I look forward to
any questions.
The Chairman. Do you all have opening statements, or are
you just answering questions?
Ms. Rowe. Just answering questions.
The Chairman. Well thank you very much. I appreciate that,
and I recognize myself for 5 minutes.
Mr. Concannon, on the retailer proposed rule that has taken
some 2 years to get to where you are right now, there is a lot
of concern about the interpretation of the interpretation. I
met yesterday with some convenience store owners who are
particularly concerned that you intend to intentionally drive
them out of the delivery system that, right, wrong, or
indifferent, rural America has to have in the fight to provide
food to rural America. Not everybody lives within 3 miles of
Whole Foods or Harris Teeter or whatever.
So can you talk to us about the seven different varieties?
Does ground beef and sliced beef count as one variety or two,
and how many of each individual items has to be on a shelf for
that to be a qualifier?
Mr. Concannon. Yes, Mr. Chairman. I appreciate the
question, particularly about that proposed rule because it was
just released within the last 2 weeks, and I want to emphasize,
as I mentioned in my oral testimony, it is a proposed rule.
That proposed rule is intended to implement a provision in the
Agricultural Act of 2014, the farm bill, that directed us and
the purpose of that, to strengthen the stock in stores, is
really to provide additional choices for low-income Americans.
The rule as proposed is just that, proposed. Our goal is to
make sure that it is a very workable rule for stores. So for
example, the questions you have raised, can two types of meat
be counted, or let's say, ground beef versus sliced beef or
pork chops versus----
The Chairman. Bacon.
Mr. Concannon.--bacon, as an example. We want the rule, the
final rule to be reasonable, to one that reflects the ability
of stores across the country. I had the occasion this past week
to meet with store owners from Iowa, the state in which I live.
I am very familiar with the importance of those stores in rural
areas. I want to assure the Committee--and another Member here
today has raised questions with me--that I want to assure the
Committee that the proposed or the final rule will reflect
reality and will not inadvertently cost us access to those
needed stores in rural or even urban areas of the country.
The Chairman. Okay. Ground beef and sliced beef, one or
two? Skim milk and whole milk, one or two?
Mr. Concannon. If left to me on the ground--I am not sure
about the milk one, but certainly on the beef one I would count
those as two items.
The Chairman. As two different varieties, okay.
Mr. Concannon. Yes.
The Chairman. What about the volume of items available? I
am told they have to have like six pieces of whatever, and
obviously in convenience stores, shelf space is at a premium.
What is the proposed rule?
Mr. Concannon. We are going to look at that very carefully.
There is a requirement that, again, I know the estimated cost
independently assessing this estimated that it would cost
stores currently just meeting the minimum to add about $140 in
stocking costs, but we want to make sure that it is----
The Chairman. Is that per day, per week?
Mr. Concannon. No, no, that would be the initial stocking
to meet it, and then to the extent that that item sells out, it
would be replaced. But if you are selling it, you would be
replacing an item that you made a profit on.
The Chairman. So what is the rule with respect to the
volume, do you have to have six cans of tomato soup?
Mr. Concannon. There are individual items, and I am not an
expert on the actual derivation of the individual items in it.
The Chairman. Okay.
Mr. Concannon. I did sit and listen to industry folks and
ensured them we are very committed to listening carefully.
The Chairman. Okay. Are you all responsible for the rule,
are either of your organizations responsible for the proposed
rule?
Ms. Rowe. Within the Food and Nutrition Service's
administration, yes.
The Chairman. All right. I need you to have your microphone
on. Chicken noodle soup has multiple ingredients. How would
that fall into the guidelines?
Ms. Rowe. Well, right now I can honestly say that as we are
hearing this information from the various retailers, we are
looking very carefully to make sure that as we look at products
that have noodles and chicken in that product, whether that
should be counted as a single product or different. But it is
so new, sir, that it is important to us that just as we are
having this discussion with you today and with other Members
and others that we hear what the impact of these rules will be.
The Chairman. Okay. Two real quick ones. Did you have a
retailer on the team that wrote the rules? Did anybody on your
team have retail experience? And the other question is, 2 years
to put the rule----
Ms. Rowe. No.
The Chairman. Ma'am?
Ms. Rowe. No, we did not--I am sorry, sir. We did not
have----
The Chairman. So no one on your team had actually ever
worked at a grocery store or anything like that?
Ms. Rowe. No, sir.
The Chairman. Okay. So 2 years in the making, 60 days, you
don't have to answer this right this second, but I would
appreciate you considering an extended comment period to maybe
clear another 60 days, because this is a big deal, and what I
am hearing from you is proposed. You are flexible. You want to
hear from everybody and so the idea of giving folks plenty of
time to make that happen, we would much appreciate it.
Ms. Rowe. Yes, sir.
And with that, I will recognize Mr. McGovern, for 5
minutes.
Mr. McGovern. Thank you very much. I want to thank all
three of you for being here, and I want to thank you for the
work that you do. I appreciate it. Mr. Concannon, you raised
the issue about block granting of SNAP, and I just want to say
for the record, I appreciate you not tiptoeing around the
issue, because I am very, very concerned about this.
As you know, the Republicans passed their budget in the
Budget Committee yesterday, and in my opinion, it contains some
of the most severe budget cuts in modern history to assistance
that would help Americans of limited means. But it also goes
one step further. It calls for the block granting of SNAP,
which is something that has been a regular in a lot of
Republican budgets.
I am deeply worried about this because I am worried that
this is the direction that the majority in this Congress want
to move in, and that would be a huge, huge mistake. People
complain that there were a lot of people enrolled in the SNAP
program during this economic crisis that we are now getting out
of. Well, that is the way it is supposed to work, right? If we
were at an all-time high in job numbers in this country, and
everything was just perfect, we wouldn't expect very many
people that would need to rely on SNAP. It is when there is an
economic downturn that we do, and thank God the program is
there.
Now I am worried about block grants. I am worried about
more work requirements, when, in fact, we know this group of
able-bodied adults without dependents, a number of them are
going to lose their SNAP benefits because they can't find a job
and they are in states where they can't get involved in a
worker training program. And, this budget that is being
proposed would cut worker training programs.
So I would welcome the opportunity for you to maybe expand
a little bit about why block grants are a bad idea, and why
states have a lot of flexibility, and what are we going to do
about this able-bodied adult without dependents population.
Many of them, by the way, are veterans who have served our
country and have fallen on hard times, and they are going to
lose their food benefits, which to me is outrageous.
Mr. Concannon. Thank you very much for the question.
As some Members of the Committee are aware, I was a State
Health and Human Services Director in three states over a 30
year period, so I am very familiar with the history of block
grants, not just in the Food Stamp Program. Happily, it hasn't
occurred yet. But in other arenas, one of the principle areas I
look at is in the TANF, or the Cash Assistance Program. Here we
have been through the deepest recession in 100 years, and TANF
was missing in action during that time. Frankly, that is part
of the reason why we have had growth in the SNAP program,
because we were the only game in town. We were the only source
of support for many families. We have a very high percentage of
SNAP households now who have no other source of support, even
though by Congress's definition, it is supposed to be
supplemental, not the only source of support. I would also
point out, we have the highest percentage of people receiving
the SNAP benefit right now who are working, who are in the
workforce in the history of the program, but it is reflective
of the fact that they are not getting enough hours and they are
not paid enough on an hourly basis.
Mr. McGovern. Right.
Mr. Concannon. So as you note in your question, SNAP, by
design, is intended to be responsive. We are in the process of
receiving a request from Louisiana, for example, where they
have had terrible flooding, for disaster SNAP assistance. That
is another feature of the program, when we have tornados,
floods, earthquakes. The snowstorms we have even had in some
parts of the U.S. The program is responsive. Block grants don't
provide that option to states, and consequently, people get
squeezed out and not responded to. It is a very bad idea from
the point of view of effectiveness. It doesn't save money in
terms of administration. SNAP is one of the least expensive
programs administered state or state and county across the U.S.
So it is a bad idea on that front.
ABAWDs, you make a very important case. That is why in my
testimony I took the occasion to remark on the fact that even
though this Congress and previous Congress sets aside funds
from Employment & Training to states, based on their SNAP
rules, we have had states who allow that to lapse, who aren't
interested in using it as a way of providing training and
skills to their underemployed, and they can target those ABAWD
folks if they so choose. But it is a matter of just we are too
busy or we are not focused on them.
I had a conversation with a governor yesterday in the
southern part of the United States. When I pointed out to him
that in previous years, his state had lapsed funds that could
have been used to provide training, training for long distance
truck drivers, training for people in the food service
industry, training for people in healthcare, because in many
parts of the U.S. and towns, hospital systems are the largest
employers in those towns.
You need to have the full complement. I think SNAP really
works well. It is very efficient. It is not perfect, but it is
very efficient, and as noted, it brings people out of poverty
as well.
Mr. McGovern. Thank you. Thank you.
The Chairman. The gentleman's time has expired. One thing,
Mr. Concannon, the reason why those funds lapse, is that
because the state failed to match that money?
Mr. Concannon. No, it was not. Thank you, Mr. Chairman. No,
there are two parts to the Employment & Training funds. States
receive collectively across the U.S. about $94 million a year
in 100 percent Federal funds.
The Chairman. Okay.
Mr. Concannon. It goes to the state agency. That is the
money that was being lapsed.
The Chairman. Okay, I just wanted to make sure. All right,
thank you. With that, Mr. Scott, 5 minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman.
You suggested that SNAP lifts people out of poverty. I
would suggest that maybe a more accurate description would be
that it reduces the impact of poverty on their lives.
But one of my primary concerns is that if we look at low-
income people, not just in America, but around the globe, it is
the rising cost of food that hurts low-income people more than
anybody else, and yet, we see continued moves by the
government, mostly in other agencies besides yours, that are
raising the costs of producing crops in the United States. If
you look at the attacks, if you will, on new seeds that allow
us to have improved yields, which means that we have more food
available to help people, if you look at the attacks on
fertilizer, on pesticides, and the other things that are coming
from certain groups and certain agencies inside the United
States today, my question would be for you, as these attacks
continue to come on production of agriculture, what do you
think the impact of the average household's grocery bill is
going to be?
Mr. Concannon. Well, I am not an expert in terms of
forecasting that, but I am very mindful of the fact that the
current situation in the U.S., we have the least expensive food
in the world, and that is a product of the production practices
and the ability of American agriculture to produce these foods.
I am very mindful of that when I travel around the country.
Mr. Austin Scott of Georgia. And that is accurate, but
those production practices today are under attack, in many
cases, by some of the same people that on one day wear the hat
for we should be doing more for people to alleviate hunger, and
the next day they turn around and they wear another hat trying
to take technology out of seed production and take fertilizers
and pesticides off the market. And there is a real impact to
that.
Mr. Concannon. I know the area in which our mission area
here is directly engaged in has been promoting; for example, I
spent time last week out on the West Coast visiting schools.
This is National Nutrition Month. And we have been promoting
something broadly referred to as Farm to School efforts across
the country, ways of better engaging school systems to
understand that food just isn't magically produced. Somebody
has to grow it. Somebody has to raise it, and that to the
extent that we can promote access to agriculture for students
when they are in the school years, they will have a better
understanding of where food comes from and the importance of
looking after the soil, looking at promoting good growing
practices, and that is one aspect of----
Mr. Austin Scott of Georgia. And this is where we just have
a fundamental difference of opinion, in that I trust the people
at the Tift County school system, which my son is in, which my
mother taught in for years, which I am very proud that my
sister was just designated as teacher of the year in, we don't
need somebody from Washington, D.C. telling us what to feed the
students in the school system. We, as the parents, the local
school board, the local teachers and the cafeteria, we can
handle that without being told from Washington what to do.
My primary concern for agriculture as a whole is when we
see the EPA, for example, taking products off the market that
we need to maintain the current agricultural production
standards that we have in the United States, the end result of
that is that we produce less food per acre, and the end result
of that on the consumer is higher food prices. Most of these
problems don't come from the USDA. We have, certainly, what I
would describe respectful differences of agreement. I do
believe it should be block granted to the states. I do think
that we have a responsibility to go after the fraud. Whether
real or not, the perception of the fraud is a problem for the
program because the American citizens have lost faith in
Washington being able to stop the abuses of the program. And so
when we see those abuses, we need to take action on them sooner
rather than later.
And with that, Mr. Chairman, I will yield the remainder of
my time.
The Chairman. The gentleman yields back. Ms. Graham, for 5
minutes.
Ms. Graham. Thank you, Mr. Chairman, and if I could just
take a moment to congratulate your sister, Congressman Scott.
That is quite an achievement. Congratulations.
And thank you all very much for being here today. I
represent the most rural district in all of the State of
Florida. We have a lot of challenges that we face with high
poverty in those rural areas as well. So I commend your goal of
healthy eating. I myself would like to eat healthier. So I
commend the goal.
However, the unique challenges that our rural, high poverty
areas face, what do you foresee in terms of ways to overcome
that in the goal of healthy eating?
Mr. Concannon. I appreciate the question. I was in Florida
just the week before last, central Florida, and in Orlando, and
Orlando, is one of the busiest, most visited places in the
world, apparently. But I was in two areas, one of relatively
wealthy schools, another deeply impoverished student
population. We were there to applaud and also promote
additional access to Farm to School, to local purchasing of
fruits and vegetables. California and Florida, one might say,
they both have such diverse agricultural production capacity,
yet it is important to make sure that schools are doing more
local purchasing and that students are educated and socialized
into eating these locally grown foods.
So fruits and vegetables are part of our focus during our
visit there as well, but we are also urging, for example, to
your question about rural poverty. We are wanting to make sure
that schools are availing themselves of the school meals
program, not just breakfast, but also the fresh fruits and
vegetables program, and the emergency suppers. I witnessed that
at one of the high schools when I was in the Orlando area.
Available where we have very high percentages of poor children,
late in the afternoon, these were students that had been part
of the band or part of basketball practice that their last meal
may have been at 11 o'clock in the morning. But we're also
promoting one of our biggest challenges, summer feeding. And
the President's budget that was heard over in the Budget
Committee earlier this year, it proposes to provide additional
resources that would be targeted to rural areas for the summer
feeding program, to electronic benefits. That is another area
that, again, we are very mindful of, of oftentimes rural areas
have structural barriers that aren't there for urban poor
people, and that we are very keen on connecting schools.
Schools are among the best sources of connecting. Backpack
programs, for example, on the weekends, many schools are doing
that now and they know that these may be the strongest source
of healthy foods for those students over the course of the
weekend.
So states like Florida, the Education Department folks were
with me, but the Agriculture Department in Florida actually
oversees school meals, and they are very committed to it. They
do a really great job from our point of view as a state agency
in endorsing and engaging these schools for meals.
Ms. Graham. Yes, I appreciate that, and Commissioner Putnam
is a friend, so I will relay that to him. Thank you so much.
As a follow up, I have also heard that there have been some
grants in rural communities. Could I recommend Florida's second
Congressional district for one of those grants? I think we
would certainly be able to benefit from that.
And I guess my follow up would be: how are these grants
functioning, and what is the goal of the grant program in the
rural communities in our state?
Mr. Concannon. Do you want to comment?
Ms. Rowe. Well, the purpose of the grants are to help us to
understand, first of all, the causes, what is creating, what is
contributing to hunger and food insecurity among children and
families who live in rural areas. What strategies seem to be
working? What best practices may be happening in one rural area
that can be migrated to another rural area? We are also
planning to bring together many of the rural communities who
are demonstrating new ways of approaching and addressing hunger
in their communities to talk about and to share. We need to
begin to also think about how do we address the silo effect
that happens in many of the programs. We have something that we
are working with as part of the Rural Child Poverty Task Force,
called the Two Generation Program that allows us to work in
rural communities, recognizing that in some situations it is
two generations that you need to work with. We are working to
be more holistic with families in addressing some of the issues
and needs that they have. That includes Employment & Training,
as well as the education and access issue.
So there is a lot going on, both at the Federal level and
at the state and local level. Rural child poverty is a major
focus, and it certainly has been in our summer feeding program
a major focus for the work that we are doing, and we are
finding new and innovative ways to connect children to sites
and to introduce to parents opportunities on ways in which they
can better meet the needs of their children.
Ms. Graham. Thank you. I know I am way out of time, but I
appreciate your responses and again, I would appreciate working
with you.
Florida was just designated as StrikeForce state, and I
appreciate that and hope we can work together in ways to better
serve our rural communities.
Ms. Rowe. Yes.
Ms. Graham. Thank you, and I yield back the time I no
longer have, Mr. Chairman.
The Chairman. The gentlelady's time has expired. I now
recognize the greenest tie in the room, Mr. Gibson, for 5
minutes.
Mr. Gibson. Thanks, Mr. Chairman, and thank you for your
leadership in pulling these hearings together. I find them very
helpful, and likewise, I want to express my gratitude to the
panelists. Thank you for your leadership.
I am going to be focusing my remarks on how well we are
doing in terms of eating healthy, but before I do that, I just
want to say how important your programs are to my people. I
represent largely rural areas in upstate New York, and I have
seen firsthand--I have gone to these programs and the
afterschool programs that are very robust in many ways,
learning, assistance, physical fitness, but then also a
nutrition component that is so critically important, and the
summer feeding program, which quite candidly, I am not sure
where our district would be without that. So I want to express
my gratitude for that, and also the backpack programs. And you
see my farmers really get heavily involved in this space, and I
am proud of their work as well.
Really what I want to do is to follow up on Congresswoman
Graham's question, and maybe dig a little bit deeper and ask
with the grants, what are we learning about best practices? Do
you have a website where you actually post some of this stuff
so my district can pull that down? And then the other part of
the question is with regard to the farmers' markets where we
are certainly endeavoring to eat more healthy.
In the farm bill I sponsored an amendment that had handheld
devices to help take the SNAP benefits. How well is that going,
and from an implementation standpoint, let me just pass it over
here and then we can maybe have a dialogue.
Mr. Concannon. Let me start with that last question on
farmers' markets. We are now up to just about 6,500 farmers'
markets across the country. One of the best ones in the whole
country, I have seen a number of them, but was in New York
State when I was there in the Rochester area, a long-standing
farmers' market that had tremendous choices, but very
affordable, generally locally grown from that central part of
New York State.
We are promoting that. We are expanding that further. We
meet with the Farmers' Market Coalition. As I mentioned in my
written testimony, incentives, financial incentives with many
farmers' markets, I saw one in California last week, are also
resulting and have been proven to result in more local
purchases, fruits and vegetables, dairy products, by households
attending those markets. And our underlying goal in that is
two-fold. One, to nudge people in the direction of eating
healthier, but also to put those dollars back in the local
community.
And in New York State, I saw some examples of mobile
farmers' markets, reconverted small, midsize school buses that
are purchasing from local farmers in that region of New York
what I refer to sometimes as imperfect fruits and vegetables, a
carrot that may not be quite shaped right or a beet or what
have you, but they are perfectly healthy and they are not quite
ready for prime time at Wegman's or a food store maybe. But
they are very healthy and available for families. And I saw
people streaming out of high rise buildings to avail themselves
of that. I have mentioned that as an example as I have traveled
the country that it is a way of also cutting down on food being
replowed into the ground. It helps the growers, but it helps
the consumers as well.
So we are promoting that, spreading those kinds of efforts
as we work with food pantries, food banks across the country in
part of our broad effort with growers and farmers.
Now on the school side, we are absolutely committed to
healthier eating, and that is working, by the way. Ninety-seven
percent of schools across the United States, I was in schools
last week in California, the week before in Florida, earlier
this week in Virginia--my colleagues here have been out
visiting schools as well--because that reinforces for us, when
we see it firsthand. And 31 million kids now are having lunch
at school, almost 15 million having breakfast at school. I know
the program is working. So yes, there are a few naysayers out
there, but they are not the majority by any means. The majority
of professional pediatricians, dieticians, people are deeply
committed to the core standards of getting healthier food to
American children.
So I am confident that this is going to pay off in
reduction of future healthcare costs by kids having been
brought up to eat healthier instead of depending upon calorie-
dense, less nutritious foods.
Mr. Gibson. Well, I thank you very much for that detailed
response, and indeed, our state, we use the financial
incentives as well to complement the Federal program.
And last, we are not wasting a single apple. We actually
put them in distilleries, too, and so you have to drink that,
but we are happy to sell it to you if you want.
So with that, my time has expired.
The Chairman. The gentleman's time has expired. Mr.
Aguilar, 5 minutes.
Mr. Aguilar. I don't want to take away from Mr. Gibson's
time talking about distilleries, but Secretary Concannon, I
appreciate seeing you here. Good to see you again. I was with
you on the West Coast when you referenced your trips, Farm to
School Programs. We visited Provision 2 schools as well. You
made me eat some imperfect vegetables as well that called
attention to the program.
You mentioned the Farm to School program, and if you can
just elaborate on some of the pieces within that program that
you think we may be able to build off of. If you could give us
a minute on that?
Mr. Concannon. Thank you very much.
We recently updated the survey of schools across the
country. There are roughly 100,000 public schools in the U.S.,
and some 43 percent of those schools now are actively engaged
in some aspect of Farm to School, either purchasing locally,
and now the most recent numbers are $800 million in schools are
being purchased from local growers, dairies, farmers. So that
is a good thing. Those are dollars going back in the local
economy.
But even more importantly from our point of view, the fact
that those are locally grown, kids tend to then be willing to
try them, to eat them, and say well, we grow them here. It is a
familiar product or it is made familiar to them. So one aspect
of Farm to School is purchasing locally. We have simplified our
regulations. We have made it easier for schools to do so. But
the other aspect of it is on encouraging schools to have
gardens. Not industrial size gardens, but they can be raised
beds. They can be a couple of acres. I have seen variations on
that across the country. But it seems to engage kids, and the
schools incorporate them into their science programs, into
their earth science programs so that kids come to know that
food just doesn't come from a Safeway. Somebody has to produce
it. Somebody has to grow it, and it has that beneficial impact
on students as well.
So that practice is growing across the country. It is a
very low-cost practice ultimately, but it is one that educators
have really embraced.
Mr. Aguilar. Thank you, and we visited with some farmers in
the region as well who are providing products to the school
district, and they had great recommendations about the program.
And the young people that we met with, one of the concerns we
heard from school district officials was they had signed up for
2 days of the program and they really could have used all 5.
They didn't know that they would be willing to use that
capacity, so they were going to modify that in the next school
year, which is an encouraging sign.
So thank you again for coming out to Upland and Fontana,
California. We greatly appreciate it, and if there are ways we
can continue to partner on these issues, we are all ears. And
thank you for your work. I appreciate it.
Mr. Chairman, I yield back.
The Chairman. The gentleman yields back. Thanks, Pete. Mrs.
Walorski, for 5 minutes.
Mrs. Walorski. Thank you, Mr. Chairman, and thank you all
for being here today.
Mr. Concannon, I just want to go back to that issue of the
retail stores and the convenience stores.
Mr. Concannon. Yes.
Mrs. Walorski. So my concern is twofold in this 15 percent
threshold area of this rule. Because I heard you say yes, you
are going to address it, yes, you are on it, and we talked
about it prior to this hearing as well. But the minute I hear
the word reality, that we are going to do this in reality, not
out here someplace else with a lot of unintended consequences.
I cringe when I hear the word reality in Washington, and so I
am already sending in a letter basically asking for what the
Chairman did, an extension period by which people can report
back in, and then second, on this issue of cooked or heated
onsite, before or after purchase, this 15 percent issue, where
did the 15 percent come? Was that just an arbitrary number that
somebody thought sounded good, or what is tied in with this 15
percent?
Mr. Concannon. Well first of all, let me say to the
question about extending the commentary period. We are actively
considering that, so I have heard that from the Chairman and
heard that from the floor----
Mrs. Walorski. Can we just ask you to confirm that today,
to put all of these stores at ease?
Mr. Concannon. I can't confirm it today, but there is news
coming very imminently, but I don't want to get ahead of the
process here.
Mrs. Walorski. Okay.
Mr. Concannon. We are actively considering that.
Now on the 15 percent side, it is an unfortunate way in
which that rule or proposed rule was constructed, because the
intent was really to get at not so much stores like a Casey's
out in the central part of the country----
Mrs. Walorski. In my district, right.
Mr. Concannon.--where they may sell a lot of pizzas or they
may sell a lot of donuts or other things that that would not in
any way make them ineligible as a SNAP recipient. The effort
here was to try to get at stores that are using it as an
occasion to really, for example, sell products that----
Mrs. Walorski. Are we talking about that Minnesota pizza
place where you can pay, like, some extra money and they heat
it up and you walk out the door and have heated food?
Mr. Concannon. Exactly.
Mrs. Walorski. Okay.
Mr. Concannon. That is the problem with it, yes.
Mrs. Walorski. Right, and the problem I have with that is a
little microcosm issue in a gigantic country like this with
literally thousands and thousands of these retailers being held
to account by somebody in a state that they have nothing to do
with.
My second question about this is though this issue of under
the same roof or in the same area. If I have a convenience
store, first of all, two things can happen to them. They can go
right now and start making all these accommodations for all of
these hoops that you want them to jump through, and they can
still get disqualified and not be able to retain SNAP for some
other little innocuous provision in here that maybe they didn't
see.
But if they are in a strip mall and a lot of convenience
stores and gas stations in the Midwest are certainly
accompanied now by strip malls and places around them, and they
happen to be connected to a Subway restaurant, and they are
going to get penalized under this provision, where did that
come from?
Mr. Concannon. Well, they are not going to, I am not quite
sure where your question is coming from on strip malls----
Mrs. Walorski. No, there is----
Mr. Concannon. If somebody has----
Mrs. Walorski. No, let me read it. So your agency proposes
to consider two separate entities selling food which operate
under the same roof to be a single entity for purposes of
eligibility determinations. If a retailer fulfills all of their
eligibilities such as depth of stock, why it is relevant that
the retailer operates under the same roof as the other entity
which is ineligible for SNAP with regard to the compliant
retailer's eligibility to participate in SNAP, how does such
provision promote SNAP's objectives? Gas stations in the
Midwest have Subway's and McDonald's under their roofs, and
they are still selling this food. How would these people
survive that entire clause?
Mr. Concannon. It is the same ownership, I am advised, is
the issue at times that----
Mrs. Walorski. Why does the USDA care who owns these
places? This is America.
Mr. Concannon. We are concerned that people may be
violating----
Mrs. Walorski. May be making a profit? May be providing
food to rural areas? This isn't corporate this is small
business.
Mr. Concannon. No, we are very committed. We have 195,000
small stores in this program, so it is some----
Mrs. Walorski. And how many of those 195,000 stores are
going to be impacted by these rules? How many? Potentially all
of them.
Mr. Concannon. No, not all of them, but there is a
significant number of----
Mrs. Walorski. What would the percentage be, because then
we have to take that percentage and translate it into the jobs
of the people that are working there in these rural areas where
there are virtually no jobs.
Mr. Concannon. About 13 percent of the SNAP benefits in the
U.S. are redeemed at convenience stores.
Mrs. Walorski. Are you looking at either rolling that back
or letting us know what reality means as to why USDA is looking
at ownership?
Mr. Concannon. When I use the term reality, what I said was
we are listening very carefully to the comment period. We are
inviting comments. We want to hear from people. I underlined in
my written testimony and oral testimony it was proposed because
we recognize that there is going to need to be accommodation in
the proposed final rule.
We don't want it to have an inadvertent effect on losing
capacity or losing access across the country, or even making
chains or a number of either independent or chain stores
ineligible for the program.
Mrs. Walorski. I appreciate it.
Thanks, Mr. Chairman.
The Chairman. The gentlelady's time has expired. Ms. Lujan
Grisham, 5 minutes.
Ms. Lujan Grisham. Thank you, Mr. Chairman.
Mr. Concannon, in your written testimony and even without
it, we would be clear about what your priorities are and your
requirements are, given the area that you serve within USDA,
but you mentioned specifically for the hearing today that
making healthful school meals accessible to low-income families
is a priority for your agency, for many of the reasons that
have been discussed as you have been answering questions.
But I see maybe a potential huge pitfall in this effort,
given your agency's commitment to this priority. But, I am
skeptical about it, after hearing comments and frankly speaking
directly with Secretary Vilsack, suggesting that we should
increase the school meal verification rate up to ten percent.
Now this significant increase, I believe, will result in
eligible low-income children being, quite frankly, kicked off
the lunch program. And as you know, the Senate's Child
Nutrition Reauthorization bill adopts Secretary Vilsack's
recommended ten percent verification rate, and while the Senate
bill exempts schools that are participating in the Community
Eligibility Provision, and strengthens direct certification,
and I am sure the intent there was to provide those balances--
but these provisions are not enough to ensure that kids are not
being denied meals that they are entitled to receive.
So let's talk about some New Mexico examples, which you and
I have talked about before, and you are not seeing a dramatic
increase in making sure that hunger is being productively
addressed among children in our state, as you know.
So here are the examples. Several schools are enrolled in
Title II. And when they do the reimbursement math, there is an
economic disincentive to switch to community eligibility
schools, and given, if you have seen our current state budget
climate, no one is moving or shifting from a budget that they
can rely on at a high level, even if it produces better results
for the kids that they are serving, to go to budget at a lower
level. Related to direct certification, New Mexico's direct
certification, as I am sure you are aware, and if you are not,
this is a good time to make sure that you are, is so bad that
most students are forced to use paper applications. So
increasing the verification rate will disproportionately impact
Hispanic children, and poor states like New Mexico, which is
extremely concerning, since New Mexico already ranks fourth in
child hunger, and has the highest rate of child poverty in the
country.
So did you consult with Secretary Vilsack? Is this your
recommendation or did he get this recommendation someplace
else?
Mr. Concannon. No, we were part of that recommendation, and
that----
Ms. Lujan Grisham. Can you tell me how you came to that
conclusion that that was a good recommendation, given the
information I just gave you about New Mexico?
Mr. Concannon. Yes. Yes, we came to that conclusion based
on the fact that as much as we love the school meals program,
as it is so urgently needed by children across the country,
including in New Mexico, one of the largest sources of improper
payments in the school meals program is to pay for those paper
applications you referred to.
Ms. Lujan Grisham. And yet, you know that that is
occurring. I am over here, sir.
Mr. Concannon. My office is very concerned about billions
of dollars----
Ms. Lujan Grisham. I am here.
Mr. Concannon.--being spent for households that could
otherwise share in the cost of that.
Ms. Lujan Grisham. But these kids--let me----
Mr. Concannon. That was the compromise in the Senate bill.
Ms. Lujan Grisham. I am reclaiming my time from the
witness.
These kids can't help any of those certification or
verification problems. They are not responsible for the waste
and issues that you addressed. So given that, what protections
are you proposing for the very children you are telling me that
you are trying to protect in my home state.
Mr. Concannon. There are a number of provisions in that
Senate bill, and by the way, I certainly hope that the House
will----
Ms. Lujan Grisham. Please list them for me.
Mr. Concannon.--actively consider the bill----
Ms. Lujan Grisham. And sir, I am here.
Mr. Concannon.--because it was negotiated with all the
parties and it includes not only provisions for direct
certification, community eligibility. There are ways in which
that ten percent percentage can be reduced, and that is the
commitment we have to work with states and school systems----
Ms. Lujan Grisham. Well, Mr. Concannon, I want to see those
directly, and I would also expect, quite frankly, given that
broad statement about what you are doing, that I want to see
what you are doing for New Mexico and all the other states in
the current situation where child hunger is significant. I want
those assurances from you that these schools are going to get
onsite support, and so are these families to ensure that no
family, given this standard, is going to be kicked off the
child nutrition program and be ineligible for that food service
in the education environment.
Thank you. I yield back.
The Chairman. The gentlelady's time has expired. Mr. Trent
Kelly, 5 minutes.
Mr. Kelly. Mr. Secretary, I thank the witnesses for being
here.
I want to go back. I think sometimes we fail to look at how
things affect rural communities, and we don't have public
transit in Mississippi, or if we do, it is very, very costly
and the people who need it the most can afford it the least, so
it is not available to them. It is available for different
purposes. The same thing when you are talking about some of
these things sharing the same roof, going back to Mrs.
Walorski's comment. We have truck stops which may have a Subway
in them or may have a McDonald's in them. The same ownership.
To certain people, that is the only option they have where I am
from. We have country stores. We still have those in
Mississippi in quite a few locations where they may sell a
certain brand of pizza or something inside of that. I think you
have to take into account and make sure, that may be the only
option that the people who need it the most have. It may be the
only thing within traveling distance.
So I just ask, to make sure that you look and don't take
away the only option that some people have to look at what
might happen or how someone could abuse something. Look at it a
little more specifically, and I just ask that you pay attention
to the comments, because there are unintended consequences to
the rule which you need to be careful and listen to the
comments and make sure that we don't have second and third
order effects that were not intended.
Mr. Concannon. I certainly appreciate that. Oftentimes, as
you may know, the Federal rulemaking process, there is a
commentary period and then it may be tweaked somewhat. I think
in the case of this proposed rule, there may be more than
tweaking needed to make sure that it is responsive to
communities like you cite.
Mr. Kelly. And recently, we have heard of EBT cards with
exceptionally large balances, some in excess of $10,000. Now
this doesn't necessarily mean something fraudulent or something
bad is going on; however, it does raise the question of what
circumstances have led to such large balances or such large
account balances. Can you discuss the process a state would
generally go through if they found accounts with large
balances? Is there some sort of threshold once met that a state
agency or administrating authority would be required to
investigate, and do they have to report that back to FNS?
Mr. Concannon. Thank you very much for that question.
We recently looked at that right across the country, and
states have an option right now on this very issue. If there is
no activity on the card, in other words, no transaction that
takes place for at least 6 months, the state may not remove it
entirely, but remove it from the account and wait for the
household to make contact with the state before they can use
any of that benefit.
In other cases I have seen, for example, the State of Ohio
will regularly look for balances and then calls households. The
survey that I saw, one, these large EBT accounts have not been
associated with fraud or trafficking, so I want to assure you
that it is not a source of fraudulent behavior. What they tend
to reflect are folks who are very frugal, people who may be
working now part-time or work getting some income, and they
tend to try to sit on this as a protection against later losing
a job or finding themselves in more dire circumstances.
So currently, we haven't seen it as, again, a source of
fraud. We know that states have the ability now for at the end
of 6 months to, in effect, remove it. There is a proposal, is
there not, now for----
Ms. Rowe. Yes, we are moving forward to implement the
proposal that was in the 2008 Farm Bill that would help us and
help states to manage this issue. We also know that states can
expunge an account for inactivity, so if there is no activity,
the account can be expunged. In many cases, what states will do
is when they identify high balances, they will contact the
participant. They will try and understand why. They are
everything from, as the Under Secretary said, being frugal to
someone has mental health issues and they have an alternative
payor, so some of their challenges need to be addressed as the
state goes forward.
Mr. Kelly. Thank you, and I thank the witnesses.
Mr. Chairman, I yield back.
The Chairman. The gentleman yields back. Ms. Kuster, for 5
minutes.
Ms. Kuster. Thank you, Mr. Chairman. Thank you for being
with us today.
This Committee has had, we are up to 12 hearings, on trying
to analyze every aspect of the SNAP program, but rarely do I
hear a lot of conversation on Capitol Hill about the benefits,
the demonstrated success of this program. So I just wanted to
use my time, if I could, in three particular areas. One, if you
could tell us of testimony or scientific evidence-based long-
term benefits of SNAP, particularly as to the health and well-
being of children and seniors, if there are any health benefits
that you can explain to us. The second area of inquiry is my
understanding is that the SNAP caseload is decreasing, and to
what you might attribute that, and then the third area of
inquiry is despite the success of all these programs, I do
continue to have a concern, particularly for children in my
area. It is a rural community. Weekends and summer programs,
because I am concerned that we still have children that may not
have access to food, and it will have a long-term impact on
health that will be detrimental to them individually and
expensive to our taxpayers.
Mr. Concannon. Thank you very much.
Let me start with the core target of the SNAP program is to
reduce food insecurity, and it does that very effectively. It
not only removes food insecurity for, in many, many households,
but also moves people up from the deepest food insecurity. So
it mitigates. It doesn't solve the problem, but it mitigates
some of the impacts of that.
We also have data that shows that it removes or moves up
out of poverty some 4.7 million people each year, and there are
recent studies that have been done that suggest that
considerably underestimates the impact on moving people out of
poverty.
Ms. Kuster. Could I ask you to stop for just 1 second? Mr.
Chairman, could I ask unanimous consent that these studies be
entered into the record with this hearing?
The Chairman. Without objection.
Ms. Kuster. Thank you.
Mr. Concannon. So in addition to the impact on poverty,
there are studies that have shown that the program as well has
an impact, as you noted, on children, but recent studies show
that adults who grew up in households in which the Food Stamp
Program was provided to them, that they have better health as
adults. So there are some longstanding benefits to it, in
addition to the here and now, so to speak, in the lives of
these households.
To your questions about children, as you know,
unfortunately, as often say, the time of year in which a child
in the United States is most likely to go hungry is the
summertime when school is out. So the Summer Food Service
Program, last year we had almost 50,000 locations across the
U.S. and Audrey Rowe here and her staff, we have been searching
from one end of the country to the other to engage more
typically not-for-profit, often religious, faith-based
organizations to sponsor these summer sites. Even with all of
that----
Ms. Kuster. Do you happen to have a number of the total
number of children served----
Mr. Concannon. The challenge is still that, for example,
during the school year, 21 million children receive meals free
and reduced in school. The total number of children served in
the summer was just under four million.
Ms. Kuster. Oh, wow.
Mr. Concannon. So there is a tremendous gap still.
Ms. Kuster. That is a big gap.
Mr. Concannon. That is why the President, frankly, in the
2017 budget proposal proposes to expand the electronic benefit,
because in rural areas, as we just heard from Congressman
Kelly, they don't have those bus systems. They don't have
transportation.
Ms. Kuster. Sure.
Mr. Concannon. In the summertime, especially. So the
piloted states across the country that have had that electronic
benefit transfer, that has been demonstrated, researched, to
have an even greater impact on reducing food insecurity.
So it works. It is very portable. It is not dependent upon
getting students to a particular site. But also, the budget
proposal that we entered several weeks ago also increases the
funding for non-congregate site, because right now, the Summer
Food Service Program is based on a congregate site model. We
would continue with that, but in other areas, for example, in
very hot climates, it may be difficult to expect that children
are going to stay out in a park when it is 100 or even higher.
So that is one of the options as well.
Ms. Kuster. My time is up. I have to cut you off, but I
just appreciate and hope that our Committee will help to share
the success of this program with the taxpayers so they will
understand the benefits. So thank you.
The Chairman. The gentlelady's time has expired. Mr. Yoho,
5 minutes.
Mr. Yoho. Thank you, Mr. Chairman, I appreciate it. Thank
you for being here.
I have several questions. One is the block grant. I see a
nanny state growing as Mr. Scott brought up. People know how to
feed themselves for the most part, but when I see the schools
in my state--I come from Florida--they can't cook in their
cafeterias because it has become so onerous for them to meet
the Federal standards and the food they don't like, so they
close down their kitchens and they are bringing that food in
and contracting that. That is what I see in my district. Yes,
sir, it is.
Mr. Concannon. Well----
Mr. Yoho. And I have been told over and over again they
have closed their kitchens down because of those regulations,
and the kids don't like the food.
Saying that, I want to move on as you brought up ABAWD, and
in what we have seen with people--with the work requirement,
they have gone off the rolls have decreased, and you were in
the State of Maine, correct?
Mr. Concannon. I was the Director of Maine for a number of
years.
Mr. Yoho. All right. We had an individual in here that was
running that program. With the ABAWD program, they saw an 85
percent decrease in the people on food stamps or on the SNAP
program. In my State of Florida, we just checked on this a week
and a half ago. They implemented the ABAWD program starting
January 1, and by the end of February of this year, there was
less than seven percent of the people have re-signed up for
that program because they put in the mandatory work
requirements, 20 hours a week, and looking for a job or getting
educated, work source or things like that, qualified for that
20 hours a week. And so we saw a huge reduction. Granted, it
has only been a 2 month window, and I am sure by the end of the
year you are going to see 30 or 40 percent that have reapplied,
but the bottom line is that would translate to 60 percent got
off with those minimum work requirements.
And you were saying and I know my colleague, Mr. McGovern,
was saying that is not the case. Do you have a different
opinion on that?
Mr. Concannon. Different opinion on what has happened in
Florida?
Mr. Yoho. Well, the ABAWD program. Just putting the minimum
work requirements in there. We have a pilot program right now
for ten states. We know, really, the results of able bodied
work requirements, and it is kind of silly not to put that
across the board, especially the way our country is in the
economic times that we have.
Mr. Concannon. Well actually, I think that maybe I
appreciate the question because there may be a lack of
understanding. Historically, there is that requirement for
every 36 months of every individual ABAWDs who are on the
program, there is a work requirement. It has been. That was
suspended during the downturn in the economy----
Mr. Yoho. Right, 2009, 2011.
Mr. Concannon.--and the majority of states, but a number of
states, because their economy has gotten better, have
reintroduced that requirement. And we work very closely with
states. In my written testimony and in response to a question
earlier, my concern has been some states have failed to take
advantage of the opportunities to help some of these folks
either get the training or connect them to jobs. That is an
option that we provide under the SNAP Employment and Training
Program to states.
Mr. Yoho. Yes, we wanted to make that work requirement to
reinstitute it after it was waived in 2009 and 2011, with all
50 states and it got voted down and we could allow it for ten
states, but we know the results are people will go back to work
if they have that little impetus. And I know there are people
out there that are working that do require SNAP, and that is a
great thing.
Another question I have is the large EBT balances. I have a
report here in front of me where there has been an
exceptionally large balance, some in excess of $10,000, and we
have seen that in our states. I have seen people come in and I
have reports of people going in and buying $1,100 wedding cakes
on EBT cards because there is a balance that is building up. If
that is so, shouldn't there be a trigger that prevents somebody
from getting that much of a balance on their EBT cards, because
if they are accumulating a balance, what it translates to me
and the people in line behind them is they really don't need
the money to accumulate like that. What are your feelings on
that?
Mr. Concannon. Well first of all, let me say this.
Mr. Yoho. On putting in a trigger.
Mr. Concannon. First of all, it is very, very rare that it
happens, and second, when we have looked at it, the farm bill
changed the timing for what is referred to as high balance. So
when states have high balances, the states can say look, if
there is no activity on that account for 6 months, the states
can remove access to those funds from the consumer, and then if
they try to have access to it, the state says you have to come
in and tell us what is going on here.
As I mentioned to an earlier question, we have not had
examples of fraud or trafficking associated with these high
balances. They tend to be parents with dependent children. They
tend to be frugal households who are worried about being in
even worse circumstances in the future, and they tend to build
up that benefit.
Mr. Yoho. I appreciate your time. I am out, and I yield
back. Thank you.
The Chairman. The gentleman yields back. Mr. Newhouse, 5
minutes.
Mr. Newhouse. Thank you, Mr. Chairman, and thank you for
being here this afternoon.
I had a question about the Dietary Guidelines, and perhaps
Ms. Tagtow might be the most appropriate, but I will leave it
up to you guys.
The final Guidelines released by USDA and HHS sometimes
seem to have significant discrepancies from the recommendations
that were released by the advisory committee, which was
probably appropriate, given that in some instances they were
made outside the scope of their committees' expertise. But also
some of the recommendations seem to operate off of a limited
range of end volume of peer-reviewed scientific data.
So Ms. Tagtow, now that the dust has somewhat settled, can
you tell me what you think are the strengths and weaknesses of
the current advisory committee process, or are there any
changes or tweaks that you would recommend to the Committee
today to ensure that it is more accurately reflects the Dietary
Guidelines and responsibilities?
Ms. Tagtow. Sure. Congressman Newhouse, thank you very much
for the question.
As you know, the Dietary Guidelines are developed based on
a variety of information that is provided to USDA and HHS. A
Dietary Guideline Advisory Committee, an independent body of
experts that rigorously evaluates the current body of nutrition
science is one of those best practices that is employed. As an
independent body outlined by FACA regulation, they provided a
report to us about a little over a year ago of their
recommendations back to USDA and HHS. As far as making
adjustments within the processes right now, the Members of this
Committee are mindful of the riders that appeared in the Fiscal
Year 2016 appropriations bill, one of those riders asking USDA
to have the Institute of Medicine closely examine the process
of developing the Dietary Guidelines. We have engaged with the
Institute of Medicine and the National Academies of Medicine,
and are in the process of launching this new study. We
anxiously await their recommendations, including
recommendations on the next processes in developing the 2020
Dietary Guidelines.
Mr. Newhouse. So from your perspective, you don't see
anything that would be helpful in improving the process at this
point?
Ms. Tagtow. Well, there are many aspects of developing the
Dietary Guidelines, one being the formation of this committee
and receiving recommendations from this committee. The Center
for Nutrition Policy and Promotion is dedicated to ensuring
that all of our processes meet the highest scientific
integrity, are rigorous, as well as transparent. And we do look
forward to the recommendations from the IOM in order to retain
the highest scientific integrity of these processes.
Mr. Newhouse. Okay.
Ms. Tagtow. Thank you.
Mr. Newhouse. Mr. Under Secretary, the issue of elderly and
disabled SNAP accessibility: For many individuals who may be in
that category, preparing food can be sometimes difficult.
Oftentimes, there are prepared foods that could be healthier to
eat than some other easy cook microwave meals, perhaps. Could
you tell me if FNS has done any research into ways to increase
access to more nutritious prepared foods for SNAP beneficiaries
such as these that may have a harder time preparing meals?
Mr. Concannon. I can't comment specifically on the prepared
food side. I thought your question might be going in another
direction, let me first say that we currently serve about 42
percent of the seniors in the U.S., people 60 years of age and
older, who are eligible for the program. They are still one of
the largest categories of persons who are eligible for the
program who don't receive it. And part of that is awareness of
it, part of that is it may be a fairly modest benefit, but we
are also working with states and a proposal that we have in the
current budget this year for seniors who are on fixed incomes,
who may be on Social Security or SSI, very limited, doesn't
change. They are not currently in the workforce. We are
proposing to extend the period of certification, because right
now what happens with a number of seniors, they get a notice
from a state agency once a year saying you have to reapply for
this. They may not understand the letter. They may set it
aside. They get a lot of mail, and all of a sudden they lose
their benefit and it is referred to as churn. It creates a
problem for them. It creates a problem for the state agency. So
we are working on that aspect of it, but to your question
explicitly about prepared foods, I am unaware currently of any
activity on our part.
Mr. Newhouse. I appreciate that.
The Chairman. The gentleman's time has expired. Mr.
Goodlatte, 5 minutes.
Mr. Goodlatte. Mr. Chairman, thank you very much. I
appreciate the witnesses. I don't have any questions, and I
will defer to the gentleman from Illinois.
The Chairman. The gentleman yields back. The gentleman from
Illinois is recognized for 5 minutes.
Mr. Davis. Thank you to my friend and colleague from
Virginia, Mr. Goodlatte, and thank you to the witnesses for
being here today. It is an interesting discussion.
I want to echo some of the comments that my colleague, Mrs.
Walorski from Indiana mentioned about concerns regarding the
rule impacting some of the convenience stores that have
restaurants attached to them that are all throughout my rural
district in central and southwestern Illinois.
Based on the language that she read, she asked my questions
so I am going to refer back to the language that she read. It
could impact many of the outlets that we currently have
throughout much of middle America, much of my district, and
there are obvious concerns. I am very thankful that you are
open to considering an additional comment period. That is only
good, though, if those comments are taken into consideration
when the final rule is issued. We have a lot of hungry people
in rural America. I appreciate your comments. I am a big
supporter of the summer feeding program. But hungry people in
rural America aren't really looking at the Federal Register to
make comments. So that is why we have you here today, to
address some of those concerns for the constituents that we
represent.
You mentioned something earlier about only 13 percent of
the SNAP recipients utilize eligible convenience stores to use
benefits, right?
Mr. Concannon. No, what I said was 13 percent of the
benefits are used in these convenience stores.
Mr. Davis. Okay, same----
Mr. Concannon. Not 13 percent of the population. The 13
percent of value.
Mr. Davis. Potato, potato. I think I meant the same thing.
Okay, 13 percent of value?
Mr. Concannon. Yes.
Mr. Davis. Okay. What is the percentage of value used in
urban areas versus rural areas?
Mr. Concannon. We actually have that, but I don't know it
off the top of my head, but we will be happy to provide it.
Mr. Davis. It is substantially higher in urban areas, just
a guess?
Mr. Concannon. I can tell you that it is more than 90
percent of households shop at least at a supermarket once a
month, and more than 82 percent of benefits are redeemed at
supermarkets.
Mr. Davis. More than 82----
Mr. Concannon. Standard supermarkets tend to be in more
urban or suburban areas----
Mr. Davis. Right.
Mr. Concannon. That is part of it, but we could--I know
even in rural areas here, 94 percent of rural households redeem
some benefits at supermarkets or super centers. But we can give
you the specifics.
Mr. Davis. That would be great. My concern is exactly Mr.
Kelly's concern. My colleague from Mississippi and I both have
areas in towns that we represent that the convenience store
that may be attached to a restaurant, hence my earlier
concerns, may be the only place that those hungry kids can go
use that EBT card you were talking about, wanting to increase
their eligibility to use even more, right?
So you talk about the EBT usage. If the new rule excludes
the only store and the only opportunity they have to go get
food to use that EBT card, don't you understand our concern
that there might be a tremendous effect on rural kids and rural
families the most?
Mr. Concannon. Clearly I would have a major concern.
Mr. Davis. Thank you.
Mr. Concannon. Because that is not the intent of the rule,
but as I emphasized earlier with Members, it is proposed. We
are committed, as many ways as I can say it, to both hearing
and weighing and considering the comments.
So we urge folks to weigh in on that comment period.
Mr. Davis. I truly appreciate that, and you know what, the
USDA has been more than willing to work with my office and with
us on numerous issues to find that flexibility that we need.
But forgive us, some of your sister agencies have not been
nearly as willing to work with us. So forgive us for not
trusting that all of these issues would be addressed because
this is a proposed rule. We understand that, but many of your
colleagues sit at that same witness table with proposed rules
and don't take our comments into consideration and don't take
our constituents' comments into consideration.
I am going to end with the school nutrition issue. Thank
you for your discussion on school nutrition. I have a lot of
rural schools that I represent that are having some problems
implementing some of the standards. I commend the USDA for
working with them. You mentioned you visited school districts
like Mr. Aguilar's. I have invited and have asked for somebody
from USDA to come out and visit some schools in my district
that are having problems, and I would express that invitation
again.
Mr. Concannon. I think our deputy went out to your----
Mr. Davis. He went and we did a round table. I would like,
if he is out in the area, to come out and visit one of our
schools itself and see what type of equipment they have,
because you are doing some good work working with different
groups to provide technical assistance, and I appreciate that.
I want to help spread the word on how we can make that better,
so the invitation still stands.
My time has expired. Thank you.
The Chairman. The gentleman's time has expired. Mr.
Bradford, for 5 minutes. I am sorry, Ashford. Brad, sorry about
that. Brad, I have screwed it up all the way around. I skipped
you and then I messed your name up. Sorry about that, buddy.
Mr. Ashford. Brad is good enough. Thank you, Mr. Chairman.
This is an intriguing topic, and you have raised so many issues
that I am interested in.
Mr. Under Secretary, the idea of sort of farm to market
kind of strategies and you have done a lot of work in that
area, and it is growing and it is good, and many more
individuals are able to take advantage of that. How do you see,
looking, envisioning out a little bit with a state like ours,
Nebraska, heavy ag, obviously, but with a large urban area in
Omaha with high poverty, what would your vision be in the next
5 years of how you would see those sorts of interactions
improving and getting more robust? How can we provide that sort
of farm interface in our urban areas to get healthier foods and
to access healthier foods? I know you do a lot of it now, but
what would be your vision or goal into the future?
Mr. Concannon. Well, we have set, when we came into office,
we had just under 800 farmers' markets nationally authorized
for SNAP. Now we are at 6,400. We have a goal. We have one of
Ms. Rowe's staff who is committed to me to exceed 7,000 this
year. We are seeing more and more of those markets connecting
up to like medical centers, like Omaha, the Omaha area. Big
medical centers are the ways to incent households to make sure
they are availing themselves of those fruits and vegetables.
Our efforts with schools are paying off in the form of more
expenditures. Earlier today I mentioned schools are now
purchasing in excess of $800 million a year in locally grown
foods. We think that is a good thing from the point of view of
putting the dollars back in those communities, but it is
typically when we go out to visit schools, we see kids that are
eating locally grown foods that are purposely more familiar to
them.
So I see us expanding. If you were to look out 5 years from
now, I would say we will see a lot more schools with gardens.
They are not industrial size, not enough to feed the whole
school, but enough to use it as an education device both from
the science associated with it, but also as a way of touching
kids, engaging them in ways that they are going to eat
healthier. So first, on more purchasing locally, more school
gardens, along that line. But also on the farmers' market side,
more increases that way.
Back in the year 2000, to give you an idea what is going on
sort of generally in society, there were only about 2,000
farmers' markets of record across the U.S. Now there are more
than 8,000 of them. So it is growing in terms of popularity
with the general population. We want to make sure that low-
income households are availing themselves of that as well. And
our SNAP education, our nutrition education program promotes
that as well, access to healthier foods.
Mr. Ashford. I think it is great work. I ran the Omaha
Housing Authority, which is a major urban housing authority. My
vision then--it wasn't a vision. I thought it would be a good
idea to create that sort of environment within the housing
authority, and we did some of it. And I guess what I would like
to see is some sort of project availability, working together
with housing authorities to provide some funding to help
integrate those families with agriculture. They are 5 miles
away from major agricultural area of the country and I see that
interface as being critical, because there are thousands of
kids and thousands of families that are directly impacted by
this issue who would love to be engaged and it would give
something for these people to do, these families to do, and
help with self-sufficiency and all the things we have tried to
do in housing.
Last, I am very encouraged by what you are doing. I think
it is an immense success, an immense success what this
Administration has done since you have come into office. But I
wish we could do more and more of that interagency cooperation,
with housing, for example, and food, SNAP. So thank you very
much.
Mr. Concannon. Thank you.
Mr. Ashford. Thank you, Mr. Chairman.
The Chairman. The gentleman yields back. Mr. Lucas, 5
minutes.
Mr. Lucas. Thank you, Mr. Chairman.
One of the great joys and privileges of being an old guy on
the back row of this Committee is that I have lived through
four farm bills, and have great appreciation for not only the
good that all sections of the various agricultural Acts can do,
but also appreciate the challenges of putting together these
comprehensive bills and persuading a majority of the body, and
the other body, and whoever happens to be at the White House at
the time, to sign the final document. And those accountability
issues are very, very important. I think everyone on this
Committee wants to make sure that we have the capacity to
produce food. The crop insurance programs I have researched,
all sort of things, but also the nutrition titles, making sure
that none of our fellow citizens are left truly in want. And
that is just a fundamental statement about this great country.
A couple of my colleagues addressed the question of the
rather large balances that occasionally appear on some of the
EBT cards. I can understand the circumstances where that is
viewed as a savings account or reserve fund, all that sort of
thing. But those are the kinds of issues that generate a lot of
excitement in the popular press. They get us a lot of
interesting bylines in various stories, so it is important we
address those kind of things.
But my focus more here for a moment is let's talk, at one
of the hearings earlier on this subject the Committee had,
there were discussions about the ability of states to share
data among themselves and between programs. Could you expand
for a moment on what the Department allows and what the nature
of the restrictions are? Just give us a little background on
what states can or cannot do.
Mr. Concannon. Yes, thank you very much for the question.
Let me say that the broad subject area that you are referencing
is what we often refer to now as data analytics where we go
looking into the SNAP electronic data. For example, that is how
we identify bad actors in the store side, but we have also had
a pilot project down in the Southeast part of the United
States, Florida, Alabama, Mississippi--I forget the fourth
state--where we waived the opportunity for those states to
share a whole bunch of data in order to eliminate the
possibility of dual enrollment, in other words, my enrolling in
Florida, and may be enrolling in a neighboring state. And we
are analyzing that. We just have the results of that four-state
pilot effort. We are encouraged by it. Didn't find a large
percentage of people dual-enrolled, but it did find people who
were dually enrolled, and so it is a relatively low cost way of
identifying dual enrollment that we encourage.
I know when I met with State Commissioners, I have
encouraged states like up in the Northeast to do data sharing,
even on a batch basis, not even real time, but do data sharing
with neighboring states to identify people who may have
enrolled in a subsequent state.
Mr. Lucas. Are there any situations, Under Secretary, where
you are aware of where the Department has told states that they
cannot share data, that you are aware of?
Mr. Concannon. Any request that I am aware of that have
come to us to say we would like to share this, we are very open
to that. In fact, I have been out talking to them saying I
encourage you to do more, but I don't think in some parts of
the country there is enough that is done.
Mr. Lucas. Last question. Like many of us on this Committee
who have worked on these issues for a long time, when you
interact with the retailers who are in a situation where they
can do a really good analysis of how the benefits are used,
these monthly trends on how the cards are charged and the
people who are standing in line somewhere at 1 minute until
midnight and the card becomes charged and they utilize it. I
know there has been discussion about perhaps instead of once a
month, twice a month, those kind of things. Could you discuss
that for a moment?
Mr. Concannon. Thank you very much on that. A number of
states actually right now have developed what I call kind of a
rolling out process where over the first 10 days of the month,
instead of issuing all the cards on May 1, they roll them out
over a 10 or 12 day period. That is an option states have that
is being done. And we have actually even weighed in another
place, it is in the discussion stages at this point, but the
possibility of splitting that benefit into being issued the
early part of the month, the middle part of the month. The goal
being, in that regard, to see if it results in the consumer
being able to purchase and have access to healthier foods.
Mr. Lucas. Even out the availability of the resources. And
I would just simply conclude my observations by the struggles
in funding all Federal programs and nutrition included are only
going to be more challenging in continuing to a higher level of
accountability, we can assure the world, the simpler your job
and mine will be, sir.
Thank you, Mr. Under Secretary. I yield back, Mr. Chairman.
The Chairman. The gentleman yields. Mr. Thompson, for 5
minutes.
Mr. Thompson. Thank you, Mr. Chairman.
Mr. Under Secretary, thank you to you and your staff for
being here and the work that you do each and every day.
Earlier this week, you published the proposed rule to
finalize implementation of Section 4018 of the farm bill. Now
that section prohibits activities designed to persuade
individuals to sign up for SNAP benefits. Such activities
include TV, radio, or billboard advertisement, agreements with
foreign governments, and worker compensations based on the
number of applications collected.
How have you been communicating this policy to states and
organizations that partner with the states to conduct outreach
activities for SNAP?
Mr. Concannon. Thank you very much for the question.
Actually, the proposed rule that was just promulgated is a
result of the farm bill, and actually when the farm bill was
passed, as soon as it was passed, we communicated with states
very clearly in guidance and said the following activities, you
need to be strict in your adherence to the following
activities. You can't use resources to persuade people to take
the benefit, to urge people to take the benefit. The standard
should be for folks who may be eligible, the standard should be
you want them to be able to make an informed decision. These
are the pluses of the program. This is the resource you might
be eligible for, but you are not to say well, you really should
do it.
Mr. Thompson. Right.
Mr. Concannon. We made that very clear. And this proposed
rule simply formalizes that.
Mr. Thompson. Yes, and just to clarify, USDA does not allow
entities that receive Federal funds to put pressure, persuade
individuals enrolled in SNAP?
Mr. Concannon. Correct.
Mr. Thompson. Correct.
Mr. Concannon. Exactly.
Mr. Thompson. And I appreciate your oversight on that
policy. When do you anticipate the proposed rule to be
finalized?
Mr. Concannon. Well, one has to allow public comment, et
cetera, but I would expect that it would be finalized before
the end of this calendar year.
Mr. Thompson. Very good. I appreciate that, and I pay
attention to this. I think Members of this Committee pay
attention to this. I did see a ``Dear Colleague'' letter today
that somehow some of my colleagues were uninformed, and
ignorance is bliss. That came from Washington, D.C., I guess,
so I hope they will be informed that the Agriculture Committee
is providing this leadership and the USDA is implementing this.
Now would entities still be allowed to provide educational
material about the programs and provide assistance to seniors,
once they choose to subscribe, but may need additional
assistance in filling out an application?
Mr. Concannon. Yes indeed, they would. And this is often
done through food banks or religious organizations that may
operate food pantries, Lutheran Services, Catholic Charities.
But this proposed rule really reflects the direction, clear and
unambiguous direction we received from the farm bill in 2014.
Mr. Thompson. And we appreciate you fulfilling the intent
of this Committee and of Congress.
You raised another question from me. How many states have
resumed the SNAP E&T requirements? Any idea? You mentioned that
some had, and if you don't have that number, if you could look
and----
Mr. Concannon. We can provide it to you, because we are
very mindful of it that a number of states----
Mr. Thompson. Then why would they--the question is--which
is great, I would love to have that in the future here whenever
you get it available. Why would they suspend those? Now I
understand that the employment market was difficult, but there
is a training component of that and in times of high
unemployment, training becomes more important. So for a state
to suspend the training side of that, to me, that is like
banning the use of water in the middle of a fire.
Mr. Concannon. No, they would not. I should be clear, many
of the states weren't taking advantage of the training, but
they were not prohibited from it. They simply paid less
attention to it.
Mr. Thompson. Any analysis of why they did that? Because if
they have citizens within the state, there are constituents too
who are unemployed, may be waking up in poverty, waking up in
crisis. They don't need a program. They need a pathway and
training is to greater opportunity, upward mobility.
Mr. Concannon. Right. We fully share that opinion with you.
The Committee, in the farm bill, authorized ten pilot projects
around the country, and they are underway right now.
But even beyond that, I often champion what I call the core
program, the importance of giving opportunities to SNAP
recipients right across the country.
Mr. Thompson. Yes, I mean, I disagree with my really good
friend from Florida who looks at folks like they don't want to
get a job, and there are some folks out there like that, don't
get me wrong. But, most people who woke up this morning in
poverty are looking for a pathway and with the right skills,
the right qualifications, there is greater opportunity out
there.
Mr. Concannon. Yes.
Mr. Thompson. Thank you.
The Chairman. The gentleman's time has expired. Mr.
LaMalfa, for 5 minutes.
Mr. LaMalfa. Thank you. Thanks to Mr. Concannon and your
panelists for being here today.
There is just a little bit on the buy American provision I
want to talk to you about today.
Mr. Concannon. Yes.
Mr. LaMalfa. Which basically requires schools to
participate in the National School Lunch Program, or that are
in the program and the school breakfast program to purchase
domestically grown and processed foods to the maximum extent
practicable. You may have heard there was an incident in
northern California in Sacramento in their unified school
district where they have been purchasing large amounts of
canned products, peaches, pears, applesauce, from China, okay?
This is an area that includes a large volume of peaches that
are grown locally and not a bad representation of pears in that
Sacramento area, and some apples as well.
So there doesn't seem to be any transparency requirements
regarding the schools' purchases, trying to get it cheaper from
those other places or what have you. And the only reason it
really came to attention because it ended up in a newspaper
article. So sir, what can be done to increase accountability
standards for this provision so that taxpayer dollars are being
used to purchase high quality, locally American grown products
instead of stuff from China?
Mr. Concannon. Thank you very much for the question. We are
very clear, unambiguous, uncompromising in terms of our
expectation that schools purchase USA produced goods. In rare
circumstances, for example, Alaska may at times have trouble
accessing U.S. produced food items, just as an example. That
particular case up in Sacramento was not a knowing request of
the school district. That was the food supplier, the regional
food supplier that provided those canned goods that were
produced outside the country, and that was deeply troubling to
us. Our regional office spoke immediately with the state who in
turn spoke to the schools. We do management evaluations. That
is required by the Healthy, Hunger-Free Kids Act of all school
systems every 3 years. And part of that management evaluation,
schools must demonstrate that they are purchasing U.S. produced
foods. So if we see foods that come from elsewhere in a school,
they are not to be using funds that come from the National
School Lunch Program to purchase those.
Mr. LaMalfa. So where would the buck stop on this thing?
With the supplier to the schools, or ultimately to the schools
for knowing where their stuff is coming from?
Mr. Concannon. Well if the school, again, this was
inadvertent, from my understanding, from the school's point.
This is not what they requested. This is their supplier that
incorporated it into a request they had for certain products.
So what our response is----
Mr. LaMalfa. Maybe the price----
Mr. Concannon. Our customer is the schools, not the
supplier.
Mr. LaMalfa. Maybe the price would reflect the too good to
be true pricing scheme, perhaps. Would that be it, if it was--
--
Mr. Concannon. I don't know if it was the pricing or just a
substitution on the part of the supplier when they, themselves,
maybe felt well maybe it isn't that important whether this can
of mandarin oranges or whatever it was, this product----
Mr. LaMalfa. We are talking peaches here again, which there
are thousands of acres grown within miles, and pears.
Mr. Concannon. Sure.
Mr. LaMalfa. But so how do we ensure that this doesn't slip
between misunderstanding or supplier versus a school situation?
Because bottom line, they were able to buy more cheaper
product.
Mr. Concannon. We don't want that to happen absolutely at
all, ever. So part of the enforcement for that comes from the
state, in this case, the California Department of Education,
and then we in turn do management audits of those state
agencies who are required then to do management evaluations of
every school system in the State of California at least once
every 3 years. And if they see examples like this of failure to
meet the requirements, they can do those management evaluations
even more frequently, and there are financial penalties if
schools don't adhere to the state requirements.
Mr. LaMalfa. Okay. Well all right. I want to know that
there are protocols to guarantee this in the future, because
our growers are, again, growing a high quality product in a
more costly atmosphere to do business with, and our kids would
want those higher quality products.
Mr. Concannon. I am very proud of what California is doing.
I was there last week. Many school systems now in California
have adopted something called California Thursdays where a
total meal is provided with foods that are grown or produced in
the state. I think that is a wonderful set of strategies that
can be imitated in other parts of the country.
Mr. LaMalfa. Very nice. Thank you, Mr. Chairman. I will
yield back.
The Chairman. The gentleman yields back. Mr. Rouzer, for 5
minutes.
Mr. Rouzer. Thank you, Mr. Chairman. Mr. Under Secretary, I
appreciate you being here today and your willingness to have
this discourse with us.
I want to go back to the SNAP retailer eligibility issue.
All of us, as Members of Congress, we have a lot of convenience
stores, obviously, in our districts and I represent a more
rural area in southeastern North Carolina. I am familiar with
the term food desert, and the consequences of that. And it
strikes me that our convenience stores, they play a critical
part for these folks that are very-low-income. And I think
about the time when gas prices were sky high. I remember
filling up at a gas station at a convenience store and there
was a young lady there. I noticed she didn't fill her tank
completely up, and it occurred to me after talking with her a
little bit, this was a lady working two and three jobs, and she
quite frankly didn't have the money to fill her tank completely
up. So you take people like that, and there are a lot of single
moms out there that rely on these convenience stores for these
food items. And given that is the case, I am not sure I
understand the rationale behind the proposed changes as it
relates to access to these stores.
Can you talk a little bit more about that?
Mr. Concannon. Yes.
Mr. Rouzer. I know that you have already addressed it
somewhat, but it is a very important topic.
Mr. Concannon. The origin of the proposed rule goes back to
the Farm Bill of 2014, and it directed us the underlying reason
to expand the food choices is to give additional healthy food
choices to low-income households, period. That is the
underlying rule.
The rule as proposed may be more complicated than it should
be, and it certainly isn't intended to result in thousands, if
not even hundreds of stores no longer being eligible for the
program. So that was the first cut at approaching that
directive, but we have heard very clearly from Members today,
but we have also heard from folks who have taken advantage of
the opportunity to weigh in to say look, here is what we think
could be workable or here is what isn't workable for us.
Mr. Rouzer. I want to follow up, too, on a couple of the
comments that you had made before the House Appropriations
Subcommittee, and I believe this was on February the 24th. You
had mentioned that there are more small stores in the SNAP
program than ``we really need.'' Is that how you still feel? Is
that really the position of the Department?
Mr. Concannon. That is certainly my position. I don't know
if I can speak for the Department. There are 195,000 stores,
and my comment in that regard was prompted by the fact that
trafficking fraudulent exchange of benefits happens in the
majority of cases in these small stores. Never happens in
supermarkets, never happens in larger stores. It happens in
smaller stores. And we see in some of those areas where there
are concentrations of those small stores, and so as a way of
either earning more profit or earning more revenue, they are
willing to traffick, and I am very opposed to that. I have
heard from other Members here. I don't have any tolerance at
all for fraudulent use of the benefit.
Mr. Rouzer. Well following up on that a little bit, during
consideration of the 2014 Farm Bill, I was not here at the
time, but Congress rejected using crude store size as a
requirement to get at the fraud issue. Instead, the 2014 Farm
Bill included language directing the Department to write rules
setting technology standards to actually prevent fraud. Why
aren't we focusing on that, given that specifically was
addressed with the 2014 Farm Bill?
Mr. Concannon. Well, we actually are pursuing increased use
of technology, both the requirement universally for stores of
any size to use electronic processing for the benefit, but in
trafficking, the way it occurs, I can have an EBT card and if
you and I conspire, you are the store owner or I am the store
owner, you can say here is my card and I will give you 50 on
the dollar for the value of that. That unfortunately happens,
and I mentioned in my testimony, we took out more stores in the
past year for trafficking than any year in the history of the
program, and of the 2,900 stores we sanctioned last year, 1,600
of them were these small convenience stores. So that is what I
was referring to in that comment.
Mr. Rouzer. Well good enforcement is always the best
deterrent.
Thank you, Mr. Chairman. My time has expired.
The Chairman. The gentleman's time has expired. Mr. Scott?
Mr. Austin Scott of Georgia. Can I ask a follow up on that
real quick?
The Chairman. Sure. Austin, we are way over, so real quick.
Mr. Austin Scott of Georgia. Right. If you have common
ownership of stores, in other words, if you catch fraud at two
or three stores, that type of fraud at two or three stores and
you know that that same person owns three or four more stores,
are you able to carry that action forward to the other stores
that they own?
Mr. Concannon. That is a great question, but unfortunately,
I believe currently we are able to take out the stores in which
we found trafficking. If we find evidence that they have
communicated that to their other store managers, we have the
opportunity to take all stores out, but we can't just routinely
say two of your stores were trafficking. We are taking all ten
of them out. I don't believe we have that----
Mr. Austin Scott of Georgia. Mr. Chairman, I might suggest
that might be a good piece of legislation for us to look for.
If that attitude is there at three of five stores that somebody
owns, I would be willing to bet that it is there at the other
two, too.
The Chairman. I don't disagree. The tone from the top needs
to make sure that the owners of those stores know the risks
associated. It is no different than a store owner allowing
somebody to sell beer to an underage consumer. So this would
follow the exact same category.
I can't thank you guys enough. We are way over time from
what you agreed to, and I appreciate that. You are the faces of
a large cadre of good, decent men and women who get up every
single day, go to work, try to administer the programs under
their care, and we appreciate that. We may disagree from time
to time on policy, but it has been my experience that you guys
want to do a good job. You want to do what is best for the
folks that you have a heart for, and I can't thank you enough
for that.
If you all wouldn't mind slipping off quickly to 1302, if
any of our Members want to talk specifically with you while we
get our other panel in here, we will stand in recess for about
5 minutes.
Thank you.
[Recess.]
The Chairman. All right, let's start back up. I appreciate
the witness' patience. We are a little past when you were
supposed to start, but thank you for hanging with us.
It is now my pleasure to introduce Mr. Alfred Almanza, who
is Deputy Under Secretary for Food Safety here in Washington,
D.C. And Mr. Almanza is accompanied today by Mr. Phil Derfler,
who is the Deputy Administrator for the Food Safety and
Inspection Service.
Secretary Almanza, the floor is yours for 5 minutes.
STATEMENT OF ALFRED V. ALMANZA, DEPUTY UNDER
SECRETARY, FOOD SAFETY, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY
PHILIP S. DERFLER, DEPUTY ADMINISTRATOR, FOOD
SAFETY AND INSPECTION SERVICE, USDA
Mr. Almanza. Mr. Chairman, Ranking Member Peterson, and
Members of the Committee----
The Chairman. Is your microphone on?
Mr. Almanza. I am the Deputy Under Secretary for Food
Safety at the United States Department of Agriculture, and I
would like to thank you for the opportunity to come before you
today to discuss our food safety mission.
To start, I would like to extend the invitation to any of
you to accompany me on a plant tour. A tour of an FSIS-
regulated establishment is the best way to see what our
inspectors on the line are doing on a daily basis to protect
public health.
Each year, one in six Americans is affected by foodborne
illness. The highest priority of our agency is to prevent as
many of those illnesses as we possibly can. The meat on your
plate is thoroughly inspected by the dedicated men and women of
FSIS to ensure that you don't get sick. While we are
modernizing the way we do things, carcass by carcass inspection
remains the cornerstone of our work. Our system of inspection
is the most reliable in the world, and I take great pride in
the work that our inspectors perform each day. I began my own
career nearly 40 years ago as a line inspector in Dalhart,
Texas.
Today, billions of pounds of meat, poultry, and egg
products are produced, transported, and sold every year. A
system of this magnitude requires constant vigilance to prevent
the possibility of foodborne illness. FSIS is required to have
inspectors present across the country in every plant that
processes meat, poultry, and egg products. The agency employs
approximately 9,000 people, and 80 percent of them work in
establishments. During Fiscal Year 2015, FSIS personnel
inspected almost 150 million head of livestock, nine billion
poultry carcasses, and over 3 billion pounds of processed egg
products. In addition, FSIS conducted nearly seven million food
safety and defense procedures last year.
With Congress's support, we have begun to modernize how we
do inspection. Our modernization efforts will lead to fewer
illnesses for meat, poultry, and egg products. We recently
updated the 60 year old poultry safety system by implementing a
final rule that requires plants to do testing at two points in
the slaughter line to verify process control. The rule requires
plants to treat Salmonella and Campylobacter as hazards that
are reasonably likely to occur. Finally, it makes the new
poultry inspection system available to all plants throughout
the country.
Last month, we finalized the first ever pathogen reduction
standards for chicken parts: 80 percent of chicken that
Americans consume is in the form of parts. These new standards,
along with our new standards for comminuted poultry, could help
prevent an estimated 50,000 foodborne illnesses.
As we move forward, our focus on our modernization has us
looking at ways to modernize pork and beef slaughter. One of
the most significant changes I have seen in my time with FSIS
has been the shift from paper to our new Public Health
Information System, or PHIS, which allows the agency to collect
inspection data in one central location. We aim to amplify our
use of data to identify trends, connect the dots, and make
meaningful improvements in public health. We are also laying
the groundwork for continued modernization in the years ahead
as we develop a new 5 year strategic plan building on this
theme of modernization as we are strengthening our use of
science. We are seeking to expand our use of whole genome
sequencing technology which will provide FSIS with a much
better understanding of what it means when we find pathogens in
the products we test. With whole genome sequencing and
improvements in analytics, we will be able to respond more
quickly and more effectively to foodborne illness outbreaks,
should they occur.
As a public health agency committed to achieving
excellence, FSIS continuously tracks performance, modernizes
methodology, and applies science-based approaches to the work
that we do. I know firsthand the hard work that the dedicated
men and women do each day to ensure that we have the safest
food supply in the world. Because of this work, millions of
Americans enjoy safe and wholesome meals each day.
Thank you for your continued support.
[The prepared statement of Mr. Almanza follows:]
Prepared Statement of Alfred V. Almanza, Deputy Under Secretary, Food
Safety, U.S. Department of Agriculture, Washington, D.C.
Introduction
Mr. Chairman, Ranking Member Peterson, and Members of the
Committee, my name is Al Almanza, Deputy Under Secretary for Food
Safety at the U.S. Department of Agriculture (USDA). Thank you for the
opportunity again to come before you today to discuss the Food Safety
and Inspection Service. I appreciate this chance to highlight our
mission and our people.
Who We Are
FSIS is the public health agency in the U.S. Department of
Agriculture responsible for ensuring that the nation's commercial
supply of meat, poultry, and processed egg products, whether domestic
or imported, is safe, wholesome, and correctly labeled and packaged.
