U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

86–216 PDF 2003

S. HRG. 107–926

S. 532, THE PESTICIDE HARMONIZATION ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON PRODUCTION AND PRICE

COMPETITIVENESS

OF THE

COMMITTEE ON AGRICULTURE,

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

JULY 18, 2002

Printed for the use of the

Committee on Agriculture, Nutrition, and Forestry

(

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

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

TOM HARKIN, Iowa, Chairman

PATRICK J. LEAHY, Vermont

KENT CONRAD, North Dakota

THOMAS A. DASCHLE, South Dakota

MAX BAUCUS, Montana

BLANCHE L. LINCOLN, Arkansas

ZELL MILLER, Georgia

DEBBIE A. STABENOW, Michigan

BEN NELSON, Nebraska

MARK DAYTON, Minnesota

PAUL DAVID WELLSTONE, Minnesota

RICHARD G. LUGAR, Indiana

JESSE HELMS, North Carolina

THAD COCHRAN, Mississippi

MITCH MCCONNELL, Kentucky

PAT ROBERTS, Kansas

PETER G. FITZGERALD, Illinois

CRAIG THOMAS, Wyoming

WAYNE ALLARD, Colorado

TIM HUTCHINSON, Arkansas

MICHEAL D. CRAPO, Idaho

MARK HALVERSON, Staff Director/Chief Counsel

DAVID L. JOHNSON, Chief Counsel for the Minority

ROBERT E. STURM, Chief Clerk

KEITH LUSE, Staff Director for the Minority

(II)

(III)

C O N T E N T S

Page

HEARING(S):

S. 532, The Pesticide Harmonization Act .............................................................. 01

Thursday, July 18, 2002

STATEMENTS PRESENTED BY SENATORS

Conrad, Hon. Kent, a U.S. Senator from North Dakota, Chairman,

Subcommittee on Production and Price Competitiveness of the Committee

on Agriculture, Nutrition, and Forestry ............................................................. 01

Roberts, Hon. Pat, a U.S. Senator from Kansas, Ranking Member,

Subcommittee on Production and Price Competitiveness of the Committee

on Agriculture, Nutrition, and Forestry ............................................................. 04

Baucus, Hon. Max, a U.S. Senator from Montana ................................................ 11

Dorgan, Hon. Byron, a U.S. Senator from North Dakota ..................................... 02

Pomeroy, Hon. Earl, a Representative in Congress from North Dakota ............ 08

WITNESSES

Panel I

Hawks, William, Under Secretary for Marketing and Regulatory Programs,

United States Department of Agriculture, Washington, DC ............................ 12

Johnson, Stephen L., Assistant Administrator, Office of Prevention,

Pestitcides, and Toxic Substances, Environmental Protection Agency,

Washington, DC ................................................................................................... 14

Panel II

Bushue, Barry, President, Oregon Farm Bureau Federation, Boring, Oregon,

on Behalf of the American Farm Bureau Federation ....................................... 22

Dalrymple, Jack, Lieutenant Governor, State of North Dakota, Bismarck,

North Dakota ........................................................................................................ 17

Frederickson, David J., President, National Farmers Union, Washington, DC . 24

Johnson, Roger, Commissioner of Agriculture, State of North Dakota,

Bismarck, North Dakota ...................................................................................... 20

Vroom, Jay, President, CropLife America, Washington, DC ............................... 26

APPENDIX

PREPARED STATEMENTS:

Bushue, Barry ................................................................................................... 97

Dalrymple, Jack ................................................................................................ 57

Dorgan, Hon. Byron .......................................................................................... 40

Frederickson, David J. ..................................................................................... 102

Hawks, William ................................................................................................ 43

Johnson, Roger .................................................................................................. 60

Johnson, Stephen L. ......................................................................................... 50

North Dakota Farmers Union ......................................................................... 101

Pomeroy, Hon. Earl .......................................................................................... 45

Page

IV

PREPARED STATEMENTS—CONTINUED

Vroom, Jay ........................................................................................................ 106

(1)

S. 532, THE PESTICIDE HARMONIZATION ACT

THURSDAY, JULY 18, 2002

U.S. SENATE, SUBCOMMITTEE ON PRODUCTION AND PRICE

COMPETITIVENESS, OF THE COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC.

The committee met, pursuant to notice, at 2 p.m., in room SR–

328A, Russell Senate Office Building, Hon. Kent Conrad, [Chairman of the Subcommittee], presiding.

Present or submitting a statement: Senators Conrad, Roberts,

and Baucus.

OPENING STATEMENT OF HON. KENT CONRAD, A U.S.

SENATOR FROM NORTH DAKOTA

Senator CONRAD. The hearing will come to order. The subcommittee meets this afternoon to hear testimony on S. 532, the

Pesticide Harmonization Act, sponsored by my colleague from

North Dakota, Senator Dorgan. I am pleased to be among the nine

other Senators who are cosponsors of Senator Dorgan’s bill.

Senator Dorgan’s legislation represents a thoughtful, straightforward, and responsible effort to address an issue that for several

years has perplexed and frustrated U.S. agricultural producers, especially those who farm near the Canadian border. That issue has

to do with the differential pricing for pesticides across the border

and the dramatically lower prices available to Canadian farmers as

compared to U.S. farmers for the very same pesticides.

We have heard a lot about the integration of the U.S. and Canadian market during the more than 10 years since enactment of the

U.S.-Canada Free Trade Agreement. The essentially open border

between our two countries has, in fact, resulted in a huge increase

in two-way trade between the two countries. For example, in fiscal

year 2001, our two-way agricultural trade set a record in both directions, totaling nearly $17.5 billion.

However, over the past decade, we have also seen the United

States’ historical agricultural trade surplus with Canada vanish,

replaced by an agricultural trade deficit that last year favored Canada to the tune of $1.5 billion. It is no wonder, then, that our producers cry foul when on the one hand they feel firsthand the impact of Canadian commodities streaming across the border, and yet

also see Canadian farmers benefiting from a competitive cost advantage that seems to have no rational explanation. Canadian

wheat, barley, livestock, and meat can flow so freely across the

2

U.S. border. Why can competitively priced pesticides not do the

same?

Just this past weekend, the Minot Daily News editorialized with

the headline, ‘‘It Just Isn’t Right.’’ The paper cited the recent case

of six North Dakota farmers who had purchased a herbicide from

a Canadian distributor that the farmers believed had a special authorization to allow the chemical to be brought into the United

States. The herbicide, called Liberty, costs $9 a gallon in Canada

and twice that in the United States. According to the editorial, the

manufacturer of the herbicide will not say—will not say—whether

the formulation of the Canadian version is different from the U.S.

version. It will not say whether there is any difference.

The editorial in the Minot paper concludes with the following. ‘‘So while it is against the law for North Dakota farmers to use Canadian Liberty, it is fully legal for Canadian canola treated with

Canadian Liberty to be imported into the United States. This is an

outrage.’’ That is the statement of the newspaper, one of the four

largest in our State.

This afternoon, the subcommittee will hear from Senator Dorgan

and from Congressman Pomeroy of North Dakota, who has championed this effort in the House of Representatives. We will also

have a chance to hear from the U.S. Department of Agriculture and

the Environmental Protection Agency.

We will also have a chance to hear from the Lieutenant Governor

of North Dakota, Jack Dalrymple, who chairs the State’s Crop Protection Product Harmonization and Registration Board; North Dakota’s Commissioner of Agriculture, Roger Johnson, who has been

a leader on this issue for many years; Jay Vroom, the President of

CropLife America; David Frederickson of the National Farmers

Union; and Barry Bushue, representing the American Farm Bureau Federation.

I want to welcome each of our witnesses here today, and in order

to maximize the amount of time available for questions and discussion, I would ask each witness following our two Congressional witnesses to please summarize their statements in 5 minutes or less.

