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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

(

Printed for the use of the Committee on Agriculture 

agriculture.house.gov 

COMMITTEE ON AGRICULTURE 

K. MICHAEL CONAWAY, Texas, Chairman 

RANDY NEUGEBAUER, Texas, 

Vice Chairman 

BOB GOODLATTE, Virginia 

FRANK D. LUCAS, Oklahoma 

STEVE KING, Iowa 

MIKE ROGERS, Alabama 

GLENN THOMPSON, Pennsylvania 

BOB GIBBS, Ohio 

AUSTIN SCOTT, Georgia 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

SCOTT DESJARLAIS, Tennessee 

CHRISTOPHER P. GIBSON, New York 

VICKY HARTZLER, Missouri 

DAN BENISHEK, Michigan 

JEFF DENHAM, California 

DOUG LAMALFA, California 

RODNEY DAVIS, Illinois 

TED S. YOHO, Florida 

JACKIE WALORSKI, Indiana 

RICK W. ALLEN, Georgia 

MIKE BOST, Illinois 

DAVID ROUZER, North Carolina 

RALPH LEE ABRAHAM, Louisiana 

JOHN R. MOOLENAAR, Michigan 

DAN NEWHOUSE, Washington 

TRENT KELLY, Mississippi 

COLLIN C. PETERSON, Minnesota, Ranking 

Minority Member 

DAVID SCOTT, Georgia 

JIM COSTA, California 

TIMOTHY J. WALZ, Minnesota 

MARCIA L. FUDGE, Ohio 

JAMES P. MCGOVERN, Massachusetts 

SUZAN K. DELBENE, Washington 

FILEMON VELA, Texas 

MICHELLE LUJAN GRISHAM, New Mexico 

ANN M. KUSTER, New Hampshire 

RICHARD M. NOLAN, Minnesota 

CHERI BUSTOS, Illinois 

SEAN PATRICK MALONEY, New York 

ANN KIRKPATRICK, Arizona 

PETE AGUILAR, California 

STACEY E. PLASKETT, Virgin Islands 

ALMA S. ADAMS, North Carolina 

GWEN GRAHAM, Florida 

BRAD ASHFORD, Nebraska 

SCOTT C. GRAVES, Staff Director 

ROBERT L. LAREW, Minority Staff Director 

(II) 

(III)

C O N T E N T S 

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

Page

IV

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—Continued

Submitted questions—Continued

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

(1)

HEARINGS TO EXAMINE USDA ORGANIZATION 

AND PROGRAM ADMINISTRATION 

(Part 1) 

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 commitVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\114-47\99585.TXT BRIAN
2

ment 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. 

3

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. 

4

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. 

5

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 

6

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 eco- nomic 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 

7

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. 

8

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-topeer 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 

9

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.’’

10

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 

11

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. 

12

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. 

13

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 

14

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. 

15

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——

16

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 

17

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 

18

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 

19

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. 

20

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 lowcost 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 

21

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 

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22

tions. 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. 

23

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——

24

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. 

25

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 ex- ceptionally 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 demVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00029 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
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onstrated 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, faithbased 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. 

27

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 

28

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 

29

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 

30

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 conVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00034 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
31

cerns. 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. 

32

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. 

33

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 

34

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 

35

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. 

36

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. 

37

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 

38

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 verylow-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 

39

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 testiVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00043 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
40

mony, 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. 

41

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 

42

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. 

43

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 incountry 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 atVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00047 Fmt 6633 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
44

tribution 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 

45

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 firsthand 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 

46

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. 

47

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 

48

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. 

49

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. 

50

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 

51

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 agenVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00055 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
52

cy 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 

53

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, someVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00057 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
54

times 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. 

55

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 

56

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? 

57

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 inVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00061 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
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vestments 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 drugfree 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 

59

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 fieldbased 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. 

60

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 busiVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00064 Fmt 6633 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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nesses 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 lowincome 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 

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$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 shortVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00066 Fmt 6633 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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ages, 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. 

