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96–176 PDF 2016

S. HRG. 114–148 

REVIEW OF THE 

U.S. GRAIN STANDARDS ACT 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MAY 5, 2015 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

Available via the World Wide Web: http://www.fdsys.gov/ 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

PAT ROBERTS, Kansas, Chairman 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

DAVID PERDUE, Georgia 

JONI ERNST, Iowa 

THOM TILLIS, North Carolina 

BEN SASSE, Nebraska 

CHARLES GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

DEBBIE STABENOW, Michigan 

PATRICK J. LEAHY, Vermont 

SHERROD BROWN, Ohio 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

JOE DONNELLY, Indiana 

HEIDI HEITKAMP, North Dakota 

ROBERT P. CASEY, Jr., Pennsylvania 

JOEL T. LEFTWICH, MAJORITY STAFF DIRECTOR

ANNE C. HAZLETT, MAJORITY CHIEF COUNSEL

JESSICA L. WILLIAMS, CHIEF CLERK

CHRISTOPHER J. ADAMO, MINORITY STAFF DIRECTOR

JONATHAN J. CORDONE, MINORITY CHIEF COUNSEL

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Review of The U.S. Grain Standards Act .............................................................. 1 

Tuesday May 5, 2015 

STATEMENTS PRESENTED BY SENATORS 

Roberts, Hon. Pat, U.S. Senator from the State of Kansas, Chairman, Committee on Agriculture, Nutrition, and Forestry ................................................. 1 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan ..................... 2 

Witnesses 

Gordon, Bill, Member, Board of Directors, American Soybean Association, 

Worthington, MN .......................................................................................... 4 

Ayers, David, President, American Association of Grain Inspection and 

Weighing Agencies, Urbana, IL ................................................................... 6 

Paurus, Tim, Representative, National Grain and Feed Association, Inver 

Grove Heights, MN ....................................................................................... 7 

Campbell, Steve, Vice Chairman, Board of Directors, North American 

Export Grain Association, Kansas City, MO .............................................. 9 

APPENDIX 

PREPARED STATEMENTS: 

Ayers, David ...................................................................................................... 26 

Campbell, Steve ................................................................................................ 29 

Gordon, Bill ....................................................................................................... 34 

Paurus, Tim ...................................................................................................... 37 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Campbell, Steve: 

U.S. Grain and Oilseed Inspection Services Competitiveness Study: Customer Specifications and Preferences .......................................................... 48 

U.S. Grain and Oilseed Inspection Services Competitiveness Study: Export Competitor and Importer Information ................................................ 65 

Paurus, Tim: 

FGIS Export Inspection Fees .......................................................................... 96 

Joint Stakeholder letter to Hon. Thomas J. Vilsack ..................................... 99 

Korea Flour Mills Industrial Association ....................................................... 102 

Joint letter to Federal Grain Inspection Service (FGIS) ............................... 103 

QUESTION AND ANSWER: 

Ayers, David: 

Written response to questions from Hon. Michael Bennet ........................... 106 

Campbell, Steve: 

Written response to questions from Hon. Michael Bennet ........................... 109 

Written response to questions from Hon. Charles Grassley ......................... 111 

Gordon, Bill: 

Written response to questions from Hon. Michael Bennet ........................... 113 

Paurus, Tim: 

Written response to questions from Hon. Michael Bennet ........................... 115 

(1) 

REVIEW OF THE 

U.S. GRAIN STANDARDS ACT 

Tuesday, May 5, 2015 

UNITED STATES SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC 

The Committee met, pursuant to notice, at 2:33 p.m., in room 

328A, Russell Senate Office Building, Hon. Pat Roberts, Chairman 

of the Committee, presiding. 

Present: Senators Roberts, Hoeven, Perdue, Ernst, Tillis, Sasse, 

Grassley, Thune, Stabenow, Brown, Klobuchar, Gillibrand, and 

Donnelly. 

STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE 

STATE OF KANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

Chairman ROBERTS. Good afternoon. I call this meeting of the 

Senate Committee on Agriculture to order. 

I have said many times that one of my main goals—and I know 

you all share that—for our Committee is to conduct our legislative 

work in a transparent and inclusive manner that gives members 

opportunities to pass good legislation for their constituents. Today’s 

hearing is an important step in completing the Committee’s work 

in considering provisions of the U.S. Grain Standards Act that expires later this year, so we must move. 

For nearly 100 years, the U.S. Grain Standards Act has authorized the Department to establish marketing standards for grains 

and oilseeds. Regulations set official standards to define each grain, 

class of grain, numerical grades of specific physical characteristics. 

In the 1970s, irregularities in grain inspection and weighing led 

to a grand jury investigation and indictments which threatened the 

U.S. marketing system. As a result, there were major reforms to 

the Grain Standards Act back in 1976 to ensure there was no questioning of the reliability and quality of U.S. grains and oilseeds. 

That global reputation is more important now than ever before 

in the history of U.S. agriculture. Our farmers and others in the 

value chain export over half of the wheat and soybeans produced 

in the United States. Additionally, about 15 percent of corn and 

other feed grains are sold to customers around the globe. Predictability and transparency are key to maintaining this success story 

for farmers and ranchers in Kansas and all across the country. 

Needless to say, the valuable role that our trading partners play 

in the agriculture economy cannot be overstated. A handful of the 

provisions in the Grain Standards Act are set to expire on SepVerDate Nov 24 2008 15:28 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96176.TXT MICAH
2 

tember 30. This hearing gives us a chance to hear from stakeholders on what is working well and where we might want to make 

some improvements. 

I am particularly interested in ensuring that the Department of 

Agriculture fulfills its statutory obligation to inspect exports. This 

responsibility lapsed for 36 days at a facility at the Port of Vancouver last summer. During that period there was substantial uncertainty about if and when inspection would be restored, and 

questions were raised about safety. That unprecedented event warrants our careful oversight and increased transparency. It is important that we find solutions to ensure the reliability and the quality 

of U.S. exports continue to be beyond question for years to come. 

The witnesses we will hear from today represent different perspectives in the grain and oilseed value chain: a farmer, an inspector, a grain handler, and a global customer. I thank each witness 

for traveling to Washington, taking time out of your very valuable 

time and providing testimony before the Committee on such an important issue. I appreciate your joining us as we seek to make this 

a Government in action—that is two words. Everybody understand 

that? All right. 

Senator GILLIBRAND. ‘‘In action’’ as opposed to ‘‘inaction.’’ 

Chairman ROBERTS. Thank you. I do not know what I would do 

without you. 

[Laughter.] 

Chairman ROBERTS. I appreciate your joining us as we seek to 

make this a Government in action, responsive to the concerns and 

working together to find common-sense solutions. The Committee 

will work to ensure that our U.S. grain inspection system continues 

to be one that ensures the reliability and high quality of U.S. exports. I look forward to hearing from our witnesses. 

With that, I recognize our Chairwoman Emeritus, Senator Stabenow, from the great State of Michigan, for any remarks. 

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR 

FROM THE STATE OF MICHIGAN 

Senator STABENOW. Well, thank you, Mr. Chairman, for holding 

this important hearing on the Grain Standards Act. I am looking 

forward to working with you to reauthorize this. I also thank those 

who traveled today to give us very important input on this issue. 

You bring perspectives from all sides of the grain inspection system, and we look forward to hearing your testimony. 

Our Nation’s farmers and producers grow the very best products 

in the world. Whether it is Michigan soybeans or Kansas wheat, 

buyers around the world know that when American products carry 

the seal of the U.S. Department of Agriculture, its quality is second 

to none. That is one reason why the U.S. is the premier supplier 

of high-quality grains and oilseeds worldwide and why the United 

States is the number one farm goods exporter worldwide, supporting more than a million jobs here at home. 