I appreciate all of the witnesses’ cooperation on that matter.

I want to welcome again all of the witnesses. I especially want

to welcome my colleague from North Dakota, Senator Dorgan, who

is the author of this legislation. Again, he has done a very careful

and thoughtful job of putting this bill together and it is a privilege

to have him before the subcommittee today. Welcome, Senator Dorgan.

STATEMENT OF HON. BYRON DORGAN, A U.S. SENATOR FROM

NORTH DAKOTA

Senator DORGAN. Thank you very much, Senator Conrad. Let me

say that this is a bipartisan piece of legislation. We have Republican and Democratic Senators as cosponsors, and I do not want

you to minimize your role here. Although my name is first on the

legislation and I introduced it, I worked closely with you and especially my colleague Congressman Pomeroy in the House, who introduced an identical piece of legislation.

This is truly a team effort and you deserve a great deal of support for what you have done, and when we make this happen, a

3

lot of Members of Congress will be very pleased, but especially

pleased will be those American farmers who are shortchanged, or

effectively cheated these days by not being able to access a virtually identical chemical north of the border and bring it back and

apply it to their crops.

Let me try to describe just briefly. You have done a good job in

your opening statement. This legislation simply would permit a

State to register a Canadian pesticide for distribution and use

within that State if the pesticide is substantially similar or identical to one already registered in the United States.

I want to say that I especially feel that the stimulus for this legislation comes from North Dakota Agricultural Commissioner

Roger Johnson. He has worked with all of us for a good number

of years to try to write a piece of legislation that is workable, that

does not compromise safety in any way, and he is going to testify

today, but I wanted to pay special mention to his contribution to

this issue that has been extraordinary.

It is interesting that we come to this point with the Environmental Protection Agency supporting this legislation. We have

worked closely with them over the last several years. The Department of Agriculture supporting this legislation. This really is a

good piece of legislation. It does not in any way compromise safety.

It does allow our farmers to access a nearly identical chemical and

pay a much lower price for it if the pricing practices of the companies are such that they would do that to the American farmer, that

is, price theirs at multiples of what you could purchase it for north

of the border.

What has happened is we have discovered that some chemicals

sold in Canada are almost identical. In some cases, they are identical, but in other cases, they have tweaked the formula just

enough so as not to make a substantive difference in the chemical,

but to be able to say, this is a different chemical. Therefore, they

have been able to keep American farmers from being able to access

that chemical. Well, that is just a charade. It is a game. The sad

part of the game is it has cost farmers a great deal of lost opportunity and money. With the slim margins that exist on the farm

today, it is very important to pass S. 532 to give farmers the opportunity to take advantage of the lower prices.

I have a box here that I want to show you. This is a box in which

the chemical Liberty will arrive. It would have five gallons of Liberty in this box and it will be sold in Canada and in the U.S. and

these are the labels. This is a Canada label. This is a U.S. label.

What you will see is this is an identical chemical. I mean, it is

identical with respect to the labels. The difference is that if this

box of Liberty is sold in Canada, this box is sold for $160. If the

box of Liberty is sold to the American farmer, it is $450. It is a

very dramatic price change, price difference.

Our American farmers would like to access that lower-priced

product, but they are told, under current law, that they may not

do that, and so what happens is the Canadians put this lowerpriced product on their canola and ship it to our country where the

canola is processed and then put into our food supply. It is not that

the Canadian canola is not becoming part of America’s food supply.

4

It is. It is just that American farmers are told, under current law,

you cannot access the savings that comes with the Canadian prices.

The circumstance in North Dakota is that for 15 selected pes- ticides, there will be $23 million, nearly $24 million in savings, according to a study that Roger Johnson will tell you about today.

CBO says that this bill has zero cost. I mentioned EPA helped us

draft it and is testifying that the language poses no safety threat

to the environment or to public health.

The organizations that support this, they are too numerous to

mention, but the American Farm Bureau, National Farmers Union,

National Association of Wheat Growers, North Dakota Soybean

Growers, Canola Growers. The list is on and on and I will submit

them for the record.

It is my hope that with this hearing, for which I am deeply appreciative, that I will be able to include this piece of legislation on

the agriculture appropriations bill. I am a member of that subcommittee and that will be marked up, I expect, next week.

Once again, I am really pleased that you are holding this hearing. This piece of legislation should move quickly and I hope it will

move easily, and the witness list you have today is excellent. It will

describe why this ought to be done and it ought to be done now

in the interest of American farmers.

Senator CONRAD. Thank you very much, Senator Dorgan. Thank

you very much for the legislation and for your leadership on this

issue. You know, I do not know how many times I have been to

farm meetings in North Dakota and this has been brought up. It

is vexatious. It angers people. It is inexplicable to people. This bill

has really—you have done an excellent job of covering the bases.

To have USDA and EPA and the major farm organizations all on

the same page, that is not easy to do, and we appreciate the care

that you have taken to put it together.

[The prepared statement of Senator Dorgan can be found in the

appendix on page 40.]

Senator CONRAD. We have been joined by my ranking member,

Senator Roberts, who is an extremely important member of the full

Agriculture Committee. It is hard to find people more knowledgeable and more dedicated to fighting for farmers than Senator Roberts. Welcome.

OPENING STATEMENT OF HON. PAT ROBERTS, A U.S. SENATOR

FROM KANSAS

Senator ROBERTS. Mr. Chairman, thank you for your very kind

comments. I had originally thought that this hearing was on the

Dorgan amendment to harmonize the two loan rates in the State

for sunflowers.

[Laughter.]

Senator DORGAN. Without objection.

[Laughter.]

Senator ROBERTS. Unbeknownst, and I want the message loud

and clear, and I have just talked with the Chairman, unbeknownst

to many in the oilseed community, we have tried for 20 years to

buildup this industry and the USDA or somebody in the USDA, in

the bowels of the USDA, somehow decided there would be two loan

rates, one for confectionery and one for oilseeds, and what it is

5

going to do is ruin the market for the confectionery side and we are

going to lose a lot of support that we have for the oilseeds. I understand you may or may not have a bill. If you have a bill, put me

on it.

I had thought that was the hearing today, but I understand it

is a different matter, so part of what I am doing is just sending

a message down to the USDA that there will be a bill unless we

can change this administratively, but it is a very serious matter,

and I know it would be to my former colleague and friend from the

House side, Congressman Pomeroy, as well.

Thank you for holding the hearing today on S. 532. I do know

what the legislation is, the Pesticide Harmonization Act. This has

not been a big, major issue in Kansas, but I certainly realize it has

been a very front-burner topic up on the Northern border, and your

involvement in this issue, both from the standpoint of the Chairman and the two witnesses.

Obviously, there are a number of questions surrounding this legislation. It is important that we are giving all the parties involved

the opportunity today to comment on its impact.

Mr. Chairman, I understand the concerns of many producers in

your State. You just spoke to that. Did Senator Dorgan, and so will

my esteemed friend from the House. All along the Northern border,

we are concerned over the cost of pesticides and input costs, in general, especially in the tough times that we are in.

Certainly, with the recent report that net farm income will drop by nearly $7 billion in 2002, input costs and how bills are paid are

even more pressing. That is a problem that will even be more

pressing for our producers.

Now, I do find it somewhat ironic that Canada actually developed its own use program because pesticide prices were, on occasion, lower in the United States. Now, we are here today because

some United States producers will argue that the prices are certainly lower in Canada.

As we take a look at this issue, it is important that we keep several principles in mind and also ask ourselves several questions,

and I am just going to submit those questions for the record in that

I do have to go to the Intelligence Committee on yet another meeting on what went wrong and what we need to do right in regards

to 9/11.

We ought to take a close look at several issues. No. 1, what effect, if any, does the exchange rate have on the relative comparison

of prices on these products?

No. 2, what can we do to improve the harmonization process between the two countries?