64

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? 

65

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 

66

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——

67

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 

68

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 HerVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00072 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
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nandez 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. 

70

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 

71

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 imVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00075 Fmt 6633 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
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prove 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-fitsall 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 

73

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——

74

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 

75

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——

76

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? 

77

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? 

78

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 

79

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:] 

81

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 parVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00085 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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ticipate 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 authorVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00086 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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ized 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-shelleggs [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 exVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00087 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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port 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 onsite 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 

85

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 AcquisiVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00089 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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tion 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. 

87

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]. 

88

1 78 FR 51130 (August 20, 2013). 

2The total number of submissions received includes 204 submissions, five public transcripts, 

and seven (7) form letter copies that were submitted under one submission. 3 Anne Shanahan, Lucinda Keller. 

4 Virginia Department of Social Services.

5 7-Eleven, Inc. 

6 7-Eleven, Inc.

[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. 

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. 

• 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. 

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. 

• 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 opVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00092 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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7 Rudd Center for Food Policy and Obesity. 

8 City of Chicago, Department of Public Health.

9Mid-Ohio Valley Health Department, United Council on Welfare Fraud, American Beverage 

Association. 10 University of California SNAP-Ed Program, Sandra Salcedo. 11Mitchell Klein, Mass Farmers Markets, Center for Disease Control. 12 USDA, Office of Inspector General. 13Mississippi Department of Human Services, Rudd Center for Food Policy and Obesity, 

Michigan Department of Human Services. 14Land O’Sun Management Corporation, American Natural, Darlene Conner, Tom Thumb 

Food Stores, Inc., Aloha Petroleum, Ltd. 

tions 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). 

• 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

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

• 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

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

• 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

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 DieVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00093 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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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.16Kevin Kehmna. 17Philadelphia Department of Public Health, Johns Hopkins Center for a Liveable Future, 

State of California Health and Human Services Agency Department of Social Services. 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. 19The Grocers Manufacturing Association. 20Donna Garen, 7-Eleven, Inc. 21Ohio Grocers Association. 22Lee Sanders. 23Sandra Salcedo. 24 National Grocers Association, Grocery Manufacturers Association. 25Little Caesars Enterprises, Inc. 26Mitchell Klein, The Food Trust. 

tary 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: 

» Alignment with DGA [G]uidelines for specific categories of ‘prepared food,’ 

‘snacks,’ ‘bakery,’ and ‘beverage’ categories; 16

» 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 

» 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

• 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

» Modifying the definition could open the door to future limitations on SNAP 

consumer choice; 20

» 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 

» Lack of consensus on what is ‘‘healthful’’ and the possible danger associated 

with deviating from the current ‘‘total diet approach.’’ 22

• 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

» 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

» 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

• 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

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 citiVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00094 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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27Donna Garen, National Grocers Association, Grocery Manufacturers Association. 28Mitchell Klein, Sandra Saleco, Mass. Farmers Markets. 29Sandra Saleco, OTDA. 30OTDA. 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. 33 United States Conferences of Mayors Food Policy Task Force, Mitchell Klein. 34 New York City Department of Health and Mental Hygiene, Association of SNAP-Ed Nutrition Networks and Other Implementing Agencies. 35Texas Retailers Association, Academy of Nutrition and Dietetics, Center for Disease Control. 36Society for Nutrition Education and Behavior. 37 Rudd Center for Food Policy and Obesity, California Food Policy Advocates. 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.

zens 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 portioncontrolled, cost-effective) and argued that no change is needed in their treatment.27

• 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

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. 

• Reasons provided by commenters that the 12 item minimum was insufficient 33

included the following: 

» Insufficient variety of foods offered in each food category (e.g., suggested increase to six items required per food category); 34

» The creation of an additional food category to list fruits and vegetables separately; 35

» A professional association suggested altering categorization by including subcategories and aligning categorization more closely with Dietary Guidelines 

for Americans; 36

» Requirement to stock perishable foods in additional food categories.37

• 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. 