To paint that in a different light, in 2014 the U.S. had agricultural exports totaling more than $150 billion, the highest dollar 

value we have ever had. But let me share a bit of historical perspective as we meet today on why it is so critical the U.S. maintain 

the Federal Grain Inspection Service and how it was designed to 

3 

defend the interests of American farmers and protect the integrity 

of the United States as a trading partner. 

In 1974, as the Chairman said, our private inspection system 

was rocked by a scandal that threatened the credibility of U.S. agricultural exports. While American farmers were producing highquality grain, private individuals and companies charged with inspections were shortchanging foreign customers by inaccurately 

weighing grain, shipping in dirty vessels, and accepting bribes. 

In New Orleans, private inspectors took bribes to certify that an 

oil tanker could be used to transport grain so that companies would 

not have to take extra time and pay for an extra cleaning process. 

A number of those individuals and companies were indicted by 

Federal grand juries, but, unfortunately, these revelations significantly diminished our reputation as a reliable business partner, 

and our competitive advantage in international markets was questioned. 

As a result, in November of 1976, Congress acted by federalizing 

the grain inspection system, now called the Federal Grain Inspection Service, to help rebuild the integrity and image of American 

agricultural exports. 

The good news is our country’s agricultural exports have grown 

6 times since then, and the trust associated with the official USDA 

Certificate of Inspection is a big part of that success story. That 

certificate also gives our American farmers the reassurance they 

need that they will receive a fair price for the grain that they have 

worked so hard to produce. 

So I look forward, again, Mr. Chairman, to working with you in 

a bipartisan way to maintain the integrity of the existing inspection system as we bring the process of reauthorizing this important 

piece of legislation forward. 

Thank you. 

Chairman ROBERTS. As usual, well spoken, and thank you very 

much, Senator. 

Senator Klobuchar, the distinguished Senator from Minnesota, 

will be introducing two of our witnesses: Mr. Bill Gordon of the 

American Soybean Association and a grower from Minnesota, and 

also Mr. Tim Paurus, who is the representative of the National 

Grain and Feed Association from Minnesota. Senator Klobuchar. 

Senator KLOBUCHAR. Well, thank you very much, and thank you 

for your wisdom in having two witnesses that are associated with 

my State. 

First of all, Mr. Bill Gordon farms with his wife, Dawn, their four 

children, and his parents on a fourth-generation farm in Worthington, Minnesota, which is right near the South Dakota border, 

not too far from Iowa, Senators Grassley and Ernst. 

They farm soybeans and corn on 2,000 acres and have 250 acres 

of CRP and water quality areas. Bill also practices as a tax accountant in Worthington. He is here today representing the American Soybean Association. You should know, Mr. Chairman and 

Ranking Member Stabenow, that he told me he has his planter out 

there, which is—who? Brother? 

Mr. GORDON. My little brother, yes. 

Senator KLOBUCHAR. His little brother, who does not quite know 

what he is doing, and so if he has to leave at any time during the 

4 

hearing, he is literally giving him instructions as the day goes by. 

So I just want to make sure he has permission to leave. 

Our second Minnesota witness is Mr. Tim Paurus. Tim is the 

vice president of terminal operations at CHS, a Fortune 100 farmer-owned energy, grain, and food co-op based in Inver Grove 

Heights, Minnesota, and he is here representing the National 

Grain and Feed Association. 

Tim began his career in grain marketing at CHS in 1978, and 

his experience has led to a number of leadership positions in the 

field, including serving as past president and chairman of the 

Grain Elevator and Processing Society and two-time former chairman of the USDA’s Grain Inspection, Packers and Stockyards Administration’s Grain Inspection Advisory Committee. That is the 

longest association I think I have ever heard. But thank you for 

being here as well. 

Thank you, Mr. Chairman. 

Chairman ROBERTS. We thank you very much, Senator. 

Bill, you are at bat, and, David, I will be introducing you. Let 

us see here. We have got to keep going. Steve—pardon me for calling you ‘‘Steve’’—Vice Chairman Campbell, I will be introducing 

you, and then you can make your comments. So you are not in the 

hole. We just have a batter up right now. 

Bill, why don’t you proceed with your testimony, please? You 

have 5 minutes. Feel free to summarize any part of your statement 

that you would like. 

STATEMENT OF BILL GORDON, MEMBER, BOARD OF DIRECTORS, AMERICAN SOYBEAN ASSOCIATION, WORTHINGTON, 

MINNESOTA 

Mr. GORDON. Thank you, Mr. Chairman and members of the 

Committee. I am Bill Gordon, a farmer from Worthington, Minnesota, and a member of the Board of Directors of the American 

Soybean Association. My family farm is in southwest Minnesota. 

We farm soybeans and corn on 2,000 acres on a fourth-generation 

farm. Our statement today is supported by the American Farm Bureau Federation, the National Corn Growers Association, the National Association of Wheat Growers, and the National Barley 

Growers Association. We thank you for the opportunity to testify 

on the reauthorization of the U.S. Grain Standards Act. 

Soybeans and soy products, as you heard earlier, are the most 

valuable U.S. agricultural export. In 2014, the U.S. exported $28 

billion in soybeans, soy meal, and soy oil, representing 56 percent 

of our total U.S. production. Our industry and our foreign customers are highly dependent on having a reliable and transparent 

export inspection and marketing system. 

Key to the growth in exports has been the reliability of the official U.S. inspection and weighing system. Under the Grain Standards Act of 1976, the service provided by the Federal Grain Inspection Service has been the gold standard for assuring foreign buyers 

that they are receiving the quality and volume of products for 

which they have contracted. 

Most of the authorities in the Grain Standards Act due to expire 

at the end of this fiscal year are not controversial. There is broad 

support for reauthorizing congressional appropriations to fund 

5 

FGIS operations and for FGIS to charge fees for supervising delegated State agencies. In addition, the grain trade has recommended that the cap to cover FGIS administrative and supervisory costs in user fees be replaced by a rolling average based on 

export volumes and inspections. Finally, the charter for the Federal 

Grain Advisory Committee should be renewed. 

In addition to these reauthorizations, the act needs to be 

strengthened to require FGIS to intervene in the event of a disruption in inspection services. The issue of when and how FGIS intervenes has been a serious concern for producers, the grain trade, 

and foreign buyers since the Washington State Department of Agriculture refused to have its employees cross the picket lines during 

a labor-management dispute at the Port of Vancouver last summer. 

This refusal resulted in a 36-day delay before FGIS was willing to 

have its own employees take over the inspections. 

Under the Grain Standards Act, official inspections are required 

for all export shipments, either directly by FGIS or by delegated 

state agencies. In the event the state agency services are disrupted, 

the act requires FGIS to step in. However, there is no fixed 

timeline for FGIS action, and the Secretary is given discretion to 

decide whether an interruption represents an emergency requiring 

FGIS to intervene. 

In October 2013, ASA and the other farm and industry organizations urged the Department of Agriculture to develop a contingency 

plan to respond to any disruption at the Port of Vancouver. After 

the Washington State Department of Agriculture withdrew services 

last July, 22 farm and industry organizations asked the Department to take immediate action to meet its statutory obligations. 

USDA replied that it was withholding services over concerns that 

its employees would not have safe access to the port facility. Subsequent to resolution of the dispute, we are not aware that the Department has taken any action to prevent the reoccurrence of a 

similar situation. 

We encourage the Committee to engage the Department on when 

and how it will act to resolve any future disruption of export inspection services. If this discussion is inconclusive, we recommend 

the Committee strengthen the Act to require FGIS to take action 

according to a fixed timetable based on hours rather than days or 

weeks. 

We further recommend that any state agency that withdraws 

services be suspended until the Department completes a review 

that confirms the agency is capable of resuming services without 

further interruption. 

As I stated earlier, our grain inspection and weighing system is 

a fundamental guarantee to our foreign customers that supplies of 

U.S. grains and oilseeds will be officially inspected and not be disrupted. Reauthorization of the Grain Standards Act presents an opportunity to correct uncertainties in the system that have come to 

light in the last 2 years. The changes needed to address these concerns need to be resolved well in advance of expiration of the authorities under the act. 