No. 3, this seems to be especially important to me. I am back on

No. 2, really. As Mr. Jay Vroom in representing his organization,

in his prepared testimony that I have read, indicates the review

time for new products in Canada is 18 months. It is 40 to 46

months in regards to the United States. There is no doubt this extended review time is adding to the costs in the United States, and

that is very important.

In addition, how do we protect the patents and the proprietary

information in light of the differences between the two countries in

these areas?

6

Who is going to be allowed to bring these pesticides back across

the border and use them and who will handle the registration and

approve the process for these activities?

The reasoning behind the bill is obvious. How we do this in

terms of a pragmatic way that makes sense from a sound science

approach is another matter. In my opinion, only individual approved applicators should be allowed to bring these products back

across the border. This is especially important in the new world we

have lived in since 9/11. I am not going to get into all the emerging

threats and all of those dangers at this particular time, but they

do represent a very factual challenge for us.

The bottom line, it seems to me we cannot really decrease our

border security as a result of this legislation. We ought to address

the problem, but we cannot get into a problem of border security.

Mr. Chairman, finally, while I have often had my own concerns

with the approval and the labeling process under EPA, and that is

probably the understatement of my statement, it is important that

we have assurances in place that pesticides are not being simply

brought across the border or trans-shipped and used for applications that are not approved in the United States.

I am going to stop there. I know you have a large number of witnesses today. It has been estimated half the population of North

Dakota is here today.

[Laughter.]

Senator ROBERTS. I will yield back my time and I, as I say, have

an obligation in the Intelligence Committee. I am going to submit

these questions that I mentioned for the record. I would ask that

the witnesses perhaps address those concerns that I brought up.

I want to thank you again for your leadership and thank you,

Byron, for bringing this to the attention, and thank you, Congressman Pomeroy. It is good to see you again.

Senator CONRAD. Thank you so much, Senator Roberts.

Senator CONRAD. Let me just, if I could, return to where you

started, and that is the question of this dual loan rate that USDA

adopted. Senator Roberts would agree, that was never the intention

anywhere in the process. It was not—— Senator ROBERTS. It was in the manager’s amendment to do the

other thing. If John McCain—pardon me.

Senator CONRAD. No, go ahead. I like that.

[Laughter.]

Senator ROBERTS. If John McCain, pardon me, Senator McCain,

the distinguished Senator from Arizona, insists that we read the

manager’s amendment on virtually every bill that is considered in

the Senate to make sure that it is applicable and it is pertinent

and there is no pork in there, et cetera, et cetera, for some reason,

the Department of Agriculture indicated that what was in the manager’s amendment and the report language had no effect. In the

slide rule world that some live in within the bowels of the USDA,

we decided to come up, well, we are going to reclassify all these

loan rates. Oh, by the way, here is something we needed to do for

some years back.

Now, we have had letters back and forth from myself and my

good friend Dan Glickman, when he was Secretary, even dating

back to Ed Madigan. Well, if the manager’s amendment and report

7

language does not mean anything, why in the hell do we put it in

there?

I have a strong message for the USDA. I am upset about this,

and I have talked to the Secretary about it. They are studying it.

It seems to me they need to do administratively precisely what the

Senator from North Dakota is addressing in legislation. We may

not even have an agriculture appropriations bill the way we are

headed. We might have a giant CR. I hope not. I hope we can get

to that. You folks are more in charge of that than I am.

Having said that, I have a little blood pressure about this. We

are going to take an industry that it took us 20 years to buildup,

to get out of mono-agriculture in the Great Plains and destroy it

with some slide rule decision within the Department of Agriculture.

Other than that, I do not have strong feelings about it.

[Laughter.]

Senator CONRAD. We are glad you are here, Senator. We are glad

you have expressed those feelings because we hope that the representatives of USDA that are here take back the message. Either

they fix it or we are going to fix it, because it had absolutely no

part of any of the Farm bill discussions. As a conferee who helped

negotiate the result, I can say very clearly—in fact, I negotiated

the loan rate on the minor oilseeds. There was no two-track. There

was one track, one track, one loan rate, and that has to be fixed.

I would just say, if I could, and I am very appreciative that Senator Roberts has joined us in sending this signal, that we have a

problem on the flax loan rate, too. They lowered it. They are going

to wipe out the flax industry. They are going to destroy it. Cramby,

for some reason, they decided that Cramby is not part of the program. Well, it comes as a big surprise to those who planted thousands of acres in anticipation that it was included and always has

been, at least in the recent past.

Senator Dorgan.

Senator DORGAN. Senator Conrad, might I make just three very

brief points, and I have to go to an Appropriations Committee

markup.

No. 1, we have prepared some legislation. I would like to see if

we could deal with the loan rates in the agriculture appropriations

bill. It is not clear to me that we will be able to do that, but if we

could solve this issue in the agriculture appropriations bill, we certainly will try to do that.

Second, we have not been well served with harmonization promises for many, many years under administrations—this is not just

one administration, several. We have this promise of harmonization of chemicals and so on with Canada, but it never really happens. Because it has not happened, we need to pass this legislation.

Third, I did not mention that—I mentioned specifically Congressman Pomeroy and you, Mr. Chairman, and Commissioner Johnson

and the important contribution made by all three. I did not mention that the North Dakota State Legislature, represented by the

Lieutenant Governor, who has, headed a committee on this and has

worked with us for a long, long while, has played a significant role,

as well, and I should have mentioned that and did not. I know he

is going to testify today, so I wanted to mention his role and the

interest of the North Dakota State Legislature on this.

8

Thank you for holding the hearing. I deeply appreciate it.

Senator CONRAD. Thank you. Thank you so much for what you

have done.

Senator Baucus of Montana has now joined us. I would ask if it

would be appropriate at this point that we turn to Congressman

Pomeroy for his testimony and then if we could come back to you

for any opening statement. Would that be all right?

Senator BAUCUS. Certainly. That would be fine. Thank you.

Senator CONRAD. Congressman Pomeroy, thank you. Thank you

for your leadership. Thank you for introducing this bill on the

House side. We have a good head of momentum and we appreciate

very much all who have played a role. Clearly, you have been the

lead on the House side. We are knocking at the door of getting this

done.

STATEMENT OF HON. EARL POMEROY, A REPRESENTATIVE IN

CONGRESS FROM NORTH DAKOTA

Mr. POMEROY. Mr. Chairman, thank you, and thank you for holding this important hearing.

Let me begin by just reflecting on the words of my former chairman, Senator Roberts. Serving with him in the Agriculture Committee was always interesting and often entertaining, sometimes

damned irritating, but that is another matter—— [Laughter.]

Mr. POMEROY. I think very highly of the Senator.

Senator ROBERTS. Not very often.

Mr. POMEROY. Not very often was it irritating. I think very highly of Senator Roberts.

Senator ROBERTS. Very highly entertaining, though. He grabbed

me out of here and said something entertaining to me, too.

[Laughter.]

Mr. POMEROY. He is absolutely right on this confectionery loan

rate. The question I would ask the U.S. Department of Agriculture

is how much confectionery sunflowers do you want the Federal

Government to own, because in 2 or 3 years, they are going to own

a whole lot of them, having totally skewed planting decisions and

disrupted the carefully developed market for sunflower oil.

It is, astoundingly surprising, to use the most polite words I can

think of, that they would advance this, and I hope we get it fixed.

I would rather have it fixed administratively as quickly as possible

as they look a little deeper into the consequences of it, but I am

certainly prepared, Mr. Chairman, to join you legislatively with

whatever we need to do to respond.

I also think with regard to flax: why put flax out of business in

terms of domestic production in this country? I do not think there

is an answer to that question, but that certainly would be the effect

of what the loan rates would do.

Senator CONRAD. I would say to my colleague, it is widely understood the Farm bill raised loan rates.

Mr. POMEROY. Exactly.