92

39 United Fresh Produce Association, Johns Hopkins Center for a Livable Future. 40The Philadelphia Department of Public Health. 41The National Grocers Association. 42Food Marketing Institute. 43State of California, Health and Human Services Agency Department of Social Services. 44The Food Trust. 45 7-Eleven, Inc., The Food Trust, Ohio Grocers Association. 46Little Caesars Inc. 47Society for Nutrition Education and Behavior. 48Food Marketing Institute. 49Mass. 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 perishable foods should be required in three 

categories (fruits, vegetables, and dairy) or four categories (fruits, vegetables, 

and two other groups).39

• 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

» A trade association said FNS should ensure that stores are able to stock perishable items based on consumer demand.41

» Another trade association said FNS should provide flexibility for stores that 

may face periodic challenges stocking perishable items.42

• 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

» One commenter stated that the requirement would be too difficult for small 

retailers in under-served communities.44

» 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. 

» 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

» 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

» 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

• 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

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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. 53The University of California SNAP-Ed Program, The Association of SNAP-Ed Nutrition Networks and Other Implementing Agencies. 54Texas Retailers Association, United Council on Welfare Fraud, Commonwealth of Virginia 

Department of Social Services. 55 Aloha Petroleum, Ltd., The Food Trust, National Grocers Association, Chicago Department 

of Public Health, Rudd Center for Food Policy and Obesity. 56 National Association of Convenience Stores (NACS) and Society of Independent Gasoline 

Marketers of American (SIGMA). 57Food Marketing Institute. 58 7-Eleven Inc. 59 California Food Policy Advocates, Philadelphia Department of Public Health, State of California, Health and Human Services Agency Department of Social Services, CDC. 60 University of California SNAP-Ed Program, the Association of SNAP-Ed Nutrition Networks and Other Implementing Agencies. 61Texas Retailers Association, National Grocers Association, Rudd Center for Food Policy and 

Obesity, United Council on Welfare Fraud.

• 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

• 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

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. 

• 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

» Two trade associations stated that retailers’ non-SNAP sales are irrelevant 

to whether they should be able to redeem SNAP benefits.56

» 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

» 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

• 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

» 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

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

• A food retailer stated that sound policy reasons exist for permitting SNAP vendors to heat foods purchased with SNAP benefits post-sale for home consumpVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00097 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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62 7-Eleven Inc. 63The Food Trust. 64Michigan Department of Human Services. 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. 67The 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. 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. 70Texas Retailers Association, Community Health Councils, Food Marketing Institute. 71 Iowa Food Bank Association, SNAP Outreach Workers, and Feeding America Food Banks 

in Iowa. 72 New York City Department of Health and Mental Hygiene, United Council on Welfare 

Fraud. 73 Commonwealth of Virginia Department of Social Services. 74 New York City Department of Health and Mental Hygiene.

tion (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 lowincome communities and stated that food insecurity experts would prove valuable to informing eligibility for prepared food retailers.63

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

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

• 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

• 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

• 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

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

» Focus investigative efforts on targeting high-risk retailers; 72

» Review current EBT reports to identify red flags for fraud; 73

» Publish FNS retailer enforcement work, make it accessible to the public, and 

combine this information with the FNS Watch List; 74

95

75 ASNNA: Association of SNAP-Ed Nutrition Networks and Other Implementing Agencies, 

OTDA. 76 Rudd Center for Food Policy and Obesity, PHI. 77Texas Retailers Association. 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. 79 United Council on Welfare Fraud. 80 United Council on Welfare Fraud. 81 Academy of Nutrition and Dietetics. 82 Academy of Nutrition and Dietetics. 83Michigan Department of Human Services. 84 New York City Department of Health and Mental Hygiene. 85PHI. 86 National Association of Convenience Stores (NACS) and Society of Independent Gasoline 

Marketers of American (SIGMA). 87 Cumberland Farms, Inc.