Thank you again for letting me testify. 

[The prepared statement of Mr. Gordon can be found on page 34 

in the appendix.] 

6 

Chairman ROBERTS. Mr. Gordon, thank you so much for being on 

time. Most Senators can read. All staff can read. So that is why 

we ask—and the Chairperson Emeritus—well, she did not do this, 

but she would ask people to be timely. Thank you so much for finishing in time, and if I had not said that, Bill could be in better 

shape. 

Our next witness is David Ayers, president of the American Association of Grain Inspection and Weighing Agencies from Illinois. 

Mr. Ayers joins us today on behalf of the American Association of 

Grain Inspection and Weighing Agencies. He has been in the grain 

inspection business for nearly 40 years. He currently owns and operates a designated official agency, the Champaign-Danville Grain 

Inspection Agency, headquartered in Urbana, Illinois. 

Welcome. I look forward to your testimony and learning from 

your experience, sir. 

STATEMENT OF DAVID AYERS, PRESIDENT, AMERICAN ASSOCIATION OF GRAIN INSPECTION AND WEIGHING AGENCIES, 

URBANA, ILLINOIS 

Mr. AYERS. Mr. Chairman and members of the Committee, I appreciate the opportunity to be here today to discuss the reauthorization of the U.S. Grain Standards Act. I would like to make a few 

opening comments this afternoon and respectfully request that my 

full statement be included in the record. 

Chairman ROBERTS. Without objection. 

Mr. AYERS. Our association, the American Association of Grain 

Inspection and Weighing Agencies, represents the public and private agencies designated and delegated by the United States Department of Agriculture, the Grain Inspection, Packers, and Stockyards Administration, and we inspect the Nation’s grain. 

AAGIWA’s members are located throughout the United States and 

perform 90 percent of all of the official inspections under the 

United States Grain Standards Act. Our official agencies employ 

over 2,000 dedicated employees. 

AAGIWA supports reauthorization of the expiring USGSA provisions and wishes to provide the following observations to Congress: 

Much has changed in America’s grain marketing system since 

the Federal Grain Inspection Service was formed by Congress in 

1976. Industry consolidations, transportation efficiencies, testing 

services, and result accuracy have all improved beyond what anyone could have envisioned 39 years ago to make the U.S. grain 

marketing system the world leader. Shuttle trains and export containers have replaced boxcars for moving grain. We can now test 

for substances in parts per billion and electronically provide inspection and weighing results around the world in seconds. 

What has not changed is the need for a third-party inspection 

service that is both responsive and unbiased to provide accurate 

and timely results. Producers, marketers, handlers, and grain processors in the U.S. and around the world all benefit from knowing 

the true quality of the grain they are selling or buying. 

GIPSA’s ability to supervise official agencies has vastly improved. Each agency now has a quality management program with 

internal audits that are reviewed annually by GIPSA’s auditors. InVerDate Nov 24 2008 15:28 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96176.TXT MICAH
7 

spection results are sent electronically on a daily basis to GIPSA 

to monitor inspection accuracy. 

Official agencies have also evolved with the changing pace of the 

grain industry by providing on-site inspection laboratories for shuttle loaders and at container yards. We now have testing methodologies that allow official agencies to quickly provide results at remote 

locations so shippers can make real-time decisions. 

Where agencies have struggled is in surviving the changing rural 

business economy. The number of official agencies has significantly 

decreased since 1976. The need for greater capital as official agencies have consolidated has increased. 

AAGIWA is requesting that the U.S. Grain Standards Act be 

amended to increase the maximum designation length for official 

agencies from 3 to 5 years. Providing a 5-year designation would 

not compromise GIPSA’s authority to suspend or revoke a designation already in place. AAAGIWA supports the suspension and revocation of a designation when it is warranted to protect the integrity of the official inspection system. 

AAGIWA believes this change will strengthen the official inspection system and its direct and indirect beneficiaries. This change 

would allow agencies to secure more favorable financing for the 

purchase of new equipment and expansion to keep pace with the 

U.S. grain industry. Increased designation times to 5 years would 

also bring more financial stability to the over 2,000 citizens employed by official agencies, mostly in rural communities across the 

Nation. 

A 5-year designation also provides agencies the opportunity to 

control expenses which translates to the inspection costs incurred 

by the grain industry. Inspection costs have been reported to be a 

grain company’s third largest cost. Keeping these costs under control contributes to the local elevator’s viability, which in some cases 

is the only major business in many rural communities. 

This change would not create any additional budgetary burden 

on the U.S. taxpayers, and it would not decrease any tax revenue 

to the U.S. Treasury. What it would do is help ensure that the official inspection system remains robust so that it is able to meet the 

needs of the grain industry, producers, and all those supported and 

dependent on receiving timely, accurate, and unbiased results. 

Thank you. 

[The prepared statement of Mr. Ayers can be found on page 26 

in the appendix.] 

Chairman ROBERTS. We thank you, sir. 

Our next witness is Tim Paurus, who has already been introduced by the distinguished Senator from Minnesota. 

Mr. Paurus. 

STATEMENT OF TIM PAURUS, REPRESENTATIVE, NATIONAL 

GRAIN AND FEED ASSOCIATION, INVER GROVE HEIGHTS, 

MINNESOTA 

Mr. PAURUS. Chairman Roberts, Ranking Member Stabenow, and 

members of the Committee, thank you for the opportunity to testify 

today. I am Tim Paurus, assistant vice president of terminal operations for CHS Inc., headquartered in Inver Grove Heights, Minnesota. CHS is a leading global agribusiness owned by farmers, 

8 

ranchers, and cooperatives across the United States. In my capacity at CHS, I am responsible for the operations of our company’s 

grain-handling facilities. 

I am testifying today on behalf of the National Grain and Feed 

Association. I am a member of NGFA’s Grain Grades and Weights 

Committee and previously served as chairman of the committee for 

8 years. 

NGFA consists of more than 1,050 grain, feed, processing, exporting, and other grain-related companies that operate more than 

7,000 facilities and handle more than 70 percent of all U.S. grains 

and oilseeds. 

NGFA strongly supports reauthorization of the U.S. Grain Standards Act to improve and maintain the U.S. official grain inspection 

system. We have worked continuously for nearly 40 years to encourage continued improvements to this system and have several 

recommendations to offer here today to further enhance the system. 

First, in response to apparent system shortcomings, including the 

disruptions in official inspection and weighing service at the Port 

of Vancouver, Washington, during 2013–14, we urge that existing 

language in the act be strengthened to reinforce the obligation of 

the Secretary of Agriculture to restore official inspection and 

weighing service in a prompt manner, except in instances where 

the disruption is caused by cataclysmic natural disasters. 

Unfortunately, the Secretary did not do this when the interruption in services occurred at the Port of Vancouver, Washington. 

Make no mistake, foreign buyers took note. In the process, the 

reputation of FGIS was damaged, as was the confidence of international buyers in the reliability of the U.S. system. I respectfully 

request that a letter from the Korea Flour Mills Industrial Association in this regard be made part of the hearing record. 

Chairman ROBERTS. Without objection. 

[The following information can be found on page 99 in the appendix.] 

Mr. PAURUS. Second, we recommend the process used by FGIS to 

delegate its authority to perform official inspection and weighing 

service at export elevators be made more transparent, more accountable, and open to the public. We urge that the delegation of 

official inspection service to State agencies be subject to notice-andcomment rulemaking and that the duration of such delegation be 

limited to no more than 5 years. 

Further, consideration should be given to directing FGIS to license and utilize, subject to FGIS oversight, qualified personnel 

employed by independent third-party entities to perform official inspection and weighing services at export elevators, particularly in 

cases where disruptions in official service occur. This can be done 

through existing licensing provisions in the act. Some attempt to 

label this concept as ‘‘privatization.’’ That is not what NGFA is proposing. 