Senator CONRAD. How they got to a conclusion that on flax the

loan rate got lowered, how that is in any way in concert with the

policy passed on a bipartisan basis is absolutely beyond me, and I

hope very much that those who are here from USDA carry back the

9

message. If they want to have a fight, then get ready. We will have

a fight, and it will get real tough real quick. We are not going to

stand by and see a domestic industry liquidated because of—what

would one term it, just foolish action.

Mr. POMEROY. The role of flax in the marketplace is going to continue. It will just be replaced with Canadian flax instead of ours.

On the other hand, as you know, in the Northern Plains, without

a lot of alternatives, producers need that crop in the rotation. Besides that, it has a lot of valuable contributions to make in terms

of its impact on soils. It has continued in the rotation and, in fact,

is experiencing some gradual development because of its end: market value in the Great Plains. We should not put it out of business.

Turning to the issue at hand, Mr. Chairman, Agriculture Commissioner Roger Johnson, through his actions in the North Dakota

Department of Agriculture, has demonstrated to this country the

foolishness of the existing framework relative to pesticides and the

restriction of bringing lower-priced pesticide across the border from

Canada into North Dakota. His actions 2 years ago relative to

Achieve at the State level allowed the import of substantially identical product. Ultimately, this action was stopped, I believe due to

a Customs, if not EPA, requirement.

The surprising thing, as I evaluated that action of our Federal

Government, was that the action was not taken on behalf of public

health because the product was substantially identical and being

used for the identical purpose for which it had been approved in

this country. It was taken simply to protect the discriminatory pricing practices advanced by the pesticide companies themselves.

We had, when I was serving in the Agriculture Committee, a

very interesting bit of testimony presented by an economist that essentially demonstrates pricing methodology comes down to this:

You charge what the market will bear. There has been a determination that producers north of the border will bear a little less

by way of charges than producers south of the border, and so the

companies have price discriminated right along that bright line of

national border.

Now, this happens in spite of the fact that these very entities

were all for NAFTA, right at the front of the parade for NAFTA,

and enjoy post-harvest the blended market across borders. Closed

market as they price their pesticides, blended market after harvest.

Well, the net consequence, of course, is putting higher cost differentials on our farmers than Canadian farmers competing in the same

market. It is totally unfair.

A recent instance in North Dakota again demonstrates the ludicrous result of this. Farmers were bringing in a Canadian chemical

product called Liberty. The U.S. has the Liberty product available,

made by the same manufacturer. The only difference is the U.S.

product cost $9 per acre more. Under laws as they are presently

constructed, the importation of the Canadian Liberty was a violation of law. If people were to literally carry out the letter of what

they are supposed to prosecute, we would probably have people

prosecuted for seeking a product at a lower price just north of the

border.

Well, that has to change, and we have advanced a proposal that

allows that change without any question of raising public health

10

concerns. The legislation, the Pesticide Harmonization Act, if enacted would eliminate the current barriers by amending FIFRA to

grant States the authority to issue State registrations to parties

who wish to import Canadian pesticides that are identical or substantially similar to products registered with EPA for use in the

United States.

Now, this proposed legislation was well advanced 2 years ago. I

have an awful lot of respect for the chemical and pesticide manufacturers and their trade association, ably led by Jay Vroom, but

this is not a new question before them. Yet, if they look at this legislation, they will ask for more time to look and to study and to

think, but this situation has been squarely before us for years.

Now, Mr. Chairman, as you say, now is the time is to act. We

can eliminate the barriers, create a free market for pesticides, and

allow the U.S. and Canadian farmers to compete on a more level

playing field. The legislation is reasonable and holds the potential,

I believe, to make a substantial impact on ongoing harmonization

issues between the United States and Canada. It will obviously create free marketplace pressure to bring down prices on the domestic

side.

I do not think that, in the end, if this legislation would pass, you

would have this massive flow of chemicals from the north of the

Canadian line to south of the Canadian line. You would have more

equitable pricing south of the Canadian line in the U.S. market

itself because pesticide companies no longer would be able to hide

behind the border for purposes of surcharging, also known as

gouging, U.S. farmers to the highest dimension the market will

bear in their pricing. It is time we harmonized.

Thank you for listening to me, Mr. Chairman. I will be happy to

answer any questions.

Senator CONRAD. Thank you, Congressman Pomeroy. We appreciate very much your being here today and for your advocacy on

this issue. It is, as you know, critically important to our farmers.

Other than the Farm bill itself and the need for disaster assistance, there are very few things I hear about more often than this,

and you have the same experience.

Mr. POMEROY. Mr. Chairman, I noted Roger Johnson’s role in the

issuance of the Achieve certificate, import certificate, our State registration. What I did not tell you is that thereafter, he, along with

my staff, along with EPA officials under the prior administration,

negotiated for months and came up with the Pesticide Harmonization Act. Roger Johnson, as the State regulatory official, brought

all of that expertise and background to bear and was integrally involved in the development of this legislative proposal and I also

want his involvement in that respect to be noted for the record.

Senator CONRAD. I appreciate that very much.

[The prepared statement of Mr. Pomeroy can be found in the appendix on page 45.]

Senator CONRAD. Senator Baucus has joined us. Senator Baucus

is a very active member of the full Agriculture Committee and has

really taken the lead on disaster assistance this year, which is not

before this committee at this time, but which is a critically important subject. I want to commend him publicly for his determination

to get disaster assistance for our farmers this year. We could tesVerDate 11-MAY-2000 15:05 May 09, 2003 Jkt 086216 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 86216.TXT SAG1 PsN: SAG1
11

tify here at great length of the desperate need for that aid in the

year 2002 and extending back to the disastrous conditions we faced

in 2001.

With that, I would turn to Senator Baucus for any statement

that he might make.

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR

FROM MONTANA

Senator BAUCUS. Thank you very much, Mr. Chairman. Congressman Pomeroy, you and Senator Dorgan and Senator Kent

Conrad have just been aces when it comes to agriculture and defending your people. I admire you all three very much. You are terrific legislators.

I might just say, too, the evidence just keeps piling up on disaster needs. I talked to a guy who called me up, George is his name,

called me up just the night before last and just said, it looked like

maybe the spring crops might be a little bit promising—this was

in July, because we got a little bit of moisture. Then we had, as

you all did in the Dakotas, record-breaking heat temperatures, 109,

112, 111, and he says that his spring crop, his barley crop just all

baked. It is just gone.

We all know that the administration is the stumbling block here.

For example, Congressman Denny Rehberg, our only House member over in the House, has been working very hard to try to get

something passed, too, but it is the administration that just said

no, just no agriculture disaster assistance. It is unfortunate, to say

the least.

Anyway, on this issue, Mr. Chairman, I commend you and Senator Dorgan and others for pushing this. It is just gut-wrenching

to see people living on the land, trying to eke out an existence,

have a tough enough time with the weather and with the vagaries

of markets generally, and then, because they need pesticides, need

product to help get a good crop and get rid of the weeds and the

pests and so on and so forth, are unable to get a decent price for

their products, for their pesticides. That just compounds one problem upon another.

In this latest problem, it is one not caused by nature, it is not

one caused by the vagaries of the international markets, it is

caused basically by an unfortunate action on the part of an industry that wants to segment the markets, the United States and Canada, that is, fellow human beings, either Americans or Canadians.

It is just, as I said, it is gut-wrenching, and I just hope, Mr.

Chairman, that we can pass this legislation very quickly because,

clearly, farmers want a level playing field. American farmers, Montana and North Dakota farmers will compete with Saskatchewan

and Albertan farmers as long as it is fair. It just is not fair when

the pesticide market is not harmonized, it is segmented, and when

people on our side have to pay so much more compared with others.

Both Canadian and American farmers, at least along the border,

we are all in the same boat together. Let us just grow our crops

and be able to market our crops.