FSIS inspection personnel inspect each and every livestock and poultry
carcass before it can enter commerce. No meat or poultry product can
enter commerce unless we can find that it is not adulterated and apply
our mark of inspection. In addition, FSIS reviews and approves the
labels of meat, poultry, and processed egg products and ensures that
they are truthful, not misleading, and contain key information. We also
take action should misbranded or economically adulterated products
enter commerce.
After publication in 1906 of Upton Sinclair's The Jungle, which
described in detail the unsanitary working conditions in a Chicago
meatpacking house, Congress passed legislation providing for the
inspection of meat. Ultimately, this legislation became the Federal
Meat Inspection Act (FMIA). In addition, Congress passed the Poultry
Products Inspection Act (PPIA), the Humane Methods of Slaughter Act
(HMSA), and the Egg Products Inspection Act, all of which the Food
Safety and Inspection Service (FSIS) enforces.
What We Do
Our employees work in approximately 6,389 federally inspected
establishments, three FSIS laboratories, 122 ports-of-entry, and
150,000 in-commerce facilities nationwide. During FY 2015, FSIS
Inspection program personnel ensured that public health requirements
were met in establishments that slaughter or process approximately 145
million head of livestock and nine billion poultry carcasses. In
addition, inspection program personnel also conducted nearly seven
million food safety and food defense procedures to verify whether
systems at all federally inspected facilities maintained food defense
procedures to protect against intentional contamination.
The Agency also is responsible for ensuring that imports of meat,
poultry, and egg products are safe and wholesome. FSIS does this
through a three part process. First, FSIS determines whether the
statutes, regulations, and other documents of any country that wishes
to export product to the U.S. establish a food safety system that is
equivalent to that of the U.S. Countries provide this information to
FSIS by using the Self-Reporting Tool (SRT). Should FSIS find on the
basis of its review of the documents that the country's system appears
to be equivalent, FSIS will send auditors to the country to assess its
system in action. On the basis of the results of the audit and the
other information that FSIS has collected, the Agency decides whether
the country is equivalent.
FSIS evaluates an exporting country's food safety system on an
ongoing basis. It inspects all eligible products from that country at
U.S. points-of-entry. Each year, FSIS reviews any changes in the
foreign country's food safety system that the country identifies
through resubmission of the SRT. In addition, FSIS also conducts in-
country audits of the system. The audits will be guided, at least in
part, based on the findings of the SRT reviews and the point of entry
inspections. Based on these reviews, the Agency decides whether the
country is maintaining equivalence.
Modernization
A key theme for FSIS is modernization. Inspection changed from a
sight, smell, and touch approach to a more science-based method when
FSIS implemented its Hazard Analysis and Critical Control Points
(HACCP) regulations between January 1997 and January 2000. Our
inspection activities include sampling ready-to-eat meat and poultry
products for Listeria monocytogenes testing, sampling raw product for
Salmonella and Campylobacter testing, and sampling raw beef product for
testing certain strains of pathogenic E. coli (including E. coli
O157:H7).
In FY 2015, FSIS laid the groundwork for fully enforcing all HACCP
validation requirements--those related to necessary in-plant data as
well as those related to scientific support. The Agency informed plants
that they would need to analyze their validation methods to ensure that
the scientific support matches their in-plant processes, and that they
needed to have at least 90 days' worth of data to show that their
plants met the critical operational parameters in their processes. The
new validation verification procedures, which we have implemented in
large plants and will implement in small and very small plants next
month, will help to ensure that establishments' HACCP plans work as
intended to address food safety hazards. To assist with this process,
FSIS has provided plants with training, webinars, and the FSIS
Compliance Guideline HACCP Systems Validation, a document designed to
help small and very small meat and poultry plants meet the validation
requirements.
We have made other changes in how we do inspection. In FY 2015,
FSIS adopted a new methodology for conducting Food Safety Assessments
(FSAs). Under this methodology, an Enforcement, Investigations, and
Analysis officer conducts a Public Health Risk Evaluation (PHRE) before
deciding whether a Food Safety Assessment is warranted. Under this new
methodology, a FSA takes 5 to 7 days instead of approximately 35 days.
This new methodology allowed us to save an estimated $1.18M and 26,600
hours within 3 months of its implementation. The new FSA methodology
allows FSIS to more efficiently use its resources by targeting higher
risk establishments.
One key investment that we have been able to make thanks to
Congressional support is in the Public Health Information System
(PHIS). PHIS captures data in automated and useful formats. The
availability of this data provides for more timely and efficient
analysis of food safety inspection-related trends that drive our
ability to take actions that enhance our ability to protect the public
health. In addition, PHIS is allowing us to make better use of the
Public Health Regulations (PHRs) to focus the inspection activities of
our in-plant personnel. With PHIS, we now collect data about the
regulations that inspectors are verifying when they perform inspection.
Before, we only knew regulation data when inspection tasks found
noncompliance. Now that we have more complete data, we can better
assess non-compliance rates of individual regulations. That has allowed
us to identify regulations for which non-compliance is linked to
adverse public health outcomes. We instruct our inspectors to conduct
special focused activities, such as PHREs and FSAs when we spot a
pattern of noncompliance with these PHRs.
FSIS coordinates closely with other Federal public health agencies
such as the Food and Drug Administration (FDA) and the Centers for
Disease Control and Prevention (CDC). Our collaboration with our
partner agencies makes FSIS more effective and improves our responses,
particularly during recalls and outbreaks. In 2011, we created the
Interagency Food Safety Analytics Collaboration (IFSAC) which brings
together senior leaders and technical experts on foodborne illness
source attribution from these agencies. In FY 2015, one of IFSAC's
major successes was developing harmonized attribution estimates for
Salmonella, E. coli O157, Listeria monocytogenes, and Campylobacter for
major food categories and hosting a public meeting with over 300
participants to share those findings. These improved estimates of
foodborne illness source attribution have informed efforts to
prioritize food safety initiatives, interventions, and policies for
reducing foodborne illnesses.
One way that the Agency is modernizing food safety is by improving
the way we inspect. In 2015, we began implementation of the final rule
on modernization of poultry slaughter inspection. The implementation of
this final rule requires that all poultry slaughter establishments take
measures to prevent contamination, rather than addressing contamination
after it occurs. Poultry facilities are required to perform their own
microbiological testing in their production process to show that they
are controlling enteric pathogens (e.g., Salmonella and Campylobacter).
The Agency established the voluntary New Poultry Inspection System
(NPIS), in which poultry slaughter establishments sort their own
product for quality defects before presenting it to FSIS inspectors for
food safety inspections. As of March 1, 2016, 51 plants have indicated
that they are interested in operating under or have transitioned to the
NPIS. The system allows for FSIS inspectors to focus less on routine
quality assurance tasks that have little relationship to preventing
pathogens like Salmonella and instead to focus on strategies that are
proven to strengthen food safety. Our food safety inspectors are now
better equipped to verify that establishments maintain effective HACCP
systems, which is a more effective and efficient way to use our
inspection resources. We are considering a similar approach for hog
inspection. We have collected a lot of data in these hog plants, and we
are now in the process of analyzing that data to determine what our
approach should be.
One of our greatest accomplishments has been the new food safety
pathogen reduction performance standards for chicken parts and
comminuted poultry that are designed to dramatically reduce Salmonella
and Campylobacter illnesses contracted from chicken and turkey
products, as well as to reduce the presence of these pathogens in raw
chicken breasts, legs, and wings. The performance standards are a major
step in the FSIS' Salmonella Action Plan, which the Agency developed in
2013. FSIS's science-based risk assessment estimates that
implementation of these standards could achieve a 30 percent reduction
in illnesses from Salmonella and 19 percent from Campylobacter, an
average of 50,000 averted illnesses annually. FSIS chose this
aggressive goal for addressing Salmonella because it will help achieve
the Healthy People 2020 national goal of reducing human illness by 25
percent.
Other FY 2015-FY 2016 Accomplishments
Additional FY 2015 and early FY 2016 accomplishments for FSIS
include the establishment of an exploratory sampling program for raw
pork products and continuous sampling of chicken parts; publication of
several compliance guidelines to help industry address pathogens in
their product, including ``Sanitary Dressing and Antimicrobial
Implementation at Veal Slaughter Establishments: Identified Issues and
Best Practices'' and ``FSIS Compliance Guidelines for Controlling
Salmonella and Campylobacter in Raw Poultry;'' issued a best practices
guideline for retailers to help them to protect public health by
decreasing the potential for Listeria monocytogenes contamination;
published a rule that will become effective in May 2016, that will
require that labels declare that raw beef product has been mechanically
tenderized and will require validated cooking instructions on labels of
mechanically tenderized beef products going to household consumers,
hotels, restaurants, or similar institutions; completed work on the
FSIS Salmonella Action Plan; and continued collaboration with the
Agricultural Research Service (ARS) for identification of additional
analyses for consideration and implementation in the multi-residue
method for testing.
As mandated by the Congress, FSIS is responsible for the regulation
of Siluriformes fish products. We published the final rule in December
2015, with March 1, 2016 as the effective date of the new inspection
system. We began inspecting in slaughter plants on March 1. We
established an 18 month transition period before FSIS begins fully
enforcing all requirements in the new regulations, in order to allow
regulated Siluriformes industry time to meet our food safety
regulations on the first day of full implementation, September 1, 2017.
During the transitional period, we will inspect processing-only plants
and re-inspect imported product on a limited basis.
So far, we have held public educational outreach meetings in
Washington, D.C. and Stoneville, MS for industry, farmers, foreign
countries, and other affiliates to learn about the program and to ask
questions. Our personnel have traveled to several foreign countries to
provide information. We also held a meeting in Newark, NJ for
importers. We also plan to hold importer meetings in Los Angeles, CA
and Houston, TX. In addition, we have provided mandatory training for
inspectors and will hold additional meetings in our ten district
offices.
Consumer and Stakeholder Outreach
To keep the public safe, we conduct outreach and educational
awareness efforts to small and very small plants and to the millions of
Americans who consume our products every single day.
With more than 90 percent of the 6,389 FSIS inspected plants
considered small or very small operations, FSIS has a Small Plant Help
Desk that serves to assist plant owners and operators with questions.
Many of these questions involve technical expertise, information, and
providing advice on FSIS regulations and policies. During FY 2015, the
Small Plant Help Desk received and responded to 2,031 inquiries in
person, over the phone, and via email. In addition, FSIS publishes
Compliance Guides and hosts webinars that help small plants comply with
new or modified FSIS regulations.
Moreover, just as FSIS is focusing on modernizing our inspection
techniques, we also are modernizing the way we communicate with our
consumers. For 30 years, the USDA's Meat and Poultry Hotline has
enabled consumers to ask questions or report incidents of foodborne
illness. The Hotline receives more than 80,000 calls each year and
helps prevent foodborne illness by answering questions about the safe
storage, handling, and preparation of meat, poultry, and processed egg
products.
The Food Safety Education Staff (FSES) has had many successes in
consumer food safety outreach throughout FY 2016. Some of these
initiatives include: partnering with the Ad Council, partnerships for
reaching at-risk groups, Hispanic outreach, social media, and our new
smartphone application, the Foodkeeper App, which has been downloaded
nearly 100,000 times.
To remain transparent to the public, we hold monthly public
meetings with consumer and industry stakeholders on upcoming policy
developments. We also distribute a weekly newsletter with policy
updates, export requirements, testing results, and personnel changes,
called the ``Constituent Update.'' In addition, FSIS has two advisory
committees, the National Advisory Committee on Meat and Poultry
Inspection (NACMPI) and the National Committee on Microbiological
Criteria for Foods (NACMCF). These committees are made up of state,
consumer, and industry representatives who work to advise the Secretary
of Agriculture on food safety policies that will contribute to USDA's
regulatory policy development.
Strategic Planning for Accountability
Every 5 years, FSIS adopts a new Strategic Plan that sets out the
Agency's goals and initiatives and is the foundation for both the long
range and day-to-day operations of the Agency. A main driver of the
Strategic Plan is the desire for the Agency to continue to be an ever
more trusted and successful public health agency--an Agency that adapts
to the changing nature of food safety risks. Outlined in the Agency's
current strategic plan are three themes and eight goals within those
themes. The themes are ``Prevent Foodborne Illness,'' ``Understand and
Influence the Farm-to-Table Continuum,'' and ``Empower People and
Strengthen Infrastructure.''
Each year, FSIS also develops an Annual Performance Plan (APP) that
sets out three or four key results that each of the Agency's ten
offices intends to accomplish to advance the Strategic Plan. The APP
provides the American public and FSIS employees with a clear list of
Agency priorities and a detailed roadmap of the steps we intend to take
to achieve our goals. It provides an operational plan that we are
following in order to steer the Agency as we work to prevent foodborne
illness and protect public health. It is traceable and transparent, so
that we are accountable to the Congress and the American public. At the
end of each year, we publish a report that sets out how well we did in
achieving key results.
FSIS has begun development of its 2017-2021 Strategic Plan. This
work will continue through FY 2016. FSIS held both public and
stakeholder meetings, including meetings with FDA and CDC, to gather
input on key focus areas, issues, and trends in food safety that the
Agency should consider in developing the Plan. This critical input from
industry, consumers, consumer advocacy groups, and Federal
collaborators has helped shape the Agency's development of desired
outcomes, specific strategic objectives, and meaningful targets and
measures to assess results.
Conclusion
These are some of the ways we are holding ourselves accountable for
achieving positive results and outcomes on food safety issues. We
continuously track performance, modernize, and apply science in
developing our approach to the food safety problems we face. I began my
career at FSIS as a line inspector, and I know first-hand the hard work
that the dedicated men and women who make up FSIS's inspection force
perform every day to ensure that we have the safest food supply in the
world. It is because of this work that millions of Americans can sit
down at the table and enjoy safe, wholesome meals each day. Thank you
for your support for our vital work as a public health agency.
The Chairman. We thank you, Deputy Under Secretary. I
recognize myself for 5 minutes.
I appreciate you being here. Speaking of the new poultry
inspection system, can you talk to us a little bit further
about what your data is showing for increased line speeds and
how the request to increase line speeds is working? And then
also any evidence you have so far about worker safety with
respect to these higher line speeds. Has DOL shared with you
specific data in reference to that program, and can that data
then be shared with the industry itself if there are things
that need to be done to protect workers?
So can you flesh out a little bit more on the poultry
inspection system?
Mr. Almanza. The new poultry inspection system has been
implemented in 35 plants. We have had 56 that have opted in, so
we are still bringing plants in quarterly. Which we are seeing
probably a greater interest as the year goes on in the new
poultry inspection system. It is too early to really have any
what I would say supportable data to recognize any difference
in the line speeds between the 20 that we have running at 175
birds per minute versus the new ones that are only allowed to
run at 140, but that is something that we are going to continue
to look at. Right now it would just be a guess as to what the
differences would be, but again, the worker safety issue is
something that we take seriously, but it is outside of our
responsibility as a regulator.
The Chairman. Has Labor shared with you the kinds of data
that needs to be collected in order for them to be able to
evaluate impacts of higher speeds?
Mr. Almanza. We have been working with OSHA on this issue,
but no, they have not given us any data that demonstrates----
The Chairman. Okay, data that--specific points of issue
that they want to collect on. I know the data would be the
incidents that have happened, knife cuts or whatever that they
want to collect, but they are not telling you yet what you need
to collect in order for them to evaluate higher line speed
safety?
Mr. Almanza. So one of the things that we have agreed to do
in those establishments is we have safety committees that meet
in these establishments that look at just accidents in general,
and so if we see trends, we will advise the Department of Labor
of what we are seeing.
The Chairman. Okay. I know certainly on the line speed, but
there is no food safety concerns, red flags yet of any kind?
Mr. Almanza. No, sir. I mean, we haven't had any food
safety concerns with the ones that are running 175 for the last
14 years either.
The Chairman. I got you. All right. With that, I will now
recognize Mr. Newhouse, 5 minutes.
Mr. Newhouse. Thank you, Mr. Chairman, and thank you both
for being here this afternoon. I appreciate your willingness to
sit before the Committee and answer a few questions, and I
appreciate your work on a daily basis as well, you and
everybody that works with you.
On the issue of food safety and research, given the more
stringent pathogen reduction standards that have been adopted
by FSIS, can you tell me what the agency has seen to date in
terms of reduction in overall levels of foodborne illnesses? It
would be a very appropriate recap or report, if you have seen
any improvements or changes.
Mr. Almanza. Right now, it is still early, a bit early to
tell, sir, but the thing that we are seeing is a fewer number
of positives in the testing that we are doing, which
ultimately, we hope that that data demonstrates that there are
fewer illnesses associated with the products that we are
testing.
Mr. Newhouse. Hopefully that is true.
As you know, many potential foodborne pathogens, such as
Salmonella, are naturally occurring. Has FSIS requested any
research to be conducted by either USDA or any other research
agencies on foodborne pathogens and how to better reduce their
presence, and could research be done on better food preparation
methods to reduce the presence of these organisms?
Mr. Almanza. So we continue to work with ARS within USDA
and there are research grants, and they do a really good job at
working both independently to try to gather the data on
Salmonella, and also work with us on effective methods for our
testing. But the industry themselves also have developed a
large number of interventions that help either reduce or
eliminate Salmonella in the products that they produce.
Mr. Newhouse. I appreciate again you being here this
afternoon, and Mr. Chairman, thank you, and I will yield back
the balance of my time.
Mr. Almanza. Thank you.
The Chairman. The gentleman yields back. Mr. Yoho, 5
minutes. Sorry about that. A little quick. Mr. Ashford has
returned. Mr. Ashford, 5 minutes. No questions? No questions?
Mr. Ashford. No.
The Chairman. All right, the gentleman yields back. Mr.
Yoho, 5 minutes.
Mr. Yoho. Thank you, sir.
Under Secretary Almanza, I appreciate your being here, and
I appreciate the work you guys do, and I do feel our food in
this country is the safest anywhere in the world. And I just
came back from a CODEL over in Latin America, and there was a
country that didn't want our food in there because they didn't
feel it was safe and didn't meet the standards, and I thought
it was kind of comical. It was on the phytosanitary, and I
can't think of anybody that does that better than us.
Saying that, could you please walk me through the role your
agency has on the trade front, and are all countries eligible
to bring meat and poultry products into the U.S., and could you
share the process a country must do to gain safety equivalence,
and the follow up that your agency performs after access to our
market? And I have a follow up question after that.
Mr. Almanza. Okay, sure. So countries that are wishing to
become eligible to export to the United States meat, poultry,
or egg products, they usually make a formal request by a letter
to us, and then the letters must come from the foreign
government or their central competent authority for the
inspection of meat, poultry, and egg products. Then what we do
is we look at the meat, poultry, and egg products that are
exported from another nation to make sure that they meet all
the safety standards that are applied to food produced
domestically in the United States. And then we make a
determination of equivalence by evaluating whether the foreign
food regulatory systems attain the appropriate level of
protection provided by our own domestic system. Then we also
evaluate their food regulatory systems for equivalence through
document reviews, onsite audits, and port of entry reinspection
of products at the time that when we import those products.
Mr. Yoho. So we feel good once it gets here that it has
gone through the proper channels, and that brings up my second
question.
I have concerns about egg product being imported from the
Netherlands to the U.S. Some have raised the concern that the
inspection process used by the Netherlands may not be a full
and continuous inspection. If the inspection is not full and
continuous, does such a process comply with Federal law?
Mr. Almanza. Okay, so that is one of the things that we
look at when we go over and audit their food safety system.
They don't necessarily have to be exactly like ours, but they
have to be equivalent to ours. And by that, I mean that they
have to have Federal inspection, same as we have here, through
the entire process of production.
Mr. Yoho. Is our process here on the eggs, is that a
continuous process?
Mr. Almanza. For processed eggs, yes, sir.
Mr. Yoho. Okay, so if it is continuous here but not over
there, is that equivalent, and what is the difference between
equivalent there versus here?
Mr. Almanza. Yes, I will have to----
Mr. Yoho. The extrapolation process.
Mr. Almanza. I would have to look at the Netherlands
specifically, but I can provide that to you.
Mr. Yoho. If you could, that would be great if you would
submit that. And if not, because the concern is if it does not
comply with the Federal law, as I believe it won't, does that
mean the FSIS would consider the product lacking proper
inspection to be ineligible for the import into the U.S. and/or
adulterated product?
And so those are the things I am getting from my producers
that we want to make sure, and Congressman King, it was a
question he had also that we want to make sure that if we are
making that requirement of our producers, that products coming
in have to meet that same requirement or it puts us at a
disadvantage.
Mr. Almanza. Yes, sir. No, I totally agree with you. But my
understanding is it is continuous, but I will provide to you
the findings of our audit so that you can----
Mr. Yoho. I appreciate it, and I remember speaking to you
before when we both started off in a packinghouse.
Thank you. I yield back.
Mr. Almanza. Yes, sir. Thank you.
The Chairman. The gentleman yields back. Mr. Rouzer, 5
minutes.
Mr. Rouzer. Thank you, Mr. Chairman. Deputy Under
Secretary, quick question for you here. In January the agency
released new Salmonella performance standards that poultry
producers will have to meet. What training and support is the
agency providing to assist industry in achieving those very
aggressive reductions? And then quick follow up to that, if you
will, how is this being addressed in the small plants that
operate under the inspection exemption?
Mr. Almanza. So one of the things that we do specifically
to issues like this, that are going to have an impact on the
industry, is we issue guidance documents. So it gives them a
road map of what our expectations are through the process, and
it applies to all establishments that are producing under, for
example, the new performance standards.
We don't see that it is going to have any greater impact on
the small plants than it does on the larger plants, just
because of performance standards, and how they are set out. We
believe it won't have any greater impact on them.
Mr. Rouzer. Another question for you, and this is a
softball for you. This is a very critically important agency,
in terms of confidence among our trading partners, our good,
safe, affordable food supplies. Very critical not only to all
of us here in the United States, but it is also very critical
in terms of exports. What is your greatest challenge, and how
can we, as a Committee, be helpful to you?
Mr. Almanza. Well, you are right, that is a softball
question. I will tell you this, I mean, we have had great
support from Congress in our budget in the things that you all
allow us to do. The thing that I look at, we have between 33 to
35 countries that are eligible to export to the United States.
That is a high bar. That is not a whole lot of countries that
are eligible to export meat, poultry, or processed eggs to us.
And so we just have to stay vigilant, maintaining the standards
that we have, and make sure that we are able to audit the
countries that do export to us meat, poultry, and processed egg
products, and make sure that their equivalency standards are
maintained. But, to me, that is what we should pay attention
to.
Mr. Rouzer. Thank you, Mr. Chairman. I yield back my time.
The Chairman. The gentleman yields back. Mr. Lucas, 5
minutes.
Mr. Lucas. Thank you, Mr. Chairman. Mr. Secretary, as the
final catfish inspection regulation is being implemented, can
you provide an update on the status of the economic compliance,
and the process of determining the equivalency of countries
wishing to export to the United States?
Mr. Almanza. Yes, sir. That is proving to be a bit of a
challenge for us. There are currently five countries that have
expressed an interest in exporting to the United States. Right
off the top of my head, I believe it is China, Myanmar,
Vietnam, and I will get you the other two. Nonetheless, there
are only five. And so that is taking up quite a bit of my time,
going to these countries and explaining to them what our
equivalency process is, because that is something that, as I
said earlier, we take very seriously in what our expectations
will be for them to meet our standards.
I do believe that they are taking us seriously in the
countries that I have been to so far, which I have been to
Myanmar, Beijing, China, and to Vietnam, and had meetings with
their government officials to get them to understand what our
equivalency process is. Domestically, it is providing--we are
looking at working with the states, trying to find all the
producers of catfish products, both slaughter plants, and that
seems kind of odd, a slaughter of a catfish, but nonetheless,
you have places that they may fillet catfish 2 or 3 days a
week, or they may do it 5 days a week. And so in trying to
identify all those, we are just in the process of getting to
all of those locations, and making sure that they understand
what our expectations are going to be as we start to regulate
them.
Mr. Lucas. So it sounds like you are making progress in
moving forward and accomplishing the goals, and it is just a
matter of time before a regime will be in place, and the
standards will apply. Fair assessment, Under Secretary?
Mr. Almanza. Yes, sir.
Mr. Lucas. Very good. I yield back, Mr. Chairman.
The Chairman. The gentleman yields back. Mr. Kelly, 5
minutes.
Mr. Kelly. Mr. Chairman, I yield back. He just asked my
question about catfish. Although I would just like to say that
is very important to my catfish producers in Mississippi, that
we have an inspection process that is taken care of in other
countries like it is here. And the longer we wait to do that,
the more at risk you put our catfish producers, who are doing
the things here, but it needs to be an equal playing field.
Otherwise, when they go out of business, it is too late to say,
well, they are complying now, but you are out of business. So
just make sure there is a sense of urgency there. And I yield
back, Mr. Chairman.
The Chairman. The gentleman yields back. Mr. Thompson, 5
minutes. Yes, that would be Glenn Thompson from Pennsylvania.
Mr. Thompson. Okay, Mr. Chairman. Thank you.
The Chairman. Thank you, Glenn Thompson.
Mr. Thompson. I guess I am the only Thompson here, all
right. Well, Secretary, thank you very much. I appreciate you
being here. I appreciate your work. And I apologize if I am
kind of re-plowing a field. I don't think I am, though. What
role do consumers play in ensuring food safety?
Mr. Almanza. Well, as consumers, you have to be vigilant of
cross-contamination in your kitchen, handling of raw products
versus cooked products. A surefire way, at the end, is to make
sure you cook your meat, poultry products thoroughly to
eliminate any possibility of foodborne illness.
Mr. Thompson. Obviously, being a Member of the Agriculture
Committee, I spend a lot of time with everyone in the food
chain, so my producers in particular, who have felt really
overwhelmed with the amount of pages of regulations for food
safety, and none of them, obviously, will deny the importance
of food safety.
One creative thing that came up, does the Department work
in any way in partnership with our extension services that we
have through our land-grant universities to me, that is just a
tremendous resource. Extension has always done all kinds of
very important things on the ground, and certainly in all 67
counties in Pennsylvania. But there seems to be, today, just
coping with all of the minuti# of regulations when it comes to
food safety, which, again, and food safety is important, any
formal relationship there with the agriculture extension
services?
Mr. Almanza. Yes, sir, we do. We do a lot of work with
agricultural extension services, with a lot of colleges and
universities as well, because sometimes they have information
that is relevant to our mission that they are able to get out
in other ways that we are not able to get. So yes, we do work
with them.
Mr. Thompson. Okay, great. And I am hearing more and more,
as I talk with our extension folks, about how they are trying
to find people with that specific expertise to put on the
ground to help producers to be successful. Because if they are
not able to produce it, and to be compliant, we are not going
to have access to affordable, high quality, and safe food. So I
appreciate your efforts, and I appreciate the efforts of our
land-grant universities, and our extension services.
Given the more stringent pathogen reduction standards
adopted by FSIS, what has the agency seen to date in terms of
the reduction of overall levels of foodborne illness?
Mr. Almanza. As I said, with the new standards, and the
performance standards, it is still a little early in the game,
but it is designed to achieve a 30 percent reduction in
illnesses from Salmonella, and about 19 percent reduction in
Campylobacter. Again, it is a little bit early in the game, but
what we are seeing is a lesser number of positives in the
testing that we are doing, and so hopefully that data will
result in fewer illnesses after we have had time to accumulate
enough data to see what the results are.
Mr. Thompson. Yes. In some of my meetings with different
stakeholders in the agricultural industry, actually, this was
producers, a large group of producers, kind of concerned about
the national security threats that may be out there. Potential
food security threats from a terrorism perspective, in terms of
trying to cause harm on the American people, and the American
economy as well. And so I assume that is something that is out
there that you all at least talk about, and kind of measure
risk, and----
Mr. Almanza. Yes, sir. We do more than talk about it. We
have tabletop exercises with other agencies, with CDC, with
FDA, to make sure that we are all on the same page in dealing
with those types of threats to the public of the United States.
Mr. Thompson. Well, thanks for what you do. Mr. Chairman, I
yield back.
Mr. Almanza. Yes, sir.
The Chairman. The gentleman yields back. Mrs. Hartzler, 5
minutes.
Mrs. Hartzler. Thank you, Mr. Chairman. Thank you, Mr.
Secretary. I was just wondering, how many employees are in your
division?
Mr. Almanza. About 9,000.
Mrs. Hartzler. All right. How many are based here in D.C.
versus out in the field?
Mr. Almanza. Here in D.C., I would say somewhere in the
neighborhood of 380.
Mrs. Hartzler. Okay. And if you have already done this, let
me know. I have a phone call, sorry about that. But how is your
agency organized? Do you have field offices? And kind of
explain how it is organized.
Mr. Almanza. No, that hasn't been asked before, but----
Mrs. Hartzler. Okay.
Mr. Almanza.--I am very familiar with how we are
structured. So we have headquarters, and then we have ten
district offices from the East Coast to West Coast. And I can
certainly provide you the locations for that for the record, if
you would like me to do that. And then we also have three labs,
one in Athens, Georgia, one in St. Louis, and one in Alameda,
California that we are in the process of moving, but it is
still in California. And then we also have some offices for our
investigative and enforcement type of jobs that we do, but most
of those are co-located with our current district offices in
the same places.
And then from there we just have our inspection personnel
that work in the----
Mrs. Hartzler. Plants?
Mr. Almanza.--in the plants. Yes, ma'am.
Mrs. Hartzler. Yes, very good. What is the overall budget
for your agency?
Mr. Almanza. It is a little over a billion dollars.
Mrs. Hartzler. Okay. If you had a pie graph, what would be
the most expensive, give me the top three areas of what you do
that are large expenditures.
Mr. Almanza. Our payroll is----
Mrs. Hartzler. Personnel would be first?
Mr. Almanza. Close to----
Mrs. Hartzler. What, 50 percent?
Mr. Almanza. No, it is closer to 80 percent.
Mrs. Hartzler. Okay. You need to cut salaries. No, just
kidding. No, go ahead. Then what is next, after personnel?
Mr. Almanza. Excuse me? I didn't----
Mrs. Hartzler. So personnel is 80 percent, and then what
would be next? I am just----
Mr. Almanza. State programs is next, and then our internal
travel would be the third.
Mrs. Hartzler. Okay. What are the top food pathogens that
you are facing right now? If you are the top five.
Mr. Almanza. Top five would obviously be E. coli, 0157:H7,
and Listeria monocytogenes, and then Salmonella.
Campylobacter----
Mrs. Hartzler. Okay. So you have this scare with Chipotle,
which is my daughter's favorite restaurant, but this was
concerning, have you found out anything? Tell me how your
agency deals with that.
Mr. Almanza. Yes. Unfortunately, with Chipotle, we weren't
ever able to determine that any of the products that we
regulate were responsible for that. But when we have an
outbreak like that, typically we are tipped off by CDC, or the
state, that they are seeing some type of illnesses that are
associated with the products that are being produced in a
specific restaurant, or an area.
And so what happens is, as we start getting enough data, we
will start an investigation, an internal investigation, and
start looking at the possible products that may be affected,
and then trying to figure out the traceback to the specific
producer. And then looking at possible venues of the
introduction of the product that were causing the illnesses.
Mrs. Hartzler. Now, it seems like there has been an uptick
in charges of where actual vegetables are coming down with some
of these things, potentially from runoff. Can you tell me about
that? I was surprised when that happened, rather than there is
an animal facility nearby. Can waste be transmitted through a
plant, like spinach?
Mr. Almanza. Well, it certainly can. I, unfortunately, only
regulate meat, poultry, and processed eggs, but I can tell you
that there was an outbreak that was caused by, like, feral hogs
walking through spinach, and then causing some foodborne
illnesses from those types of cross-contamination vehicles,
livestock and things of that nature.
Mrs. Hartzler. Well, you have a tough job, but a very, very
important job, so we appreciate what you do. Thank you very
much. I yield back.
The Chairman. The gentlelady yields back. Mr. Moolenaar, 5
minutes.
Mr. Moolenaar. Thank you, Mr. Chairman. Just following up
on this discussion about Chipotle, can you describe for me the
process when you have E. coli problems, and where does it
start? Where are the processes where it could be identified?
What should families be thinking about when they go into a
restaurant? Those kinds of things.
Mr. Almanza. What do I think about when I go into a
restaurant?
Mr. Moolenaar. Yes.
Mr. Almanza. Well, I have been doing this for close to 40
years, so I would say I probably pay very close attention to
what the people are doing behind the counter. Just, for
example, if they are using gloves, if they are touching money,
and then they are touching the products that you are eating.
And then just looking. I look at the practices that the
employees are engaging in. If they are back there cooking, are
they handling raw product while they are handling cooked
product? That is, for me, that is just an easy, maybe I
shouldn't be eating here if that is what they are doing.
Now, what I would say is, for us, as a regulator, we would
love to be able to track somebody that is making somebody sick
as quickly as possible, and we do that as quickly as possible.
But sometimes what gets lost in the mix is we don't know that
products are making people ill until there is an incubation
period, and then people start going to the hospital, and then
they are reported to CDC, and then CDC starts tracking that.
And as they start tracking the multiple illnesses, well, then
they start to track it, and we are tracking that with them as
well. FDA is notified as well, because most of the time it is
not just a meat product, or it is not a vegetable. And so they
keep us all in the same loop until it starts trending one way
or another, and doctors and hospitals are doing these
checklists with the patients.
And so once we are in tune with that, what we do is we will
go and interview patients. Sometimes the states have done that
before we get there, but they give us that information to be
able to tell us in what direction we need to go in. And,
unfortunately, sometimes we are just not able to have
conclusive evidence with a case patient in a hospital, and
running the PFG pattern for that illness to the product that is
assumed to have caused the illness.
Mr. Moolenaar. And are there best practices in the field,
or in transportation, that prevent these kinds of things that
are common knowledge for people involved in the business? Or is
that something where it just varies depending on the country-
of-origin, what are your thoughts on that?
Mr. Almanza. Well, one of the things that is going to make
it easier for us is this new requirement they are going to have
for grinding logs. And it has nothing to do with grinding
trees. We are going to have these establishments, what they are
going to do is they are going to have to track everybody that
supplies them, and the times and the dates that they are using
their specific product to grind hamburger meat, ground beef.
And so that will make it easier for us, when we go and do an
investigation, to make sure that they have accurate records
that demonstrate to us, okay, they were grinding product from
Establishment X on a certain date, and then we can traceback
from the patient to when that product that was ground there was
consumed. So, we think that that is going to make a significant
improvement to our ability to use our investigators to get that
type of information.
Mr. Moolenaar. Yes. Okay. So that would handle the grinding
aspect. Are there other areas that need to be addressed as
well?
Mr. Almanza. The other situation that we are dealing with
on the other thing is the mechanically tenderized products as
well, that we are going to have labeling that is going to be
required for those type of products. Mechanically tenderized
products, basically, are products that are tenderized with
needles and/or some type of blade tenderization. We believe
that the risk is a little bit higher because any contamination
you may have on the surface gets driven in, into the muscle,
and so therefore, cooking those products thoroughly, the
consumers will be able to have a label that tells them these
products have been tenderized, and make sure you cook them to
140 internal temperature for a minimum of 3 minutes.
Mr. Moolenaar. Thank you very much. Thank you, Mr.
Chairman.
The Chairman. The gentleman's time has expired. Now for a
second round. Mr. Yoho, did you want to ask something else?
Mr. Yoho. Yes, sir, Mr. Chairman. Again, I appreciate you
being here. Let me ask you about the small custom meat packers.
We have had some concerns with some of the small meat packers
that they are doing it custom for people that raise their own
animals, or slaughter--not slaughter, but, shot a deer or
something like that, and they bring it in. They forego the
inspection process because it is their own meat. What if they
were to sell that meat, or donate it to a food bank? Does that
violate that, and are they held accountable for that?
Mr. Almanza. So for beef, or for cattle, if they bring in
their own----
Mr. Yoho. Like a club steer that somebody raises for a
fair.
Mr. Almanza. If they bring that in for custom slaughter,
basically, it has to be consumed by them, by the family that
owns it. And it cannot be sold.
Mr. Yoho. What about if they donate it to a food pantry,
like ground beef, or something like that? That would violate
that and they are not supposed to do that?
Mr. Almanza. Yes, sir.
Mr. Yoho. All right. I just wanted that for clarification,
so we can pass that on. The other thing is, on CSAs, the
Community Supported Shared Agricultural Operations, they are
starting to pop up more and more. And I have heard of some that
are selling their produce at farmers' markets, or they are
selling them to restaurants. Do they fall under the Food Safety
Inspection Act if they are doing that versus me contracting
with you to grow carrots and vegetables like that? Does that
disqualify them in that process not to be inspected, or follow
the FSIS protocols?
Mr. Almanza. So we work with FDA in the food inspection
process. We don't have any involvement with the vegetables, and
things of that nature. But the FSIA, obviously, will have an
impact on what you are----
Mr. Yoho. Well, how about if they are growing organic eggs
and selling those at a farmers' market? Does that fall under
the inspection process, or are they in violation if they don't?
Mr. Almanza. Not ours, sir. We only do processed eggs,
which are powdered eggs, liquid eggs, things----
Mr. Yoho. Okay. And then, on the catfish, I remember when
we were discussing the farm bill here, back in 2014. It was my
first year here. The question came up with catfish from Asia,
the Asian markets, and how few were inspected for antibiotic
residues. It was, like, .01 percent, which is virtually none,
but yet there was meat showing up that had chloramphenicol, and
nitrofurans in it, and other type of substances that, number
one, is carcinogenic. The other one is detrimental to the bone
marrow. How much of that is being tested, and how reliable is
that? As far as if you have 1,000 pounds of catfish fillets,
how much of that is being inspected and sampled?
Mr. Almanza. Yes. So we just started sampling the beginning
of March, which is what started our regulatory authority over
imported catfish. It is a little bit early to tell right now,
but we believe that, as we start testing, and have more testing
of the products that are coming in from the countries that are
exporting to us, we should be able to have more data for you. I
would say in a few months.
Mr. Yoho. Okay. What I would like to see, the percentage
that you are testing on those fillets coming in, is that
comparable to what is being tested here? Or is 100 percent of
the catfish here being tested?
Mr. Almanza. It is 100 percent of the catfish that is being
produced here is not being tested. We don't have the capacity
to test 100 percent.
Mr. Yoho. Okay. All right. Mr. Chairman, I yield back, and
thank you for the second round. Thank you.
The Chairman. Does anyone else on the Committee have
another question? Well, since we have a couple of minutes, Al,
would you walk us through a primer on how a country who
currently is not exporting to the United States would go about
the process of getting the equivalency standard, or whatever?
You talked a little bit about that, but walk the Committee
through how a new country would be admitted.
Mr. Almanza. Sure. So, like, what typically happens is
countries will see an opportunity, in fact, right now, like I
say, we have 32 countries that are currently eligible to export
to the United States. We also have 24 countries that are
pending an initial equivalence determination. So what happens
is these countries, or their central competent authority, which
is basically their FSIS for another country, will write a
letter to us and say, we are interested in an equivalency
standard for our country. And we request them to fill out what
we call an SRT, a Self-Reporting Tool, which is basically
somewhere between 130, 140 questions that basically outline
what it is that they do to meet our equivalency standards in
the United States.
What we do from that is we glean the information from the
SRT, looking at their central competent authority, and how they
regulate down. In other words, how do we know that the
inspectors in the field are doing the expectations of their
central competent authority, and their organizational
structure? We look at that. We also look at their methodologies
for testing for E. coli 0157:H7, if they are going to export
beef productions. If they are going to export poultry products,
they are testing for Salmonella and Campylobacter.
And so it is pretty extensive, and so we go back and forth
with them until they satisfy basically what our audit team will
be looking at when we send them over there. And normally an
audit team can be over there, depending on the number of plants
that they put forward that will be exported to the United
States, we can be over there anywhere from 2 weeks to a month,
sometimes a little bit longer than that. And what we do while
we are over there is we go into the establishments, look at
their establishments, make sure that what they have identified
in their self-reporting tool reflects what they have reported
to us. And then we ask the inspectors, and the veterinarians
that work in the plants, different questions about how they
report deficiencies, and things of that nature, basically just
looking for what it is that they do that makes them believe
that their standards are equivalent to ours.
The Chairman. And then, on an ongoing basis, do you have
surprise or follow-up annual, biannual, every 3 years, some
sort of system to go back and make sure they are still doing
what they told us they would do to begin with?
Mr. Almanza. Yes, sir. Usually the first year that they get
approved, we will go back, for the first 3 years, annually, but
we will always be reviewing either the self-reporting tool, and
the data that they are putting in there. We review that all the
time, but at least----
The Chairman. So they file that self-reporting thing
annually?
Mr. Almanza. No, they have to keep it updated.
The Chairman. Okay. So there is a system if they were to
make a change to their process, they have a duty to tell you
they have changed it?
Mr. Almanza. Yes, sir.
The Chairman. Okay. And then, without telling who, have you
ever turned anybody down?
Mr. Almanza. Have we?
The Chairman. Turned a country down.
Mr. Almanza. What we have done is not approve them, and
they keep in the system to keep trying to get equivalency.
The Chairman. Okay. Anybody else? Well, as I told the
previous panel, you guys are the two pretty faces of the
organizations you represent. Might have brought better faces.
No, I am just kidding. I am confident that your team goes to
work every day, good people, decent people, trying to do the
exact best job they can to prevent illnesses, and do all the
things that they are charged with doing. And so thank you for
their efforts, on behalf of the Committee, and thank you both
for getting ready to go.
Mr. Derfler, it looked like you were ready to answer
something over there, but thank you for coming in this
afternoon as well. And we will be in recess for 10 minutes
while we swap out panels.
Mr. Almanza. Thank you, sir.
The Chairman. Thank you gentlemen. I appreciate that.
[Recess.]
The Chairman. All right. I welcome our third panel for the
afternoon. We have with us this afternoon the Under Secretary
for Rural Development, Ms. Mitch. Did I--Mitch?
Ms. Mensah. Mensah.
The Chairman. Mensah.
Ms. Mensah. Yes.
The Chairman. There you go. Sorry about that. Joining her
today is Brandon McBride, Administrator of Rural Utilities
Service, Mr. Tony Hernandez, Rural Housing Service, and Mr. Sam
Rikkers, who is Administrator for Rural Business--Cooperative
Service. Under Secretary Mensah, 5 minutes.
STATEMENT OF HON. LISA MENSAH, UNDER SECRETARY, RURAL
DEVELOPMENT, U.S. DEPARTMENT OF
AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY
BRANDON McBRIDE, ADMINISTRATOR, RURAL UTILITIES SERVICE, USDA;
TONY HERNANDEZ, ADMINISTRATOR, RURAL HOUSING SERVICE, USDA;
SAMUEL H. RIKKERS,
ACTING ADMINISTRATOR, RURAL BUSINESS--
COOPERATIVE SERVICE, USDA
Ms. Mensah. Thank you, Chairman Conaway, and Ranking
Member----
The Chairman. I will need you to use your microphone.
Ms. Mensah. There it is. Thank you, Chairman Conaway,
Ranking Member Peterson, and Members of the Committee. Thank
you for the opportunity to be here this afternoon, and to
discuss the Department of Agriculture's Rural Development
mission area. And as you have already introduced, I am
accompanied this morning by Rural Development Administrators
Brandon McBride, Sam Rikkers, and Tony Hernandez.
Rural Development, or RD, as we are known in our
communities, we manage a loan portfolio of more than $212
billion. We are organized into three agencies, Rural Utilities
Service, Rural Business and Cooperative Service, and Rural
Housing and Community Facilities. Our fundamental mission is to
increase economic opportunity, and improve the quality of life
for all rural citizens. Our investments support rural residents
looking for affordable and safe housing, municipalities seeking
water infrastructure in community facilities, and small rural
businesses, co-ops, and ag producers who are looking to expand
to new markets.
RD investment capital spurs economic development, and the
jobs that come with it. I appreciate the authorities and the
resources that are provided to us by Congress to allow us to
continue our work on behalf of rural America. Since becoming
Under Secretary, I have visited many projects to see how rural
America benefits from our investments. I have also met many of
our dedicated field staff, who engage directly with local
lenders and community partners to solve problems and explore
options for economic development.
RD continues to make investments in water, in electric, and
broadband because they continue to be necessary for rural
America to be competitive. Last summer, RD announced a loan and
grant to the City of Baird, Texas to replace its wastewater
treatment plant. This was just one of 39 projects in Texas,
totaling over $161 million to build and improve water and
wastewater infrastructure in rural communities across Texas
last year. RD dollars have also assisted with families affected
by the drought. Recently I had the pleasure of traveling with
Representative Costa, where we visited with a Madeira,
California family that had received a loan to drill a new well.
RD contributes to economic growth. Since 2009 we created or
saved more than 450,000 jobs, and helped 112,000 rural small
businesses. There is tremendous opportunity to spur economic
development in rural communities through renewable
technologies. In Redwood Falls, Minnesota, farming implements
dealer Welch Equipment received a Rural Energy for America
Program, or REAP, grant to install a solar array that will
provide nearly 88 percent of operational energy for that rural
small business, saving them nearly $11,000 in annual energy
costs. In Kerkhoven, Minnesota a local producer received a REAP
grant for renewable energy at their pasture-raised livestock
farm. This farm uses drug-free feed, and small family-owned
processors, to raise and process its livestock in order to
provide products from the pasture to the plate at local
restaurants. Since 2009 RD has helped more than a million rural
families to buy, repair, or refinance a home. In Fiscal Year
2015, we did not leave $1 unspent in our program to provide
direct mortgages to low- and very-low-income Americans. We
understand the unique needs of rural residents, and we remain
committed to serving them.
Additionally, RD works with communities to improve the
quality of life for rural residents. One example of this
collaboration was in Georgia, where a Community Facilities
grant provided equipment to help school districts in five rural
counties promote STEM education. And this kind of investment
linked universities to rural K-12 public schools to enhance
opportunities for rural students. RD plays a key role in USDA's
place-based efforts to ensure that our loan and grant programs
are available and accessible, even in persistently poor areas.
Our proactive approach identified and assisted areas of
greatest needs in rural America, and I am committed to
providing increased opportunities to allow everyone to share in
the prosperity of a growing economy.
I want to end today on our people. Every day nearly 5,000
Rural Development professionals work to grow businesses,
provide affordable rural housing, maintain and upgrade
infrastructure and investments, and our staff live, and work,
and raise their families in the communities they serve. They
are smart, they are dedicated, and resourceful. And because
Congress has supported this field-based delivery system, we
have staff in every state, singularly focused on making rural
communities stronger and more vibrant. Yet in recent years
fewer personnel had to do more work, and we need to continue to
invest in our people to ensure that they can provide quality
services.
Congress has provided significant resources to make a real
impact in rural places, and I assure you that we are not only
careful, we are always working to stretch the dollars. So thank
you for your continued interest, and I am looking forward to
the opportunity to testify before the Committee, and happy to
answer your questions.
[The prepared statement of Ms. Mensah follows:]
Prepared Statement of Hon. Lisa Mensah, Under Secretary, Rural
Development, U.S. Department of Agriculture, Washington, D.C.
Chairman Conaway, Ranking Member Peterson, and Members of the
Committee, thank you for the opportunity to discuss the programs,
successes and challenges of the Department of Agriculture's Rural
Development mission area. I am accompanied this afternoon by Mr.
Brandon McBride, Mr. Sam Rikkers, and Mr. Tony Hernandez,
Administrators for Rural Development's Utilities, Business and
Cooperative, and Housing Services, respectively.
Rural Development's fundamental mission is to increase economic
opportunity and improve the quality of life for all rural citizens. Our
investments contribute to rural growth and support the needs of the 46
million American citizens that provide the food, fiber, fuel, and
durable goods the rest of the nation, and the world, depend upon.
Since 2009, Rural Development has provided grants and loans to help
grow the economy, create jobs and provide housing and opportunity for
home ownership. Rural Development has helped approximately 112,000
rural small businesses grow, creating or saving an estimated 450,000
jobs; invested in more than 6,600 critical community projects including
hospitals, libraries, schools, and public safety facilities; supported
more than 3,000 multi-family housing developments; and helped more than
1.1 million rural families buy, repair or refinance a home helping more
than 141,000 rural Americans become homeowners in FY 2015 alone.
Rural Development has also invested a total of $13.3 billion since
FY 2009 in new or improved infrastructure in rural areas through 10,623
water projects. These improvements helped nearly 18 million rural
residents gain access to clean drinking water and better waste-water
disposal. Rural Development staff provided grants and loans for water
and waste-water projects to help safeguard the health of approximately
15.7 million rural residents. Modernized electric service was delivered
to more than 5.5 million subscribers and over 180,000 miles of electric
lines were funded. We invested in new and improved broadband service to
nearly 1.5 million rural residents, which expands access to state-of-
the-art health care, educational and cultural resources, and provides
the opportunity for local businesses to compete in the global economy;
helped modernize rural electric infrastructure for about 5.5 million
rural residents and businesses.
As this Committee well knows, the economic well-being of all
Americans is inexorably tied to rural growth. We are proud to serve the
needs of rural people and places to ensure that rural America continues
to thrive and to drive the economy. I have had the benefit of visiting
a number of projects throughout the country and am excited by the
innovation and cutting edge technology in use and growing the rural
economy.
Our dedicated field staff in nearly 400 offices live in the areas
they serve closely collaborating with those communities to engage
directly with local lenders and partners to solve problems and explore
options for sustainable economic development. Our work is designed to
maximize taxpayer dollars, leveraging private-sector financing or
providing a guarantee to private banks. Small businesses looking to
expand into new markets and create jobs, municipalities seeking to
lower energy and water costs and improve efficiency, and rural
residents looking for safe, affordable housing are all well served by
Rural Development.
We are able to conduct this important work strengthening rural
America through the authorities provided to USDA by Congress and the
work of this Committee. The 2014 Farm Bill renewed our authority to
strengthen our efforts on our core programs for rural America. I want
to thank the Members of the Committee for your continued commitment to
the well-being of rural America and for your support of Rural
Development investments in towns and communities across the country.
The Rural Utilities Service--Investing in Infrastructure for a Modern
Rural America
The Rural Utilities Service (RUS) has an 80 year history of funding
basic infrastructure, providing the critical financial support for
electric infrastructure, clean, safe water and wastewater services, and
finally, bridge the digital divide with broadband service to help
healthy rural communities grow and prosper. During 2015, RUS has
provided over 5.5 million rural consumers with improved electric
service, over 2.8 million rural households, businesses and community
institutions with better access to telecommunications services, and
over 18 million rural residents with improved water and wastewater
services.
For example, Rural Development provided over $22 million to assist
the communities of Cameron, Maysville, and Stewartsville in northwest
Missouri. Over the last 10 years these towns have struggled to provide
their residents with water due to drought and aging water treatment
facilities. These funds will be used to construct a 36 mile water line
and related storage and pumping facilities. The system improvements
will bring safe, clean, and abundant water to about 4,370 rural
households and businesses.
Overcoming geographic and demographic challenges to offer access to
robust broadband service is difficult and among the reasons that less
than 40 percent of those living in rural communities have high speed
Internet service. In 2015, RUS awarded $280 million to improve
telecommunications services--including broadband delivery, distance
learning and telemedicine systems, expansion of rural 911 systems, and
other telecommunications infrastructure--for 2.8 million rural
customers. Since 2009, USDA has awarded $6.7 billion for nearly 550
projects to improve telecommunications infrastructure in rural
communities.
In September 2015 the White House released a report submitted by
USDA and the Department of Commerce on ways to continue to bring
broadband to unserved areas. Work continues on those next steps of
getting robust broadband service available to all who live in rural
areas. As part of those efforts, many RD programs can be an important
resource in this effort.
Efforts such as the Community Connect grant program, provide
broadband grants to better target last-mile funds to rural communities
that are least likely to have broadband infrastructure needed for
economic development. Rural Development also invests in Distance
Learning and Telemedicine Programs (DLT) to provide innovative
breakthroughs and increased medical care access for rural citizens.
Rural Business and Cooperative Services--A Force for Rural Jobs and
Revitalization
USDA's Rural Business and Cooperative Service (RBS) continues to
bring investments and jobs to rural areas that improve lives of rural
Americans. In FY 2015, RBS helped more than 12,500 rural businesses
through $1.5 billion in loans, loan guarantees, and grants. Since 2009,
USDA has helped over 112,000 rural businesses start or expand
operations with nearly $11 billion in investments.
The Rural Economic Development Loan and Grant Program has made over
600 awards totaling over $365 million assisting nearly 1,100 businesses
and helping create or save over 31,000 jobs since 2009. In FY 2015, RBS
made under this program 38 loans, totaling $38.6 million, and 33
grants, totaling approximately $9.2 million. One example is a $2
million loan to East Mississippi Electric Power Association to provide
a loan to Winston Plywood & Veneer, LLC to purchase machinery and
equipment needed for an $85 million plywood and veneer manufacturing
facility to be located in Winston County, Mississippi, a consistent
poverty/StrikeForce county. The project is expected to create 300 new
jobs.
The Rural Energy for America Program (REAP) has significantly
contributed to doubling the number of farms using renewable energy
production in the last 5 years. Since 2009, RBS renewable energy
programs have made 11,649 awards to provide over $720 million in
funding to agricultural producers and rural small businesses to
strengthen rural economies. REAP is bringing down energy costs for
rural small businesses and agriculture producers and making them more
competitive in the global marketplace.
In 2015, RBS awarded Wellons Farm, LLC, in Johnson County, North
Carolina, a $4.3 million REAP loan guarantee to provide financing to
install a 6.5 megawatt photo-voltaic solar array on the farm. Once the
system is up and running, the solar panel system will generate enough
energy to power 1,000 average sized homes per year.
During FY 2015, RBS provided approximately $59 million in
Cooperative Program grants to support over 4,000 projects in business,
agriculture and health care sectors. Since 2009, RBS has helped more
than 15,000 farmers, ranchers and businesses through approximately $224
million in funding.
Today, we are using lessons learned from our lengthy experience in
rural America to help communities capitalize on emerging opportunities
in the 21st Century economy. Consider our work in the rapidly expanding
area of local and regional food systems. In FY 2015, RBS provided $88
million to assist over 1,400 producers and businesses for local and
regional food systems.
One example is Buffalo Creek Beef, LLC of Lexington, VA, which
received a $200,000 working capital Value-Added Producer Grant (VAPG)
in FY 2015 to produce high-value beef utilizing a unique processing and
finishing method that results in a hand-raised, all natural product.
This family-owned operation concentrates on local markets and will use
grant funds to diversify their product line to include a wider variety
of raw and ready-to-eat products.
Rural Housing Services--Anchoring Communities with Homes and Essential
Facilities
A special point of pride for Rural Development is our housing
programs. The Rural Housing Service and Community Facilities (RHS and
CF) make critical loans and grants to support rural residents and the
communities in which they live. Congress has defined for us a
tremendous set of housing and community development programs to ensure
that rural families have access to safe, affordable homes and thriving
communities.
Since 2009, Rural Development has helped more than 1.1 million
rural families buy, refinance and maintain homes with $137.5 billion in
RHS investments. During FY 2015, our Rural Development housing programs
provided $19.5 billion to help more than 141,300 families with modest
incomes buy, finance, or repair their homes. These programs mean that
low and moderate income borrowers are now on the journey to
homeownership, which will help build wealth and security for rural
families. We offer one of the best home mortgages in the United States
and boast a low default rate. Additionally, we left no dollar unused in
our [section] 502 direct mortgage program and we plan to do this again
in 2016. We understand how vital this core program is to rural America.
Another significant part of our housing program provides rental
assistance to low-income people who live in USDA-financed multi-family
housing. During FY 2015, RHS helped 10,840 families build or renovate
about 450 multi-family housing rural apartment complexes through $277.2
million in funding.
We have worked hard to address recent challenges of providing
sustainable rental assistance to those who rely on this program, and I
am optimistic that these efforts and the FY 2017 investment build a
stronger program to better serve rural residents.
RHS continues to make tremendous gains to its systems and
processes--and recently took on a decade of needed upgrades. As of this
spring, our guaranteed Single Family Housing loan program is now
paperless. Not only are we saving 37,500 reams of paper every year,
we've lowered postage costs, saved printer ink, and are moving loan
guarantees out the door more efficiently, making our programs easier
for our customers to use.
USDA Rural Development, through its Community Facilities programs,
has taken a leadership role in facilitating and strengthening public
private partnerships to ensure that rural residents have the
opportunity for a brighter future with good schools, quality health
care and other critical community infrastructure needs. Since 2009,
this program has improved the quality of life for rural residents by
investing $9.6 billion in more than 9,000 community infrastructure
projects.
School districts in rural Clay, Colquitt, Quitman, Randolph, and
Sumter counties are partnering with the Georgia Tech Research Institute
(GTRI) to build STEM distance learning infrastructure for STEM
education and outreach. USDA Rural Development provided a $99,900
Community Facilities grant in 2015 to help purchase teleconferencing
and online access equipment to facilitate STEM program outreach. Since
2013, USDA Rural Development has provided ten grants totaling almost
$502,000 to educational institutions to support STEM education in rural
Georgia and give local students a competitive edge in the job market.
Addressing the Challenge of Rural Poverty
Under Secretary Vilsack's leadership, there has been a push to
transform rural America from a primarily agri-based economy to one that
makes, creates and innovates. A focus on taking advantage of the
emerging bioeconomy, including biomanufacturing and advanced biofuels,
local and regional food systems, broadband, and telemedicine has not
only supported the most productive agricultural sector in the world,
but also assisted rural communities to be places where all businesses
have prospered and created jobs. I am committed to continue this work
of providing increased opportunities to allow everyone to share in the
prosperity of the growing economy.
Rural Development plays a key role in USDA's place-based efforts
making sure that the programs that help alleviate the impact of poverty
are available and accessible even in the poorest and persistently poor
rural communities. Over the course of the last several years, we have
been proactive in identifying and assisting areas of greatest need in
rural America. Earlier this year, the StrikeForce Initiative added four
additional states to include a total of 970 counties, parishes,
boroughs, and census areas in 25 states and Puerto Rico. We know that
place-based efforts work and we have seen StrikeForce bring economic
opportunity directly to rural Americans where they live and help rural
communities leverage their assets. In 2015, in StrikeForce target
areas, USDA partnered with more than 1,000 organizations to support
56,600 investments that directed more than $7.5 billion to create jobs,
build homes, feed kids, assist farmers and conserve natural resources
in some of the nation's most economically challenged areas. Since the
initiative was launched in 2010, USDA has invested more than $23
billion in high-poverty areas, providing a pathway to success and
expanding the middle class.
Across the country poverty rates are in decline. Still, in 2014,
roughly 2.5 million children in rural areas were poor and approximately
1.2 million children lived in rural families with cash incomes below
\1/2\ of the poverty line. Rural and tribal communities face distinct
challenges to combating rural poverty, including limited access to
critical services, fewer job prospects, and in some places, relative
lack of institutional capacity. The budget requests $20 million in
grants to rural communities to implement two-generation strategies that
seek to intentionally align high-quality workforce development programs
with high-quality child-focused programs. In addition, the budget
requests $5 million to support data systems alignment across several
USDA and HHS programs to gain efficiencies and maximize impact of
existing programs.
Throughout my travels to rural communities, it is clear that
addressing the challenge of outmigration and giving our next generation
of rural Americans opportunities to stay and use their skills to earn a
living in their communities was extremely important to local community
leaders, family members and businesses. I know this can be done.
Investing in the People to Make Rural Development Investments Possible
All that Rural Development does is possible because of the people
who do this work. Every day, 5,000 Rural Development professionals work
to help rural business, provide affordable rural housing, and maintain
and upgrade infrastructure investments. Because Congress has supported
our field based delivery structure, Rural Development has staff in
every state to make and service the loans and grants that help our
rural communities become stronger and more vibrant.
Over the course of my career, in both the philanthropic foundations
and the private-sector financial industry, I have had the opportunity
to work with great people. In my 14 months in this position, I could
not be more impressed with the men and women of USDA Rural Development.
They are smart, dedicated and resourceful. Fewer personnel have done
more work. Our field based staff works, lives and raises their families
in the communities they serve. They deserve our praise and support for
the work they do.
This work modernizes rural America; it connects citizens to
broadband; it builds a cleaner future through renewable power and
energy efficiency; it reduces child poverty by investing in businesses;
it helps manage the growing healthcare needs of an aging population; it
builds rural places where young people want to stay, start families,
build businesses and create futures.
I will focus on increasing investments in our people to continue to
provide quality service in both our national office and in the field,
where staff are part of our rural communities. There is a need for new
employees to fill mission-critical skill shortages, particularly
important since Rural Development's loan portfolio has grown to more
than $212 billion.
Congress has provided significant resources to make a real impact
in rural places. Yet the opportunities and the challenges of rural
America make it clear to all of us that taxpayer dollars will continue
to deliver stronger economies in rural communities. There is something
extraordinary about rural America's ability to survive and thrive. It
is a place where values count and where stewardship is a meaningful
obligation.
Thank you for your continued interest and support of Rural
Development programs. Together, we can coordinate and leverage our
resources to invest in our country's future and turn Rural
Development's transactional work into transformational work.
I appreciate the opportunity to testify before this House
Agriculture Committee. At this time, I am happy to answer your
questions. Thank you.
The Chairman. Thank you, ma'am. I appreciate you and your
team being here today. I will recognize myself for 5 minutes.
On your Community Facilities grants versus direct lending
programs, you zeroed out again this year the loan guarantees
versus fully funding the direct lending. Does that tell me, as
a former banker, that there is less credit risk in a direct
loan than there is in a guaranteed loan?
Ms. Mensah. There is less----
The Chairman. And why is that?
Ms. Mensah.--and we have a lower subsidy rate.
The Chairman. Why wouldn't the banks make those direct
loans instead of the government?
Ms. Mensah. Well, the subsidy rate is composed of many
things, but right now it is a difference in how we charge for
those loans. And this direct portfolio--you have given us such
an authority that we feel we have huge ability to use that
portfolio, and we are using it very, very well.
I want to bring on our Administrator too, Tony Hernandez,
to just say a word about the differences in the guaranteed and
the direct.
Mr. Hernandez. Thank you very much. Mr. Chairman, the
direct program is a very outstanding program. It is $2.2
billion that handles both public facilities, which is health
care, which is about 45 percent. But most every loan that we do
with--is shared interest and shared lending, so we don't do the
whole project. Somebody else is doing part of the lending.
The Chairman. Do you generate the loan, and they will
participate with the local banker, or does the local banker
come to you for the participations?
Mr. Hernandez. Both. We generate the--loan, so we have a
direct loan that we do, but usually there is other type of
financing. Most of the time it is tax credits or some bonds
that are coming into the financing as well. But we do direct
lending.
The Chairman. Okay, you said you participate, but you don't
participate directly. With the way that term is traditionally
used in banking you don't participate with other banks?
Ms. Mensah. We don't farm it out, and share----
Mr. Hernandez. We do not farm it out.
Ms. Mensah.--no.
Mr. Hernandez. We have a guarantee program that we have
zeroed out, but in the past we have used guaranteed lending.
The Chairman. Okay. I am still walking myself through this.
The bad news is, I have had some experience in this area, so I
am having a hard time understanding why direct loans are less
credit risky than guaranteed loans. Why would you guarantee
something to somebody else? In the guaranteed lending, does the
person you guarantee, do they bear all of the risk?
Mr. Hernandez. No. When we work with other lenders, lenders
who want to do the short-term financing. We tend to do long-
term financing, financing up to 40 years. So what we are trying
to do is to reduce the cost to access the capital, work with
other type of financing mechanisms, which is usually a bond or
tax credits, do market tax credits, other ways that other
financial institutions are participating. But we do a direct
lending that makes the deal possible.
The Chairman. So I really shouldn't compare these
portfolios because they really aren't comparable lending
portfolios? The guarantee is for shorter-term----
Mr. Hernandez. Shorter-term.
The Chairman.--and then your direct lending is for longer-
term. What is the default rate on your direct lending?
Mr. Hernandez. We are under two percent, sir.
The Chairman. And how much--two percent of $2.5 billion?
Mr. Hernandez. About two percent.
The Chairman. Is that annually?
Mr. Hernandez. That is annually.
The Chairman. All right. How does that show up on approps?
Mr. Hernandez. On our appropriations?
The Chairman. Yes.
Mr. Hernandez. It is----
The Chairman. Well, I mean, how does that get scored so to
speak?
Ms. Mensah. Yes. You know, what, we should----
The Chairman. Excuse me a second. Mr. Rouzer, could you
move one way or the other, buddy? There we go. Thank you.
Ms. Mensah. This is a very big room.
The Chairman. You have Tony and I----
Mr. Rouzer. What is it with you and Rodney Davis?
The Chairman. Well, thank you, buddy.
Ms. Mensah. I think what we should do is have a more
precise discussion, or maybe we can give you a longer briefing.
What I reflected was the negative subsidy rate, which is
causing our direct program to be such a lower--it was incorrect
of me to say that it has lower risk. I think the portfolios are
comparable, but with a negative subsidy rate, which is driven
by a variety of things. Loss experience is one of them, but it
is not the only portion of that----
The Chairman. All right. Negative subsidy rate.
Ms. Mensah. Yes, correct.
The Chairman. That would be income earned----
Ms. Mensah. Negative rate.
The Chairman.--on the portfolio?
Ms. Mensah. Excuse me?
The Chairman. I don't have a clue what that means, but is
that income earned on the portfolio?
Ms. Mensah. I know. As a former banker, this was the first
time I have heard of this too, coming into this job. But the
way we price our loans is really with this subsidy rate, and
when it is negative like this, that is a combination of
wonderful performance on the loans, and also the income we make
on those loans.
The Chairman. Got it. So, real quick, $10,000 loan, you are
going to charge me six percent interest rate, 3 year
amortization. What is a negative subsidy?
Ms. Mensah. It just means that, for the government's books,
we know that when we make that loan, we are actually going to
make more money on it. We don't cost budget authority to make
that loan. So when we are back on that loan----
The Chairman. All right. Is that the same thing as
borrowing money at three percent, and I am loaning it to you at
six?
Ms. Mensah. I think that might be a way to say--I have to
think about that. If you are borrowing at six----
The Chairman. No, I am lending at six. I am borrowing----
Ms. Mensah. Lending at six and borrowing at three. Meaning
there is a three percent spread?
The Chairman. Right. Is that the negative subsidy?
Ms. Mensah. That is the----
The Chairman. I am not trying to be argumentative. I just
don't----
Ms. Mensah. No, I know. The best way I have learned the
subsidy rate, and I have my budget team behind me, and I am
happy to speak longer, it is really the cost for us to make the
loan. And when it is negative, it means we can do so much more,
which is why we have really leaned into this program, and
have----
The Chairman. Okay. So if it is negative, you can do an
infinite amount?
Ms. Mensah. Well----
The Chairman. No, never mind. Thank you, we will get back
with you on that.
Ms. Mensah. No, it is a great program.
The Chairman. My vaunted team will explain the term.
Ms. Mensah. Thank you. And I am happy to----
The Chairman. With that, I now recognize, Mr. Kelly, 5
minutes.
Mr. Kelly. Thank you, Mr. Chairman, and thank you, Under
Secretary and Administrators, for being here. My first question
is to Mr. McBride, and it deals with rural broadband.
Administrator McBride, I understand there is about $10 million
available in the Community Connect Grant Program with no
backlog. There is about $50 million available in the broadband
loan program, but it currently has nine applications awaiting
action, which total about $80 million. The President's Fiscal
Year 2017 budget proposed nearly quadrupling the Community
Connect Grant Program from $10.3 million to $40 million, saying
the program is oversubscribed, while proposing zero dollars for
the Broadband Loan Program, saying in rural areas it is often
difficult to make business case to support loan funding, and
therefore granting assistance more appropriate.
When considering the various technologies that are
interested in receiving our U.S. financing and Universal
Service Fund support to provide mobile and fiber-based
broadband in rural areas, how should we balance the need for
competition in providing solutions for the costs of rural
deployment with the Communications Act standard of reasonably
comparable networks in urban and rural areas?
Mr. McBride. Thank you for the question, Congressman.
Actually, all of our telecom programs tend to be
oversubscribed. Last year, with the $10 million we had in
Community Connect, we were able to fund I believe five or six
projects. We had more than 60 applications. With the budget
request, considering the difficult budget environment that we
know that we are in, we put the--we chose to direct the funding
towards the Community Connect Program, which is targeted to
communities that do not have service.
The farm bill loan program which you referenced, that we
are processing applications right now, that is a great program,
and we are proud of the work that it does there. But in this
environment, we chose to recommend putting the resources that
we do have towards unserved communities.
Mr. Kelly. And my next question is to Administrator
Hernandez. And--Mr. Newhouse of Washington was here earlier,
and I don't know if he is going to be back, so he asked me to
ask you this question. It is on the Farm Housing Program. As
you are aware, the Section 514 Loan Program provides financing
to buy, build, improve, or repair housing for farm laborers.
The range of eligible tenants was expanded in the 2008 Farm
Bill, but legally admitted temporary laborers, such as H-2A
workers, remain ineligible for Section 514. Obviously, for
farmers, it would be helpful if they could focus more on
farming, and less on housing tenant criteria for their farm
workers. Can you tell me, do you believe the USDA currently has
the authority to alter the terms of tenant eligibility, or do
you think that would require legislative activity?
Mr. Hernandez. Thank you for the question, Congressman
Kelly. Congress has given us only statutory authority to
provide housing for farm workers, but not H-2A residents. We
cannot do that.
Mr. Kelly. And, Mr. Chairman, I yield back.
The Chairman. The gentleman yields back. Mr. Yoho, 5
minutes.
Mr. Yoho. Thank you, Mr. Chairman. Secretary Mensah--is
that right?
Ms. Mensah. You got it.
Mr. Yoho. All right. You said your portfolio was $2.2
billion, and you had a failure rate of less than two percent on
the direct loans. What about the overall lending of the $2.2
billion----
Ms. Mensah. That two percent is an overall.
Mr. Yoho. That is the overall? And then----
Ms. Mensah. That is an overall.
Mr. Yoho.--direct loans are comparable to two percent?
Ms. Mensah. Yes.
Mr. Yoho. Or less than two percent? And I want to kind of
clarify that negative subsidy, because I too am confused about
that. Tell me if this is right. A negative subsidy implies the
performance of the loan returns more than the expense or cost
of the subsidies, therefore it is positive, right? The
government is making money off----
Ms. Mensah. The government is making----
Mr. Yoho. All right. That is good.
Ms. Mensah. Yes. I am sorry.
Mr. Yoho. We have that cleared out.
Ms. Mensah. Yes.
Mr. Yoho. Administer McBride, at the Ag Appropriations
hearing on Tuesday, you said the demand for the Broadband Loan
Program was double the program level. Why would you zero out
this program, and nearly quadruple the Community Connect grant
program instead?
Mr. McBride. Thank you for the question. Again,
understanding the budget environment, and looking at what we
wanted to propose for Fiscal Year 2017, we chose to recommend
directing the funding that we thought might be available to
communities that do not have service at this time, and
Community Connect serves communities that do not have broadband
service currently.
Mr. Yoho. Okay. Let us see. A follow-up question: In a loan
situation, the government is paid back, with interest, correct?
That is not the case with the grants. In this time of budgetary
constraints, do the grants really do the most good, in your
opinions?
Mr. McBride. I think that there is a lot of need for rural
broadband expansion, so we were just looking at the various
tools that we have. We are proud of all the programs that we
are fortunate to administer, and, again, we were looking at
targeting resources to communities that do not have service.
Mr. Yoho. And I appreciate the help you have given us,
because we have sat in our office and gone over trying to get
rural broadband out to an area that talked about wanting it
more than they wanted to put the effort behind. But we will be
back with you on that.
Mr. McBride. We are happy to help whenever they are ready.
Mr. Yoho. I know you are, and it was funny, because you
heard people complaining about it. Then, when you sit at the
table, they are like, well we really don't want it that bad.
Mr. Hernandez, again, I wanted to ask you, the cost of
administering the direct loans that you do versus the
guaranteed loans, the guaranteed loans are going through
another lending entity that you are guaranteeing that. And the
question I asked before is, would it not be--or the cost of
administering in the USDA--they would have to have their own
banking system, collecting the funds, and doing all the
accounting. And as most business entities, the cost of the
labor is the most expensive part. We had a hearing today where
80 percent of a billion dollar budget went to the employees. In
your situation, what is the cost of administering a loan for
through the USDA for the U.S. Government?
Mr. Hernandez. What is the cost for processing--this is a
single----
Mr. Yoho. Well, just to run the direct loan program, as far
as labor, how many people do you have, and expense of that.
Because where I am going is, would it be better to have you
guarantee the direct loans, and stand behind them as the USDA,
and let a private entity do them, and be the bank----
Mr. Hernandez. That is a great question, Congressman. As
you and I were talking before, the reason we do the guaranteed
loan is that lenders are willing to participate. We actually
welcome and encourage the private-sector to provide single
family loans. For some of our customers, lenders will not lend
to those folks, even though they are creditworthy, because they
are more challenging customers. And so that is why, in the
wisdom of Congress, you set up what we call our retail process,
so we have offices in every state, so a citizen can come and
get a loan that would not be approved by a private-sector
lender.
Mr. Yoho. I realize that, and I appreciate the compliment
of the wisdom of Congress. I appreciate that. But, again, if
the government is going to stand behind a direct loan, could
you not stand behind that in a private entity if it were to
fail, that you are going to pick up that loan with the same
guarantee, and move the overhead of the cost of that program of
administering it in the USDA, and let the private-sector take
it?
Mr. Hernandez. That is a good question. We have worked with
the private-sector, and they have told us they will not do
certain loans. That is why we do about 140,000 loans that the
private-sector does that we guarantee, and we only do about
7,000 loans that we do, so it is a very small amount. But
lenders have told us they will not do those loans, and so this
is a nice partnership between the government and the private-
sector to increase home ownership jointly. And that is the role
of government, to go places where the private-sector does not
go, and that is what we are doing.
Mr. Yoho. I appreciate you clarifying that, bringing that
out. Thank you. I yield back.
The Chairman. The gentleman yields back. Mr. Scott, 5
minutes.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. Ms.
Mensah, first of all, think you for coming to Tifton, and Worth
County, and the other counties that we got to go to together in
October. I appreciate the opportunity to speak with you. And,
as I mentioned when you were there, one of the challenges we
have in rural Georgia is that many times we only have one or
two major employers, and many times they are family owned, or
ag related, and certain tax issues that can have a tremendous
impact on the whole community. Federal and state tax is an
example, is one that I appreciate the opportunity to discuss
with you, and the impact that that has in those areas where you
have only one privately held business.
But one of the things that I would like to ask you about is
the public-private partnerships, and how the USDA is supporting
working in partnership with the private-sector regarding rural
infrastructure, and projects that get back to kind of the basic
necessities, whether it be water, sewer, or other
infrastructure needs?
Ms. Mensah. Thank you, Congressman Scott. I had a wonderful
visit in Georgia. And what you have put your finger on is a key
interest of this agency, of this Secretary, and of this
President. We understand, as the Administrator just spoke to,
that we can't do all the lending. All the infrastructure needs
exceed even the powerful resources, and this powerful book of
business, that I have the pleasure to lead. And so we have been
very interested in expanding our portfolio with private
partners. One way we do that is in our guarantee programs. Even
sometimes when we are making a direct investment in our
Community Facilities, as Administrator Hernandez spoke, private
investors are the initial construction financier.
But as you speak to infrastructure, we know that the needs
exceed our authorities, and even our specific ways we can work.
You have authorized us in water, for instance, to work only in
communities up to 10,000 people. And we know that there are
other needs. So this Administration seeks to partner. We have
had an initiative looking at ways we can increase the
partnership. There was a conference where partners, such as
CoBank, made a commitment to increase lending to co-lend with
us where possible. So we have been proud of that work. We will
continue to look for partnerships, and we thank you for the
authorities to work that way.
Mr. Austin Scott of Georgia. One of the concerns that I
have is that the President's budget, whenever he submits it, it
certainly appears, if you look at the numbers, that he seems to
prefer the direct lending model to the guaranteed lending
model. Certainly, it seems to me that the guaranteed lending
model is more efficient, allows us to use our resources more
efficiently. Is there a reason that we continue to see the
press from the President, where does the bias for the direct
versus the guaranteed lending come from, I guess is my
question.