» 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

» Share data amongst all government agencies involved in regulating food retailers; 76

» Include input from all stakeholders (e.g., convene a working group); 77

» Require stores to utilize EBT or POS systems; 78

» Review current ALERT process for potential enhancements to identify suspect transactions; 79

» Mandatory store visits; 80

» 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

» Seek additional legislative authority as necessary to reduce fraud and utilize 

financial penalties; 82

» Use the WIC model to limit the amount of subsidized unhealthy food items; 83

» 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 

» Test strategies using technology-based measures to assess retailers’ compliance.85

• 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

• 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 proVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00099 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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88Some 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. 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. 90 University of California SNAP-Ed Program, ASNNA: Association of SNAP-Ed Nutrition 

Networks and Other Implementing Agencies. 91 University of California SNAP-Ed Program, ASNNA: Association of SNAP-Ed Nutrition 

Networks and Other Implementing Agencies, Academy of Nutrition and Dietetics. 92 ASNNA: Association of SNAP-Ed Nutrition Networks and Other Implementing Agencies. 93 University of California SNAP-Ed Program, ASNNA: Association of SNAP-Ed Nutrition 

Networks and Other Implementing Agencies. 94 UNC Gillings School of Global Public Health. 95 New York City Department of Health and Mental Hygiene. 96State of California, Health and Human Services Agency Department of Social Services. 97 Rudd Center for Food Policy and Obesity. 98 United Council on Welfare Fraud. 

vided the following ways in which FNS could improve SNAP with regard to 

farmers[’] markets: 88

» 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

» Require that SNAP staple foods be visible from the store entrance; 90

» Encourage cross-promotion between WIC-allowed and SNAP ‘‘staple foods’’; 91

» Post clear labels for unit pricing of all foods and beverages; 92

» Allow retailers to offer discounts and bonus values for ‘‘staple foods’’ to SNAP 

customers; 93 and 

» Restrict or limit the amount of tobacco product displays or marketing in 

SNAP eligible stores.94

• 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

» Consider a separate application for smaller retailers to deter trafficking.96

» 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

» Consider a probation period during which random inspections will be conducted.98

97

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. 100PHI, Academy of Nutrition and Dietetics. 101 Academy of Nutrition and Dietetics. 102The Society for Nutrition Education and Behavior, the National WIC Association, PHI. 103 Johns Hopkins Center for a Livable Future. 104Texas Retailers Association, United Council on Welfare Fraud, Commonwealth of Virginia 

Department of Social Services. 105 Cumberland Farms, Inc. 106 American Beverage Association. 107 Academy of Nutrition and Dietetics. 

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

• 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

• 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

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

• An educational institution encouraged FNS to develop SNAP standards that are 

in line with WIC requirements.103

• 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

• 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

• 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

• 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

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).

Coding 

Structure 

Category 

Number 

Category Title 

Count of 

Unique

Submissions 

(including one 

copy of each 

form letter) 

Count of All 

Submissions 

(including 

form letter 

copies) 

1 General feedback on the RFI 0 0

98

Coding 

Structure 

Category 

Number 

Category Title 

Count of 

Unique

Submissions 

(including one 

copy of each 

form letter) 

Count of All 

Submissions 

(including 

form letter 

copies) 

1.1 General support for making changes to existing program 

eligibility requirements (w/o substantive rationale) 5 5

1.2 General opposition to making changes to existing program 

eligibility requirements (w/o substantive rationale) 1 1

1.3 Other general comments 1 1

2 Responses to Questions Posed by FNS 0 0

2.1 Question No. 1: Reasonableness of ensuring provision of 

healthy food options as SNAP store eligibility criterion 0 0

2.1.1 Agreement that provision of healthy food options is a reasonable eligibility requirement 34 34

2.1.2 Disagreement that provision of healthy food options is a 

reasonable eligibility requirement 1 1

2.1.3 Other comments on reasonableness of healthy food provision eligibility requirement 6 6

2.2 Question No. 2: Existence of store types that should always 

be eligible for SNAP participation 0 0

2.2.1 General support for eligibility of particular store types 6 6

2.2.2 General opposition to eligibility of particular store types 11 11

2.2.3 Suggestions for store types that should always be eligible 

for participation 1 1

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 whether some store types should always be eligible for SNAP participation 12 12