Some people have pointed out to a pilot study GIPSA conducted 

as a reason not to allow qualified third-party inspectors. This study 

had several significant flaws, the most glaring of which is that 

GIPSA chose to study sites that historically account for less than 

5 percent of the export volume. To properly assess the viability of 

9 

using qualified independent third-party inspectors, GIPSA would 

need to base its assessment upon a port region that handles a more 

significant export volume. 

Third, NGFA supports the current provisions that authorize 

FGIS to designate qualified, accredited State or private entities to 

perform official inspection and weighing services in geographic territories within the domestic market and support extending the designation from 3 to 5 years. 

Fourth, we urge that FGIS be required to base the tonnage portion of export inspection user fees on shifts in actual shipment volumes that are officially inspected by basing it on a 5-year rolling 

average. 

Finally, we recommend that reauthorization of the act be reduced 

from 10 years to 5 years, particularly given the dynamic, changing, 

and highly competitive nature of the global grain export marketplace. The recommendations we have proposed will help strengthen 

the official inspection system, enhance U.S. competitiveness, and 

retain the integrity of U.S. inspection results. Our industry pledges 

to work with Congress to craft policies that achieve these positive 

outcomes. 

Thank you for the opportunity to testify. I will be pleased to respond to any questions you may have. 

[The prepared statement of Mr. Paurus can be found on page 37 

in the appendix.] 

Chairman ROBERTS. Well, thank you, sir. So far everybody is on 

time. We may set a record here today. I hate to put pressure on 

you, Mr. Campbell. 

Steve Campbell, vice chairman, board of Directors, North American Export Grain Association, from Kansas City, Missouri. Mr. 

Campbell is the executive vice president and head of Grains Platform, North American, Louis Dreyfus Commodities in Kansas City. 

He has spent his career working with customers all around the 

globe who purchase U.S. grains and oilseeds. 

Welcome, sir, and we look forward to your testimony. 

STATEMENT OF STEVE CAMPBELL, VICE CHAIRMAN, BOARD 

OF DIRECTORS, NORTH AMERICAN EXPORT GRAIN ASSOCIATION, KANSAS CITY, MISSOURI 

Mr. CAMPBELL. Thank you. Chairman Roberts, Ranking Member 

Stabenow, and members of the Committee, I am Steve Campbell, 

executive vice president and head of Grains Platform, North America for Louis Dreyfus Commodities. I manage our grain businesses 

in North America and work with customers around the world to 

meet their grain procurement needs. 

I appreciate this opportunity to appear on behalf of the North 

American Export Grain Association, which was established in 1912 

and whose members consist of private and publicly owned companies and farmer-owned cooperatives that shift the vast majority of 

U.S. grain exports. 

Let me begin by saying NAEGA supports each of the recommendations for improvements to the U.S. Grain Standards Act 

made by the National Grain and Feed Association. Virtually my entire 28-year industry career has focused on meeting the needs and 

understanding the perspectives of customers around the world. 

10 

In my grain trade experience, I have found that international 

markets in which we do business and the demands and needs of 

foreign customers are complex, dynamic, and ever changing, and 

their purchase decisions are based on value. 

When I started supplying international markets in U.S. wheat, 

buyers specified simply U.S. No. 2 and nothing more. Increasingly 

over the past two decades, buyers now specify that export wheat 

meet several safety, label, and quality attributes. Many of the attributes are end-use properties: protein, falling number, and other 

processing specifications require specific sample analysis, in addition to inspection for factors used to determine a U.S. grade, even 

though the grade still provides a baseline for which value can be 

built. 

When it comes to the value equation, also paramount in buyers’ 

minds is the importance of a reliable, predictable, and competitively priced source of supply. That also encompasses the reliability, integrity, competence, and reputation of the originating 

country’s grain inspection. 

The world-class productivity of American farmers, the fungibility 

of our supply, and our grain-handling and transportation infrastructure are among the many U.S. advantages. So, too, is our 

leadership in assembling and conveying market information. FGIS 

plays a key role. The U.S. Grain Standards Act provides an efficient and transparent system for price discovery that benefits all 

market segments, including consumers. FGIS’ work in resolving 

problems that periodically arise in international trade has proven 

value. 

But the fungibility of the world’s grain supply also means customers have a wide choice of options when it comes to suppliers. 

Those involved in the international grain trade source and act globally, with competition driving us to continually improve. 

As shown in my written testimony, our buyers and our foreign 

competitors are not standing still when it comes to improving their 

export and inspection systems. Let me share a few examples. 

One of our major competitors, Canada, has eliminated its monopoly state grain trading enterprise and revised its very expensive 

grain inspection. It now is largely using independent third-party 

firms working at the direction of the government. 

Australia, Brazil, and other South American competitors also 

have changed their approaches to marketing grain by opening up 

to private competition and deploying competitive third-party inspectors. 

Reliably meeting demands of buyers around the world, as well as 

price, are the keys to winning the challenge to bring the most value 

to market. 

Two recent U.S. Grain and Oilseed Inspection Services Competitiveness studies conducted for NAEGA and attached to my written 

testimony provide important insights. One found that 20 to 25 percent of U.S. exports now are being reinspected by third parties to 

verify inspection results. Further, we currently estimate that third 

parties already are performing tests for various grain quality attributes of more than 70 percent of all U.S. exports. 

The global trend clearly is toward increased utilization of these 

highly qualified third-party inspectors to provide the risk manageVerDate Nov 24 2008 15:28 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96176.TXT MICAH
11 

ment and intrinsic product value information needed by international customers. We believe adding the capabilities of thirdparty inspection personnel to our U.S. official grain inspection system is justified, particularly as a tool to improve reliability and responsiveness. We would not be making this recommendation unless 

these entities already had earned a solid reputation for professionalism and integrity and whose work not only is accepted but 

actually requested by foreign customers. 

Reauthorization of the U.S. Grain Standards Act provides Congress with the chance to work to further improve and strengthen 

U.S. agricultural competitiveness. We can burnish the existing 

grain inspection system that Government and industry have 

worked hard to establish as the gold standard and which is integral to the unique U.S. brand value. It is imperative to ensure that 

the Federal Inspection System comes with the proper controls, best 

practice, and best science. 

The paramount issue for inspection is reliability. The best inspection system in the world will not generate sufficient value if it is 

not predictable and reliable. 

In closing, let me reiterate NAEGA believes strongly that official 

inspection plays an integral role in meeting the value chain needs 

and can be strengthened by ensuring availability and adding accountability and market responsiveness to build U.S. competitive 

advantage in the international marketplace. 

That can be done while maintaining a system that has unquestioned reliability, responsiveness, and integrity by providing for 

prudent FGIS oversight and licensing of qualified personnel of 

third-party firms that already are in the U.S. grain export elevator 

performing a wide variety of non-grade-determining inspections. 

We look forward to working together to make trade work, and we 

thank you for this opportunity. 

[The prepared statement of Mr. Campbell can be found on page 

29 in the appendix.] 

Chairman ROBERTS. Thank you very much. 

Here is a question for the entire panel. All of you mentioned, either directly or indirectly, the situation in Washington State and 

the shutdown at the Port of Vancouver last summer. I find the 

whole thing incredulous and egregious, and I am curious—and I 

think all the members of the Committee share our concern. I am 

curious. Did any of you imagine a scenario like this occurring? Bill, 

did you imagine something like this happening? 

Mr. GORDON. Mr. Chairman, no, because when you put faith in 

USDA or the Government, you expect, when a state agency steps 

out, that the U.S. Government will step in in a timely fashion. 

That is why we proposed having a timetable set in the statute. 

That way if this happens again, at least the U.S. Government can 

step in and make something happen and continue our shipments. 

As these gentlemen said, our foreign buyers depend on that reliability. 

Chairman ROBERTS. Mr. Ayers. 