Ms. Mensah. Well, I would say it is wonderful to have both
tools, and during this Administration the expansion of the
guaranteed program, particularly in our housing, has been
tremendous. The current authority we are asking for, $24
billion in guaranteed lending, it dominates our portfolio, but
we do have a preference to be in both tools. And in part it is
exactly as the Administrator spoke to, we can't reach the
markets just with our guarantee, so there is a preference to
hold on hard to our ability to directly lend. You won't see the
kind of vibrant rural America if we step aside and only do it
through a guarantee.
I think one thing that is missed often is the tenor of our
loans. A 40 year exposure is rare in the marketplace, and we
have that privilege. We make those choices well, and we have
something else that, as banking has compressed, we have an
ability to work close to our local partners, close to
communities.
Mr. Austin Scott of Georgia. Ma'am, I apologize, I am down
to about 30 seconds----
Ms. Mensah. Sorry.
Mr. Austin Scott of Georgia.--but you mentioned the total
volume of the loans. What is the Department doing to monitor
those loans, and to make sure that they are in good standing,
and ensure that the taxpayers don't take losses on them?
Ms. Mensah. Yes. Every piece of our agency owns its own
risk. We have extensive risk monitoring. We have extensive
review of loans. And that is why I believe we keep a very low
default rate overall in our portfolio. The taxpayer would be
proud.
Mr. Austin Scott of Georgia. Thank you, Mr. Chairman. I
yield the 2 seconds back.
The Chairman. The gentleman yields back. Mr. Goodlatte.
Mr. Goodlatte. Mr. Chairman, thank you very much. I
appreciate this panel, and their contribution, but I don't have
any questions.
The Chairman. The gentleman yields back. Mr. Thompson, 5
minutes.
Mr. Thompson. Madam Secretary, thank you. I am over here.
Thank you----
Ms. Mensah. Sorry.
Mr. Thompson. That is all right. Now, thank you so much for
being here, for your leadership, and thank you for your staff.
A few months back I hosted, for lack of a better name--it was a
Rural Development town hall, and one of your very dedicated,
and very competent, staff, Gary Reed, came in, and between the
two of us we had invited in--and we had township supervisors,
and we had people who work in health care, and when you have a
cross-section of the rural communities within that part of the
quarter of Pennsylvania I represent. Kind of one stop shopping
for information.
Ms. Mensah. Yes.
Mr. Thompson. And it was very, very helpful, and I would
certainly commend that the--or suggest that to my colleagues. A
lot of folks there who just didn't know what was available, and
I thought it was also a very efficient way to get information
out to them. And, in fact, it would--it all came about in the--
in my introducing Mr. Reed, and sharing my perspective and
experiences with Rural Development. I talked about how my staff
had been working with a mental health provider. Significant
need in all of America, but certainly in rural America as well,
where our access issues are compounded by distance.
And in this particular organization, they were--this
nonprofit was--wanted to--knew they needed to do something. But
I will--honestly, they went to the website, and they looked at
the application process, and--kind of scared them away. And,
thankfully, we convinced them to sit down with the local Rural
Development person. And after 60 minutes at the end of the--end
of that meeting, they came away with a ribbon cutting date.
Yes. It was----
Ms. Mensah. Wonderful.
Mr. Thompson.--pretty impressive, and it was obvious to
myself, my staff, at that point where we needed to work with
you to get those connections made. A couple real quick
questions. One is just under biofuels. Are any of the
refineries that are funded through USDA energy programs
producing advanced biofuels, I guess what I would call second
generation biofuels, on a commercial scale, and what other
products are they producing?
Ms. Mensah. Thank you for your question, and I am going to
pull in Administrator Rikkers on this. We are excited by the
expanded authorities of the 2014 Farm Bill on advanced
biofuels, and we are seeing some of our first applications, and
our first--and are moving toward an expanded portfolio. But I
will ask Sam Rikkers to say a few words about the current
portfolio.
Mr. Rikkers. Thank you, Congressman. Our current portfolio
has--of the section 9003 program--let me just, at the very
outset, thank this Committee for its investment in the 2014
Farm Bill in that program, but also in its direction to expand
the program beyond just advanced biofuels. It is now expanded,
as of last year, to the renewable chemicals and biobased
product manufacturing facilities. And so we see great promise
in that. We have seen incredible interest from new applicants.
We have already started--these are complex projects, but it
will be better for the larger bioeconomy and rural communities.
With respect to your question about the biofuel--the
advanced biofuel facilities that the program has already
funded, we have two projects. INEOS is one, and Sapphire, which
is another, which are producing advanced biofuels. And we look
forward, with the new direction that Congress gave, that we
have followed up on, for that to increase, going forward.
Mr. Thompson. Thank you. Mr. McBride, I just want to see--
the Administration's Clean Power Plan that is currently been
stayed by the courts, but I have significant concerns, should
they go forward, looking at the portfolio that our electricity
providers use, and relying on a diverse portfolio, and
certainly a lot of fossil fuels for the base load. I really
think it is a misguided rule, if it were to go into effect. How
would this impact the electric loan portfolio, given the
significant dependence on fossil fuels for the base load at
this point?
Mr. McBride. If the Clean Power Plan does go forward, there
is still some things to be worked out between the states and
EPA, if it is implemented. With regard to your question about
our loan portfolio, we have about $7 billion tied to coal
assets in our portfolio. We talk to our borrowers constantly,
and believe that we have authority and the ability to work with
them if they need to come into compliance with the Clean Power
Plan.
Mr. Thompson. Well, let me just close here--I want to say,
I have more confidence with those folks' ability to work with
you than I do the EPA. Thank you.
The Chairman. The gentleman yields back. Mr. LaMalfa, 5
minutes.
Mr. LaMalfa. Thank you, Mr. Chairman. First of all, to
Under Secretary Mensah, we wanted to say thank you for your
help in a rural loan program that helped a hospital up in
northeastern California, Mayers Memorial, to secure a loan that
was very, very important for them. Long time coming, and helped
them get over the line, especially with California's very
burdensome earthquake mandates that are still in place, even in
areas where there are no earthquakes. So that was a Godsend for
them, so we appreciate the help on making that----
Ms. Mensah. Good.
Mr. LaMalfa.--getting that over the line for those folks up
there. So thank you. Just following up a little more on the
broadband, I am sorry I didn't get to hear the whole--for the
whole Committee, with everything going on here today, but rural
broadband, is very important for folks like Mayers, and
telemedicine, and a lot of the other technology to keep rural
America hooked up.
We want to make sure that the advanced broadband networks
that are coming into place that can be--at an affordable price
are accessible to rural areas, as well as urban. Again, the
technology is leaps and bounds for, as I mentioned,
telemedicine, others. USDA has done a lot to invest in this,
and I appreciate that too. You mentioned in written testimony
the different ways you are addressing it, since the last few
years--$6.7 billion in awards to improve the technology in
rural communities, and about $280 million last year.
Now, you still have gaps where there are many rural
residents who have zero broadband access, as opposed to, well,
juxtaposing that there are other areas that have some that are
being upgraded. So my question is, are our U.S. folks seeing
their dollars on those areas who don't have any options at this
moment, rather than working to speed up Internet, what might be
seen as duplicative efforts on areas that are already
oversubscribed? How are we working to fill in that zero gap, or
upgrading areas that are oversubscribed?
Ms. Mensah. Right. Congressman, you ask a very important
question, and I can say assertively that we do prioritize
unserved areas. One of the reasons why we asked for an increase
in grant funds is to reach those areas in greatest need. When I
was in California, the home of Silicon Valley, I was surprised
to hear even in California we have big stretches without
adequate high speed broadband, and those remain our priorities.
Congress provided us great direction in the farm bill to
ensure that our resources go to unserved areas, and so we
follow that language in the farm bill, and you will see we have
to require that our applicants have 15 percent of the
population that is unserved. So you will see that as our
priority, and that remains our priority.
Mr. LaMalfa. Okay. And I know there can't be a one-size-
fits-all due to the geography involved in everything, but I
appreciate that pledge and effort to fill in all the gaps. What
more can we do to ensure that the recipients of that would have
all the necessary tools in order to realize the full
capability? Is there more we can be doing in that area so that
those that get that can actually take advantage of it too?
Ms. Mensah. I think one of the things that makes RD special
is the people that are on the ground. Congressman Thompson
commended us for being able to work people-to-people, hand-in-
hand. We have engineers, we have field staff, who can work
right with the communities. And that is one way that we are
advantaged as an agency, so it is one of the reasons I have
such belief in our people. That is how we operate this program.
Mr. LaMalfa. Okay. Well, again, I appreciate your gracious
efforts on this, and for being here today to help with these,
and anything we can do in the future to make sure it is indeed
a broad broadband.
Ms. Mensah. We may have to borrow that line.
Mr. LaMalfa. Well----
Ms. Mensah. Thank you.
Mr. LaMalfa. Okay. Well, thank you. Mr. Chairman, I will
yield back.
The Chairman. The gentleman yields back. Mrs. Hartzler, 5
minutes.
Mrs. Hartzler. Thank you, Mr. Chairman. I wanted to follow
up on the same line of questioning as my colleague here, as we
are all very supportive of rural broadband. Just a couple
things I am not sure have been touched on yet, is that--my
constituents have expressed support for the FCC standard for
broadband, and my constituents believe they shouldn't settle
for slower download/upload speeds as compared to what is
available in metropolitan areas. So how is the USDA working
with the FCC to address broadband and rural communications
issues?
Ms. Mensah. Thank you, Congresswoman. That is a constant
effort of ours, to harmonize efforts, but I will ask
Administrator Rikkers to say a little more detail on the speed
question that you----
Mrs. Hartzler. Okay.
Ms. Mensah.--that you posed. I am sorry, not Mr. Rikkers. I
am going to make--he would be surprised. Mr. McBride.
Mrs. Hartzler. Yes.
Mr. McBride. Thank you for the question. With regard to the
speed, in the 2014 Farm Bill Congress provided us with some
direction to provide at least 4.1 speed. That is the minimum.
Most of the applications that we received for the farm bill
loan program exceed that. So most of the projects that we
consider will have a higher speed. It may not be the 25.3 that
the FCC has put forward, but it will be higher than the 4.1.
With regard to your other question, about working with the
FCC, certainly we have communication with them. The bigger
effort from this Administration has been the Broadband
Opportunity Council, which was a directive from President Obama
for all of the agencies to look at their current authorities
and resources to see how we could partner together to leverage
each other's programs and resources to expand access.
Mrs. Hartzler. Great. Representative LaMalfa mentioned
telemedicine, and I wanted to follow up on that too, because
that is very exciting in my district as well. I have 24
counties, and visit--try to visit every hospital, and many of
them are seeing the potential of that, as well as--I was at my
VA in Columbia earlier, and we were--last week, and we were
also talking about that, so it is of growing interest. But
broadband is the linchpin, being able to do that. So how is the
USDA working with the health care industry to advance
telemedicine?
Ms. Mensah. Well, I am so proud of our current budget,
which really expands our distance learning and telemedicine
grants. And those are grants, so it is rare, precious dollars
that are used by rural communities to expand equipment, and
that becomes one of our huge programs. We have great demand in
that program. So you have seen us ask for more support in that
arena. I saw my first demonstration of that. It is powerful.
When rural communities can be served by a provider not only for
things like an ear exam, but also for things like mental
health, that you can see mental health provision through this
vehicle. So we are proud to be in this.
Mrs. Hartzler. Yes.
Ms. Mensah. It is our job to bring the grants to the local
health care clinics.
Mrs. Hartzler. Yes, absolutely. One of my hospitals is
doing stroke detection.
Ms. Mensah. Yes.
Mrs. Hartzler. That is amazing they can do that. And then
some of my VAs are doing, actually, PTSD counseling----
Ms. Mensah. Exactly. From----
Mrs. Hartzler.--over it, and talked about how successful
that is. So it is amazing, and it has a lot of potential, so I
am glad to hear that.
I wanted to follow up on your earlier comments too about
the REAP Grants, and the renewable solar. I believe we were
talking about an example up in Minnesota or something. Can you
explain, how does that work? So if you are a business, I think
that was the farm equipment business, but a business who wants
to use this, how does that work?
Ms. Mensah. Great. Well, we have two programs, both a REAP
loan, and a REAP grant program.
Mrs. Hartzler. Okay.
Ms. Mensah. The REAP grant program is smaller, very
competitive. REAP loans, we have a large program, and we just
implemented that in the 2014 Farm Bill. But I spoke to a REAP
grant, we find almost all of these businesses locally, with our
local staff. So, once again, they are able to compete for this.
I will bring Administrator Rikkers in to say a little bit
about the competition for REAP grants, and how we identify
businesses locally.
Mr. Rikkers. Congresswoman Hartzler, the REAP grants, it
is, in many ways, government at its best. They are only 25
percent of a project cost, and so if the government is coming
in with that seed money of 25 percent, the business comes up
with the other 75 percent. And so it is really acting as an
incentive for a business to make those investments in renewable
energy systems, or energy efficiency and prudence. And at the
end of the day, what that energy savings does is cuts against
that business's bottom line. That business has a larger profit,
and, through that, has more money to expand their business, and
hire more people.
So we have seen an incredible oversubscription in the
grants. We had $80 million available in 2015 because 2 years
were together. And in that year we had $50 million, nearly
1,000 eligible applications, that were good applications we
couldn't fund because we ran out of money. And this year we are
back down to $40 million in grants, and it is so very
competitive, but making a really big impact in rural America.
Mrs. Hartzler. Mr. Chairman, could you indulge me for 2
more minutes, follow up? Thank you. So there was a local
business who was in--featured in the paper, and they installed
solar panels on the top, but they were talking about how--
basically it didn't cost them anything, with tax credits and
stuff. So can you bring in the whole picture, not just your
Department? What else is available so that a local business
could have--basically cost free?
Mr. Rikkers. Sure. States will have different tax credits.
In those states there might be other grant programs through
Department of Energy, or other parts in the government. I was
in the State of Oregon about 2 weeks ago--and what is
interesting is it is difficult for us to go out to every little
small mom and pop business. There was a vendor, a local
electric company, that had a small solar division, and they are
the ones that reached out and connected us with a small little
hardware store in Arlington, Oregon. And it is in a town that
you wouldn't think, ``Gosh, I need to put solar panels on my
roof.'' But they got a small grant, it was at just under
$20,000, and they invested some of their own money, and now
have--are going to cut significant energy costs. But, again, it
is not always directly through us, but by working through some
of the vendors that are seeing the synergies they can have by
the opportunities that our grants offer.
Mrs. Hartzler. I should probably make a little editorial
comment. Yes, it is great for the businesses that are able to
apply. My only concern, as a watchdog for the taxpayer, is how
come some businesses are able to get this almost free, at
taxpayer expense? So they are not only getting the solar panels
free, but then their energy costs are almost nothing, and the
business next door doesn't able--isn't able to access that. So
something about that kind of concerns me, but, anyway, thank
you. I yield back.
The Chairman. The gentlelady yields back. I have a couple
of follow-ups. While we are on that subject, Mr. Rikkers, you
said a $20,000 grant, so the company came up with $60,000.
Mr. Rikkers. The----
The Chairman. Okay.
Mr. Rikkers. The REAP grant will only cover 25 percent of a
project cost.
The Chairman. Okay. So the amount of it coming out of other
taxpayers'----
Mr. Rikkers. Typically it is----
The Chairman.--Federal taxpayers'----
Mr. Rikkers.--there are those cases where there certainly
are some tax credits in certain states, but oftentimes there is
such an incentive by that business to even put in their own
investment, because they are seeing that money paid back within
years--within just a handful of years because of the energy
savings they are reaping through the program.
The Chairman. Got you. Mr. Hernandez, do we make direct
rural home mortgage loans?
Mr. Hernandez. We do, sir. We have a single family direct
program.
The Chairman. All right. Are you subject to the same
onerous processes that our community bankers are subject to
that is driving them out of that business, that the CFPB has
put in place? Do you have to do the same documentation, the
same vetting, everything?
Mr. Hernandez. We follow all of the regulations that are
passed by Congress, and----
The Chairman. No, those weren't passed by Congress. These
are rules from the CFPB.
Mr. Hernandez. Okay.
The Chairman. They are driving community banks out of that
business. Do you have to do everything they do?
Mr. Hernandez. On our guarantee program, the lenders do the
lending. On the direct, we do the same type of process.
The Chairman. Okay. How much have your costs gone up?
Mr. Hernandez. Actually, I don't think our costs have gone
up, sir, and actually, our processes are getting better all the
time. And that is why we are doing more loans.
The Chairman. Okay, Tony. You are saying that you are
better than every community banker out there?
Mr. Hernandez. No, I am not saying that, sir. I am saying--
--
The Chairman. Well, every one of those guys are telling me
it is costing them a lot more in compliance costs to book home
mortgage loans that they keep on their books. It is costing
them more money, and yet you just told me that it costs you
less money to paper a loan today than it did before the CFPB
was created?
Mr. Hernandez. Chairman, the cost for us doing business is
less because we are using government funds.
The Chairman. We know. Put your business hat on, Tony.
Mr. Hernandez. Okay.
The Chairman. All right. You spend money for a loan
officer, and a documents person, and all those things. Those
are your costs. Even though the taxpayer may be paying those,
you are incurring those costs. So none of that has changed? You
are using the exact same number of compliance officers that you
did before?
Mr. Hernandez. No, we don't have as many compliance
officers as the private-sector.
The Chairman. And why is that?
Mr. Hernandez. That is because Congress doesn't fund us to
have as many compliance officers.
The Chairman. Then how could you make more loans? Or how
could you----
Mr. Hernandez. No, we don't make more loans, sir. We did
146,000 loans last year. The private-sector does many, many----
The Chairman. I know that, but I have community bankers all
over west Texas telling me they can't compete for home
mortgages. Not with you necessarily, but they can't compete,
given the new onerous rules. And you are telling me something
that is really inconsistent with that. I am not trying to be
argumentative.
Mr. Hernandez. No.
The Chairman. Just trying to understand how you could do
something that folks who do it for a living, and try to make
money at----
Mr. Hernandez. Well, let me find out more from your Texas
experience, but our experience, the lenders love our guaranteed
program.
The Chairman. No, I am talking about your direct loans.
Don't switch topics on me. That is----
Mr. Hernandez. No, I am to the guaranteed loan, which is--
the lenders were used. So your community bankers use our
guaranteed product.
The Chairman. I know, but your direct loans--I am asking
about your direct loans.
Mr. Hernandez. Yes, our direct loans.
The Chairman. You are not finding the new rules from the
CFPB particularly onerous?
Mr. Hernandez. I will do some checking to make sure if we
have that Mr. Chairman.
The Chairman. All right. Has your demand for direct loans
gone up as a result of community bankers in small communities
getting out of that business? Is your demand up?
Mr. Hernandez. The demand we have for direct is very high.
We only have----
The Chairman. Is it up over the last 3 years, since Dodd-
Frank kicked in, and the CFPB's putting them out of business?
Mr. Hernandez. No, I don't think it is affected our demand
that way at all, sir. Actually, the demand for our housing
programs is growing all the time.
The Chairman. All right. Tony, I want you to think about
that. It doesn't ring accurate with me, I am not trying to be
argumentative, but given that almost every single community
banker I represent has complained about the increased costs,
and the compliance folks that have to be in fact, they have
gotten out of this business altogether because they can't loan
money at an interest rate that fades the cost of putting the
loan on the books.
Mr. Hernandez. Well, let me do some checking for you.
The Chairman. Okay.
Mr. Hernandez. Let me get some research done, and get back
to you on that information.
The Chairman. All right. That would be great. Mr. McBride,
you mentioned, a while ago, that if your power plants come into
compliance with the Clean Power Plan, you would be under any
kind of an obligation to loan them money to upgrade their
facilities beyond what they could pay back?
Mr. McBride. We would consider whatever project and loan
application that they submitted. But, as far as an obligation--
--
The Chairman. Could you take more risks with them to try to
get into compliance with those rules than, say, a standard
lender would?
Mr. McBride. We will have to make sure that the loan that
we make to them can be repaid.
The Chairman. Okay. And then, Mr. Rikkers--are you
broadband? Who is broadband?
Mr. McBride. That is me.
The Chairman. Sorry about that. My recollection is, out of
the stimulus bill, there was $300 million hardwired to map the
United States to tell us where broadband is and isn't. My
recollection is that all of that $8 billion of broadband money
had to be committed before that study was done. The question,
though, I am assuming the study got done. How do you use that
study, in terms of deciding where that should go and shouldn't
go? Is it a tool that you use, or just a book on a shelf?
Mr. McBride. The study was done by the FCC. And, actually,
in the 2014 Farm Bill, as a part of our farm bill loan program,
Congress directed us to share information that we had with our
loan applications with the FCC to make sure that the maps were
as up to date as possible. With regard----
The Chairman. But you don't take their map----
Mr. McBride. I am sorry?
The Chairman. I understand that you are helping them fill
in their map, but their map doesn't drive what you do?
Mr. McBride. Well, certainly we are aware of their map, but
we consider the applications that are sent in to us.
The Chairman. Okay.
Mr. McBride. And with regard to existing service providers,
we also post those applications online, so people can see if
there is an existing service provider in that territory.
The Chairman. Okay. I guess the bottom line was do we get
any value of the $300 million that we spent on that map?
Mr. McBride. Yes. The mapping is helpful. Yes, sir.
The Chairman. But it is only after the fact that you
consult the map, after you have already made your loan, and you
tell the FCC about it, right?
Mr. McBride. Well, we can check when we get an application,
and it helps us to see what is available----
The Chairman. Right. I hope the answer is that----
Mr. McBride. Yes.
The Chairman. At least bluff me into thinking that you look
at the $300 million of money that was spent. Ms. Mensah, you
and your team are terrific. You have a question? All right.
Mr. McBride. Yes, sir.
Ms. Mensah. Mr. Yoho.
Mr. Yoho. You almost were out of here.
Ms. Mensah. That is okay. We are happy to be here. We are
happy----
Mr. Yoho. Just real quickly, Mr. Hernandez, I wanted to
follow up on that. Are you saying, on the direct loan portion
that the USDA does, they have to be in--compliant with Dodd-
Frank, just like a regular bank?
Mr. Hernandez. We have to follow the mortgage industry
guidelines. So the compliance----
Mr. Yoho. I know that the department that funds, or works
with the GSEs, like Farm Credit, that agency has their own set
of guidelines that is separate from Dodd-Frank. And I assume
you would be like that entity, right?
Mr. Hernandez. We are, but the industry creates standard
forms and documents that we all tend to use, so there is some
uniformity in the mortgage industry. So we use similar types of
forms----
Mr. Yoho. On the regulatory side?
Mr. Hernandez. On the regulatory side. But, the advantage
of the compliance is that it actually helps improve the
performance of our loans. So our performance for the loans on
direct are very low. In fact, it is about two----
Mr. Yoho. Well, that is what I wanted to talk to all of
you.
The Chairman. Would the gentleman yield for a second while
we are on that subject? Tony----
Mr. Yoho. Yes, sir.
The Chairman.--what I asked you was not the industry
standards. I was asking you about the rules put forth by CFPB.
Mr. Hernandez. Right.
The Chairman. I don't care about the industry, the stuff
they developed themselves. I am concerned about the
requirements to follow all those rules that the CFPB put out
referencing home mortgage lending.
Mr. Hernandez. Let me do more research for you, sir, and I
will come back and tell you exactly what we do so you have a
better understanding. I would appreciate that, thank you.
The Chairman. All right.
Mr. Yoho. You guys, the USDA, we are all proud of the work
you guys do. It is a--the USDA has over 100,000 employees, and
if you compare it to a farmer ratio, it is, I read, anywhere
from one USDA employee to 17 farmers, or 30 farmers. It is a
huge agency, and you guys know the state of the economy. You
know the state of our country right now.
We are arguing--we are discussing--I don't want to say
arguing. We are discussing a budget for this country, and there
is a gap of $30 billion. And, Under Secretary Mensah, you were
saying that you have a two percent failure rate, which is
great. I would love to have that in my veterinary practice when
we had that, as far as uncollectables. But I have dealt with
other agencies, like OPIC, and MCC, and other agencies that
claim to have a 0.1 percent failure rate.
And if we look at a two percent failure rate on $212
billion, it is $4.2 billion. Given the financial situation that
we are facing today, with Social Security, Medicare, Medicaid,
and the mandatory spending consuming 68 percent of our income
that the government brings in, can I implore you guys to go to
one percent? That would save $2 billion. And, again, we are
discussing, and trying to come to terms over $30 billion. And I
know you guys do a great job, but I am going to implore all of
you to do what we can to save more money so that we can get our
financial house in order. Because, if not, 6 years from now
these won't be discussions we are having in this House about
what we are doing, and the good job we are doing, and we want
to continue that. And I yield back, and I thank the Chairman
for indulging me.
The Chairman. I thank the gentleman. Ms. Mensah, thank you
and your team. My takeaway is that you are really aggressive at
trying to prosper rural America, and I can't thank you enough
for that.
Ms. Mensah. That is exactly our mission.
The Chairman. We may have some differences from here to
there, but I just really sense a real heart for rural America
coming from you and your team. And that is commendable. I got
at you a little bit on some stuff, but please don't interpret
that as----
Ms. Mensah. That is okay. We are serious about it too. I--
--
The Chairman.--because that is all I represent is rural
America. I have three big towns, and the rest of my district is
rural. And if we don't have a strong production agriculture
industry, we don't have a strong rural America, and vice versa.
So thank you for what you do. We appreciate it. Obviously we
try to make sure that the private-sector can compete, or
deliver the services first. But, if they don't, then that is
where you guys step in, under the farm bill. I appreciate the
aggressiveness with which I sense you get after your job to
help prosper rural America, so thank you very much. With that,
we are adjourned until in the morning. Thanks, everybody.
Ms. Mensah. Thank you.
[Whereupon, at 4:41 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Questions
Response from Hon. Kevin W. Concannon, Under Secretary, Food, Nutrition
and Consumer Services, U.S. Department of Agriculture
Questions Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. On February 17, the U.S. Department of Agriculture's
Food and Nutrition Service (FNS) published a Proposed Rule altering
eligibility requirements for retailers participating in SNAP.
Members of this Committee communicated extensively with FNS during
negotiations for the 2014 Farm Bill. At no point during those
discussions did FNS indicate that it was interested in altering the
definition of ``staple foods'' by removing multiple ingredient items or
expanding the accessory food category.
Why has FNS chosen to take this approach in its Proposed Rule? Why
did FNS not seek Congressional input on this approach during the 2014
Farm Bill negotiations?
Answer. The USDA, Food and Nutrition Service (FNS) is committed to
improving access to nutritious foods for low-income Americans and
supporting healthy lifestyle choices by SNAP participants. This
proposed rule is intended to ensure that the over 260,000 outlets that
accept SNAP benefits offer a variety of products to support healthy
choices for SNAP participants.
The provisions in the proposed rule related to staple foods are
well within the bounds of FNS authority set out in existing statute,
which directs FNS to authorize retail food stores that further the
purposes of the Program, and are consistent with statutory definitions.
FNS chose to revise these definitions because we know that a small
portion of SNAP retailers are meeting the current retailer standards
with the barest of food choices for SNAP participants. Note that from a
legal perspective, standards that are set in regulation can be revised
through a rulemaking process.
FNS has been fully transparent in its desire and intent to ensure
that SNAP participants have access to retailers who are offering a
basic supply of healthy foods, rather than meeting current eligibility
criteria with chips, cookies and other snack foods that today can meet
the ``staple foods'' definition, and retailers that are really
restaurants that have been able to thwart Congressional intent to
exclude most restaurants from SNAP by selling food cold and heating it
after the sale. FNS sought public input on these proposed provisions in
advance of this rulemaking and is carefully reviewing comments received
on the proposal in order to craft requirements that ensure SNAP
participants have access to healthy food choices, legitimate retailers
have workable rules, and healthy food choices remain available to SNAP
participants who live in areas with limited retailer options.
Our interest in seeking broad stakeholder input began with the
Request for Information (RFI) published in the Federal Register on
August 20, 2013, titled, ``Request for Information: Supplemental
Nutrition Assistance Program (SNAP) Enhancing Retail Food Store
Eligibility'' at 78 FR 51136. The RFI, which included 14 specific
questions, focused on ways to enhance the definitions of retail food
store and staple foods, as well as overall retailer eligibility
requirements to participate in SNAP, in order to improve access to
healthy foods and ensure that only retailers that effectuate the
purposes of SNAP are authorized to accept benefits. In addition to the
RFI, five listening sessions were held across the country to garner
feedback from interested parties. FNS received a total of 211 comments
from a diverse set of stakeholders, including trade associations,
individual retailers, academics, policy advocates, professional
associations, government entities, and the general public. Stakeholder
input was considered in drafting the February 17, 2016, proposed rule.
A copy of the comment summary can be viewed at: http://
www.fns.usda.gov/rfi-retailer-enhancement [Attachment 1].
As explained in the preamble to FNS' proposed rule published at 81
FR 8015, FNS is using authorities in Sections 3 and 9 of the Food and
Nutrition Act of 2008 to propose the discretionary regulatory changes,
which are based on stakeholder feedback and are proposed to encourage
the participation of firms that further the purposes of the Program by
offering a healthy variety of foods in sufficient quantity to satisfy
the needs of SNAP households.
Finally, the rule is proposed and provided for public comment.
Based on inquiries and requests, FNS extended the public comment period
in order to ensure stakeholders had ample opportunity to weigh in so
that FNS may fully understand the implications of any provisions in the
rule on authorized or applicant retailers, SNAP participants, and other
interested parties.
Question 2. Do you intend for small format retailers, like
convenience stores, to continue to play a role in SNAP? Do you think
they will continue to be able to participate if your proposed rule is
finalized? Have you conducted an analysis exploring how many current
retailers would exit the program and the impact this could have on
access for beneficiaries?
Answer. As explained in the RFI and the preamble to the proposed
rule, FNS' objectives are to improve the availability of healthful
foods without compromising access to food for SNAP participants, or
unnecessarily burdening the retailers that redeem SNAP benefits. FNS
intends for any store that makes a business decision to meet the SNAP
eligibility criteria, including reasonable requirements to offer a
variety of healthy foods, to continue to play a role in SNAP. A
comprehensive regulatory flexibility analysis (RFA) was completed
specifically to consider the impact of this proposed rule on small
entities. As the Regulatory Flexibility Analysis to the proposed rule
noted, we estimate that most small grocery stores, convenience stores
and combination stores can meet the new standards with modest additions
or changes to the foods that they stock. We are reviewing the comments
submitted to ensure that the final rule will expand access to healthy
foods for participants while ensuring access to retailers who
participate in SNAP
The comprehensive RFA is posted as a supporting document alongside
the proposed rule at: https://www.regulations.gov/
#!documentDetail;D=FNS-2016-0018-0007 [Attachment 2].
Question 3. Many convenience stores are run by companies that
maintain both a convenience store and franchise restaurants at the same
location. Often times the same company owns and operates both
establishments. As currently drafted, the Proposed Rule appears to
exclude these businesses from the SNAP program even if they otherwise
comply with eligibility requirements. Was this FNS's intent? If so, why
does FNS feel that these stores do not further the purpose of the SNAP
program?
Answer. To be eligible to accept SNAP benefits, under Section
3(o)(1) of the Act, a retailer must ``sell food for home preparation
and consumption'' as well as meet other criteria in the Act and SNAP
regulations. Section 3(k)(1) of the Act defines ``food'' to include
``any food or food product for home consumption except . . . hot foods
or hot food products ready for immediate consumption . . . .'' Congress
did not intend for restaurants to participate in SNAP, except under
limited circumstances to serve the elderly, disabled, and homeless, as
set forth in Section 3(k) of the Act and as referenced in Section
7(f)(2) of the Act. This proposed rulemaking is intended to ensure that
SNAP retailer policy is aligned with this statutory intent.
As explained in the proposed rule, over the years, a growing number
of firms operating primarily as restaurants have become authorized to
participate in the Program as retail food stores. Nothing in the
current regulations specifically prohibits items sold for SNAP benefits
that are cold at the point-of-sale from being heated or cooked in the
store after purchase. Further, current rules allow foods to be
classified as staple or non-staple by their first ingredient; therefore
some pizza restaurants, for example, have been deemed eligible with
pizza as a qualifying staple food based on the primary ingredient
(bread). After selling a cold pizza to SNAP customers, these firms
subsequently heat the pizza and then have ultimately sold hot food from
their pizza-restaurant location.
Our goal in the proposed rule was to ensure that SNAP retailers
were selling food for home consumption and offering a variety of
healthy food choices. We specifically asked for comment on whether the
proposed standard that at least 85 percent of an entity's total food
sales be for items that are not cooked or heated on-site before or
after purchase. We received a variety of comments in response to this
aspect of the proposed rule. These include: concerns about
establishments that sell a significant amount of healthy food for home
consumption in addition to food that is eaten on the premises; concerns
that food that is bought and then heated on the premises may be more
expensive than food that is made at home for home consumption, which
means that SNAP benefits don't go as far; and concerns that foods that
can be heated on premises may assist SNAP recipients without kitchens.
We are carefully reviewing all of these comments along with the
statutory requirements for SNAP participation and will carefully
consider how the rule, as currently drafted, would affect this type of
retailer model as the Agency moves forward in the rulemaking process.
Question 4. The Proposed Rule contains a provision that would allow
stores that are unable to meet the depth of stock requirements to file
for an exemption if losing SNAP eligibility would harm food access in
the surrounding area.
What will the process look like for this waiver process?
Answer. FNS has proposed that it would determine whether SNAP
participant hardship exists by considering factors such as whether
there are other SNAP-authorized stores serving the area and
transportation options to other SNAP authorized retailer locations. In
the proposed rule, FNS sought comments from the public regarding
refining the language in this provision and how to implement it.
Question 4a. How long does FNS anticipate it will take for a waiver
petition to be approved or rejected?
Answer. The proposed rule seeks comments from the public on
refining the language and how to implement this provision. Therefore,
it is difficult to provide an estimate how long the process for a
``waiver petition'' will take. However, the proposed rule did propose
that all participating stores would have 1 year to meet the new
eligibility criteria.
Question 4b. Will FNS consider the expense associated with the
application process when reviewing such petitions?
Answer. There is no fee associated with SNAP retailer
authorization. All of the processes associated with SNAP authorization
are completed by FNS at no cost to the retailer.
Response from Alfred V. Almanza, Deputy Under Secretary, Food Safety,
U.S. Department of Agriculture
Questions Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. Mr. Almanza, there have been some reports of processed
egg products that may have been entering the United States though
incorrect tariff lines. Is this truly an issue? If not, could you tell
us how FSIS deals with similar situations and how you respond? If so,
could you tell us how you plan on correcting this situation?
Answer. FSIS has seen a recent increase in egg products imported
into the United States from ineligible countries, including imported
egg products labeled with incorrect product names. Currently, there are
only two countries eligible to export egg products to the United
States: Canada and The Netherlands.
To address these issues, FSIS is coordinating with the U.S. Customs
and Border Protection to identify misbranded or ineligible product at
U.S. ports of entry and then notifying the importer of record that the
ineligible or misbranded product has been refused entry into the United
States, according to 21 U.S.C. 1046 and 9 CFR 590.910. The importer
must then ensure that the product is destroyed or re-exported within 30
days of notification from FSIS.
To facilitate compliance, FSIS has provided guidance to importers/
brokers and foreign governments on egg products under FSIS
jurisdiction, misbranded egg products, foreign country eligibility, the
import process, and enforcement provisions for ineligible or misbranded
egg products that arrive at the borders of the United States or enter
U.S. commerce without being presented to FSIS for reinspection, as
required. The guidance can be found at http://www.fsis.usda.gov/wps/
portal/fsis/topics/international-affairs/importing-products/importing-
egg-products-and-shell-eggs [Attachment 3].
Question 2. I have heard concerns about egg products being imported
from the Netherlands to the U.S. Some have raised concerns that the
inspection process used by the Netherlands may not be a full continuous
inspection. If the inspection is not continuous, does that comply with
the Federal law? And, if it does not comply, does that mean FSIS would
consider this product lacking proper inspection to be adulterated and
ineligible for import into the U.S.?
Answer. The Food Safety and Inspection Service (FSIS) conducted an
equivalence verification audit of The Netherlands' processed egg
inspection systems from June 2-26, 2014, to determine The Netherlands'
eligibility to resume export of egg products to the United States and
to verify that the egg products inspection system is equivalent to that
of the U.S. with the ability to produce products that are safe,
wholesome, and properly labeled. As the audit found, The Netherlands'
egg products inspection system includes requirements to ensure that
establishment construction, facilities, and equipment are adequate;
provides for continuous inspection; and provides for periodic
supervisory review of official establishments.
FSIS' evaluation of all the data collected before, during, and
after the on-site audit supports that The Netherlands' egg products
regulatory system achieves the level of protection required by the
United States. Therefore, FSIS reinstated The Netherlands' equivalence
and allow resumption of egg products export to the United States.
Question 3. Are there additional countries seeking approval for
importing egg product into the U.S.? If so how long does that process
take and can you tell me which countries those are?
Answer. Yes, there are additional countries seeking to export egg
products to the United States, which are Argentina, Denmark, Germany,
Italy, Lithuania, Mexico, Poland, Romania, Bulgaria, and Greece.
Countries wishing to become eligible to export meat, poultry, or egg
products to the U.S. must make a formal request by a letter that must
come from the foreign government's Central Competent Authority (CCA)
for the inspection of meat, poultry or egg products. While there is an
established process for equivalency, the length of the process varies.
Timing will depend on the effectiveness to which countries provide
documentation to FSIS, if requested, during the document review
process, as well as if translation of documents is needed.
To elaborate, the evaluation of a country's inspection system to
determine eligibility involves document review and an on-site review.
The document review is an evaluation of the country's laws,
regulations, and other written information that focuses on six risk
areas: Government Oversight, Statutory Authority and Food Safety
Regulations, Sanitation, Food Safety Systems, Chemical Residues, and
Microbiological Testing Programs. Technical experts evaluate the
information to assure that critical points in the six risk areas are
addressed satisfactorily with respect to standards, activities, and
resource allocations. If the document review process shows the
country's system to be satisfactory, a technical team will visit the
country for an on-site review to evaluate the six risk areas as well as
other aspects of the inspection system, including plant facilities and
equipment, laboratories, training programs, and in-plant inspection
operations. When both the document review and on-site review steps have
been satisfactorily completed, FSIS develops a proposed rule to be
published in the Federal Register that proposes to add the country to
its list of countries in the Code of Federal Regulations (CFR) that are
eligible to export product, in this case processed eggs, to the U.S.
Upon receipt of public comments, FSIS makes a final decision about the
country's equivalence based upon all available information. If FSIS
determines that the country maintains an equivalent inspection system,
FSIS publishes a final rule in the Federal Register adding the country
to the list of countries in the CFR that are eligible to export.
Response from Hon. Lisa Mensah, Under Secretary, Rural Development,
U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in
Congress from Texas
Question 1. Following our conversation regarding USDA's budget
request where the Department zeroed out the guaranteed loan program
under the Community Facilities program, I have some questions. During
our exchange, you said, ``. . . when we work with other lenders,
lenders want to do the short-term financing. We tend to do long-term
financing, financing up to 40 years.'' Can you clarify if the
portfolios for the Community Facilities direct loan program and the
Community Facilities guaranteed loan program are comparable, or are the
direct loans for longer-term financing and the guaranteed loans are for
shorter-term financing?
Answer. Typically, the loan term varies between 30 and 40 years
under the CF direct loan program and under the guaranteed loan program,
the term is determined by the lender of record. The average loan term
for CF Guaranteed loans currently in the RD portfolio is approximately
23 years.
Question 2. Under the Community Facilities programs, are the direct
loans more or less credit risky than the guaranteed loans? If the
direct loans are less credit risky, why is the government making these
loans? Shouldn't the private-sector be servicing those loans?
Answer. The direct loans are generally less risky than the
guaranteed loans when evaluated on an historic loss basis. However,
some of the major losses in the guaranteed loan program occurred on
projects that were recreational in nature, and such projects were made
ineligible in FY 2013. Often rural America does not have access to
affordable and long term capital for rural infrastructure projects
unless they are investment grade credits. So, there is a strong need
for long term, fixed rate, and low cost capital. We think the Agency
has a fiduciary responsibility to service these loans and ensure
compliance with all regulatory and statutory requirements.
Question 3. The negative subsidy rate was mentioned several times
during the hearing. Administrator Mensah mentioned that the subsidy
rate, ``. . . is driven by a variety of things. Loss experience is one
of them.'' Please provide the Committee with a breakdown of how the
subsidy rate is calculated and how the negative subsidy rate might be
impacted by future changes in the economy and interest rates.
Answer. The subsidy rate represents the estimated life-time cost of
the program to the government. Rural Development's (RD) Budget Division
(BD) calculates the subsidy rate by determining the present value of
all future program cash flows per the Federal Credit Reform Act of
1990. BD uses contractual and performance assumptions to estimate
future cash flows. The main contractual assumptions include repayment
periods, frequency of payments, and borrower interest rates (BIR). The
main performance assumptions include estimates of borrower prepayments,
delinquency, and default, as well as the government's recoveries on
defaults. Contractual and performance assumptions are based on the
historical performance of the program. Table 1 and Table 2 show how
increases in both contractual and performance assumptions typically
affect the subsidy rate.
Table 1: Contractual Assumptions
------------------------------------------------------------------------
Assumptions Impact to Subsidy
------------------------------------------------------------------------
Loan Term Dependent on interest rates and
performance assumptions
Borrower Interest Rate As interest rate increases,
subsidy decreases
------------------------------------------------------------------------
Table 2: Performance Assumptions
------------------------------------------------------------------------
Assumptions Impact to Subsidy
------------------------------------------------------------------------
Prepayment Rate Dependent on the difference
between Treasury rates (RD's
cost of borrowing) and the BIR
Delinquency Rate As the delinquency rate
increases, subsidy decreases
Default Rate As the default rate increases,
subsidy increases
Recovery Rate As the recovery rate increases,
subsidy decreases
------------------------------------------------------------------------
Changes in the economy are indirectly captured in the model through
changes in borrower behavior. For example, if the unemployment rate
increases, this may lead to more borrower defaults. An increase in
defaults would increase the default rate assumption and therefore the
subsidy rate, assuming all other assumptions remain the same.
Questions Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. The USDA 9002 BioPreferredTM Program
continues to be a market facing program which is internationally
renowned, but it does not provide exact procurement numbers from the
Federal Government and its contractors for both renewable chemicals and
biobased products. Despite the fact that President Obama's Executive
Order (EO) 13693, Planning for Federal Sustainability in the Next
Decade, calls for the reporting of biobased product procurement yearly,
there is still sometimes resistance toward buying and reporting
biobased products procured by the Federal Government and its
contractors. The purchase of renewable chemicals and biobased products
by the Federal Government for FY13 was $5 million, however, that number
was recorded when the SAM.gov portal was wide open for any vendor to
report. In FY14, OFPP/GSA changed the portal to limit which contracts
could report. The number of contracts that could report went from 370K
being able to report to 5K contracts able to report. Basically, the
FY13 numbers and the FY14 numbers are comparing apples to oranges. Will
there be work done to remove filters which are preventing the correct
reporting of renewable chemicals and biobased product procurements?
Answer. The Office of Management and Budget's (OMB) Office of
Federal Procurement Policy (OFPP) provides overall direction for
government-wide procurement systems, policies, and regulations. The
System for Award Management (SAM) is the main contractor database for
the Federal Government. The General Services Administration (GSA)
maintains the SAM database.
USDA's Office of Procurement and Property Management is currently
part of the Biobased-Targets Working Group under the interagency
Sustainable Acquisition and Materials Management Practices Workgroup
(SAMM) which is set up to implement EO 13693. Recommendations from the
working group are currently under discussion and formulation. Specific
work changes to the SAM regarding correct reporting of renewable
chemicals and biobased product procurements are under the direction of
OFPP and GSA.
Question 1a. Will there be a public disclosure of the contract used
by Federal agency contractors to report their purchases and a Notice of
Proposed Rulemaking (NPR) for public comments to ensure transparency in
reporting the acquisition of renewable chemicals and biobased products?
Answer. The Office of Management and Budget's (OMB) Office of
Federal Procurement Policy (OFPP provides overall direction for
government-wide procurement systems, policies, and regulations,
including the issuance of Notices of Proposed Rulemaking. USDA's Office
of Procurement and Property Management is currently part of the
Biobased-Targets Working Group under the interagency Sustainable
Acquisition and Materials Management Practices Workgroup (SAMM) which
is set up to implement EO 13693. Recommendations from the working group
are currently under discussion and formulation.
Question 1b. Will categories be created for renewable chemicals
mirroring that which was created for biobased products?
Answer. As directed by the Agricultural Act of 2014, the USDA
BioPreferred Program has begun the regulatory development process
leading to the designation of categories of intermediate ingredients,
including renewable chemicals, which are used in the production of
biobased finished products. The designation process for intermediate
ingredient product categories will mirror the process used to designate
the 97 categories of finished products that are currently subject to
the Federal procurement preference.
Question 1c. Congress redefined ``biobased products'' in the 2014
Farm Bill, which now consists of mature products such as innovative
wood products, yet the acquisition of biobased products continues to be
low. Will the Federal Government contracts describe what categories of
the biobased products as delineated in the USDA BioPreferred Program
are purchased annually for public disclosure?
Answer. Section 9002 of the Farm Security and Rural Investment Act
of 2002 (the 2002 Farm Bill), as amended by the Food, Conservation and
Energy Act of 2008 (the 2008 Farm Bill), requires the Office of Federal
Procurement Policy (OFPP) to report to Congress every 2 years the
number and dollar value of contracts entered into during the year that
include the direct procurement of biobased products; the types and
dollar value of biobased products actually used by contractors; the
number of service and construction contracts that include language on
the use of biobased products; and other data requirements. The Office
of Management and Budget's (OMB) Office of Federal Procurement Policy
(OFPP) provides leadership on final requirements for Federal Government
contracts and descriptions included in them for categories of biobased
products. We anticipate OFPP to use the revised definition published on
June 15, 2015 in a final rule amending 7 CFR 3201.2 to reflect the
definition in the 2014 Farm Bill.
Question 1d. Will there be annual reports available on the USDA
BioPreferred website showing the category of procurements?
Answer. Under Executive Order 13693, all Federal agencies must set
biobased purchasing targets and achieve 95% compliance. Federal
agencies are also required to report on biobased purchasing
accomplishments. A Federal Government workgroup has been established to
help agencies set biobased purchasing targets and achieve their goals.
USDA is a key part of that group. OMB and the White House Council on
Environmental Quality (CEQ) will be reviewing those recommendations and
directing all agencies on data reporting and time frames. The law and
the Federal Acquisition Regulation stipulate that all Federal agencies
and contractors must purchase biobased products in ``designated
categories'' and report on how they are doing. The USDA BioPreferred
Program has designated 97 product categories for Federal purchase
representing over 14,000 products and serves an important role in our
continuing promotion of these innovative products. As an agency, USDA
will continue to use the power of Federal purchasing to support the
biobased product industry.
Question 2. As exemplified by the Biogas Opportunities Roadmap, the
deployment of Anaerobic Digesters is a priority of the USDA. However,
the cost of obtaining a feasibility study, which is a requirement for
the grant application has proven far too costly for smaller farms and
has stopped many of these smaller projects from moving forward with a
grant application. We have heard the Secretary's remarks about building
the on-farm bioeconomy and assume that smaller farms also have a role
to play in environmental sustainability, energy generation and
biofuels. Can you please address the significant burden being placed on
smaller farms by the cost of the feasibility study?
Answer. USDA has made significant progress over the last decade in
deploying anaerobic digesters. Farms using anaerobic digesters
typically are dairies with large animal numbers and their primary
concern is addressing nutrient management and environmental concerns.
The Rural Energy for American Program (REAP) can fund anaerobic
digesters. In order to qualify for REAP, the project must be a
renewable energy project, which requires the biogas being created by
the anaerobic digester to be used in the operation to offset energy
needs of the farm or sold as a natural gas, or be used to generate
electricity used on the farm or sold to the grid. The amount of biogas
produced from small anaerobic digesters generally is not in sufficient
quantities to economically generate electricity because of the high
cost of necessary equipment. The biogas could be used to offset farm
energy needs such as fuel for heating water.
The larger and more complex the project is, the greater the risk
associated with this technology is, both on the technical side as well
as the economical side. Therefore with smaller anaerobic digesters
there is potentially less risk, which matches the agency policy on when
feasibility studies are required. The Value-Added Producer Grants may
provide planning grants for up to $100,000 toward eligible anaerobic
digester projects. When a feasibility study is not required, the
applicant must demonstrate in the application for these projects that
the technology is commercially available and that the system will work
for the proposed purpose, such as providing gas to boiler to supply the
farm's hot water needs. .
It is important to evaluate feasibility of a project, and a proper
evaluation requires expert analysis to determine if a digester is
appropriate. Factors that influence the feasibility of a project
include the composition of the manure, the method of manure collection,
the digester design, how the biogas will be used and required equipment
and infrastructure, grid interconnection compatibility, and the
managerial capacity of the owner to operate the digester and related
equipment. The USDA Rural Development through the Rural Business--
Cooperative Service can assist farmers with feasibility study costs by
providing up to 50 percent planning costs up to $75,000 through the
Value-Added Producer Grant Program.
Question 3. Finally, EQIP and REAP can be used in parallel on the
same digester project. However, some state USDA offices do not seem to
understand this? Can you please explain why this ability to use both
programs has not been made more clear to state USDA offices?
Answer. Rural Development (RD) conducted training with NRCS field
staff in May of 2015, after the REAP rule was published. This training
included explaining how REAP and EQIP can be utilized together to fund
a project. RD's Rural Business--Cooperative Service (RBS), Natural
Resources and Conservation Service (NRCS), and Farm Service Agency
(FSA) are currently conducting additional training to USDA state and
field office staff, starting with states with areas of high poverty and
under-served populations and moving to all other states, with the
anticipation all States will have received the training by the end of
this fiscal year. The training includes providing information and
resources to cross-promote programmatic services, refer clients to
appropriate programs, provide a framework for expanding energy outreach
efforts, and outline how projects can be funded utilizing multiple
programs offered by USDA. The programs included in the training are the
NRCS EQIP, the RBS REAP, and FSA's Farm Storage Facility Loan, Farm
Ownership and Operating loans and the Microloan Programs.
Question 4. As stated previously, the USDA has highlighted the
importance of the Digester Industry by its publication of the Biogas
Opportunities Roadmap. One of the most significant ways that the USDA
can foster greater deployment of digesters is by ensuring that liquid
digestate from an anaerobic digester that utilizes food waste as its
feedstock can be stabilized and still qualify for certification under
the National Organics Program. This would allow digestate produced from
food waste to be sold as an organic fertilizer and bring significant
economic value to the projects. The USDA has worked with the fish
processing industry to resolve this same issue. What would be required
to enable the same treatment for stabilized digestate?
Answer. To add stabilized digestate to the list of materials
approved for use in organic agriculture, the industry would need to
submit a petition to the USDA National Organic Program for the National
Organic Standards Board (NOSB). Under the USDA organic regulations,
materials used in organic crop production must be nonsynthetic
(natural) or included on the National List of Allowed and Prohibited
Substances (National List). Food waste is natural; however, any
synthetic materials used to stabilize anaerobic digestate must appear
on the National List. Synthetic materials may be petitioned to the
National List for review by the NOSB. The NOSB is a 15 member Federal
advisory committee that is authorized under the Organic Foods
Production Act to make recommendations to USDA on which materials
should be allowed in organic production and handling. The NOSB has
previously recommended the allowance of liquid fish products that have
been pH adjusted with sulfuric, citric, or phosphoric acid. A similar
petition could be submitted by industry to consider the use of
anaerobic digestate that is pH adjusted with acids. A previous petition
for anaerobically digested food waste stabilized with acids was
submitted on January 6, 2015, but was withdrawn by the petitioner on
October 19, 2015. Petition procedures are available on the National
Organic Program website at ``How to File a Petition'': https://
www.ams.usda.gov/rules-regulations/organic/national-list/filing-
petition [Attachment 4].
[attachment 1]
High-Level Summary of Public Comments on the U.S. Department of
Agriculture (USDA) Food and Nutrition Service (FNS) Request for
Information on Enhancing Retail Food Store Eligibility under
the Supplemental Nutrition Assistance Program (SNAP)
Docket No. FNS-2013-0033
FNS published a request for information on August 20, 2013 asking
for comments on issues related to retail food store eligibility
requirements for the agency's Supplemental Nutrition Assistance Program
(SNAP).\1\ Through December 17, 2013, FNS has received a total of 211
public comments on the request for information.\2\ Our analysis of
these comment letters has identified a total of 99 unique submissions,
104 form letters, and eight non-germane or duplicate submissions.
Nearly all of the form letters were from a single campaign associated
with convenience stores. Of the 99 unique letters, a total of 91 were
deemed to be substantive.
---------------------------------------------------------------------------
\1\ 78 FR 51130 (August 20, 2013).
\2\ The total number of submissions received includes 204
submissions, five public transcripts, and seven (7) form letter copies
that were submitted under one submission.
---------------------------------------------------------------------------
Today's high-level summary focuses primarily on common suggestions
and statements contained within these 91 substantive submissions. In
addition, we have included some quantitative data in the form of
tallies of the submissions that addressed certain coding structure
categories to further demonstrate trends in support or opposition of
specific issues. The counts included in the summary bullets below and
in the table that follows reflect the approximate total number of
submissions (including both unique letters and form letter copies) that
weighed in on certain issues. Please note that these tallies may change
as we continue to perform a quality control review of our coding prior
to delivery of ICF's final reports in January 2014. In addition,
references to certain commenter types and footnotes citing specific
commenters within the summary bullets are intended to be illustrative
and should not be considered exhaustive of the commenters that have
expressed a particular position.
General Support and Opposition to Changing Existing Program Eligibility
Requirements
Five commenters, including several private citizens \3\ and
a state agency,\4\ expressed general support for the
strengthening of program eligibility requirements. In
expressing general support, some of these comments noted that
SNAP retailers should be providing healthy food options and
that items with little nutritional value (e.g., energy drinks,
snack items) should be ineligible for purchase with SNAP
resources.
---------------------------------------------------------------------------
\3\ Anne Shanahan, Lucinda Keller.
\4\ Virginia Department of Social Services.
One food retailer \5\ expressed concern that strengthening
program eligibility requirements will have adverse consequences
on a substantial number of SNAP beneficiaries and retailers.
The retailer argued that increasing standards for retailers
will result in the closure of current SNAP authorized dealers,
a resulting decrease in jobs, and a decrease in opportunities
for SNAP participants to redeem their benefits.
---------------------------------------------------------------------------
\5\ 7-Eleven, Inc.
---------------------------------------------------------------------------
Question No. 1: Reasonableness of Ensuring Provision of Healthy Food
Options as SNAP Store Eligibility Criterion
Over 30 commenters agreed that ensuring healthy food options
is a reasonable SNAP eligibility criterion; all commenter types
were represented in these expressions of support. Only one
commenter, a large food retailer,\6\ argued that current SNAP
retail eligibility requirements are sufficient and that FNS
should not limit the eligibility requirements further by adding
such a criterion.
---------------------------------------------------------------------------
\6\ 7-Eleven, Inc.
Many of the supporters argued that improving participants'
access to healthy food supports one of SNAP's program goals of
---------------------------------------------------------------------------
improving nutrition in low-income individuals and families.
Governmental entities, academics, and advocacy groups in
support of FNS' focus on healthy food options referenced
published works (e.g., law review articles, scientific journal
articles) to support their claims (e.g., that healthier food
options are linked to combatting food insecurity,\7\ that
provision of healthier food options is within FNS' scope of
authority and is possible to obtain \8\).
---------------------------------------------------------------------------
\7\ Rudd Center for Food Policy and Obesity.
\8\ City of Chicago, Department of Public Health.
Several commenters, including a trade association, advocacy
group, and governmental entity, acknowledged that no uniform
definition for ``healthy food'' exists to use as a basis for
considering this question. Comment views varied regarding
whether the term should or should not be defined, and
commenters noted that providing such a definition could prove
difficult.\9\
---------------------------------------------------------------------------
\9\ Mid-Ohio Valley Health Department, United Council on Welfare
Fraud, American Beverage Association.
---------------------------------------------------------------------------
Question No. 2: Existence of Store Types that Should Always Be Eligible
for SNAP Participation
A few dozen comments were received from commenters, such as
private citizens, academics, governmental entities, trade
associations, and professional associations, in favor of
allowing some store types to always be eligible for SNAP
participation. A total of 11 commenters, including food banks,
governmental entities, trade associations, and private
citizens, opposed allowing some store types to always be
eligible for SNAP participation.
Store types identified by commenters as examples of entities
which should always be eligible for SNAP participation include:
grocery stores, supermarkets, food cooperatives, farmers[']
markets, and produce stores. Approximately 25 commenters argued
the merits of always allowing farmers['] markets to be eligible
for SNAP participation. A few commenters in support of allowing
certain types of stores to always be eligible stated that the
businesses should still meet SNAP program goals and any other
business requirements to participate.\10\
---------------------------------------------------------------------------
\10\ University of California SNAP-Ed Program, Sandra Salcedo.
Commenters opposed to allowing some store types to always be
eligible for participation argued that all stores should be
examined on their merits and periodically reviewed for
compliance with SNAP requirements.\11\ The USDA Office of
Inspector General stated that no store types can be said to
``clearly meet all of the Program goals'' and that the only
store type in which it has not seen SNAP trafficking was
``larger retail stores.'' \12\
---------------------------------------------------------------------------
\11\ Mitchell Klein, Mass Farmers Markets, Center for Disease
Control.
\12\ USDA, Office of Inspector General.
---------------------------------------------------------------------------
Question No. 3: Existence of Store Types That Should Always Be
Ineligible for SNAP Participation
Roughly ten commenters, including certain academics,
professional associations, governmental entities, and
farmers['] markets, argued in favor of designating store types
that should never be allowed to participate in SNAP, while
approximately 20 commenters, mostly food retailers, argued
against such a proposition.
Store types cited by commenters as examples of entities
which should never be eligible for SNAP participation include:
convenience stores, liquor stores, gas stations, and
``combination'' businesses.\13\
---------------------------------------------------------------------------
\13\ Mississippi Department of Human Services, Rudd Center for Food
Policy and Obesity, Michigan Department of Human Services.
Several commenters, including food retailers, governmental
entities, and farmers['] markets, argued that no types of
retailers should universally be denied participation in SNAP.
Some of these commenters warned that the effect would be to
further limit food accessibility to SNAP participants. Many
food retailers, specifically convenience store owners,
addressed why their specific store should not be categorically
excluded from SNAP participation (e.g., located in food desert,
store's provision of healthy food options).\14\
---------------------------------------------------------------------------
\14\ Land O'Sun Management Corporation, American Natural, Darlene
Conner, Tom Thumb Food Stores, Inc., Aloha Petroleum, Ltd.
---------------------------------------------------------------------------
Question No. 4: Redefinition of ``Staple Foods''
About 30 commenters, including private citizens, policy
advocates, governmental entities, academics, and trade
associations, supported changing the current definition of
``staple foods'' while fewer than ten commenters, all
representing certain trade associations, argued in opposition.
Although some commenters argued, generally, for enhanced
standards for ``staple foods,'' many commenters suggested
specific changes to the current definition. Many commenters who
supported changing the definition requested that FNS align
``staple foods'' with the five food group categories specified
by the Dietary Guidelines for Americans (DGA): breads and
cereals, vegetables, fruits, protein, and dairy.\15\ Other
specific examples for how commenters proposed to change the
definition include:
---------------------------------------------------------------------------
\15\ University of California SNAP-Ed Program, United Fresh Produce
Association, Association of SNAP-Ed Nutrition Networks and Other
Implementing Agencies, ChangeLab Solutions, CraigMoscetti, Society for
Nutrition Education and Behavior, Academy of Nutrition and Dietetics.
Alignment with DGA [G]uidelines for specific
categories of `prepared food,' `snacks,' `bakery,' and
`beverage' categories; \16\
---------------------------------------------------------------------------
\16\ Kevin Kehmna.
Additional requirements for each food category (e.g.,
Dairy category must include at least one low- or non-fat
item, Bread or cereal category must include at least one
whole grain item); \17\ and
---------------------------------------------------------------------------
\17\ Philadelphia Department of Public Health, Johns Hopkins Center
for a Liveable Future, State of California Health and Human Services
Agency Department of Social Services.
Numeric requirements designated within the food
categories (e.g., Bread or cereal category would have no
more than 10 grams of added sugar, Fruits category would
require four varieties of fresh fruit as well as four
varieties of canned or frozen juice, with no sugar
added).\18\
---------------------------------------------------------------------------
\18\ University of California SNAP-Ed Program. ASNNA also suggested
these types of numeric requirements, but generally suggested higher
value requirements than University of California SNAP-Ed Program.
The commenters who argued that the current definition for
``staple foods'' is sufficient offered the following arguments
---------------------------------------------------------------------------
to explain why no change is needed:
The current definition meets best practices of
established nutrition guidelines; \19\
---------------------------------------------------------------------------
\19\ The Grocers Manufacturing Association.
Modifying the definition could open the door to future
limitations on SNAP consumer choice; \20\
---------------------------------------------------------------------------
\20\ Donna Garen, 7-Eleven, Inc.
Altering the definition in a way that increases
grocery store stocking requirements could further cut into
small profit margins and force some food retailers out of
business; \21\ and
---------------------------------------------------------------------------
\21\ Ohio Grocers Association.
Lack of consensus on what is ``healthful'' and the
possible danger associated with deviating from the current
``total diet approach.'' \22\
---------------------------------------------------------------------------
\22\ Lee Sanders.
Commenters were split regarding whether FNS should exclude
items high in sugar, sodium, and saturated fats from ``staple
foods,'' with several commenters (governmental entity,
farmers['] market, private citizen) in favor and others (food
---------------------------------------------------------------------------
retailer and trade associations) opposed.
One private citizen specifically argued for the
exclusion of sugary beverages from ``staple food''
consideration.\23\
---------------------------------------------------------------------------
\23\ Sandra Salcedo.
Trade associations voiced strong opposition to
excluding these foods based on what they deem to be an
arbitrary determination and a considerable burden to FNS in
assessing all of the products.\24\
---------------------------------------------------------------------------
\24\ National Grocers Association, Grocery Manufacturers
Association.
A food retailer argued that FNS should not only look
at the fat, sugar, and sodium content, but also the
underlying nutritional value of a product as well before
excluding an item from the ``staple foods''
consideration.\25\
---------------------------------------------------------------------------
\25\ Little Caesars Enterprises, Inc.
A few commenters argued that any change to the ``staple
foods'' definition and requirements should be grounded in
research or come from USDA's nutritional staff.\26\
---------------------------------------------------------------------------
\26\ Mitchell Klein, The Food Trust.
---------------------------------------------------------------------------
Question No. 5: Applicability of ``Staple Foods'' Categories to
Prepared Foods With Multiple Ingredients
Approximately 20 submissions discussed multi-ingredient
prepared foods as ``staple foods.'' About \1/2\ of these
commenters, including trade associations and other entities,
preferred to maintain the current treatment of counting such
foods in up to one ``staple food'' category. The other \1/2\,
ranging from private citizens to professional associations and
governmental entities, argued for a change in classification.
Commenters in favor of maintaining current treatment of
these prepared foods noted the benefits of such products (e.g.,
nutrient-dense, calorie- and portion-controlled, cost-
effective) and argued that no change is needed in their
treatment.\27\
---------------------------------------------------------------------------
\27\ Donna Garen, National Grocers Association, Grocery
Manufacturers Association.
Several commenters, including private citizens and
farmers['] markets, argued that ``staple foods'' categories
should only be comprised of single-ingredient foods or foods
that are minimally or unprocessed.\28\ A few of these
commenters noted that these foods tend to be high in sodium,
saturated fats, and sugar--the same ingredients being
considered for exclusion from ``staple foods''
consideration.\29\ One governmental entity suggested placing
numeric limitations on the amount of particular types of
ingredients (e.g., x# of mg of sugar or sodium) to monitor
which multiple ingredient foods are allowed to be considered as
``staple foods.'' \30\
---------------------------------------------------------------------------
\28\ Mitchell Klein, Sandra Saleco, Mass. Farmers Markets.
\29\ Sandra Saleco, OTDA.
\30\ OTDA.
---------------------------------------------------------------------------
Question No. 6: Adequacy of the Twelve Applicable Item Minimum Under
Criterion A
Over a dozen commenters, including professional
associations, an academic, and governmental entities, expressed
support for an increase in the minimum applicable item
requirements under Criterion A \31\ while only two commenters,
including a food retailer,\32\ asserted that the current 12
item minimum is sufficient.
---------------------------------------------------------------------------
\31\ Association of SNAP-Ed Nutrition Networks and Other
Implementing Agencies, University of California SNAP-Ed Program, Texas
Retailers Association, Center for Disease Control, United Council on
Welfare Fraud.
\31\ 7-Eleven, Inc.
Reasons provided by commenters that the 12 item minimum was
insufficient \33\ included the following:
---------------------------------------------------------------------------
\33\ United States Conferences of Mayors Food Policy Task Force,
Mitchell Klein.
Insufficient variety of foods offered in each food
category (e.g., suggested increase to six items required
per food category); \34\
---------------------------------------------------------------------------
\34\ New York City Department of Health and Mental Hygiene,
Association of SNAP-Ed Nutrition Networks and Other Implementing
Agencies.
The creation of an additional food category to list
fruits and vegetables separately; \35\
---------------------------------------------------------------------------
\35\ Texas Retailers Association, Academy of Nutrition and
Dietetics, Center for Disease Control.
A professional association suggested altering
categorization by including subcategories and aligning
categorization more closely with Dietary Guidelines for
Americans; \36\
---------------------------------------------------------------------------
\36\ Society for Nutrition Education and Behavior.
Requirement to stock perishable foods in additional
food categories.\37\
---------------------------------------------------------------------------
\37\ Rudd Center for Food Policy and Obesity, California Food
Policy Advocates.
The food retailer opposed to an alteration of the 12 item
minimum argued that the current standards are sufficient in
meeting SNAP program goals.
Question No. 7: Possible Change From Criterion A Requirement To Stock
Perishable Items in Two Categories
Nearly 20 commenters, including state government agencies,
professional associations, and policy advocacy organizations,
expressed support for requiring perishable items in more than
two categories.
Several commenters stated that FNS should expand the
perishable food requirement to all staple food
categories.\38\ Some of these commenters stated that fresh
items, distinct from refrigerated and frozen, also should
be required.
---------------------------------------------------------------------------
\38\ California Food Policy Advocates (CFPA), University of
California SNAP-Ed Program, ASNNA: Association of SNAP-Ed Nutrition
Networks and Other Implementing Agencies, OTDA, United Council on
Welfare Fraud, Commonwealth of Virginia Department of Social Services.
Several commenters stated that perishable foods should
be required in three categories (fruits, vegetables, and
dairy) or four categories (fruits, vegetables, and two
other groups).\39\
---------------------------------------------------------------------------
\39\ United Fresh Produce Association, Johns Hopkins Center for a
Livable Future.
Multiple commenters supported an increase in the number of
---------------------------------------------------------------------------
required perishable items with exceptions.
A state agency argued that there should be an
exception for certain types of retailers that sell multiple
fresh fruit and vegetable varieties but may not be able, or
may find it cost prohibitive, to sell perishable items in
more than two categories (e.g., a farmers['] market
retailer).\40\
---------------------------------------------------------------------------
\40\ The Philadelphia Department of Public Health.
A trade association said FNS should ensure that stores
are able to stock perishable items based on consumer
demand.\41\
---------------------------------------------------------------------------
\41\ The National Grocers Association.
Another trade association said FNS should provide
flexibility for stores that may face periodic challenges
stocking perishable items.\42\
---------------------------------------------------------------------------
\42\ Food Marketing Institute.
A few commenters stated that perishable items should not be
---------------------------------------------------------------------------
required in more than two categories.
A state agency noted that quality fruits and
vegetables can come in multiple varieties, such as frozen
and canned, and are often less expensive and last longer
than perishable goods.\43\
---------------------------------------------------------------------------
\43\ State of California, Health and Human Services Agency
Department of Social Services.
One commenter stated that the requirement would be too
difficult for small retailers in under-served
communities.\44\
---------------------------------------------------------------------------
\44\ The Food Trust.
A private citizen suggested than an increased
perishable food requirement may exclude specialty stores
that offer healthy foods (e.g., butcher shops, fish
mongers).
Question No. 8: Adequacy of Criterion B 50% Sales Requirement of
``Staple Foods'' in Meeting SNAP's Purpose
While a few commenters on this question supported the
current 50% requirement,\45\ many more stated that the
requirement is not sufficient.
---------------------------------------------------------------------------
\45\ 7-Eleven, Inc., The Food Trust, Ohio Grocers Association.
A food retailer suggested that the current application
of Criterion B denies SNAP participants the opportunity to
purchase healthy food items for home preparation at
establishments that specialize in sales of food items.\46\
---------------------------------------------------------------------------
\46\ Little Caesars Inc.
A professional association encouraged FNS to revise
the current Criterion B to focus on specialty retailers
that offer fresh healthy foods but may not stock the full
variety of staple foods required by Criterion A (e.g.,
farmers' markets, produce markets, and meat markets).\47\
---------------------------------------------------------------------------
\47\ Society for Nutrition Education and Behavior.
A policy organization stated that, due to the size of
some stores, a 50% criterion may not be reached even though
thousands of food products may be available.\48\
---------------------------------------------------------------------------
\48\ Food Marketing Institute.
Several commenters asserted that the criterion would be
sufficient if the definition of ``staple foods'' is changed to
exclude items high in added sugar, sodium, or solid fats.\49\
However, other commenters were opposed to amending the
definition to exclude these items because the process of
determining whether a staple food contains excess sugar, sodium
or solid fats would be burdensome and would lead to
confusion.\50\ One of these commenters stated that an easy way
to influence food choices would be to prohibit the purchase of
food items with more than five ingredients using SNAP
funds.\51\
---------------------------------------------------------------------------
\49\ Mass. Farmers Markets.
\50\ National Grocers Association, Food Marketing Institute, United
Council on Welfare Fraud, Commonwealth of Virginia Department of Social
Services.
\51\ Commonwealth of Virginia Department of Social Services.
Several commenters stated that the 50% criterion would be
sufficient if FNS revised the definition of ``staple food''
according to their comments on the other questions posed in the
RFI.\52\
---------------------------------------------------------------------------
\52\ California Food Policy Advocates (CFPA), University of
California SNAP-Ed Program, State of California, Health and Human
Services Agency Department of Social Services, OTDA, Rudd Center for
Food Policy and Obesity.
A few commenters suggested that the ``accessory foods''
category could be expanded to include other foods with minimal
nutritional value where fat and sugar are the principal
ingredients by weight. These commenters also suggested that
``accessory foods'' should continue to be excluded from total
receipts with definitions updated and expanded for more
nutrient-specific criteria.\53\
---------------------------------------------------------------------------
\53\ The University of California SNAP-Ed Program, The Association
of SNAP-Ed Nutrition Networks and Other Implementing Agencies.
---------------------------------------------------------------------------
Question No. 9: Eligibility of Stores Whose Primary Business Is Not
Food Sales
Most of the commenters who responded to this question
supported eligibility of stores whose primary business is not
food sales, but a few commenters \54\ opposed their
eligibility.
---------------------------------------------------------------------------
\54\ Texas Retailers Association, United Council on Welfare Fraud,
Commonwealth of Virginia Department of Social Services.
Commenters provided several reasons for their support of
---------------------------------------------------------------------------
these stores.
A few commenters, including food retailers, advocacy
organizations, and state and local agencies, stated that
broadly eliminating SNAP acceptance based solely on venue
would restrict food access in food deserts.\55\
---------------------------------------------------------------------------
\55\ Aloha Petroleum, Ltd., The Food Trust, National Grocers
Association, Chicago Department of Public Health, Rudd Center for Food
Policy and Obesity.
Two trade associations stated that retailers' non-SNAP
sales are irrelevant to whether they should be able to
redeem SNAP benefits.\56\
---------------------------------------------------------------------------
\56\ National Association of Convenience Stores (NACS) and Society
of Independent Gasoline Marketers of American (SIGMA).
A policy organization stated that, due to the format
of some stores, the primary source of inventory may not be
food even though thousands of food products may be
available.\57\
---------------------------------------------------------------------------
\57\ Food Marketing Institute.
A food retailer stated that analysis of items sold by
stores in determining retailer eligibility would not be an
appropriate use of scarce agency resources.\58\
---------------------------------------------------------------------------
\58\ 7-Eleven Inc.
Some commenters offered proposed standards for contingent
support for eligibility of stores whose primary business is not
---------------------------------------------------------------------------
food sales.
A few government agencies and a policy advocacy
organization stated that, as long as the retailer meets the
minimum eligibility requirements of SNAP, that retailer
should be allowed to participate.\59\
---------------------------------------------------------------------------
\59\ California Food Policy Advocates, Philadelphia Department of
Public Health, State of California, Health and Human Services Agency
Department of Social Services, CDC.
The University of California SNAP-Ed Program and
another commenter argued that such stores should be
eligible to participate only if they meet more stringent
stocking requirements and there are no other stores
authorized to accept SNAP within a specific geographic
area.\60\
---------------------------------------------------------------------------
\60\ University of California SNAP-Ed Program, the Association of
SNAP-Ed Nutrition Networks and Other Implementing Agencies.
---------------------------------------------------------------------------
Question No. 10: Eligibility of Retailers That Primarily Sell Food for
Immediate Consumption, But Also Sell Products Cold and Heat
Them for SNAP Recipients After Purchase
The response to this question was fairly evenly divided
between support for and opposition to the eligibility of stores
that primarily sell food for immediate consumption, but also
sell products cold and heat them for SNAP recipients after
purchase.
A few commenters, including trade associations, an advocacy
organization, and a professional association, opposed the
general eligibility of these types of retailers, but stated
that there are certain circumstances (e.g., natural disasters,
food deserts) when hot food should be available.\61\
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\61\ Texas Retailers Association, National Grocers Association,
Rudd Center for Food Policy and Obesity, United Council on Welfare
Fraud.
A food retailer stated that sound policy reasons exist for
permitting SNAP vendors to heat foods purchased with SNAP
benefits post-sale for home consumption (e.g., SNAP
beneficiaries may not have access to adequate or safe cooking
facilities at home, foods sold cold are almost always less
expensive than purchasing prepared foods).\62\ Similarly, an
advocacy organization referenced low-income communities and
stated that food insecurity experts would prove valuable to
informing eligibility for prepared food retailers.\63\
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\62\ 7-Eleven Inc.
\63\ The Food Trust.
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Question No. 11: Granting Authorization To All Eligible Retail Stores
(Regardless of Whether Sufficient Store Access Is a Concern)
Nearly all commenters on this topic agreed that all eligible
retailers should be granted authorization to participate in
SNAP.
A state government agency stated that if a store meets the
criteria and there is concern that there is not sufficient
store access, the store should not be authorized.\64\
---------------------------------------------------------------------------
\64\ Michigan Department of Human Services.
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Question No. 12: Granting SNAP Authorization When No Store Meets Basic
Eligibility Criteria In An Area
The responses to this question were split between support
for and opposition to granting SNAP authorization when no store
meets basic eligibility criteria in an area. Some commenters
agreed that evaluation would be useful when no store meets
basic eligibility criteria in an area,\65\ but others stated
that the current modest regulations are sufficient to ensure
access in most cases.\66\
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\65\ Iowa Food Bank Association, SNAP Outreach Workers, and Feeding
America Food Banks in Iowa, The Food Trust, Texas Retailers
Association, California Food Policy Advocates.
\66\ 7-Eleven Inc., State of California, Health and Human Services
Agency Department of Social Services, National Association of
Convenience Stores (NACS) and Society of Independent Gasoline Marketers
of American (SIGMA), Mississippi Department of Human Services,
Commonwealth of Virginia Department of Social Services.