2.3 Question No. 3: Existence of store types that should always 

be ineligible for SNAP participation 0 0

2.3.1 General support for ineligibility of particular store types 4 4

2.3.2 General opposition to ineligibility of particular store types 10 10

2.3.3 Suggestions for store types that should always be ineligible 

for participation 0 0

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 whether some store types should never 

be eligible for SNAP participation 27 123

2.4 Question No. 4: Redefinition of ‘‘staple foods’’ 0 0

2.4.1 A different definition of ‘‘staple foods’’ would help ensure 

more healthy food choices 1 1

2.4.1.1 Proposed changes to definition 24 24

2.4.1.2 Support/references for need to change definition 1 1

2.4.1.3 Other comments in support of a new definition for ‘‘staple 

foods’’ 7 7

2.4.2 Redefining ‘‘staple foods’’ would not ensure more healthy 

food choices 0 0

2.4.2.1 Current definition is sufficient 6 6

2.4.2.2 FNS should only focus on trafficking/redefining staple foods 

will not impact trafficking 0 0

2.4.2.3 Other comments in opposition to a new definition for ‘‘staple foods’’ 6 6

2.4.3 Treatment of foods high in added sugar, sodium, or solid 

fats 0 0

2.4.3.1 Support for exclusion of these items as ‘‘staple foods’’ 2 2

2.4.3.2 Opposition to exclusion of these items as ‘‘staple foods’’ 3 3

2.4.3.3 Other comments regarding treatment of foods high in added 

sugar, sodium, or solid fats 3 3

2.4.4 Other comments on redefining ‘‘staple foods’’ 4 4

2.5 Question No. 5: Applicability of ‘‘staple foods’’ categories to 

prepared foods with multiple ingredients 0 0

2.5.1 Support for 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). 8 8

2.5.2 Support for changing treatment of multiple ingredient foods 

(e.g., only considering single ingredient foods as staple 

foods) 6 6

99

Coding 

Structure 

Category 

Number 

Category Title 

Count of 

Unique

Submissions 

(including one 

copy of each 

form letter) 

Count of All 

Submissions 

(including 

form letter 

copies) 