Mr. AYERS. Senator, I personally have never dreamed that anything like this would have ever happened. I call it ‘‘a perfect 

storm,’’ all the different scenarios that came into place at one time. 

12 

In my nearly 40 years, I have never seen a disruption like this before, even through natural disasters, hurricanes. 

Chairman ROBERTS. Mr. Paurus. 

Mr. PAURUS. I would not have foreseen that happening. I would 

have expected FGIS to provide the inspection and weighing services, unless there was a bodily harm that may have come to somebody, and in that case, I would think that you would have Federal 

marshals or something, somebody would have been doing something illegal that would have caused people to be fearful of being 

hurt. 

Chairman ROBERTS. Mr. Campbell. 

Mr. CAMPBELL. Senator, no, I would not. I have been loading vessels and been in the export trade my entire career, and I have 

never seen anything of this magnitude from the U.S. Have I seen 

it from other countries, other parts of the world? Absolutely, but 

not from the U.S. As Tim said, our people were going to work. 

There was plenty of opportunity to have security, plenty of protection. No reason to get into all that. But could I have foreseen that 

they would shut the markets down, shut the PNW down for 36 

days? Absolutely not. 

Chairman ROBERTS. You have already touched on the answers to 

my next questions, but what do you see—take into account what 

you see as the role of the Department of Agriculture and the FGIS 

in mitigating the risks to the industry. Where did most of the 

breakdown occur? Let us go in reverse order. 

Mr. CAMPBELL. Where did the breakdown occur is essentially 

your question. I think honestly, when the State inspection decided 

to not go to work and when at that point the Federal Grain Inspection Service did not step in and say, ‘‘We will bring our own people 

in. We will make other arrangements. We will get marshals in 

there to make sure that you are protected so that you can come to 

work.’’ That is when the breakdown occurred, and then when the 

breakdown moved to Washington, it just stopped. 

Chairman ROBERTS. Mr. Paurus. 

Mr. PAURUS. I would agree with Steve on that, that it happened 

at that point. I am sure there were things that went on previous 

to the Washington Department of Agriculture making their decision about not providing that service. Even though FGIS could 

have—should have been prepared, I know there were letters that 

were sent to the Secretary of Agriculture asking them to take steps 

to make sure it did not happen. I believe that it probably—that is 

where it started, but previous to that, there were people talking 

about what would happen if they did not show up for work. 

Chairman ROBERTS. David. 

Mr. AYERS. Senator, I believe that all the parties involved had 

some play in what happened, and the lack of preparedness through 

all the different parties involved led to what happened in the Vancouver situation. 

Chairman ROBERTS. Steve. 

Mr. GORDON. I agree with the gentlemen here, the same thing. 

As a producer on the beginning end of this, we look toward the 

Government. We follow our rules. We do what we are supposed to 

do. We produce this wonderful crop. We ship it out there. Because 

of bureaucracy and Washington or however you want to look at it, 

13 

all of a sudden our buyers cannot receive their products, and our 

sellers are in the middle. They are trying to work on it. So you 

have a fundamental breakdown. When you have a state agency 

that is using the U.S. Government as their backbone and they just 

step out of the way, there is no consequence for that. They just say, 

‘‘Well, we do not want to do it today,’’ and then the U.S. Government does not step in and either punish that or at least evaluate 

what happened. That is the key step to trying to fix this problem. 

Chairman ROBERTS. I might have another question, but I will 

now recognize the Senator from Michigan. 

Senator STABENOW. Thank you very much, Mr. Chairman. 

Let me first follow up, Mr. Gordon, on what you were saying, and 

I appreciate all the testimony. We obviously need to know that you 

have predictability and reliability. No question about it. But since 

we have every other row of soybeans being exported now, and we 

are proud of our Michigan soybean growers, but you mentioned— 

all of you have mentioned how this system is vital to you, and that 

it is the gold standard for us, and so understanding the disruption 

at the Port of Vancouver and how serious that was for all of you. 

If we would build confidence that our Federal inspectors will be 

able to promptly respond to situations, which is what you need, do 

you think that we need to make other major changes in the current 

inspection system? 

Mr. GORDON. Thank you, Senator, for the question. No, I really 

think the breakdown here is the major one. I was in Japan at the 

end of January when they had a longshoreman’s strike out of L.A. 

I had a gentleman ask me ‘‘Are you guys doing anything about it?’’ 

Our association had sent a letter to the administration asking what 

we are doing about it. I said, ‘‘We are trying. We are doing our 

best. We are bringing up the issue.’’ He says, ‘‘Good, because tomorrow I was going to change my order of soybeans to Canada.’’ But 

he said, ‘‘Because you told me that you are trying with the U.S. 

Government, I have faith in the U.S. Government. I will keep purchasing my beans from the U.S.’’ 

That is a big deal when our foreign buyers are asking, and the 

gold standard is the key to the credibility that we have, but we 

need to keep that credibility. 

Senator STABENOW. I agree with you. In fact, Mr. Chairman, I 

am sure you have as well, but I have received communications 

from a number of countries actually that support our system. They 

want it to work. They support the current system, including South 

Korea. So it is important to make sure that the current system 

works, and that is what we are all about. 

But to go a little farther, Mr. Paurus, and, Mr. Campbell, you 

mentioned this as well, the idea of using licensed private contractors in some way. My concern is that the current system right now, 

American exports have been at record levels. The cost of grain inspection is about a penny per bushel. It seems like that is a good 

deal for the American farmer.Since we had a system before that 

had serious issues with scandal and so on, had to be fixed, and now 

we have a system that, in general, is supported—we had a problem, a serious problem, but is in general supported, everyone has 

said that our system is respected around the world. So I am wondering, if that is the case, why would we risk our reputation and 

14 

possibly our competitiveness by directing the USDA to again go 

back in some way to private contractors? Mr. Paurus. 

Mr. PAURUS. Thank you. The proposal would still have FGIS 

oversight. We would still want to maintain the integrity of the official grade certificate and weight certificates. The idea is you would 

have people in the wings, so to speak, to be able to address the situation in Vancouver if it happened again for that reason or some 

other reasons. The people available today, FGIS licenses designated 

agencies today. 

Those individuals are—they grade the same grain. They do it the 

same way that the Federal Inspection Services do. So there is a 

possible group of people that you could use to hire on a short-term 

basis, and I believe FGIS has the authority to do that already. So 

that would be a backup plan at least at this point. 

Senator STABENOW. You are saying they have the authority to do 

that already? If that is the case, I just do not see that as a solution. 

It seems to me we need to be addressing making sure that there 

is a prompt response and so on by the Federal inspectors. But I do 

not understand why if they already have the authority anyway, 

why that would have made a difference then. If, in fact, we had another layer or another step away from the inspectors who, in fact, 

have done an excellent job, the system has done an excellent job, 

I am not—I just do not see that as the solution. I guess I am not 

quite understanding of how that is the solution. 

Mr. PAURUS. Well, maybe you would look at it that FGIS needs 

to manage and be held accountable for making sure that process 

is in place so that when something happens, they are able to react 

to it. 

Senator STABENOW. Thank you very much, Mr. Chairman. 

Chairman ROBERTS. Senator Perdue. 

Senator PERDUE. Thank you, Mr. Chairman, Ranking Member. 

Thank you for being here. 

Tell your brother to turn the GPS on. He will be just fine on that 

tractor. 

[Laughter.] 

Senator PERDUE. You know, this is at the heart of our financial 

crisis in America. I personally believe we have a very serious financial problem in the United States, our debt. One of the ways to get 

out of that is to grow the economy. Both sides up here agree on 

that. One of the best ways to grow our economy is to export more. 

You guys are in that business. I have been in that business most 

of my career, and I can tell you, what you are saying today, credibility, consistency, and reliability are the three things that I always 

depended on. When you break that, you lose customers, to your 

point. 

I can tell that you had a good record with that individual customer, or he would have switched to soybeans out of Canada. We 

have plenty of alternatives around the world today, which makes 

this very critical. 