Some commenters stated that evaluation and scoring systems,
including but not limited to CX3 and NEMS, have already been
recognized by authorities and could serve as a starting point
or be pilot tested for SNAP.\67\
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\67\ The Food Trust, Rudd Center for Food Policy and Obesity,
Academy of Nutrition and Dietetics, ASNNA: Association of SNAP-Ed
Nutrition Networks and Other Implementing Agencies.
Multiple commenters, including state government agencies and
professional associations, recommended probationary
authorization and/or a phase-in for retailers that have trouble
meeting updated requirements.\68\ A Federal agency suggested an
approach used by USDA for other efforts (e.g., National School
Lunch Program and the School Breakfast Program), in which
short-term waivers are used if a retailer in a ``no access''
area cannot comply by the initiation date of the new
criteria.\69\
---------------------------------------------------------------------------
\68\ Academy of Nutrition and Dietetics, ASNNA: Association of
SNAP-Ed Nutrition Networks and Other Implementing Agencies, Michigan
Department of Human Services, OTDA.
\69\ CDC.
A trade association and a few policy advocacy organizations
said FNS should pose this question to a focus group or advisory
committee to identify solutions.\70\
---------------------------------------------------------------------------
\70\ Texas Retailers Association, Community Health Councils, Food
Marketing Institute.
---------------------------------------------------------------------------
Question No. 13: Balancing Integrity and Management Priorities Against
Healthy Food Choice Criteria
Approximately 30 commenters provided various recommendations
and elements for balancing integrity and management priorities,
including the following:
Assess fines to retailers that are repeat offenders;
\71\
---------------------------------------------------------------------------
\71\ Iowa Food Bank Association, SNAP Outreach Workers, and Feeding
America Food Banks in Iowa.
Focus investigative efforts on targeting high-risk
retailers; \72\
---------------------------------------------------------------------------
\72\ New York City Department of Health and Mental Hygiene, United
Council on Welfare Fraud.
Review current EBT reports to identify red flags for
fraud; \73\
---------------------------------------------------------------------------
\73\ Commonwealth of Virginia Department of Social Services.
Publish FNS retailer enforcement work, make it
accessible to the public, and combine this information with
the FNS Watch List; \74\
---------------------------------------------------------------------------
\74\ New York City Department of Health and Mental Hygiene.
Develop a recognition program for retailers who
embrace the goals of the Program, provide leadership in the
retail community, and find ways to encourage adoption of
healthy shopping habits; \75\
---------------------------------------------------------------------------
\75\ ASNNA: Association of SNAP-Ed Nutrition Networks and Other
Implementing Agencies, OTDA.
Share data amongst all government agencies involved in
regulating food retailers; \76\
---------------------------------------------------------------------------
\76\ Rudd Center for Food Policy and Obesity, PHI.
Include input from all stakeholders (e.g., convene a
working group); \77\
---------------------------------------------------------------------------
\77\ Texas Retailers Association.
Require stores to utilize EBT or POS systems; \78\
---------------------------------------------------------------------------
\78\ National Association of Convenience Stores (NACS) and Society
of Independent Gasoline Marketers of American (SIGMA), United Council
on Welfare Fraud, Commonwealth of Virginia Department of Social
Services.
Review current ALERT process for potential
enhancements to identify suspect transactions; \79\
---------------------------------------------------------------------------
\79\ United Council on Welfare Fraud.
Mandatory store visits; \80\
---------------------------------------------------------------------------
\80\ United Council on Welfare Fraud.
Monitor retailer eligibility in areas of limited
access (e.g., by mapping eligible retailers against food
desert data available in USDA's Food Environment Atlas);
\81\
---------------------------------------------------------------------------
\81\ Academy of Nutrition and Dietetics.
Seek additional legislative authority as necessary to
reduce fraud and utilize financial penalties; \82\
---------------------------------------------------------------------------
\82\ Academy of Nutrition and Dietetics.
Use the WIC model to limit the amount of subsidized
unhealthy food items; \83\
---------------------------------------------------------------------------
\83\ Michigan Department of Human Services.
Partner with interested state and local government
entities, and conduct investigations through the expanded
use of the State Law Enforcement Bureau (SLEB) program;
\84\ and
---------------------------------------------------------------------------
\84\ New York City Department of Health and Mental Hygiene.
Test strategies using technology-based measures to
assess retailers' compliance.\85\
---------------------------------------------------------------------------
\85\ PHI.
Two trade associations stated that the RFI fallaciously
conflates SNAP fraud and SNAP beneficiary purchasing
decisions.\86\ Similarly, a food retailer stated that USDA
should not accept the apparent premise that ``fraud'' and
``healthful food offerings'' are somehow intrinsically
linked.\87\
---------------------------------------------------------------------------
\86\ National Association of Convenience Stores (NACS) and Society
of Independent Gasoline Marketers of American (SIGMA).
\87\ Cumberland Farms, Inc.
The Office of Inspector General (OIG) stated that its recent
work demonstrated that FNS does not have clear procedures and
guidance to carry out key oversight and enforcement activities
to address SNAP retailer fraud, or adequate authority to
prevent multiple instances of fraud. According to the OIG, this
occurred because FNS had not yet comprehensively updated its
regulations and guidance to reflect the changed fraud risks
that accompanied the transition from a stamp-based benefit
system to the EBT system. OIG asserted that this has led to a
retailer authorization process without clear roles and
responsibilities for different FNS divisions, inadequate
supervisory reviews, and fragmented access to important
documents. Finally, OIG stated that FNS does not require
---------------------------------------------------------------------------
retailers to undergo self-initiated criminal background checks.
OIG also stated that prior audit results found that FNS has
not established processes to identify or estimate the total
amount of SNAP fraud occurring nationwide by retailers. As a
result, OIG concluded that FNS does not have tools to
effectively measure a total SNAP fraud rate over time, and the
actual extent of trafficking could be over or underestimated.
OIG also reiterated its recommendations to FNS regarding the
use of suspension and debarment.
Question No. 14: Additional Ways in Which Eligibility Criteria Should
Be Changed
Approximately two dozen commenters noted the value of
farmers['] markets in the healthy food retail landscape and the
barriers that fa[r]mers['] markets face when applying for
authorization to be a SNAP retailer. These commenters provided
the following ways in which FNS could improve SNAP with regard
to farmers['] markets: \88\
---------------------------------------------------------------------------
\88\ Some of the commenters that provided these recommendations
include: Michigan Farmers Market Association, Fair Food Network, Johns
Hopkins Center for a Livable Future, Farmers Market Coalition, NSAC,
Washington State Farmers Market Association.
Create a separate application for farmers['] markets
or remove the structural barriers of the retailer
---------------------------------------------------------------------------
application and additional processing fees;
Allow farmers['] markets to select a Type of Ownership
that more closely reflects their organizational structure;
Allow farmers['] markets to provide an Employer
Identification Number, instead of an individual's Social
Security [N]umber;
Authorize one managing organization for multiple
market locations;
Provide an exemption for farmers['] markets that do
not have a business license;
Exempt farmers['] markets from providing sales data;
Permit partnering organizations to apply for the
market's authorization status with written permission from
the decision-making body of the farmers['] market; and
Require states to include in future contracts a
provision that provides the same service to retailers using
wireless service as to those using traditional, hardwired
machines.
Approximately a dozen commenters provided suggestions for
requirements related to marketing, promotion, and education
efforts that encourage SNAP participants to purchase health
foods. Some of the suggestions include the following:
Limit or discourage in-store SNAP marketing on
ineligible or non-staple products and on food and beverage
signage; \89\
---------------------------------------------------------------------------
\89\ California Food Policy Advocates, University of California
SNAP-Ed Program, ASNNA: Association of SNAP-Ed Nutrition Networks and
Other Implementing Agencies, ChangeLab Solutions, Society for Nutrition
Education and Behavior, Leadership for Healthy Communities, OTDA, Trust
for America's Health.
Require that SNAP staple foods be visible from the
store entrance; \90\
---------------------------------------------------------------------------
\90\ University of California SNAP-Ed Program, ASNNA: Association
of SNAP-Ed Nutrition Networks and Other Implementing Agencies.
Encourage cross-promotion between WIC-allowed and SNAP
``staple foods''; \91\
---------------------------------------------------------------------------
\91\ University of California SNAP-Ed Program, ASNNA: Association
of SNAP-Ed Nutrition Networks and Other Implementing Agencies, Academy
of Nutrition and Dietetics.
Post clear labels for unit pricing of all foods and
beverages; \92\
---------------------------------------------------------------------------
\92\ ASNNA: Association of SNAP-Ed Nutrition Networks and Other
Implementing Agencies.
Allow retailers to offer discounts and bonus values
for ``staple foods'' to SNAP customers; \93\ and
---------------------------------------------------------------------------
\93\ University of California SNAP-Ed Program, ASNNA: Association
of SNAP-Ed Nutrition Networks and Other Implementing Agencies.
Restrict or limit the amount of tobacco product
displays or marketing in SNAP eligible stores.\94\
---------------------------------------------------------------------------
\94\ UNC Gillings School of Global Public Health.
Some commenters provided other suggestions for ways in which
the eligibility criteria should be changed, including the
---------------------------------------------------------------------------
following:
Consider beverage provisions and placement options as
additional criteria for retailer eligibility.\95\
---------------------------------------------------------------------------
\95\ New York City Department of Health and Mental Hygiene.
Consider a separate application for smaller retailers
to deter trafficking.\96\
---------------------------------------------------------------------------
\96\ State of California, Health and Human Services Agency
Department of Social Services.
Use WIC model to require training for SNAP retailers;
coordinate store audits with the WIC program; and develop a
unified database for tracking WIC and SNAP authorization
information.\97\
---------------------------------------------------------------------------
\97\ Rudd Center for Food Policy and Obesity.
Consider a probation period during which random
inspections will be conducted.\98\
---------------------------------------------------------------------------
\98\ United Council on Welfare Fraud.
---------------------------------------------------------------------------
Suggestions for Implementation Support (e.g., Pilot Studies, Technical
Assistance, and Education Programs)
Several commenters, including local governments, state
governments, and policy advocacy organizations, generally urged
FNS to provide implementation support, including pilot studies,
technical assistance, and education programs to SNAP
beneficiaries.\99\
---------------------------------------------------------------------------
\99\ National WIC Association, ChangeLab Solutions, Leadership for
Healthy Communities, Society for Nutrition Education and Behavior, New
York City Department of Health and Mental Hygiene, The Food Trust,
United States Conference of Mayors Food Policy Task Force, Academy of
Nutrition and Dietetics.
A policy advocacy organization and professional association
said USDA should encourage collaboration between the SNAP
retailer program and the SNAP nutrition education program
(SNAP-Ed).\100\
---------------------------------------------------------------------------
\100\ PHI, Academy of Nutrition and Dietetics.
A professional association said FNS should consider working
with the Small Business Administration or other Federal
entities to offer assistance with issues such as budgeting,
sourcing, product selection and handling, and technology.\101\
---------------------------------------------------------------------------
\101\ Academy of Nutrition and Dietetics.
---------------------------------------------------------------------------
Comments About the Public Listening Sessions
A policy advocacy organization encouraged FNS to review the
comments at the Baltimore listening session provided by
Maryland Hunger Solutions.
Other Comments
Several policy advocacy organizations recommended that FNS
use its existing waiver authority to test and evaluate any
proposed changes.\102\
---------------------------------------------------------------------------
\102\ The Society for Nutrition Education and Behavior, the
National WIC Association, PHI.
An educational institution encouraged FNS to develop SNAP
standards that are in line with WIC requirements.\103\
---------------------------------------------------------------------------
\103\ Johns Hopkins Center for a Livable Future.
A few commenters, including a trade association, a state
government agency, and a professional association said state-
supplied EBT POS equipment should be eliminated, and that
retailers should be required to purchase their own POS wireless
devices as a cost of doing business (except for farmers[']
markets).\104\
---------------------------------------------------------------------------
\104\ Texas Retailers Association, United Council on Welfare Fraud,
Commonwealth of Virginia Department of Social Services.
A food retailer said the Health Incentives Pilot and similar
incentive-based programs are the best method to increase
healthy choices among SNAP participants.\105\
---------------------------------------------------------------------------
\105\ Cumberland Farms, Inc.
A trade association stated that the imposition of government
restrictions on SNAP recipients' food decisions would
significantly expand Federal bureaucracy, increase burdens on
small business and retailers, and play no role in lowering
obesity rates.\106\
---------------------------------------------------------------------------
\106\ American Beverage Association.
A professional association stated that more data is needed
to analyze the ability of SNAP recipients to access SNAP-
eligible retailers, and to determine whether enhanced
eligibility requirements would negatively impact that
access.\107\
---------------------------------------------------------------------------
\107\ Academy of Nutrition and Dietetics.
---------------------------------------------------------------------------
Tallies of Submissions by Coding Structure Category
The table below indicates how many comment submissions addressed
each coding structure category. The first set of counts indicates how
many unique submissions (including one representative or ``master''
version of each form letter variety) addressed a category, while the
second count includes all letters analyzed (including form letter
copies). Counts listed for a ``parent'' issue reflect comments that
addressed the parent issue generally but that could not be assigned
into a more specific sub-issue (i.e., counts do not ``roll up'' to the
parent issues).
------------------------------------------------------------------------
Count of Unique
Coding Submissions Count of All
Structure Category Title (including one Submissions
Category copy of each (including form
Number form letter) letter copies)
------------------------------------------------------------------------
1 General feedback on 0 0
the RFI
1.1 General support for 5 5
making changes to
existing program
eligibility
requirements (w/o
substantive
rationale)
1.2 General opposition to 1 1
making changes to
existing program
eligibility
requirements (w/o
substantive
rationale)
1.3 Other general comments 1 1
2 Responses to Questions 0 0
Posed by FNS
2.1 Question No. 1: 0 0
Reasonableness of
ensuring provision of
healthy food options
as SNAP store
eligibility criterion
2.1.1 Agreement that 34 34
provision of healthy
food options is a
reasonable
eligibility
requirement
2.1.2 Disagreement that 1 1
provision of healthy
food options is a
reasonable
eligibility
requirement
2.1.3 Other comments on 6 6
reasonableness of
healthy food
provision eligibility
requirement
2.2 Question No. 2: 0 0
Existence of store
types that should
always be eligible
for SNAP
participation
2.2.1 General support for 6 6
eligibility of
particular store
types
2.2.2 General opposition to 11 11
eligibility of
particular store
types
2.2.3 Suggestions for store 1 1
types that should
always be eligible
for participation
2.2.3.1 Grocery stores 9 9
2.2.3.2 Supermarkets 8 8
2.2.3.3 Farmers['] Markets 25 26
2.2.3.4 Food cooperatives 1 1
2.2.3.5 Others 3 3
2.2.4 Other comments on 12 12
whether some store
types should always
be eligible for SNAP
participation
2.3 Question No. 3: 0 0
Existence of store
types that should
always be ineligible
for SNAP
participation
2.3.1 General support for 4 4
ineligibility of
particular store
types
2.3.2 General opposition to 10 10
ineligibility of
particular store
types
2.3.3 Suggestions for store 0 0
types that should
always be ineligible
for participation
2.3.3.1 Convenience stores 7 7
2.3.3.2 Gas stations 3 3
2.3.3.3 Liquor store 4 4
2.3.3.4 Pharmacies 1 1
2.3.3.5 Dollar stores 0 0
2.3.3.6 Others 2 2
2.3.4 Other comments on 27 123
whether some store
types should never be
eligible for SNAP
participation
2.4 Question No. 4: 0 0
Redefinition of
``staple foods''
2.4.1 A different definition 1 1
of ``staple foods''
would help ensure
more healthy food
choices
2.4.1.1 Proposed changes to 24 24
definition
2.4.1.2 Support/references for 1 1
need to change
definition
2.4.1.3 Other comments in 7 7
support of a new
definition for
``staple foods''
2.4.2 Redefining ``staple 0 0
foods'' would not
ensure more healthy
food choices
2.4.2.1 Current definition is 6 6
sufficient
2.4.2.2 FNS should only focus 0 0
on trafficking/
redefining staple
foods will not impact
trafficking
2.4.2.3 Other comments in 6 6
opposition to a new
definition for
``staple foods''
2.4.3 Treatment of foods 0 0
high in added sugar,
sodium, or solid fats
2.4.3.1 Support for exclusion 2 2
of these items as
``staple foods''
2.4.3.2 Opposition to 3 3
exclusion of these
items as ``staple
foods''
2.4.3.3 Other comments 3 3
regarding treatment
of foods high in
added sugar, sodium,
or solid fats
2.4.4 Other comments on 4 4
redefining ``staple
foods''
2.5 Question No. 5: 0 0
Applicability of
``staple foods''
categories to
prepared foods with
multiple ingredients
2.5.1 Support for 8 8
maintaining current
treatment of multiple
ingredient foods
(i.e., to be
considered in one
``staple food''
category as long as
it has one ingredient
that meets ``staple
foods'' definition).
2.5.2 Support for changing 6 6
treatment of multiple
ingredient foods
(e.g., only
considering single
ingredient foods as
staple foods)
2.5.3 Other comments on 16 16
multiple ingredient
foods as ``staple
foods''
2.6 Question No. 6: 0 0
Adequacy of the
twelve applicable
item minimum under
Criterion A
2.6.1 Support for 3 3
maintaining current
twelve applicable
item minimum for
eligibility
2.6.2 Support for changing 0 0
applicable item
minimum eligibility
requirements
2.6.2.1 Support for increase 15 15
in minimum applicable
item requirements
2.6.2.2 Support for increased 2 2
flexibility in
categorization
2.6.2.3 Other comments on 9 9
proposed changes for
applicable item
minimum eligibility
requirements
2.6.3 Other comments on the 3 3
potential increase of
the Criterion A
twelve applicable
item minimum
2.7 Question No. 7: 0 0
Possible change from
Criterion A
requirement to stock
perishable items in
two categories
2.7.1 Support for requiring 20 20
perishable items to
be stocked in more
than two categories
2.7.2 Opposition to 1 1
requiring perishable
items to be stocked
in more than two
categories
2.7.2.1 Current program is 2 2
sufficient in meeting
program goals
2.7.2.2 Increasing the 1 1
required number of
categories of
perishable items
would be too
difficult
2.7.2.3 Other comments 4 4
opposing the
requirement of
perishable items in
more than two
categories
2.7.3 Other comments on 3 3
changing the required
number of categories
of perishable items
2.8 Question No. 8: 0 0
Adequacy of Criterion
B 50% sales
requirement of
``staple foods'' in
meeting SNAP's
purpose
2.8.1 Current requirement 3 3
for 50% sales of
staple foods is
sufficient
2.8.2 Requirement for 50% 6 6
sales of staple foods
is not sufficient
2.8.3 Sufficiency of 7 7
Criterion B 50% sales
requirement if
``staple foods''
definition is changed
to exclude items high
in added sugar,
sodium, or solid fats
2.8.4 Comments on the 2 2
treatment of
``accessory foods''
2.8.5 Other comments on 15 15
Criterion B
percentage sales
requirement
2.9 Question No. 9: 0 0
Eligibility of stores
whose primary
business is not food
sales
2.9.1 Support for allowing 1 1
these stores to be
eligible
2.9.1.1 Food deserts 11 11
2.9.1.2 Contingent support 0 0
2.9.1.2.1 Access to other SNAP 0 0
providers in the area
(e.g., food deserts)
2.9.1.2.2 Proposed standards for 7 7
contingent support
2.9.1.2.3 Other comments on 0 0
contingent support
for eligibility
2.9.1.3 Other comments in 6 6
support of allowing
these retailers to be
eligible
2.9.2 Opposition to allowing 5 5
these stores to be
eligible
2.9.3 Other comments on 2 2
eligibility of stores
whose primary
business is not food
sale
2.10 Question No. 10: 0 0
Eligibility of
retailers who
primarily sell food
for immediate
consumption, but also
sell products cold
and heat them for
SNAP recipients after
purchase
2.10.1 Support for continuing 7 7
eligibility for these
stores
2.10.2 Opposition for 7 7
continuing
eligibility for these
stores
2.10.3 Other comments on 8 8
eligibility of these
stores
2.11 Question No. 11: 0 0
Granting
authorization to all
eligible retail
stores (regardless of
whether sufficient
store access is a
concern)
2.11.1 Support for granting 27 27
authorization to all
eligible retail
stores
2.11.2 Opposition to granting 2 2
authorization to all
eligible stores
2.11.3 Other comments 3 3
regarding grating
authorization to all
eligible stores
(e.g., request for
definition of
``sufficient store
access'')
2.12 Question No. 12: 0 0
Granting SNAP
authorization when no
store meets basic
eligibility criteria
in an area
2.12.1 Evaluation and scoring 0 0
system applied
2.12.1.1 Criteria used in 7 7
evaluation and
scoring system
2.12.2 Other comments on 23 23
granting SNAP
authorization when no
stores meet basic
eligibility criteria
2.13 Question No. 13: 0 0
Balancing of
integrity and
management priorities
against healthy food
choice criteria
2.13.1 Suggestions regarding 25 25
balancing integrity
and management
priorities against
healthy food choice
criteria
2.13.2 Suggested elements to 4 4
be used to assess
integrity risks
2.13.3 Suggestions regarding 6 6
application of
integrity risk
elements
2.14 Question No. 14: 0 0
Additional ways in
which eligibility
criteria should be
changed
2.14.1 Separate application 22 23
criteria for
farmers['] markets
2.14.2 Suggestions for 12 12
requirements related
to marketing,
promotion, and
education efforts
that encourage SNAP
participants to
purchase healthy
foods and beverages
2.14.3 Other comments 11 11
regarding ways to
change eligibility
criteria
3 Other comments on the 0 0
RFI
3.1 Suggestions for 16 16
implementation
support (e.g., pilot
studies, technical
assistance, and
education programs)
3.2 Comments on public 1 1
listening sessions
3.3 Other comments on RFI 16 16
4 Comments Outside the 3 3
Scope of the RFI
(e.g., labeling
requirements, GMOs)
------------------------------------------------------------------------
[attachment 2]
Initial Regulatory Flexibility Analysis_Proposed Rule
Enhancing Retailer Standards in SNAP: Changes to Depth of Stock and
Stocking Requirements Using New Farm Bill Definition
Agency: Food and Nutrition Service, USDA.
Background: The Regulatory Flexibility Act (RFA) requires agencies
to consider the impact of their rules on small entities and to evaluate
alternatives that would accomplish the same objectives without undue
burden when the rules impose a significant economic impact on a
substantial number of small entities. Inherent in the RFA is the desire
to remove barriers to competition and encourage consideration of ways
to tailor regulations to the size of the regulated entities.
The RFA does not require that agencies necessarily minimize a
rule's impact on small entities if there are significant legal, policy,
factual, or other reasons for the rule's impacts. The RFA requires only
that agencies determine, to the extent feasible, the rule's economic
impact on small entities, explore regulatory alternatives for reducing
any significant economic impact on a substantial number of such
entities, and explain the reasons for their regulatory choices.
Reasons That Action Is Being Considered
The Food and Nutrition Service is proposing a rule that would
revise minimum inventory requirements for stores eligible to redeem
SNAP benefits. Several changes in the proposed rule will affect
retailer stocking requirements. First, retailers may need to add
varieties within four staple food groups (meat, poultry, or fish; bread
or cereal; vegetables or fruits; dairy products). Under previous
requirements, most retailers were eligible to redeem SNAP using the
criteria that they offered for sale, on a continuous basis, at least
three varieties of qualifying foods in each of four staple food groups,
with perishable foods in at least two of the food groups. The 2014 Farm
Bill modified those criteria by requiring that retailers stock at least
seven varieties of qualifying foods in each of four staple food groups,
with perishable foods in at least three of the food groups.
As part of this rule FNS has also proposed that retailers now must
stock at least six stocking units of each variety of food in each food
group. Current regulations do not specify a minimum depth of stock.
Finally, FNS is also proposing that multi-ingredient foods and `snack'
foods be classified as accessory foods, which cannot be used to meet
either the variety or depth of stock requirements.
This action is being considered by FNS in part due to Section 4002
of the Agricultural Act of 2014 (2014 Farm Bill), which revises
eligibility for SNAP retail food stores by increasing the required
number of varieties and number of perishable items. Additional changes
to depth of stock and to the classification of accessory foods are
being proposed to ensure that retailers are maintaining sufficient food
stock for sale to SNAP recipients at all times, and to ensure that
retailers are stocking foods that could contribute to a nutritious
diet.
Under current law, a store could stock as few as 12 food items (3
varieties 4 staple food groups 1 stocking unit) and be eligible to
redeem SNAP benefits. The impact of these changes results in a new
minimum inventory requirement of 168 items (7 varieties 4 staple food
groups 6 stocking units). While this change in stocking requirements
appears substantial, for the vast majority of stores, the changes
needed would be much smaller because they already stock many of the
required items in appropriate amounts.
Objectives of, and Legal Basis for, the Proposed Rule
As stated above, the legal basis for the proposed rule are the
relevant sections of the 2014 Farm Bill and existing legal authority
under the Food and Nutrition Act. The objectives of this rule are to
establish new parameters for inventory requirements for retailers that
are certified to accept SNAP.
Number of Small Entities to Which the Proposed Rule Will Apply
This proposed rule directly regulates all retailers that accept
SNAP benefits pursuant to agreements with USDA's Food and Nutrition
Service. However, many of these stores already stock a sufficient
quantity and variety of foods to meet the eligibility criteria in the
proposed rule. Certain stores, however, primarily combination stores,
convenience stores, and small grocery stores, may need to make changes
to their inventory in order to remain eligible to redeem SNAP benefits.
Of the 68,338 combination stores, 112,066 convenience stores, and
15,060 small grocery stores certified to accept SNAP benefits in 2014,
almost all of them (194,834 total stores, or 99.7%) would fall under
the SBA gross sales threshold to qualify as a small business for
Federal Government programs.\1\
---------------------------------------------------------------------------
\1\ Based on the North American Industry Classification System
(NAICS code) categories for Convenience Stores (NAICS code 445120,
standard of $29.5 million) and Supermarkets and Other Grocery Stores
(NAICS code 445110, standard of $32.5 million).
---------------------------------------------------------------------------
Projected Reporting, record-keeping and Other Compliance Requirements
All retailers attest to proper stocking requirements at
authorization, and all retailers would be subject to periodic store
reviews that evaluate whether the currently displayed stock and number
of units are appropriate to maintain certification to redeem SNAP
benefits. FNS knows of no reporting or record-keeping requirements that
would impact small entities. However, most small stores would be
required to make changes to their inventory in order to comply with
this rule.
FNS thinks that the rule does not present a significant economic
impact to a substantial number of small businesses. Although the number
of stores impacted is large, we estimate that the cost to those small
businesses for stocking additional inventory would be nominal, on
average about $140. However, FNS has prepared this Initial Regulatory
Flexibility Analysis to provide the opportunity for comment and input
from the public. FNS invites comments on all aspects of the analysis
that follow.
This analysis uses data from a sample of 1,392 small stores to
examine the average number of varieties that retailers may need to add
in the staple groups as well as the number of stocking units the
average retailer may need to add in order to be in compliance with the
new rules. Available data come from the Authorized Store Checklist.
This checklist is used by FNS during store visits to determine how many
varieties in a staple food group a retailer is currently stocking as
well as how many individual stocking units are in the store at the time
of the visit. It is important to note that this checklist groups
certain foods together and that these groupings may combine foods from
more than one `variety' as defined by the proposed rule. For example,
with regard to cheese, the checklist groups hard and soft cheeses
together, but these would be considered different varieties for
purposes of meeting the new variety requirement. For this analysis,
this means that for some staple food groups we are likely undercounting
the actual number of varieties a store already stocks. This is
especially true for the Dairy category--the checklist only contains six
product groupings, so no store in the data set could be classified as
having seven different varieties of Dairy. In this case, six dairy
varieties were used in the analysis.
Farm Bill Changes to Variety and Perishable Criteria
Based on analysis of this data, FNS estimates that 88.6% of small
stores would not meet the variety criteria. Most need to add one or two
items per staple food category:
92.8% of the stores in this subgroup would not meet the
Dairy variety criteria (based on six dairy categories
analyzed).
Median = five items (out of seven) for non-qualifiers.
6.9% would not meet the Fruit & Vegetable criteria.
Median = five items for non-qualifiers.
21.7% would not meet the Bread variety criteria.
Median = six items for non-qualifiers.
66.5% would not meet the Meat variety criteria.
Median = five items for non-qualifiers.
1.5% of stores would no longer meet the perishable criteria.
All stores that would no longer meet perishable criteria
also no longer meet the variety criteria.
In sum, most currently authorized small stores (88.6%) would not
immediately meet the inventory requirements mandated in the 2014 Farm
Bill. However, conformance typically requires adding two varieties for
each of two or three categories.
Proposed Changes to Definition of Accessory Foods
Under the proposed rule the definition of accessory foods will
change to include snacks such as chips or ice cream and multi-
ingredient foods such as pizza. This change may potentially increase
the number of varieties a store might need to add in order to remain
compliant, as those items are separate `groupings' on the Store
Checklist. In the Dairy category, ice cream, which is its own category
on the checklist, will be removed as a variety. The analysis of the
impact of the 2014 Farm Bill changes, which concluded that the median
store would need to add two varieties in the Dairy group, counted ice
cream as a variety. When ice cream is removed, we estimate that all
retailers in the data set would need to add one additional variety of
dairy in order to be compliant, bringing the median number of dairy
varieties needed to three.
Similarly, in the Breads and Cereals staple foods category, some
snacks and cakes will be redefined as accessory foods. For purposes of
this analysis, we removed those items from each store's total count of
``varieties.'' With those items removed, nearly 20% of retailers were
still stocking seven varieties of Breads and Cereals and would remain
eligible under the new requirements. An additional 68% of retailers
would only need to add between one and three varieties in order to
remain eligible in the Breads and Cereals staple food category. For
purposes of this analysis, we assume that the median store would need
to add two varieties of Breads and Cereals to meet the new
requirements.
Proposed Changes to Depth of Stock
FNS also did further analysis to estimate the number of additional
stocking units in each staple food category retailers might need to add
in order to be compliant with the proposed provision that retailers
carry at least six stocking units of each variety.
Dairy: As noted above, FNS estimates that the average store
would need to add three varieties of products to the Dairy
category to meet the variety requirement and the new definition
of accessory foods. For these varieties, we estimate that the
average store would need to add 18 stocking units. When looking
only at those varieties stores already have in this category,
most stores already have six or more stocking units in three
(of their current four) varieties. Therefore, FNS estimates
that the average store would need to add up to six additional
stocking units to meet the new depth-of-stock requirement. In
total, we estimate that the average store would need to add 24
stocking units in the Dairy staple food group in order to meet
the combined requirements of this proposed rule (see Table 1).
Fruits and Vegetables: As noted above, the vast majority of
retailers already meet or exceed the new variety requirement,
and changes in the definition of accessory foods are not
expected to impact this. When looking only at those varieties
stores already have in this category, most stores already have
six or more stocking units in each variety. Therefore, FNS
estimates that the average store would not need to add any
stocking units in the Fruits and Vegetables staple food group
in order to remain compliant with new requirements.
Breads and Cereals: As noted above, most stores currently
have five or more varieties of Breads and Cereals, after
removing foods that would now be classified as accessory foods.
FNS estimates that the average store would need to add two
varieties of products to the Breads and Cereals category to
meet the variety requirement and the new definition of
accessory foods. For these varieties, we estimate that the
average store would need to add 12 stocking units. When looking
only at those varieties stores already have in this category,
most stores already have six or more stocking units within
these varieties. Therefore, the depth-of-stock requirement does
not add additional inventory changes beyond what is a needed to
meet the variety requirement and the new definition of
accessory foods. FNS estimates that the average store would
need to add about 12 total stocking units within this staple
food category to meet the combined requirements of this
proposed rule.
Meat/Poultry/Fish: As noted above, most stores currently
stock five varieties of Meat, Poultry, or Fish. FNS estimates
that the average store would need to add two varieties of
products to the Meat, Poultry, or Fish category to meet the
variety requirement and the new definition of accessory foods.
For these varieties, we estimate that the average store would
need to add 12 stocking units. When looking only at those
varieties stores already have in this category, most stores
already have six or more stocking units within these five
varieties. However, because the categories on the checklist do
not align perfectly with planned implementation of the variety
definition for this staple food group, FNS estimates that the
average store may need to add up to six stocking units within
this food group to meet the depth-of-stock requirement. In
total, FNS estimates that the average store may need to add
about 18 stocking units in this staple food category to meet
the combined requirements of this proposed rule.
Stores that do need to make adjustments should be able to do so at
a relatively low total cost. Based on a review of 2015 wholesale prices
for specific items in each staple food group, FNS estimates that a
retailer who needed to purchase six stocking units of all seven
varieties of food in all four staple food groups could obtain these
items at a cost of approximately $310 (see attached Table 2). Adding an
inventory carrying cost of 25%,\2\ to account for storage costs and
potential spoilage, the total cost of stocking all 168 items would be
approximately $400.\3\ The average cost per variety and cost per unit
(based on these wholesale prices) for each staple food group is as
follows:
---------------------------------------------------------------------------
\2\ Inventory carrying costs average 20-30% of the value of the
stock. Source: http://www.opsrules.com/supply-chain-optimization-blog/
bid/314279/Do-You-Know-Your-Inventory-Carrying-Costs.
\3\ In addition to the cost of adding specific stocking units or
varieties, a small number of stores may need to add additional storage
for perishable items. FNS estimates that the cost of purchasing an
additional cold case would be approximately $750, bringing the maximum
total possible cost of compliance to approximately $1,140. However, FNS
estimates that 98.5% of stores would currently meet the requirement for
stocking perishable items, so it is unlikely that stores would need to
add cold storage in order to remain compliant, nor is it likely that
the ability to store perishable foods would be a barrier to remaining
eligible. Cost of a Glass merchandise: $749 new through http://
www.webstaurantstore.com/26249/1-section-glass-door-merchandising-
refrigerators.html.
---------------------------------------------------------------------------
Breads and Cereals:
Average cost of adding six stocking units of one
variety: $10.06.
Cost of adding each unit: $1.68.
Dairy:
Average cost of adding six stocking units of one
variety: $11.83.
Cost of adding each unit: $1.97.
Meat/Poultry/Fish:
Average cost of adding six stocking units one variety:
$15.57.
Cost of adding each unit: $2.60.
Fruits and Vegetables:
Average cost of adding six stocking units of one
variety: $6.96.
Cost of adding each unit: $1.16.
However, as noted above, most stores would need to add far fewer
items--approximately 54 stocking units for the median store, at an
estimated cost of about $114, or about $142 when factoring in the
inventory carrying cost of 25%. In most stores, this could be
accomplished by swapping out certain items for others in order to meet
the new requirements. In any case, the initial cost of adding new items
to inventory would be recouped when a retailer sells those items. In
the event of spoilage, the inventory carrying cost accounts for the
need to replace items.
Table 1 below outlines the additional stocking units needed, by
staple food category, for the average small store for each change to
inventory requirements in the proposed rule. Specific wholesale food
costs, used to estimate the cost per staple food group, are detailed in
a table at the end of this document.
Table 1
Additional Stocking Units Needed for Average Small SNAP Retailer
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Additional Varieties Needed Impact from Definition Change Additional Units Total
------------------------------------------------------------------------------ Needed to Meet ---------------------------------------------------------------------------
Depth of Stock
Number Stocking Units Varieties Stocking Units ------------------- Varieties Stocking Units Average Price Cost per Staple
Stocking Units Group
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dairy 2 12 1 6 6 3 24 $1.97 $47.28
FV 0 0 0 0 0 $1.16 $--
Bread 0 0 2 12 0 2 12 $1.68 $20.16
Meat 2 12 6 2 18 $2.60 $46.80
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total............ 4 24 3 18 12 7 54 $7.41 $114.24
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Economic Opportunity Costs for Small Retailers
Another approach to estimate potential costs for small retailers is
to examine the economic opportunity costs for those retailers. To do
this, FNS examined SNAP redemption patterns at these smaller stores.
Stores that redeem a very small amount of SNAP benefits may find that
even small changes to inventory requirements would not be cost
effective, given the overall contribution that SNAP has to their
monthly revenue. Alternatively, some smaller stores may determine that
they redeem enough SNAP benefits to justify these minor stock changes.
Combination stores, Convenience stores, and Small Grocery Stores
are most likely to require changes to their depth of stock in order to
remain eligible to redeem SNAP benefits. FNS looked at the number of
these stores that are certified, the total amount of SNAP benefits that
are redeemed in these stores, and the average amount of SNAP benefits
redeemed per store on an annual and monthly basis. While these stores
make up a substantial percentage (73%) of all authorized retailers,
their share of SNAP redemptions is much smaller (13%).
Combination Stores:
26% of all authorized stores in 2014.
6.8% of total SNAP benefits redeemed.
$70,125 annual SNAP benefits redeemed on average per
store.
$5,844 monthly SNAP benefits redeemed, on average per
store.
$9.6 million in annual gross sales, on average per
store.
Convenience Stores:
41% of all authorized stores in 2014.
4.96% of total SNAP benefits redeemed.
$32,770 annual SNAP benefits redeemed on average per
store.
$2,731 monthly SNAP benefits redeemed, on average per
store.
$2.1 million in annual gross sales, on average per
store.
Small Grocery Stores:
5.3% of all authorized stores in 2014.
1.16% of total SNAP benefits redeemed.
$58,427 annual SNAP benefits redeemed on average per
store.
$4,869 monthly SNAP benefits redeemed, on average per
store.
$193,000 in annual gross sales, on average per store.
For the average small retailer, the cost of adding the additional
inventory represents a negligible share of their SNAP redemptions and
of total gross sales.
Retailers that redeem the least amount of SNAP benefits may be most
likely to make a business decision to leave the program because they
find the changes needed to comply with the new inventory requirements
to be more costly than the profit from SNAP participation. An analysis
of the lowest 10%, 20%, and 30% of SNAP redemptions by retailer type
indicates that many of these stores do not generate a significant
portion of their revenue from SNAP. According to FNS retailer data, in
2014 average annual redemptions for the stores (among these three store
types) that redeemed the least amount of SNAP benefits were as follows:
Combination stores (20,500 in the bottom 30th percentile):
10th percentile--$2,830 in SNAP redemptions, 0.05% of
Total Gross Sales.
20th percentile--$7,050 in SNAP redemptions, 0.15% of
Total Gross Sales.
30th percentile--$11,720 in SNAP redemptions, 0.20% of
Total Gross Sales.
Convenience stores (33,600 in the bottom 30th percentile):
10th percentile--$2,130 in SNAP redemptions, 0.08% of
Total Gross Sales.
20th percentile--$5,530 in SNAP redemptions, 0.12% of
Total Gross Sales.
30th percentile--$8,750 in SNAP redemptions, 0.37% of
Total Gross Sales.
Small Grocery Stores (4,500 in the bottom 30th
percentile)[:]
10th percentile--$1,990 in SNAP redemptions, 1.4% of
Total Gross Sales.
20th percentile--$6,300 in SNAP redemptions, 4.0% of
Total Gross Sales.
30th percentile--$11,650 in SNAP redemptions, 6.7% of
Total Gross Sales.
Depending on the amount of inventory these retailers need to add,
some may be unwilling to make inventory improvements in order to comply
with the new regulations. In these cases, since their total annual
redemptions are relatively small, stores may make the economic choice
to opt out of SNAP. However, FNS anticipates that only those stores
whose current SNAP redemptions are extremely low may make that choice.
For those stores, their `cost' of opting out of SNAP would be no more
than the amount of foregone SNAP redemptions, generally a few hundred
dollars or less per year for stores with the lowest redemptions.
Table 2
Wholesale Costs for Specific Food Items in Each Staple Food Group
------------------------------------------------------------------------
Per
Staple Food Price Quantity Total Price Per Unit
Group Variety Cost
------------------------------------------------------------------------
Meat
Canned $1.50 6 $9.00
Chicken
Sardines $1.46 6 $8.76
Tuna $1.35 6 $8.10
Beef Franks/ $8.98 2 $17.96
3 pack
Canned $4.18 6 $25.08
Salmon
Turkey Lunch $7.34 3 $22.02
Meat/2 pack
Eggs/7.5 $18.08 1 $18.08
dozen
---------------------------------------------------------
$109.00 $15.57 $2.6
0
---------------------------------------------------------
Breads and
Cereals
Cornmeal $1.64 6 $9.84
Pasta/6 pack $6.48 1 $6.48
Quick Oats $2.60 6 $15.60
Cheerios/6 $7.42 1 $7.42
pack
Rice $1.35 6 $8.10
Bread/packs $3.98 3 $11.94
of 2 loaves
Flour $1.84 6 $11.04
---------------------------------------------------------
$70.42 $10.06 $1.6
8
---------------------------------------------------------
Fruit and
Vegetables
Fruit $1.38 6 $8.28
Cocktail
Canned $1.24 6 $7.44
Pineapple
Pinto Beans $1.05 6 $6.30
Canned Mixed $1.05 6 $6.30
Vegetables
Canned $0.99 6 $5.94
Sliced
Carrots
Canned Peas $0.99 6 $5.94
Canned $1.42 6 $8.52
Tomato
Sauce
---------------------------------------------------------
$48.72 $6.96 $1.1
6
---------------------------------------------------------
D[ai]ry
Cheese--hard $6.48 2 $12.96
(cheddar)/3
pack
Cheese--soft $6.98 1 $6.98
(cream
cheese)/6
pack
Soy Milk/6 $8.58 1 $8.58
pack
Milk $2.63 6 $15.78
Yogurt/18 $7.98 1 $7.98
pack
Butter/4 $10.98 2 $21.96
pack
Sour Cream/3 $4.28 2 $8.56
pack
---------------------------------------------------------
$82.80 $11.83 $1.9
7
---------------------------------------------------------
Total All $ 310.94 $44.42 $7.4
Groups 0
=========================================================
Total $ 388.68
with
Invento
ry
Stockin
g Fee
------------------------------------------------------------------------
Federal Rules That May Duplicate, Overlap or Conflict with the Proposed
Rule
FNS is unaware of any such Federal rules or laws.
Significant Alternatives
Prior to the passage of the farm bill, in 2013, FNS released a
Request for Information and held five listening sessions across the
country to gather feedback from interested stakeholders relative to
alternatives for enhancing this area. These comments were considered
when developing the current proposal. However, most of the changes to
inventory requirements in this proposed rule are directed by statute.
FNS has outlined the ability to waive these requirements for a retailer
if access to certified SNAP retailers would be limited by the
elimination of a small store. However, FNS does not anticipate that
many small stores will make the decision to opt out of SNAP based on
the new requirements. FNS anticipates potential access issues
necessitating a waiver of requirements only in remote or rural areas
such as rural Alaska. FNS annual fiscal year data indicates that over
80% of benefits are spent in supermarkets and superstores which make up
just under 15% (37,536 of the 261,150 SNAP authorized stores in Fiscal
Year 2014) \4\ of all authorized stores. As well, 96 percent of
households visit a supermarket or superstore at least once each month;
the four percent of all households that never shopped in a supermarket
tended to receive relatively small benefits.\5\ Finally, the number of
SNAP authorized stores has increased steadily over the last 12 fiscal
years from 145,312 in Fiscal Year 2003 to 261,150 in Fiscal Year 2014
(56% increase); even at its low point in 2003, FNS was not made aware
of client or advocate concerns regarding access.\6\
---------------------------------------------------------------------------
\4\ http://www.fns.usda.gov/sites/default/files/snap/2014-SNAP-
Retailer-Management-Annual-Report.pdf.
\5\ http://www.fns.usda.gov/benefit-redemption-patterns-
supplemental-nutrition-assistance-program.
\6\ FNS Retailer Management Annual Reports 2003 and 2014.
---------------------------------------------------------------------------
[attachment 3 *]
---------------------------------------------------------------------------
* Editor's note: Attachments 3 and 4 are ``snapshots'' of the
referenced websites. The ``snapshots'' contain the text and hyperlinks
that are on each page.
---------------------------------------------------------------------------
[https://www.ams.usda.gov/rules-regulations/organic/national-list/
filing-petition]
Importing Egg Products and Shell Eggs
FSIS regulates the importation of egg products (http://www.gpo.gov/
fdsys/pkg/CFR-2015-title9-vol2/xml/CFR-2015-title9-vol2-chapIII-
subchapI.xml), which must originate from countries and plants (http://
www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/
importing-products/eligible-countries-products-foreign-establishments/
eligible-foreign-establishments) eligible to export to the United
States. Currently, Canada and The Netherlands are the only countries
where plants are eligible to export egg products to the United States.
Animal disease restrictions may be applied to some egg products by the
Animal and Plant Health Inspection Service (APHIS).
Letter to Importers/Brokers on Ineligible and Misbranded Egg
Products (http://www.fsis.usda.gov/wps/wcm/connect/915de780-
e589-40cc-af91-8ec93ac849db/Importer-Broker-
Egg_Products.pdf?MOD=AJPERES) (Apr. 4, 2016)
Letter to Countries on Ineligible and Misbranded Egg
Products (http://www.fsis.usda.gov/wps/wcm/connect/9ff6e7f5-
44a1-4d0f-bf0e-b0b54357cff8/Egg-Products-Country-
letter.pdf?MOD=AJPERES) (Apr. 4, 2016)
For Q&As about importing egg products into the United States, see
Importing Shell Eggs and Egg Products into the United States (http://
www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/
importing-products/importing-egg-products-and-shell-eggs/faq-importing-
shell-eggs).
Please visit the Agricultural Marketing Service (http://
www.ams.usda.gov/services/imports-exports/breaking-stock) Website for
information about importing shell eggs for breaking into the United
States.
For information regarding foreign sources of eggs and egg products,
see the Fact Sheet--Sourcing Egg Products and Shell Eggs from Foreign
Countries (http://www.fsis.usda.gov/wps/portal/fsis/topics/
international-affairs/importing-products/importing-egg-products-and-
shell-eggs/!ut/p/a1/04_Sj9CPykssy0xPLMnMz0v
MAfGjzOINAg3MDC2dDbwMDIHQ08842MTDy8_YwMwEqCASWYG_paEbUEFY oL-
3s7OBhZ8xkfpxAEcDQvq9iLDAqMjX2TddP6ogsSRDNzMvLV8_IjO3IL-oJDMvX begKD-
lNLmkGFksNR0hrpuYl6JbnJGakwMSLtYP14_Ca6W_CboCLGECUYDb
0wW5oRFVPh4GmZ6OigCtT8d_/?1dmy¤t=true&urile=wcm%3apath%3a%2
Ffsis-content%2Finternet%2Fmain%2Ftopics%2Ffood-safety-education%2Fget-
an swers%2Ffood-safety-fact-sheets%2Fproduction-and-
inspection%2Fsourcing-egg-products-shell-eggs%2Fsourcing- egg-products-
shell-eggs).
Last Modified Apr. 07, 2016.
[attachment 4]
[https://www.ams.usda.gov/rules-regulations/organic/national-list/
filing-petition]
How to File a Petition \1\
---------------------------------------------------------------------------
\1\ http://www.ams.usda.gov/rules-regulations/organic/national-
list/filing-petition.
---------------------------------------------------------------------------
The National List of Allowed and Prohibited Substances identifies
synthetic substances that may be used and the nonsynthetic (natural)
substances that may not be used in organic crop and livestock
production. It also lists the non-organic substances that may be used
in or on processed organic products. Any individual or organization may
submit a petition to add, remove, or amend the listing of a substance.
Role of the NOSB
The National Organic Standards Board (NOSB), a Federal Advisory
Committee, reviews petitions based on specific criteria in the Organic
Foods Production Act of 1990. Depending on the proposed use of the
substance, the petition will be reviewed by an NOSB sub-committee:
crops, livestock, or handling.
Role of the NOP
The National Organic Program (NOP) accepts petitions, solicits
public comments, and manages all communication with petitioners.
Petition Process
The petition process is summarized below:
Individual or organization develops & submits petition. A
complete petition for a single substance * must be submitted to
the NOP as described in the guidelines for petition submission
(NOP 3011: National List Petition Guidelines.\2\ View notice in
the Federal Register b.\3\
---------------------------------------------------------------------------
\2\ http://www.ams.usda.gov/sites/default/files/media/
NOP%203011%20Petition%20Procedures.pdf.
\3\ https://www.federalregister.gov/articles/2016/03/10/2016-05399/
national-organic-program-notice-of-availability-of-national-list-
petition-guidelines.
E-mail submission. Petitions may be submitted as a single
PDF file via e-mail ([email protected]).\4\
---------------------------------------------------------------------------
\4\ mailto:[email protected]?subject=National%20List%20Petition.
Mail submission. Petitions may be sent electronically (i.e.,
---------------------------------------------------------------------------
CD) or hard copy via mail:
National List Manager,
USDA/AMS/NOP, Standards Division,
1400 Independence Ave. SW,
Room 2648-So., Ag Stop 0268,
Washington, DC 20250-0268
Note: Electronic submission (by disk or e-mail) is preferred to
facilitate posting of petitions on the NOP website.
NOP determines if substance is eligible for petition. If the
substance is eligible for petition and the petition meets the
guidelines referenced above, it is forwarded to the appropriate
NOSB sub-committee (crops, livestock, or handling). If the
petition is insufficient or if additional information is
needed, NOP contacts the petitioner to request additional
information. Eligible petitions are posted on the NOP website
for public viewing, with the exception of Confidential Business
Information.
NOSB sub-committee determines if additional information is
needed. If the sub-committee finds the petition insufficient,
NOP will contact the petitioner to obtain additional
information. If the petition is deemed sufficient, the sub-
committee may request a technical report. These reports are
done by a third-party contractor and posted on the NOP website.
NOSB sub-committee reviews petition and publishes a proposal
with request for public comments. While reviewing substances,
the NOSB uses these criteria: \5\ The NOSB sub-committee's
proposal outlines their reasoning and proposed response to the
petition. The proposal will include background information,
discussion, and the sub-committee's votes to: (1) Classify the
substance (2) Crops and livestock: synthetic or non-synthetic
(3) Handling: agricultural or non-agricultural (4) Add, remove,
or amend the listing of the petitioned substance.
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\5\ http://1.usa.gov/NationalListCriteria.
NOP publishes the public meeting agenda and solicits public
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comments on NOSB's behalf.
NOSB analyzes comments & votes on petition. The NOSB sub-
committee makes necessary edits based on written and in-person
public comments and presents the amended proposal to the full
NOSB. The full NOSB discusses and votes on the petition in a
public forum.
NOSB submits final recommendation to NOP. After the meeting,
the NOSB finalizes its recommendation to reflect the final vote
and submits it to the NOP.
NOP reviews recommendation and initiates rulemaking, if
appropriate. The NOP reviews all NOSB recommendations and
publishes its response on the NOP website. The NOP may decide
not to add a recommended substance to the National List, but
may not add a substance without the NOSB's recommendation.
Learn about the rulemaking process b.\6\
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\6\ https://www.ams.usda.gov/rules-regulations/rulemaking.
* If the substance you wish to petition is an inert
ingredient for use in a pesticide formulation, please also
review this memo.\7\
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\7\ https://www.ams.usda.gov/sites/default/files/media/NOP-Notice-
11-6.pdf.
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Questions?
Please contact the National List Manager
[email protected]. \8\
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\8\ mailto:[email protected].
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Rules & Regulations:
Organic Regulations \9\
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\9\ http://www.ams.usda.gov/rules-regulations-terms/organic-
regulations.
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HEARINGS TO EXAMINE USDA ORGANIZATION AND PROGRAM ADMINISTRATION
(Part 2)
----------
FRIDAY, MARCH 18, 2016
House of Representatives,
Committee on Agriculture,
Washington, D.C.
The Committee met, pursuant to call, at 9:00 a.m., in Room
1300, Longworth House Office Building, Hon. K. Michael Conaway
[Chairman of the Committee] presiding.
Members present: Representatives Conaway, Lucas, Thompson,
Benishek, LaMalfa, Yoho, Rouzer, Moolenaar, Kelly, and Lujan
Grisham.
Staff present: Bart Fischer, Caleb Crosswhite, John
Goldberg, Josh Maxwell, Mary Nowak, Matt Schertz, Patricia
Straughn, Scott C. Graves, Skylar Sowder, Stephanie Addison,
Faisal Siddiqui, Anne Simmons, Evan Jurkovich, Keith Jones,
Mary Knigge, Matthew MacKenzie, Mike Stranz, Nicole Scott, and
Carly Reedholm.
OPENING STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE
IN CONGRESS FROM TEXAS
The Chairman. Well, good morning. This part two of the
hearing of the Committee on Agriculture concerning USDA
organization and program administration, will come to order.
I will now ask Trent to offer a quick opening prayer.
Trent.
Mr. Kelly. Bow your heads.
Dear, Heavenly Father, we just ask that you bless this
great nation, that you continue to bless our farms and our
farmers. We ask that you continue to bless us with rich
resources and water. Dear Lord, we just ask that you bless all
of us in government to help us carry out your will. In Jesus'
name, I pray. Amen.
The Chairman. Thank you.
Well, good morning. The chair would remind Members that
they will be recognized for questioning in order of seniority,
for Members who were here at the start of the hearing. After
that, Members will be recognized in order of arrival. I think
everybody was here in order.
Witnesses are reminded to limit their oral comments to 5
minutes. All your written statements, of course, will be
included in the record. And over the course of today's hearing,
following the testimony of each witness, everyone at the table
will be available for questions.
After each panel, we will have a 10 minute break. We will
see how this goes. If Members want to come visit with you, we
have 1302 reserved. If you guys slip over there real quick, and
then we can come say hi, then we will get the other panel in,
and that way that will work.
First panel this morning, I would like to welcome, the
Honorable Robert Bonnie, Under Secretary of Natural Resources
and Environment with USDA. He is accompanied this morning by
Ms. Mary Wagner, who is the Associate Chief of the Forest
Service, and Mr. Jason Weller, who is Chief, Natural Resources
Conservation Service.
Mr. Bonnie, the floor is yours, sir.
STATEMENT OF HON. ROBERT BONNIE, UNDER SECRETARY, NATURAL
RESOURCES AND ENVIRONMENT, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.;
ACCOMPANIED BY MARY WAGNER, ASSOCIATE CHIEF, U.S. FOREST
SERVICE, USDA; JASON WELLER, CHIEF, NATURAL RESOURCES
CONSERVATION SERVICE, USDA
Mr. Bonnie. Thank you very much, Mr. Chairman.
Mr. Chairman, distinguished Members of the Committee, I
want to thank you for the opportunity to appear before you
today to discuss the work of the Natural Resources Conservation
Service and the Forest Service. I will focus much of my remarks
on implementation of the 2014 Farm Bill, and in addition, I
will address the impacts of wildland fire on the Forest Service
budget.
NRCS is demonstrating that voluntary conservation backed by
strong science, done in concert with a variety of partners, can
solve critical natural resource challenges for America's
farmers, ranchers, and forestland owners.
I reported to this Committee last September that the agency
has completed interim final rules for the Environmental Quality
Incentives Program, the Conservation Stewardship Program, and
the new Agricultural Conservation Easement Program. This past
week, we published the final rule on CSP, and EQIP and ACEP are
nearing final stages of review and will be published this
spring.
The new Regional Conservation Partnership Program continues
to be extremely popular. In February, Secretary Vilsack
announced that USDA and partners across the nation together
will direct up to $720 million towards 84 conservation projects
that will help communities improve water quality, combat
drought, enhance soil health, support wildlife habit, and
protect agricultural viability. And the request for proposals
for the third round of RCPP, set to be awarded at the end of
2016, was just announced last week.
Beyond this program, NRCS is spearheading a series of
initiatives to address drought, water quality, wildlife
habitat, and other issues. NRCS is demonstrating through its
Working Lands for Wildlife program that farmers, ranchers, and
forestland owners can voluntarily restore habitat for rare
wildlife so species no longer need the protection of the
Endangered Species Act.
Just last week, the Department of the Interior de-listed
the Louisiana Black Bear, which was possible in no small part
thanks to the significant engagement of NRCS with private
landowners through the Wetlands Reserve Program.
Let me now turn to the Forest Service. Increasing the pace
and scale of forest restoration and management across the
National Forest remains the top priority for the agency. The
agency continues to invest in collaborative landscape-scale
projects and has increased acres treated over the last several
years. Timber sales have increased by 20 percent since 2008.
The Forest Service has successfully implemented all the
relevant provisions of the 2014 Farm Bill. I reported last fall
that 20 projects were moving forward under the new insect and
disease provisions of the farm bill. Currently, 34 projects are
now moving forward, with 28 of those using categorical
exclusions under NEPA. The Forest Service now has good neighbor
authority agreements with nine states, up from the three I
reported last fall, and we have more agreements on the way.
The biggest obstacle to increasing forest restoration and
management is the wildfire budget. Last year was a very
difficult year with more than 10 million acres impacted, many
lives lost, including 13 firefighters, and hundreds of homes
burned. The agency was forced to transfer $700 million from
non-fire programs to cover suppression costs.
The Forest Service spent more than 60 percent of its budget
on fire-related activities last year, up from 16 percent 2
decades ago. Longer fire seasons, increased fuel loads, and
development into our wildlands are all significantly increasing
the cost of firefighting. All agency activities are suffering,
including recreation, research, range management, and, yes,
forest management.
The current budget system, which requires us to shift
additional resources to fire every year, is cannibalizing the
very programs that can help us reduce the threat of
catastrophic wildfire. Many of you are keenly aware of the fire
budget challenge, and I appreciate the hard work that you have
invested on this issue. It was disappointing to be so close to
a comprehensive fix last year and not see it realized.
We will continue to push hard for a comprehensive fix. The
urgency to solve this problem has not lessened. The trends are
not good. Forest Service scientists expect catastrophic fire to
get worse. A comprehensive fire fix, one that stops fire
transfers and provides the additional capacity the agency needs
to increase forest management, will over the long-term save
lives, property, natural resources, and taxpayer dollars.
Thank you very much.
[The prepared statement of Mr. Bonnie follows:]
Prepared Statement of Hon. Robert Bonnie, Under Secretary, Natural
Resources and Environment, U.S. Department of Agriculture, Washington,
D.C.
Mr. Chairman, Ranking Member, and distinguished Members of the
Committee, thank you for the opportunity to appear before you today to
discuss the role of the Natural Resources Conservation Service (NRCS)
and the Forest Service at the U.S. Department of Agriculture. My
testimony today will focus on farm bill implementation; wildfire
response; and strengthening rural communities through voluntary
conservation, resilient landscapes and recreational opportunities.
Farm Bill Implementation
Implementation of the 2014 Farm Bill is a priority across USDA. The
new farm bill delivered a strong conservation title that makes robust
investments to conserve and support America's working lands and
consolidates and streamlines programs to improve efficiency and
encourage participation. For the Forest Service, the farm bill expanded
current authorities and provided several new authorities including Good
Neighbor Agreements, expanded insect and disease designations under the
Healthy Forest Restoration Act, and permanently reauthorized
stewardship contracting. NRCS is focusing on implementation of the
Environmental Quality Incentives Program (EQIP), Conservation
Stewardship Program (CSP), Agricultural Conservation Easement Program
(ACEP), Regional Conservation Partnership Program (RCPP), and Voluntary
Public Access and Habitat Incentive Program (VPA-HIP).
Expanded Insect and Disease Designations
The 2014 Farm Bill added authority to the Healthy Forest
Restoration Act to authorize designation of insect and disease
treatment areas and provide a categorical exclusion (CE) for insect and
disease projects on areas as large as 3,000 acres. The Forest Service
has designated approximately 52 million acres in 37 states under the
authority. Currently, 36 projects have been proposed under the
provision; the Forest Service intends to use the CE for 30 of the
projects. The Forest Service is preparing Environmental Assessments for
five projects, and an Environmental Impact Analysis Statement for the
remaining project.
Good Neighbor Agreement Authority
The Forest Service completed the requirements under the Paperwork
Reduction Act to approve the new Good Neighbor Agreement templates that
will be used to carry out projects with the states. The Forest Service
worked closely with the states to collaboratively develop the new
templates, which were approved by the Office of Management and Budget
on June 24, 2015. Since then, the agency has entered into agreements
with the states of Wisconsin, Pennsylvania, Utah, Michigan, Texas, New
Hampshire, California, Alabama, Minnesota, Wyoming and Colorado to
implement projects to carry out timber sale, hazardous fuels, habitat
improvement and other restoration projects in those states.
Stewardship Contracting
The permanent authority for stewardship contracting provided by the
farm bill is fundamentally the same as the stewardship contracting
authority the FS and BLM have implemented for more than 10 years. The
final rule to implement the permanent authority was published on
January 22, 2016.
Traditional timber sale contracts will continue to be a vital tool
for the Forest Service in accomplishing management of the National
Forests. At the same time, stewardship contracting is helping the
Forest Service achieve land and natural resource management goals by
funding forest health and restoration projects, stream restoration,
hazardous fuel removal, and recreation improvements. In many areas,
stewardship contracting will allow the agency to build larger projects,
treating more acres, with broader public support. Key accomplishments
in FY 2015 utilizing Stewardship Contracting include:
6,569 acres of forest vegetation established,
13,968 acres of wildland-urban interface (WUI) hazardous
fuels treated,
24,276 acres of non-WUI hazardous fuels treated, and
40,726 acres of terrestrial habitat enhanced.
Additionally, the farm bill required the agency develop a fire
liability provision that is available for use in all stewardship
contracts and agreements within 90 days of enactment. The fire
liability provision required by the farm bill will limit a contractor's
liability from as a result of a non-negligent fire. The fire liability
clause was published in the Federal Register on May 22, 2014 as an
interim final rule, making it immediately available for use. The final
fire liability clause was published in the Federal Register on February
12, 2016 and was effective beginning March 14, 2016.
Conservation Stewardship Program
Since CSP was authorized by the 2008 Farm Bill, the program has
become a major force for agricultural conservation, and it continues to
inspire action to enhance America's natural resources. Private or
Tribal agricultural land and non-industrial private forestland is
eligible, unless it is enrolled in the Conservation Reserve Program
(CRP), ACEP-Wetlands Reserve Easements, or the Conservation Security
Program. With the FY 2015 sign up enrollment of about 7 million acres,
the total acreage of lands now enrolled in CSP exceeds 67 million
acres, about the size of Iowa and Indiana, combined. In FY 2015, 55
percent of the 2010 contracts were renewed for another 5 year term
building on the conservation benefits gained from the initial
contracts.
The CSP Final Rule was published last week, reflecting statutory
changes to the acreage enrollment cap, stewardship levels, contract
modifications, and CRP and certain easement land eligibility. NRCS
received nearly 500 individual comments; most related to small
operations having access to the program, minimum payments, contract
rates, and stewardship thresholds.
Environmental Quality Incentives Program
Through EQIP, producers addressed their conservation needs on
nearly 10 million acres in FY 2015. EQIP provides financial and
technical assistance to agricultural producers to help plan and
implement conservation practices that address natural resource
concerns. Conservation practices are designed to improve soil, water,
plant, animal, air and related resources on private and Tribal
agricultural land, and non-industrial forestland In FY 2015, over $861
million was obligated in nearly 33,000 contracts to support this
conservation work. EQIP has been instrumental in helping communities
respond to drought as well, including $20 million in 2015 for
addressing drought related resource concerns across the West.
The EQIP Interim Rule was published in December 2014, reflecting
statutory changes to incorporate the purposes of the former Wildlife
Habitat Incentive Program and address the payment limitation and
irrigation history waiver authority, advance payments for historically
under-served producers, and preferences to certain veteran farmers and
ranchers. NRCS received over 330 individual comments; most related to
the irrigation history, confined animal feeding operations, EQIP plan
of operations, program administration, payment rates and limitations,
application selection, and funding levels for wildlife practices. The
final rule is targeted for publication in Spring 2016.
Conservation Innovation Grants
Conservation Innovation Grants (CIG) are a component of the EQIP.
These grants stimulate the development and adoption of innovative
conservation approaches and technologies, while leveraging the Federal
investment in environmental enhancement and protection in conjunction
with agricultural production. CIG is used to apply or demonstrate
previously proven technology in order to increase adoption with an
emphasis on opportunities to scale proven, emerging conservation
strategies. CIG funds projects targeting innovative on-the-ground
conservation, including pilot projects and field demonstrations. In
2015, NRCS invested $20.5 million in 45 Conservation Innovation Grants
(CIG), leveraging over $20 million in non-Federal matching funds. Many
of these projects use a systems approach to solving water quality
problems such as reducing nitrogen and phosphorus in Western Lake Erie
Basin and the Mississippi River Basin. Last week, NRCS announced the
availability of $20 million in CIG funding for 2016, with up to $2
million set aside for projects targeted to historically under-served
and veteran farmers and ranchers, beginning farmers and ranchers, and
those with limited resources.
Agricultural Conservation Easement Program
Landowners participating in the Agricultural Conservation Easement
Program (ACEP) enrolled an estimated 116,596 acres of farmland,
grasslands, and wetlands through 490 new ACEP easements (138
Agricultural Land Easements parcels, 68,895 acres and 209 Wetlands
Reserve Easement , 46,338 acres) with the $332 million in FY 2015
funding.
The ACEP Interim Rule was published in February 2015, reflecting
statutory changes to consolidate the purposes of Farm and Ranch Lands
Protection Program, Grassland Reserve Program (easement component
only), and Wetlands Reserve Program and address the certification
process for ACEP-Agricultural Land Easements; authority to subordinate,
modify, or terminate an easement; grasslands of special environmental
significance; and the agricultural land easement plan. NRCS is
currently evaluating public comments and finalizing development of
recommendations for the final rule before it proceeds in the regulatory
review process. We expect to publish the final rule this Spring.
Regional Conservation Partnership Program
The RCPP created a new platform for engaging partners and
leveraging the Federal conservation investment. RCPP promotes
coordination between NRCS and partners to deliver conservation
assistance to producers and landowners. NRCS provides assistance to
producers through partnership agreements and through program contracts
or easement agreements. Now in its second year, RCPP has demonstrated
high demand, with over 2,000 partners leading nearly 200 projects
nationwide. All told, in the first 2 years of the program, NRCS will
have invested about $500 million while another $900 million is being
brought in by partners to address locally defined, nationally
significant natural resource issues. NRCS recently announced
availability for the 2016 round of RCPP funding.
Voluntary Public Access and Habitat Incentives Program
The VPA-HIP assists states and Tribes to increase public access to
private lands for wildlife-dependent recreation, such as hunting,
fishing and hiking. In FY 2014, NRCS made $20 million available for
VPA-HIP awards and was able to fund ten of the 30 proposals received.
In February 2015, NRCS announced the availability of another $20
million for VPA-HIP projects. Project selections were announced on
August 17 and funding was used to award grants to projects in 15
states.
Mitigation Banking Program
The Mitigation Banking program provision will be implemented
directly through an announcement of program funding. On January 28th,
NRCS announced up to $9 million in funding. Applicants (states, non-
governmental organization, for-profits companies, Tribes) have 60 days,
through March 28th, to submit proposals to develop and operate wetland
mitigation banks, or to modify existing banks to better serve
agricultural producers.
In addition to the major rule changes discussed above, minor
statutory changes to Technical Service Providers; State Technical
Committees; Healthy Forests Reserve Program; Small Watershed Program;
Regional Equity; VPA-HIP, and Agricultural Management Assistance were
published in a consolidated Interim Final Rule in August 2014. The few
public comments received were addressed in the final rule published in
April 2015.
Managing Wildland Fires
Increasingly severe fire seasons are one of the greatest challenges
facing the nation's forests. Last year, a total of 68,151 fires burned
over 10.1 million acres across all ownerships in the United States. We
spent 24 days at National Preparedness Level 5--the highest level--
meaning all available ground and air assets were committed to priority
work. The Forest Service, in coordination with our fire response
partners, mobilized thousands of firefighters along with numerous
airtankers, helicopters, fire engines and other assets through our
integrated, interagency suppression efforts. Every state and Puerto
Rico, along with the military and international support, provided
people and equipment last season to respond to the severe fire
activity. Last year's fires destroyed over 4,600 structures; however,
the greatest losses involved the fatalities of 13 wildland firefighters
who made the ultimate sacrifice to protect the lives of others. The
Forest Service will continue to collaborate with its Federal, state,
local, and Tribal governments, partners, and stakeholders on the
implementation of the National Cohesive Wildland Fire Management
Strategy.
The Forest Service has one of the most effective fire organizations
in the world and continues to keep almost 98 percent of the wildfires
we fight very small. However, the few fires that do escape initial
response tend to grow much larger far more quickly than ever before. As
documented in the 2015 Rising Cost of Fire report,\1\ the cost of fire
suppression has soared in the past 20 years and is having a
debilitating impact on the Forest Service budget and non-suppression
activities of the Forest Service.
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\1\ http://www.fs.fed.us/about-agency/budget-performance/cost-fire-
operations.
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As noted in our report last year, the growth of fire from 16% of
the agency's budget to more than 52%, before transfer, in FY 2015 is
putting the agency in an untenable position. Major shifts in financial
resources and in staff capacity, with non-fire staff down 39% as a
result of the increasing costs of fire suppression, are having a real
impact on our ability to fulfill our mission of caring for the land and
serving people. It impacts the acres we can restore, the timber
projects we can plan, the trails we can maintain, the communities we
can protect, and so much more. The fire suppression cap adjustment
proposal in our budget request would prevent fire transfers and
maintain capacity for other programs.
Restoring Fire-Adapted Ecosystems
Fire plays a beneficial role in maintaining the ecological
stability of many landscapes, and the Forest Service is working with
partners to restore healthy, resilient, fire-adapted ecosystems. Our
goal, especially near homes and communities, is to prepare forests and
grasslands to resist stresses such as drought and recover from
disturbances, including wildfires. Our large-scale restoration projects
are designed in part to restore fire-adapted forest types across large
landscapes, including the reintroduction of periodic wildland fire
where safe and effective.
Developing new markets for the low-value woody materials we remove
during restoration and hazardous fuels treatments will help offset the
costs of these activities while providing new revenue streams for
private landowners and remains a top priority for the Forest Service.
We will continue to provide grants and other forms of assistance for
wood-to-energy initiatives, and to help projects compete for other
sources of funding. We will also provide technical assistance to help
facilities that convert wood to energy become or remain financially
viable.
Strengthening Rural Communities through Voluntary Conservation,
Resilient Landscapes and Recreational Opportunities
Our National Forest System presents a range of recreational
opportunities to connect people with nature in an unmatched variety of
settings and through a plethora of activities. Spending by visitors
engaging in recreation activities, including skiing, hiking, hunting,
and fishing, supports more jobs and economic output than any other
activities on the National Forest System. In 2012, outdoor recreation
on the National Forest System supported around 190,000 jobs and
contributed about $13 billion to the nation's gross domestic product.
Through work on the 193 million acres of National Forest System
lands, the timber and forest products industries, livestock producers,
and minerals/energy production collectively support about 118,000 jobs.
Each year, these industries contribute about $11.5 billion to America's
gross domestic product. In rural areas in particular, these uses
deliver sustained social and economic benefits to communities.
The Forest Service works to build thriving communities across the
nation by providing communities with the many economic benefits that
result from sustainable multiple-use management of the National Forests
and Grasslands, helping urban communities reconnect with the outdoors,
and expanding the benefits that both rural and urban residents get from
outdoor recreation. Jobs and economic benefits stem from our
administration of the National Forest System, including its multiple
uses, as well as from investments in the activities, access, and
infrastructure needed to deliver essential public services such as
clean water, electrical power, and outdoor recreational experiences.
NRCS is helping producers improve their natural resources and
strengthen their communities. The right conservation practices put in
the right places are an effective means to achieve cleaner more
abundant water for farmers, ranchers, communities, and wildlife. Using
farm bill programs through the Mississippi River Basin Initiative
(MRBI), NRCS has invested significantly in high-priority water quality
projects in the Basin delivering on the ground benefits. For example,
as a result of MRBI conservation efforts, Arkansas was able to remove
two stream segments from the State's Clean Water Act 303(d) impairment
designation. Working with partners and using farm bill tools, farmers,
ranchers and other landowners have helped remove nine more streams from
Oklahoma's 303(d) list of impaired streams in 2014. Oklahoma ranks
second in the nation for Environmental Protection Agency-recognized
water quality success stories. In the region overlying the Ogallala
Aquifer in the Central Plains, farm bill programs have allowed NRCS to
partner with farmers to install water conservation practices that
conserved an estimated 1.5 million acre-feet of groundwater over 4
years, or enough water to provide annual water needs for about 3.3
million households.
If the widespread drought has shown us anything, it is the value of
crop resilience through good soil health management systems. Using farm
bill programs, NRCS has been accelerating adoption of soil health
practices and helping producers build resilience in their production
systems. Soil health management systems help increase organic matter,
reduce soil compaction, improve nutrient storage and cycle and increase
water infiltration and water availability to plants. These benefits
lead to greater resiliency to adverse conditions but also boost yields.
For example, a national survey of farmers documented an increase in
yields of nine percent for corn following cover crops and ten percent
for soybeans after cover crops.
The StrikeForce for Rural Growth and Opportunity initiative targets
farm bill programs in persistent poverty communities to assist farmers
and ranchers in achieving economic and environmental objectives. Since
2010, NRCS and other USDA agencies have focused assistance and outreach
in over 970 counties, parishes, boroughs, and census areas, and in
Indian reservations in 26 states. In FY 2015 alone, NRCS invested $318
million in partnership with producers in high-poverty communities to
help their operations be more economically successful and
environmentally sustainable. For example, NRCS in partnership with
Tuskegee University has invested about $1 million to help nearly 40
producers in Alabama StrikeForce counties to incorporate innovative
practices on their farming operations, including retro-fits for current
irrigation systems, new wells, solar powered wells, and drip irrigation
systems that will make their operations more productive and
sustainable.
Conclusion
We are now facing some of the greatest ecological challenges in our
history: invasive species, climate change effects, regional drought and
watershed degradation, fuel buildups and severe wildfires, habitat
fragmentation and loss of open space, and devastating outbreaks of
insects and disease. In response, we are working with our public and
private partners to increase the pace and scale of ecological
restoration and promote voluntary conservation that is creating
healthy, resilient landscapes capable of sustaining and delivering
clean air and water, habitat for wildlife, opportunities for outdoor
recreation, and providing food and fiber for the world. The Forest
Service and NRCS provide the programs and services that help strengthen
agriculture, the environment, and rural economies.
The Chairman. Secretary Bonnie, thank you very much. I
appreciate it. Good concerns, all. Thanks, all three of you,
for being here this morning.
Given the Members here, we may have more than one round of
questions. I will recognize myself for 5 minutes.
Chief Weller, I am getting concerns back home. Everything
is local, as we say. I have folks that are complaining that on
certain EQIP contracts that the ranchers are being required as
a part of that to take up certain grazing practices that are
not vetted through the local decision-making process. They are
telling me that it is a top-down decision, that they no longer
have any kind of real say in what is going on with respect to
that. As a result, the number of contracts are down because
they don't want to marry up those grazing practices with what
they are trying to get done.
Can you talk to us about what has changed with respect to
your decision-making processes at the agency?
Mr. Weller. Our decision-making processes have not changed,
and we really value the local approach. I had a chance to visit
with the State Conservationist, Sal Salinas, yesterday about
this issue, and what he has then shared with me is he makes it
a requirement that at a minimum every field office has at least
one local worker meeting a year.
Most field offices have several what we call local work
group meetings with a chance to meet with local district staff,
local farm groups, individual farmers themselves, and really
understand what their priorities are for that local area, that
field office; which, in turn then, informs how that field
office in that area of Texas is then going to prioritize
assistance, whether it is for forestry, for grazing, for water
quality, water quantity issues.
With respect to the specific concerns on grazing, this is
more about a bigger picture approach that NRCS is trying to
take, and it is really trying to offer producers, both ranchers
and farmers, a systems approach to conservation.
And so my understanding in this specific case, the concerns
are a producer may sign up for what we call a facilitating
practice, like brush management, prescribed fire, fencing,
pasture replanting. And what we are offering then is part--and
it is not mandatory--but we are offering a part then as a suite
of assistance that then, including doing a planting or brush
management, you then have to offer the incentive to do proper
management of that range or pasture area.