2.5.3 Other comments on multiple ingredient foods as ‘‘staple 

foods’’ 16 16

2.6 Question No. 6: Adequacy of the twelve applicable item 

minimum under Criterion A 0 0

2.6.1 Support for maintaining current twelve applicable item 

minimum for eligibility 3 3

2.6.2 Support for changing applicable item minimum eligibility 

requirements 0 0

2.6.2.1 Support for increase in minimum applicable item requirements 15 15

2.6.2.2 Support for increased flexibility in categorization 2 2

2.6.2.3 Other comments on proposed changes for applicable item 

minimum eligibility requirements 9 9

2.6.3 Other comments on the potential increase of the Criterion 

A twelve applicable item minimum 3 3

2.7 Question No. 7: Possible change from Criterion A requirement to stock perishable items in two categories 0 0

2.7.1 Support for requiring perishable items to be stocked in 

more than two categories 20 20

2.7.2 Opposition to requiring perishable items to be stocked in 

more than two categories 1 1

2.7.2.1 Current program is sufficient in meeting program goals 2 2

2.7.2.2 Increasing the required number of categories of perishable 

items would be too difficult 1 1

2.7.2.3 Other comments opposing the requirement of perishable 

items in more than two categories 4 4

2.7.3 Other comments on changing the required number of categories of perishable items 3 3

2.8 Question No. 8: Adequacy of Criterion B 50% sales requirement of ‘‘staple foods’’ in meeting SNAP’s purpose 0 0

2.8.1 Current requirement for 50% sales of staple foods is sufficient 3 3

2.8.2 Requirement for 50% sales of staple foods is not sufficient 6 6

2.8.3 Sufficiency of Criterion B 50% sales requirement if ‘‘staple 

foods’’ definition is changed to exclude items high in 

added sugar, sodium, or solid fats 7 7

2.8.4 Comments on the treatment of ‘‘accessory foods’’ 2 2

2.8.5 Other comments on Criterion B percentage sales requirement 15 15

2.9 Question No. 9: Eligibility of stores whose primary business 

is not food sales 0 0

2.9.1 Support for allowing these stores to be eligible 1 1

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 providers in the area (e.g., food 

deserts) 0 0

2.9.1.2.2 Proposed standards for contingent support 7 7

2.9.1.2.3 Other comments on contingent support for eligibility 0 0

2.9.1.3 Other comments in support of allowing these retailers to be 

eligible 6 6

2.9.2 Opposition to allowing these stores to be eligible 5 5

2.9.3 Other comments on eligibility of stores whose primary business is not food sale 2 2

2.10 Question No. 10: Eligibility of retailers who primarily sell 

food for immediate consumption, but also sell products 

cold and heat them for SNAP recipients after purchase 0 0

2.10.1 Support for continuing eligibility for these stores 7 7

2.10.2 Opposition for continuing eligibility for these stores 7 7

2.10.3 Other comments on eligibility of these stores 8 8

2.11 Question No. 11: Granting authorization to all eligible retail 

stores (regardless of whether sufficient store access is a 

concern) 0 0

2.11.1 Support for granting authorization to all eligible retail 

stores 27 27

2.11.2 Opposition to granting authorization to all eligible stores 2 2

2.11.3 Other comments regarding grating authorization to all eligible stores (e.g., request for definition of ‘‘sufficient store 

access’’) 3 3

2.12 Question No. 12: Granting SNAP authorization when no 

store meets basic eligibility criteria in an area 0 0

100

Coding 

Structure 

Category 

Number 

Category Title 

Count of 

Unique

Submissions 

(including one 

copy of each 

form letter) 

Count of All 

Submissions 

(including 

form letter 

copies) 

2.12.1 Evaluation and scoring system applied 0 0

2.12.1.1 Criteria used in evaluation and scoring system 7 7

2.12.2 Other comments on granting SNAP authorization when no 

stores meet basic eligibility criteria 23 23

2.13 Question No. 13: Balancing of integrity and management 

priorities against healthy food choice criteria 0 0

2.13.1 Suggestions regarding balancing integrity and management 

priorities against healthy food choice criteria 25 25

2.13.2 Suggested elements to be used to assess integrity risks 4 4

2.13.3 Suggestions regarding application of integrity risk elements 6 6

2.14 Question No. 14: Additional ways in which eligibility criteria should be changed 0 0

2.14.1 Separate application criteria for farmers[’] markets 22 23

2.14.2 Suggestions for requirements related to marketing, promotion, and education efforts that encourage SNAP participants to purchase healthy foods and beverages 12 12

2.14.3 Other comments regarding ways to change eligibility criteria 11 11

3 Other comments on the RFI 0 0

3.1 Suggestions for implementation support (e.g., pilot studies, 

technical assistance, and education programs) 16 16

3.2 Comments on public listening sessions 1 1

3.3 Other comments on RFI 16 16

4 Comments Outside the Scope of the RFI (e.g., labeling requirements, GMOs) 3 3

[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 multiingredient 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 

101

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). 

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

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. 

102

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 the definition of accessory foods will change to include 

snacks such as chips or ice cream and multi-ingredient foods such as pizza. This snacks such as chips or ice cream and multi-ingredient foods such as pizza.

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 

103

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-InventoryCarrying-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-merchandisingrefrigerators.html.

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: 

• 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.

104

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.