It is not directly on subject, Mr. Chairman, but I met today with

Ambassador Johnson, USTR Ambassador, and I urged him very,

very strongly to followup on the 301 action with respect to the CaVerDate 11-MAY-2000 15:05 May 09, 2003 Jkt 086216 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 86216.TXT SAG1 PsN: SAG1
12

nadian Wheat Board as we start commencing some CBD and other

action. We have a 301 action at the WTO so we can start following

up with deeds as well as words and help get some relief there from

the Canadian Wheat Board, and I just urge all of us to followup

in that regard, as well.

To add to the tragedy in my State, so many Montana farmers are

tempted to break the law, and in some cases feel they have to in

order to provide for their family. It is just not right. It just plainly

and simply is not right. It is also extending beyond border States.

This is starting to reach now further south into the United States,

Nebraska and other States. It is just not right.

The Chairman just passed me a headline and the headline is, ‘‘It

is Just Not Right.’’

[Laughter.]

Senator BAUCUS. Great minds think alike on the Northern border. Thank you. Thank you very much, and I will leave it there.

It is just not right, and let us get on with this. Thank you very

much.

Senator CONRAD. Thank you very much, Senator Baucus. Senator Baucus, of course, is Chairman of the Finance Committee that

oversees and has responsibility for all trade laws and the oversight

of all trade administrative decisions, so his opinion carries special

weight in this regard.

Again, Congressman Pomeroy, thank you so much for being here

with us.

Mr. POMEROY. Thank you for holding this hearing. I look forward

to what vehicles there may be to move the legislation this session

yet. Thank you.

Senator CONRAD. I am going to call to the witness table panel

one, Mr. William Hawks, the Under Secretary for Marketing and

Regulatory Affairs, the U.S. Department of Agriculture. Welcome,

Mr. Hawks. Stephen Johnson, the Assistant Administrator, the Office of Prevention, Pesticides, and Toxic Substances of the Environmental Protection Agency. Welcome to Mr. Johnson, as well.

I would ask the two of you to summarize your testimony and the

full testimony will be made a part of the record. We very much appreciate your presence here today. Thank you, Senator Baucus, for

your participation. Thank you very much for being here, Mr.

Hawks and Mr. Johnson. We do appreciate it.

We will go to Mr. Hawks first, and then to Mr. Johnson. Again,

my welcome.

STATEMENT OF WILLIAM HAWKS, UNDER SECRETARY FOR

MARKETING AND REGULATORY PROGRAMS, UNITED STATES

DEPARTMENT OF AGRICULTURE, WASHINGTON, DC

Mr. HAWKS. Thank you, Mr. Chairman. It is certainly a pleasure

to be with you this afternoon. For the record, I will say that I

heard what you said and we will deliver the message back to the

Department of Agriculture. I do not have direct responsibility for

loan rates, but we can certainly deliver that message back there.

As I said, it is a great deal of pleasure with which I come here

today to talk about pesticide harmonization and its potential impact on American farmers. The United States Department of AgriVerDate 11-MAY-2000 15:05 May 09, 2003 Jkt 086216 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 86216.TXT SAG1 PsN: SAG1
13

culture welcomes the opportunity to fulfill its role as the advocate

of the American producer within this administration.

As you know, although the Environmental Protection Agency is

the lead agency for pesticide regulation, the USDA has been concerned with this issue of pesticide harmonization for some time. Although important progress has been made in harmonization of registration for new pesticides, harmonization for older pesticides have

not been matched. USDA supports efforts to facilitate harmonized

pesticide regulations so that our farmers will have equitable and

economical access to safe and effective agricultural chemicals.

The Department of Agriculture is very interested in proposals

that offer to improve the competitiveness of our American growers

in domestic and world markets. While recognizing there are many

factors that can contribute to differential pricing between markets,

some of which are marketing strategies, market size, demand,

structural differences, and regulatory and legal systems that may

have an impact on these issues.

Before serving in this current position as Under Secretary for

Marketing and Regulatory Programs, I grew corn, wheat, and soybeans in Mississippi, and often I said as a farmer in Mississippi

that I can compete with any farmer anywhere in the world, but I

cannot compete with other governments and other regulatory

frameworks in the world, and that is what our government is for.

I want to, in this role, I want to help break down barriers to create

a level playing field for U.S. producers while continuing to protect

public health and the environment.

USDA supports EPA’s efforts to harmonize pesticide registration

as a means to promote the economic well-being of Americans farmers. In 1999, USDA commissioned a study to look at these differences. The study reported that pesticides accounted from ten to

18 percent of the overall cost of production. The report identified

many factors affecting pricing on either side of the border, including difference in the patent protection length, difference in the

market size and cost, difference in pesticide demand, and difference

in the number of substitute products that were available.

The Department has been an active participant in the North

American Free Trade Technical Working Group on Pesticides and

will continue to work with the EPA and the United States Trade

Representative through the Consultative Committee on Agriculture

to resolve trade issues related to pesticide harmonization.

Thank you for the opportunity to address this issue on behalf of

the American producers. We look forward to working with Congress

and stakeholders to achieve pesticide harmonization with Canada

and to eliminate the arbitrary differences that impact prices and

availability.

Senator CONRAD. Thank you, Mr. Hawks. Let me just say publicly that you come here with a very good reputation being an advocate for farmer. I will tell you, you appear before this committee

and you are respected by this committee and we are glad to have

you here.

[The prepared statement of Mr. Hawks can be found in the appendix on page 43.]

Senator CONRAD. Mr. Johnson, please proceed with your testimony.

14

STATEMENT OF STEPHEN L. JOHNSON, ASSISTANT

ADMINISTRATOR, OFFICE OF PREVENTION, PESTICIDES,

AND TOXIC SUBSTANCES, ENVIRONMENTAL PROTECTION

AGENCY, WASHINGTON, DC

Mr. S. JOHNSON. Thank you, Mr. Chairman, and good afternoon.

Thank you for the opportunity to appear before your subcommittee

to discuss the concerns of American farmers with regard to pesticide pricing between the U.S. and Canada.

Today, I would like to provide you with information on the longterm approach EPA is taking to address this issue, as well as discuss the current legislation which attempts to remedy these pricing

discrepancies in the near term. I will also touch on some of the harmonization activities that my program has been involved in since

I testified to Congress on this important matter last summer.

As you know, EPA’s legal authority over pesticides is to ensure

the protection of public health and the environment. Our authority

does not extend to pricing. Current U.S. pesticide laws require extensive scientific evaluation and a pesticide registration before it

can be sold and distributed in the United States. Further, EPA is

not aware of any evidence that indicates that national pesticide

regulatory requirements contribute significantly to existing price

differences. Many factors contribute to pricing, such as marketing,

availability, and demand. As all parties have acknowledge, this is

a highly complex issue.

That said, I know that EPA has worked very closely with Congressional staff, State officials, and pesticide companies over the

last few years to explore remedies that would help address price

differences that U.S. farmers are experiencing. EPA continues to

make progress on a variety of administrative and regulatory approaches that help facilitate equal access and harmonization.

Let me describe some of the longer-term, more strategic actions

that EPA has taken and partnerships that EPA has established to

address this important issue. EPA continues to work closely with

Canada and our other trading partners to break down barriers and

facilitate trading competitiveness. Together, we are developing

more consistent regulatory and scientific requirements, registering

needed products, and supporting the principles of sustainable pest

management.

EPA’s work on pesticide harmonization with Canada is increasingly providing benefits to the American farmer. In the long term,

the creation and ongoing support of a North American harmonized

market for pesticides will ensure a level playing field.

EPA continues to make considerable efforts to receive input on

harmonization approaches with representatives from industry and

grower groups. This includes supporting and actively participating

in the important work of the North American Free Trade Agreement, NAFTA, Technical Working Group on Pesticides.