So we would offer then a prescribed grazing plan, which
would be then, if the taxpayers are paying money to put in new
vegetation, let's help the producer then better manage that so
that you are not going to get the weeds, the brush coming back
in.
The Chairman. So the grazing practice is not mandatory, it
is voluntary?
Mr. Weller. It is voluntary, yes, sir.
The Chairman. Okay. Why do our guys think it is mandatory?
Mr. Weller. We will have to follow up with Sal and his team
to understand, to maybe help clarify this is not a mandatory
requirement.
The Chairman. Okay. Because they think it is either-or, you
either take the top-down suite of offers. So I appreciate that.
Mr. Weller. Okay.
The Chairman. Also, while I have you on the hook--again,
everything is local--the allocation for EQIP for Texas has
generally been in the range of $75 million to $90 million. This
year it is $66 million. Can you talk to us about where the
money went and what was the decision there?
Mr. Weller. Yes. Over the last several years the average,
as you pointed out, has been about $78 million, $79 million. It
has fluctuated a little around that. But the average is around
$78 million, $79 million. So the initial allocation to Texas
for EQIP financial assistance is $66 million, but this is just
the initial allocation. So those other averages are the final
allocation, what Texas ended up with at the end of the year.
Over the course of the year, what we do is we allocate
money and then we are constantly reallocating between states.
As demand fluctuates between states, there could be severe
drought, we would then reallocate from other regions of the
country where they don't have as much demand or need for EQIP.
For example, we are going to be allocating to Texas--well,
we already have an advisory allocation to Texas, an additional
$6 million. Right now they are going to now have $72 million. I
suspect by the end of the year they are going to be well above
their average.
The Chairman. Okay. So what these guys were looking at was
the average of what happened the whole year versus what started
the year----
Mr. Weller. They are comparing final versus the initial.
The Chairman. I got that. Thank you.
Mr. Bonnie, on the issue with respect to DUNS numbers and
SAM database, a lot of dustup there. We have folks that are
getting pretty staggering bills. Can you talk to us? Is that
getting fixed? Are the producers being protected from errors or
omissions that they really weren't at fault on?
Mr. Bonnie. Yes, I think the Chief can talk to this as
well, but we have put a lot of NRCS staff to work through this.
This problem came to light last summer.
The Chairman. Right.
Mr. Bonnie. And we put additional staff to try and work
through as quickly as we can. And so we are, you can imagine,
paying very close attention to this.
The Chairman. Okay. So at the end of the day, though, is
there a way to improve this deal where we don't have this
happen again inadvertently? Is there some way to improve both
those systems? Do we need them both? Because a Dun & Bradstreet
number, your internal database number----
Mr. Bonnie. Yes. I might turn to the Chief on this one.
The Chairman. Okay. Chief, what do you have?
Mr. Weller. We are taking this very seriously, and I am
personally concerned because it is honestly hurting the brand
of NRCS.
The Chairman. Right.
Mr. Weller. It is very concerning.
What this is is a requirement that was put in place. It was
the Federal Financial Management Transparency and
Accountability Act of 2006----
The Chairman. Right, right, right.
Mr. Weller.--requires a producer, an entity. If someone
files their taxes as an entity they must get both a DUNS number
and a System for Award Management number, a SAM number. The
DUNS number is a once-and-done. You get your DUNS, you don't
have to reregister again.
The SAMs, the way that GSA has set this up, is they have to
renew annually. So what happened is some folks get their DUNS,
they don't get their SAM, or they don't realize they have to
re-up every year.
We are required to have entities provide these numbers.
This is for all entities dealing with the government. We did a
review. We found a lot of producers, there was a hitch where
they either didn't get their SAM or it had expired. It is
officially, under Federal accounting rules, it is an improper
payment.
We are working really hard. We are not going to go after
the money. I am using my equitable relief authorities this
Committee provides me. I have already waived over 5,000 cases
that have been brought to me.
The Chairman. Okay.
Mr. Weller. You can rest assured, we are taking it really
seriously, dedicating staff, as the Under Secretary said. We
are going to fix this.
Going forward, we are going to try and figure out a way
this is less onerous for producers. But at the end of the day,
it is still a Federal requirement that producers have to
register these numbers.
The Chairman. Yes. None of us want improper payments if
there is a way to get at that. So if there is something you
need legislatively to smooth this out, still get what we all
want, and that is nobody getting the money they shouldn't get.
Mr. Weller. Thank you.
The Chairman. Thank you for the aggressive attitude on
using equitable relief.
Mr. Lucas, 5 minutes.
Mr. Lucas. Thank you, Mr. Chairman.
Chief, I suspect you might have a clue as to I would like
to discuss. I know my colleague, the Ranking Member, Mr.
Peterson, brought this issue up, discussing the watershed
funding programs in this year's budget proposal. And I would
like to echo his sentiments from your prior appearance before
the Committee.
The watershed programs are important, and I, like Collin,
was very disappointed to see the suggested funding level in the
President's budget for these programs. Could you comment on
that one more time, please?
Mr. Weller. There is no smaller, bigger, whatever the
saying is, supporter for this program, sir, than NRCS and
myself. As you know, I also was really proud in part to
recognize your leadership of the Watershed Rehabilitation
Program in Oklahoma. And, yes, the P.L. 83-566 program has been
historically an excellent program. It has delivered huge
results for both rural and urban America across the country.
Yes, in the 2016 budget, the President did request $200
million for the P.L. 83-566 program. In the end, as part of the
Administration's budget formulation, ultimately the 2017
budget, I wasn't part of those final decisions, but my
understanding is really the Administration took a look, and in
the 2016 budget they asked for $200 million. In the end,
Congress did not provide any funding. But it did as part of the
President's budget CHIMP or cut mandatory funding for
conservation programs that this Committee authorizes out of the
2016 budget.
In the 2017 budget, there is a decision where to put those
resources. In the end, they did not request money for P.L. 83-
566. But historically, the President did not request a dollar
of cuts from any of the Title II conservation programs in the
farm bill, which is a really bill deal.
It was, ultimately, from a budgeting standpoint, is where
is that marginal dollar better invested. And in this case,
because of all the priorities for NRCS, USDA, and the
Administration, that marginal dollar was better invested in the
Title II programs.
Mr. Lucas. We would agree, both you and I, from our
experiences, P.L. 83-566 is an important long-term investment
in preserving the resources of this country. And ultimately,
whether it is future efforts of the Administration or future
efforts in the budget process here, we have to get back on
track and continue to make those investments.
Sticking with that point, I hear lots of good things about
the Regional Conservation Partnership Program that was in the
House-passed conservation title, about how it is being
implemented and all that. One of the programs allowed, of
course, as a part of that, it authorizes the use of some of
these resources in P.L. 83-566.
So tell me, in the 2016 round of RCPP projects, only two
projects were funded that use these authorities. And my concern
is that this innovative approach is not being fully utilized
and the potential there is not being realized.
And let's visit for a moment about, is the application
process too complicated for small communities? Do the folks who
would potentially use this not understand the program? Is there
something going on at USDA? Expand for me, if you would, and if
there is something that needs to be corrected, let's talk about
that for future legislative corrections.
Mr. Weller. Well, thank you for the recommendation for
RCPP. I am personally really excited about it, and ultimately
it is achieving the vision of this Committee's leadership on
it. It has brought in thousands of new partners across the
country into the conservation arena and the conservation
mission. And so we have awarded funds to 199 projects. We,
ourselves, at NRCS, we have put in $590 million, but that in
turn has leveraged over $900 million in non-Federal
contributions, which is just monumental.
On P.L. 83-566 specifically, it is important to not just
look individually but look across multiple years and see what
is going on. In the first round, we did fund multiple P.L. 83-
566 projects. If you look at the whole suite of P.L. 83-566
projects that are now authorized, whether in Gunnison River, in
Oregon, in Washington State, in Minnesota, North Dakota, South
Dakota, in Missouri, in Arkansas, we have examples of P.L. 83-
566 projects that have been successful.
It is a very competitive program. For every dollar that
NRCS has had to invest, we had demand for seven. It is a highly
competitive program.
At NRCS, though, it is not sufficient for us to sit back
and wait to see what comes in. I expect, and the strong
expectation I have for our state leaders, is to reach out to
their local partners and really offer mentoring or an
opportunity to sit down and really talk about how RCPP can
better fit in their state or in their region, and that includes
P.L. 83-566.
I agree with you, this is a huge opportunity to show the
power and the value of our P.L. 83-566 program across the
country, and how you can take a watershed approach, you can
address water management issues, whether it is flood, too
little water, too much water, water quality, municipal water
supply, ag water supply. It is a very flexible program, very
powerful. And believe me, I want to see it be successful and
work.
We are going to be sitting down with partners to help
provide training, outreach, lessons learned from successful
applicants. But also for those folks who were not successful,
sit down with them, talk about their applications and how they
can beef them up and be more competitive in round three.
Mr. Lucas. Thank you, Chief.
Thank you, Mr. Chairman. I yield back.
The Chairman. Thank you.
Mr. Thompson, 5 minutes.
Mr. Thompson. Thank you, Mr. Chairman.
Thanks to all the folks on the panel here. It is good to
see everybody. I appreciate your work. I appreciate your
leadership.
Yesterday, I had, at the end of one of my meetings, at the
end of the day, it was really about a number of things, but
voluntary conservation, which we all take a lot of pride in
with the success we have had. I had folks, somebody from Travel
Unlimited and somebody there, one of the district managers from
our conservation districts.
Erica Tomlinson, who is a district manager up in Tioga
County, Pennsylvania, was talking about how she regularly takes
school kids out to these streams to show them what the need is.
And they have a particular place they like to go to because,
quite frankly, nothing lives there.
And so she was talking about how the last time her agenda
got blown up because when the kids showed up they came back to
her and said, ``What do you mean nothing lives in there?''
because there are all kinds of bugs and aquatic life. And so
the kids discovered the outcome before we did. But it was a
result of voluntary conservation. And I have to say that I
don't think Erica was disappointed. She was thrilled actually.
But our voluntary conservation programs, there are some out
there that like to attack those. The EPA attacks voluntary
conservation. It claims that they are not effective. Some
extreme environmental groups appear to be increasingly
skeptical of the ability of voluntary conservation programs to
help meet nutrient and sediment reduction goals.
And I believe we need to continue programs which provide
farmers with the resources they need, obviously, to work with
their states on water quality problems and natural resource
concerns. And the President's budget was very supportive of
USDA voluntary conservation programs.
Just kind of a confirmation, I guess. Do you agree the
voluntary programs are an important and an effective way to
help reduce nutrient and sediment runoff?
Mr. Bonnie. Absolutely.
Mr. Thompson. Yes. I couldn't agree more.
Actually, I want to ask a question on behalf of my Ranking
Member of the Subcommittee, who was hoping to be here, and
maybe she still will be, but she wanted to make sure this
question is asked. And I support her question as well. And this
is to Under Secretary Bonnie and Associate Chief Wagner.
There is a lot of talk about building off of the farm bill
insect and disease categorical exclusions. Where does the
implementation of those stand? And can you tell us how many
acres have been proposed for CE and how many acres have been
granted CE to this point?
Mr. Bonnie. I can tell you the number of projects. It is 34
projects. I said in my statement and I want to say 26 use CEs.
I can't give you the acreage, but I am happy to follow up and
give you the acreage.
And there is a lot more interest in using those CEs moving
forward. As I told you last September, our expectation is it
will continue to ramp up over time.
Mr. Thompson. Thank you.
Chief Weller, good to see you again. Thank you so much for
the hearing we did a couple weeks ago. You did a great job. I
appreciate your passion and your professionalism in the role
that you are in.
I want to ask about easements quickly. As NRCS develops the
final rule for the Agricultural Conservation Easement Program
for Agricultural Land Easements, the ALE program, what is NRCS
doing to ensure that well-established state programs for
farmland protection are able to be certified under the Federal
program?
Of course, in Pennsylvania, we take that pretty serious.
They are our number one industry. It is a treasure.
Pennsylvania has a long history for farmland protection,
actually longer than the Federal program. But, unfortunately,
it was not certified last year because of some onerous
requirements established from NRCS.
Mr. Weller. The ACEP generally, the Ag Conservation
Easement Program, is generally very popular. The ag land
easement component is even more popular. For every dollar that
NRCS had, there was $4 demanded. We only competitively,
nationally, we are only able to get to about \1/4\ of those
projects that were submitted to us.
But to your point, we can also do better. And rest assured,
I really take seriously, and particularly Pennsylvania, a lot
of the northeastern states, they have long, storied histories
and very successful programs, either state programs or land
trusts. We have been meeting with both departments of
agriculture and other state agencies that have land trust
responsibilities in their states, but also with land trusts
themselves, and we are really trying to understand what their
concerns are.
In the end, there are some requirements that we have that
we just have to ensure the integrity of the program, but I
still think there is a way to ensure integrity but still allow
for flexibility.
In the case of Pennsylvania, our staff, both the state
staff and our national staff, we had our national team go up to
Pennsylvania and really sit down with the state agency and just
figure out how to make the program work in the Commonwealth of
Pennsylvania to make Pennsylvania comfortable and feel assured
that this program will work, but then also to ensure at the end
of the day we can ensure the integrity of the program, meet the
purposes that this Committee requires.
We negotiated with the Commonwealth of Pennsylvania the
deed terms that was the hitch, the hangup. In the end we got to
a good place. And this includes allowing for energy
development, appropriate mineral rights recognition for
Pennsylvania, which is also very important, but still allow for
protection of the lands in the farmer viability aspects of the
program.
Nationally, we would like this to be streamlined, so we
offer it as a template. If land trusts or partners come in and
they are willing to use a template, they have a very quick path
to go, and they don't need any more work with us. They just
take the template with the deed terms and they can run with it.
If those national template deed terms don't work for them,
we absolutely will sit down and work with the partners to make
sure we can get deed terms that work for that state entity or
that local land trust partner, but that, they have to
recognize, will take a little more time, because we only have
so much bandwidth. But we are committed to making the program
work for all partners.
Mr. Thompson. Thank you.
The Chairman. Mr. Kelly, 5 minutes.
Mr. Kelly. Thank you, Mr. Chairman.
I thank all the witnesses for being here.
Under Secretary Bonnie, on endangered species, how does
NRCS and the Forest Service work with Fish and Wildlife
Services to prevent species from being listed as either
threatened or endangered? And then how do the agencies also
work with FWS once a species is listed?
Mr. Bonnie. We are in constant contact with the Fish and
Wildlife Service both at the local level, but also our
leadership teams are talking.
On the private land side, NRCS is doing a lot of proactive
work through Working Lands for Wildlife to work to keep species
off the list, in many cases. Sage-grouse is a good example of
that. There are other examples of that as well. I mentioned the
Louisiana Black Bear coming off the list.
Wetlands Reserve Program and the support from this
Committee deserve a lot of recognition for that. But there are
other species that similarly have come off the list or we have
kept off the list, the New England cottontail, the fluvial
Arctic grayling in Montana.
So there are a bunch of good stories there. And Fish and
Wildlife Service has recognized that NRCS is a real resource on
this.
One of the things we need to do in addition to providing
financial incentives is to provide regulatory assurances that
if landowners do right by the species, that they will have
certainty that they will continue to be able to farm and ranch
or practice forestry. So that is one of the pieces that is
really, really important.
On the Forest Service side, it involves our planning, our
forest planning, to ensure that we take care of species so we
can keep them off the list. And then obviously taking steps to
take care of species if they are on the list.
There are places where we have challenges like catastrophic
wildfire, where we have to be able to manage in order not only
to be able to reduce the threat of fire, but also ultimately to
be able to take care of those species as well. And there we
really have to work with the Fish and Wildlife Service closely
to ensure we can do both those things.
Mr. Kelly. Thank you.
And this is to Ms. Wagner. Clearly, the Forest Service and
state forestry agencies do not directly implement the farm
bill's conservation programs, but you do play an important role
in providing basic landowner education, outreach, and technical
assistance to help landowners implement conservation practices.
In your opinion, where are there areas for improvement, and
where can NRCS work better with the Forest Service and state
forestry agencies to implement these programs, especially in
light of the fact that forestry is still only a small component
of many of the conservation programs?
Ms. Wagner. Thank you for the question.
The chiefs of the NRCS and the Forest Service have for the
last 3 years been investing in something called the joint
chiefs projects, where private landowners and National Forests
are collaborating across boundaries and developing projects and
implementing projects that protect water quality, reduce fire
risk, improve wildlife habitat. So that is one way that we are
working together.
Also, to the farm bill, we have the good neighbor authority
where we are working closely with states. Robert mentioned the
number of agreements that we have on deck and more pending. And
that is giving us the ability to not only do work on National
Forests, but have our state partners, who have expertise and
skills, to be able to deliver more work on National Forests as
well through agreements.
Mr. Kelly. And then finally, I just have a comment. Under
Secretary Bonnie, going back to the voluntary conservation, I
also think that is very important that we have the voluntary
conservation. It works, and we need to work together and let us
know how we can help to keep EPA and some of these groups from
preventing us from doing the right thing.
Because I have found in life, when we do things voluntarily
because we want to and it makes us feel better, we all wind up
with a better product than when we are forced to do something,
especially if what we are forced to do doesn't make sense. So
thank you for your help in this matter.
Mr. Bonnie. Well, thank you. Thanks to this Committee. You
all have provided resources and direction that has been
incredibly important.
There is a conservation ethic in this country amongst
landowners that is very, very strong. And the farm bill
programs allow us to take advantage of that. And we have made
enormous progress. Wildlife, or think of the de-listing of
streams in places like Oklahoma where voluntary conservation
has improved water quality to an extent where we can take those
streams off the section 303(d) list under the Clean Water Act.
So there are a lot of examples out there. Part of our job
is to talk about that, to show those examples and to show where
endangered species have come back or we have kept species off
the list. And so we are going to continue to call those
examples out and would look for opportunities with all of you
to do that.
Mr. Kelly. And, Mr. Chairman, I yield back.
The Chairman. The gentleman yields back.
Mr. Benishek, 5 minutes.
Mr. Benishek. Thank you, Mr. Chairman.
Thanks to all of you for coming here this morning. Chief
Wagner and Under Secretary Bonnie, thanks for your efforts
after the last hearing. You have done a good job following up
on some of the questions that I had about timber contracts in
my district, and I appreciate that.
I still want to talk about some of these issues. In my
district, the Forest Service usually comes out with two issues:
harvesting the forest and access to the forest for multiple
use. We have made some good progress in Michigan with the good
neighbor authority. I was able to talk to the State Forester,
and I know they are going to be starting to do some cutting
under that authority this summer in the Ottawa. And, hopefully,
you can maybe give me your side of that. He had nothing but
good things to say about it.
I also want to talk about this accessing road issue. We
spent a lot of time with several constituents about access to
the forest on certain roads, and we have had some progress in
that regard, but we have had to spend quite a bit of time doing
it in my office, myself, my staff.
So I want to talk a little bit about the process of
interaction with the local community a little bit. How can we
change the process so that local input is a regular part of the
forest management? And what are the policies that the Forest
Service does to encourage that? I mean, do you have local
government weigh in when you change the travel plan? Do you
require public meetings? I was hoping you could touch on those
two things that I just mentioned.
Go ahead, whoever wants to take that.
Mr. Bonnie. I will start and then hand it to Mary.
We have tried to build in collaboration with local groups,
governments, stakeholders, conservation groups, industry
groups, others, into everything we do, whether it is putting
together forest projects, forest plans, or travel management.
So that is a key effort of what we do.
As you know, there are a lot of issues on the National
Forest that have been polarizing for a long time. But I would
say, we are making great progress, particularly on the forest
management and restoration side and having forest industry and
environmentalists and others work together.
And as you point out, there are similar challenges on the
access side, and we continue to promote collaborative effort.
Mary can probably get into a little bit more detail,
particularly on the travel management side.
Mr. Benishek. Go ahead, Chief Wagner.
Ms. Wagner. Thank you.
The management of transportation on National Forests is of
keen interest to constituents. It is of keen interest to the
Forest Service because we think public access is absolutely
vital to hunting, to fishing, to recreating, for the uses and
production of minerals and energy and forest products and
forage. So access is a really important issue.
We have provisions that have required us to identify a
system of designated roads, trails, and areas for motor vehicle
access, and over 93 percent of all National Forests have
completed that.
In addition, we have a provision that requires us to look
at the minimum transportation system necessary. We have a lot
of roads. We want to maintain access for all of those reasons
that I talked to, but we also want to minimize the number of
roads that we have to be right-sized with the investment and
our ability to maintain those.
So local decision-making, local involvement in that
decision-making is absolutely vital. You mentioned things like
public meetings, public notice, engaging in citizens and having
them look at maps with us. That is absolutely expected.
Mr. Benishek. Well, I know. But sometimes it seems people
complain to me that they go somewhere and the road is closed
and this is the first time they heard of it. So I am just
wondering as to what degree that actually occurs. I mean, do
you have a hearing before any road is changed, or what is the
actual practice? How can it be improved, frankly?
Ms. Wagner. It is not our intention to ever surprise
somebody by having them expect to have access. We produce a map
on an annual basis that shows the roads, trails, and areas that
are open for public use. There are times when occasionally we
will have an emergency situation, perhaps a road culvert was
washed out and a road will be closed. But those always come
with provisions to notify the public, and those always come, if
we have a need to close a road, we always expect the public
involvement process, transparent decision-making, participation
by citizens in that.
So I will take your comments and share those back with the
regional forester so she can talk with the forest supervisors.
Our expectation would be to do it just as you are saying.
Mr. Benishek. That 5 minutes sure goes fast.
The Chairman. It does. Thanks, Dan.
Ms. Lujan Grisham, 5 minutes.
Ms. Lujan Grisham. Thank you, Mr. Chairman.
Under Secretary Bonnie, I know that you are well aware, and
so is the whole Committee, that Congress, unfortunately, is a
bit gridlocked on the Forest Service wildfire budget situation.
And last year's fire season, frankly, as expected, was one of
the worst in recent memory, and that has caused, again,
disruption in the Forest Service's operations.
And then regardless of where the fires occur, states and
communities all over the countries, we feel the pain when there
is a transfer of funds from the non-fire programs to support
the immediate emergency needs of fire suppression.
During the last fire season in the Southwest region, which
includes New Mexico and Arizona, I understand that we lost more
than $15 million to fire borrowing, and as a result, several
projects in my state were put on hold that, quite frankly--and
I know I am preaching to the choir--could have been and should
be preventing at least the extreme nature of the fires and the
fire danger situation that we have in the state.
So it is clear to me that under the current funding
structure that you can't really carry out your Congressional-
mandated mission. And we need to fix the wildfire budget first
before we can really analyze and discuss what management
practices are actually going to work in order to promote
healthy and productive forests.
I know also that you are supportive of the Wildfire
Disaster Funding Act, which many on this Committee have signed
on to. And I want to thank the Administration for continuing to
push on that. And I want to thank the Chairman and the
Committee for really working through this issue to the highest
degree possible.
So given that long scenario and story, which everyone is
well aware of--I appreciate your patience with me--last year,
Secretary Vilsack sent a letter to Capitol Hill saying he would
not authorize any Forest Service wildfire budget transfers this
year. And I know that the wildfire budget is bigger this year,
but how did this decision come about, and what happens to the
Southwest and the West as fire season approaches us and we have
a terrible fire, God forbid, and the wildfire budget is
exhausted?
Mr. Bonnie. So thank you for the question. To the specific
question, this was a decision of the Secretary. As you all
know, he is frustrated with the current system. Last year, we
transferred $700 million out of non-fire programs into fire
suppression. And the Secretary and all of us recognize that we
need to treat wildfires as the disasters that they are. And so
it was his decision.
And as you alluded to, the budget last year put $600
million additional into the fire suppression account. We hope
that we don't have to run to the place where you are alluding
to. And the Secretary would say, as would I, that we came very
close last year to solving this problem. This Committee did a
lot of really good work on it and is very much appreciated.
There are two problems here we have to solve. One is the
one you point out, which is the transfer problem, which is we
get in a bad year and we have to transfer non-fire dollars to
fire dollars. Those transfers affect everything. But one of the
things they affect as well is forest restoration and
management, as you point out.
The second problem is the long-term problem, which is the
creep of the budget increasingly towards fire. I mentioned in
my opening remarks, 2 decades ago we spent 16 percent of our
budget on fire. If you take fire suppression preparedness,
hazardous fuels, and a few other smaller areas on fire, last
year we spent well north of 60 percent of our budget on fire.
And that is just unsustainable if we are going to do all the
things we need to do, forest management, research, access,
roads. There are places where we want to keep roads open----
Ms. Lujan Grisham. So what can we be doing? What are the
key compromises here? What is your advice for this Committee?
And I appreciate your response. I don't know what the answer
is, because if there is a terrible situation, I need to know
that the Secretary is going to be a bit more flexible and make
sure that we are not going to lose lives as a result of USDA
deciding not another dollar goes towards fighting a wildfire.
That seems ludicrous to me.
Mr. Bonnie. So, in terms of what we can do, we came very
close last December. We had a compromise that had forest
management provisions in it that this Committee helped work on,
and we had some compromise on the budget side as well. Our hope
was we can start where we left off in December and move that
compromise forward. I think we are very close to that. There
was broad agreement in the House, and we came close in the
Senate, and our hope is that we could move this forward this
Congress.
Ms. Lujan Grisham. Mr. Chairman, I yield. Thank you.
The Chairman. The gentlewoman yields back.
Mr. Yoho, 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman.
And I appreciate all of you being here when Congress is in
recess so that we can continue to do the people's work.
You guys, as we go through this hearing today, what I would
like for you to do is just kind of look at ways we can become
more efficient at everything we do in our departments, because
of the state of the economy. And right now there is a
discussion going on over the budget. There is a $30 billion
difference. It is a big deal. And if we can cut a little bit
out of each program and save that money for the budget, it
would be awesome.
Secretary Bonnie, you were talking about the increase in
fire budget of 16 percent. Was that a decade ago or 20 years
ago?
Mr. Bonnie. Two decades ago.
Mr. Yoho. All right. Two decades ago and now it is 60
percent of the budget. What is the difference? Why did it go up
so much? Is it a lack of fire suppression or the way you are
doing it or more National Forest owned by the government?
Mr. Bonnie. There is no question that past management has
had an impact. Last time you asked about prescribed fire. We
have taken fire out of these ecosystems for a long time, fuel
loads have built up, and we have to go back in and deal with
that.
There are two other issues, though, that are really
important. One is our fire seasons are longer. They are 78 days
longer than they used to be and we are seeing more extremes and
that is causing more catastrophic and extreme fires.
The other piece that is important is we have had a lot of
development into the wildland-urban interface. That makes
fighting fires more difficult, because instead of being able to
sit back and draw a line where we want to, we have to go do
point production, that means more people and more assets.
Mr. Yoho. Okay. Let me ask you this. What do you need as
far as authorization or funding to do more prescribed burnings?
I come from the Southeast, and we have the longleaf pines. And
they do controlled burns all the time, and they keep the
underbrush burned out. And I know out West it is a little bit
different. You have higher winds and velocities.
Can they do more controlled burnings more frequently in
smaller areas and maybe make bigger fire zones around those
areas? What are your recommendations so we could do that so we
can save the money and not have to transfer?
Mr. Bonnie. So as you point out, if we invest in this on
the front end, we will spend less money on the back end. And
one piece is this fire funding fix is actually important for us
to have the boots-on-the-ground to be able to get fire done.
The other thing I would point to is we are actually having
good conversations with EPA right now about ways to square the
Clean Air Act to make sure we have enough burning days to
invest in prescribed fire. And that is another piece that will
be important.
Mr. Yoho. Is that something we need to talk to the EPA and
just say, this is more important than what your mandate may be,
this is more serious? Because if we don't do this, we are going
to have a bigger problem.
Mr. Bonnie. That is exactly right. We are having, as I
said, very good conversations both at the national level and
local level with EPA. The last couple of rules they have done
have reflected this. I think we are making a lot of progress.
Mr. Yoho. Chief Weller, I have a comment and a question for
you. I just want to compliment one of your employees in the
Gainesville area, Russell Morgan. He came by, and he does a
great job in our district. The district people really love him,
and actually all over the state. He is out there and just
really promoting what you guys do.
With the million of acres moving into conservation
easement, at what point do we get to where we move from the
private tax revenue supporting local and regional governments
and state governments to where we get into a situation where we
go into the PILT payment systems like they do in a lot of the
western states: The way I understand it, some of those states,
80 to 90 percent of the land is owned by the Federal
Government, so their tax revenue is down.
Is there a formula that you go by, say, like, for the State
of Florida? We have real estate all over the state, but about
\1/2\ of the state is in forest products or forest or range
land. At what point do you get to where you say we can't afford
to take anymore from this state, because if we do, it is going
to start costing the Federal Government more than they bring in
in tax and the government will have to pay that?
Mr. Weller. Well, with the easements, they still are
taxable, it is just at an adjusted rate that reflects the new
rights that landowner still retains. So they are still
privately owned lands, just to be really clear.
We don't necessarily, as part of our formula, take into
account the impacts on local tax base or on what is the
saturation or expansiveness of easements in a given county or
area. Ultimately, it is a demand-driven approach, and it is at
the request of private landowners and what they want to do with
their lands. So it is a shared investment with that private
landowner.
Mr. Yoho. And then I visited south Florida in the Homestead
area, and they used to have a lot of cattle grazing on the
western part of the state. There was roughly 12,000 acres. And
when the Everglades restoration project came through there, the
cattle were told they had to leave and they tore down the
fencing. And now they have an overgrowth of the kind of grass
that grows down there, your Johnson grass, maiden grass, and
all that.
And now they need to have it mowed, but they can't find
anybody to mow it, and they are asking if people would want to
run cattle back on there. And my cattle producer says, if we
can fence it, we will. And they were told they couldn't fence
it.
How do we prevent programs like that?
And I am out of time. I will have to get back with you. I
will yield back.
The Chairman. Mr. Rouzer, 5 minutes.
Mr. Rouzer. Thank you, Mr. Chairman.
I have just a couple questions, just for my own educational
benefit here.
One topic I am very interested in is endangered species. I
can't think of really anything that probably affects what you
can and can't do more than those species that are listed and
how it impacts, whether it is beech tree nourishment or
dredging of inlets and waterways or what you can do in
California as it relates to the water, et cetera.
My question is, how does NRCS and the Forest Service work
with the Fish and Wildlife Service to prevent species from
being listed as either threatened or endangered?
Mr. Bonnie. So as I noted before, the NRCS has a Working
Lands for Wildlife program where we are working both for
species that are listed, to try and get them off, and species
that are potentially headed to the list.
One of the things that is important about endangered
species is that most of endangered species have most of their
habitat on private lands. And these species are declining
because they don't have enough habitat. The Endangered Species
Act doesn't compel any landowner to restore, and that gets to
the notion of the importance of voluntary conservation.
If we are going to get that habitat back, we have to
incentivize restoration, and so voluntary conservation becomes
very, very important. And so that requires providing assistance
to landowners so that they can understand how to square
endangered species conservation with the things they want to
do: agriculture, ranching, forestry. It requires financial
assistance, because sometimes those things are expensive.
Restoration can cost money, and so we need to help.
And then the third thing I would say is, which I alluded to
earlier, is regulatory assurances. Landowners need to know that
if they do right by endangered species, that the Fish and
Wildlife Service or a state agency or anybody else isn't going
to come later and ask them for more.
And if you can give them that assurance, landowners have
shown across the country that they are willing to step up in a
major way. And we can look at examples across the country where
we have additional endangered species habitat or where we are
keeping species off the list because of the voluntary
activities of landowners.
Mr. Rouzer. Another question I have for you deals with
litigation. I grew up in the shadow of the Cold War as a kid,
and I always thought Armageddon was going to be nuclear weapons
and missiles, et cetera. I have come to believe it is going to
be every individual is suing every other individual.
I am just curious, how has litigation affected the Forest
Service's active forest management?
Mr. Bonnie. I will start and then Mary may follow up.
Forest management on the National Forest System has not
been without controversy. We know that. But if you look back 20
or 30 years, I would argue today we are in a much better place
than we were. We have examples all over the country where
environmentalists, timber industry, local communities are
sitting down developing plans to restore forest--both, whether
it is for catastrophic fire, wildlife--to address a variety of
threats.
And I would argue, and our numbers prove it that the amount
of litigation we are seeing is going down, and in large part
because the investment in collaboration. We get people to the
table.
Now, there are still groups out there that are going to
litigate. But when you have industry and a portion of the
conservation community and local communities standing together,
not only is the litigation risk lower, but we tend to win more.
And I would argue we are actually winning more.
So it is not to say that there is a silver bullet. My
argument would be, by investing in collaboration--which you all
did as part of the farm bill when you did the insect and
disease language, that requires collaboration--that type of
approach, over the long-term, will win.
Mr. Rouzer. Thank you, Mr. Chairman. I yield back.
The Chairman. Mr. Moolenaar, 5 minutes.
Mr. Moolenaar. Thank you, Mr. Chairman.
And I also want to thank our witnesses today.
I am from Michigan's Fourth Congressional District, and we
have used the Regional Conservation Partnership Program. And in
2015, the NRCS selected the Saginaw Bay Watershed Conservation
Partnership for funding, and the project is focused
specifically on water quality challenges, including loss of
habitat, excessive nutrients, and algae blooms.
By 2019, the project aims to treat 55,000 acres with
conservation practices through the Environmental Quality
Incentives Program and restore 400 acres of wetlands through
the Agricultural Conservation Easement Program.
And Chief Weller, I know you have spent some time in
Michigan and I appreciate you being here. You just announced
final projects for the second round of the RCPP. I am just
wondering if you could share with the Committee what lessons
you have learned from the first and second rounds, and have you
seen success with the Saginaw Bay Watershed Conservation
Program?
Mr. Weller. We are learning and the partners are learning
too. If you look at the differences between the first round of
the project applications we received versus the second round,
the quality, both in terms of the focus and the definition of
what they want to achieve, the solutions those partners are
going to bring, the expansiveness of the partners, and the
contributions the partners are bringing, both cash and in-kind
assistance, have all increased significantly.
The first round, we had about a one-to-one match for
projects that we awarded. We had about 115 projects we were
able to fund had a one-to-one match. Second round we were able
to fund about 82 projects, and it was almost a one-to-two match
in terms of for every Federal dollar we are getting $2 of both
in-kind and cash contributions. The partners have expanded, and
they have been much more creative in bringing new groups into
the fold.
We also saw that folks, including in Michigan, the Traverse
City area had a project, as an example, but there were projects
around the country that were not successful first round. It is
very competitive. And there were some folks that were
frustrated.
But they didn't let up. And they came back. They sat down,
in this case with our state leadership in Michigan, but also
with the team here in Washington, D.C., and they went after it.
And they buffed up their proposals. The proposals came back
really strong. And they are now among one of the top-ranked in
the country. And so they were successful, like in Michigan and
others around the country, where they didn't give up, they came
back.
We have the third round open. I am expecting it to be even
more competitive. But, again, with the quality increasing, the
creativity and the expansiveness in the partnerships is also
increasing.
With respect to Saginaw Bay, Mr. Benishek, also last year
we had highlighted it, and one of the witnesses was from the
Saginaw Bay project and highlighted some of the concerns that
the partners have there. As I said at the outset, this is a
learning experience both for partners and for NRCS.
It is my expectation that when NRCS enters into this
agreement, it is really an agreement, a partnership agreement
between our agency and these partners. We sit down as coequals,
and there is a learning opportunity on both sides. I want to
have partners be able to really prove out their approach. A lot
of times those approaches just slip right in with what NRCS
does. Sometimes they are challenging us to look outside our box
and think a little bit creatively.
And my understanding is, with the Saginaw Bay, there has
been some additional, I will say, a little friction, maybe
misunderstandings on both sides. They are working that out.
They are starting to get work done on the ground. We may have a
little work yet to do on our side in that specific project.
But ultimately, I expect it to be successful and to really
prove out, again, how voluntary approaches for conservation,
whether in Saginaw Bay or elsewhere in the Great Lakes region,
can show that farmers cannot only produce food and fiber, but
also can protect water quality.
Mr. Moolenaar. Okay. Thank you.
And then are there any changes that Congress should make to
this program?
Mr. Weller. We are still, I would say, in the learning
phase, so at this point I won't have any technical advice or
legislative changes. But, after three rounds of this the agency
will be able to come back, and if the Committee is interested,
will be able to provide some technical assistance on tweaks
that may or may not be needed within the statute.
Mr. Moolenaar. The other question I had is, are there any
emerging technologies or technologies on the horizon that would
help with nutrient recovery kind of at the individual farm
level?
Mr. Weller. There are two sides of the nutrient equation.
It is being really precise in optimizing what you put on the
ground. And so the farmer doesn't want to waste his money and
his farm inputs, his fertilizer costs, and he wants to ensure
his yield is maxed out.
But then also, in the event that there is a rain event or
maybe they overplow one part of the field or they have some
soils where there is a lot of leaching potential, whatever the
issue may be, you try and capture those nutrients before they
leave the farm field as it leaves the farm field.
And so there are new practices. For example, we have put in
place things that are called bioreactors, which are essentially
underground tanks where you put in wood chips. They serve as a
substrate for the microbes. So you can install this, for
example, on a tile line.
So as the tile water runs through this bioreactor, the
microbes on the wood chips actually oxidize and they munch and
they eat all the nitrates and they can remove up to 80 percent
of the nitrates from the water supply. By the time that water
leaves the bioreactor and is at the end of the tile line and
enters the ditch, that water is a lot cleaner, a lot less
phosphorous and nitrogen in the water.
There are new practices like that that the NRCS has
incorporated and we are offering to producers a broader array
of tools so they can address water quality.
Mr. Moolenaar. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. All right.
Mr. LaMalfa, 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman.
I appreciate the panel for being here today.
I heard some comments a few minutes ago about a couple
issues. One, that most endangered species are found on private
land. Did you care to reiterate that?
Mr. Bonnie. Yes. So if you look at where endangered species
are found across the United States, most of the habitat is on
private lands, and it puts a----
Mr. LaMalfa. Have you looked at the map of the western half
of the country here being mostly in Federal hands?
Mr. Bonnie. Yes. There is no question there are endangered
species issues in the West, and in your district, obviously, as
well.
Mr. LaMalfa. And every time you turn around they want to
make another monument, another wilderness land, another set-
aside of some type or another that is supposedly going to
preserve something from something. Yet, my people are still
hassled to death by the Federal Government on their lands for
150 year practices of ranching, of trying to maybe convert an
open field into an orchard or something like that. And they get
six-digit fines upon them, they get their land taken away from
them, they get dragged into court, they are under stress.
How is that a success, especially if the Federal Government
is supposed to be preserving all this land for us?
Mr. Bonnie. Well, from our standpoint, obviously, through
the NRCS programs, we are trying to work cooperatively to deal
with all types of challenges.
Mr. LaMalfa. You know how uncooperative it feels to my
people in my district? You know that we had a fire in western
Siskiyou County in the fall of 2014 that they are just now
putting bids out? And maybe they can get into the forest on May
of 2016 to try and salvage a skinny four percent of the forest.
The other 96 will just be left to turn back into snags and grow
into brush and become the next tinderbox for the next round of
fire because the government can't manage its land and refuses
to do so.
How is that a success?
Mr. Bonnie. Well, we are both, as I mentioned earlier,
putting a very high priority on increasing the amount of work
we do before the fire. We have also done a lot of work to----
Mr. LaMalfa. Four percent is not going to get it done, sir.
Mr. Bonnie. I would agree with you----
Mr. LaMalfa. You talk about having partnerships with the
environmental groups that sue all the time. They are still
suing away. They are still preventing decent salvage operations
from happening. This happens in my backyard. My constituents
get to breathe this all summer every summer because the Forest
Service can't manage its land and refuses to put out the fire.
Even our locals trying to put out the fire, CAL FIRE, we
get up to that line, the Forest Service says: Oh, no, let it
burn. Then when it is time to come back and do the salvage
operations: Well, we are going to have to litigate, we might
get sued. Is this a success?
Mr. Bonnie. We work closely with CAL FIRE. I think we have
a good relationship there. On the salvage side, we did a 300
million board foot sale post-Rim Fire. One of our big problems
with salvage is the markets to actually move the material.
Mr. LaMalfa. Thankfully, you were able to get that done,
because it took every bit of resources of Forest Service from
the entire State of California, it seems, to go down there and
work only on that salvage. Meanwhile, all the green work that
needs to be done ongoing during the year was left wanting
because everybody focused just on that.
We have been working legislatively trying to keep the
Forest Service focused on its green work in the meantime and
getting timber harvest permits out legislatively. Haven't
gotten there yet.
But this is a giant success for doing nothing, because we
are still, despite the water conditions in California are going
to be susceptible to drought, we have over 12 million and
counting dead trees in California that haven't had any kind of
salvage done up around them. They are going to be the next bug
infestation. They are going to be the next tinderbox for
following years.
And I don't see nearly the speed of things needing to
happen on our forestry that is going to not have us be
vulnerable for gigantic catastrophic fires every single year
until something dramatic is done and we finally quit saying
``yes'' to environmentalists stopping everything. You guys are
going to have to start upping your budget for litigation to
fight back on them because we are suffering out here in the
West.
Mr. Bonnie. Well, I would say, as I said earlier, we are
committed to getting more work done, both on the, as you point
out, the need to do work and advance on the green side, but as
well on the salvage side.
Our biggest challenge right now is capacity, and that is
directly linked to the fire budget. And if we solve that, our
ability to be able expand the amount of work we have done will
increase.
Mr. LaMalfa. Please emphasize what you mean by capacity.
Mr. Bonnie. So we have 39 percent fewer staff on the non-
fire side of the Forest Service than we had in the late 1990s,
and that is a direct result of the increasing amount of our
budget that is taken up by fire.
Mr. LaMalfa. Well, we will help to remedy that, but it is
frustrating to hear around here all we need is more money and
more staff, because when we look at that or we look at the VA,
we look at a lot of things around here that don't get better
when you give them more money.
Mr. Chairman, I will yield back.
The Chairman. The gentleman yields back.
We have asked the panel to stay until 10:15. And who all
wants a second round? Okay. We will take 3 minutes apiece.
And we may also at the end, if we run out of time, read
your question into the record and ask for you guys to respond.
That way, we will have the question in the record. We just
won't get the answer until they come back in writing.
So, Chief Weller, Bighorn sheep and grazing rights for
domestic sheep, ARS is doing a lot of research on what is the
vector between, if there is in fact one, between Bighorn sheep
and domestic sheep. Grazing allotments are being trimmed
dramatically for domestic sheep under the guise that somehow
they are killing off the Bighorn sheep, but ARS science doesn't
support that.
Can you visit with us quickly about how you guys are using
the science from your sister organization to make decisions
with respect to grazing sheep in the West?
Mr. Weller. We do work closely with Agricultural Research
Service and their experts, for example, on range management
research, on what is the right management techniques, whether
it is stocking rates, different brush management techniques,
trying to do ecological site descriptions to enhance our
ability to run whether it is sheep or cattle in a way that
sustains grazing over the long period.
But in terms of disease risks between wildlife and
domesticated cattle or sheep, that is really outside of our
expertise and our bandwidth.
The Chairman. Exactly. So that is what ARS is for. And they
are showing that there is, so far, no direct link between
domestic sheep and respiratory diseases in Bighorn sheep. In
fact, they have had significant die-offs in the Bighorn sheep
when there is not even domestic sheep near them.
So can you at least commit to talking more with ARS and
looking at the science that they are developing with respect to
these issues when you then, on the other hand, decide on
grazing allotments for sheep? If you decide you can't do that,
can you begin to present alternatives to these long-held
grazing allotments that these sheep guys have had for a long,
long time, give them something that is an alternative to just
saying no?
Mr. Weller. I absolutely will commit to having us work with
ARS. But, to be clear, we are not responsible for grazing
allotments. We only work with producers to put in place
conservation systems, whether on their private lands or on
grazing allotments. But we are not involved with managing the
permittees.
The Chairman. Who is?
Mr. Weller. That would either be the Forest Service or the
Bureau of Land Management.
The Chairman. Oh, okay. Sorry about that.
Yes?
Mr. Bonnie. This is an important issue on the Forest
Service side and our trying to work in a collaborative way to
work with sheep producers to identify where there are
challenges but then also look for allotments where we may be
able to provide some flexibility in terms of grazing.
The Chairman. All right. The ARS does really good research,
and so if the decision is based on science, fine, but if it is
just an arbitrary no----
Mr. Bonnie. Absolutely.
The Chairman. Well, let me read one into the record real
quick. Our colleague Kristi Noem has asked: There is a
significant backlog in wetland determinations over the Prairie
Pothole Region. Can you talk to us about the latest numbers on
that backlog as well as what you are going to do to address the
backlog to get these determinations made quicker?
And, Chief Weller, I will give you a written question that
she has asked for her, if you wouldn't mind getting back to
that.
So who was next? G.T., 3 minutes.
Mr. Thompson. Thanks, Mr. Chairman.
Well, first of all, this one is just a request for
consideration. I don't need a response. For Chief Wagner, if
you could take it back to Chief Tidwell. I know that regional
foresters are looking at creating whether it is called an
assistant forest supervisor or a deputy forest supervisor on
the Allegheny National Forest. That is greatly appreciated,
given the diversity of hardwoods.
Here is my request for consideration. I don't need a
response from you. I just really would like serious
consideration. The uniqueness of those hardwoods--I would
really like to see a track that whoever fills that position has
experience managing a diverse hardwood forest. The
considerations, and I would be glad to talk to you and the
Chief offline about that more. And I have certainly made that
request to the regional forester who was in to see me. And I
appreciate it.
We recognize in terms of wildfires the issues that are out
there. We need more foresters, period, because of the
retirements, attrition. You have to have those professionals.
I appreciate your comments about forest roads. I mean, we
have decreased the access, especially under President Clinton,
dramatically in our National Forests. And that is not good for
our citizens for access, but it is not good for managing the
forests either. That is an access issue. I think the
Subcommittee is going to do a hearing on that.
Expanding CEs, we have talked about that. Expanding
collaborative work, which are all good things, and we are going
to continue to work on them.
I want to zero in, in what little bit of time I have, on
litigation and litigation costs and try to quantify it, if
possible. And if we don't have the numbers, if this is
something you could look at for me. Litigation threats do have
a cost. Just the whole delay of the implementation of the
forest plans is a big cause of this wildfire problem. And it is
not the Forest Service; it is those extreme environmental
groups that put a bullseye on your backs.
Do we know what the cost of defending those, let's just
take a 10 year period. Do we know what the cost of defending
that litigation has been to the Forest Service?
Mr. Bonnie. I don't know the answer to that. We can
certainly look into it for you and----
Mr. Thompson. Yes. We talk about litigation in
generalities. You have to get to the specifics until we can
solve this problem. So that is a number I would like.
I would like to know in just 10 years, we will be
conservative with it, what the loss of forest health has been
when our forest management plans have been tied up in
litigation and not able to be implemented. Do we have any
estimate of the loss of forest health, that asset?
Mr. Bonnie. We can certainly work on that for you too.
Mr. Thompson. Okay.
And then the final one is: What is the loss of the asset
value, specifically the timber value, either of what has been
burned--that is probably a little easier to figure out, how
much has been burned up--but also how much has been aged out?
I mean, my hardwood cherry, which is the best in the world
in the Allegheny National Forest, if you don't cut it at a
particular span, every year that goes on the value of that
decreases dramatically. That is a disservice to the American
taxpayers, who should benefit from the asset. And I would love
to get my arms wrapped around what the loss of that asset value
is, as well.
And then I am out of time, but I would love to hear from
each of you, Under Secretary, you in the past have made
comments that you don't support this. And we can talk about
this, maybe, afterwards. Do you support the provisions limiting
litigation within the expanded collaborative provisions of the
Resilient Federal Forest Act?
Because, these three costs are going to be outrageous when
we find those. And so, as long as we welcome people to the
table in a collaborative way, and we know collaboration works.
All the successes we are celebrating are based on collaborative
work. If they are welcome to the table, we need to, if they are
not going to join the table, restricting their litigation
abilities in some way is not a bad thing.
The Chairman. The gentleman's time has----
Mr. Bonnie. I do have an answer to your earlier question.
Nineteen thousand acres. You asked how much insect and disease.
I am sorry to interrupt, Mr. Chairman.
The Chairman. That is all right.
Mr. Bonnie. Nineteen thousand acres, both in the EA and the
CE side of the insect and disease. So thanks.
The Chairman. All right.
Ms. Lujan Grisham, 3 minutes.
Ms. Lujan Grisham. Oh, come on.
The Chairman. Three minutes.
Ms. Lujan Grisham. Yes, sir.
Under Secretary, I know that my dear friend and colleague
Mr. Thompson talked about the categorical exclusions and the
delay in getting it started, so I don't want to rehash that.
My understanding is that we have 26 projects. My concern is
that if we are going to have a best practice standard and we
are going to be able to provide advice and support out in the
field about such practices, then we need to speed up what we
are doing and we need to get information certainly back to the
Members of this Committee and/or stakeholders so that they have
a sense.
Can you commit today that you are going to work on that and
make sure that we are getting the data that we need?
Mr. Bonnie. Absolutely.
Ms. Lujan Grisham. Okay.
Mr. Bonnie. And one of the issues is we will have to do
learning within the Forest Service to learn how these are
working on the ground. And that is part of the role. I am happy
to work with the Committee and sharing what we are learning and
seeing out on the ground and have a conversation with you all,
as well.
Ms. Lujan Grisham. That would be great. And even we might
have our office reach out to you so that the projects that are
in the Southwest, in particular, for us to be more inclined and
aligned to work with you on the information that you have. We
could maybe make some of those visits. My staff are here in
this committee room. That would be valuable to us. And
hopefully that partnership would also put you in the best
possible position to do more in this area. And I appreciate
that you will move it up to a priority list.
Mr. Bonnie. Thank you. Absolutely.
Ms. Lujan Grisham. Thank you.
The Chairman. Ted?
Mr. Yoho. Thank you, Mr. Chairman.
And what we see here is a common element. We talk about the
16 percent, the budget on fire suppression, was 20 years ago
and it is 60 percent now. And as my colleague Mr. LaMalfa
brought in the struggle they are having up there. And you were
saying that the fight over the fire suppression, you are having
a harder time.
What I am going to ask you to do is, if there is an agency
that is blocking you, like the EPA, that is preventing you from
doing that, instead of you being the bad guy, come to this
Committee or come to Mr. Thompson's Committee and say we need
relief on this. Because if we don't do that, we are going to be
struggling with this much more down the road, and that usable
wood is not going to be used.
The other thing Mr. Thompson brought up, one of my main
questions was the cost of litigation. And I know you are going
to get that number back to him. What groups are doing these?
Are they environmental groups? Are they NGOs? And if they are
NGOs, are they getting Federal money or public money to sue the
Federal Government?
Mr. Bonnie. As I said, the amount of litigation we are
seeing has dropped. We do have some areas, particularly in
Region 1, Montana, northern Idaho, where we see it.
The bulk of the litigation, not always, is from
environmental NGOs. And they are able to get back some of their
costs through the courts for that litigation.
Mr. Yoho. Is that through the sue and settle?
Mr. Bonnie. No. It is through Access to Justice Act.
Mr. Yoho. Would you recommend that any group suing the
Federal Government should not be getting Federal funds to do
so?
Mr. Bonnie. I wouldn't recommend that. I think there are
some very good reasons for that law. It is something that the
Administration I don't think would support. But a broader
conversation with you all about the litigation challenge and
how we address that, we would welcome that.
Mr. Yoho. I yield back, Mr. Chairman. Thank you.
The Chairman. Anybody else?
Dan, 3 minutes.
Mr. Benishek. Well, thanks.
I hope that I can get a little further comment about this
Good Neighbor Authority. I know it started in Michigan. The
Michigan Forestry said that they think they can get a harvest
done by September. Is that legitimate, and would that happen?
And how is it going around the country? These pilot
programs, are you going to do more, or is it all happening now?
Just go into that a little more.
Ms. Wagner. Well, actually, since the testimony was
approved, we have actually increased the number of states who
either have a master agreement or a specific project agreement
under the Good Neighbor Authority. So 12 states, 16 different
agreements, four more states in the queue. In the Northeast,
there are four states that plan some level of timber harvest
this year under the Good Neighbor Authority.
In the Northeast part of the nation, the region has
increased its timber sale volume over 48 million board feet
since 2014----
Mr. Benishek. So they are doing that through the Good
Neighbor----
Ms. Wagner. We are working to find efficiencies across a
number of----
Mr. Benishek. I want to talk about the Good Neighbor
Authority, not the general cutting.
Ms. Wagner. No.
Mr. Benishek. This is all--so the Good Neighbor----
Ms. Wagner. Good Neighbor is quite fresh, so there is----
Mr. Benishek. Right, right. Is there an opportunity for
Tribal Governments to participate in this?
I had a Tribe asking me about this yesterday.
Ms. Wagner. Yes. Under something called the Tribal Forest
Protection Act, we would be able to work with Tribes across
boundaries. So that would be worth exploring with you.
Mr. Benishek. Okay. All right. I will yield back. Thank you
very much.
The Chairman. Well, thank you.
Secretary Bonnie and Chief Weller, Chief Wagner, thank you
for coming in this morning. I appreciate that. I know a whole
lot more time went into prepping for this hour and 15 minutes
than it lasted. And I suspect you guys prepped answers to a lot
of questions we didn't ask. That is the beauty of this thing.
We keep the questions secret and make you guys go through an
awful lot of work.
You lead agencies of vital importance to the system. You
are the face of all those thousands of folks out there who get
up every day, go to work, try to do their job, run the agencies
they do to take on the responsibility they have, and we
appreciate that.
We may have some difference of opinion from time to time,
but please don't let that morph into some sense that we don't
appreciate fully what you do. Everywhere I go, I try to avoid
telling people who I am with, particularly when I am on
vacation in the forests and other places, just to watch you
guys work, and I am rarely disappointed in what I see going on,
which, to me, means it is just everyday folks. It is not some
show you put on because a Member of Congress showed up.
So thank you for what you do. We will get the band back
together next year in a similar kind of circumstance, but maybe
a different band on that side of the table. But I want to thank
everybody.
So we will adjourn for 10 minutes. And if the Members want
to speak directly to any of the panelists, they will go to
1302, and that way, we will get the other folks in. So if you
want to speak to them directly one on one, why don't you take
that advantage and do that now.
With that, we will stand in recess for 10 minutes. Thank
you all.
[Recess.]
The Chairman. All right. We will go ahead and start with
our second panel this morning.
I would like to welcome to our witness table Ms. Alexis
Taylor, who is the Deputy Under Secretary for Farm and Foreign
Agricultural Services at USDA.
She is accompanied this morning by Mr. Val Dolcini,
Administrator of the Farm Service Agency; Suzanne Palmieri,
Associate Administrator, Foreign Agricultural Service; and
Brandon Willis, Administrator for the Risk Management Agency.
Welcome this morning. I appreciate you being here.
Ms. Taylor, the floor is yours for 5 minutes.
STATEMENT OF ALEXIS TAYLOR, DEPUTY UNDER SECRETARY, FARM AND
FOREIGN AGRICULTURAL SERVICES, U.S.
DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C.;
ACCOMPANIED BY VAL DOLCINI, J.D., ADMINISTRATOR, FARM SERVICE
AGENCY, USDA; SUZANNE PALMIERI,
ASSOCIATE ADMINISTRATOR AND GENERAL SALES
MANAGER, FOREIGN AGRICULTURAL SERVICE, USDA;
BRANDON WILLIS, ADMINISTRATOR, RISK MANAGEMENT AGENCY, USDA
Ms. Taylor. Thank you, Mr. Chairman, Members of the
Committee. It is our pleasure to be here again to provide
information on the programs and accomplishments of the Farm and
Foreign Agricultural Services.
Mr. Chairman, you introduced my colleagues who are with me
today. Thank you for the opportunity to be here.
The past 2 years have been an increasingly difficult time
for U.S. agriculture. Due to the decline in commodity prices,
net farm income has dropped by 27 percent in 2014, by 38
percent in 2015, and it is forecast to drop by three percent
this year. USDA's commodity and crop insurance programs are
providing a safety net to producers and stabilizing farm income
during this market downturn.
The 2014 Farm Bill introduced two new farm safety net
programs through FSA: the Agriculture Risk Coverage Program,
known as ARC, and the Price Loss Coverage Program, known as
PLC. We undertook an unprecedented educational and outreach
effort, resulting in over 1.7 million producers electing into
these new programs. For both 2014 and 2015, the Margin
Protection Program for dairy enrolled over \1/2\ of all U.S.
dairy operations.
FSA also provides loans to producers who are temporarily
unable to obtain other credit. In 2015, FSA provided nearly
38,000 loans, valued at a record $5.7 billion, to producers
unable to obtain commercial financing. Over 20,000 loans went
to beginning farmers in 2015, 40 percent more than in 2009.
Over 9,000 loans went to minority and women producers over that
same period, a 65 percent increase.
Since 2009, over $64 billion in crop insurance payments
have helped farmers and ranchers through these difficult times,
including $17 billion paid during the historic drought in 2012.
RMA has also been expanding its reach. For example, the
Pasture, Rangeland, and Forage Program is available in the
continental United States. Whole-farm revenue protection is
available in every county in the nation. This is a first for
the crop insurance program. And RMA now offers organic price
elections on 56 different crops, up from just four in 2011.
In addition, incentives provided in the 2014 Farm Bill made
crop insurance more affordable to beginning farmers and
ranchers due to a ten percent premium discount and a waiver of
fees. Over 13,000 producers have used these incentives and
saved over $14.5 million.
The efforts of FAS, in collaboration with the agricultural
community, have contributed to the strongest 7 years in history
for U.S. agricultural exports. These agricultural exports
support about one million jobs here at home.
Trade Promotion Authority boosted our ability to complete
the negotiations of the Trans-Pacific Partnership, or TPP,
which is a landmark agreement. When implemented, TPP, which
includes 11 Pacific Rim countries representing nearly 40
percent of the global economy, will lower tariffs and eliminate
other barriers, helping farmers, ranchers, agribusinesses, and
food companies compete in the region. Today, roughly 20 percent
of farm income comes from agricultural exports. Agreements such
as TPP hold the promise of increasing exports and, in turn,
farm incomes over the long-term.
FSA trade negotiators are also advocating on behalf of U.S.
agriculture in the Transatlantic Trade and Investment
Partnership, or T-TIP, negotiations. Exports to the European
Union, currently our fourth-largest agricultural export market,
were valued at $12.3 billion in Fiscal Year 2015. However,
European barriers have created a deficit in our agricultural
trade. T-TIP is an opportunity to address not only the market
access commitments but non-tariff barriers that we are
experiencing today.
Over numerous farm bills, Congress has refined our market
development programs. The largest is the Market Access Program,
or MAP, which benefits a wide range of U.S. commodities. The
Foreign Market Development Program, like MAP, involves work
with our cooperator partners. These programs are highly
effective. They have been found to provide $35 in economic
benefit for every $1 we spend.
Also, FAS leads USDA's efforts to help developing
countries. For example, the McGovern-Dole Program provides
technical assistance and commodities for school feeding and
child nutrition projects. It is projected that 3.4 million
women and children will be helped in 2017.
Further, we are implementing the Local and Regional
Procurement Program. We know from USDA's farm-to-school efforts
that bringing locally grown foods into schools has multiple
benefits, including added nutrition and increased incomes for
local growers. We want to expand that success internationally.
Mr. Chairman, Members of the Committee, we thank you for
the opportunity to be here today and look forward to any
questions you may have.
[The prepared statement of Ms. Taylor follows:]
Prepared Statement of Alexis Taylor, Deputy Under Secretary, Farm and
Foreign Agricultural Services, U.S. Department of Agriculture,
Washington, D.C.
Mr. Chairman and Members of the Committee, I appreciate this
opportunity to provide information on the programs and accomplishments
of the Farm and Foreign Agricultural Services (FFAS) mission area of
the U.S. Department of Agriculture. The FFAS mission area is composed
of the Farm Service Agency, the Risk Management Agency, and the Foreign
Agricultural Service. Much of our work in the past several years has
focused on implementing the Agricultural Act of 2014 (the 2014 Farm
Bill) in record time.
The Farm Service Agency (FSA)
FSA programs encompass five of the twelve titles of the 2014 Farm
Bill. The agency's primary focus is on Title I--Commodities, Title II--
Conservation, and Title V--Credit.
Commodity Programs
The 2014 Farm Bill significantly changed FSA's safety net programs.
It repealed the Direct and Counter-Cyclical Program and the Average
Crop Revenue Election program, and introduced the new Price Loss
Coverage (PLC) and Agriculture Risk Coverage (ARC) programs. In total,
approximately $5.2 billion in ARC and PLC payments were made for 2014-
crop revenue and/or yield losses to over 900,000 farms, with over 70
percent of these payments for ARC-County on corn. Producers of long
grain rice, wheat, peanuts, and soybeans were also major recipients of
ARC/PLC payments.
FSA implemented these complex programs in record time--which
included working with farmers to reallocate base acres and update
yields, plus processing program elections for over 1.7 million farms--
required an ``all hands on deck'' approach to reach producers, and
involved the hard work of dedicated FSA staff plus close collaboration
with our land-grant university and state and county extension partners.
FSA's university partners at Texas A&M, the Food and Agricultural
Policy Research Institute, the University of Illinois, and others,
developed web-based decision tools so farmers could input their own
farm data and explore multi-year scenarios associated with adopting ARC
or PLC for the length of the farm bill, as well as the intersection of
these programs with our crop insurance offerings.
Further, FSA worked with extension specialists in virtually every
state on an extensive ARC/PLC education and outreach effort. In 2014
and 2015, over 400,000 attendees participated in approximately 5,000
ARC/PLC events that provided producers with valuable information on how
to best manage risk through their ARC and PLC choices. The ARC/PLC web
tools were demonstrated at over 2,500 of these events and the tool
developers hosted ``hotlines'' for producers who needed additional
assistance. In addition, FSA mailed over five million postcards to
producers and landowners to inform them of upcoming deadlines for
important decisions, and worked closely with media partners, who
produced over 1,000 news stories on ARC/PLC.
For 2016, the timing of yield and price data postings and ARC/PLC
payments will be similar to 2015. In early March, FSA started posting
yield data that, when paired with season average price projections,
allows producers to calculate their 2015 crop ARC guarantees. Both ARC
and PLC payments depend on the 12 month market year average price, and
payment amounts for ARC-County depend on calculations for 100,000 crop/
county/practice (irrigated vs. non-irrigated) combinations. By statute,
ARC and PLC payments cannot be made until October of any given year. In
October 2016, 2015 crop year ARC/PLC payments will begin and will
continue throughout the fall and early winter, as market year average
price data for additional commodities become available.
For both calendar years 2014 and 2015, the new Margin Protection
Program for Dairy (MPP-Dairy) enrolled approximately 25,000 producers--
over \1/2\ of all U.S. dairy operations, and covers 166.3 million
pounds of milk production for calendar year 2016. MPP-Dairy offers: (1)
catastrophic coverage for an annual $100 administrative fee, and (2)
optional buy-up coverage. Catastrophic coverage provides payments when
the national dairy margin (the difference between milk prices and feed
costs) is less than $4 per hundredweight (cwt). Producers may purchase
buy-up coverage, for a premium, that provides payments when margins are
between $4 and $8 per cwt.
With relatively calm dairy markets in 2015, margins were near
historical averages and payments were made only at the highest buy-up
coverage level, with 261 dairy operations receiving modest payments.
However, if we apply 2015 MPP-Dairy enrollment and payment rules to
2009-2014 milk prices and feed costs, a time of greater margin
variability, the program would have paid out considerably more.
Specifically, if MPP-Dairy had been in place in 2009-2014, producers
would have received $2.5 billion in payments in return for the $500
million in premiums and fees that they would have paid to enroll.
Although the marketing assistance loan program was largely
unchanged by the 2014 Farm Bill, the Consolidated Appropriations Act of
2016 re-authorized commodity certificates retroactive to the 2015 crop,
which provides an additional loan repayment option for producers. FSA
implemented these certificates within 2 months of their enactment,
including retroactive provisions that benefit cotton producers back to
August 1, 2015, the start of the cotton marketing year. Producers can
purchase commodity certificates when the loan rate for a given crop
exceeds the exchange rate (i.e., the Adjusted World Price, National
Posted Price, or Posted County Price). Eligible crops include wheat,
rice, upland cotton, peanuts, feed grains, soybeans, designated minor
oilseeds, pulse crops (lentils, dry peas, large and small chickpeas),
and wool.
Disaster Assistance Programs
Immediately after 2014 Farm Bill passage, FSA focused on
implementing the livestock and tree disaster assistance programs--
including the Livestock Forage Disaster Program (LFP); the Livestock
Indemnity Program (LIP); the Emergency Assistance for Livestock, Honey
Bees, and Farm-Raised Fish (ELAP); and the Tree Assistance Program
(TAP).
Over 650,000 producers so far received more than $5.8 billion in
assistance for 2011-15 losses through LFP, providing feed assistance to
producers who suffered from long-term drought. In addition, more than
15,000 producers to date have received payments for 2011-15 losses
under LIP, which provides financial assistance to producers who incur
livestock deaths caused by blizzards and other natural disasters. ELAP
payments are capped by the 2014 Farm Bill at $20 million annually.
Hundreds of beekeepers lose hives each year many due to colony collapse
disorder, and represent more than \1/2\ of ELAP recipients. ELAP
payments have been factored to recipients in two of the three fiscal
years since FY 2012 because of the cap; the FY 2015 payment factor will
soon be available.
TAP provides assistance to orchardists and nursery tree growers to
help them replant or rehabilitate eligible trees, bushes, and vines
lost by natural disaster. Since the enactment of the 2014 Farm Bill,
approximately 650 Florida producers, the majority of whom were affected
by citrus greening, received TAP assistance totaling approximately $7.8
million. Citrus greening drops the average productive lifespan of the
tree from 50 or more years to 15 or less.
In addition, more than 25,000 producers each year benefit from the
Noninsured Crop Disaster Assistance Program (NAP), which covers 55,000
crops. This program was expanded in the 2014 Farm Bill to include
protection at higher coverage levels, similar to provisions offered
under the Federal crop insurance program. NAP continues to offer
coverage at the catastrophic level based on 50 percent of expected
production at 55 percent of the average market price for the crop.
However, producers can now obtain additional coverage levels ranging
from 50 to 65 percent of expected production, in five percent
increments, at 100 percent of the average market price for the 2014-18
crops years. In 2015, producers elected these higher levels of coverage
for over 4,000 crops. Beginning, limited resource, and other
traditionally under-served farmers are eligible for a waiver of the NAP
service fee and a 50 percent reduction in premium for additional levels
of coverage.
Conservation Reserve Program
The Conservation Reserve Program (CRP) has a 30 year track record
of providing tremendous conservation and environmental benefits. CRP
allows USDA to contract with landowners so that environmentally
sensitive land is not farmed or ranched, but instead used for
conservation benefits. In return, FSA provides participants with annual
rental payments, incentive payments, and cost-share assistance.
Contract duration is between 10 and 15 years. CRP improves water
quality, reduces soil erosion, and restores habitat for ducks,
pheasants, turkey, quail, deer, pollinators, and other wildlife. In
doing so, CRP spurs hunting, fishing, recreation, tourism, and other
economic development across rural America.
As of February, 23.7 million acres were enrolled in CRP contracts,
13.1 million acres below peak enrollment in 2007. This enrollment
figure includes 16.9 million acres under general sign-up enrollment
authority and 6.8 million acres under continuous sign-up enrollment
authority. CRP general sign-up is a competitive process conducted on a
periodic basis, while CRP continuous sign-up occurs on an on-going
basis throughout the year. CRP contracts on 1.66 million acres
(combined general and continuous) are set to expire on September 30,
2016; program payments total approximately $1.8 billion annually.
Because CRP is currently near the farm bill imposed 24 million acre
cap, any new enrollments will be limited to the number of acres
expiring each year. These limited enrollment opportunities make it
imperative that FSA enroll the most environmentally sensitive acreage
to maximize environmental benefits on a per-acre basis. We are pursuing
continuous signup options to achieve this targeting, and in FY 2015,
continuous signup enrollment reached 837,000 acres, the largest
enrollment ever.
In lieu of a general signup in FY 2015, a 1 year contract extension
was offered for general signup contracts that were not over 14 years in
length, and were set to expire on September 30, 2015. About 500,000
acres received this 1 year extension (about 58 percent of eligible
acres).
FY 2016 activities include a general signup period, plus continuous
and grasslands signups. The FY 2016 general enrollment period began on
December 1, 2015, and ended on February 26, 2016. In addition, sign-up
in CRP Grasslands--a new 2014 Farm Bill program--is on-going. The 24
million acre statutory cap is making competition under both general and
grasslands sign-up especially fierce.
We are proud of the impact that CRP has had on the rural landscape.
Since its inception in 1985, we estimate that CRP has prevented more
than 8 billion tons of soil from eroding and reduced nitrogen and
phosphorous runoff into rivers and streams by 95 percent and 85
percent, respectively, relative to similar lands that are cropped. On
average over the past 5 years, CRP has protected more than 175,000
stream miles with riparian forest and grass buffers, enough to go
around the world seven times, and since 1996, has created about 2.7
million acres of restored wetlands.
CRP also provides greenhouse gas benefits. Over the past 5 years,
CRP has sequestered an average of 46 million metric tons of
CO2 equivalent per year. This is equal to removing about
nine million cars from the road annually, and the CO2
equivalent reduction is worth $2 billion per year.
Energy
USDA recognizes that the bioeconomy has the potential to create
unprecedented growth in the rural economy, by creating opportunities
for the production, distribution and sale of biobased products and
fuels. Therefore, FSA made available $100 million in grants under the
Biofuel Infrastructure Partnership (BIP), nearly doubling the number of
fueling pumps nationwide that supply renewable fuels to American
motorists, such as E15 and E85. Twenty-one states are participating in
the BIP, with matching funds from state and private partners, providing
$210 million to strengthen the rural economy and increase the demand
for corn and agricultural commodities used in the production of
biofuels. We are also proud of our effort to partner with the
Department of Energy and Navy to create advanced drop-in biofuels that
will power both the Department of Defense and private sector
transportation throughout America. Each partner has committed over $160
million to this effort.
Farm Credit Programs
Access to credit remains a critical issue for producers, in
particular for new and beginning farmers and ranchers. In 2015, FSA
provided nearly 38,000 loans, valued at a record $5.7 billion, to over
27,500 farmers and ranchers who were temporarily unable to obtain
commercial financing. Over 20,000 loans went to beginning farmers and
ranchers in 2015, 40 percent more than in 2009. These included more
than 4,000 farm ownership loans, which enabled beginning farmers to
purchase farmland, construct or repair buildings, and make farm
infrastructure improvements. FSA also increased its assistance to
minority and women farmers and ranchers, providing these groups with
over 9,000 loans--65 percent higher than in 2009.
FSA's microloan program, which provides direct operating loans of
up to $50,000 to pay for startup expenses such as land rent, essential
tools, livestock and farm equipment, and annual expenses such as seed,
fertilizer, utilities, marketing, and distribution expenses, has
greatly improved FSA's ability to provide credit to beginning farmers
and ranchers. Since its inception in January 2013, FSA has issued over
17,000 microloans, and nearly 70 percent have gone to beginning farmers
and ranchers. And, as of January 2016, microloans are now available to
help with farm land, building purchases, and soil and water
conservation improvements.
Building on the success of collaborative efforts in 2014 and 2015
that helped producers with their ARC/PLC and MPP-Dairy decisions, FSA
is developing additional partnerships. In 2015, FSA announced the
availability of $2.5 million in cooperative agreement funding for
nonprofits and universities to facilitate program outreach to under-
served communities, including veterans, beginning farmers and ranchers,
minority producers, and organic/specialty crop producers. The first
round of proposals was submitted in late November, 2015 and awardees
will soon be announced. These 1 year cooperative agreements are focused
on increasing access to FSA programs and improving technical assistance
outreach and financial education.
The Risk Management Agency (RMA)
The Federal Crop Insurance Program is a vital risk-mitigation tool
available to our nation's agricultural producers. It provides risk
management solutions that are market driven and reflect the diversity
of the agricultural sector, including specialty crops, organic
agriculture, forage and rangeland, as well as staple row crops.
Over its history, the value of the Federal Crop Insurance Program
to American agriculture has grown. In 2015, the crop insurance program
provided coverage on more than 298 million acres of farm and ranch land
and protected over $102 billion of agricultural production. As of
February 25, 2016, indemnity payments to producers on their 2015 crops
total just over $5.6 billion on a premium volume of just under $10
billion. Our current projection for the 2016 crop year shows the value
of protection will be slightly less than $100 billion.
Program Expansion
In addition to maintaining and building upon existing programs, RMA
has also made great progress in implementing the 2014 Farm Bill. The
Supplemental Coverage Option (SCO) is now available for 58 crops and
the Actual Production History Yield Exclusion is available for 50
crops. Expansion will continue as more data becomes available. The
Stacked Income Protection Plan for Producers of Upland Cotton (STAX) is
currently available for every county that has a crop insurance policy
for cotton, and producers now have the ability to request coverage even
if it is not available in their county. Peanut Revenue Protection is
available in every county with peanut coverage, and Margin Protection
Insurance is available for wheat, corn, rice, and soybeans in select
counties. Coverage Level by Practice is now available for 52 crops.
Enterprise Unit by Practice is now available for 16 crops. RMA now
offers organic price elections on 56 different crops, up from four in
2011. In addition, in 2016 RMA will offer Whole Farm Revenue Protection
insurance in every county in the nation--a first for the crop insurance
program. All of these options provide producers more ways to tailor
crop insurance for their specific needs.
To further expand crop insurance options for all growers, Pasture,
Rangeland, and Forage is now available in every state in the
continental United States. RMA continues to engage with ranchers to
improve this policy.
In an effort to ensure that producers continue to receive premium
subsidies, RMA worked with the Natural Resources Conservation Service,
the Farm Service Agency, private partners, and commodity groups to
inform farmers and ranchers about new conservation compliance
requirements. Any farmer or rancher that was potentially out of
compliance received three letters and at least one phone call. As a
result, over 98 percent of crop insurance customers complied with the
provisions. Most of the remaining two percent are likely retired,
deceased, or operating under a different entity. RMA has implemented
several exemptions to ensure beginning farmers and ranchers, and those
who are new to USDA programs, as well as those who have formed new
entities, do not lose premium subsidy. To date, over 1,000 exemptions
have been granted.
Incentives authorized in the 2014 Farm Bill make crop insurance
more affordable for beginning farmers and ranchers by providing a ten
percent premium discount, as well as a waiver of the catastrophic and
additional coverage administrative fees. Over 13,500 producers have
taken advantage of these incentives. Beginning farmers and ranchers
have saved over $14.5 million in premiums and administrative fees
because of this program.
The farm bill included several reforms to the Federal Crop
Insurance Program; however, there remain further opportunities for
improvements and efficiencies. The President's 2017 budget includes two
proposals to reform crop insurance, which are expected to save $18
billion over 10 years. This includes reducing subsidies for revenue
insurance that insure the price at the time of harvest by ten
percentage points and reforming prevented planting coverage. These
reforms will make the program less costly to the taxpayer while still
maintaining a quality safety net for farmers.
Program Integrity
RMA has also been working on a process to reduce improper payments.
RMA has developed and received approval from the Office of Management
and Budget for a new sampling and review methodology for measuring
improper payments. Throughout the development process, RMA worked
closely with the Office of the Inspector General to address concerns
the oversight agency had with the previous methodology. The
collaborative effort has resulted in significant improvements to the
improper payment sampling methodology and review process. The new
methodology will allow RMA to more accurately estimate an improper
payment rate for the crop insurance program and identify root causes of
the improper payments. I am proud to report that the improper payment
rate for Fiscal Year 2015 is 2.2 percent, down from 5.5 percent in FY
2014. Beginning in Fiscal Year (FY) 2017, RMA will determine an
improper payment rate for each approved insurance provider in addition
to the overall program rate.
The Foreign Agricultural Service (FAS)
The Foreign Agricultural Service (FAS) is USDA's lead international
agency, linking U.S. agriculture to markets around the world to enhance
export opportunities and global food security.