105

Table 1

Additional Stocking Units Needed for Average Small SNAP Retailer 

Additional Varieties Needed Impact from Definition Change 

Additional Units 

Needed to Meet 

Depth of Stock 

Total 

Number Stocking Units Varieties Stocking Units Stocking Units Varieties Stocking Units Average Price Cost per Staple 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 

106

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.

107

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 

Staple Food Group Price Quantity Total Price Per 

Variety 

Per Unit 

Cost 

Meat 

Canned Chicken $1.50 6 $9.00 

Sardines $1.46 6 $8.76 

Tuna $1.35 6 $8.10 

Beef Franks/3 pack $8.98 2 $17.96 

Canned Salmon $4.18 6 $25.08 

Turkey Lunch Meat/2 pack $7.34 3 $22.02 

Eggs/7.5 dozen $18.08 1 $18.08

$109.00 $15.57 $2.60

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 pack $7.42 1 $7.42 

Rice $1.35 6 $8.10 

Bread/packs of 2 loaves $3.98 3 $11.94 

Flour $1.84 6 $11.04

$70.42 $10.06 $1.68

Fruit and Vegetables 

Fruit Cocktail $1.38 6 $8.28 

Canned Pineapple $1.24 6 $7.44 

Pinto Beans $1.05 6 $6.30 

Canned Mixed Vegetables $1.05 6 $6.30 

Canned Sliced Carrots $0.99 6 $5.94 

Canned Peas $0.99 6 $5.94 

Canned Tomato Sauce $1.42 6 $8.52

$48.72 $6.96 $1.16

D[ai]ry 

Cheese—hard (cheddar)/3 pack $6.48 2 $12.96 

Cheese—soft (cream cheese)/6 pack $6.98 1 $6.98 

Soy Milk/6 pack $8.58 1 $8.58 

Milk $2.63 6 $15.78 

Yogurt/18 pack $7.98 1 $7.98 

Butter/4 pack $10.98 2 $21.96 

Sour Cream/3 pack $4.28 2 $8.56

$82.80 $11.83 $1.97

Total All Groups $ 310.94 $44.42 $7.40

Total with Inventory Stocking Fee $ 388.68 

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 

108

4http://www.fns.usda.gov/sites/default/files/snap/2014-SNAP-Retailer-Management-Annual-Report.pdf. 5http://www.fns.usda.gov/benefit-redemption-patterns-supplemental-nutrition-assistance-program. 6FNS Retailer Management Annual Reports 2003 and 2014. 

* 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. 1http://www.ams.usda.gov/rules-regulations/organic/national-list/filing-petition. 

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

[ATTACHMENT 3 *] 

[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-productsand-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 Petition1

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 orVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00112 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
109

2http://www.ams.usda.gov/sites/default/files/media/

NOP%203011%20Petition%20Procedures.pdf. 3https://www.federalregister.gov/articles/2016/03/10/2016-05399/national-organic-program-notice-of-availability-of-national-list-petition-guidelines. 4 mailto:Nosb@ams.usda.gov?subject=National%20List%20Petition. 5http://1.usa.gov/NationalListCriteria.

ganization 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 ➢.3

• E-mail submission. Petitions may be submitted as a single PDF file via e-mail

(Nosb@ams.usda.gov).4

• 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. 

• NOP publishes the public meeting agenda and solicits public 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.

110

6https://www.ams.usda.gov/rules-regulations/rulemaking. 7https://www.ams.usda.gov/sites/default/files/media/NOP-Notice-11-6.pdf. 8 mailto:Nosb@ams.usda.gov. 9http://www.ams.usda.gov/rules-regulations-terms/organic-regulations. 

• 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 ➢.6

* If the substance you wish to petition is an inert ingredient for use in 

a pesticide formulation, please also review this memo.7

Questions? 

Please contact the National List Manager

202–720–3252≥Nosb@ams.usda.gov. 8

Rules & Regulations: 

Organic Regulations 9

(111)

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. 

112

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. 