We have recently published the NAFTA Technical Working

Group report, called the Milestone Report, and Mr. Chairman, I

have copies for you and members of the committee. This report

highlights the numerous accomplishments of the NAFTA Pesticide

Group over the last several years and it provides a valuable perspective for setting an agenda for future harmonization work. Efforts like these are helping to break down the political and reguVerDate 11-MAY-2000 15:05 May 09, 2003 Jkt 086216 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 86216.TXT SAG1 PsN: SAG1
15

latory barriers with respect to the delivery and use of pest management tools on both sides of the border.

An important part of this work continues to be the development

of a NAFTA label, which will enable the sale and distribution of

a pesticide across North America, thereby guaranteeing its availability at the same time in the U.S. and Canada. We continue to

make great strides in putting this into practice, building on existing joint registration reviews. To date, our joint registration review

program has resulted in the registration of 12 new pesticide products in the U.S. and Canada, with 11 additional products currently

under review. We continue to believe that expansion of products

under NAFTA labels will help break down potential trade barriers.

EPA stands ready to work with Congress and others on possible

legislative solutions that effectively address observed differences in

pesticide pricing, as long as the protection of public health and the

environment are not compromised. EPA believes that S. 532 is intended to create a structure which ensures that appropriate safeguards remain in place to enable EPA to achieve its primary mission, the protection of public health and the environment.

However, I should mention that there remain some broad policy

concerns with this legislation that we believe need to be further addressed and the consequences fully considered. For example, a legislative approach like this with a focus on one country alone may

have international trade implications.

Another potential concern is that of implementation. For example, there are some important questions regarding a State’s ability

to maintain confidential business information and other trade secrets.

In conclusion, EPA has worked very closely with Congressional

staff over the last few years, as well as State officials here today,

to alleviate the concerns U.S. farmers have regarding differences in

pesticide pricing. EPA continues to seek and create effective mechanisms that will ensure the safety of our health and environment

while also ensuring an equal playing field for our farmers.

In the long term, EPA continues to work to harmonize the availability of pesticide products between the U.S. and Canada through

NAFTA. In the near term, with no adequate administrative or regulatory option available to fully address the potential pricing disparity between the U.S. and Canada, EPA supports seeking an appropriate legislative solution. The legislation as drafted does not

compromise protection of human health and the environment. That

is EPA’s principal criterion.

However, as I have mentioned, there are some implementation

issues that should be addressed. Certainly, we commit to working

with Congress, with States, with growers, with other Federal agencies and industry to resolve these concerns.

Again, I look forward to working with you, Mr. Chairman, and

other Members of Congress and other affected stakeholders on this

important issue and I would certainly be happy to answer any

questions you may have.

Senator CONRAD. Very good. Thank you very much for your testimony. Again, thank you for being here.

[The prepared statement of Mr. S. Johnson can be found in the

appendix on page 50.]

16

Senator CONRAD. Mr. Hawks, we are going to ask each of the

witnesses here today, because there is strong interest on the committee and strong interest in the general body to move legislation

this year, in that regard, the committee needs to know, do you or

does the agency support enactment of S. 532 as proposed or with

amendments?

Mr. HAWKS. I would have to say that we have not taken a position on this specific piece of legislation, so I would have to say that

we are not in support of it, but we are not in opposition. We have

not taken a position on this specific piece of legislation. Having

said that, it is certainly my hope and my desire that we can address these concerns so that our farmers can have the same advantage or the same opportunity as farmers across the border.

Senator CONRAD. The committee would like to ask you, Mr.

Hawks, to go back to USDA and ask them what amendments

might be necessary to secure the Department’s support for the bill.

Mr. HAWKS. I would be happy to do that.

Senator CONRAD. If you could go back and just ask, are there

amendments that could be crafted here that would preserve the intent of this bill but allow the Department to support it, that would

be useful to the committee.

Mr. Johnson, I would ask you the same question. Is EPA in a position to support this bill as proposed or with amendments?

Mr. S. JOHNSON. We certainly support, Mr. Chairman, the intent

of the bill. There are, and as far as the EPA’s role of protecting

public health and the environment, we have no issue with the proposed legislation. As I mentioned, there are some implementation

issues.

One, for example, confidentiality, that inherent in the ability of

the bill to work or to operate, a State has to be able to handle confidential information. Certainly in the case of North Dakota, that

is the case. There is the case with the State of Washington and the

State of Vermont that have disclosure laws which would appear to

be in conflict with the needed confidentiality in this. That kind of

implementation issue needs to be worked out, and if those were

worked out, then certainly the agency would be fully supportive of

the legislation.

Senator CONRAD. That is very important to know.

Let me indicate that you have stated in your prepared remarks

that you have had some concerns about the ability of States to protect confidential business information, and as I understand it, your

concern lies with the specific statutes in a number of States, that

is, the States that you named—Washington, and I cannot recall the

other State—— Mr. S. JOHNSON. Vermont, yes.

Senator CONRAD. Washington and Vermont apparently have statutes that require disclosure?

Mr. S. JOHNSON. Yes.

Senator CONRAD. What would the disclosure requirements of

those States be?

Mr. S. JOHNSON. I am not specifically familiar with, or familiar

with the specifics of it. What I do understand is that whatever information with regard to chemicals, chemistry that some might interpret as having an effect on health of the environment, that that

17

information has to be disclosed and be made publicly available. Of

course, the information that is necessary to say that a chemical is

identical or substantially similar would require, if you will, the

ability to look at the confidential statements of formula and be able

to protect that confidentiality.

Senator CONRAD. Let me ask you this. Do most States not already exercise authority in emergency situations to register certain

pesticides?

Mr. S. JOHNSON.Under the Section 18 programs, States and Federal agencies have the authority to ask the agency for a Section 18.

The agency is responsible for granting or denying the emergency

exemption, and so we are the ones who are the overseers and controllers of confidential information, for example.

Senator CONRAD. Has that authority, to your knowledge, ever led

to the wrongful release of industry data?

Mr. S. JOHNSON. No.

Senator CONRAD. That is a model for how we might address this

concern?

Mr. S. JOHNSON. That would be one approach, yes, sir.

Senator CONRAD. All right. Well, that is important.

Let me ask Mr. Hawks, before we go to the next panel, is there

anything you would want to add, sir, to the deliberations of the

committee on this legislation?

Mr. HAWKS. No, sir. I would just like to say that I am looking

forward to working with the committee, with EPA, to alleviate this

discrepancy in pricing that is certainly—we are looking forward

and I have been working with—every speaker here has referenced

Roger Johnson, and I would certainly add to that. I certainly enjoyed the opportunity to work with him within the NASDA association and am looking forward to continue to work with you all.

Senator CONRAD. We appreciate it very much. As I say, Mr.

Hawks, you come here with a very good reputation as being a sincere advocate for farmers and we appreciate that, and we appreciate very much the two of you coming here this afternoon. Thank

you very much.

Mr. HAWKS. Thank you.

Mr. S. JOHNSON. Thank you.

Senator CONRAD. We will now go to our second panel, led by

Lieutenant Governor Dalrymple of North Dakota; Agriculture Commissioner Roger Johnson; Mr. Barry Bushue, the President of the

Oregon Farm Bureau; Mr. David Frederickson, representing the

National Farmers Union; and Mr. Jay Vroom, the President of

CropLife America.

Thank you all for being here. Lieutenant Governor Dalrymple,

why do you not proceed with your testimony. It would be the intention of the committee to hear from all of the witnesses and then

open it up to questions, unless we do not follow that procedure.

[Laughter.]

Senator CONRAD. Lieutenant Governor Dalrymple, welcome.

STATEMENT OF JACK DALRYMPLE, LIEUTENANT GOVERNOR,

STATE OF NORTH DAKOTA, BISMARCK, NORTH DAKOTA

Mr. DALRYMPLE. Chairman Conrad, thank you for the opportunity to provide a statement in support of S. 532, the Pesticide

18

Harmonization Act. I must say, as one interested in North Dakota

agriculture, I am thoroughly enjoying this hearing and the broad

range of topics that you are touching on here.