The efforts of FAS employees, both in Washington and around the
globe, combined with market promotion programs authorized in the 2014
Farm Bill, and collaboration with the U.S. agricultural community, have
contributed to the strongest 7 year stretch in history for U.S.
agricultural trade. From fiscal years 2009 to 2015, U.S. agricultural
exports climbed more than 45 percent in value, totaling over $911
billion. In FY 2015, American agricultural producers achieved $139.7
billion in exports, the third highest year on record. In addition,
agricultural exports have increased in volume, demonstrating an
increasing global appetite for American-grown products. In 2014, U.S.
agricultural exports supported more than one million American jobs.
Credit for these accomplishments belongs to America's hardworking farm
and ranch families.
FAS supports U.S. producers through a network of agricultural
economists, marketing experts, negotiators, and trade specialists in
Washington, D.C. and 93 international offices covering 170 countries.
We are proud that our role in opening and maintaining markets has
resulted in billions of dollars of additional U.S. agricultural
exports. FAS also contributes to the Department's goal of enhancing
global food security. The food assistance programs, technical
assistance, and capacity building activities administered by FAS have
provided assistance that has helped millions of people worldwide. Trade
policy, trade promotion, and capacity building are the core functions
at the heart of the programs and services that FAS provides to U.S.
agriculture.
Trade Policy
FAS expands and maintains access to foreign markets for U.S.
agricultural products by removing trade barriers and enforcing U.S.
rights under existing trade agreements. Working with our sister agency,
the Animal and Plant Health Inspection Service (APHIS), we are
instrumental in resolving sanitary, phytosanitary, and technical
barriers to trade. FAS also works with foreign governments,
international organizations, and the Office of the U.S. Trade
Representative (USTR) to establish international standards and rules to
improve accountability and predictability for agricultural trade.
Congressional passage of the bipartisan Trade Promotion Authority
(TPA) bill last summer boosted the Administration's ability to complete
negotiations of the landmark Trans-Pacific Partnership (TPP) agreement.
When implemented, the TPP agreement, with eleven Pacific Rim countries
representing nearly 40 percent of global GDP, will provide new market
access for America's farmers and ranchers by lowering tariffs and
eliminating other barriers. Rural America needs the good deal laid out
in the TPP agreement. The Administration is committed to working
closely with Congress to obtain support for this historic deal so that
our businesses can sell more rural-grown and rural-made goods around
the world.
FAS trade negotiators are also advocating on behalf of U.S.
agriculture in the Transatlantic Trade and Investment Partnership (T-
TIP) negotiations. Our exports to the European Union (EU), which
currently is our fourth largest agricultural export market, were valued
at $12.3 billion in FY 2015; however, European barriers to U.S. exports
help create a deficit in our agricultural trade to that region. FAS
experts are an integral part of the T-TIP negotiating team and USDA's
economic analysis underpins the negotiating strategy on agriculture.
Our negotiators seek the elimination of all agricultural tariffs and
remain resolute in pushing back on the EU's requests for geographical
indications that do not comport with the U.S. intellectual property
system. The T-TIP is an opportunity to address not only market access
commitments, but non-tariff, sanitary and phytosanitary and technical
barrier to trade issues that impede U.S. agricultural exports.
Closer to home, another important market for U.S. agriculture is
Cuba. USDA is proposing to establish an in-country presence in Cuba to
cultivate key relationships, gain firsthand knowledge of the country's
agricultural challenges and opportunities, and develop programs for the
mutual benefit of both countries. Since Congress authorized
agricultural exports to Cuba in 2000, the United States has shipped
nearly $5 billion in agricultural and food products to Cuba. Cuba's
geographical proximity and demand for U.S. products makes it a natural
market, but as Secretary Vilsack has said ``We are now stymied by an
embargo that has certainly outlived its purpose.'' A more open and
normalized trade relationship with Cuba will benefit both countries and
help address the competitive disadvantages that U.S. agricultural
products currently face in this market. USDA's Economic Research
Service (ERS) analysis suggests that greater liberalization could lead
to higher and more diversified sales to Cuba, similar to what the
United States exports to the Dominican Republic, a country with similar
population and per capita income. U.S. agricultural exports to the
Dominican Republic averaged $1.1 billion a year between 2012 and 2014,
compared to $365 million to Cuba. Moreover, the United States exports a
broad range of agricultural products--beef, turkey, breakfast cereals,
and fresh apples--to the Dominican Republic that Cuba does not
currently import in sizable amounts.
Trade Promotion
Over numerous farm bills, Congress has authorized and refined an
effective combination of agricultural market development and export
credit guarantee programs. These programs that are designed to develop
markets, facilitate financing of overseas sales, and resolve market
access barriers dovetail with the FAS mission. We must open, expand,
and maintain access to foreign markets, where 95 percent of the world's
consumers live. FAS partners with a broad spectrum of cooperator groups
representing the U.S. food and agricultural industry and manages a
toolkit of market development programs to help U.S. exporters develop
and maintain markets for hundreds of products.
The largest market development program operated by FAS is the
Market Access Program (MAP). Through MAP, FAS partners with nonprofit
U.S. agricultural trade organizations, U.S. agricultural cooperatives,
nonprofit State Regional Trade Groups, and small-scale U.S. commercial
entities to share the costs of overseas marketing and promotional
activities, such as consumer promotions, market research, and trade
show participation. The 2014 Farm Bill makes available $200 million of
CCC funds annually for MAP. That amount is matched with industry
contributions to aid in the creation, expansion, and maintenance of
foreign markets for hundreds of U.S. agricultural products. A range of
U.S. commodities from Texas beef and cotton, to Minnesota pork and
soybeans, to California grapes and almonds, and apples and pears from
the Pacific Northwest, all benefit from MAP. In FY 2016, MAP is
providing funding to 62 U.S. agricultural trade associations, state
regional trade groups, and agricultural cooperatives.
The Foreign Market Development Program (FMD) is another FAS-
administered market development program reauthorized by Congress in the
2014 Farm Bill. FMD is a cost-share program that aids in the creation,
expansion, and maintenance of long-term export markets for U.S.
agricultural products. The 2014 Farm Bill makes available $34.5 million
of CCC funds annually for FMD. The program fosters a market development
partnership between FAS and U.S. agricultural producers and processors
who are represented by nonprofit commodity or trade associations known
as Cooperators. Under this partnership, FAS and each Cooperator pool
their technical and financial resources to conduct overseas market
development activities. FMD-funded projects generally address long-term
opportunities to reduce foreign import constraints or expand export
growth opportunities. For example, FMD-supported projects include
efforts to reduce infrastructural or historical market impediments,
improve processing capabilities, modify codes and standards, or
identify new markets or new uses for the agricultural commodity or
product. In FY 2016, FMD is providing funding to 23 U.S. agricultural
trade associations.
Working with our agricultural cooperator partners, our MAP and FMD
programs have been shown to be highly effective. An independent study
released in 2010 by IHS Global Insight, Inc. found that trade promotion
programs like MAP and FMD provide $35 in economic benefits for every
dollar spent by government and industry on market development. FAS
contracted with an independent company to update the cost-benefit
analysis of these programs. Results of this study are expected in the
spring of 2016.
Building Capacity and Food Security
FAS leads USDA's efforts to help developing countries increase food
security, improve their agricultural systems, and build their trade
capacity. FAS's non-emergency food aid programs help meet recipients'
nutritional needs and also support agricultural development and
education.
The McGovern-Dole International Food for Education and Child
Nutrition Program (McGovern-Dole) provides agricultural commodities and
technical assistance for school feeding and maternal and child
nutrition projects in low-income, food-deficit countries committed to
universal education. The program is projected to assist 3.4 million
women and children worldwide in 2017.
Congress identified fostering local self-sufficiency and ensuring
the longevity of programs in recipient countries as one of the
priorities for awarding McGovern-Dole grants. FAS and its partner
organizations work to ensure that the communities served by McGovern-
Dole can ultimately continue the sponsored activities on their own or
with support from other sources such as the host government or local
community. By procuring local foods such as fruits and vegetables, FAS
will be able to offer more nutritionally rich meals and boost local
farmer incomes, which will in turn build community support for our
McGovern-Dole programs.
Building community support enhances long-term success and increases
the probability that local governments take over school feeding
programs. For example, in Bangladesh, FAS is witnessing success in
obtaining local support and sustainability. The Government of
Bangladesh pledged that from 2015 onward it will spend $49 million
annually for school feeding programs in poor areas. By 2017, the
Government of Bangladesh will manage school feeding in 50 percent of
the schools currently receiving food under McGovern-Dole.
Since Congress established the Food for Progress (FFPr) program in
1985, it has been a cornerstone of USDA's efforts to support
sustainable agricultural production in developing nations that are
committed to free enterprise in the agriculture sector. Under FFPr,
proceeds from the sale of donated U.S. agricultural commodities are
used to fund projects that improve agricultural market systems and
trade capacity. More than 263,000 metric tons of U.S.-produced
commodities will be donated this fiscal year. In FY 2015, FAS awarded
nine agreements that covered six countries in Latin America, Sub-
Saharan Africa, and the Middle East. The recipients involve six
private, voluntary organizations and three government (Mali, Honduras
and Jordan), and range in activities from building governments'
capacity to improving agriculture productivity, and increasing rural
communities' access to credit. In FY 2016, USDA selected Angola,
Bangladesh, Burkina Faso, Guatemala, Haiti, Malawi, Mozambique,
Pakistan, the region of Liberia and Cote d'Ivoire, and the region of
Senegal, The Gambia, and Guinea Bissau as priority countries and
regions. Currently, FAS oversees $814.6 million in programming in 57
countries that were funded in 2011-2015.
We also have the ability to respond to requests by governments with
FFPr. Last May, Secretary Vilsack traveled to Jordan for the signing of
a Food for Progress agreement to provide 100,000 metric tons of U.S.
wheat, valued at approximately $25 million, to the Government of
Jordan. As one of our most steadfast partners in the Middle East, the
Government of Jordan will be able to access the expertise of USDA to
improve its agricultural productivity and therefore relieve some of the
economic burden that it is currently facing. Proceeds from the sale of
the commodities will improve the country's agricultural productivity
and security through water conservation (over 20 percent of Jordanians
are water insecure).
As authorized in the 2014 Farm Bill, we are continuing to implement
the Local and Regional Procurement (LRP) program. We are working to
finalize a new LRP rule and begin FY 2016 programming. We know from
USDA's ``Farm to School'' efforts that bringing locally grown foods
into the schools has multiple benefits--including added nutrition,
improved science skills, and increased incomes for local growers. We
want to expand this success to our international school feeding
programs. The FY 2017 LRP program will focus on improving supply chains
and procuring supplementary food for school meals in McGovern-Dole
programs.
The Chairman. Well, I thank you, Ms. Taylor. I appreciate
that.
I will start, 5 minutes.
Mr. Willis, let me brag on you a bit or let you brag on
yourself. Improper payments at your agency have dropped from
5.58 percent in 2014 to 2.2 percent in 2015. Thank you for
that.
Can you talk to us about the steps you have taken at the
agency to make that positive improvement, I guess that is
redundant, that improvement happen?
Mr. Willis. Certainly.
First, I want to acknowledge the Committee. And the last
farm bill provided some focus and resources to help us make
some of these improvements, and I want to acknowledge that
first and foremost.
Crop insurance is----
The Chairman. I don't know if I would do that because Mr.
Lucas is with us this morning and his head gets----
Mr. Willis. Thank you.
The Crop Insurance Program is a well-run program, and the
improper payment rate that is \1/2\ the national average
demonstrates that. We started a few years ago, actually,
focusing on this, trying to look at ways to more accurately
measure improper payments, and then find ways over the long run
to see a reduction.
We are, I would say, just part of the way through. We are
continuing to take more steps in the future to continue to
demonstrate this program is something that both farmers and
taxpayers can defend and feel good about.
The Chairman. All right.
Well, let me go the other way and talk to you about
enterprise units and the struggle we have there. Can you update
us, update the Committee?
We thought the farm bill allowed producers to elect
enterprise units at their choice. That doesn't seem to be how
you guys implemented it. Can you walk me through some of that,
where we currently stand?
Mr. Willis. Yes. That issue, obviously, is a little
difficult issue. From the beginning when we have implemented
the farm bill, we have made a sincere effort to try to
implement it in a way that used common sense, used an approach
that farmers would appreciate and understand. I had a farmer
from the State of Texas in earlier this week, a peanut
producer, and that producer specifically brought up this issue
and asked about it.
For us, it goes back to the fact that we do believe we
implemented the statute based upon the language within it. We
did look at the report language for guidance. We are at the
point where we don't know what else to do at this point in
time, but we do understand there are some people who wish we
had done that differently.
The Chairman. Okay.
And then let me ask about the ARC county payments. We have
this anomaly throughout the system where folks on one side of a
county line get a full payment, folks in the other country next
to it get nothing.
Can you walk us through how that is working and talk to the
Committee about what we can do in the next farm bill to address
some of those things? I don't think that was an intended
consequence.
Ms. Taylor. Mr. Chairman, if I could take that question.
The Chairman. Sure.
Ms. Taylor. First and foremost, the ARC County Program or
just the new PLC and ARC Programs are fundamentally different
than direct payments from the last farm bill. So, part of it is
a mentality shift. It certainly was in Congress but also for
farmers out there in the countryside.
We developed producer-provided solid data sets in a cascade
to ensure that the data that we use, first, protected producer
information but then also, second, ensured that we had solid
data sets, whether it was NASS county or RMA county. These were
provided by the farmers.
It is a county-based program, so one of the things that we
are seeing was intentional or part of how Congress structured
this, that counties are going to vary. There are different
variabilities in those counties on producer yields, it is a big
impact in our county.
So I would say we have signed up 1.7 million producers, and
for the 2014 crop year, we paid $5.2 billion in safety net to
those producers. I think that is a strong safety net. I think
it is working. But inherently in the way a county program is
structured means counties are going to have different payment
factors in them.
The Chairman. All right. Well, thank you.
Ms. Taylor, let me ask about this. One of the arguments on
food aid is that high commodity prices have reduced the amount
of food that was able to be bought. Commodity prices now have
dropped considerably. Have we seen an incremental increase in
the amount that you have been able to buy with food aid, given
those lower commodity prices? What is happening?
Ms. Taylor. Yes, Mr. Chairman. Certainly there is a
correlation there.
The Chairman. But it works both ways, right? When prices
are high, you are buying less. But now that prices are low, are
you demonstrating that you are buying more?
Ms. Taylor. Yes, Mr. Chairman. As you said, there is a
correlation between commodity prices and the amount of tons
that we could ship of various foods. We do expect to see this
year an uptick on some of the tonnage of commodities that we
can buy due to lower commodity prices.
The Chairman. All right.
Mr. Lucas, 5 minutes.
Mr. Lucas. Thank you, Mr. Chairman.
Administrator Dolcini, there is currently a push by
commercial lending institutions to increase the authorized loan
level for FSA-guaranteed loans to $2.5 million. Are you
familiar with this proposal? And if so, do you have a position
or any observations on such an idea?
Mr. Dolcini. Well, my observations are these, sir. There is
certainly more demand today for our farm loan products at the
Farm Service Agency all across the country as we are seeing a
softening in the farm economy and in the decline in commodity
prices, certainly in your district in west Texas. Elsewhere in
the nation we are seeing that.
We have been in touch and have had meetings with the Farm
Credit Council, with the American Bankers Association, and
other interested members of industry who are wanting to talk a
little bit about what it would mean for us to increase our loan
limits.
The guaranteed program has annual increases of incremental
amounts. The direct loan program does not have those. Those
require statutory changes. We would be happy to work with
Members of this Committee or your teams to develop some
thoughts around technical issues associated with that.
But one potential ramification of increasing the loan
limits is that we will make fewer and larger loans, thereby,
the pool won't be available to as many American farmers and
ranchers as it is today.
Mr. Lucas. Do you have any idea off the top of your head
how many of these guarantees we are talking about now that are
in place?
Mr. Dolcini. I am going to have to get back to you, sir. I
don't want to give you incorrect information.
Mr. Lucas. That is just fine, Administrator.
To shift subjects on you for just a moment, I want to thank
you and your staff for the work on helping U.S. peanut
producers who were impacted by the Clint Williams Company
bankruptcy last year, something that essentially had not
happened in that fashion before, put a huge number of producers
in a terrible stress, and now has been resolved to the best
that the Department can do. I am very much appreciative.
I just kind of would like to note for the record and to my
colleagues that there has been the impression somehow in some
places that, by addressing the producers at the $355 per ton-
loan rate, that that basically has made producers totally
whole. Just for the benefit of my colleagues here, many of
those producers had contracts at $625 a ton.
Mr. Dolcini. That is right.
Mr. Lucas. So while USDA fulfilled its obligations 100
percent, through a very complicated fashion--and I very much
appreciate that, and they do too--it is just worth noting that
those producers weren't made totally whole, because they had
contracts for $625 and they are taking a $270 a ton haircut.
Just an observation for everyone.
That said, though, thank you for the Department's moving so
swiftly. Because there were a number of good people who had
been very good managers for sometimes generations who were
caught in a horrible bind, who were on the verge of being torn
limb from limb. So just to note that.
And if there is anything in the future that we can do to
help address your ability to meet those kind of challenges,
certainly we will need to talk about that before the 2018 Farm
Bill.
Mr. Willis. Well, we certainly appreciate those
compliments, Congressman Lucas, and I will make sure to pass
them along to those that were involved. It was a creative
approach taken by the Department, and by the agency. And we
worked closely with industry and growers, Congress and others
to make sure that folks had an opportunity to provide input to
the process. I think that it worked reasonably well.
Mr. Lucas. You bet. And that $355 a ton was critically
important to producers matching the loan rate. But in the eyes
of some of our media friends, that wasn't making everybody
whole. That was doing everything we could to help them,
appropriately, within the law, but they still took a big
economic haircut over what happened at that company with that
company's bankruptcy that impacted them.
And, with that, Mr. Chairman, I yield back.
The Chairman. Mr. Thompson, 5 minutes.
Mr. Thompson. Thank you, Mr. Chairman.
Thanks to all of you for your leadership and your service.
It is greatly appreciated.
Administrator ``Dolcini''?
Mr. Dolcini. ``Dolcini.''
Mr. Thompson. ``Dolcini.'' Sorry about that. I hate messing
people's names up. It is the only thing we come in and out of
this world with, is our name.
Mr. Dolcini. I am used to it, sir. It happens all the time.
Mr. Thompson. I want to zero in on energy. And the intent
of the Biomass Crop Assistance Program, BCAP, is to provide
financial assistance to producers to establish dedicated energy
crops. To date, how many acres of dedicated energy crops have
been created from the program? And how much has been spent
through the BCAP to date?
Mr. Dolcini. Sir, I am sorry, I don't have those at my
fingertips, but I can certainly provide them later this
morning, in fact, to you and the Committee.
Mr. Thompson. Okay.
Mr. Dolcini. It has been a successful program thus far, and
USDA has invested in both project areas which encouraged the
cultivation of energy crops as well as in parts of the western
U.S., for example, where forest residue, ag residue/other
materials are removed from the forest and brought to biomass
conversion facilities.
Mr. Thompson. Yes. It is part of the solution. We were just
previously talking about forest health with the Deputy of the
Forest Service and the Under Secretary and creating that market
demand. Excellent.
I want to talk a little bit about trade. Specifically, can
you speak to expected outcomes for American agriculture in the
TPP negotiations? I know some ag groups are very strongly in
favor of TPP, but others, such as tobacco and rice, have
lingering concerns and outright opposition. Is there anything
that can be done by USDA to help address those in agriculture
who wanted more out of what is being proposed at this point?
Ms. Taylor. Congressman, I appreciate that question. As you
mentioned, we have strong support across almost all of the
agriculture community around TPP. It is a game changer as far
as trade agreements go for U.S. agriculture. The Farm Bureau
recently came out with a study and found that it will boost net
farm income by $4.4 billion. That number, to me, shows that
U.S. agriculture can't wait for this agreement to be passed and
to start being implemented.
We are seeing our competitors, with the strength of the
U.S. dollar, we are seeing them gain market share today in some
of our key markets, Japan, Vietnam, and really outcompete
because of whether preferential trade agreements or their
currency is weaker. And so TPP is vital to leveling that
playing field and making sure U.S. products are competitive.
One tool that we have at USDA and we use quite effectively
with the private-sector is our market development programs,
thanks in large part to Congress, to this Committee, for their
strong support. Those are highly effective dollars that we
leverage. As I mentioned in my opening statement, what we find
is for every $1 that industry puts in or the U.S. Government
puts in, we are seeing a $35 return on investment, meaning we
are selling $35 worth of U.S. agricultural products in those
markets.
And so we are working to partner with our various
stakeholders on ensuring those dollars are leveraged in a
diversity of marketplaces. But, also, a lot of them are looking
for the coming years, when TPP will be implemented, on how they
can effectively target those marketplaces and ensure we are in
there and promoting U.S. goods and ensuring that those
customers in Vietnam, Malaysia, some of these markets are
developing a taste for U.S. products.
Mr. Thompson. There is a lot of antitrade rhetoric right
now in politics, which I find most of it under- or uninformed
about the value of trade and about how much that we make here
or grow here and we sell there, sell overseas, and what that
means.
And my understanding is, I want to get your opinion on
this, in the recession we went through, which was pretty
significant, that, of all the industries, the agriculture
industry was somewhat resilient to that downturn, that economic
downturn that cost so many jobs, devastated so many industries.
And my understanding, a part of that was just how robust our
trade has been.
Now, maybe other areas of trade have not been negotiated
well in the past, and we are doing a better job of setting the
rules, and Congress driving that. Your opinion in terms of was
trade helpful in providing resiliency in the agriculture
industry in the most recent recession?
Ms. Taylor. Absolutely, Congressman. What we find is about
20 percent of farm income is directly tied to U.S. agricultural
exports. So opening new markets is key to keeping the ag
economy strong.
We also find it is not just about the benefit to farmers
and ranchers. What we have also found is, for every $1 of
exports, it stimulates another $1.27 in business activity. And
I am sure you all represent rural districts, you see this. If a
farmer has a dollar, they are looking to upgrade their
facilities, invest in better technology. And that is what we
see. The numbers support that.
Mr. Thompson. Yes, farmers aren't going to save the money;
they will spend it.
Ms. Taylor. I grew up on a farm, Congressman. I saw this
firsthand from my dad.
Mr. Thompson. Okay.
Thank you, Mr. Chairman.
The Chairman. Mr. Kelly, 5 minutes.
Mr. Kelly. Ms. Palmieri, just to follow up kind of on Mr.
Thompson's question, what are your expected outcomes from T-
TIP?
Ms. Taylor. Congressman, if I could actually take that?
I think there is a lot of opportunity here in T-TIP. As you
look at the U.S. and the EU, it makes a lot of sense. There are
a lot of geopolitical reasons why we decided to negotiate this,
but there are also a lot of economic reasons, that together we
represent about 50 percent of the world's economy, and it kind
of makes people scratch their heads to think about why we
haven't had one. Even without a trade agreement, they are still
our fourth-largest trading partner.
But there are a lot of challenges. We have some different
philosophies on how we regulate. We have a risk-based, science-
based, internationally recognized kind of rules of the road on
how we regulate for various food safety or non-tariff barriers
and measures. And so there is a lot of opportunity here, but it
is not without challenges as well.
Mr. Kelly. Thank you.
And, Administrator Dolcini, what kind of concerns are you
hearing from FSA offices in the Cotton Belt?
Mr. Dolcini. Well, we are hearing quite a number. I don't
know if the Deputy Under Secretary wants to provide a broader
cotton answer, sir, but I can tell you that the offices that I
oversee in the Cotton Belt are working with farmers today on
restructuring loans, servicing loans, providing additional
financial assistance where it is appropriate.
We are also in conversation with the industry here in
Washington, and perhaps the Deputy Under Secretary can provide
a little bit more detail there.
Mr. Kelly. Please.
Ms. Taylor. Yes. Thank you for that opportunity,
Congressman.
I actually had a couple cotton farmers from Texas in my
office just on Wednesday talking about what they are seeing and
what the impacts of the current market conditions around cotton
are, how they are affecting them. There was a new and young
farmer there, as well, and he talked about what the impact,
what he is seeing on a cash flow side and really the strain of
how the current market conditions are impacting them.
We are certainly in close contact. I know the Secretary was
up here talking about the assistance that we are looking at
providing. We have had active conversations in the government
but then also within the cotton industry. And we will certainly
keep this Committee apprised as those go forward on what a
program that could assist cotton farmers may look like.
Mr. Kelly. And just for the panel, anything you can do to
help our cotton. Once that infrastructure goes away, more than
any other crop, it goes away and it is difficult to rebuild,
and we lose cotton for a long time, or it is much more
expensive to get back in.
And the second thing is never underestimate its impact on
other crops, because when cotton is not profitable, they start
growing another crop, which depresses the prices there.
So I would just ask that you keep that in mind with all
your solutions and understand that urgency is key here to make
sure that we do whatever we need to do quickly.
And kind of as a follow-up on credit, and this is for Mr.
Dolcini on this one, but what can be done to educate young and
beginning producers in order for them to better understand the
credit opportunities available to them? Because, as you know,
we have an aging farm population who are farming, and we need
to get new and younger farmers engaged for the long-term.
Mr. Dolcini. Well, that is a great question, sir. And we
have done a lot of work throughout the Department but really at
the Farm Service Agency, as we are the Department's primary
lender, to educate new and beginning farmers, returning
veterans, women farmers, farmers of color, disadvantaged
farmers, others that have not been able to avail themselves of
FSA credit in the past.
And what we are seeing just this year is that there is a 20
percent greater increase on our loan tools around the country
and a 40 percent increase year over year on our microloan,
which has been the best tool for new and beginning farmers. We
have made 18,000 of these microloans since the program started
in 2013, 70 percent of which went to new and beginning farmers,
50 percent of which went to first-time FSA customers.
So we are able to bring new folks into the offices through
greater outreach in all of our field offices. We have nearly
2,200 offices around the nation, and they are all really
selling the idea of working more closely with beginning farmers
and ranchers.
We have a great new service called Bridges to Opportunity,
which will allow FSA offices to act as information gateways not
only for our credit programs, not only for our farm programs,
but for programs that other agencies, whether it is RMA or NRCS
or Rural Development, offers.
So we are really trying to offer a full suite of services
to new and beginning farmers around the country, and I think
that the metrics bear that out. We have had a lot of success so
far. We are going to keep at it.
Mr. Kelly. Thank you.
And that was my next question. But, overall, how are the
microloans performing?
Mr. Dolcini. It is the workhorse of our farm loan
portfolio. It is really one of the best things we have done at
the Farm Service Agency in the last few years.
Mr. Kelly. Thank you, Mr. Chairman. I yield back.
The Chairman. The gentleman yields back.
Mr. Benishek.
Mr. Benishek. Thank you, Mr. Chairman.
Thank you all for being here this morning.
Could you weigh in on this U.S.-Canada Softwood Lumber
Trade Agreement?
Apparently, there is a trade agreement with Canada that has
expired concerning soft lumber. The Canadians subsidize their
timber industry much more than we do, and it has affected
prices in my district and around the country.
So is there any movement on renegotiating that? Or is a
deal in the works? Or what is happening with that?
Ms. Taylor. Congressman, I am going to have to--I don't
know the latest. So if I could go back, consult with my
colleagues, also consult with the U.S. Trade Representative's
office, we can follow up with you on that.
Mr. Benishek. Yes, well, it is an important issue across
the country. The timber producers always complain about the
Canadians bringing in a lot of timber. So I would appreciate a
brisk, early followup.
And the other question that I have concerns this T-TIP
stuff too. It seems to me there have been some difficulties
dealing with this. And you mentioned a little bit about the
non-tariff issues. And apparently there is some kind of a
pesticide issue in the EU that is different from the way the
rest of the world deals with, and is this an impediment to our
shipping commodities into Europe?
Ms. Taylor. At the end of last year, we were coming up to
an issue with a lot of the tree nuts and some specialty crops
on the level of a certain pesticide that we use and the
tolerance level. We actually worked on the tree-nut side quite
closely with the European counterparts to kind of extend a
temporary MRL until they could----
Mr. Benishek. What is an MRL?
Ms. Taylor. Minimum residue level. Sorry, sir. To extend
that temporary minimum residue level of the certain pesticide
for another year----
Mr. Benishek. So is this a part of the T-TIP thing, then,
or what?
Ms. Taylor. It is on the margins of T-TIP. We are each
working on various issues. They are not part of the actual
negotiating itself. But, we need to continue to build momentum
on both on sides on priority issues for both us and Europe.
Mr. Benishek. Well, there is some question in my mind about
the coordination of these international deals here. The
Agricultural Marketing Service, that is something different
than you, then, right? So, then, are you guys coordinating in
what you are doing in these negotiations? I don't understand
how this works. Are you both doing the same thing? Or how does
that work exactly? Is there communication?
Ms. Taylor. Congressman, we actually work quite closely as
an interagency. The Foreign Agriculture Service oversees and
coordinates the entire department's international activities.
So that means on food safety we work quite closely with the
Food Safety Inspection Service, with APHIS, with the
Agricultural Marketing Service.
And so not just within trade agreements but bilateral when
a trade issue comes up, we are constantly pulling the team
together and ensuring that what we do and agree to, that all
the agencies within USDA, that it will work for them.
Mr. Benishek. So there are how many different agencies are
working on this all together? How many people do they have to
pull together to make something actually happen?
Ms. Taylor. It depends on the issue, honestly, Congressman.
It is an export issue for, say, meat, it would be FAS and FSIS,
the Food Safety Inspection Service, work quite closely. On
high-path avian influenza, we work quite closely with our
colleagues in APHIS. And so it depends on the issue.
Mr. Benishek. All right.
Thank you, Mr. Chairman. I will yield back.
The Chairman. The gentleman yields back.
Mr. Yoho, 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman.
Thank you all for being here.
Secretary Taylor, you were talking about TPP. And were we
negotiating with, like, Japan, like Australia did with their
beef? Because with Australia, their beef exports went up eight
percent, and ours decreased three percent. Are we waiting on
this comprehensive TPP instead of just negotiating a bilateral
agreement like Australia did?
Ms. Taylor. We have long had a target on Japan as a market.
They are a priority market, they are one of our top markets,
even with very high tariffs. But we did negotiate an agreement
in a multilateral sense with----
Mr. Yoho. So we are waiting on TPP instead of just----
Ms. Taylor. We don't have bilateral negotiations because
of----
Mr. Yoho. Is there a reason we didn't do that? Because
Australia was ahead of the curve, and they did a good thing for
their country, and we went down.
Ms. Taylor. Well, TPP really gave us more leverage in
getting better market access packages. We are getting the beef
tariff to single digits. That is the first time Japan has ever
done that. Japan did not agree to that in a bilateral sense
with Australia.
Mr. Yoho. Right.
Ms. Taylor. And so we had better leverage within TPP than
we would in a bilateral sense.
Mr. Yoho. Let me ask you about, along with TPP, neonics is
the pesticide I would assume you are talking in the EU that
they are kind of putting their minimum standards on the levels.
Is that based on science, or is that driven by populism and the
environmentalists?
Because if you look at Canada, they have over 50 million
acres that are sprayed on their canola fields with neonics, and
they haven't seen a decline in their bee colonies or the honey
production. In fact, they have gone up. And I just want to hear
your opinion on that.
Ms. Taylor. Congressman, actually, the specific pesticide
was Fosetyl-Al that I was taking about. I will say this: On the
driven-by-science side, they have a food safety commission or
committee that reviews all the science of these. And what we
find oftentimes is that our scientific body and theirs actually
find the same outcome; theirs maybe takes longer. They also
have an additional political layer oftentimes on approval of
some of these pesticide residues or if it is certain food
safety washes that we use in the United States. So the food
safety part of it, we often come to the same result.
Mr. Yoho. Okay. Thank you.
Mr. Dolcini, let's see here. What kind of concerns are you
hearing from the FSA offices in the Cotton Belt with the price
of cotton right now?
Mr. Dolcini. Well, we are hearing quite a few concerns, as
I expressed to Mr. Kelly. Our offices throughout the Cotton
Belt, from Texas all the way over to Florida, are very busy
working with cotton growers to help them restructure their
loans and identify other sources of credit that might be
applicable to their operations.
Mr. Yoho. Are you using the microloan program for that, or
maybe you need a macroloan?
Mr. Dolcini. The microloan program may be a little small
for that, sir. Right, the loan sizes need to be a bit larger.
But we are really pulling out an all-of-the-above strategy when
it comes to providing credit to our growers.
Mr. Yoho. Okay.
Have people expressed a concern about an oilseed program
for cotton? And if so, is that something you can implement?
Mr. Dolcini. Well, no, sir, I don't believe that we can.
The Secretary was up here several weeks and made clear what the
limits of the USDA authorities were with regard to oilseed.
That said, we are working quite closely with the industry, and
the Secretary has directed his whole team to work to try and
identify a path forward within our legal authorities.
Mr. Yoho. The way we understood it or I understood it up
here is that they are authorized to go ahead and do an oilseed
program because it says other oilseeds and doesn't specifically
say one over the other. So if there is something extra you need
on that, it would sure help our peanut producers out and cotton
producers. If you could get back with us on that.
Mr. Dolcini. Thank you, sir.
Mr. Yoho. Let's see. I need my glasses. There is currently
a push for the commercial lending institutions to increase the
authorized loan level of the FSA guaranteed loans to $2.5
million. Is that a high enough increase in the loan value? I
think they are, what, at $\1/2\ million now?
Mr. Dolcini. Yes, the guaranteed limits are at $1.3
million.
Mr. Yoho. Okay.
Mr. Dolcini. An increase in the limit is a conversation
that we have been having with industry and the Farm Credit
Council and the American Bankers Association. Other grower
groups, commodity organizations have come to the agency to say
maybe it is time that Congress look at increasing the limits
there. And we are happy to come back up to the Committee and
speak with staff and economists and others about our
experience.
There is an incremental increase that the guaranteed
program sees year over year. Sometimes, though, it doesn't
really make that dramatic a difference. But there would be a
statutory change needed to----
Mr. Yoho. Okay. You need a statutory change. That is what I
am getting at. And if so, we can look at that, and I am sure
the Chairman will.
I am out of time, and I will yield back. Thank you for your
time.
Mr. Dolcini. Thank you.
The Chairman. The gentleman yields back.
Mr. Rouzer, 5 minutes.
Mr. Rouzer. Thank you, Mr. Chairman.
I want to touch on tobacco and TPP. I just can't help
myself on this since it came up a little bit earlier, and
everybody knows how I feel about this. And I am just going to
make a comment, and then I am going to go to a very different
question.
Tobacco would be very, very supportive of TPP if one simple
thing happened, and that was it was no longer excluded from the
investor-state dispute settlement. Every other legitimate and
legal product is protected by law except for tobacco. And when
you take away legal protections for one product, you are
basically opening up the door for discriminatory action against
another product at a future point in time, future trade
agreement.
So, anyhow, enough said on that. I said it for the record,
and everybody knows where I am.
I have a question for RMA Administrator Willis. I am
curious about the recently released reports as it relates to
poultry, particularly as it relates to disease, catastrophic
disease. I am curious what your reports are showing.
Mr. Willis. The farm bill had a handful of requests for
requirements to do some studies, mostly for sectors of
agriculture where crop insurance is currently not available.
The studies were to evaluate the effectiveness of crop
insurance in that sector.
What we do with those usually is we contract with the
private-sector, with individuals who have experience in crop
insurance and understand how Federal crop insurance works. What
they do is they meet with people in the field, growers,
experts, et cetera, and come back with a report.
That specific report, the common theme with that report and
a few others indicates there are some hurdles, to be very
frank, to overcome to offer these types of crop insurance for
those types of situations. Some of the hurdles are a lot of the
growers in the poultry and swine, as well, industries are
contract growers, and they oftentimes do not have an insurable
interest. Obviously, they raise them, but they don't actually
own the livestock. The Crop Insurance Act, as it stands today,
requires them to have insurable interest.
There is another issue with natural causes. Sometimes
poultry business interruptions is not a natural cause. That
would also be a hurdle as far as the Crop Insurance Act is
concerned. There is also a current cap within the Crop
Insurance Act of $20 million for livestock.
All this the report said it might not be feasible at this
point in time. That doesn't mean conversations cannot continue.
That doesn't mean that at some point in time it might not be
possible. But it did point out there are some real hurdles
before we have a viable program.
Mr. Rouzer. Well, thank you very much for that. And that
definitely is something we have to continue to think about and
work on. I appreciate the update.
I yield back my time, Mr. Chairman.
The Chairman. The gentleman yields back.
Let me claim a little bit of that time.
Brandon, those contract growers, is there a business
interruption concept that would be appropriate for those guys?
It is a little different model than what you are used to
putting in place, but that is basically what they have done, is
they have interrupted their business.
Mr. Willis. Yes, for a business interruption for
catastrophic loss or for a business interruption----
The Chairman. No, for pork and chicken guys who are just
intermediaries, don't have an insurable interest, they do an
insurable interest in their business.
Mr. Willis. Yes, that is one area, and the report did
allude to that specific issue. I think that is one where some
detailed conversations probably need to take place on that. And
I also think part of that conversation needs to be talking
about the cap that currently exists. Because one would hate to
have a very useful product that would actually work and then
you hit the cap every time you try to operate it.
The Chairman. All right. Thank you.
Mr. Moolenaar, 5 minutes.
Mr. Moolenaar. Thank you, Mr. Chairman.
And thank you for your testimony today.
I want to ask you about a few different things, and whoever
is the best person can feel free to talk about it.
I want to the start with Cuba. There has been a lot of
discussion about Cuba. What currently can agriculture do to
sell into Cuba, and what can it not do right now?
Ms. Taylor. Well, I will talk a little bit what USDA cannot
do. What we cannot do, and it is because of the embargo, we
cannot use any of our market development funds that I was
talking about a little bit earlier to promote U.S. product
there in Cuba.
U.S. agriculture can sell products and foodstuffs to Cuba.
They have been able to for quite some time. However, there are
restrictions around financing and how they can extend terms of
credit. So they can sell, but it is much more difficult than it
is selling to any other market in the world.
Mr. Moolenaar. And are there any other countries where we
can only sell--it is only cash to Cuba. Are there any other
countries like that?
Ms. Taylor. I am not sure if there are any other countries
with those same restrictions. There are different restrictions
for some other markets that we have various embargoes or
restrictions on. But the restrictions around Cuba are unique to
Cuba.
Mr. Moolenaar. Okay.
And then if, let's say, someone were to sell beans in Cuba
and it was opened up to a credit basis or whatever and the
terms were not met in Cuba, that they did not fulfill the
contract, who would be in charge of enforcing that?
Ms. Taylor. I believe it would be based in Cuba and their
rule of law, the way it would be anywhere else, if someone is
selling beans into Japan and there was an issue on them getting
payment or not. But if I could follow up on that exactly for
you, Congressman, for the record, I would appreciate that.
Mr. Moolenaar. Okay. Because, yes, there are concerns about
the rule of law in Cuba, and that is one of the questions I
have for you.
I wanted to also shift gears a little bit to the
International Year of the Pulse. Are there any projects or any
initiatives you have going on around the world with respect to
pulse crops?
Ms. Palmieri. Thank you for that question. I was honored to
be able to attend the U.S. North American launch of the
International Year of Pulses in New York City with a lot of
farmers from the western part of the country. And the efforts
around these kinds of activities is highlighting the
nutritional value, the uses of pulses. And it is an education
campaign in general.
The U.S. and in FAS in particular, we are working with our
commodity buys and particularly in our McGovern-Dole Program
for using that education effort to increase our ability to have
pulses be a part of the program.
I can't give you exactly what that is going to look like
after this year, but we know that it has been helpful. The
research is really strong. I saw the presentations in New York.
And I am a believer that we need to be pushing these kinds of
nutritional products for----
Mr. Moolenaar. And is that something you could share with
my office or even the Committee, some of the information that
you have on that and what you are doing in that regard?
Ms. Palmieri. Clearly. And, also, our sister agency, NIFA,
Sonny Ramaswamy was there with me. So we know that there is
activity in connection----
Mr. Moolenaar. And what is that? NIFA?
Ms. Palmieri. The National Institute of Food and
Agriculture.
Mr. Moolenaar. Okay.
Ms. Palmieri. They will be here this afternoon, I believe.
Mr. Moolenaar. Okay. All right. Thank you.
With that, Mr. Chairman, I yield back.
The Chairman. The gentleman yields back.
Mr. LaMalfa, 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman, and for panelists for
appearing with us here today.
Coming back to the TPP, some of my colleagues expressed
some concern or even a little dismay at how that has gone with
some of other crops, as well. And we have a very major rice-
growing industry in northern California that is very
disappointed with the outcome, as well. Rice and a few other
crops feel like they are always the tail end of the dog being
wagged here, that are the afterthoughts in trade negotiations,
and feels that way to them this time as well.
When in a 21st-century trade agreement we see that new
access for rice is less than one percent of existing numbers,
that is quite an under-performance there in negotiations. USA
rice creates more than an eighth of a million jobs, $34 billion
in our national economy. We could have done a little better in
securing a bit stronger market share for that industry,
especially with how much we get dumped upon us in this country
here from those areas.
So what can I go tell my growers in this, that we can say
that the USDA will be doing to help address these shortfalls to
make a more palatable deal should it come to that for the
industry?
Ms. Taylor. Thank you for that question, Congressman.
First, I would like to say rice was not treated as an
afterthought in the negotiations. They were a priority for the
U.S. Government in negotiating. Rice is a highly sensitive
issue in many of these markets. When you look at Japan
specifically, they have actually excluded rice in every FTA
they have ever done. So TPP is the first time that they have
ever opened market access for rice.
And I would say it is actually meaningful, valued, we
estimate, somewhere between $43 million and $60 million in
additional sales at the current prices. So there is that
immediate benefit to our rice industry today once TPP is
passed.
But then there are also benefits in the future that will
come as other countries, and there has already been a whole
list of other countries already kind of knocking at the TPP
door, as I would like to say, that have said that they want to
come in. And the U.S. being in TPP gives us even more influence
and leverage to say: You want to join TPP? We need serious
access for all agriculture products----
Mr. LaMalfa. Well, let me cut in there a little bit. They
may say it is a sensitive issue to them in Japan, but the stuff
they sell us may be a sensitive issue as well. I mean, their
consumers would like to buy this product. The barriers are put
up by their government and lobbying. And so it is sensitive to
our growers as well. So, at some point, they need to be held
accountable for a tiny amount of new access that, if I remember
the amount of tons that would be newly accessible, five large
growers could meet that need, okay? Five large rice--or maybe
six in California could meet the new access amount that was
actually negotiated.
And I know there is some talk out in the ether of maybe
allowing some more in the future, but, when you go to your
banker, you have to be able to put your finger on being able to
actually produce. And with the price of rice going down as much
as it is, whether they felt like an afterthought or not, at the
end of the day, the growers don't feel like the TPP did hardly
anything to help them.
So, again, I want you to take that thought back with you,
that the additional access was something that could be done
inside one county of northern California's growing area.
Ms. Taylor. I appreciate your comments, Congressman. So
there is the market access piece. As I was saying, there are
future countries who are going to be coming in who we will have
more leverage to ensure that that market access continues to
grow. But, specifically, in Japan, the access in TPP was
starting at 50,000 tons, growing to 70,000. As I said, that is
worth $60 million to producers. I think that is not nothing. I
think that is meaningful, particularly today, in today's farm
economy.
But also we were able to secure many improvements to how
Japan operates their tariff rate quota to make it more
streamlined so we are able to sell more directly to the
consumers, as you said, in Japan, who have a desire for the
quality product that our producers produce here in the United
States.
Mr. LaMalfa. Just for perspective, you said 50,000 tons. My
farm can grow 10,000 tons, okay?
The Chairman. The gentleman yields back.
We will do a second round, so I will recognize myself for 5
minutes.
Ms. Taylor, on the food aid shipping costs, studies are
showing that the international freights are down, costs are
down from 29 percent to 23 percent, yet internal costs have
gone from five to 25 percent. Can you talk to us, a couple
things, about what has happened that it costs so much more to
move the food around once it is in country? And what are you
doing with respect to these lower commodity prices to perhaps
preposition things that would allow better use of the money?
Ms. Palmieri. I will take that question.
The Chairman. Okay.
Ms. Palmieri. Thank you. Some of this I will need to get
information from our colleagues at USAID to give you precise
numbers. But what I know from their operations, we were working
with them last year on wheat shipments to South Sudan, and the
ability for them to get food into the remote areas around some
pretty insecure barriers was very, very expensive. So USAID is
dealing with a lot of these types of situations and crises,
which has put their internal transportation costs at a very
high level.
For our own programming in McGovern-Dole and for Food for
Progress, we are seeing less of those increases. So I would
like to work with our colleagues at USAID to get you some
precise numbers.
The Chairman. Okay. I appreciate that. We have this ongoing
conversation about what those levels ought to be, and I am just
trying to make sure we understand those programs.
I don't know who to address this question to, but I have
had a long-running gentleman's disagreement with Secretary
Mabus, Secretary of the Navy. He is a great guy, a gentleman. I
respect his work a great deal. We just have a disagreement
about algae-based jet fuel.
My understanding is that he worked with somebody at USDA to
create a fund that would fund a refinery to do biofuels, and we
are doing an investigation on that. We want to make sure we
understand who we need to address our questions to because I
wear two hats. Obviously, biofuel would be beneficial to
production of agriculture, but by the same token, we have
tremendous stresses on the operation and maintenance side of
the Department of Defense, and they are being used to develop
things that are really better left up to the Department of
Energy and/or something else.
In the NDAA we passed for this year, there is a restriction
on the Navy to not buy unconventional fuels at a price that
exceeds what you could buy the equivalent gallon of
conventional jet fuel for, as an example. I want to make sure
that USDA is not backside funding this effort to draw down the
price per gallon of this fuel in contravention of the NDAA.
So, Ms. Taylor, does that fall under your area?
Ms. Taylor. Congressman, this does not fall under the FFAS
mission area, but I have been told that you have sent a letter,
an oversight letter, and questions for the record. We are
working quite quickly to get you a response to those.
The Chairman. Okay. That does it. I just want to make sure
it does not get lost in a shuffle, because this is important to
me. I have conflicting interests because on the ag side,
obviously, it helps producers who are on this business; but by
the same token, we have incredible strains on the Department of
Defense budget. As big as it is, it doesn't make a lot of sense
to buy jet fuel for $25 a gallon or $15 a gallon when the
market is $3 or $4 a gallon. And that is just a gentleman's
disagreement, because I do have a great deal of respect for
Secretary Mabus.
With that, we will go to, Mr. Lucas?
Anybody else want a second round?
Mr. Thompson, 5 minutes.
Mr. Thompson. Just a real quick follow-up on the trade. And
one of the criticisms I have heard, that we hear about, about
MAP and FMD funding is that it goes to large companies. Any
idea how many corporations receive MAP and FMD funding? What is
the distribution of folks that are benefiting, growers that are
benefiting from this?
Ms. Taylor. Congressman, we actually are quite public on
who our cooperators are. We put lists on our website. There are
about 80, and the range is quite diversified. As agriculture
has evolved over the years and has become diversified, so have
our cooperator partners.
I was just at the Gulf Food Show in Dubai, in the UAE, and
the Intertribal Ag Council had several Native American
businesses there. I have talked to folks from our Organic Trade
Association who have been a cooperator and looking at using
these funds to get into more trade shows and more export
markets.
So I would say our cooperators and the size and the scale
are as diverse as U.S. agriculture is.
Mr. Thompson. Very good. Thank you.
Mr. Chairman, I yield back.
The Chairman. The gentleman yields back.
Mr. Yoho.
Mr. Yoho. Ms. Palmieri, the annual International Food
Assistance Report, a joint product of the USDA and USAID, is
due April of each year, April 1. And to my knowledge, we have
yet to receive the IFAR report. That was due almost 12 months
ago. Why is it so late, and when can we expect it?
Ms. Palmieri. Thank you for that question.
Mr. Yoho. Are you sure?
Ms. Palmieri. We do some things really well at FAS, and we
are not as good at selling our successes. And this is one of
those reports that is crucial to report in on all that we have
been able to accomplish. I checked on it this morning. It is in
the last stages of clearance, and I hope to have it to you as
soon as possible.
Mr. Yoho. This is from a year ago, right?
Ms. Palmieri. This is the 2014. The 2015 is in draft. So I
know we are going to be working to get that here on time this
year. It is important to me.
Mr. Yoho. And you said we can expect that when?
Ms. Palmieri. On time is what I am hoping for.
Mr. Yoho. So that will be last year and this year's, 2014
and 2015?
Ms. Palmieri. Yes, both of them are in the works.
Mr. Yoho. All right. And you understand the reason, because
we can't do accountability if we don't get those reports. And
again, with the budget crunches that we have, it is imperative
that we get it. So I would implore you to do that.
And, again, I want to kind of talk about the European Union
and the process of implementing pesticides, that it seems to be
out of step with the science-based regulatory approach followed
by the U.S. and nearly every other country in the world.
What is the Administration doing to ensure that the new EU
policy does not become a barrier to the U.S. ag exports? And
again, it was kind of what I had asked about before. I have
read several reports on the neonics and the EU that they are
banning them not based on science, but based on political
pressure.
Ms. Taylor. I appreciate that question, Congressman. As I
said before, I do think they have a scientific committee that
oftentimes finds the exact same outcome as our regulators find
on the safety of a product or the appropriate levels to use
products at or similar.
But sometimes they have this additional political layer. It
is something we spend, I personally spend a lot of time on
talking to my European counterparts. Secretary Vilsack does as
well. And it is certainly a priority.
So on specific issues as they arise, we are working on them
outside of kind of alongside T-TIP, but not really as part of
it. But we are working on regulatory coherence between our two
governments as part of T-TIP as well.
Mr. Yoho. Okay. I was asking Ms. Palmieri too. I would like
to get her to weigh in on that. Do you differ from that?
Ms. Palmieri. No, sir, I do not.
Mr. Yoho. Mr. Wills, on crop insurance, as the ARC programs
increase and increase coverage to different crops, it will cost
more to fund these crops at the Federal level. What do you
anticipate as far as meeting those extra expenditures as far as
the cost of the crop insurance? Will that go down on the
Federal side? Will the farmers be more responsible for paying
more of the crop insurance? Or do we need to raise taxes or
fund the program more from a Federal level, the anticipated
growth in the program?
Mr. Willis. Can I just make sure I understand the exact
question?
Mr. Yoho. Sure.
Mr. Willis. Is the question the impact upon crop insurance
with ARC, or is the question more the impact of ARC upon the
Federal budget? I just want to make sure so----
Mr. Yoho. Well, they kind of tie in together, because as we
increase more coverage to different crops, the specialty crops,
like blueberries in my state, when it first came out it covered
five counties. But we grow it in a lot of the other counties,
and now most of the other counties are covered. So it was an
increase in coverage. The farmers are paying a percent and the
Federal Government is paying a higher percentage of the
coverage.
So as that grows, there is going to be funding shortfalls.
So what do you anticipate 5 years down the road in the
increased coverage, and where do you recommend that funding
comes from?
Mr. Willis. Well, if we look at history, what we see is,
while the cost of crop insurance may increase slightly, we see
that there is not a need for other, more costly forms of
assistance, such as ad hoc disaster, et cetera.
So in the long run, we have over the last 30 years really,
we have seen a slow and a steady growth of crop insurance. But
since 2007, I believe, we haven't seen the ad hocs, which were
a very costly form of disaster assistance. We also see farmers
staying on the farm.
One of the things we often forget is we don't read stories
about farmers after 2012 who are leaving the farm. A lot of
that was because of crop insurance and the impacts that we
don't talk about because they didn't happen. And that is a good
story in and of itself.
Mr. Yoho. It is, and I agree.
Ms. Taylor. If I could just add one thing to that,
Congressman Yoho.
Mr. Yoho. Yes, ma'am.
Ms. Taylor. The way Congress really worked on the new ARC
and PLC programs, they were done in a way to complement the
crop insurance programs and not supplement crop insurance, per
se. And so that is what we are seeing, is ARC and PLC are part
of the safety net, but so is crop insurance. And we haven't
seen a shift from producers buying less crop insurance because
of ARC repeal.
Mr. Yoho. All right. Thank you. I am out of time.
Thank you, Mr. Chairman.
The Chairman. Mr. Benishek.
Mr. Benishek. Thank you, Mr. Chairman.
I just have a couple quick follow-up questions and one that
Mr. Yoho brought up. How is it that you are able to get the
2015 USAID report done on time but the 2014 report is a year
late? Now, is there a particular problem with that? Are there
two parallel teams working on it? Just tell me briefly why the
situation is.
Ms. Palmieri. Well, some of what happened during the Fiscal
Year 2014 reporting was there were some new laws that were
implemented, and the way those were dealt with in the report
took a little bit more time.
We are working with our colleagues at USAID because this is
the International Food Aid Report, so there are back and forths
with the teams in both agencies pulling this together. We have
a system now that works more smoothly, and that is what I am
counting on to get----
Mr. Benishek. And then I just wanted to follow up a little
further about this Canadian-American Softwood Agreement. Who in
your Department would know about that? I just want to make sure
that we get this follow-up. Who would know about that?
Ms. Palmieri. We have a softwood team back at FAS, and I
will check in with them as soon as we get back.
Mr. Benishek. But you don't know a person?
Ms. Palmieri. I don't have that name on the top of my head,
no, sir.
Mr. Benishek. Okay. All right. I will yield back, Mr.
Chairman.
The Chairman. Thank you.
Mr. Rouzer.
Mr. Rouzer. Thank you, Mr. Chairman.
One item I want to bring up, and it is critically important
but doesn't always have the political urgency behind it, and
that is research. Tell me where we are with our research
programs, any highlights that we have. I know the funding has
stayed relatively stagnant, probably in the past 10, 20 years
or so, and I just want to see if you had any highlights on
that.
Ms. Taylor. Congressman, I believe my colleagues from the
REE mission area are testifying later today, and they would be
the appropriate mission area that oversees all of the various
research efforts going on at USDA.
Mr. Rouzer. Follow-up unrelated to research. T-TIP. You
mentioned it earlier. What is our timeline on that? What
exactly are we expecting to get out of that? What are our major
challenges going to be?
Ms. Taylor. Well, on timing, we are committed to allowing
substance driving the timeline. And one thing I believe, that a
strong agriculture package in TPP and a strong vote in TPP from
the agricultural community and agricultural members will help
drive a strong, comprehensive agricultural package.
The Secretary has often said that agriculture on its own
might not be able to pass an agreement, but it certainly can
prevent one from passing Congress. And that correlation is
going to be important. But I won't speak to the timeline. We
are obviously committed in making this a priority for this
year, but really we need the substance across the economy to be
there and certainly agriculture is part of that.
Mr. Rouzer. Thank you, Mr. Chairman.
The Chairman. Anyone else?
Mr. LaMalfa.
Mr. LaMalfa. Thank you. I will be brief on that.
Just so I can take this back home and clarify on the TPP
and market access there for rice. California's rice production,
more or less, on acres is about 2 million tons a year. What
they had sought was 100,000 tons of new access there and came
away with a figure that shows about one percent of new access.
And so you want me to report that home as a win, right?
Ms. Taylor. Well, Congressman, we walked away with 70,000
tons of new access into just the Japan market, with the ability
to grow further as others, like South Korea----
Mr. LaMalfa. How long will it take to get to the 70,000
figure?
Ms. Taylor. I don't know the exact, I can't recall the
exact tariff phasing schedule, but I can certainly get that to
you.
Mr. LaMalfa. Please. Because my understanding is it comes
in at 50,000 and all the rest is pixie dust.
Ms. Taylor. It grows over time over certain years to get to
that 70,000. I don't know the exact time to grow there.
Mr. LaMalfa. All right. Well, I will be looking at my ``USA
made'' label rules real carefully over time as well. So thank
you.
The Chairman. The gentleman yields.
I want to thank the panel. We are going to let you off a
little early. We said you need to be here an hour and 15
minutes. As I told the previous panel, I am sure you prepared a
lot of answers for questions that we didn't ask this morning.
I want to particularly thank you, this panel, because with
Mr. Dolcini's FSA group and Brandon's RMA group, you probably
have the most customer contact with production agriculture,
broadly speaking, of anybody in USDA. And your team does a
great job across the board helping implement new farm bills,
all those new provisions, working year in and year out with the
producers that rely on your programs. And your team gets up
every day and does a great job, and I want to just thank you
for that. Please express that to them.
As I told the other panel, if we have disagreements, it is
about policies. Don't let that morph into thinking that we
don't appreciate what you do and how well you do it. So I want
to thank everybody on the panel and let you off, get out early.
So thank you all very much for being here.
We have lunch available in 1302, and so we will take about
a--I don't know if the other panel is ready yet. We are a
little bit ahead of schedule. So lunch is in 1302. We will be
back here at--what time are we supposed to start the next
panel? 11:45?
Okay. Let's be back in here at 11:50.
[Recess.]
The Chairman. Good morning still, I guess, for a couple
minutes. Let me gather our team back up. We were having a quick
bite. And there is food in 1302. When you all transition out,
there are a lot of sandwiches and stuff. You are welcome to
them as they come in.
I will briefly start our introductions. So this third panel
will be led by the Honorable Catherine Woteki, who is the Under
Secretary for Research, Education, and Economics at the USDA.
She is joined by Chavonda Jacobs-Young, the Administrator for
Agricultural Research Service; Sonny Ramaswamy, who is the
Director of the National Institute of Food and Agriculture; Mr.
Joseph Reilly, the Administrator of the National Agricultural
Statistics Service; and Ms. Mary Bohman, who is the
Administrator for the Economic Research Service.
So thank you all very much for being here this afternoon.
And, Dr. Woteki, you have the floor.
STATEMENT OF HON. CATHERINE E. WOTEKI, Ph.D., UNDER
SECRETARY, RESEARCH, EDUCATION, AND ECONOMICS, U.S. DEPARTMENT
OF AGRICULTURE, WASHINGTON, D.C.;
ACCOMPANIED BY CHAVONDA JACOBS-YOUNG, Ph.D.,
ADMINISTRATOR, AGRICULTURAL RESEARCH SERVICE, USDA; SONNY
RAMASWAMY, Ph.D., DIRECTOR, NATIONAL
INSTITUTE OF FOOD AND AGRICULTURE, USDA; JOSEPH T. REILLY,
ADMINISTRATOR, NATIONAL AGRICULTURAL
STATISTICS SERVICE, USDA; MARY BOHMAN, Ph.D.,
ADMINISTRATOR, ECONOMIC RESEARCH SERVICE, USDA
Dr. Woteki. Well, thank you very much, Chairman Conaway.
And good morning, distinguished Members of the House
Agriculture Committee. My colleagues and I are very pleased to
appear before you today and provide an overview of the work
that we do in research, education, and economics. I am going to
briefly summarize our written testimony and request that that
be entered into the record, the full testimony.
The Chairman. Yes, ma'am.
Dr. Woteki. We in the United States, as well as actually
around the world, are facing some critical problems and
opportunities as they relate to the productivity of
agriculture. Investments in research are an important factor in
surmounting these challenges and also creating new
opportunities for farmers and ranchers here in the U.S.
Our work is based on the premise that the Federal
Government has a role in advancing scientific knowledge to
promote our nation's social and economic well-being, and the
agencies in the mission area do that by investing in areas in
which the for-profit industry does not invest.
This is research our country needs to keep our food supply
safe, secure, and abundant; to ensure the profitability of
farmers and ranchers; to improve nutrition and food safety for
lifelong health; to reduce pollution and improve the
environment through climate-friendly agricultural practices; to
safeguard the sustainable use of our natural resources,
including an abundant and safe water supply; and to address our
nation's energy needs. Under-investment in the food and
agricultural sciences depletes the foundational knowledge base
and affects our nation's global preeminence and economic well-
being.
I would like to provide a few brief examples that are the
results of our research programs, starting with the
Agricultural Research Service.
Since 2009, ARS scientists have received 391 patents for
their research and were also responsible for over 31,000
scientific publications. Last year, ARS scientists developed
and transferred to industry an effective vaccine against the
highly pathogenic avian influenza strain that killed more than
45 million chickens and turkeys in the U.S. last year.
NIFA measures its success through the impacts that its
grants have on the public good. And scientific advances
resulting from NIFA-funded research, education, and extension
activities contributed more than $9.5 billion over the years
2009 to 2015.
One example of this is the coordinated agricultural
projects that focused on improving wheat and barley for
changing environments that yielded more than 100 different
commercial varieties with over $1.8 billion in production
value. These grants also trained more than 100 students,
preparing them to fill some of the very important high-tech
jobs that are available in the agricultural industries.
Despite their relatively small size, the remaining two REE
agencies, the National Agricultural Statistics Service and the
Economic Research Service, have an outsize impact. They provide
an essential service to policymakers, regulators, markets, as
well as to the academic community every day.
As principal Federal statistical agencies, NASS and ERS
provide data that is relevant to policy issues as well as
program decisions that USDA agencies make every day. And in
doing this, NASS and ERS must maintain credibility among data
users, maintain the trust and the confidentiality of data
providers, maintain independence from political and other
external influence.
NASS' mission is to provide timely, accurate, and useful
official statistics and service to U.S. agriculture, and with
the 2014 Farm Bill implementation, the Farm Service Agency
relies on NASS' county estimates to enable administration of
the Agriculture Risk Coverage Program as well as the Price Loss
Coverage Program.
And ERS studies are widely recognized in the research
community for their credibility, timeliness, and use of
cutting-edge data, models, and methods. And some of ERS' recent
research has been focusing on trade agreements and examining
the potential impact that these agreements have on producers
and also showing the implications long-term for the health of
U.S. agriculture.
So we have made some very significant strides, we believe,
but in research there is always more to be done. Moving
forward, we really are looking to having a sufficient continued
investment in developing our scientific talent as well as
funding research that is going to be addressing those
challenges facing producers across the country.
We thank you very much for the opportunity to testify
today, and my colleagues and I look forward to answering your
questions.
[The prepared statement of Dr. Woteki follows:]
Prepared Statement of Hon. Catherine E. Woteki, Ph.D., Under Secretary,
Research, Education, and Economics, U.S. Department of Agriculture,
Washington, D.C.
Chairman Conaway, Ranking Member Peterson, and distinguished
Members of the House Agriculture Committee, I am pleased to appear
before you to provide an overview of the activities of the Research,
Education, and Economics (REE) mission area of the United States
Department of Agriculture (USDA), highlight some of our recent success,
and share some insight on the priorities for the coming years.
I am accompanied by the leaders of our four agencies: Dr. Chavonda
Jacobs-Young, Administrator of the Agricultural Research Service (ARS),
Dr. Mary Bohman, Administrator of the Economic Research Service (ERS),
Mr. Joseph Reilly, Administrator of the National Agricultural
Statistics Service (NASS), and Dr. Sonny Ramaswamy, Director of the
National Institute of Food and Agriculture (NIFA).
The United States and the world are facing critical problems and
opportunities. Global population is expected to reach nine billion
people by 2050, an increase of almost two billion people in about 34
years. At the same time we are seeing the impacts of climate change,
impacts that will only get worse. Investments in research are a
critical factor in meeting these and other challenges and
opportunities. REE's work is based on the premise that the Federal
Government has a role in advancing scientific knowledge to promote our
nation's social and economic well-being, and the agencies do so by
investing in areas in which for-profit industry does not invest. The
REE mission area agencies support the critical research our country
needs to keep our food supply safe, secure, and abundant, ensure farm
profitability, improve nutrition and food safety for lifelong health,
reduce pollution and improve the environment through climate friendly
practices, safeguard sustainable use of natural resources, including an
abundant and safe water supply, and address our nation's energy needs.
Under-investment or the absence of investments in food and agricultural
sciences diminishes the needed foundational knowledge-base and impacts
our nation's global preeminence and economic well-being, and may put us
at a competitive disadvantage with other nations, such as China, which
is making significant increases in their investment in public sector
research. While the private-sector's commitment to agricultural
research in the United States remains strong, many of the most
important agricultural research companies are large international
corporations that invest and outsource significant research dollars
overseas, and China, India, and Brazil have begun making large public
investments in agricultural research. Although private industry will
play an important role, many of the challenges are in the public
domain, and the waning public investment in agricultural research in
the United States contributes significantly to the risk of losing its
international leadership in agriculture.
The following are examples of the results of USDA research. Take
for example the efforts of ARS, which conducts research to develop and
transfer solutions to agricultural problems of high national priority
to ensure high-quality, safe food, and other agricultural products;
assess the nutritional needs of Americans; sustain a competitive
agricultural economy; enhance the natural resource base and the
environment; and provide economic opportunities for rural citizens,
communities, and society as a whole.
Since FY 2009, ARS scientists have had 391 patents issued and were
responsible for over 31,224 scientific publications. Furthermore ARS
scientists developed and transferred to industry an effective vaccine
against the highly pathogenic avian influenza (HPAI) virus strains that
killed more than 45 million chickens and turkeys in the United States
during 2015. ARS scientists also developed and licensed the world's
first molecular foot-and-mouth disease (FMD) vaccine for cattle, the
most significant scientific accomplishment in FMD vaccine development
in the past 50 years and the first FMD vaccine that can be manufactured
in the United States. On the plan side, ARS scientists significantly
advanced methods to detect and control the Huanglongbing (citrus
greening) disease by increasing reliability of the standard assay
tests, training dogs to detect greening and canker (currently the only
detection method that is effective prior to symptom development), and
evaluated promising bactericidal compounds that reduce the level of
disease and improve tree vigor in field trials. Crop and animal
protection is a key research investment in ARS totaling $287.6 million
in Fiscal Year 2016.
ARS maintains one of the world's oldest and largest plant genetic
resource collections at 19 locations situated around the United States.
These gene banks, which hold materials from both cultivated plants and
their wild relatives, presently safeguard 218 plant families, 2,378
genera, 14,851 species, and more than 569,000 accessions. During the
last 5 years, the ARS gene banks distributed more than one million
samples to researchers and breeders, most of who lived in the United
States. In addition, in 2014, ARS plant breeders and researchers
developed and released 398 new plant varieties and enhanced germplasm
lines that are part of an effort to help create new markets and enhance
economic opportunities for rural America.
An example of the use of such a treasure is seen in the battle
against wheat stem rust strain Ug99, which threatens wheat production
worldwide. ARS scientists used a gene derived from a wild wheatgrass
species to develop a new line highly effective at resisting Ug99 wheat
stem rust that will help wheat breeders throughout the world develop
more durable varieties for production. ARS invested $51.2 million in
preserving plant and animal genetic resources in Fiscal Year 2016.
Salmonella and Camplyobacter are the most commonly reported
bacterial pathogens causing foodborne illness in the United States. ARS
scientists developed a novel probiotic method targeting these bacteria
in poultry which has been licensed and developed by a start-up company,
now marketed in 16 countries and dosing approximately 300 million
birds. On the nutrition side, ARS scientists discovered that flour made
from chardonnay grape seeds (a waste byproduct from wine making)
prevented increases in weight gain in hamsters fed a high-fat diet. ARS
invested $198.7 million in food safety and nutrition research in Fiscal
Year 2016.
In the same vein, NIFA measures its success through the impacts of
its grants on the public good. Through the integration of research,
education, and extension, NIFA ensures innovative solutions to problems
in agriculture, food, the environment, and communities go beyond the
laboratory, into the classroom, and to people who can put the knowledge
into practice. Scientific advances resulting from NIFA-funded research,
education, and extension--more than $9.5 billion from Fiscal Year 2009
through 2015--enhance the competitiveness of American agriculture,
ensure the safety of the nation's food supply, improve the nutrition
and health of the populace, sustain the environment and natural
resources, and bolster the U.S. economy.
For example, through NIFA funding, the Triticieae coordinated
agricultural project (T-CAP), and its predecessor Wheat and Barley
CAPs, focused on improving wheat and barley for changing environments.
Like many of NIFA's CAPs, the T-CAP bridges the gap across the academic
research, industry, and farming communities in order to produce higher
yielding crops and support sustainable farming. The more than 100
commercial varieties developed through the T-CAP and its predecessor
CAPs have a $1.8 billion production value. The Wheat, Barley, and T-
CAPs have trained more than 100 students, preparing them to fill some
of the projected annual openings of 57,900 jobs in agriculture-related
fields between 2015 and 2020. The T-CAP also has had a positive impact
in fostering international collaborations.
Peanuts are the 12th most valuable cash crop in the U.S., and
allergies to peanuts are among the most severe of all food allergies,
affecting some 2.8 million people in the U.S., including 400,000
school-aged children. Under an Agriculture and Food Research Initiative
NIFA grant, North Carolina Agricultural and Technical State University
(NC A&T) scientists discovered a way to remove up to 98 percent of the
allergens. The process does not affect flavor, and treated peanuts can
be eaten whole, in pieces, or as flour in various products. NC A&T
officials expect hypoallergenic peanut products to be available
commercially soon. Finally, as part of NIFA's commitment to local and
global food supply and security, the University of Georgia
horticulturists received NIFA grants to develop several varieties of
blueberries that are specialized as early- and late-season crops, as
well as larger berries at a higher yield. As a result, blueberry
production has increased from 3,500 acres to more than 20,000 acres in
recent years.
These are just a few examples of results from two of the largest
REE mission area agencies. Despite their relatively smaller size, the
remaining two REE agencies--NASS and ERS--provide an essential service
that policymakers, regulators, markets, and academics rely on every
day. As principal Federal statistical agencies both NASS and ERS
provide data relevant to policy issues, maintain credibility among data
users, maintain the trust and confidentiality of data providers, and
maintain independence from political and other external influence.
NASS's mission is to provide timely, accurate, and useful official
statistics in service to U.S. agriculture. NASS achieves this through
two separate appropriated program areas: the Agricultural Estimates
program and the Census of Agriculture and its follow-on studies. The
Agriculture Estimates program issues over 400 reports annually, of
which 46 are Principal Federal Economic Indicators, providing U.S.,
regional, and state estimates on a wide range of crop and livestock
commodities, in addition to estimates of environmental issues,
economics, and demographics. With the implementation of The
Agricultural Act of 2014, the Farm Service Agency relies on the NASS
County Estimates to enable administration of the Agriculture Risk
Coverage (ARC) Program and the Price Loss Coverage (PLC) Program.
During calendar year 2016, NASS published special reports on Organics,
and the Census of Horticulture and Tenure Ownership and Transition of
Agricultural Land (TOTAL). As the only source of detailed information
on agricultural land ownership characteristics and economic data, TOTAL
provided important statistics to government, academia, the farming
industry, and others regarding agricultural land ownership for
planning, policymaking, research, and market analysis. Results from the
2014 TOTAL Survey showed that 91.5 million acres are expected to change
ownership in the next 5 years.
The Economic Research Service also reaches far beyond the borders
of USDA. The mission of ERS is to inform and enhance public and private
decision making on economic and policy issues related to agriculture,
food, the environment, and rural development. Although ERS research
programs are aimed at the information needs of policymakers, its
information and analysis are also used by the food and agricultural
sector, academic researchers, trade associations, public interest
groups, the media, and the general public. ERS studies are widely
recognized in the research community for their credibility, timeliness,
and use of cutting edge data, models, and methods.
For example, ERS carefully tracks and projects the state of the
farm economy to better understand the financial condition of
agriculture. ERS data show how resilient American farmers have been and
how well they managed their savings and expenses during the recession.
These core statistical indicators can guide policymakers, lenders,
commodity organizations, farmers, and others interested in the
financial status of farms. ERS also has determined the location and
derived the characteristics of areas with low food access--places where
grocery stores do not exist or are not easy to reach--and these ERS
research tools help national, state, and local governments target food
access investments so that Americans with low access will have better
choices and better health in the future. ERS's research on trade
agreements examines the potential impacts of these agreements on food
and agricultural production and trade and shows the implications for
the health of U.S. agriculture. Finally, ERS research demonstrates the
benefits of agricultural research and the importance of public
agriculture research spending for continued productivity growth. ERS
research finds that every dollar invested in public agricultural
research generates at least ten times that amount in benefits to
society.
Mr. Chairman, I would like to round out my discussion with a word
on current initiatives and a look forward at agricultural science in
the coming years. The REE agencies continue to meet head on the
existing and emerging challenges of the agricultural community in
innovative ways through consolidations and partnerships that increase
flexibility and maintain critical mass needed for research on pressing
problems. Here are three such examples.
In the last few years, the issue of antimicrobial resistance (AMR)
has emerged as a serious health threat to both animals and humans. The
action plan for combating AMR takes a voluntary, comprehensive, systems
approach to surveillance, research and development, and outreach
activities. In implementing this action plan, USDA intends to provide
researchers, producers, and consumers science-based, quantitative
information about drug use and resistance in food animals and their
relationship to livestock management practices.
Over the next decade we face diverse challenges stemming from a
changing climate. In order to maintain the viability of their farms and
ranches and respond to the growing demand for food around the world,
U.S. producers have to prepare for, and mitigate and adapt to the
impacts of climate change and the severe weather. REE continues to
develop innovative climate solutions and tools that can be applied on
the farm. ARS researchers will: (1) identify and evaluate management
practices that maximize the genetic potential to achieve optimal yield
and quality with climate change; (2) advance the understating of
climate change effects on pests and beneficial insects; (3) develop the
means to reduce vulnerability to water variability; and (4) determine
the relative degree of production sensitivity among different animal
and cropping systems to projected changes of climate.. By working with
our network of regional Climate Hubs, our research can be disseminated
to meet regional conditions and help producers implement climate-
informed management practices.
The Pollinator Health Initiative will focus on the decline of honey
bees and other pollinators. The continued loss of commercial honey bee
colonies stands to have profound implications throughout the food and
agriculture enterprise. In collaboration with the U.S. Environmental
Protection Agency, university scientists, and private-sector partners,
the Pollinator Health Initiative will make advances in our
understanding of the complex factors contributing to the decline--
factors like poor bee nutrition, loss of forage lands, parasites,
pathogens, and exposure to pesticides--and provide a path forward to
arrest continued pollinator losses.
Of course all of us are aware of the increase in demands on our
water resources and areas that have and continue to experience
droughts. REE is meeting the challenge of providing a sufficient level
of safe water for agricultural purposes through investments in both ARS
and NIFA, including additional funding in ARS for the CA area drought,
for the Great Basin and for the use of non-traditional water.
REE also has led the charge to better coordinate global
agricultural research efforts. In 2012, REE advocated for, and was
instrumental in forming, the establishment of the G20 Meeting of
Agricultural Chief Scientists (MACS). Thus far, we have met three
times. MACS seeks to promote collaboration among the major public
funders of agricultural research. The MACS forum also has proven
instrumental in identifying key global challenges, like the development
of animal disease vaccines, which have a significant impact on global
food security and would benefit from collective solutions. Identifying
key global challenges can be particularly helpful to the developing
world as key research is pursued among the G20.
Finally, I want to highlight the critical importance of competitive
peer-reviewed research. REE is proposing to double the funding for the
Department's flagship Agriculture Food and Research Initiative (AFRI)
to the authorized level of $700 million. While a portion ($25 million)
of the increase is included in the discretionary request that we have
submitted, the remainder will be proposed through authorizing
legislation.
Mr. Chairman although REE has made significant strides, there is
still much to be accomplished. Our storied legacy of discovery,
innovation, and international leadership in agricultural research,
education and economics was achieved through a steadfast approach to
our overall goals. Moving forward, sufficient investments in man-power
and funding will be a challenge we must all rise to meet. I look
forward to redoubling our efforts together in the coming year. Thank
you.
The Chairman. Well, thank you, ma'am.
And in an exercise of the Chairman's prerogative, I am
going to reverse the order and start with Mr. LaMalfa for 5
minutes.
All right. Then Mr. Moolenaar. Nope.
How about Mr. Rouzer?
Mr. Rouzer. Thank you, Mr. Chairman.
I got ahead of myself at the last panel asking about
research, so I am eager to see you. Research is one of those
areas that is so critically important but oftentimes doesn't
have the political urgency. I know funding has been relatively,
I am trying to think of the right word here, flat; maybe
stagnant might be an adjective as well.