113

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 

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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 

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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 nonindustrial 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 milVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00119 Fmt 6601 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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1http://www.fs.fed.us/about-agency/budget-performance/cost-fire-operations. 

lion 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. 

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. 

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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 acrefeet 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. 

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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. 

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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——

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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? 

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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 Housepassed 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 nonFederal contributions, which is just monumental. 

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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. 

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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. 

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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. 

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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 

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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. 

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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 gridVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00131 Fmt 6601 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
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locked 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 

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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. 

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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 bootson-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 

131

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. 

132

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? 

133

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. 

134

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 setaside of some type or another that is supposedly going to preserve 

135

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. 

136

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 

137

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. 

138

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 

139

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. 

140

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——

141

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. 

142

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. 

143

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 

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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 DisVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00148 Fmt 6601 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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aster 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 

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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. 

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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 

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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. 

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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 

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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 Coˆte 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 

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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. 

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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 FSAguaranteed 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 

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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? 

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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. 

155

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. 

156

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 

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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. 

158

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. 

159

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 drivenby-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. 

160

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 privatesector, 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 

161

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. 

162

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. 

163

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. 

164

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. 

165

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. 

166

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 

167

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. 

168

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 

169

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. 

170

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 climatefriendly 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 

171

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 JacobsYoung, 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 

172

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. 

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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 NIFAfunded 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 resilVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00177 Fmt 6601 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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ient 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 privatesector 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. 

175

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. 

176

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 

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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 

178

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. 

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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 fullfledged 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 atVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00183 Fmt 6601 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
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tention 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. 

181

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 

182

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-today 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 

183

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. 

184

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. 

185

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. JacobsYoung 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. 

186

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. 

187

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 

188

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. 

189

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. 

190

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 ComVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00194 Fmt 6601 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
191

mittee, 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. 

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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 

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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) 

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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, 

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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 

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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 sysVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00200 Fmt 6601 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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tem, 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 exVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00201 Fmt 6601 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
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panded 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. 

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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? 

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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. 

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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. 

202

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. 

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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 exVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00207 Fmt 6601 Sfmt 6601 P:\DOCS\114-47\99585.TXT BRIAN
204

ample, 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 

205

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. 

206

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. 

207

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 

208

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. 

209

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:] 

211

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 

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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.

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Region 

Forest Products FY 2016 

Funding Allocation (dollars in 

thousands) 

FY 2016 Timber Volume

Target (million board feetMMBF) 

2 $24,969 286

5 $28,720 385

6 $46,791 610 

8 $29,169 592

9 $35,916 499 

10 $14,490 62

Region 

IRR Pilot Regions FY 2016 

Funding Allocation (NFRR) 

(dollars in thousands) 

FY 2016 Timber Volume

Target (million board feetMMBF) 

1 * $57,986 360 

3 * $41,461 217 

4 * $47,758 150

Total * $147,205 727

All Regions FY 2016 Funding 

Allocation (dollars in

thousands) 

FY 2016 Timber Volume

Target (million board feetMMBF) 

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 A 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 Thinning 400,008 279,659 263,786 310,851 235,425 1,489,729

Question 10b. When treated, produced merchantable timber. 

Answer.

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Calendar Year 2011 2012 2013 2014 2015 Total 

Acres treated producing merchantable timber 195,217 207,912 206,924 192,562 204,420 1,007,035

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.

Region Fiscal Year 2014 Revenues ($) Fiscal Year 2015 Revenues ($) 

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.

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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. 

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 coinfect 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. 

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 

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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. 

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. 

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. 

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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. 

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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 

219

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 estiVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00223 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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mated 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 

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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 upVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00225 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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dates, 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 signup 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? 

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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 riskadverse 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 ComVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00227 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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mittee 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 producVerDate 0ct 09 2002 12:24 Oct 20, 2016 Jkt 041481 PO 00000 Frm 00228 Fmt 6621 Sfmt 6621 P:\DOCS\114-47\99585.TXT BRIAN
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tion 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, 

226

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 European Commission asked that Poland 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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