My name is Jack Dalrymple. I serve as Lieutenant Governor of

the great State of North Dakota and I am here today in that capacity, as well as in my role as Chairman of the State’s Crop Protection Product Harmonization and Registration Board. I also farm

near Casselton, North Dakota, where my family raises wheat, soybeans, and barley.

The North Dakota Crop Protection Product Harmonization and

Registration Board was created by the State legislature specifically

to address and resolve pesticide availability and pricing fairness

issues for the State’s farmers. The bipartisan board consists of

elected State officials and farmers who have a common mission of

working with regulators and pesticide manufacturers to make effective products available at fair prices.

It seeks to promote the registration of new, safe crop protection

products for farmers to use on the more than 70 crops that are

raised in North Dakota. The board is conducting an ongoing survey

of farmers and pesticide retailers in an effort to establish possible

additional applications for the products that are already available.

Primarily, the board is focused on efforts to harmonize the availability and pricing of herbicides, fungicides, and insecticides to

match those of our world competitors, most notably in Canada, our

immediate neighbor to the north.

The facts of North Dakota’s agricultural economy and the variety

of crops produced in the State will probably be addressed directly

by Commissioner Roger Johnson. In summary, low-price commodities, higher input costs, and adverse long-term weather conditions

leading to increased disease, weed, and insect pressure have challenged North Dakota farmers. These factors contribute to a poor

profit outlook for producers. Costs are at a level where farmers

simply cannot make a profit.

Because of increased pest problems, coupled with high pesticide

costs, the North Dakota Crop Protection Product Harmonization

and Registration Board supports this and other legislation that can

help make more crop protection products available to farmers at

costs that are comparable to those paid by their world competitors.

It is simply unfair that farmers, especially in a border State like

North Dakota, are placed at a competitive disadvantage to other

countries’ farmers, both in terms of availability and price of pesticide products.

Pesticide companies are able to charge higher prices in the

United States because farmers are prohibited from purchasing the

same products in Canada and importing those products to the

United States. This bill seeks to provide the equivalent of joint labeling to effectively accomplish harmonization of pesticide products

and their prices.

By the way, Mr. Chairman, Canada has adopted laws that allow

farmers to import their own pesticides. Why would the USA not

have a similar provision?

The Environmental Protection Agency here in the United States

and its counterpart in Canada, the Pesticide Management Regulatory Agency, PMRA, have tried to address the issue of product

19

availability in their respective countries. While the EPA and

PMRA’s progress regarding harmonization of new product registrations encourages us, the heart of the issue lies with existing product availability and pricing. While the pesticide companies often

blame the regulatory agencies, it is often the manufacturers themselves who make registration timing decisions. The decision is impacted by expected return on investment and anticipated competition.

This bill will effectively give the States the ability to co-label

those products for the company, under the strict supervision of the

EPA, if they are found to be essentially the same product. This

simple mechanism will bring those products to market more quickly, to the benefit of the farmers and the manufacturers.

North Dakota’s legislature has worked to expedite the chemical

harmonization process, including providing the Agriculture Commissioner with the authority to seek special emergency exemptions

on products registered in both countries. The legislature has also

shown how serious they feel this problem is by creating this special

harmonization board and appropriating State funds for this purpose.

American and Canadian growers produce virtually identical

crops and are forced to compete with one another in the global

market. Therefore, it is imperative that product availability and

price stand on equal footing across borders. After all, Canadian

wheat is allowed to move freely into the United States without any

inspection to determine if it has been produced with chemicals that

are banned in the USA.

S. 532 will be an important step in eliminating the crop protection product trade disparities between our two countries. Free

trade policies must be applied consistently. The legislation will

prove to be a tremendous asset in the effort to standardize the

prices paid for substantially identical pesticides on either side of

our shared border.

On behalf of the State of North Dakota and its Crop Protection

Product Harmonization and Registration Board, I respectfully request your positive consideration of S. 532. It will provide the

mechanism to level a competitive cost disadvantage facing American farmers. Thank you much for your attention.

Senator CONRAD. Thank you, Lieutenant Governor Dalrymple.

Thank you very much for being here. Thank you for that excellent

testimony.

[The prepared statement of Mr. Dalrymple can be found in the

appendix on page 57.]

Senator CONRAD. We will now hear from our Commissioner of

Agriculture in North Dakota, Commissioner Johnson, who as many

have said here today has made such a positive contribution here.

I do not know of anybody who has more credibility on this question

than Commissioner Johnson, right across the board, and I say that

on behalf of members of this committee who have, on numerous occasions, recognized the important leadership that Commissioner

Johnson has given, not only on this issue, but if I could take this

opportunity to thank you for your leadership on the Farm bill. The

members of this committee on many occasions said to me, thank

you for the job Commissioner Johnson did in bringing together agVerDate 11-MAY-2000 15:05 May 09, 2003 Jkt 086216 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 86216.TXT SAG1 PsN: SAG1
20

riculture commissioners around a set of proposals. That made a

meaningful difference here as we deliberated the Farm bill and I

want to thank you for it.

Commissioner Johnson.

STATEMENT OF ROGER JOHNSON, COMMISSIONER OF

AGRICULTURE, STATE OF NORTH DAKOTA, BISMARCK,

NORTH DAKOTA

Mr. R. JOHNSON. Thank you, Senator and Mr. Chairman. I, too,

wish to thank you for the leadership you have taken. In particular,

I want to thank you for holding this hearing and in being one of

the cosponsors of this important piece of legislation.

My testimony is very long, so I am just going to skip around and

hit a few very quick high points and try to avoid repeating what

has already been said.

It is important for all of us to understand when we talk about

pesticide harmonization that there are two fundamental things

that come to play. One is access to product, in other words, is the

same product available on both sides of the border, or another example of that is are new chemistries allowed to move into the countries simultaneously? That is the access issue. This bill does not

deal with that.

That is the harmonization question that a lot of us also want to

work on, but this bill deals with the second part. That is pricing.

It is where you have identical products or nearly identical products

registered in both countries but priced differently because the law

prevents producers or dealers, the network, from moving across the

border and accessing those different price levels. This bill deals

with pricing.

A number of studies have been done to describe the nature of the

disadvantage that we are faced with. The first attachment to my

testimony is a study that was done at NDSU, concluding that

about $24 million of extra costs are charged to North Dakota farmers alone by the use of this practice. If they had access to the Canadian prices, they would save $24 million.

On page two of my testimony, I provide a table that we developed internally in the Department that comes very close to that

number. It shows about $23.7 million and it lists pesticide by pesticide the price differences. You have already heard testimony

about some of them.

On the next page of my testimony, I provide the equivalent information, but a year earlier, to demonstrate that this has been an

ongoing practice. The difference there was just over $32 million to

our disadvantage.

In many cases—in fact, the NDSU study said that in many cases,

10 percent of the net farm income of a farmer is comprised of pesticide costs and this issue is huge for many of the farmers that

have substantial pesticide expenses. It is safe to say that for many

of the products, a 40 or 50 percent increase in pesticide prices is

what they pay as compared to the Canadian version of the identical

product. For many of these producers, we are talking about bills

that could range from $10,000 to $20,000 annually in differences

that would be saved if this bill were adopted.

21

There needs to be attention given to this. Specifically, that study

also points out the impact to just hard red spring wheat producers

in North Dakota. Their disadvantage that they face in the marketplace is almost $12 million alone, just for hard red spring wheat

producers.