Talk to me about the needs that we face, any exciting
advancements. Obviously, we have a growing world population,
less and less farmland all the time. We have to be able to
produce more on less. And this is a great opportunity to share
with the Committee and get it on the record exactly what the
needs are and how we could be helpful, moving forward.
Dr. Woteki. Well, Mr. Rouzer, you are very much on target
to describe our funding situation as flat. In fact, if you look
at the buying power currently of the appropriations to these
four agencies, and adjusting for inflation, the current level
of support is less than it was in 2010.
And in addressing that, we have certainly been looking to
reduce any opportunities for duplication of effort and actually
have been reporting, as required in the 2014 Farm Bill,
annually about our efforts to reduce those duplications where
they do exist. And, in fact, at this point we believe there is
very little that is going on within our agencies with respect
to duplication. Quite the contrary, the programs are very
complementary, and also complementary with those that are
conducted in the private-sector.
We have also been looking for ways to increase the use of
our information, and one of those steps has been to make our
research publications, as well as the data underlying them,
open and accessible in machine-readable form. So the agencies,
for example, the research agencies are committed to that. And,
for example, some of the genetics and genomics databases that
ARS is a major developer of are enormously helpful to plant
breeders in academia as well as in private companies.
So we are pursuing a variety of different ways to make the
best use of the funds that are made available to us.
Mr. Rouzer. What areas in particular do you think we need a
real shot in the arm? Is there a specific area of research in
terms of priorities and prioritizing funding where you think we
really need to focus?
Dr. Woteki. Well, I can start off by just naming two, and I
am sure that Dr. Jacobs-Young and Dr. Ramaswamy will have some
additions that they would like to add.
But one of the areas that has been of top priority for us
has been to increase the amount of competitive grants funding
that the National Institute of Food and Agriculture has. The
flagship grants program is called, for short, AFRI the
Agriculture and Food Research Initiative. And we are requesting
in the 2017 President's budget request essentially to double
the appropriation to AFRI, to the fully authorized amount of
$700 million.
So that would be one area that I would flag, increasing the
funding that goes to universities, because that has actually a
double benefit. It produces new knowledge and it also trains
students, undergraduate and graduate students, to move out into
the workforce.
The second area that I might highlight is also in this
year's budget request, and it relates to antimicrobial
resistance. This is a problem that affects animal health, and
it also affects public health, and for which the agencies in
REE play really a key role in the development of alternatives
to the use of antibiotics in livestock feeding operations.
So we feel that this is an area that really we need to be
investing more in and are requesting an increase of $22 million
in the Agricultural Research Service 2017 request for that
purpose of examining and developing alternatives to the use of
antibiotics.
Mr. Rouzer. Thank you, Mr. Chairman. My time has expired.
The Chairman. The gentleman yields back.
Mr. Yoho, for 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman, and I appreciate it.
And since we are on the topic about antibiotic resistance,
the research I have read--I am a veterinarian by trade, and I
have practiced for 30 years, food animal production
specifically. And for the last 35 years, the research I see
when I talk to people like Dee Griffin, the veterinarian that
works with a lot of feedlots, we talk about how much antibiotic
residuals are in meat carcasses that they test, and it is less
than 0.001 percent, which is 1/
1,000 percent, which is
virtually none, or \1/100\ of a percent, which is virtually
none.
And we have seen other countries and done studies in the
European countries where they have taken preconditioning
antibiotics, like Aureomycin, and those out of the
preconditioning, and they have seen their production yield
decrease. They have seen their sickness in the animals
increase. The overall production costs go up. Yet, there has
been no change in the antibiotic resistance. In fact, they
still see it.
So the correlation I don't see tied to the science that I
would like to see to go on with the VFD, the veterinary feed
directive that just came out. And we are getting a lot of
producers saying it is an onerous rule. And I would like to
hear your comments on that.
Dr. Woteki. Well, we agree that the industry has been
terrifically successful at reducing the amount of antibiotics
that are being used and that the residue levels in meat are
actually very low. The issue is, though, that by continuing to
feed antibiotics there is the development of resistance to
those antibiotics in the gut microflora that can be
transmitted.
Mr. Yoho. I understand. I understand all that. I really do.
I have a great background on that. But, again, without the use
of those, your production costs go up, and we have not seen the
correlation of the antibiotic resistance. We are talking about
tetracycline that has other benefits too. It does stimulate the
immune system, is one of the benefits of that.
In conjunction with a good backgrounding program of
vaccinations for the respiratory diseases and the
clostridiales, it is an imperative tool in the arsenal of the
producers. And what we are seeing, in my opinion, is it is an
overreach of the Federal Government regulation that is solving
a problem that is not really at the root of the problem.
I go to the human doctor so many times, and they will want
to put me on a Z-Pak, which is one of the most powerful
antibiotics you can get, without doing sensitivity and culture
and all that and the blood work ahead of time. Whereas in
veterinarian medicine, we are doing that. And you said you have
done a good job at reducing the antibiotic levels. When you are
down to 1/1,000
percent or zero percent, it is virtually no residue. And if you
look at hormone levels, like estrogen, cows will have more
estrogen just from grazing green grass than they do from the
supposedly implants that we see.
And so sometimes this gets hyped up in the media and it is
not based on science. And we are spending a lot of money on
research in the ag sector, and we need to have a real strong
program of educating the public on these things, and I would
like to see more effort in that.
Dr. Woteki. Well, we certainly agree on the need for
educating the public. And we also, from the research agency's
perspective, our role is to be providing that information base
that is going to inform good public policies.
It is also our responsibility to be looking to develop
alternatives to the use of antibiotics. And there are a lot of
very promising research directions, prebiotics, probiotics, to
improve the immune system of animals, improve vaccines, wider
spectrum of vaccines being available, bacteriocins, lytic
enzymes, a whole range of different approaches. So that is the
direction to support our livestock industry that we see our
research going in.
Mr. Yoho. And I appreciate the research you are doing.
And I don't want to steal Chairman Lucas' thunder on citrus
greening, but coming from Florida, we thank you very much for
that. And if we have a second round of questions, I will ask
something on that.
And I will yield back, Mr. Chairman.
The Chairman. The gentleman yields back.
Mr. Kelly.
Mr. Kelly. Ms. Secretary, how does REE guarantee or guard
against duplication of research?
Dr. Woteki. Well, we have a variety of different approaches
that we take in planning our research programs that are our
primary way of assuring that the research that we undertake is
unique and important and is going to be addressing the needs of
agricultural producers.
In all of the agencies that are represented here, they have
a cycle of planning that goes in the Agricultural Research
Service to the program and project level, within the National
Institute of Food and Agriculture they take what they call a
portfolio approach, and in ERS and NASS planning cycles also,
all four agencies, involving stakeholder input.
So as part of these planning cycles, they consult with the
scientific community as well as with commodity organizations,
the scientific societies, to identify what the needs are, the
unmet needs, the big questions. Those are also then taken into
account in developing a plan of work that goes through further
discussion and refinement.
The project proposals then are developed within the
intramural agencies by the specific investigators in line with
the priorities that have been identified. And at the end of
each of these cycles of planning, the entire program that was
conducted under that is reviewed with that broader stakeholder
input. So all of it is very much informed by consultation with
the external community.
Internally, we make sure through a variety of consultations
that there is coordination that is going on among the agencies.
And we have also, in response to a directive from Congress in
the farm bill, in 2008 developed an overall roadmap for
agricultural research and an action plan that guides the
overall priorities of all of the agencies. And we report on
what we have conducted under that each year. So that action
plan gives kind of an umbrella to the work that all of the
agencies undertake.
Mr. Kelly. And, Administrator Reilly, what is the
fundamental difference between Agricultural Estimates and the
Census of Agriculture programs?
Mr. Reilly. Well, the Agricultural Estimates is our annual
program measuring basically acreage production and yield of the
different commodities across the country, which is done by a
series of probability-based samples of producers and farmers.
The Census of Agriculture is an enumeration of the entire
farm population, the 2.1 million farms out there, which is used
more as a complete baseline that we adjust in our samples and
design our 5 year program based on the results of the Census.
Mr. Kelly. And why do some farmers feel that NASS contacts
them so frequently and asks personal questions, are personal-
in-nature questions: Why do they feel like these? And I know
that we had oversight on that. And we just have to be very
cautious that the questions that we ask are agricultural based
in getting the answer. Can you comment on that, please?
Mr. Reilly. Well, we go through, in any survey that we do,
as Dr. Woteki talked about, we engage stakeholders across the
country, both within government and on the public side, of what
data is needed. So we try and we do every effort we can to make
sure whatever questions we ask have a legitimate need for some
type of policy discussion.
Why we contact farmers and they perceive that we are
contacting them repeatedly is that there is a growing need for
agriculture information, and some of the farm operations are,
through consolidation, are so large and so impactful that if
you are trying to produce reliable estimates or whatever data
down to a local level, you have to sometimes go back to those
same large producers in many of our programs. Regrettably, that
is just the nature of the game.
Mr. Kelly. Mr. Chairman, my time has expired.
The Chairman. The gentleman yields back.
Mr. Thompson, 5 minutes.
Mr. Thompson. Thank you, Mr. Chairman.
Thanks to all of you once again for your leadership and
your service and for being here today.
I want to start out asking about the Specialty Crop
Research Initiative. It is an important issue, obviously, in
U.S. agriculture, and we broke some new ground here.
So, Dr. Ramaswamy, one of the provisions in the 2014 Farm
Bill included greater input from the specialty crop industry
when awarding projects and allocating funds in the competitive
grant programs, including AFRI and the Specialty Crop Research
Initiative.
Can you tell us how NIFA has been implementing this
provision and ensuring that the money being spent through AFRI
and SCRI is going towards industry-supported research.
Dr. Ramaswamy. Good morning, and thank you very much, Mr.
Thompson, for that question.
And yes, sir, we now are through the third round of
undertaking the two-step review process. The first step is an
industry relevancy evaluation that is undertaken by
representatives of the industry. And they make a
recommendation. They also provide us a rank order of the ones
that should be going forward to the next round, which is the
scientific merit review, and they also provide a rank order.
And that information, along with the comments that have
been made, is provided verbatim to the scientific review panel.
We also try to bring in some members from the industry
relevancy panel on to the scientific review panel itself as
well. The chair of the industry review panel also serves as the
chair of the scientific review panel, at least in the last
year, and this year, again, we are going to be proposing to do
that.
And so that information is utilized. And then there is a
full-fledged scientific review process that is undertaken, and
that group will incorporate the information from the first
review as well, and then make recommendations on what projects
are going to be funded.
And the NAREEE Board has a subcommittee that actually looks
at whether we are or are not doing the right things, and they
give us some feedback as well. So based on that sort of a
feedback over the last now, as I said, the third round, we have
iteratively improved the whole process.
Mr. Thompson. That is very much appreciated, procedural
leadership in that area.
Dr. Ramaswamy. Thank you.
Mr. Thompson. We are under more and more pressure, and
appropriately so, from constituents and the citizens wanting to
know what our outcomes are, our effectiveness, and making sure
we are doing the right things based on sound data. And so that
has grown in importance.
So, Administrator Reilly, and I don't think this helps, the
fact that in inflation-adjusted terms the NASS budget has
really been flat over the last 10 years despite the fact that,
from a citizen perspective, there is more accountability. They
are actually paying attention now, which is really a good
thing. I think the founders would be pleased.
And yet, we are not adjusting to provide increased support
for getting the data. And we have seen several examples where
NASS will drop important reports, such as the July Cattle
report was canceled. How has the number of surveys and reports
administrated by NASS changed over time?
And I recognize the need for better resourcing, but with
the resources you have being flat for 10 years, which is really
a decline with the increasing need, what mechanism do you use
to prioritize what you get done?
Mr. Reilly. That is a very good question, because we are
always looking to prioritize. And what we tried to do is look
at what data is needed for whatever policy decision and are
there other sources of it, or in lieu of eliminating a report
completely, we look at how often we have to release that
information and how often we could provide it.
So, for example, for the July Cattle report, we realize
that that was kind of something that we didn't have the funds
to do. But in looking around, we realized that we do a very
extensive January Cattle report, we do ongoing monthly cattle
on feed information, and then we work with the Food Safety and
Inspection Service and publish all the slaughter information on
a regular basis.
So for the cattle industry specific, we made sure, yes, it
was another important data point, but it wasn't void of
eliminating something completely. And that is what we attempt
to do as much as possible.
Mr. Thompson. Thank you.
Thank you, Mr. Chairman.
Dr. Woteki. If I might just add a little bit. NASS has also
taken a number of steps to reduce the cost of the data
collection and processing, automating the interviewing process,
centralizing their telephone interviewing. And that has enabled
them to maintain as many of the surveys as they have been able
to do.
Mr. Thompson. Any idea what, and I don't know if you can
capture that somehow, but that increase in efficiency, like
over 10 years ago, how you would quantity that? Because I
assume it has probably been leaps and bounds given the
technology that is available.
Mr. Reilly. Well, one of the key measures, as I look just
at our overall staffing level, we are down about 15 percent
staffing level just of where we were a couple years ago and we
were able to do that by standardizing our processes,
introducing more automated steps, and eliminating and
centralizing some of our functions to do it more efficiently.
We opened up a new operating center out in St. Louis,
Missouri, and we do a lot of our extensive telephone data
collection out of there. And all of our forms that are filled
out by the respondents come back there for sort of a
centralized data capture operation, which we could do much more
efficiently, rather than through a distributed fashion.
Mr. Thompson. Thank you for your efforts.
The Chairman. Mr. Lucas, 5 minutes.
Mr. Lucas. Thank you, Mr. Chairman.
One of the issues that caught my attention, of course, as
Mr. Yoho noted, is very important to a lot of the Members of
this Committee, the wonders of this thing called citrus
greening. And, Dr. Ramaswamy, earlier this year, the NIFA
awarded several projects for Citrus Disease Research and
Extension Program through that. Do you feel like the selected
projects can effectively address the threat posed by citrus
greening?
Dr. Ramaswamy. Congressman Lucas, thank you very much for
that question. Good to see you again, sir.
Yes, sir, I believe that the projects that were selected by
NIFA are going to have very significant impacts. NIFA projects
tend to have a longer timeline in looking at the return on
investment, but I will give you a couple of examples of
something that is happening right now.
One of those is the University of Central Florida received
funding to develop nanopesticides, it is a zinc compound, it is
called zinc oxide, and that has demonstrated phenomenal
efficacy against the pathogen and the insect itself as well,
both. And so it is undergoing tests, and we hope that will be
undergoing field tests and deployed here in the near future.
A second example is the development of tools, pesticidal
tools, against the genetic mechanisms of the insect itself, and
it is called RNAi. You are interfering with the inheritability
process. And that has some really outstanding possibilities as
well.
So those are a couple of examples of things that are
happening that we believe will in the longer-term provide us
that sort of a return on investment.
Mr. Lucas. Not having any citrus in my district in Oklahoma
until we got into this process a few years ago, I didn't
appreciate potentially how devastating an issue could be and
literally could bring an industry entirely to an end in this
country. So it got the attention of the Committee and we worked
very diligently.
One last question, though. The industry has prioritized
funding projects related to trees genetically engineered to
resist the citrus greening. And some observers have indicated
that funding was denied because of a concern related to how the
consumers might potentially accept the final result. Why has
your agency not funded this project?
Dr. Ramaswamy. So the answer is actually yes and no.
Funding is being provided for looking at genetic engineering
approaches to deal with this devastating pest, as you said.
Over 75 percent of the Florida citrus industry has now been
impacted, and it is found in California and Texas as well. So
we are providing funding for genetic engineering.
But, again, it is peers that come together that are
providing the input in reviewing these projects as well. And,
in fact, the Agricultural Research Service has some really cool
stuff that is going on in regards to genetic engineering, and I
am going to let Dr. Chavonda Jacobs-Young refer to that.
Mr. Lucas. Please.
Dr. Jacobs-Young. Yes. So I will tell you that we are
undergoing the research on the genetically engineered tree
there in Fort Pierce, Florida. And in 2014, we released seven
new rootstocks that are tolerant to HLB. And we are working
cooperatively with the State of Florida, the University of
Florida, and we are running field trials right now and we are
seeing some excellent results.
We have shown that other therapies, like thermal therapy,
is important to put some of the trees into remission. But the
key is early detection. And early detection is where we can
have our best options for saving the trees. And believe it or
not, the dogs have been very important in helping us be able to
detect the disease early enough to come in with some sort of
antimicrobial or thermal treatment.
Mr. Lucas. Thank you both.
I yield back, Mr. Chairman.
The Chairman. Thank you.
I now recognize myself.
This is a two-part question. And one is that earlier I
questioned the Forest Service and others about use of, Dr.
Jacobs-Young, your agency's studies on Bighorn Sheep and
domestic sheep and the impacts that has had, and the great work
you are doing trying to figure out what is happening. And yet,
it doesn't appear the agency uses that information in making
some of the decisions.
And then broadly, how do we do a better job, NASA bragged
on Teflon as a way to say that here is how these research
dollars, in addition to putting a man on the Moon, helped
everyday Americans.
So how can we do a better job, all of us, in communicating
the successes that you are having and the actual pocketbook,
day-to-day impact on consumers, as an example, and then your
own sister agencies or other agencies within the government
taking advantage of the science that you are coming up with and
the answers you are coming up with, and then that factors into
the other policymaking things that go on?
It is a broad-based question, and anybody that wants to
weigh in, I would appreciate it.
Dr. Jacobs-Young. So could I start with just the Forest
Service question in terms of the grazing allotments? And in
Dubois, Idaho, we are still allowed access for the Forest
Service allotments for our grazing. And so we have been working
with them. They are doing an environmental assessment for us.
And so we are in constant communication with the Forest
Service.
We do have some new research findings. And when I saw your
question earlier today, I reached out to my scientist to ensure
that we touch base with the Forest Service on our new findings
in terms of this interaction between the Bighorn and the
domestic sheep in terms of immune systems and deficits in
immune systems. And so there are some research findings that we
want to make sure that we want to keep on the front burner for
our service agencies.
Well, we have been working with NOAA and NASA around
climate change and soil moisture and global measurements to
help us make better decisions. And you are right, we don't do a
great job telling the stories of the impacts that we have had.
We think about cotton, just the outcome of some of the work we
have done in cotton. Permanent press cotton, for those of us
who travel a lot, are very thankful for that discovery. That
originated out of agriculture.
The avian influenza pandemic, is what I like to call it, it
could have been much worse had it not been for science, being
able to come in and being able to diagnosis the situation,
being able to help mitigate the situation. In fact, now that we
have seen another case of it, we have been quickly able to
isolate and we don't have what we experienced in the past.
And so you are right, we need to do a better job of really
telling people the impact that science has on just the everyday
way of life.
So I am going to let my Under Secretary have it.
Dr. Ramaswamy. I will let her, and then I will respond as
well.
Dr. Woteki. Each agency has a different approach taken from
the fact that they are all quite different in their missions
and their constituencies.
But on the broader level, we are blogging, we are tweeting,
we are putting out podcasts from ERS and the other agencies. We
are using the new media.
And at the same time, we are continuing to put out into the
scientific literature, which is the main way that we have of
communicating, literally tens of thousands of peer-reviewed
scientific articles that are the result of the research
investment in the intramural agencies and in the university
scientists and students that are funded by NIFA.
And last, we have the enormous advantage of having the
partnership with Cooperative Extension in the land-grant
universities that is a way of providing the research-based
solutions directly to the people. So that partnership is very
strong and is one key way that we continue to get the science-
based solutions out to the users.
Dr. Ramaswamy. If I might pick up on Dr. Woteki's response
here. Indeed, extension, as you know, is in every one of our
4,143 counties, boroughs, and parishes in America, and there is
a way to get knowledge and information in there.
And all the tweets and all the Facebook postings and all
the social media and things like that really are part of this
overall approach to conveying what is happening on the ground,
as Chavonda just said. There are impactful things that are
happening.
If you look at wheat production in America, products that
have been funded by NIFA have resulted, if you look at America,
about 15 percent of the wheat acreage is based on the varieties
developed by funding that we provided across multiple
universities. That translates into about $1.8 billion of added
income to farmers, and that translates into about 15,000 jobs
as well on the ground.
And so what we are doing is working through multiple media
to get that information out. I like to say that we need to
remove the shroud of secrecy that surrounds this amazing
enterprise that we have in the world of agriculture.
Dr. Bohman. One of the things we do at ERS is to measure
the impact of technologies on farmers, consumers, and U.S.
agriculture as a whole. And we annually produce measures of
agricultural productivity, which show on average about three
percent growth. And this is all from technology and better
management by farmers. It is not from added inputs.
So this allows us to show how land resources have been
saved, how there are fewer chemicals being added because of new
technologies. And that is something we continue to invest in
and have a scientific review of the methods to make sure that
the public has confidence in what we are finding.
We also do sector studies. We published a report on
structural change in the dairy industry a few weeks ago which
shows--and I can't remember the time period--over recent years
that there has been a 19 percent decrease in the average cost
of production in the dairy industry. So this leads to lower
consumer prices and benefits all Americans.
And we plan to continue to invest in these studies. And
they rely heavily on the information we get from our sister
agencies ARS and NIFA on science and the data and statistics
from NASS. So it really is an integrated effort to do this.
The Chairman. Well, we will do our second round here in a
second. I appreciate that. But we all need to do a better job
of trumpeting your successes in a tangible way that in 2018
will help us get another farm bill done, because I am a little
self-serving here, but we are going to need all the help we can
get to get that done.
And the more consumers can understand where their food
comes from and how it gets there and the successes that are
there, which always translates into less food costs that they
are enjoying. And they don't understand all the great work that
you do. They don't understand how that translates through the
extension service that Dr. Ramaswamy talked about. All of that
just happens seamlessly, and we do it really, really well, but
we don't brag on it enough.
And you have a great story to brag on. There is nothing
wrong with helping consumers understand that, whether it is
permanent press clothes or whatever it might be, that that is
coming about as a great work that--in partnership between your
agencies, your sister agencies, as well as production
agriculture and all the kind of reciprocal folks that are doing
research and everything else that is going on.
So you have a terrific story to tell. We just, all of us,
need to do a better job telling it, and by 2018 we need to
really do a good job.
Dr. Ramaswamy?
Dr. Ramaswamy. Yes, I just wanted to add, one of the things
that I have been pushing with the grantees, the people that we
give the money to, to make sure that they make the connection
between the public investments and the public good that is
derived as well. They do a lousy job of making that connection.
The Federal Government, the state government, and the local
governments are also investing in these things. They have to
remember to make sure that they are making that connection as
well, in the press releases that they do, the radio and
television interviews they do, the tweets that they do as well.
Once we start making that, the public gets it as well.
The Chairman. Amen. I agree.
Who wants a second round?
Mr. Benishek. Well----
The Chairman. Oh, I am sorry.
Mr. Benishek. Mr. Chairman?
The Chairman. Mr. Benishek, 5 minutes.
Mr. Benishek. I didn't have a first round, so I just wanted
to make sure that I have my 5 minutes in before you started
again.
The Chairman. Sorry about that.
Mr. Benishek. That is okay.
I just want to ask a couple brief questions on the Economic
Research Service. And apparently there are people in the
Department that specialize in regions around the world that are
important for agricultural trade. And what is the focus of that
research?
Dr. Bohman. So we cover developments in international
markets in two dimensions.
One is through our contributions to USDA's World
Agricultural Outlook Board and the monthly interagency
commodity estimates. And ERS has experts who go to those
meetings and, with the Foreign Ag Service and our other USDA
colleagues, assess the impacts of developments. And you see
those in the numbers that come out every month. So we are
behind those numbers with our international assessment.
We put out every year a 10 year baseline in conjunction
with the Office of the Chief Economist, but we have the models
that do the heavy lifting in that. And that looks forward in
terms of taking assumptions about macroeconomic developments,
population growth, and puts together a set of forecasts that
help industry and agriculture look forward.
We also do special studies that is more motivated by this
work. And we identify these issues through our work with the
World Agricultural Outlook Board, where are the big
uncertainties, where are the issues. We also consult regularly
with stakeholders to bring in topics, and we welcome input from
your staff on issues you think are important.
Recent examples include work we did last year on China's
cotton policies and the impacts of their accumulation of stocks
on global markets, impacts for the U.S. We looked at potential
implications of trade with Cuba. As Under Secretary Woteki
mentioned, we published work on the bigger trade agreements, on
TPP implications and T-TIP.
So this two-pronged approach is really necessary because
the U.S. exports between 20 and 30 percent of our production
depending on who measures it, so we are highly integrated and
dependent on world markets.
Mr. Benishek. Thank you. I appreciate that answer.
I just want to ask Dr. Ramaswamy a question, and I am
hoping to touch on it in the next panel too.
We have this bovine TB issue in Michigan. I know you worked
at Michigan State at one point, and I know that they are
implementing kind of a new program for dealing with these
infected herds. But since you are talking about research, I
talk to these farmers that were involved, and they have been
apparently doing everything that they are supposed to do to
prevent this TB, and they still get the TB.
So I know it has been around for a long time, but can you
tell me do you know the vectors? I mean, people think it is
just wild animals and everything. Can you go into that a little
bit?
Mr. Ramawsamy. I am actually going to defer to Dr. Jacobs-
Young because the Agricultural Research Service actually has
significant work going on in that area.
Mr. Benishek. Well, good. Tell me about it.
Dr. Jacobs-Young. Absolutely.
We have determined that it is being transmitted by wild
deer to the cattle. And so we have identified the transmission
mechanism. And we have actually worked to develop an assay to
help us detect infected animals. And so this assay, in addition
to the human skin test for TB, we have been able to enhance our
ability to determine if the deer are in fact, and our cows are
in fact, infected.
Now, in terms of vaccines, we are actually using a human TB
vaccine to start with. And so we are going to be developing a
more robust animal vaccine from that point, but we are using a
human vaccine to actually vaccinate the wild deer and not the
cattle. So we are working from the point of----
Mr. Benishek. How are you going to get a hold of a wild
deer and vaccinate it?
Ms. Jacobs-Young. I have not personally been involved in--
--
Mr. Benishek. Let me tell you, that doesn't seem like an
easy thing to do.
Dr. Jacobs-Young. Very carefully is what my colleagues say.
So we are working with the vector. And so we would be happy
to follow up with you with some----
Mr. Benishek. Well, I would appreciate that, because I have
had a couple of visits to farms within the last year that have
had pretty agonizing situations occur. And I understand that it
is not only in Michigan, but Texas also has this problem too.
So it would be good to work with you because these problems
seem like they are ongoing, and----
Dr. Jacobs-Young. Yes, they are.
Mr. Benishek.--I want to put a stop to it.
Dr. Jacobs-Young. And as soon as we solve one issue, there
is something else.
But this is an example of where human science and animal
science have to be in communication, right? So we have learned
a lot from human TB in order to be able to manage this.
Mr. Benishek. Okay. Thank you.
The Chairman. Well, Dan, since I skipped you, would you
like to start the second round? Dan? Benishek? Since I skipped
you, would you like to start the second round?
Mr. Benishek. No, that is okay. Go ahead, Mr. Chairman.
The Chairman. All right.
Mr. Benishek. I will wait my turn. I just want to be----
The Chairman. You are just going to sit over there and
pout. Is that what you are going to do? You are going to sit
over there and pout?
Mr. Benishek. Well, no. I am good with these folks. I will
hopefully start the next time.
The Chairman. Okay.
Who would like a second round with this panel?
G.T., 5 minutes.
Mr. Thompson. Thank you, Chairman.
Once again, thanks.
And I am not really looking for an answer on this now, but
it has to do with research. When we did the farm bill, we had
what I would call milk wars in terms of the dairy program of
what we were going to do. And we wound up doing something I
supported, the margin insurance.
And so I am assuming, I guess you never assume, but I am
hoping that something that we will be able to look at the
effectiveness of that. Because we need to know how we have
done, whether it is good or bad news. And that is one in
particular because of how our dairy farmers struggle.
So it is pretty early, so I don't know if there is any
preliminarily data on the outcome of that, or is that something
you are tracking?
Dr. Bohman. So yes and yes.
So I mentioned the report we published a couple weeks ago
looking at structural changes in the dairy industry. That
concludes with a preliminary look on the MPP-Dairy program.
Mr. Thompson. Okay.
Dr. Bohman. And we have research underway doing just what
you asked for. And we expect to have results coming out over
the next couple years and in time for people to use in thinking
about the next farm bill.
Mr. Thompson. Excellent. And I would love to look at it
just as kind of a cross-section of how well we are doing, I
appreciate it.
I really appreciate the land-grant universities were
mentioned. I bleed blue and white. I am a Penn Stater. I am a
product of Penn State. And I love our extension agent services
that we have, 67 counties in Pennsylvania. Some of those are
closing right now. And it is not our fault, it is not your
fault, we have a governor, and it is our number-one industry in
Pennsylvania, but we just have a governor that is holding that
hostage. And these are Federal dollars that we have
appropriated back in the end of June last year, and he just
refuses to release those.
The question I have, and I don't know whether you know the
legal answer to this question. Because it is federally
appropriated, and most of it is not matched by state dollars, I
don't think he has a legal leg to stand on for withholding that
funding, which is hurting our people and hardworking men and
women that are working today that benefit from that technical
expertise in so many different ways. And they are actually
looking to discontinue our 4-H and FFA programs. That is our
next generation of farmers.
And so I don't know if you have any insight into whether
that money can legally be held up and held hostage, but I would
just love to get your opinion on it.
Mr. Ramawsamy. Yes. Congressman Thompson, yes, sir. In
fact, the folks from Penn State, the President and the dean----
Mr. Thompson. Dr. Barron.
Mr. Ramawsamy. Yes, sir.
Mr. Thompson. Good guy.
Mr. Ramawsamy.--Barron and Rick Roush, the dean as well,
they have been in touch with us over the last several months,
as a matter of fact, since last summer, when this whole thing
got started. And, indeed, I have also heard from various farm
groups and others within the Commonwealth of Pennsylvania, as
well, about the significant challenges. Just last week, I was
talking to folks that do mushrooms in that state. Again, they
were asking me about this situation.
And, yes, there is a legal requirement on the match. But,
for every dollar that we provide, there has to be a state
dollar on it. And, as I understand it, within the legislature
and between the Governor and the legislature, there is some
movement on coming to some sort of an agreement, and we are
waiting to see how that comes about. But we are going to be
following up on that, as well, in regards to making sure that
the match is being met by the state.
Mr. Thompson. Yes. Well, I can tell you it passed the House
and the Senate, I believe, yesterday, but the Governor has
threatened to once again veto it. And he has a line-item veto.
I don't understand that.
I yield back.
The Chairman. Anyone else, Ted, 5 minutes.
Mr. Yoho. Thank you, Mr. Chairman.
And, again, I want to thank you for the work you guys have
all done on citrus greening in our state. We went from about
400 million to 450 million boxes down to under 100 million
boxes. And it is just devastating in Florida without oranges.
It is like Wal without mart. They just kind of go hand-in-hand.
And the research you are doing on that, especially with the
GMOs and the bactericides that you had mentioned if you catch
it early, those are great, but if we can't market, it is for
naught. And that is what we saw in Florida with the ringspot
virus on the papayas, that the GMOs were created at the
University of Florida, IFAS, approximately 12 years ago. The
EPA approved them, the FDA, the USDA. But it is just now coming
to where it is coming to market.
Is there a way to enhance that marketing aspect of that as
you are doing the research and start letting people on a public
education level know, maybe it is documentaries, how you
produce this product and the outcome of that? What are your
thoughts on that?
Dr. Ramaswamy. Well, I will take a shot at it, and then Dr.
Bohman there, from an economist's perspective, might be able to
provide some insights as well.
So, yes, indeed. In America, we have a situation where in
the marketplace there is a significant reluctance to consume,
genetically modified crops and papayas and things like that.
Never mind all the science points to the fact that there is
nothing wrong, there is no difference between a GM crop and a
non-GM crop. And, to your point, IFAS, the Institute of Food
and Agriculture at University of Florida, is indeed trying to
figure out how to change the mindset of the consumer and the
public.
And so we are in a situation where we are trying to react
to the situation that we have. And so a number of land-grant
universities that we have provided funding to are undertaking
research on how to get consumer behavior to change as well,
going back to the question that the Chairman asked, as well,
about the impacts of things like that. So we are working with
IFAS and other institutions to figure out the best path forward
on enhancing knowledge in the consumer, and, therefore, that
they are able to go ahead and purchase and consume.
Last, the genetic modification that is going on has now
gone beyond the transfer of genes from unrelated species to
manipulating the genetics inside of the same organism itself.
And we have to do a really better job of explaining to the
consumer that that sort of changes that are taking place is not
unlike the selection and breeding that we have done over the
millennia as humanity.
Mr. Yoho. When you say we, are you talking about the USDA?
And do you have a marketing campaign or budgeted for a
marketing campaign to utilize the research that you are funding
so that the public does know about this so we dispel a lot of
the misinformation out there?
Dr. Woteki. We do not have something like what you have
just described for the research and education agencies.
Mr. Yoho. Okay.
Dr. Woteki. The primary way that we have for communicating
with the public would be through NIFA programs, cooperative
extension, which has over the years had good science-based
information about genetic engineering, its applications in
agriculture, and what this means. NIFA has programs for
curriculum development, grants programs that Dr. Ramaswamy
administers, that also can be used for development of
curriculum for high schools as well as at the university and
the graduate level.
So that is the primary way by which we would be
communicating about this science, what it means for the
consumer, what it means for safety. But we don't have
authorization or marketing----
Mr. Yoho. Would you need authorization from us, or is that
something you can do internally?
Because if you look at, Dr. Borlaug with genetically
modified wheat back in the sixties, that accounted for a
billion people being saved, and India, they have a statute of
him over there. Those kind of documentaries, I don't know if it
is best through you or through the big ag farm companies or a
correlation between you two, to get that word out there.
Because there is just so much misinformation and confusion on
that, and we need to promote the benefits of these products if
we are, and we are growing to nine billion people on this
planet and we need to be able to utilize these products.
I yield back. Thank you.
The Chairman. The gentleman yields back.
Anybody else would like another round? Any comments for
this particular panel?
Well, Dr. Woteki and the rest of the panel, thank you all
very much. Your agencies do great work. You typically labor in
anonymity, for the most part. And we thank you for all of the
work you do.
And, as we said, all of us, including yourselves, need to
do a better job of bragging on your successes. The way we can
best do that is convert what you do into the pocketbook impacts
on consumers and that kind of thing. If there is a way we can
start talking better about that, because they, as we all say
often, enjoy the most affordable food supply in the world, and
it is driven by a lot of moving parts, including what you and
your agencies do and the men and women who get up every day and
try to make this world a better place to live in. So thank you
for what you do. We appreciate that.
We will take a brief 15 minute break while we get the other
panel here. We were a little early, but I want to thank you all
for very much for the preparation done. And thank your
backbenchers back there for all the questions that they
prepared you to answer that we didn't ask. So thank you all
very much.
Dr. Woteki. Thank you, Mr. Chairman. We appreciate your
support.
The Chairman. Yes, ma'am.
[Recess.]
The Chairman. All right. Let's go ahead and start back up.
It is now my pleasure to welcome our fourth panel to the
witness table today, led by the Honorable Ed Avalos, who is the
Under Secretary for Marketing and Regulatory Programs at USDA.
Today, Mr. Avalos is accompanied by Elanor Starmer, who is the
Acting Administrator for Agricultural Marketing Service; Kevin
Shea, the Administrator for Animal and Plant Health Inspection
Service; and Larry Mitchell. He is the Administrator for the
Grain Inspection, Packers and Stockyards Administration, a
proud Charleston State grad and, I understand they bragged on
you at the Charleston academic forum this past fall as being
one of their better graduates. So we are glad you are here with
us this morning, Mr. Mitchell.
With that, Mr. Avalos, 5 minutes.
STATEMENT OF HON. EDWARD M. AVALOS, UNDER
SECRETARY, MARKETING AND REGULATORY PROGRAMS, U.S. DEPARTMENT
OF AGRICULTURE, WASHINGTON, D.C.; ACCOMPANIED BY ELANOR
STARMER, ACTING
ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE, USDA; KEVIN
SHEA, ADMINISTRATOR, ANIMAL AND PLANT HEALTH INSPECTION
SERVICE, USDA; LARRY MITCHELL, ADMINISTRATOR, GRAIN INSPECTION,
PACKERS AND STOCKYARDS ADMINISTRATION, USDA
Mr. Avalos. Mr. Chairman, Members of this Committee, I am
pleased to have an opportunity to discuss activities of USDA's
Marketing and Regulatory Programs' mission area, including
APHIS, GIPSA, and AMS.
American agriculture directly and indirectly supports over
16 million jobs. At USDA, we have some very dedicated, very
hardworking and talented people. I applaud their work that they
do for farmers and ranchers in our rural communities.
The MRP agencies must cultivate strong relationships and
partnerships with industry groups, state agencies, sister
Federal agencies, and foreign governments. Expanding and
maintaining agricultural trade is a priority for the
Administration and so important to our farmers, our ranchers,
our shippers, our packers, our feeders, and so many, many, many
more stakeholders.
The MRP mission area plays a vital role in developing and
facilitating the exports of livestock, meat, poultry, and
agricultural products throughout the world. APHIS addresses
animal and plant health issues that many times are used to
restrict trade. GIPSA inspects and certifies almost all grain
that is exported. AMS issues export certificates to verify and
certify that products meet specific export requirements for
countries around the world. So much of the market access and
market share that we enjoy today is due to the work of this
mission area.
Mr. Chairman, Members of the Committee, thank you so much
for the opportunity to be here with you today. This is my last
year as Under Secretary. After my service here in D.C., I plan
to return home to New Mexico, to Las Cruces, to the Mesilla
Valley. It has been an honor to serve our nation's farmers and
ranchers and our many, many rural communities. I enjoyed
working with the Committee, Mr. Chairman, and I thank all of
you for your hard work in supporting and protecting American
agriculture.
So now my team and I are ready to answer any questions you
might have.
[The prepared statement of Mr. Avalos follows:]
Prepared Statement of Hon. Edward M. Avalos, Under Secretary, Marketing
and Regulatory Programs, U.S. Department of Agriculture, Washington,
D.C.
Mr. Chairman and distinguished Members of this Committee, I am
pleased to appear before you to discuss the activities of the U.S.
Department of Agriculture (USDA) Marketing and Regulatory Programs
(MRP) mission area, including the Agricultural Marketing Service (AMS),
the Animal and Plant Health Inspection Service (APHIS), and the Grain
Inspection, Packers and Stockyards Administration (GIPSA).
With me today are: Mr. Kevin Shea, Administrator of APHIS; Ms.
Elanor Starmer, Administrator of AMS; and Mr. Larry Mitchell,
Administrator of GIPSA. They will answer questions regarding specific
agency activities.
Agriculture is an engine of growth and prosperity, directly or
indirectly supporting 16 million jobs. MRP programs have contributed
significantly to the success as well as the development of domestic
markets in a variety of ways. For example, both AMS and GIPSA certify
the quality of agricultural commodities and provide industry with a
competitive edge earned by the USDA seal of approval for grading and
inspection. AMS also facilitates marketing by reporting essential
market data, upholding strong organic standards, and supporting the
ongoing growth of local and regional food systems. GIPSA also works to
help ensure that livestock, meat, and poultry producers have a fair and
competitive market environment. APHIS also protects the health of
plants and animals, enhancing the competitiveness of U.S. producers by
keeping production and marketing costs low. All three agencies help
resolve international issues to maintain and open markets around the
world for U.S. products, thus supporting American families.
As you can see, each of our agencies has unique responsibilities,
and today my colleagues and I are here to and discuss the important
work our agencies are engaged in and how each contribute to the success
of American agriculture.
APHIS
APHIS' primary mission is to safeguard the health and value of U.S.
agricultural and other plant and animal resources. The Agency's
programs directly protect livestock, poultry, and crops worth an
estimated $193 billion in 2015 (based on data collected by USDA's
National Agricultural Statistics Service) and the well-being of 2.5
million animals under the Animal Welfare Act. APHIS employees come to
work, every day, across the country and around the world, to serve a
diverse array of customers and stakeholders and respond to challenges
and threats as they arise--as they have with their response to the
outbreak of Highly Pathogenic Avian Influenza (HPAI). The customers
APHIS serves include ranchers, farmers, poultry producers, citrus
producers, licensed animal dealers, importers and exporters, and
ultimately the general public.
Several core beliefs form the foundation of APHIS' mission. First,
healthy and profitable agriculture is good for America; it provides
food and clothing for countless people worldwide and is a key pillar to
a thriving economy. Second, as a Federal agency, APHIS' role is to take
actions that no one state or individual entity has the capacity to take
on their own. Last, APHIS has a special role to carry out in caring for
vulnerable animals. APHIS accomplishments over the last year
demonstrate our commitment to these principles, our mission, and to our
customers. I'm pleased to share a few of the Agency's most notable
accomplishments with you now.
Highly Pathogenic Avian Influenza
In FY 2015, 21 states had positive cases of notifiable avian
influenza, affecting 232 premises (211 commercial, 21 backyard) and
more than 48 million birds. At its largest point, APHIS' response team
included 3,200 individuals, including Federal employees, state
employees, and contractors. The response team worked diligently to
contain and eradicate the disease, safely dispose of infected
materials, and ensure the virus was eliminated so affected farms could
safely return to production. Throughout the experience, APHIS
continuously improved its response capabilities to provide the most
effective and efficient services possible. All affected premises from
those outbreaks have resumed operation.
Based on conversations with states and industry groups and the
lessons APHIS identified from the FY 2015 response, the Agency prepared
a comprehensive and updated emergency response plan for a potential
return of notifiable avian influenza. APHIS also learned that it needs
to rebuild response capabilities for large-scale events such as this
one, and developed a plan to move in that direction including the
development of multiple level coordination groups in APHIS and USDA.
Therefore, when HPAI was detected in Indiana in January 2016, APHIS
took immediate action to identify the disease and launch response
activities per the Agency's updated HPAI emergency response plan. APHIS
depopulated the infected flock as well as other flocks at premises in
close contact with the affected flock. It appears that this was an
isolated incident where a low pathogenic virus mutated into the highly
pathogenic form--a different strain from the one that caused the 2015
outbreak--and it does not necessarily indicate the beginning of a
larger outbreak.
All told, USDA has received nearly $1 billion in Commodity Credit
Corporation (CCC) funding to address these outbreaks. This has allowed
it to help producers recover from the outbreak, with over $190 million
directly compensating them for the loss of the poultry and related
equipment. It has funded the depopulation and disposal of infected
poultry, as well as cleaning and disinfection of premises. Funding also
has allowed the Agency to increase staffing to address the outbreak,
conduct planning activities and to do extensive surveillance so there
is early warning of where the virus may strike.
APHIS is prepared for any return of the disease and its
preparedness and quick response to the Indiana outbreak likely helped
prevent further spread of HPAI in the region. APHIS will continue to
work with its state and industry partners to identify and address any
additional outbreaks should they occur.
Biotechnology
APHIS continues to make significant progress with its biotechnology
petition review process. In recent years, this process was taking more
than 3 years, adding to a growing backlog of petitions. To address this
situation, APHIS undertook a business process improvement review and
for petitions received in 2015, is now meeting its goal of 13 to 15
months to review petitions that do not require an environmental impact
statement (EIS). When the process began, APHIS had a backlog of 23
petitions. The Agency has reviewed 22 of those with just one still
pending.
Most recently, APHIS announced that it is developing a draft EIS to
evaluate a range of alternatives the Agency can take as it works to
update its biotechnology regulations. APHIS is considering amending its
biotechnology regulations to reflect lessons learned from regulating
biotechnology products since 1987, reflect advances in biotechnology
and address comments and suggestions raised by stakeholders. This
update to the regulations would increase the efficiency and precision
of our regulations. As we do so, we will continue to ensure that our
business process improvements to the regulatory process will continue
as well.
The proposed revisions APHIS is considering could align the range
of risks that may be considered under APHIS' biotechnology regulations
with both the plant pest and noxious weed authorities of the Plant
Protection Act, to ensure a high level of plant health protection,
improve regulatory processes so that they are more transparent to
stakeholders and the public, and provide regulatory relief so that
unnecessary regulatory burdens are eliminated.
Feral Swine
In FY 2014, APHIS requested and received funding from Congress to
initiate the National Feral Swine Damage Management program. These
animals cause damage estimated at $1.5 billion annually and pose risks
to agriculture, natural resources, property, animal health, and human
health and safety. APHIS' goal is to reduce damage by suppressing
populations in states where feral swine populations are large and
widely distributed. In states where feral swine are emerging or
populations are low, APHIS will cooperate with Federal, state, Tribal,
and local entities to eliminate them. The Agency will also target feral
swine emerging in urban areas where they pose a danger to people and
property, and the Agency will also conduct research to develop and
evaluate new and emerging tools to further reduce damage inflicted by
feral swine.
Plant Protection Issues
USDA appreciates Congress' support of the Huanglongbing (HLB)
Multi-Agency Coordination group (MAC). The MAC is working diligently
with the citrus industry to find near-term practical tools and
solutions for the industry to use in combating HLB. It has brought
unprecedented coordination and cooperation across Federal and state
agencies and industry in an effort to speed progress on methods to
fight this disease. With support from Congress, the HLB MAC has been
able to approve $20 million in more than 30 HLB-related projects to put
practical tools to work in the field now while longer term solutions
are developed. Some of the tools being developed include delivering
thermal therapy to citrus trees (to kill the bacteria that causes HLB)
on a grove-size scale, increasing production of biological control
agents to manage Asian citrus psyllid populations (which spreads HLB),
and training detector dogs to find trees infected with HLB. We would
also note significant progress in field trials for the use of
antimicrobials that attack the disease and stop its spread. In
addition, in FY 2016, with Congress' support, APHIS was able to commit
more than $48.8 million to Citrus Health Response Program activities
with an emphasis on HLB and Asian citrus psyllid.
APHIS also has made significant progress in addressing a variety of
plant pests, including our very successful work with the State of
California and industry to keep the European grapevine moth (EGVM) from
establishing a foothold. APHIS detected more than 100,000 of these
moths in FY 2009, the first year of the program. In FY 2015, APHIS and
its partners did not detect a single moth, and it may be able to remove
all EGVM quarantines by the end of this fiscal year.
APHIS has also used the funding provided by the Agricultural Act of
2014 (2014 Farm Bill) to continue to enhance plant health through two
important programs, Plant Pest and Disease Management and Disaster
Prevention and the National Clean Plant Network (NCPN). Since 2009,
APHIS has funded more than 2,600 projects in 50 states and two U.S.
territories, strengthening the Agency's abilities to protect U.S.
agriculture and natural resources from foreign pest threats.
Cooperators across the country put innovative ideas into action with
farm bill funds. APHIS just announced its $58.25 million FY 2016
funding plan, which will support 412 projects suggested by states,
universities and other partners. Projects include $890,000 for old
world bollworm survey and response activities; and $157,000 for bark
beetle and other wood boring beetles that affect important forests in
Oregon. Farm bill funding has also allowed APHIS to commit $3.4 million
to eradicate gypsy moth infestations in Washington and Oregon; over
$2.2 million to support eradication of the giant African snail in
Florida; $1.6 million for coconut rhinoceros beetle in Hawaii and Guam;
and over $1.6 million to address spotted lanternfly in Pennsylvania. In
support of the NCPN, which provides reliable sources of pathogen-free
planting stock of high-value specialty crops, APHIS and cooperators
have also provided funding and other support to 22 clean plant centers
and associated programs in 17 states representing specialty crops
including fruit trees, grapes, citrus, berries, sweet potatoes, roses
and hops.
Assisting and Expanding Exports
The ability to export is key to the growth, profitability, and
continued success of U.S. farmers and ranchers and related agricultural
businesses, and is an important contributor to our balance-of-payments.
For some crops, 50 percent or more of our production is exported,
including 80 percent of U.S. cotton, 70 percent of tree nuts, and 50
percent of wheat and rice. According to USDA's Economic Research
Service, the value of U.S. agricultural exports has nearly tripled in
value. U.S. agricultural exports totaled about $140 billion in FY 2015.
The strong showing demonstrates continuing world-wide demand for high-
quality U.S. grown products.
APHIS plays a significant role in continuing to help U.S. farmers
and ranchers access new markets. In January 2015, APHIS reached a
historic agreement with China to allow all U.S. grown apples into the
Chinese market. These efforts result in high quality, fresh U.S. apples
being available for consumers in China and a significant boost in sales
for American apple producers. Exports of U.S. apples to China through
November 2015 were valued at nearly $22 million. Last year, APHIS, in
cooperation with other agencies, successfully negotiated and resolved
171 sanitary and phytosanitary (SPS) trade-related issues involving
U.S. agricultural exports, with an estimated market value of more than
$2.5 billion. This includes continuing our efforts to eliminate all
remaining bovine spongiform encephalopathy (BSE)-related restrictions
on U.S. cattle and beef. Based on our efforts, 14 countries removed all
BSE restrictions on U.S. beef and beef products in FY 2015. Together
these markets have a potential value of $180 million for our exporters.
We were able to retain important markets for U.S. poultry like the
European Union (worth $111 million) by providing scientifically sound
information on our efforts to contain the outbreak of highly pathogenic
avian influenza. APHIS also successfully intervened in 293 situations
where U.S. cargo was held up at foreign ports-of-entry, which prevented
the rejection of shipments worth more than $25 million.
Animal Welfare
APHIS' Animal Care program carries out activities designed to
ensure the humane care and treatment of animals covered under the
Animal Welfare Act (AWA) through inspections, enforcement, and
education. The program ensures that proper care is provided for certain
animals that are: exhibited to the public; bred for commercial sale;
used in medical research; or transported commercially. Facilities using
regulated animals for regulated purposes must provide their animals
with adequate housing, sanitation, nutrition, water and veterinary
care, and must protect their animals from extreme weather and
temperatures.
AMS
AMS's mission is to facilitate the strategic marketing of
agricultural products in domestic and international markets, while
ensuring fair trading practices and promoting a competitive and
efficient marketplace to benefit producers, traders, and consumers of
U.S. food and fiber products. AMS also provides the agriculture
industry with valuable services to ensure the quality and availability
of wholesome food for consumers across the country.
AMS carries out a wide range of programs under the authorization of
the Agricultural Marketing Act of 1946, as well as over 50 other
statutes. More than \1/2\ of the funds needed to finance AMS activities
(excluding commodity purchase program funds) are derived from voluntary
user fees. AMS also provides services for private industry and state/
Federal agencies on a reimbursable basis. In addition, AMS conducts
several appropriated program activities through cooperative
arrangements with State Departments of Agriculture and other agencies.
AMS employees work every day to support the country's diverse
agricultural operations. The Agency's workforce includes marketing
specialists, commodity graders, economists, Market News reporters,
scientists, and analysts who support the marketing of American
agricultural products and work in industry-specific processing plants,
terminal and shipping point markets, production facilities, and office
environments. AMS provides services and awards millions of dollars in
annual grant investments that create opportunities by supporting
economic development in small towns and rural communities across
America.
Much of the agency's support for agriculture is provided through
commodity-specific efforts, such as its Dairy; Fruit and Vegetable;
Livestock, Poultry and Seed; and Cotton and Tobacco Programs. AMS also
oversees the National Organic Program; Science and Technology Program;
and the Transportation and Marketing Program. Further, AMS provides
oversight for over 20 research and promotion programs, also known as
checkoffs, which are responsible for well-known advertising campaigns
such as ``Got Milk'' and ``Beef: It's what's for dinner.'' In addition,
AMS enforces other Federal regulations such as the Perishable
Agricultural Commodities Act (PACA) and the Federal Seed Act.
Within five of the twelve titles of the 2014 Farm Bill, there were
nearly 30 provisions related to AMS. The agency has made great strides
toward implementation including the timely awarding of grants,
providing several reports to Congress, establishing the Unprocessed
Fruit and Vegetable Pilot in eight states, and moving to a hearing on a
proposed California Federal Milk Marketing Order.
Market News
One of our most widely used programs is Market News. Last year
marked the 100 year anniversary of AMS' Market News which provides
agricultural stakeholders with the information they need to evaluate
market conditions and trends, make purchasing decisions, and assess
movement of products across the nation and the globe. Market News
covers approximately 700 products on a daily basis and issues more than
250,000 unbiased reports per year, attracting more than 53 million
views from stakeholders. The reports increase market transparency and
help farmers and ranchers identify opportunities by ensuring that all
farmers, traders, and agribusinesses have equal access to information.
Market News is constantly evaluating the evolving needs of the
agriculture industry to better serve our stakeholders. For example, AMS
has increased the reporting of pricing data relevant to small and mid-
sized fruit and vegetable producers and participants in emerging
sectors such as grass-fed, organic, and local foods.
Commodity Procurement
Another key AMS activity is commodity procurement. AMS purchases a
variety of domestically produced and processed foods, providing an
outlet for surplus products, supporting American agriculture, and
providing food to Federal nutrition programs administered by the Food
and Nutrition Service (FNS). Annually, AMS purchases about 2 billion
pounds of domestic foods with funding from Section 32 and FNS funds
appropriated for the Federal nutrition programs, through legislation
such as The National School Lunch Act and The Emergency Food Assistance
Act of 1983. These purchases are an important outlet for surplus
products and provide the National School Lunch Program with food for 31
million school children daily, in addition to making available 930
million pounds of food for food banks, disaster relief, and soup
kitchens.
In 2015, AMS conducted significant outreach to small business
entities, in particular minority-owned, service-disabled veteran owned,
and women-owned small businesses, as well as those operating in
historically underutilized business zones, to inform them about
opportunities to sell to USDA. AMS approved 20 new vendor applications,
and the program attained a small business contracting rate of more than
38 percent, for over $1 billion in purchases.
Grants
AMS grant programs also play an important role in facilitating
marketing. The Federal-State Marketing Improvement Program (FSMIP)
provides matching funds to states to assist in exploring new market
opportunities for U.S. food and agricultural products, both locally and
internationally. Recent FSMIP projects have supported efforts to
bolster local and regional food systems through farmers markets and
community supported agriculture operations, while other projects have
focused on building international markets for pine lumber, pork, and
more.
With the Specialty Crop Block Grant Program, AMS helps states
strengthen markets for their specialty crops, such as fruits,
vegetables, tree nuts, horticulture and nursery crops. In FY 2015, AMS
awarded $63 million to 755 Specialty Crop Block Grant Program projects
nation-wide. AMS expects to award approximately $62 million in FY 2016.
These grants address issues ranging from food safety to research needs
to increased access to fruits and vegetables, all benefiting specialty
crop producers and consumers across the country. With additional
funding from the 2014 Farm Bill, we are able to do even more to help
specialty crop growers increase profitability and sustainability.
Farmers' Market and Local Food Promotion Program grants are
available annually to support local and regional food systems through
two competitive programs: the Farmers Market Promotion Program (FMPP)
and the Local Food Promotion Program (LFPP). FMPP grants fund farmer-
to-consumer direct marketing projects such as farmers markets,
community-supported agriculture programs, roadside stands, and
agritourism. LFPP grants fund local and regional food business
enterprises that serve as intermediaries to process, distribute,
aggregate, and store locally or regionally produced food products.
Projects also provide technical assistance and outreach, including
planning grants for local food businesses. In Fiscal Year 2015, AMS
awarded approximately $25 million in competitive grants to expand
marketing through these two programs. A similar amount will be
available in Fiscal Year 2016.
Local
As demand for and sales of local food continue to grow--topping
$11.7 billion in 2014 according to industry estimates--AMS plays a key
role in helping stakeholders throughout the supply chain tap into
growing consumer demand for locally-grown food. Secretary Vilsack has
identified strengthening local and regional food systems as one of the
four pillars of USDA's work to help revitalize the rural economy and
create jobs.
In 2015, AMS created three new online local food directories that
provide public listings of food hubs, on-farm markets, and community
supported agriculture (CSA) operations. Similar to the National
Farmers' Market Directory, which now includes about 8,500 market
locations, each new directory provides vital information about listed
enterprises, including a mapped location, operating hours, months of
operation, the types of products available, the number of producers at
each market, and the accepted forms of payment. These directories allow
household shoppers and wholesale food buyers to quickly identify nearby
suppliers of local foods, while producers and distributors of local
foods are able to take advantage of emerging opportunities in direct-
to-consumer and wholesale markets.
Organics
AMS' National Organic Program (NOP) facilitates market access for
organic agricultural products and conducts compliance and enforcement
activities that protect the integrity of the organic label to ensure
consumer confidence. NOP establishes national organic regulations and
accredits 79 third-party organic certifying agents worldwide. Those
certifiers oversee an organic industry that experienced 11% growth in
the U.S. in 2015, with 21,666 certified organic operations (up from
19,474) and 24% growth around the world, with 31,020 operations (up
from 25,008).
To facilitate the international trade of organic products, AMS
works with the Foreign Agricultural Service and Office of the United
States Trade Representative to establish equivalency arrangements. Over
the last 5 years, AMS has established five (Canada, European Union,
Japan, South Korea, Switzerland) such arrangements that make it easier
for U.S. organic businesses to access a $65 billion global organic
market.
Another achievement worth noting is AMS' launch of the first
release of the Organic INTEGRITY database at the end of 2015. Developed
with funding from the 2014 Farm Bill, this database is a major upgrade
that provides more current information on certified operations, deters
fraud, increases market and supply chain connections, and supports the
development of new markets.
GIPSA
The core mission of GIPSA is to facilitate the marketing of
livestock, poultry, meat, cereals, oilseeds, and related agricultural
products, and promote fair and competitive trading practices for the
overall benefit of consumers and American agriculture. GIPSA plays an
integral role in ensuring the economic viability of America's farmers
and livestock producers, and in turn, of rural America. GIPSA
administers two programs that are very import to American agriculture:
the Packers and Stockyards Program (P&SP) and the Federal Grain
Inspection Service (FGIS).
Packers and Stockyards Program
Under the Packers and Stockyards Act (P&S Act), GIPSA's P&SP
regulates businesses that market livestock, poultry, and meat. Congress
passed the P&S Act in 1921 to address serious concerns of unfair and
deceptive practices in the meatpacking industry. Over the years,
Congress has amended and supplemented the P&S Act to keep the Act
relevant to the changing livestock, poultry and meat industries. For
instance, in 1976, Congress added authority for the Secretary to assess
civil penalties for violations. In 1987, Congress added financial
protection for poultry producers, and as recently as 2008, Congress
added the right of producers growing poultry or swine under contract to
decline arbitration clauses in the contracts and established the forum
for resolving disputes.
Today, the P&S Act promotes fair and competitive marketing in
livestock, poultry, and wholesale meat for the benefit of American
agriculture and consumers. By fostering fair competition, the P&SP
helps assure that meat and meat products are available to consumers at
fair prices. Fair competition, payment protection, and prohibitions
against deceptive and fraudulent trade practices in livestock markets
assure producers that they will receive competitive prices and timely
payment for livestock.
By protecting fair-trade practices, financial integrity, and
competitive markets, GIPSA promotes marketplace fairness for livestock
producers, buyers, sellers, swine contract growers, and poultry growers
for the benefit of all market participants and American consumers.
Federal Grain Inspection Service
FGIS facilitates the marketing of U.S. grain, oilseeds, and related
agricultural products by providing official U.S. grading standards, as
well as methods to assess product quality; maintaining the integrity of
the marketing system by enforcing the United States Grain Standards Act
(USGSA) and the Agricultural Marketing Act of 1946 (AMA); and
administration and oversight of America's national grain inspection
system, a network of third-party Federal, state, and private
laboratories that provide impartial, user-fee funded official
inspection and weighing services under the USGSA and the AMA. Grain
standards established under the USGSA and AMA and maintained by FGIS
are used to facilitate the marketing of approximately 309 million
metric tons of grain, rice, and pulses, in domestic and export markets.
Of the total tonnage volume, approximately 133 million tons were
exported by way of ships, trucks, rail, and containers, worth
approximately $41 billion. This amounted to approximately one out of
every eight rows of corn raised in the United States, one out of every
two rows of soybeans and two out of every five truckloads of wheat. In
2015, there were more than 3.4 million inspections by the national
grain inspection system.
FGIS is recognized worldwide as the gold standard for grain
inspection. In FY 2015, FGIS grain inspection accuracy was 96.5 percent
based on a review of 5,258 samples covering a total of 8,962 quality
factors. Inspection accuracy is determined by a quality assurance
review of the original grain inspection and factors that are grain
characteristics that have been determined to be important to the
commercial value of the grain. During the first 4 months of Fiscal Year
2016, FGIS grain inspection accuracy was 97.1% based on a review of
1,510 samples covering a total of 3,109 factors.
FGIS facilitates foreign trade by assisting countries with the
development of standards that are consistent with U.S. grain standards.
FGIS personnel frequently meet with delegations visiting from other
countries to brief them on the U.S. grain marketing system and the role
of FGIS, our national inspection and weighing system, U.S. grain
standards, the various services offered to our customers under the
USGSA and AMA, explain the importance of using the same inspection
methods and procedures at destination, importance of maintaining
equipment accuracy, and FGIS quality control programs.
During FY 2015, GIPSA personnel met with 74 teams from 43 nations.
Additionally, in FY 2015, FGIS inspectors traveled to China and closely
worked with the Chinese Government on U.S. grain moving into China, as
well as Columbia and Algeria to conduct workshops on U.S. inspection
methods for corn, soybeans and wheat. These activities foster better
understanding of the entire U.S. grain marketing system and enhance
purchasers' confidence in U.S. grain. In 2015, China purchased 1.85
billion bushels of soybeans representing 58.3% of all U.S. soybeans
which shows the importance of maintaining these critical relationships
with our trading partners.
Conclusion
In closing, MRP strongly supports the Department of Agriculture's
key role in growing the rural economy and supporting producers and
consumers across the nation. As Federal agencies tasked with regulating
and facilitating the agricultural industry, MRP agencies must perform
this work at the speed of commerce. To do this, AMS, APHIS, and GIPSA
must have strong relationships and partnerships with state agencies,
industry groups, universities, and other Federal agencies, among
others. Further, we are constantly seeking new opportunities to
leverage the capabilities of other USDA mission areas to meet the needs
of producers and consumers.
Mr. Chairman and Members of this Committee, this concludes my
statement. Thank you for the opportunity today and I look forward to
continuing to work with you. At this time, my colleagues and I will be
glad to answer any questions you may have regarding the MRP mission
area.
The Chairman. Well, I thank you, Ed. I appreciate that, and
I appreciate your service and all those years.
We will reverse the order, and Mr. LaMalfa would be first.
Mr. LaMalfa. Thank you again, Mr. Chairman, and, Mr.
Avalos, Under Secretary, for your appearance here today. And
congratulations on your decision to go back to beautiful New
Mexico, where living is good. So I hope you enjoyed your time
and your service in a difficult place.
I will just home in on it here with a major issue that
affects a lot in California as well as consumers across the
country. Earlier this year, CBS had a 60 Minutes report about
the pervasiveness of the olive oil and the fraud that is found
within the olive oil in its labeling, its designation, whether
it is extra-virgin or even actually 100 percent oil in those
containers.
Experts stated that U.S. annual imports of tainted and
adulterated and fraudulent olive oil is significantly high,
including blending small quantities of extra-virgin oil with
large quantities of either old, low-quality oil or other types,
such as sunflower, and getting away with a label of extra-
virgin for all of that in order to keep the price up for extra-
virgin oil values.
Of course, it is a major issue for customers, who so many
of them don't even know what really good oil is like. And it
has become a pretty strong industry in California now with the
wonderful oils that are being produced there under an extra-
virgin label. So, obviously, with this mislabeling or
inaccurate labeling, it hurts our domestic industry and
producers and also consumers, who might be overpaying for
fraudulent products when they could be buying good product at
maybe similar prices.
California, again, produces about 99 percent of the olive
oil that is produced in this country and represents less than
one percent of the total global consumption. So they need a
little help and a little protection from USDA, who my
understanding is they have expanded their quality monitoring
program to include extra-virgin olive oil, but there is still
no Federal requirement or standard.
So, as you are aware, the manager's amendment in the farm
bill directed USDA, among other agencies, to work to remove
obstacles that are preventing the domestic oil industry from
reaching its potential. What do you see lately that USDA has
been doing to a help achieve a solution to protect our domestic
producers as well as consumers, who would like to believe what
it is on the label?
Mr. Avalos. Well, Congressman, I am familiar with the issue
that you brought up. And I am really glad you brought it up in
this hearing because I have had growers in California come in
to see me about this very issue, very concerned about the
imports that come in and that are maybe misrepresented.
So, anyway, at USDA it is not all our issue; it is also an
FDA issue. But we are continuing to have the conversation with
the California growers. We have had discussion with them about
a possible marketing order. So, at this time, the discussions
are ongoing and have nothing else to report as to progress
made. But we will continue to work on this, because I know how
important it is to those folks in California.
Mr. LaMalfa. Do you see a stronger enforcement mechanism
over fraud on the oil that is imported under false pretense?
Mr. Avalos. Congressman, to be honest with you, I don't
know if we have that jurisdiction or not. But if there is
anything we can do that is within our realm, we will.
Mr. LaMalfa. All right. Well, please keep my office and
this Committee abreast of how those conversations are going and
what we can do to help ensure that olive oil is as it is
labeled. If people want choices, they want lower-quality
blends, that is fine, but they need to be able to see what is
in there. And, well, I think we all recognize that. So thank
you.
Mr. Avalos. We will. Yes, sir.
Mr. LaMalfa. And congratulations, and enjoy New Mexico,
sir.
Mr. Avalos. Thank you.
The Chairman. The gentleman yields back.
Mr. Rouzer, for 5 minutes.
Mr. Rouzer. Thank you, Mr. Chairman.
I want to get some clarification and explore a little more
on this issue related to the pork trademark. And it is perhaps
an understatement to say that there has been a little commotion
about all this. Just last week, the pork industry voted
unanimously in opposition to USDA's actions related to the pork
trademark.
And so I have several questions here to try to get at the
bottom of this. Explain to me exactly who is conducting the
review. Is it AMS?
Mr. Avalos. Congressman, I am going to ask my Administrator
at AMS to address your questions because she has been working
on this almost on a daily basis.
Mr. Rouzer. Very well.
Ms. Starmer. Thank you, Congressman. Do you want to ask all
of your questions and then I can respond, or do you want me to
respond to each?
Mr. Rouzer. I would like for you to respond to the first
one first.
Ms. Starmer. Sure.
The independent evaluation is being conducted by an
external entity that was recommended to us. We did consult with
the National Pork Board in selecting that independent
evaluator. And they are going to be conducting the valuation of
the trademarked phrase.
And then they will supply that information to our office,
at which point information that has been provided by NPPC as
well as by the Humane Society will be packaged up with the
independent evaluation and sent on to the Secretary for a
decision.
Mr. Rouzer. So who is paying for that review? Is that AMS?
Ms. Starmer. The National Pork Board, sir.
Mr. Rouzer. Was the National Pork Board consulted in terms
of seeking that outside consultant?
Ms. Starmer. We did bring the recommendations to the
National Pork Board and worked closely with them in determining
which to select, yes.
Mr. Rouzer. Did they approve that outside consultant?
Ms. Starmer. They were ultimately responsible for the
selection of the independent evaluator.
Mr. Rouzer. So did they vote on that?
Ms. Starmer. I don't know, sir.
Mr. Rouzer. What authority would the Pork Board have to end
the review?
Ms. Starmer. I know that we have some more detailed
information coming to you on that, but I do not believe that
they have authority to end the review.
The case is between the Humane Society of the United States
and independent pork producers, brought against USDA for our
determination to allow the sale of the trademarked phrase to go
forward. So, under our jurisdiction to oversee financial
transactions by the board, the claim that was brought by the
Humane Society was that we erred in our allowing that sale to
go forward.
So the industry is not a party to the suit, and, therefore,
they don't have standing. But USDA has been--we agreed to have
the independent evaluation conducted. We sought information
from NPPC and from HSUS, and we will come out with the
recommendation. The litigation has been stayed pending that
independent evaluation.
Mr. Rouzer. Is the contract legal or not legal?
Ms. Starmer. Which contract are you----
Mr. Rouzer. The contract between the two entities in terms
of transferral of the trademark.
Ms. Starmer. Well, I believe that is the subject of the
suit that was brought. So that is pending litigation.
Mr. Rouzer. So they are alleging that it is not legal.
Ms. Starmer. We can certainly get you details on the
specific allegations. But they alleged that we should not have
approved the sale and that the value of the trademark that it
was overvalued. And so that is why we have agreed to conduct
this independent evaluation that will provide both USDA and the
industry with a current-day value for that trademarked phrase.
Mr. Rouzer. So who is going to make the decision whether to
breach the contract or maintain the contract? Will that be AMS,
or will that be the Pork Board?
Ms. Starmer. Once we get the independent evaluation back,
we will be issuing a decision that will come through the Office
of the Secretary. And that decision we have committed to
issuing that by May 2. And that is going to be informed by our
independent judgment and the evaluation and the submissions
that we receive from the industry and from HSUS.
The litigation itself has been stayed until we come out
with that recommendation. So, depending on what that
recommendation says, we will see what happens with the
litigation process.
Mr. Rouzer. Thank you, Mr. Chairman.
The Chairman. The gentleman yields back.
Mr. Yoho, 5 minutes.
Mr. Yoho. Me?
The Chairman. Yep.
Mr. Yoho. Sorry.
I have been following that case, and it just, to me, it is
crazy. If I were to buy a house from Mr. Rouzer and we agree on
a price and I agree with it and I pay it and then a third party
comes along and says, ``You paid too much for that,'' and then
they get a lawsuit that goes into that, it just seems like it
is meddling in an affair that they have no standing in.
And do you see this as a frivolous lawsuit that shouldn't
even be litigated?
Ms. Starmer. Well, sir, the lawsuit was brought against
USDA related to our authority and our responsibility under the
law to approve financial transactions of the National Pork
Board. And so the suit alleges that we erred in our approval of
that financial transaction.
So that is our responsibility. And I believe that after we
complete the independent evaluation we will be in a good
position to be able to provide all parties with information on
the current value of that.
Mr. Yoho. Any idea what the cost of that litigation is and
all this before you get a settlement, that it is costing the
USDA?
Ms. Starmer. I do not know that, sir.
Mr. Yoho. In the millions?
Ms. Starmer. I couldn't say, sir.
Mr. Yoho. Okay.
Let's move on to something else that is probably not less
controversial. It is biotech labeling. We passed that bill here
in the House, went over to the Senate, and, the way I
understand, the Senate is going to send it back to us.
Correct me if I am wrong. With the biotech labeling bill
that we sent over there, it would be like setting standards
kind of like they set for gallons of gas or pounds, weights for
doing commerce. Is that pretty much what we sent and decided
here, a certain standard at the Federal level that would allow
each state to designate voluntarily how they wanted to label
products?
Secretary Avalos?
Mr. Avalos. Well, Congressman, first, I just want to
acknowledge that the House and the Senate have put a
considerable amount of effort into this topic.
Mr. Yoho. We sure did.
Mr. Avalos. I know. And I know it is a very, very important
issue. And at USDA, in this mission area, we are still ready to
continue to provide any technical support you might need.
Now, to try to answer your question, I am going to answer
it with a statement that Secretary Vilsack has said many, many
times. He has made it very clear that a patchwork of rules is
not functional and would not work. So it is an important issue
that we hope Congress will continue to address.
Mr. Yoho. Well, again, we were talking about this in the
last Committee hearing we had, just right before you guys,
about the marketing strategy. And I made Secretary Vilsack's
blood pressure go up the last time he was here, not
intentionally. But we spend all this money in research that we
fund through the land-grants, and we come up with a product,
and then it seems like it gets stuck in the marketing chain.
And there is a lot of misinformation out there. And we were
talking about is there a marketing program or is there
authorization for a marketing program that we can tell how a
GMO is created and how it goes to market and show the peer
research behind it to answer these questions so that we can
utilize the research that we have done. And USDA does a
phenomenal job on this.
But, with the GMO, when we passed this bill here, we were
getting hammered in our districts that: How dare you pass
something like this? And we were trying to set a standard on
the Federal level so that each state could voluntarily decide
what to label a GMO.
Do we have a program that you are aware of, or do you need
authorization to do a different marketing program? I don't want
to say you are not doing a marketing program, but a different
marketing program.
Mr. Avalos. Congressman, I am going to ask our
Administrator, Elanor, to respond.
Ms. Starmer. Thank you, Congressman.
So, without express authority from Congress, EMS cannot set
a standard for GMO or non-GMO labels. We can, however, through
our Process Verified Program, use government auditors to assure
that a company is meeting its own standard.
We have done that for one company for a non-GMO claim. And
so the way that that program works is the company develops its
own standard, we post that to the website so it is transparent,
and then we have auditors to ensure that that standard is
adhered to.
Mr. Yoho. All right. I appreciate it.
And before I go, I just wanted to give a shout-out to
Administrator Shea for all the help you have given us on the
PAST Act (H.R. 3268, Prevent All Soring Tactics Act of 2015)
and the clarification and the guidance you have given us, and I
thank you.
I yield back.
The Chairman. The gentleman yields back.
Mr. Benishek, 5 minutes.
Mr. Benishek. Thank you, Mr. Chairman.
Mr. Shea, I have a question that I kind of brought up in
the last panel. And I appreciate you all being here today. But
my district has an issue with bovine TB. Some of the producers
have had positive herds this year, and their experience has
been difficult. The indemnity fund was overwhelmed with this
avian flu thing.
And, apparently, there is a new way of dealing with TB so
that states are going to be more involved with this. And I am
happy that states are more involved, but I just have a few
questions about it.
There is a concern among the farmers that there is not
going to be a clear way of negotiating the bureaucracy with
states, and the Feds, to get the help they need when they have
to depopulate. Can you kind of go into that a little bit?
Mr. Shea. Congressman, we are looking at new rules for
tuberculosis and brucellosis as well to bring the program more
into modern times. And one of the things we want to do is make
sure that we are not overpenalizing states when they do have a
few positive herds.
Mr. Benishek. Right, right.
Mr. Shea. In terms of your State of Michigan, in the case
that happened last year, let me just say right up-front I do
apologize, and I regret that it took too long to get the
depopulation funding back to that owner. As you mentioned, we
simply were overwhelmed last year with too many tuberculosis
herds between Texas and Michigan, and it took us some time to
find all the money we needed. And then there was some
negotiation about the actual price.
But we will do better the next time. We hope there aren't a
lot of next times, but we will certainly do better. And we have
a good relationship with the state. As you know, in Michigan,
we have a specific problem with TB in wildlife, and
particularly in that part of Michigan.
Mr. Benishek. TB what?
Mr. Shea. TB in wildlife.
Mr. Benishek. Right, right, right, yes. Well, that was the
question I had for the last panel, is how are they going to fix
that. I am not sure of every case, but I know I talked to one
farmer, in particular, where they weren't sure, their dairy was
separate from the wildlife, or they kept them inside, and they
weren't sure of the vector. You know what I mean? And making
sure of the vector is kind of important for solving the
problem. And if it is the wildlife, great. But I am not sure
what the proof is, if they had the same exact strain of TB that
was found. I don't know exactly the proof situation.
But I have had two separate herds now in my district that
had to be depopulated, and it is pretty traumatic for the whole
family, the whole area. Everybody gets nervous. You know what I
mean? They don't know what the situation is. So I just want the
process to be smooth and really worked on to solve this
problem.
Please give me your comments for the time I have left.
Mr. Shea. Well, we will certainly do everything we can to
make that process smoother, going forward. We will work very
closely with any affected herds to reach a common agreement on
the value of a heard before we depopulate it so it doesn't
stretch out too long.
But you are right. As long as the disease is in wildlife,
there is a problem. And, of course, there doesn't necessarily
have to be direct contact between the wildlife and those dairy
cows for them to get infected.
Mr. Benishek. Right, right.
Mr. Shea. Someone or something could come in contact with
the deer and spread it into the dairy farm, just as we saw
avian influenza spread by things and people even though
initially it came in through wildlife.
Mr. Benishek. Right. Okay. Well, I appreciate your interest
in this because it is pretty dramatic when it happens, and
there is a lot of angst over the whole situation. I just want
the new process, the new rules to make sure that everything
works smoothly, because there is a little bit of fear about how
that is going to work in the future. So I appreciate your
comments.