I just have a quick question. Mr. Paurus, would you expand just 

a little bit more on why it is so important to maintain an uninterrupted and consistent flow of products out of the United States in 

our export efforts? 

15 

Mr. PAURUS. To keep the system moving and keep our customers 

over there, that they can rely on us being able to satisfy their 

needs in a competitive manner, price competitive, and so they do 

not do what Mr. Gordon’s Japanese stakeholder said, ‘‘I was going 

somewhere else, but I am going to come back to you or stay with 

you to buy soybeans.’’ 

Senator PERDUE. Did we have any evidence in the 36 days of 

that disruption, did we have any evidence coming through the industry of lost sales? Do we have any quantification of that? Mr. 

Chairman, do you have any information on that? 

Mr. CAMPBELL. Yes, we absolutely lost sales. We lost sales, and 

we also switched vessels from the United States to other parts of— 

to Canada. 

Senator PERDUE. As I understand it, though, right now—and correct me if I am wrong. Any of you can jump in on this. It looks 

to me like we have 58 U.S. inspection facilities, and about 45 of 

those use Federal inspectors. Only 13 use designated State inspectors, which I presume was the Vancouver situation. I have a couple 

questions on that. 

It looks to me like you already have some potential backup in 

those designated State facilities, that they could rely on Federal inspectors. I have a specific question, though. In this situation that 

happened in Vancouver, during those 36 days, did the industry, the 

grain industry contact the Secretary of Agriculture? If they did, 

what was the response? Mr. Paurus. 

Mr. PAURUS. Yes, they did. The ag stakeholders sent two letters 

that were submitted as part of this record, and the letters urged 

the Secretary to immediately provide service. The response received from the Secretary referenced safety concerns, but to date, 

the USDA has not shared their safety report, if there is one. 

The ag stakeholders also met with GIPSA Administrator Mr. 

Mitchell, but that meeting did not bring about any action from the 

USDA to restore the service. 

Senator PERDUE. What was the security risk? I know they did 

not supply the report, but what was the security situation that 

caused them not to respond? 

Mr. PAURUS. I do not know. 

Senator PERDUE. The record said it had something to do with the 

longshoremen’s strike. Is that right? 

Mr. PAURUS. Well, there was the longshoremen’s strike going on, 

and the Vancouver facility was still operating. The Columbia grain 

facility in Portland operated, but FGIS was inspecting grain there, 

and they kept operating at that time. 

Senator PERDUE. But there was no attempt to move FGIS inspectors from other facilities into Vancouver during those 36 days? 

Mr. PAURUS. No, there was not. 

Senator PERDUE. The primary reason given was the security 

issue, which was never—— 

Mr. PAURUS. Safety concern. 

Senator PERDUE. Which was never—well, safety concern to me is 

the machinery is not protected, but a security concern is a little 

more alarming to me. I would like to know more about that for the 

Committee. I will submit that, Mr. Chairman, in writing to follow 

up. 

16 

Senator PERDUE. I just have one last question. I am about out 

of time. Mr. Campbell, you had mentioned changing—I think you 

were the one. If not, anyone can respond. Why do you think it is 

important to change the reauthorization period? We have gone 

from 3 to 10 over the last 20 years or so, I guess. What is the reasoning behind reducing back to a 5-year recommendation? 

Mr. CAMPBELL. So really, in the end here, we are talking about 

reliability, we are talking about competitiveness, and we are talking about evolution. As I mentioned in my opening comments, what 

they did in 1974, not so relevant today in 2014. I understand the 

problem, but the reality is the buyer today is way more sophisticated than he ever was. 

In the last 20 years, the buyer today is very sophisticated. Every 

one of them has a plaque on their wall as to what milling school 

they went to. Every one of them can tell you all the milling characteristics of any class of wheat in the United States. The FGIS system has not evolved. It has not maintained. So at the end of the 

day, we get the grade factor, and the grade factor is very important 

for setting that baseline. 

But if it does not evolve and maintain itself in the world marketplace, it is going to continue to slip. We simply ask that it gets— 

as we see, the labs that the third-party inspections have and are 

performing those tests today, we simply ask FGIS that you are 

going to have to evolve and stay up. 

Senator PERDUE. Thank you. 

Thank you, Mr. Chairman. 

Chairman ROBERTS. Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. I appreciate that. 

Thank you, all four of you, for testifying today and for sharing your 

knowledge and experience. 

Mr. Gordon, my first question is for you. Soybeans are an important crop in Ohio, as you noted, our Nation’s largest agricultural 

export. The Federal Grain Inspection Service was created by Congress some 40 years ago because of significant problems at our 

ports, as you know. 

Private inspectors were taking bribes. Shipments were being 

misrepresented. Inferior products were being exported. You also 

noted that the work of the Federal Grain Inspection Service is the 

gold standard to assure foreign buyers about the high quality of 

our exported grain. 

That being the case, if you would just answer yes or no, does the 

American Soybean Association support privatizing the inspection of 

exported grain? 

Mr. GORDON. On behalf of the groups that I mentioned, the National Wheat Growers and others, we have no problems with the 

Government running the program. We do not necessarily see the 

need to privatize it. The gentleman has spoken in favor of it. We 

are not necessarily opposing it, but the system is not broken. How 

the system didn’t work in Vancouver is the real problem behind it, 

the rest of the system. 

We do agree, though, that the inspection system needs to evolve. 

Mr. Campbell said it exactly. Our customers know more about our 

soybean genetic makeup than we do even as producers. As a proVerDate Nov 24 2008 15:28 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96176.TXT MICAH
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ducer, I know just about everything about that soybean when I put 

it in the ground so I can raise it the best way I can. 

So to answer your question, no, we do not necessarily do we need 

it to be privatized. We think the Government does a good job. 

Senator BROWN. Thank you. 

Mr. Paurus, I understand that NGFA and others on the basis of 

last year’s lockout—lockout, not strike—of long—not a strike by the 

longshoremen but a lockout of the longshoreman, major distinction—at the Vancouver report are recommending that Congress 

force the Secretary to take certain actions in light of possible disruptions in ports. In particular, it is my understanding that while 

foreign-owned conglomerates were locking out workers—foreignowned conglomerates were locking out workers at the Vancouver, 

Washington, port—your company, which had negotiated a successful contract with your workers was actually experiencing an increase in business at your Tacoma operations. Is that correct? 

Mr. PAURUS. Yes, we would have had some more volume than 

maybe if the others had not locked out the longshoremen. That is 

correct. 

Senator BROWN. According to USDA, more than 80 percent of exported grain is inspected by Federal inspectors, that the delegated 

States are each inspecting a relatively small amount of grain. I do 

not understand why in light of this isolated incident in Vancouver, 

the trade association is advocating for such a one-size-fits-all approach that could tie USDA’s hands. 

Mr. PAURUS. We would like—are you talking about the proposal 

to have the USDA take over—— 

Senator BROWN. Well, I am talking about your trade association. 

You were moving forward. The foreign conglomerates were locking 

workers out. You were moving forward. You were seeing increased 

business. I guess I do not understand why the trade association is 

advocating for a one-size-fits-all approach as a result. 

Mr. PAURUS. In case we would all be for the same thing, to have 

FGIS be held accountable to provide service at any kind—where 

there is a disruption, like there was in Vancouver. Now, I cannot— 

that may be the next time. It may be our joint venture with Cargill 

and TEMCO, one in Tacoma, or Kalama, Washington, or Portland, 

Oregon. 

Senator BROWN. Well, I guess I look at it as you negotiated a 

contract, you did it right. These foreign companies locked out their 

workers and, unfortunately, what happened is what happened. 

Thank you, Mr. Chairman. 

Chairman ROBERTS. Senator Thune. 

Senator THUNE. Thank you, Mr. Chairman, you and Senator Stabenow, for having this hearing about reauthorizing the U.S. Grain 

Standards Act. My home State of South Dakota is a big exporter. 