Mr. Shea. Thank you.
The Chairman. The gentleman yields back.
Mr. Kelly, 5 minutes.
Mr. Kelly. I am going to start, and I am going to ask the
Acting Administrator here, Ms. Starmer? I can't see from here.
My eyes are not what they used to be.
Ms. Starmer. Starmer.
Mr. Kelly. Okay. Thank you, ma'am.
I am going back to Congressman Yoho from Florida about the
GMOs. Each state can determine what a GMO is, a genetically
modified organism. However, it gets a bad rap by the use of
that name, and if each state can determine the labeling on
that, how far back do we go?
I know my grandfather was a farmer, and he would have Angus
cows, and he would have Hereford cows, and if he bred those
together, that would be a genetically modified organism, right?
Because you have two different subspecies which we just called
them whiteface, where I was from. But you modified that cow.
You go back to horses. You have recreational K9s that
people have that are different breeds, like a Labradoodle or
those type of names. All those things, the grafting of an
orange plant with some root system which will more naturally
hold up and keep the root system so it can grow longer and
sustain the growth. Vegetables, how far back do we allow--it is
your duty at some point, number one, to market what a GMO is or
to name it something that applies.
And number two is to say how far back. Because I doubt that
there are very many original species left from when this world
was created. And so anytime that we modify anything, or any
cross-pollination. Do you understand what I am saying?
There are a lot of things that a state can say, ``I don't
want a cow from Mississippi, so I know that in the past they
have bred Herefords and Angus together and that is a GMO, so we
are not going to take any beef from Mississippi.'' Or they bred
Longhorns from Texas with some other breed of cattle, so that
is a GMO, and so we are no longer going to take beef from the
State of Texas.
I think we have to be very careful. And that is part of our
marketing and your duty to define what a genetically modified
organism is rather than just using the term where it can apply
in states. Can you comment to that, please?
Ms. Starmer. Sure. Thank you, Congressman.
As I did mention earlier, without statutory authority
provided by Congress, we can't define GMO or non-GMO through a
standard. But if Congress provides us with that authority, as
they did, for example, with the National Organic Program to
define what organic means, then we would engage in the
rulemaking process to define that term. And that would go
through public comments. Then it would fall on FDA and FSIS to
determine truth in labeling as to how those products were
labeled to ensure that they conform to the standard.
So there are a number of different players engaged in this,
but with statutory authority provided by Congress, we would
develop a standard through the rulemaking process.
Mr. Kelly. I understand that. But on a very basic level,
would you not agree that there are certain things--I don't know
that we have any pure species anymore in this world, anywhere
in his world in any type of thing, because nature does that in
and of itself. And there is a huge perception out there that we
have scientists that, for the most part, in all these things
that are being called GMO, are doing these things outside of
the realm of natural science, that they don't understand it is
the same things that we did in the 1930s and the 1940s and the
1950s and the 1880s.
And is there any way or anything you can do, even if it is
not defining what a GMO is, just to say what is not a GMO? Or
is there any timeframe which you can do? Because, otherwise, I
do think, if a state wanted to, they could actually not allow
anything or any produce into their state other than what they
grow in their state.
Ms. Starmer. At this point, we are limited to auditing
companies' own standards through our Process Verified Program,
as I mentioned. With statutory authority, we could define the
term. And you have touched on the fact that that would be a
very complicated process that would obviously require and, I am
sure, elicit a lot of public comment. At this point, though, it
is FDA and FSIS that are looking at the truth-in-labeling
question when they look at claims on the labels.
Mr. Kelly. And just very briefly, how do you ensure the MRP
is coordinating appropriately with other Federal agencies such
as FDA and EPA?
Ms. Starmer. On the GMO issue specifically?
Mr. Kelly. On any issue.
Ms. Starmer. Do you want to speak to that, sir?
Mr. Avalos. At USDA and this mission area, whether it be
APHIS or AMS, we routinely, regularly coordinate with other
sister Federal agencies, like FDA, EPA, FSIS within USDA. This
is ongoing and is part of our responsibility because our work
overlaps and complements each other.
Mr. Kelly. Thank you.
And I yield back, Mr. Chairman.
The Chairman. The gentleman yields back.
Mr. Thompson, 5 minutes.
Mr. Thompson. Thank you, Chairman.
Under Secretary Avalos, congratulations on your upcoming
retirement.
And I wanted to follow through on the biotech labeling
issue, as well, from the standpoint of the FDA has stated that
the only reason a label would be mandated is if a new variety,
the language they use, materially different, is materially
different from a conventional counterpart.
Do all applications of genetic engineering technology
result in material differences and new plant varieties which
would necessitate a government-mandated warning label?
Mr. Avalos. Congressman, I don't have an answer for you,
but I am going to turn to Kevin Shea to help me out a little
bit.
Mr. Thompson. Okay. Sure.
Mr. Shea. Congressman, of course, we in APHIS regulate
plant biotechnology----
Mr. Thompson. Right. And that is what I am talking about.
Mr. Shea. And, well, I think you are getting at a good
point here. Biotechnology has evolved quite a bit over the last
30 years, which makes our current regulatory scheme a little
archaic, frankly. So we are working with FDA and EPA, who are
our partners in the consolidated framework, to make some
changes. And we recently published a notice of intent to do an
environmental impact statement that would make some changes.
But to your very specific question, certainly there are
many applications of biotechnology now that don't turn
something from one species into another. And maybe some of the
questioning here gets to that point----
Mr. Thompson. And, yes, you got where I am zeroing in on.
It is the language where it says that it should only be
mandated if it is a new variety materially different from a
conventional counterpart.
Mr. Shea. That is right. I think that often there is not a
material difference anymore.
Mr. Thompson. And I agree with you. And if not, then why
would USDA propose a government-mandated warning label on all
new plant varieties derived through biotechnology or genetic
engineering or whatever you want to call it?
Mr. Shea. Well, Congressman, if I could say, I don't think
that anyone at USDA has any intention of proposing a mandatory
label of any kind. In fact, our role in regulating
biotechnology is simply to say whether or not a new event, as
they call it in that world, would indeed cause any plant pest
or disease. And once we pass that threshold, we are finished.
We don't think there is any need to have a label to point to
that.
Mr. Thompson. Well, I would agree with you, but your boss'
boss actually has come out with a statement in favor of a
mandated labeling program. And so maybe it is a
miscommunication. I hope it is, because I agree with your
perspective and not what Secretary Vilsack has commented on and
released.
So maybe that is something we could go back and get a
clarification on. Hopefully there is some miscommunication at a
higher level, because I certainly agree with your perspective
on that.
Mr. Shea. Well, maybe I am parsing words a little bit here.
You used the term warning label. I don't think that Secretary
Vilsack has ever used the term warning for a label. There is
obviously some good-faith dispute about whether or not there
should be a label for consumer awareness purposes, but I don't
think that is the same as a warning label.
Mr. Thompson. Well, mandatory labels, what other purpose
would they be for? I mean, it is a warning label.
I think that is just something, if you could go back and
get some clarification, I would appreciate it. Because, like I
said, I actually respect and agree with your perspective on
that.
Administrator Starmer, in the biotech labeling area, is
participation in the National Organic Program voluntary?
Ms. Starmer. Absolutely.
Mr. Thompson. All right. Do food producers and processors
use the National Organic Program Certification to distinguish
their product in the marketplace and only take advantage of
those marketing opportunities?
Ms. Starmer. They do. Certainly, we have a number of
entities from the farm to the processor that use the organic
seal and are certified to be in compliance with the standard.
Mr. Thompson. Great. I would love to have your perspective
on this, because we just dealt with the country-of-origin
labeling, which a lot of people were just confused across the
country and thought it was a safety issue, when COOL was really
a marketing issue. And we had to take some measures, obviously,
after we were found out of compliance by the World Trade
Organization a couple times.
Is the organic labeling a safety program, or is it a
marketing program?
Ms. Starmer. It is a marketing program, sir. And it is used
to verify compliance with a standard, with a set of practices
that organic farmers and supply-chain entities comply with.
Mr. Thompson. Absolutely. And it has been great for some of
my farmers. It is a niche. They are able to get a premium for
folks who want to pay a little more for that brand, which is
good for farmers and good for consumers who are looking for
that.
Thank you so much to all of you.
Ms. Starmer. Thank you.
The Chairman. Thank you.
A couple weeks ago, maybe all of you or some of you
testified in front of the Agriculture Appropriations hearing
and were asked about upcoming regulations under the Packers and
Stockyards Program. And at least the comment that was conveyed
to us is that you all were not aware of anything coming forward
yet. Just this last week, Secretary Vilsack had mentioned that
in a matter of weeks there will be poultry regulations coming
out.
Did you all get double-crossed, or how do you square the
answers to the question within such a short timeframe?
Mr. Avalos. Mr. Chairman, this process on the GIPSA rule,
it is ongoing. And right now at USDA, internally, we don't have
a commitment as to what these rules are going to look like.
I have been here since 2009, and I remember in 2010 we
initiated this rulemaking on the GIPSA rule. Then we were
prohibited from working on certain parts of the GIPSA rule. And
now this prohibition has been lifted.
So the Secretary, he asked us to look at the GIPSA rule,
look at possible modifications, look at possible changes that
we could do that would be appropriate, still taking into
perspective the concerns that have been expressed in the past.
So, Mr. Chairman, right now, we are in the preliminary
stages, and we are going to do our job because we are required
to do our job, and we are going to continue some internal
discussions. We are going to look at all the comments that we
have received in the past, and we are going to take a very
well-balanced approach. And at the end of the day, we are going
to come out with something that hopefully will be acceptable,
and we are going to try to do our job correctly.
The Chairman. Okay. Well, I guess what was communicated or
what was heard was that final rules would be much more quickly
coming than that. What you have laid out is the right way to
get at it, deliberatively, taking into consideration all the
folks that are having conversations. But what was heard from
the Secretary's comments is that you were a lot further down
the road than that and that you were prepared to release that
rule much sooner and in a much more complete fashion that what
I hear you saying.
What I just heard you say is the process isn't that far
along yet and you are still gathering it up. Am I parsing
things out here, Ed? Am I missing something?
Mr. Avalos. Mr. Chairman, like I said, we are just working
on internal discussions. We don't have work plans yet.
The Chairman. Okay.
Mr. Avalos. And, we will be working on these.
Now, it is important to note that, once we get a work plan
and once we get a rule put together, we still have to go
through OMB, and that is 90 days or longer.
And so the earliest that I see having anything for the
public to look at and comment on will be summer, early fall.
The Chairman. Okay. So the answer, then, to the Agriculture
Appropriations guys, was it reflective of--did something happen
after your testimony there and to where we are now that is
different? Or were you in that same frame of just we are
processing this through, and you didn't anticipate anything
coming to the public's--I am just trying to get squared away
here. I don't know what the deal was.
Mr. Avalos. Mr. Chairman, that is correct. We had just
initiated internal discussions.
The Chairman. Okay.
Mr. Avalos. So I couldn't really say, yes, we can move
forward with this rule. Because at that time when I testified,
we weren't ready to go forward with the rule.
The Chairman. Okay. I gotcha.
I probably should have asked this of the panel before. Is
there any shred, any scintilla of evidence that biotechnology
is endangering health in our food system? Anybody aware of any?
Mr. Shea. We are certainly not aware of any in APHIS,
although I would say that that is really FDA's purview to
determine whether any kind of biotechnology application would
be a human health problem.
The Chairman. Yes.
Mr. Shea. But certainly we are not aware of any, and we
think that biotechnology has been good for everyone.
The Chairman. Does anybody on the panel see a way forward
to feed an additional three billion people over the next 35
years with the same land mass we have in place under production
without using sound science?
Mr. Shea. Well, the Secretary has been pretty consistent in
saying that we need all kinds of agriculture: conventional,
organic, and biotech, going forward.
The Chairman. Gotcha. All right.
Anyone else want a second round?
Mr. Rouzer.
Mr. Rouzer. Yes, Mr. Chairman. Mr. Chairman, thank you very
much. I want to follow up on the GIPSA line of questioning
there for a second, because I am a little unclear.
This rule, will it be a proposed rule or will it be a final
rule? Or do you know?
Mr. Avalos. Congressman, at this time, like I was
mentioning earlier, we are just in the preliminary stages. We
are just having internal discussions. So I can't tell you if we
are going with a proposed rule, a final rule, because we
haven't gotten that far down the road yet.
Mr. Rouzer. Okay. I just wanted clarification on that. I
would suggest it would be significantly unfair to issue a final
rule, if you are going to go that route, on that.
Mr. Avalos. Congressman, I need to point out that this has
been an ongoing discussion since 2010, and we have many, many,
many comments that have been made, from both sides, okay? We
have a lot of comments. And in our internal discussions, we are
going to look at those comments, and they will dictate how we
move forward. Because that is part of the process, and that is
what the stakeholders are asking for, and that is why they
comment. And that is why the comment period on any rule,
whether it be a proposed or final, is so critical.
Mr. Rouzer. Well, you seem to be tipping your hand that you
would lean towards a final rule. I think that would be a
mistake.
Would the changes be based on the 2008 Farm Bill language,
given there was no mention of this, to my knowledge, in the
2014 Farm Bill?
Mr. Avalos. Any modifications or changes that we do
incorporate are going to take all comments that come in into
consideration. They are going to take in consideration concerns
that were expressed by not only Congress but by other
individuals. It is a very thorough internal evaluation.
Mr. Rouzer. Moving back to my original question as it
related to the pork trademark, I am a little confounded by
this. So the National Pork Board has no standing, yet they are
being required to pay for it. Does that seem fair to you?
Ms. Starmer. Well, sir, the National Pork Board is a quasi-
government entity, and the Supreme Court has ruled that their
speech is government speech. So they administer the check-off
program. Under our legal authority, we regulate, oversee, and
approve all of their funding expenditures.
And as part of the process of determining the transfer of
the trademarked phrase, they are paying for the independent
evaluation so that we can find an outcome to this issue.
Mr. Rouzer. You are trying to have it both ways here. Now
you are saying that it is a quasi-government, so why don't they
have standing?
Ms. Starmer. Well, we will get you and the Committee
specific responses to these that will be informed by our
lawyers. And I am not a lawyer. But, the Pork Board is
represented by the Office of General Counsel at USDA, and so
they have representation. And OGC has been engaged in the
ongoing litigation process as well as the current process now
with the evaluation.
Mr. Rouzer. The fact of the matter is they either have
standing or they don't have standing, and if they don't have
standing, they shouldn't have to pay for it. By gosh, this is
not the Soviet Union, or I hope that we are not becoming the
Soviet Union.
This is why people are outraged all across this country.
This is a microcosm of why the politics in this country is on
fire right now. So, anyhow, that is just my comment.
Mr. Chairman, I yield back my time.
The Chairman. G.T., any comments?
Well, thanks to this panel for showing up today. I
appreciate it. I know you probably didn't have a choice, but I
appreciate it. I appreciate all the preparation you did in
advance.
Ed, congratulations on being able to move back to the
Mesilla Valley, get direct, immediate access to fresh chiles,
at least 2 or 3 days fresher than what you get here.
Mr. Shea, thank you for the hard work you and your team did
over the last year-plus on your response to the high-path avian
influenza deal. And we are blessed to not have to repeat that.
I watched and saw you put in place best practices and future-
looking things to how to be better responsive and how to be
more adaptive to the process. The folks in Indiana were swamped
with folks last month when they looked like they might have a
case. So you guys and your team did good work, and I appreciate
that.
All of you represent goodhearted men and women, decent
people who get up every day, as I have told every panel. You
just happen to be the ones I get to talk to. And so please
express our appreciation to them for the work they do day in
and day out. We may disagree from time to time on some of the
things that are going on, but please don't ever let that morph
into something that says that we don't appreciate what you do,
and that production agriculture is better as a result of your
team and the folks that you all lead.
So thank you very much for being here.
With that, under the rules of the Committee, the record of
today's hearing will remain open for 10 calendar days to
receive additional material or supplementary written responses
from the witnesses to any question posed by a Member.
This hearing of the Committee on Agriculture is adjourned.
Thank you.
[Whereupon, at 1:50 p.m., the Committee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Questions
Response from Hon. Robert Bonnie, Under Secretary, Natural Resources
and Environment, U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in
Congress from Texas
Question 1. Last September, the EPA published Interim
Recommendations for environmental standards and ecolabels for use in
Federal procurement. EPA's recommendation for lumber excludes several
credible standards that are widely used in the United States, including
the Sustainable Forestry Initiative (SFI) and American Tree Farm System
(ATFS) standards. Across the United States, more than 82 million acres
of forestland are certified to either the Sustainable Forestry
Initiative (SFI) or the American Tree Farm System (ATFS). This
represents more than 70 percent of all certified forests in the United
States. These forests provide a renewable timber resource, clean water,
wildlife habitats, and numerous other public benefits. They also
support thousands of jobs. I was disappointed to learn that this
recommendation, along with a prior lumber determination by the
Department of Energy, was made without consultation with the USDA. USDA
not only has expertise in forest management and forest products, but
has publicly stated that SFI and ATFS standards can be used to verify
sustainability of forest products. I am hopeful that USDA will engage
with DOE and EPA and work with them to change their current programs to
recognize all three credible forest certification standards. Hasn't
USDA, and in particular, the U.S. Forest Service, as the Federal
experts of sustainable forests, already made a determination regarding
systems for demonstrating sustainability of forests through the USDA
BioPreferred program as well as your green building policy? Doesn't
this policy recognize ATFS, SFI, FSC as well as other approaches that
meet the ASTM 7612-10? Do you recommend EPA and DOE use this approach?
Answer. The U.S. Department of Agriculture's (USDA) Natural
Resources and Environment Office has met with EPA's Office of Chemical
Safety and Pollution Prevention to discuss the interim recommendations.
EPA's Standards Executive plans to reach out to the Sustainable
Forestry Initiative (SFI), the American Tree Farm System (ATFS) and
other forestry stakeholders to gather additional relevant input to
inform subsequent revisions of the Recommendations of Specifications,
Standards and Ecolabels. USDA also plans to provide relevant, existing
analysis to inform EPA's determination for the lumber/wood category,
going forward.
Question 2. Please provide the Committee with the number and status
of Good Neighbor Master Agreements that have been signed. Please
include the number of agreements that have been signed since Feb. 2014;
the number of acres that have been managed under GNA; and the projected
timber outputs from acres under GNA agreements in 2016.
Answer. The agency has entered into 23 Good Neighbor Agreements
with 18 States including Alabama, Arizona, California, Colorado, Idaho,
Indiana, Michigan, Minnesota, Montana, Tennessee, Texas, New Hampshire,
Oregon, Pennsylvania, Utah, Vermont, Wisconsin, and Wyoming. Thirteen
of the 23 agreements are master agreements that establish a framework
for future project agreements, while ten are project agreements.
Implementation is just beginning, but more than 14,000 acres of
management activities are identified to be completed in project
agreements, including timber harvest and regeneration, insect and
disease treatment, post-wildfire tree planting, range vegetation
improvement, prescribed fire, and wildlife habitat improvement. Other
activities and coordination of personnel resources are included in Good
Neighbor agreements that are not captured as acres of management.
Timber harvest projects are currently being implemented by
Wisconsin Department of Natural Resources (DNR) on the Chequamegon-
Nicolet National Forest and by Minnesota DNR on the Chippewa and
Superior National Forests. To date, Wisconsin DNR has sold
approximately 8.2 million board feet (mmbf) of 25 mmbf planned for
2016. Minnesota DNR is preparing to sell approximately 1 mmbf in 2016.
Question 3. How many projects have been completed using the
Categorical Exclusions? How many acres are covered by these projects?
If you are not doing 3,000 acre projects, can you explain to the
Committee what prevents you from maximizing the benefits of this
program?
Answer. Approximately twelve project decisions have been approved
utilizing the Categorical Exclusion provisions in the 2014 Agricultural
Act (Farm Bill). Almost 17,000 acres of pesticide treatment, commercial
and noncommercial timber sales, and prescribe burns are covered in the
twelve decisions. There are many factors that determine the size of a
project. Each project is designed to achieve specific results for the
objectives and conditions in the area. Through our collaborative
processes it may be determined that a small project is appropriate and
sometimes a larger project is appropriate. In many instances a 3,000
acre project would be considered large and the capability of shrinking
staff to plan implement projects is often a limiting factor.
Question 4. How many projects are being done under the
Environmental Analysis authority that enables the Forest Service to
analyze action and no action alternatives? How many acres do these
projects cover?
Answer. There are eight projects utilizing the environmental
assessment process under the HFRA, as amended by the farm bill. These
eight environmental assessments propose approximately 11,000 acres of
commercial and 1,400 acres of noncommercial timber sales, 4,100 acres
of prescribe burn, and 150 miles of road work.
Question 5. Does the Forest Service tend to drop acres from
management whenever there is a sensitive resource? Does this sometimes
hinder getting needed management on the forests?
Answer. Sensitive resources are considered before project
development begins and in many instances are addressed at the Forest
Plan level. Projects may be adjusted during development to protect or
enhance sensitive resources. Conversely projects are also designed to
avoid and/or minimize effects to sensitive resources. Considering
sensitive resources in the planning of projects is part of sound
natural resources management and helps facilitate effective treatments
on the ground.
Question 6. Section 8303 of the farm bill allowed the Forest
Service to expand the use of designation by description and
prescription. Can you update us on the use of this authority? Has
guidance been provided to field? Please provide any examples of how it
has been used.
Answer. Guidance has been provided to the field on the use and
application of designation by description (DxD) and designation by
prescription (DxP). An initial letter of direction was issued to the
Regional Foresters by the Director of Forest Management. The letter
signed by the Director of Forest Management and dated May 20, 2015,
specified how to use and apply the authority and included contract
provisions for the use of DxD and DxP.
The National Forests of Texas use DxD and specifically, DxSpacing
as appropriate and have a long history of use for designating or
describing timber to be cut and removed by purchasers from National
Forest System lands in East Texas.
While DxD has been used for many years in the National Forests of
Texas, the following examples nationally apply the 2015 direction. The
Siuslaw National Forest is using DxP to move plantation stands towards
late successional reserves within Northwest Forest Plan area. DxP is
used on the Siuslaw NF to develop the skips (clumps) and gaps (small
openings) in an otherwise uniformly spaced plantation that will allow
the stand to trend toward late successional reserve structural
conditions. These desired conditions include large old trees with
character, variable spacing, and several canopy layers. Because the
selection of individual trees is less critical than the end result, DxP
is utilized to somewhat randomize the selection and utilize existing
structure where it exists more effectively, and for less cost than
individual tree marking. Four sales have been sold and two more are
planned for this year using DxP on the Siuslaw National Forest.
The Okanogan-Wenatchee National Forest in Washington is preparing
approximately 5,000 acres of thinning with DxD (Swauk Pine project) and
1,000 acres with DxP (South Summit 2 Project) to create fire-resilient
stand conditions by removing individual trees, clumps of trees, and
creating openings (all trees removed). In addition, approximately \1/2\
of the acres being annually prepared in the Four Forests Restoration
Initiative (4FRI) Stewardship Contract in Arizona are using DxD and DxP
provisions.
Question 7. Do you anticipate meeting the 3.2 billion board foot
timber sale goal in 2016 without using personal use firewood in your
accomplishment totals?
Answer. The Agency is on a trajectory to meet the 3.2 billion board
feet timber sold target for 2016. The 3.2 billion board feet includes
the personal use firewood, which has always been included in the
Agency's annual accomplishment target.
Question 8. Please provide the Committee with how you allocated
funding and volume targets among FS regions.
Answer.
------------------------------------------------------------------------
Forest Products FY
2016 Funding FY 2016 Timber Volume
Region Allocation (dollars in Target (million board
thousands) feet-MMBF)
------------------------------------------------------------------------
2 $24,969 286
5 $28,720 385
6 $46,791 610
8 $29,169 592
9 $35,916 499
10 $14,490 62
------------------------------------------------------------------------
------------------------------------------------------------------------
IRR Pilot Regions FY
2016 Funding FY 2016 Timber Volume
Region Allocation (NFRR) Target (million board
(dollars in thousands) feet-MMBF)
------------------------------------------------------------------------
1 * $57,986 360
3 * $41,461 217
4 * $47,758 150
-----------------------------------------------
Total................. * $147,205 727
------------------------------------------------------------------------
------------------------------------------------------------------------
All Regions FY 2016
Funding Allocation FY 2016 Timber Volume
(dollars in Target (million board
thousands) feet-MMBF)
------------------------------------------------------------------------
NFTM $180,055 2,434
NFTM $180,055 2,434
NFRR * $147,205 727
------------------------------------------------------------------------
Note: The Integrated Resource Restoration (IRR) pilot regions--1, 3, and
4--are allocated funding in the Integrated Resource Restoration (NFRR)
budget line item. This includes $65,560 in Forest Products funding
(NFTM) transferred to the NFRR budget line item, as well as Vegetation
and Watershed Management funding, Wildlife and Fisheries Habitat
Management funding, and a portion of Legacy Roads and Trails and
Hazardous Fuels funding. The NFRR budget line item funds a wide
portfolio of restoration work producing many outputs and outcomes
including, but not limited to, timber volume.
Question 9. How much volume do you anticipate will come from the
Four Forest Restoration Initiative (4FRI)? Are you confident that the
contractor there will be able to increase acres treated rather than
just acres awarded?
Answer. Implementation of the Four Forest Restoration Initiative
(4FRI) continues to accelerate, with the planned timber sale and
stewardship offerings in FY16 accounting for approximately 275,000 CCF
(33,000 acres). Most of these offerings (approximately 70%) will be
outside of the Phase I Contract to existing timber industry in Northern
Arizona. 4FRI consists of a wide variety of work across the ponderosa
pine forests of Northern Arizona, the Phase I Contract held by Good
Earth Power (GEP) is one just facet of the restoration work being
accomplished. GEP continues to accelerate its work, and the Agency is
cautiously optimistic that the ramp-up in restoration capacity
projected by GEP in the coming year will materialize. By diversifying
contracting opportunities, the Agency is positioning itself to be
successful in the implementation of 4FRI regardless of the performance
of GEP.
Question 10. On page 13 of the budget justification, the Forest
Service notes they have treated an average of over 4.8 million acres
annually to make them ``more resilient to a variety of threats, and
more capable of delivering benefits to the American people.'' Please
provide a breakdown for the last 5 years of how many acres:
Were treated using prescribed fire.
Answer.
----------------------------------------------------------------------------------------------------------------
Calendar Year 2011 2012 2013 2014 2015 Total
----------------------------------------------------------------------------------------------------------------
Acres treated using t Fire 1,108,415 1,177,789 1,279,290 1,367,588 1,060,622 5,993,704
----------------------------------------------------------------------------------------------------------------
Question 10a. Were treated using mechanical thinning.
Answer.
----------------------------------------------------------------------------------------------------------------
Calendar Year 2011 2012 2013 2014 2015 Total
----------------------------------------------------------------------------------------------------------------
Acres treated using Mechanical 400,008 279,659 263,786 310,851 235,425 1,489,729
Thinning
----------------------------------------------------------------------------------------------------------------
Question 10b. When treated, produced merchantable timber.
Answer.
----------------------------------------------------------------------------------------------------------------
Calendar Year 2011 2012 2013 2014 2015 Total
----------------------------------------------------------------------------------------------------------------
Acres treated producing 195,217 207,912 206,924 192,562 204,420 1,007,035
merchantable timber
----------------------------------------------------------------------------------------------------------------
Question 10c. Were treated using prescribed fire during fire
suppression operations (i.e., backfires, burning of jackpot fuels
within the fire perimeter, etc.).
Answer. During suppression operations, use of prescribed fire for
burnouts, backfires, or other tactical activities is not measured. The
purpose of using fire during suppression activities is to reduce
potential fire behavior, by limiting burnable material. The wildland
fire agencies do not track acres treated by prescribed fire during
suppression activities.
Question 10d. Were treated by allowing wildfires to burn within
prescription or to accomplish resource objectives.
Answer. The Forest Services does not track this statistic. The USFS
recognizes that every wildfire, regardless of management strategy or
objective, has the potential to have burned areas that both enhance and
diminish resource values, dependent upon burning conditions. The 2009
Implementation Guidance for Federal Fire Policy provides managers with
an adaptive policy that allows for every wildfire to be assessed on its
potential to create positive or negative outcomes.
Acres burned by wildfires resulting in desirable conditions as
defined by the Land and Resource Management Plan for a particular
Forest or Grassland are reported as ``Fire Use'' acres. At present the
USFS only tracks this for naturally occurring wildfires (lightning),
and not for human caused fires. The total reported ``Fire Use'' acres
for the last 5 years is found in the table below.
----------------------------------------------------------------------------------------------------------------
Calendar Year 2011 2012 2013 2014 2015 Total
----------------------------------------------------------------------------------------------------------------
Wildfire Acres that Met Objectives 418,528 222,272 397,166 276,148 489,207 1,803,322
----------------------------------------------------------------------------------------------------------------
Question 11. Did any wildfires which were allowed to burn within
prescription or to accomplish resource objectives in FY2015
subsequently escape and require additional suppression resources?
Answer. The Forest Service does not collect information on
wildfires that would allow us to answer this question. As of 2009, the
Forest Service manages all wildfires by first establishing a protection
strategy for those values immediately at risk. The strategies used to
manage a fire can change as the fire spreads across the landscape,
weather conditions change, and often vary on a single fire.
Question 12. The Knutsen-Vandenberg (K-V) Act of June 9, 1930
allowed the Forest Service to utilize revenue generated from timber
sales to conduct resource restoration. In the FY 2006 Interior
Appropriations Bill (P.L. 109-54), Congress amended the K-V Act to
allow the Forest Service to use K-V to pay for ``watershed restoration,
wildlife habitat improvement, control of insects, disease and noxious
weeds, community protection activities, and the maintenance of forest
roads, within the Forest Service region in which the timber sale
occurred,'' removing a prior restriction which required that the funds
be used within the sale boundary. This gave the Forest Service the
means to expand and expedite its restoration efforts in connection with
forest management projects utilizing traditional timber sale contracts.
For each region, how much of the revenue generated from timber
sales in 2014 and 2015 was available to carry out work under the K-V
Act?
Answer.
------------------------------------------------------------------------
Fiscal Year 2014 Fiscal Year 2015
Region Revenues ($) Revenues ($)
------------------------------------------------------------------------
R-1, Northern 4,056,395 6,138,319
R-2, Rocky Mountain 3,780,760 4,249,664
R-3, Southwestern 188,616 283,436
R-4, Intermountain 419,183 206,807
R-5, Pacific Southwest 4,752,236 2,767,369
R-6, Pacific Northwest 13,804,251 14,504,640
R-8, Southeastern 15,964,402 20,773,186
R-9, Eastern 9,947,601 12,565,697
R-10, Alaska 51,325 8,691
-----------------------------------------------
Total................. 52,964,769 61,497,809
------------------------------------------------------------------------
Question 12a. How much of this revenue was actually collected and
used to fund K-V projects?
Answer. $23,683,398 and $21,416,473 was used to fund CW KV projects
within the sale area boundary during FY 2014 and FY 2015, respectively.
Question 12b. How much of the revenue collected was used to fund K-
V projects outside the sale area boundary as authorized by P.L. 109-54?
Answer. $322,912 and $478,266 was used to fund Regional Projects
(CWK2) outside the sale area, during FY 2014 and FY 2015, respectively.
Within the region, the money was collected as authorized by P.L. 109-
54.
Question 13. Within USDA, the Agriculture Research Service (ARS),
USDA's intramural science agency, is heavily involved in research to
identify the causes and vectors of Bighorn diseases. It seems the
Forest Service has chosen to ignore sound science provided by ARS. For
instance, there is evidence that there is no single, identifiable
pathogen responsible for the most common respiratory diseases in
Bighorn sheep that can clearly be tied to contact with domestic sheep
on open range. In fact, there are documented Bighorn die-offs in areas
far removed from any domestic sheep. The recent development of genetic
markers and isolation of the CD14 genetic marker will allow for marker-
assisted selection for reduced transmission to Bighorn sheep as well as
highlight very important biological and immunological differences
between domestic and Bighorn sheep. Yet, the Forest Service continues
to ignore this evidence and research. To the degree that you continue
down the path of allotment termination, please tell me how you can make
land management decisions based on assumptions of disease transmission
that are not backed up by the science developed by your sister agency,
the ARS? Why do you choose to ignore that science? Is the Forest
Service planning further reductions or nonrenewal of grazing allotments
for domestic sheep? If so, is the Forest Service prepared to offer
comparable alternative allotments for domestic sheep grazing?
Answer. The Forest Service acknowledges that the Agriculture
Research Service (ARS) continues to conduct valuable research on
diseases affecting domestic livestock and wildlife, specifically
domestic sheep (DS) and bighorn sheep (BHS), which can inform our
management and policy decisions. The Forest Service will continue our
partnership with ARS, and the Animal and Plant Health Inspection
Service (APHIS) to work together to better understand the evolving
science and its relevant applications. Numerous peer-reviewed
scientific publications spanning more than 30 years indicate that BHS
are highly susceptible to several highly pathogenic disease causing
agents carried by DS which includes Mycoplasma ovipneumoniae and
multiple strains of bacteria within the Pasteurella family.\1\ These
organisms often co-infect both BHS and DS to produce a `poly-microbial
pneumonia complex'. Although DS carry (and are infected with) these
pathogenic agents without significant disease manifestation, similar
infections in BHS often have lethal consequences. There have been
instances where BHS die-offs have occurred away from domestic sheep
either related to or unrelated to infectious disease events. However,
there remains significant published scientific evidence documenting
that direct contact between the BHS and DS can be profoundly lethal to
BHS.\2\ The Forest Service will continue to consider all reasonable
management options available, in partnership with ARS and APHIS who
provide their expertise in disease transmission, prevention,
management, and control especially at the livestock-wildlife interface.
---------------------------------------------------------------------------
\1\ Callan, R.J., T.D. Bunch, G.W. Workman, and R.E. Mock. 1991.
Development of pneumonia in desert bighorn sheep after exposure to a
flock of exotic wild and domestic sheep. Journal of the American
Veterinary Medical Association 198: 1052-1056.
Cassirer, E.F., L.E. Oldenburg, V.L. Coggins, P. Fowler, K.
Rudolph, D.L. Hunter, W.J. Foreyt. 1996. Overview and preliminary
analysis of a bighorn sheep dieoff, Hells Canyon 1995-96. Pages 78-86
in Proceedings of the Tenth Biennial Symposium Northern Wild Sheep and
Goat Council.
Dubay, S., H. Schwantje, J. DeVos, T. McKinney. 2002. Bighorn sheep
(Ovis canadensis) diseases: a brief literature review and risk
assessment for translocation. Proceedings of the Biennial Symposium of
the Northern Wild Sheep and Goat Council 13: 134-152.
Foreyt, W.J. 1989. Fatal Pasteurella haemolytica pneumonia in
bighorn sheep after direct contact with clinically normal domestic
sheep. American Journal of Veterinary Research 50: 341-344.
Foreyt, W.J., and D.A. Jessup. 1982. Fatal pneumonia of bighorn
sheep following association with domestic sheep. Journal of Wildlife
Diseases 18: 163-168.
Garde, E., S. Kutz, H. Schwantje, A. Veitch, E. Jenkins, and B.
Elkin. 2005. Examining the risk of disease transmission between wild
Dall's sheep and mountain goats, and introduced domestic sheep, goats,
and llamas in the Northwest Territories. The Northwest Territories
Agricultural Policy Framework and Environment and Natural Resources,
Government of the Northwest Territories, Canada. 139 pp.
Goodson, N. J. 1982. Effects of domestic sheep grazing on bighorn
sheep populations: a review. Proceedings of the Biennial Symposium of
the Northern Wild Sheep and Goat Council 3: 287-313.
\2\ [Supra] fn. 1.
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As new scientific information becomes available, such as `CD-14' or
other `genetic markers', the US Forest Service will work closely with
ARS and APHIS to interpret the relevance and potential application of
this information. The recent publication describing `CD-14 markers'
refers to surface markers on white blood cells (WBC) that indicate
differences in host immune responses to infectious agents.\3\ This
recent study demonstrated that BHS have a greater number of `CD-14
markers' on their WBC, compared to DS, causing a severe, lethal immune
(inflammatory) response to the ``poly-microbial pneumonia complex''
pathogens in BHS but causing only a mild response in DS to the same
infection. This supports the pre-existing published evidence that BHS
are highly susceptible with fatal consequences to this shared disease
while DS remain infected but are asymptomatic. The Forest Service
appreciates these scientific advancements in disease immunology (e.g.,
CD-14 markers) to help inform management decisions.
---------------------------------------------------------------------------
\3\ Highland, H.A., D.A. Schneider, S.N. White, S.A. Madsen-
Bouterse, D.P. Knowles, and W.C. Davis. 2016. Differences in leukocyte
differentiation molecule abundances on domestic sheep (Ovis aries) and
bighorn sheep (Ovis Canadensis) neutorphils identified by flow
cytometry. Comparative Immunology, Microbiology and Infectious Diseases
46: 40-46.
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The Forest Service will continue to gather the necessary data and
information that will help to inform our decisions on the potential for
disease transmission between the BHS and DS species. We will be
developing and implementing management actions as part of the National
Environmental Policy Act (NEPA) process for sheep allotment management
planning and Forest Plan revisions. Where allotments or portions of
allotments have been identified with unacceptable risk, the Forest
Service will use best efforts to identify and implement best management
practices to help mitigate the potential for high-risk of disease
transmission; or where possible, relocate domestic sheep to other
allotments, with minimal disruption and displacement of permittees. We
will continue to use the best scientific information available as it
relates to disease prevention and control including vaccines,
inoculations, and genetics that will assist us in the management of
this issue. Finally, the Forest Service will continue to consult with
interested stakeholders, including the permittees, prior to decisions
being made that may adjust management actions on domestic sheep
allotments.
Question Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question. In November the President issued a Presidential
Memorandum on mitigation policy calling for agencies to ``share and
adopt a common set of their best practices to mitigate for harmful
impacts to natural resources.'' Do you know why this Memorandum was
issued and does it change what USDA is already doing? Also, does the
Memorandum apply to anything beyond conservation and natural resource
programs?
Answer. The Presidential Memorandum was developed and issued by the
White House. USDA understands that the Council on Environmental Quality
identified an opportunity to increase cooperation and efficiency across
and among the Federal land management agencies in their permitting of
infrastructure projects. The Memorandum specifically calls for the
Forest Service to develop a national mitigation policy and all natural
resource trustees, which includes the Secretary of Agriculture for
National Forest System lands to develop guidance for the use of
mitigation banking as a component of Natural Resource Damage Assessment
settlements. The Secretary of Agriculture has delegated the trustee
responsibility to the Chief of the Forest Service. The Forest Service
had begun to evaluate its mitigation authorities and existing policies
in response to the Presidential Memorandum. The Forest Service has been
using mitigation to limit the impacts from its activities and those
that it authorizes for decades. The Forest Service views the Memorandum
as providing an opportunity to clarify the Agency's approach to
mitigation and improve transparency, efficiency and effectiveness.
USDA interprets the specific requirements of the Memorandum to
apply to the Forest Service. However, the Memorandum sets expectations
for all USDA agencies to appropriately mitigate ``harmful effects to
land, water, wildlife, and other ecological resources (natural
resources) caused by land- or water-disturbing activities, and the
ensure that any remaining harmful effects are effectively addressed,
consistent with existing mission and legal authorities.''
Response from Jason Weller, Chief, Natural Resources Conservation
Service, U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in
Congress from Texas
Question 1. Please provide the Committee with the latest numbers on
the backlog for wetland determinations for each state in the Prairie
Pothole region.
Answer. Certified Wetland Determination Request Backlog (As of Apr.
1, 2016 for the Prairie Pothole Region of each State):
Iowa....................................................... 598
Minnesota.................................................. 240
North Dakota............................................... 737
South Dakota............................................... 1,372
------------
Total.................................................... 2,947
Significant progress has been made in reducing the backlog:
The net backlog of requests that exceeded 11,000 in the
spring of 2012 is less than 3,000 today.
From October 1, 2015 to March 1, 2016 the four states have
reduced the backlog by over 1,000.
NRCS has been using revised State Offsite Methods to
complete wetland determinations since July 1, 2015. This is a
more efficient method of completing preliminary determinations.
Question 2. As you may know, many in the Prairie Pothole Region
have concerns with the off-site wetland determination process. In what
other ways is NRCS speeding up the process to address the backlog?
Would NRCS be interested in working with the Committee to better
leverage third party expertise to help with the backlog?
Answer. The backlog is being reduced in a more expedient manner
through:
Increased efficiencies in the wetland determination process
facilitated by the states commitment in establishing dedicated
leadership positions for conservation compliance and the use of
more efficient systems to track workload.
Continued dedicated funding to hire temporary staff and
redirection of existing resources to service producer requests.
Continued training efforts to increase and maintain
effectiveness and efficiency of staff conducting
determinations.
The procurement or creation of enhanced remote resources
including LiDAR and Ecological Site Descriptions tied to hydric
soil map units.
As a result, NRCS has completed over 55,000 determinations (over
92% of those requested) in the last 5 years resulting in fewer
producers not having a determination. In addition, we have seen fewer
requests for determinations as commodity prices and land values have
fallen in the last 2 years.
The potential for the use of third parties is affected by the
provision added in The Farm Security and Rural Investment Act of 2002,
which stipulated that the authority to determine compliance could not
be delegated to any private person or entity (16 U.S.C. 3821(e)). So
while NRCS accepts data provided by third parties, this data must be
independently evaluated by NRCS in making determinations.
Question 3. What is the average time in the past couple years for a
producer to get a final determination in South Dakota, for example,
including any time spent in the appeals process? Is NRCS required to
turn over the notes and documents used to make the determination to the
producer if the producer requests it?
Answer. The average time for a producer to get a final
determination has been decreasing, however it is difficult to assess
due to the different appeal options available to producers and the
differing extent and complexity of individual determinations. In 2014
and 2015 the average time for a producer to get a preliminary
determination conducted in South Dakota is approximately 5 to 9 months.
If a determination is appealed, then a reconsideration site visit must
be conducted and the time requirement for this varies greatly based on
the number of and complexity of sites that need to be inspected and
discussed. There are further appeal options and ``levels'' available to
producers including appeals to the Farm Service Agency County
Committee, which requires another field visit by regulation, or the
National Appeals Division (NAD). The final option in the administrative
process is a request for a NAD Director review, which generally takes
over 1 year. The most current data indicates that the appeal rate in
South Dakota is approximately five percent. This means that 95 percent
of the time, producers should have a final determination within 5 to 9
months.
When the NRCS transmits a preliminary or final wetland
determination to the producer, the factual basis is always provided as
required by the appeals regulation. There may be additional documents
and field notes in the NRCS case file that are not provided by default,
but are always available to a producer upon request.
Question 4. As you know, farmland protection, grassland reserve,
and the wetland reserve were consolidated into the Agricultural
Conservation Easement Program during the 2014 Farm Bill. However, the
Agricultural Land Easement (ALE) component is currently receiving only
29 percent of the funding and far fewer dollars than under the former
program. What steps are being taken to ensure a fair and equitable
allocation of funding between agricultural land easements and wetlands
reserve easements?
Answer. The Agricultural Conservation Easement Program (ACEP)
allocation between the program components is based upon demand. NRCS
works diligently to allocate program funds to states for the ACEP
program components to respond to established demand. Over the course of
the 2008 Farm Bill, the predecessor easement programs (the Farm and
Ranch Lands Protection Program (FRPP), the Grassland Reserve Program
(GRP), and the Wetlands Reserve Program (WRP)) received an average of
$780 million annually, of which approximately 73 percent went to WRP
and 27 percent went to GRP and FRPP. The current average annual funding
available under ACEP is approximately $368 million annually, about 47
percent of the amount available under the predecessor programs. As a
result, NRCS is able to fund approximately 30 percent of the total ACEP
applications received each year.
In FY 2014 and FY 2015, the demand under ACEP, in number of
applications and dollars requested, was approximately 65-70 percent for
the Wetlands Reserve Easement (WRE) component and 30-35 percent for the
Agricultural Land Easement (ALE) component. In FY 2014 and FY 2015, an
average of 130,000 acres were enrolled in ACEP each year. This includes
80,000 acres annually of farm and ranch lands protected through new
ACEP-ALE enrollments, and 50,000 acres annually of wetlands restored
and protected through new ACEP-WRE enrollments, a split of 61 percent
ACEP-ALE acres and 39 percent ACEP-WRE acres. The associated funding
split has averaged approximately 39 percent ACEP-ALE and 61 percent
ACEP-WRE.
While the reduced ACEP funding results in reduced enrollments
across the entire program compared to prior years, the reduction in
ACEP-WRE enrollments have been disproportionately larger than ACEP-ALE.
ACEP-ALE has been allocated funds to enroll 60 percent of the historic
average acres under FRPP/GRP, from 132,000 acres annually under FRPP/
GRP to 80,000 acres under ACEP-ALE; ACEP-WRE has been allocated funds
to enroll 28 percent of the historic average acres under WRP, from
177,000 acres per year under WRP to 50,000 acres per year under ACEP-
WRE. Similarly, in FY 2014 and FY 2015, ACEP-ALE received a larger
relative proportion of funds than historically received under the
predecessor programs. NRCS will continue to work to balance demand,
resource needs, and maximizing the benefits of Federal funds invested.
Question 5. Under the Agricultural Conservation Easement Program
(ACEP), the two components of the Agricultural Lands Easement (ALE) and
Wetland Reserve Easements (WRE) are quite different--ALE protects
working lands while WRE largely retires wetland areas. Unfortunately,
USDA is prohibiting any Conservation Reserve Program (CRP) contracts,
including conservation buffers along rivers, lakes and streams, if the
working land is covered by an agricultural land easement. This is
creating an unfair situation between farmers with an easement and those
without an easement. Why is this being done, and how can USDA fix this
problem?
Answer. NRCS encourages the implementation of conservation
practices recommended for resource concerns identified in the
Agricultural Land Easement Plan. The NRCS ACEP manual provides specific
policy guidance and identifies CRP, the Environmental Quality
Incentives Program (EQIP), the Conservation Stewardship Program (CSP),
the Agricultural Management Assistance (AMA) Program, and the Regional
Conservation Partnership Program (RCPP) as possible sources of
financial assistance for implementation of the conservation practices
identified in the Agricultural Land Easement plan. ACEP does not
prohibit the use of those conservation programs but the availability of
the programs are subject to the eligibility requirements, policies, and
procedures of those programs. NRCS is committed to allowing full
participation in any available program as consistent with the purposes
of the ACEP easements. NRCS and FSA have worked cooperatively to update
and revise to Conservation Reserve Enhancement Program (CREP) policy to
allow for ALE participation in efforts to provide needed buffers along
rivers, lakes and streams in important areas.
Question 6. In the Agricultural Conservation Easement Program
created in the 2014 Farm Bill, Congress directed that an Agricultural
Land Easement (ALE) Plan be developed. However, Congress did not say
that the responsibility be handed over to the partnering entity. For
most entities, developing the plan would be an area they have little
expertise in while NRCS does. This could very well be NRCS's
responsibility. What is NRCS doing to engage their own conservation
planning expertise to address the need for an ALE plan?
Answer. The eligible entity has the option under the terms of the
Agricultural Conservation Easement Program--Agricultural Land Easement
(ACEP-ALE) cooperative agreement to develop the ALE plan itself or to
allow NRCS to develop the ALE Plan at NRCS cost. This choice provides
the full use of the NRCS conservation planning expertise and allows the
eligible entity to provide input in the development of the ALE plan on
the easement. For eligible entities who opt to develop the ALE plan on
their own, NRCS does review those plans and works with the eligible
entity to ensure the plan addresses program purposes and the resource
concerns for which the easement is being acquired. Under ACEP-ALE
policy, the eligible entity, the landowner, and NRCS all approve the
ALE plan.
Question 7. The Federal right of enforcement was intended as a
backstop for the slight risk of an entity failing to enforce a
conservation easement. The interim rule left an open ended liability
for entities to repay any and all costs of any Federal enforcement.
Entities are being forced to sign commitments to have these open ended
liabilities even if the state or local program correctly enforces
easement requirements. What is being done to avoid this problem?
Answer. The ACEP regulation and the easement deed outline the
circumstances under which the Federal right of enforcement may be
exercised. This enforcement right is triggered when the entity violates
its agreed-to responsibilities to enforce the terms of the easement.
The Federal right of enforcement is not triggered if an entity enforces
easement requirements.
All NRCS program participants are required to meet the terms of the
program requirements. If a participant fails to meet the required terms
of a program, NRCS has the ability and fiduciary responsibility to
recover costs. However, unlike the 30 day timeframe given to producers
and landowners participating in NRCS financial assistance programs,
ACEP-ALE entities are given 180 days to correct any deficiencies prior
to a determination by NRCS to take its own action with respect to
violations. Provided the entity keeps NRCS apprised of the actions the
entity is taking to resolve any enforcement situation, the Federal
right of enforcement would not trigger.
The Federal right of enforcement is a backstop that safeguards the
Federal investment and protects the natural resources. NRCS must ensure
that any limitation on the Federal Government's ability to recovery
costs is consistent with principles of fiduciary responsibility. The
recovery of costs is authorized specifically by the ACEP-ALE statute
and ensures that the entity maintains its role as primary title holder
of the easement under the terms of the ALE agreement.
NRCS received 17 comments related to the Federal right of
enforcement during the public comment period associated with the
February 2015 publication of the Agricultural Conservation Easement
Program (ACEP) interim rule. Of these comments, a few respondents
recommended that NRCS modify the right of enforcement language to limit
or eliminate NRCS' ability to recover any funds in the event that the
entity breaches its responsibilities under the terms of the ACEP
Agricultural Land Easement (ALE). NRCS is sensitive to the concern
expressed by entities concerning potential open-ended liabilities, and
is reviewing these comments in the development of its ACEP final rule.
In the meantime, NRCS will continue to work with entities, such as
State partners, that have specific statutory concerns with respect to
the right of enforcement language.
Questions Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. Mr. Bonnie or Chief Weller--Can you explain how the
NRCS Conservation Client Gateway interacts with FSA and RMA? Is the
basic data that producers enter, like farm nos., accessible by FSA and
RMA as well or can a producer pull what they need from their FSA data
to your portal? How many producers are utilizing this on-line option?
Answer. The NRCS Conservation Client Gateway (CCG) is a secure,
web-based application that is designed to be used by NRCS clients to
request technical assistance, apply for financial assistance
conservation programs, manage their conservation plans and farm bill
contracts, and track their conservation payments for completed and
certified conservation practices from the convenience of their home or
office.
As currently implemented, NRCS, FSA, and RMA share a common client
database, called the Service Center Information Management System
(SCIMS), which is populated from FSA's Business Partners application.
In a prior analysis, it was estimated that about 70 percent of the
active clients contained within SCIMS are common between NRCS and FSA.
For a given client record, NRCS and FSA share common business entity
types (e.g., individual, limited liability corporation), demographic
classifications, and other client information. Although NRCS's CCG uses
common client data, it does not interact directly with FSA nor RMA
software applications.
Secure access to CCG by authorized clients is provided through a
valid SCIMS client record and a secure login and password provided by
an eAuthentication Level 2 record. An account with Level 2 access
allows the client to enter CCG with a higher level of security to
protect client information.
Land delineation data are similar, but not identical between NRCS
and FSA. FSA uses common land units (CLUs), containing farm, tract, and
field numbers within Farm+ to delineate client land areas mainly for
the purpose of determining crop acreage for commodity programs. NRCS
uses planning land units (PLUs), containing farm, tract, and PLU
numbers within CCG to delineate client planning areas for purpose of
identifying an area for conservation planning for conservation
programs. A PLU may be larger than a CLU because PLUs often need to
contain field borders and corners that are not in crop production.
While very similar in most instances, they are designed for different
programmatic purposes.
FSA clients cannot view their FSA acreage information through the
NRCS CCG. Clients can import CLUs of their land into CCG through the
Import/Export Coverage function, which can then be used to delineate
areas for requests for assistance by NRCS.
As of April 22, 2016, nearly 1,000 clients are using the NRCS CCG
to conduct some portion of their business with NRCS. The majority of
the use is to report completed conservation practices and to request
certification and payment of farm bill program contract items for these
completed practices, as well as to upload documents to support
conservation planning and contract efforts.
Question 2. Chief Weller--Under the cooperative agreements you have
with groups like Pheasants Forever, Ducks Unlimited and others, are
these TA providers given direction on how they're to provide technical
assistance and act on behalf of NRCS? Are they directed not to advocate
on anything that may benefit their primary employing organization?
Answer. When a partner signs a cooperative agreement with NRCS to
perform technical assistance, the Cooperator/Grantee signs a mandatory
Assurance form SF-424b (non-construction) or SF-424c (construction).
The forms contain standard language stating that the partner will
``establish safeguards to prohibit employees from using their positions
for a purpose that constitutes or presents the appearance of personal
or organizational conflict of interest, or personal gain.''
Response from Alexis Taylor, Deputy Under Secretary, Farm and Foreign
Agricultural Services, U.S. Department of Agriculture
Questions Submitted by Hon. K. Michael Conaway, a Representative in
Congress from Texas
Question 1. We are hearing from a number of farmers about
variability of ARC payments on corn between counties. FSA has made it
clear that they started with NASS data when setting ARC guarantees.
But, it seems that RMA has the most complete data set for the purpose
of providing payments to farmers, since it is based on all insured
acres rather than a survey of acres. Can you explain why USDA did not
use RMA data as the primary data source in determining ARC payments?
Answer. Under current policy, the yield for ARC-CO is based on data
from the National Agricultural Statistics Service (NASS) for the
county, if available. NASS yield data is based on long-standing
statistical procedures that best approximate yield for the geographic
area in question. To publish county or district data, NASS requires a
minimum of 30 producer respondent reports (with both harvested acreage
and yield) or that the harvested acres from producer reports with
positive yields account for a minimum of 25 percent of the current
year's harvested acreage estimate for that county or crop reporting
district. NASS's statistical procedures ensure that the resulting data
published are objective, unbiased, and protect producer information.
In addition to NASS being the only regularly published county-level
yield information, it is available several months before comparable RMA
yields. Given the time it takes to collect and collate information
through the agents and insurance companies, RMA's data is not available
until several months after the NASS data This additional time would
have in turn delayed the availability of the information for the
university-based producer education tools that were used as a reference
even for some of the early program-related decisions like whether or
not to reallocate base acres.
Question 2. The intent of the Biomass Crop Assistance Program
(BCAP) is to provide financial assistance to producers to establish
dedicated energy crops. To date, how many acres of dedicated energy
crops have been created from the program? How much has been spent
through BCAP to date?
Answer. Over 49,000 acres across 74 counties in 11 different
project areas are currently enrolled, helping over 800 producers with
the production and establishment of seven different dedicated energy
crops, including fast growing trees, energy grasses, and oilseed crops.
Under the Notice of Funding Availability (NOFA) of 2009, with an
apportioned budget of $535 million, BCAP matching payments totaled a
delivery in FY 2009 and FY 2010 of 5.9 million dry tons of
predominantly forestry waste from private forestlands and manufacturing
wood waste.The BCAP costs include the following below.
BCAP Rental Payments....................................... $15.67 M
BCAP Cost-Share Payments................................... $22.43 M
BCAP Matching Payments..................................... $277.96 M
BCAP Technical Assistance.................................. $162,000
Matching Payments date ranges cover 6 years................ **
* Note: obligations for these payments were made in 2011, 2012, and
2015.
** October 2009 through December 2012; and January 2014-April 2015.
Project Area payments are 2011 through 2015.
Questions Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. We've heard a little bit about double ditch
conservation practices that are very beneficial for runoff and water
quality. However, this practice takes up significantly more land than
just single ditch practices, causing farmers to take more land out of
production. One incentive for some farmers would be to use CRP here,
but we are hearing that the double ditch practices are not meeting CRP
standards. Can you explain why this isn't qualifying and are you
looking into this at all?
Answer. The double ditch, or two-stage ditch conservation practices
are not currently an approved practice for CRP. While it may be
effective in certain applications, the effectiveness has not been
studied in as much detail as other CRP practices. As the technical
service provider for CRP, the Natural Resources Conservation Service
studies the effectiveness of the practices and adopts a national
standard for the practice. CRP only recognizes new practices that have
completed this review and approval.
Question 2. Ms. Taylor--NRCS introduced a web portal that allows
producers to enter data on their operations. Where do things stand with
FSA's option to allow on-line web access to producers to enter
information for their operations and check on other items?
Answer. FSA currently allows producers who through FSAfarm+ Eauth
level 2 to electronically access their farm and personal information.
This includes information such as farmland and cropland information;
ARC/PLC bases and yield information; CRP and other conservation program
acreage; HELC and WC (Wetland) status information; field boundaries
(common land unit); farm imagery; name and address details; membership
interest and share information; and contact information.
FSAfarm+ also allows producers to search for and print their farm
and tract maps; view and print farm details; and view and export their
common land unit (field boundaries).
FSA is exploring ways to expand this opportunity to allow on-line
web access to producers through FSAfarm+ including the NRCS portal that
is mentioned, along with other customer self-service avenues.
Question 3. Ms. Taylor or Mr. Dolcini--How many instances did you
have under the ARC and PLC program where a producer did not complete
their sign-up by coming back into their local offices a second time?
What have budget cuts meant for the ability of county offices to keep
producers up to speed on sign-up deadlines and other reporting
requirements? Are they still allowed to mail newsletters?
Answer. Approximately 1.78 million producers signed up for ARC or
PLC in crop year 2014. Some producers with bases do not enroll in ARC-
PLC for various reasons, including ineligibility such as AGI, or having
bases that are 10 acres or less. FSA engaged in significant outreach
and educational efforts with producers by: partnering with universities
and other stakeholder partners to develop decision tools; participating
in more than 5,000 events discussing base reallocation, yield updates,
and the ARC-PLC programs; and mailing over five million postcards and
other reminders in newsletters or via e-mail through GovDelivery to
producers informing them of the deadlines for completing work relative
to the base reallocation, yield update, and the ARC-PLC election.
Similar to any other program, if producers did not meet the sign up
deadline due to misaction, misinformation or miscommunication from an
FSA employee they can contact their county office to seek equitable
relief. Under this long-standing process, these relief requests then
can be sent forward by the state FSA office to FSA headquarters for
review and a decision.
Question 4. Mr. Dolcini--Do you have wildlife biologists on staff
who determine cover crop mixes for the CRP? Or do you rely on NRCS? I'm
hearing concerns that in some states, the recommended seeding rates may
not be enough to ensure that a successful cover gets established.
Answer. FSA does not have wildlife biologists on staff to provide
technical advice. FSA establishes the broad eligibility requirements
for earning cost share such as requiring a minimum number of species in
a seeding mix based on the overall goals of the conservation practice.
By statute, NRCS provides the technical services that support
implementation of CRP including the specific species to include in the
seed mixes. The specific seed mixes are established locally within each
state with the advice of the State Technical Committee, which is
chaired by NRCS and has various stakeholders as members.
Question 5. Ms. Taylor and Mr. Dolcini--As you may be aware, we've
had concerns in several counties in Minnesota where groups of producers
did not make their third and final trip back to their local FSA offices
to sign their ARC or PLC contract for the 2014 and 2015 year crops. Do
FSA computers have the ability to flag when a producer has unsigned
paperwork or forms that are yet unfilled and alert the county office
staff when a producer visits the office? As an example, I'm wondering
why some of the producers in my impacted counties weren't reminded that
they hadn't signed up for the 2014-2015 program while they were in
providing their acreage reports.
Answer. Approximately 1.78 million producers signed up for ARC or
PLC in crop year 2014. Some producers with bases do not enroll in ARC-
PLC for various reasons, including ineligibility such as AGI, or having
bases that are 10 acres or less. FSA engaged in significant outreach
and educational efforts with producers by: partnering with universities
and other stakeholder partners to develop decision tools; participating
in more than 5,000 events discussing base reallocation, yield updates,
and the ARC-PLC programs; and mailing over five million postcards and
other reminders in newsletters or via e-mail through GovDelivery to
producers informing them of the deadlines for completing work relative
to the base reallocation, yield update, and the ARC-PLC election. While
county offices can track enrollment progress and are encouraged to make
personal contact such as reminder phone calls when time and resources
allow, it is important to remember that it is the producer's
responsibility to enroll in the program.
The vast majority of farmers completed the process successfully and
participation was similar to the predecessor direct payment program.
With that said, having such a complicated and large program there were
some producers that either decided not to enroll or missed the
deadline. Similar to any other program, if producers did not meet the
sign up deadline due to misaction, misinformation or miscommunication
from an FSA employee they can contact their county office to seek
equitable relief. Under this long-standing process, these relief
requests then can be sent forward by the state FSA office to FSA
headquarters for review and a decision. FSA will take into account the
pattern of relief requests when considering the cases and pay
particular attention if there is a cluster in a particular county.
Questions Submitted by Hon. Randy Neugebauer, a Representative in
Congress from Texas
Question 1. Can you tell me how many acres were in the Conservation
Reserve Program (CRP) in FY 2015, how many acres are currently in the
program and how many acres you expect to be in the program after this
year's general sign-up? Additionally, can you explain to me why you
used your discretion to hold a general sign-up for FY 2017 but not hold
a general sign-up for FY 2016?
I have heard from several landowners who feel that, through no
fault of their own, they are being penalized by the Federal Government
for having CRP land expire at the end of FY 2015 rather than FY 2016.
They have shown me examples of seemingly similar land where one piece
of land is allowed to sign up for CRP while the other is not. Under the
current CRP general sign-up, how does USDA treat acres that expired in
the previous year when no general sign-up was available? Are these
acres evaluated equally with current re-enrollments that may have a
similar EBI? If not, how does USDA justify treating similar acres
differently?
Answer. At the end of FY 2015, there were 24.2 million acres under
contract, and as of March 2016, enrollment was 23.8 million acres.
After October 1, 2016, enrollment is not allowed to exceed 24 million
acres. A general sign-up was held from December 1, 2015, through
February 26, 2016. The statutory ramp-down of the acreage enrollment
cap meant there were insufficient acres to conduct a general sign-up in
both FY 2015 and FY 2016.
Since there was no general sign-up in FY 2015, a 1 year contract
extension was offered if the existing contract was less than 15 years.
By statute, contracts cannot exceed 15 years. Many contracts are only
10 years and these producers could take advantage of the extension. For
contracts that were not eligible for the extension, landowners could
apply for the recent general sign-up or in some cases they could have
applied to enroll the land in a new Continuous CRP practice if the land
was eligible or they were willing to improve the habitat.
Question 2. Last spring and early summer, many producers and ag
lenders in my area contacted my office with their concerns that the
time it took to process loan applications through FSA was too long. As
cotton prices continue to strain many producers' cash flow in my
district, they are understandably looking more and more at utilizing
financing offered through FSA. While this increase in workload for FSA
might have been unexpected last year, going into this year, where
conditions have not markedly improved, it is my hope that FSA has
looked ahead in an attempt mitigate these long turnaround times. Can
you tell me what actions FSA has proactively taken to reduce these
delays and address the increased workload that is expected in Lubbock
and the surrounding counties? Last year we faced a situation where many
producers did not get answers until planting deadlines had passed and I
hope we can work together to keep this from happening in the coming
months.
Answer. The FSA Texas State office, with National Office support,
has taken a variety of actions to address farm loan delivery issues in
the Lubbock area. Steps have been taken to address resource
challenges--several key positions have been filled which includes the
hiring of a new District Director with extensive farm loan experience.
In addition, several new loan officers have been hired including three
in the South Plains area. The Texas State Office also has plans to make
additional hires consistent with available resources, including a
District Director-at-Large, to focus on farm loan program operations in
the region.
FSA is committed to timely high quality service, and is using a
multi-pronged approach to improve service in the Lubbock area and
across the entire state of Texas. Overtime has been made available for
staff to help cope with the increased workload. The National Office is
working to provide additional staff resources from other states to help
in Texas. As of date, the Lubbock and surrounding FSA offices
(Littlefield, Lamesa and Seminole) have seen a 5.5 day reduction in
average processing time for loan requests so far in FY 2016.
FSA National Office will continue to monitor the situation in the
Lubbock area and work closely with the Texas State Executive Director
in managing available resources to address the issues in the Lubbock
region.
Response from Brandon Willis, Administrator, Risk Management Agency,
U.S. Department of Agriculture
Question Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question. Are you looking at any benefit programs for producers who
are employing certain conservation and soil health practices that are
making them less risk-adverse to poor yields? Some conservation and
soil health practices such as cover crops and crop rotations help crops
perform better in poor weather years and I'm wondering if RMA is taking
this into account at all. It seems like this could be a place to
provide some incentives to farmers.
Answer. For the most yield and revenue insurance plans, producers
that have above-average yields are charged a lower premium rate, and
vice-versa. To the extent that a conservation practice improves a
producer's yield, the current premium rating structure already
recognizes this in the form of a lower premium rate.
Response from Hon. Edward M. Avalos, Under Secretary, Marketing and
Regulatory Programs, U.S. Department of Agriculture
Questions Submitted by Hon. David Rouzer, a Representative in Congress
from North Carolina
Question 1. USDA has recently indicated recently plans to revisit
proposed GIPSA regulations that for years have been repeatedly
prohibited by Congress. The Committee remains deeply concerned about
the scope of these regulations and is troubled by the recent
announcement they would be revisited.
What is the anticipated scope of the proposed changes?
Answer. Appropriations riders restricted USDA from acting on
multiple sections of GIPSA's proposed rule entitled ``Implementation of
Regulations Required under Title XI of the Food, Conservation and
Energy Act of 2008; Conduct in Violation of the Act'' (75 Fed. Reg.
35,388 (June 22, 2010)). Specifically, the appropriations provisions
restricted USDA' activity in five substantive areas including: whether
a finding of harm or likely harm to competition is necessary to
establish a violation of section 202(a) or (b) of the Packers and
Stockyards Act; practices or devices that would be considered unfair,
unjustly discriminatory or deceptive in violation of the Act; criteria
that the Secretary would consider in determining if undue or
unreasonable prejudice or disadvantage has occurred in violation of the
Act; a requirement that packers, swine contractors, and live poultry
dealers submit a sample copy of each unique marketing arrangement or
poultry growing arrangement; and a requirement that live poultry
dealers paying growers pursuant to a tournament system pay all growers
raising the same type and kind of poultry the same base pay and to rank
growers in settlement groups with like house types. As of December 18,
2015, these restrictions no longer apply. GIPSA is working on rules
covering these areas except the regulation to require sample copies of
each unique marketing arrangement or poultry growing arrangement.
Question 2. Does GIPSA intend to issue a new proposed rule
outlining its changes?
If the agency contemplates moving forward as final or interim final
all or part of previous proposals without first re-proposing those
rules for public comment, does the agency intend to conduct a new
economic impact assessment of the proposals? Will the agency allow for
public review and comment a current economic impact assessment prior to
issuing final regulations, or will the public be denied the opportunity
to comment on the implications of proposals that have not been publicly
reviewed as they relate to today's livestock markets?
Answer. GIPSA will comply with all requirements of the
Administrative Procedures Act, as well as other applicable statutes and
Executive Orders 12866 and 13563. The cost and benefits will be
assessed of any proposed or final rules.
Question 3. Does GIPSA intend to provide a reasonable comment
period, with reasonable extensions as appropriate to allow all parties
to submit meaningful comments? How does the agency define
``reasonable'' in this context?
Answer. The Agency intends to provide for public comment as
appropriate.
Question 4. GIPSA has issued letters to some poultry integrators
listing a large number of items that GIPSA believes must be disclosed
in arbitration provisions in poultry growing contracts. Please identify
in the regulations as published exactly what items must be disclosed.
Has or does GIPSA intend to take enforcement action based on contracts
that meet the terms of the regulation but don't satisfy the expansive
guidance?
Answer. Section 210 of the Packers and Stockyards Act requires that
any livestock or poultry contract that contains a provision requiring
the use of arbitration contain terms that conspicuously disclose the
right of the contract producer or grower, prior to entering the
contract, to decline the requirement to use arbitration to resolve any
controversy that may arise under the livestock or poultry contract.
The regulations prescribe the language that must appear on the
signature page of the contract and establish criteria that may be
considered to determine whether the grower has sufficient opportunity
to participate in the arbitration process and to make an informed
decision regarding whether to accept or decline the mandatory
arbitration in the contract (9 CFR 201.218). The regulation became
effective February 7, 2012.
GIPSA's review of contracts after the regulation became effective
revealed that many contracts that require arbitration still lack
sufficient information to enable growers to make an informed decision
regarding whether to accept or decline the arbitration provision in the
contract. Rather than issue Notices of Violation to live poultry
dealers and swine contractors regarding the arbitration provision in
numerous contracts, the Agency determined that the better course would
be to provide all known production contractors with further guidance
regarding the appropriate disclosure.
The regulatory criteria includes: ``Whether the contract discloses
sufficient information in bold, conspicuous print describing all the
costs of arbitration to be paid by the poultry grower, swine production
contract grower, or livestock producer, and the arbitration process and
any limitations on legal rights and remedies in such a manner as to
allow the poultry grower, livestock producer or swine contract
production grower to make an informed decision on whether to elect
arbitration for dispute resolution.'' The Agency provided contractors
with further guidance in the referenced letters as to what information
GIPSA believes provides sufficient notice to enable the grower to make
an informed decision about whether to accept or decline the arbitration
provision in the contract.
GIPSA has worked with individual companies and with the National
Chicken Council to resolve questions and concerns about the additional
guidance and to identify contract language that the Agency believes
provides sufficient notice to the poultry grower or swine contract
grower.
GIPSA's goal is to assure that growers have the information
necessary to make an informed decision regarding whether to accept or
decline the arbitration provision in growing contracts. GIPSA is
working with the industry to bring contracts into compliance rather
than focusing on enforcement. However, if a packer, swine contractor,
or live poultry dealer does not work with GIPSA to modify its contracts
to comply with the statute and regulation, GIPSA will consider
initiation of enforcement proceedings.
Question 5. Secretary Vilsack recently suggested that the GIPSA
rules were being revisited partly out of concern about payments to
contract growers who suffered losses due to last year's Highly
Pathogenic Avian Influenza outbreak.
APHIS already issued an interim final rule in February of this year
addressing those payments. The rule took effect immediately and changed
the way indemnity payments were handled. Under the rule, indemnity
payments for birds lost to HPAI will now be split between the
integrator and the contract farmer, with the contract farmer being paid
directly by USDA. In its rulemaking, APHIS explained that the change
would ``ensure that all contractors are compensated appropriately.'' If
the indemnification rule fixes any potential inequities in the
distribution of indemnification payments, why does USDA think that a
GIPSA regulation is also required?
Answer. GIPSA does not have a role in providing indemnity payments
to owners or growers whose birds are destroyed to prevent the spread of
highly pathogenic avian influenza. Secretary Vilsack commented that the
Department's experience with avian influenza reminded the Department of
the importance of the relationship between poultry growers and poultry
integrators. The Secretary did not intend to imply that GIPSA would be
involved in the APHIS indemnity program.
Question 6. The proposed GIPSA rule did not address indemnification
payments, and GIPSA does not oversee the HPAI indemnification program.
Why does the Department believe that GIPSA is the appropriate agency to
address indemnification payments?
Answer. Please refer to the response to Question 5.
Question 7. How does GIPSA interpret the Packers and Stockyards Act
as providing GIPSA the authority to oversee APHIS' indemnification
payments?
Answer. Please refer to the response to Question 5.
Question 8. How would the GIPSA changes interact with the APHIS
indemnification rule?
Answer. Please refer to the response to Question 5.
Response from Kevin Shea, Administrator, Animal and Plant Health
Inspection Service, U.S. Department of Agriculture
Questions Submitted by Hon. Collin C. Peterson, a Representative in
Congress from Minnesota
Question 1. Many countries have bilateral agreements with the U.S.
regarding how we will address disease reporting issues as well as how
those countries will react should a disease outbreak happen. Have you
had any success, specifically with HPAI, but with other diseases as
well in getting countries to agree to modernizing how they treat an
outbreak for example through regional ban? Furthermore, how can we in
Congress help you move these bilateral agreements along--it seems
countries move a little faster through this process than through OIE's
system.
Answer. APHIS, consistent with international obligations, has long
promoted the concept of regionalization with our trading partners so
that we can limit the number of producers affected by trade
restrictions and to help us reopen international markets to U.S.
products as soon as possible after a disease outbreak. We have had some
success with this approach. With HPAI, for example, the Agency's
previous legwork in emphasizing the importance of a regionalized
approach paid off. When the outbreak began, while some countries
curtailed all imports of U.S. poultry, most of our trading partners
(those who accounted for about 70 percent of the total value of poultry
exports in 2014) limited trading bans to affected states or counties,
preserving export markets for the majority of the country. After the
outbreak, the Secretary and other USDA and APHIS officials spoke
regularly with trading partners, emphasizing the continued importance
of regionalization and urging them to re-open markets as quickly as
possible. We remain in regular communication with our trading partners
to try to reopen any remaining markets and to encourage them to
regionalize in the event of future HPAI or other animal disease
outbreaks. We have also modeled this approach for other countries; when
they have had disease outbreaks, we have looked to regionalize our
response to encourage our trading partners to do the same should
disease strike here. We appreciate Congress' support of our efforts.
Question 2. One of the most important missions that APHIS has is to
protect U.S. agriculture from invasive pests and diseases. Some of my
farmers have expressed concerns about a proposed rule that would
expedite access to our market for Polish apples. A full pest and
disease risk assessment has never been conducted on Poland as is
routine with such requests. This concerns me as I fear granting access
without the necessary risk assessment could result in the introduction
of foreign pests or diseases. We have seen the devastating impact of
the brown marmorated stink bug, Asian long horned beetle and emerald
ash borer to name a few. What makes this even more perplexing for my
constituents is that the EU has virtually shut out our industry from
exporting to their markets due to Maximum Residue Limit (MRL) standards
that seem to follow the precautionary principal rather than sound
science. Can you please explain the reasoning behind this approach?
Answer. APHIS has rigorous systems in place, codified through the
Code of Federal Regulations, based on sound science and implemented by
experts in risk management to protect U.S. agriculture from invasive
pests and diseases. We only make decisions to allow imports when the
risk assessment process determines that there are sufficient protective
safeguards in place.
APHIS performs pest risk assessments for all commodities requiring
market access into the United States. The first step in this process is
to develop a list of potential pests that pose a risk to agriculture
and that could be transferred with the commodity. If the pests
identified during this stage of the pest risk assessment are well known
and ones for which we have mitigations in place, APHIS does not prepare
a Pest Risk Analysis (PRA) document. APHIS uses PRAs in cases where the
Agency needs to inform the exporting country of requirements for market
access due to new pests or mitigations which are not already in
practice in that country.
On September 29, 2014, the European Commission asked that Poland be
included in a market access request for apples and pears, along with
several other EU countries. Our decision to include Poland in this risk
assessment was based on our evaluation of the technical information
they submitted, risk of the potential pathways for pests, and risk
reducing mitigations. In response to their request for access, we
developed a pest list identifying all of the pests of concerns for the
countries wishing to export, and also prepared and published a risk
management document to determine what phytosanitary measures should be
applied to each of these pest risks.
When APHIS added Poland to the EU market access request, APHIS
determined that Poland did not add new pests or mitigations beyond
those of the other EU countries. Therefore, the Agency can develop a
risk management document using existing information from the pest risk
assessment without producing a full Pest Risk Analysis document.
As APHIS has developed the rule to allow market access, we have
sought public input on the process. We published the pest list for
comment on two separate occasions--from August 2014 to October 2014,
and again from December 2014 to January 2015--after Poland asked to be
included in the market access request. APHIS sent the pest list to over
78,000 stakeholders.
We published a proposed rule in the Federal Register on January 20,
2016, with a 60 day comment period. We extended the comment period an
additional 45 days at the request of stakeholders. The proposed rule is
based on a systems approach, which is a concept that employs multiple
mitigation steps and layers of protection to ensure that the exports
can be shipped safely. APHIS will not publish a final rule unless the
Agency is comfortable that imports of apples from Poland and the other
EU countries can be done so safely, based upon the best available
science.
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