We are number 10 in the Nation total when it comes to agricultural exports, and our top five exports totaled over $2 billion last 

year, soybeans leading the way at about $1.2 billion, wheat around 

$400 million, and corn around $300 million. 

But we have about, I think one out of every three rows of soybeans that is grown in South Dakota hitting the export market. So 

what those numbers confirm is the urgent need that we have for 

an effective, reliable, and accurate U.S. grain inspection process. 

18 

Global grain trade is growing. I think our producers and exporters are continually facing increasing competition from around the 

world, and so we cannot afford another disruption of inspection 

services and trade flows such as what we had last summer and the 

Port of Vancouver in Washington State. 

So in thinking about that, as we consider reauthorization, I want 

to ask if you could make a recommendation—you have probably 

been asked this already—to this Committee as we prepare for reauthorization of the U.S. Grain Standards Act to ensure that we have 

uninterrupted inspections moving forward in the event similar situations such as Vancouver, Washington, occur again. 

What would you recommend to this Committee in terms of the 

reauthorization process with regard to a circumstance along the 

lines of what we saw? Feel free. Yes, sir, Mr. Gordon. 

Mr. GORDON. Senator Thune, thank you for the question. As I 

said in my testimony we talked about an hourly decision. There are 

other Federal agencies like the FAA, that in the event of a disruption, lockout or a strike, the Government would not allow them to 

walk out of the booths and not regulate airplanes. 

Now this does not raise a safety concern to that degree, but it 

is still a federally delegated agency. We have the statute in place 

for the Secretary of Agriculture to take this action, but the time 

frame is ambiguous. If we set up a time, at least make them either 

have a policy or have the Committee set that time frame, then you 

have teeth where you say, ‘‘Okay, Secretary, you have had 10 hours 

to respond to the walkout. 

Washington State decided not to go in there. You need to get 

your inspectors there.’’ Now we would have that timeline. Right 

now we do not have that timeline in the Act. 

Senator THUNE. Anybody else? Any suggestions or recommendations? 

Mr. PAURUS. I think we need to hold the USDA and FGIS accountable to provide service in times when there are interruptions, 

whether it would be a lockout, a strike, something else would happen. I cannot foresee everything, but I think we need to have FGIS 

accountable to provide the service. 

Senator THUNE. How do you think—or how would you suggest 

Secretary Vilsack should have handled the Port of Vancouver slowdown with regard to using private agencies? 

Mr. PAURUS. He could have maybe got some other State, delegated State to bring some people in and to add more people from 

the delegated State, or could have maybe in the act itself maybe 

changed it so that you can use some designated agencies to come 

in and provide official service at export. I believe today the act says 

that you cannot do that from a designated agency standpoint. 

Senator THUNE. Good. Anybody else? 

Mr. Campbell. 

Mr. CAMPBELL. Well as Mr. Paurus said, he could have acted 

much quicker, number one. 

Number two, at the end of the day we had buyers asking for 

waivers, which they eventually granted, but that is not a good sign 

when a buyer is asking for a waiver and we are talking about reliability of our exports. But he could have simply mandated that 

Federal inspectors went in there. If the Washington State inspecVerDate Nov 24 2008 15:28 Feb 16, 2016 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\96176.TXT MICAH
19 

tors did not want to go in, he should have just mandated that we 

take in and we bring in some Federal inspectors. It could have happened in 24 hours. That is the law. It should have been—should 

have been enforced. 

Senator THUNE. Right. Okay. 

All right. I see my time has expired, Mr. Chairman, so thank 

you. Thank you, panel, for your testimony. 

Chairman ROBERTS. Thank you very much. We are expecting 

Senator Hoeven. Let me go ahead. I just have a couple of followup questions for the panel. 

The Grain Inspection Advisory Committee, what role did the Advisory Committee play during the situation in the Port of Vancouver? We can go down. Mr. Gordon, why don’t you just start off, 

and then we go to Mr. Ayers, Mr. Paurus, and then Mr. Campbell. 

Mr. GORDON. Senator, I am not aware of that information. I am 

not sure how that Advisory Committee played a part in that. 

Chairman ROBERTS. Mr. Ayers. 

Mr. AYERS. Mr. Chairman, the Advisory Committee members 

made recommendations to GIPSA on how to react to the situation, 

and I have never heard of any follow-up on an actual—— 

Chairman ROBERTS. No recommendations after this has occurred? 

Mr. AYERS. They made recommendations for trying to correct the 

situation at the Advisory Committee, but it is just that, an Advisory Committee, and whether they take the advice or not is strictly 

up to them. 

Chairman ROBERTS. Well, they are not sitting there somewhere. 

I mean, they sent them to the Department of Agriculture, I am assuming. Is that correct? 

Mr. AYERS. I am not sure where the Advisory Committee recommendations go. They go to the Administrator and Deputy Administrator of GIPSA, and where it goes from there, sir, I am not 

aware. 

Chairman ROBERTS. Mr. Paurus. 

Mr. PAURUS. There were two resolutions made for consideration 

to the Administrator, one in July shortly after the State of Washington Department of Ag stopped service, and that one urged FGIS 

to take whatever action was necessary immediately to restore official grain inspection and weight service. 

Then in November of 2014, there was another resolution that 

talked about the FGIS revoked the agreement—or the Advisory 

Committee recommends that FGIS remove the delegation and designation of all State agencies that did not fulfill their obligation of 

providing service as required under the Grain Standards Act and 

that FGIS immediately provide the required services. 

I am a current member of the Advisory Committee. As far as I 

am aware of, there was never any follow-up to the Advisory Committee from that. 

Chairman ROBERTS. So they never got back to you? 

Mr. PAURUS. Pardon? 

Chairman ROBERTS. You did not get an answer. 

Mr. PAURUS. No. 

Chairman ROBERTS. Please, sir. 

20 

Mr. GORDON. I cannot add to what Tim put forward. He is on the 

Committee. 

Chairman ROBERTS. Well, this goes into my second part of this. 

I think everybody on the Committee was troubled by the lack of response that the Department offered the commodity groups when 

you all wrote the Department about the situation at the port. Has 

there been any follow-up from USDA on GIPSA since last August? 

Mr. PAURUS. I have not gotten any. 

Mr. GORDON. The commodity groups have not gotten any either. 

We had the one letter basically stating that they would not send 

people in due to the employees’ safety. That was the last and only 

thing we have heard from USDA. 

Mr. CAMPBELL. No, we have not as exporters heard anything, 

and we continue to wait for the safety report. 

Chairman ROBERTS. Well, that is not the way things ought to operate. That is probably the understatement of the hearing. 

Well, Senator Hoeven is here, and I am going to recognize him. 

Senator HOEVEN. Thank you, Mr. Chairman. Thanks to each of 

you for being here. I guess from your respective perspectives, just 

tell me how the problem developed and all the components you 

think it would take to solve it. So not just the inspection piece, but 

if you were overseeing the situation, both how we got into it and 

how you would try to address it. We can start on either end. 

Mr. Gordon. 

Mr. GORDON. We did talk about it a little earlier, but the Grain 

Inspection Act actually is a very good Act. It has a lot of great attributes, and there are teeth in place. It is just that there isn’t a 

timeline, which allows for this ambiguous decision by the Secretary 

of when he decides if it is an emergency. 

Well, a decision on an emergency differs from one person to another. For a farmer in southwest Minnesota, when my basis goes 

from a negative 30 cents to a negative dollar because I cannot ship 

anything, and for my bankers, that is an emergency. You know, we 

have seen that with different transportation issues. So the timeliness of response from the U.S. Government is probably the key factor. 

Now, there are ideas on how to increase that timeliness with private sector—I truly believe and I think the associations really truly 

believe we have the people in place. We just need to act on that; 

when something goes wrong, get that timetable set up either in 

statute or in response from USDA, and act on it, get the inspectors 

there. If we have got to bring in U.S. marshals to get them through 

the picket lines, it is our job as the U.S. to provide this service to 

our foreign customers. 

Senator HOEVEN. Were there workers in place to actually do the 

work then? 

Mr. GORDON. I believe so. Again, the problem with being in the 

middle of the heartland in Minnesota is that I do not get to go to 

the PNW all that often to get my soybean to my foreign buyers in 

a timely fashion. I do believe there were ships available. There 

were workers available. I have no problem with the union issues. 

I understand they have contract issues. As a farmer, my job is to 

produce the crop, and the U.S. Government’s job is to inspect it and 

to get it out to my foreign buyers. 

21 

Senator HOEVEN. Mr. Ayers, same question. In other words, kind 

of comprehensive here, not just the inspection but the other things 

that have to happen here. 

Mr. AYERS. Senator, we are in a precarious situation that we not 

only provide service to the elevators and the customers that export 

grain, but we also answer to the guidelines of the USDA GIPSA’s 

authority through the Grain Standards Act. It is our opinion that 

this scenario that came up was a very unique scenario, and I do 

not foresee and nobody did foresee a situation like this coming up. 

I think the key is to ensure in the future that no other happenings 

like this ever comes about again, and that GIPSA prepare a comprehensive procedure to handle the situation. 

Senator HOEVEN. So you would agree it is more than just the inspectors. It is also other components that have to go into having 

a solution here. 

Mr. AYERS. Yes. 

Senator HOEVEN. That is what I am asking. What other pieces 

besides the inspection? Any other recommendations? 

Mr. AYERS. No, sir. 

Senator HOEVEN. Okay. Mr. Paurus. 

Mr. PAURUS. First of all, I am going to go with David and say 

there needs to be a plan that FGIS has, like an emergency action 

plan that every industrial facility has to have, a manufacturing 

plant or something like that, that they would put together in case 

there is one of these disruptions or something similar not a lockout, 

it could be a strike, it could be any one of a number of things that 

could happen. 

I think that FGIS under the act should be held accountable to 

do that and should be also held accountable to plan ahead and 

have a contingency plan set up. If we are looking for people, there 

is any number of licensed inspectors that work in the domestic and/ 

or possibly in other delegated States or that they could draw on 

and hire those people to work for an intermittent period of time. 

I think the main thing is to get FGIS held accountable for coming 

up with that plan. 

Senator HOEVEN. Thank you. 

Mr. Campbell. 

Mr. CAMPBELL. Senator, it has been said once before—I am not 

sure if you were in the room or not—that this was the perfect 

storm. I frankly do not think it was the perfect storm. It was a 

labor situation. We are probably going to have labor situations in 

a lot of ports at different places. We cannot afford to shut down the 

grain system to back up thousands of rail cars into South Dakota 

and other parts, to have major transportation issues because we 

are shutting down these railroads. 

So I do not really know—I mean, I kind of do know, but what 

was the problem? I mean, the problem was they refused to go and 

inspect, as the Washington delegate said. Then the Federal Grain 

Inspection Service refused to send workers in. Where the workers 

are is a bit irrelevant to me per se. Should there have been workers? You bet. It is their job. It is their mandate. But could they 

have gotten workers? Sure, they could have flew workers out of 

many of the other ports. 

22 

Senator HOEVEN. Well, that is my question in that you need inspection, you need workers, you need ships, you need a number of 

things. That is why I am getting your recommendations as to what 

all—all the component parts that go into the solution. That is my 

question. 

Mr. CAMPBELL. There were plenty of ships. The ships were there. 

The sales were on the books. The rail cars were—— 

Senator HOEVEN. Trucks, rail cars, all the—— 

Mr. CAMPBELL. Trucks—we do not take trucks in the PNW, but, 

yes, the rail cars were flowing, the barges were flowing. The rail 

cars backed up in the interior, caused massive problems. It was all 

there in place. What was not in place, pure and simple, was the 

inspection of our grain being loaded on our vessels because they 

chose for 36 days to not abide by—— 

Senator HOEVEN. But you feel the other components were there. 

So there are not other recommendations besides the inspection 

piece that you have. 

Mr. CAMPBELL. Well, this is—yeah, I mean, this—there may be— 

no, I do not really believe so in this particular case. This one is 

about reauthorization of FGIS, so in that vein, we are talking 

about, A, when it comes to grain trade and all the numbers that 

have been thrown around, 70, 80 percent, this and that and that, 

reliability is all it is about. I have had many customers say, ‘‘When 

is this going to happen in the gulf? Is this better than Russia? Russia bans exports. Is this better? You tell me. You are the exporter. 

Is this going to happen to me?’’ These are the questions they ask 

me when we are shut down for 36 days. 

Senator HOEVEN. All right. Well, we are working on reauthorization of the Federal Grain Inspection Act, and that is why I want 

to make sure that we are including any and all components that 

we need to in order to have the kind of solution that works. Yes, 

you are right. I mean, in this case it was the Pacific Northwest. It 

could be somewhere else. But, again, we want to make sure we are 

looking at all the things we need to in order to have a good solution. That is the question I am asking. 

Mr. CAMPBELL. Yeah. Well, I think we are looking at all things, 

but I guess my point is that no other—in this particular supply 

chain, that was the only bottleneck. 

Senator HOEVEN. Okay. I am asking, do you have any other recommendations besides the inspection piece? 

Mr. CAMPBELL. Not from a reauthorization—— 

Senator HOEVEN. Okay, and that was what I was looking for 

from all of you. 

Chairman ROBERTS. Time. 

Senator HOEVEN. Thanks. 

Chairman ROBERTS. I do not mean it is time. 

Senator HOEVEN. Thank you, Mr. Chairman. 

Chairman ROBERTS. I do not mean it is time. Time is the other 

equation. Inspection—— 

Senator HOEVEN. Oh, I thought you meant time as in my time 

is up. 

Chairman ROBERTS. No. 

[Laughter.] 

Senator HOEVEN. Thank you, all of you. I appreciate it. 

23 

Chairman ROBERTS. My time is your time if you would like to 

have another 30 seconds. 

Senator HOEVEN. No. Thank you, Mr. Chairman. I appreciate it. 

Chairman ROBERTS. All right. Thank you. 

I promise, the last question for the panel, user fees. You and others in industry are supporting a new mechanism to support the 

mandatory export inspection. I was going to ask you, can you elaborate on how the Department currently sets the user fee schedule? 

But the question I have, given our recent history of drought and 

other very limiting supply and demand factors, the only thing certain in farm country is uncertainty. How much confidence do you 

have in the USDA’s ability to predict export tonnage several years 

from now with regard to user fees? 

Mr. PAURUS. Their history of predicting, which they use the 

WASDE numbers that the USDA puts out, has not been over a period of time very good. So what we proposed is to do a 5-year average of export tonnage, for their tonnage fee, right? Those would be 

actual numbers, so take out the highs, take out the low over a period of 5 years, and then use that to develop their tonnage rate. 

Chairman ROBERTS. Mr. Paurus, have you ever thought about 

working for the RMA in crop insurance? 

[Laughter.] 

Mr. PAURUS. I do not understand that, sir. 

Chairman ROBERTS. Same deal. We just offered a different kind 

of program. 

I want to thank the panel. I feel that as Chair of this Committee 

I owe you an apology from the Department of Agriculture and 

GIPSA and to a certain extent in terms of our oversight responsibility here. This should not have happened. It has dramatic effects. 

I think we all know that you have made good suggestions on timing, on inspection, and obviously a backup plan that can be put immediately into place. I would offer that authority is already there, 

but at least we could buttress that with regards to when we mark 

up the bill. 

I thank you all for coming. I want to thank you for taking the 

time to come and thank you for what you do. 

This hearing is adjourned. 

[Whereupon, at 3:47 p.m., the Committee was adjourned.] 

(25) 

A P P E N D I X 

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