On page four, I want to read a paragraph of my testimony because it is normally not our practice to talk about ongoing investigations, and what I am talking about, in fact, is one that is under

investigation. Recent events in North Dakota illustrate the temptation these price differentials create for U.S. farmers struggling to

remain economically viable. On June 15 of this year, we were notified by representatives of Bayer Cropsciences that several North

Dakota farmers were attempting to import and use Canadian Liberty, one of their products, a broad-spectrum herbicide. Six farmers

were erroneously allowed to import the product by EPA Region 8

and U.S. Customs. They declared it at Customs and were allowed

to bring it in.

Our staff, working in consultation with EPA, stopped the importation because the information on the forms was incorrect and the

product, in fact, was not registered by EPA. As such, it is illegal

to bring the product across the border. We have tested this theory

on numerous occasions, most recently 2 years ago with the importation of Achieve. In fact, we had a judge tell us you cannot do

that.

Our investigations determined that nine farmers attempted or

succeeded to import approximately 8,000 gallons of Canadian Liberty. The price difference between the two products is $9.55 an

acre. If you are spraying this product on just 1,000 acres of canola,

it is about a $10,000 savings. That is what drove these farmers to

try to bring it in, and they thought what they were doing was legal.

This issue needs to be addressed. As the Lieutenant Governor indicated, the legislature has weighed in on this issue. All of the ag

commissioners have weighed in on this issue. All of the border

State ag commissioners have weighed in on this issue. Even the ag

ministers from Canada support this legislation, if you can believe

that. In the last three international accord meetings that we have

conducted, they have agreed with us on that issue.

As has already been said, this bill does not compromise the environment or food safety, public health, in any fashion. That is principally EPA’s concern and this bill is crafted to address those concerns and they have been addressed.

Finally, I want to make a point about who ought to be importing

if this bill passes, because there are a lot of misconceptions about

this. The way the bill is crafted, it is likely that the folks who

would import pesticides using this authority would, in fact, be the

distributors in the dealer network. It would not be individual producers, and that is as it ought to be. Producers should not be required to drive to Canada to buy chemicals to treat their products

any more than—well, I do not want to get into the drug issue, but

it seems very similar. The bill has been crafted to safeguard the

environment and to allow for the distribution channels to access

the lower price at the distribution level and that is the way it

would, in fact, play out.

22

Mr. Chairman, when you get to the question and answer session,

I am particularly interested in responding to the three questions

that Senator Roberts raised, as well. Thank you.

Senator CONRAD. We welcome that.

[The prepared statement of Mr. R. Johnson can be found in the

appendix on page 60.]

Senator CONRAD. Let me just say, when we get to the question

period, I have often found it more useful to have those who are

part of a panel be able to respond to other members on the panel.

We are not going to engage in some rigid hierarchy here. I have

often found the most useful exchanges come when the most knowledgeable people are able to discuss among themselves evaluations

of the positions that are being taken. Do not feel that you are restricted to answering my questions. If there is something somebody

else says you want to comment on or you want to discuss, feel free

to ask to be recognized for that purpose.

Mr. Bushue, welcome very much. It is good to have you here. I

noticed that you are from the town of Boring, Oregon. I do not

know how a town came to be named Boring, but——

Mr. BUSHUE. It is.

[Laughter.]

Senator CONRAD. Well, maybe that explains it. Welcome. It is

good to have you here, and please proceed.

STATEMENT OF BARRY BUSHUE, PRESIDENT, OREGON FARM

BUREAU FEDERATION, BORING, OREGON, ON BEHALF OF

THE AMERICAN FARM BUREAU FEDERATION

Mr. BUSHUE. Thank you. As a word of explanation, it is named

after the name of the century farm who donated the original land

for the original school in what was a rural community and has now

become a very small rural town.

Senator CONRAD. It is a family name.

Mr. BUSHUE. Yes. Still, the Boring Farm still exists.

Good afternoon, Chairman, and unfortunately, not any other

committee members. I am Barry Bushue, a farmer from Boring,

Oregon, where I operate a family nursery stock and berry operation. I am also the President of the Oregon Farm Bureau Federation and a member of the Board of Directors of the American Farm

Bureau Federation. I am testifying today on behalf of the American

Farm Bureau Federation.

Farm Bureau is the nation’s largest farmer and rancher organization, with over 5.1 million member families in all 50 States and

Puerto Rico. As you know, Mr. Chairman, farmers and ranchers in

all 50 States have been facing some rather hard times these past

few years. These difficult times have forced us, those of us in production agriculture, to take a closer look at our bottom line and attempt to do whatever we can to reduce any unneeded costs and

hopefully realize a profit, or if we are lucky, maybe even break

even.

This has been hard to achieve in recent years. This examination

has exposed a number of increasing costs that farmers are now

voicing concern about and attempting to mitigate. Such expenditures include ever-increasing environmental regulation costs, labor

23

costs, energy costs, and agricultural chemical costs, which is what

we want to focus on today.

Let me begin by saying that American Farm Bureau strongly

supports S. 532, the Pesticide Harmonization Act sponsored by

Senator Dorgan. This legislation will allow farmers, cooperatives,

and farm supply stores access to lower-priced Canadian agricultural chemicals that are identical or substantially similar to those

sold in the United States.

The high cost of some pesticides in the U.S. is contributing to the

current farm crisis by inflating agricultural producer input costs.

Producers in other nations, such as Canada, use pesticides substantially similar in content to those used in the United States, but the

foreign products are often less expensive. Under current law, U.S.

producers cannot import these pesticides from other nations.

We farm in a global market. Our competitors are not just down

the road, but around the world. To remain competitive and hopefully profitable, we must constantly search for ways to reduce our

production costs. From the producers’ point of view, there is a price

disparity amongst some agricultural chemicals in the U.S. and

Canada that impedes our competitiveness and profitability. We believe that this legislation will work to remove that disparity.

Under the Pesticide Harmonization Act, States could petition the

Environmental Protection Agency to issue pesticide labels that

could be placed on Canadian products when the only significant difference between the two is the price. The U.S. product label would

allow our farmers to buy the Canadian pesticide for use on their

farms in the United States.

Farm Bureau believes this legislation is a significant step toward

achieving the goals of gaining access to affordable and needed products for U.S. farmers while at the same time maintaining U.S.

standards designed to protect consumers, farmers, and the environment. Farmers in this country need a level playing field to compete

with foreign growers, and having equal access to less expensive

crop protection materials will improve the competitive position of

United States producers.

Studies have been conducted on cost differences by USDA and

others, and the results demonstrate that similar compounds used

on both sides of the border can be priced differently. Sometimes,

these price differences are significant. Senator Dorgan has stated

that recent surveys have found that U.S. farmers can pay as much

as 117 to 193 percent more than farmers in Canada for virtually

the same product.

A USDA study puts this in perspective by stating that although

pesticide expenditures are not high for the study crops in the Canadian-U.S. prairie area compared with some crops in areas, they are

relatively high compared with per-acre profits. A few dollars of

extra cost can make a significant difference between a profitable

and an unprofitable year.

The American Farm Bureau and the Canadian wheat pools have

sponsored producer meetings for the last 3 years. This effort has

resulted in forming the Canada-U.S. Producer Consultative Committee on Grain. These exchanges have resulted in the identification of issues that are important to grain producers in Canada and

the United States. We reached consensus that harmonization of

24

pesticide registration and labeling was desirable. If we can solve

this trade or border irritant, perhaps we can solve some other

issues.

I applaud EPA’s efforts to work with our international trading

partners to promote consistency in the various regulatory and scientific requirements regarding pesticides, such as the work being

conducted with the Technical Working Group for Pesticides under

NAFTA. However, while the administration’s actions are helpful,

they have not resolved the issue.

Farm Bureau does understand that because pesticides must be

registered in the U.S. before they can be sold and distributed, there

are certain limits on EPA’s involvement. EPA must continue to

work within current authorities to find solutions.

We were pleased to hear the statement of EPA Assistant Administrator Steve Johnson during his confirmation hearing regarding

the need for legislation to address this problem, and I quote, ‘‘I believe that legislation is needed because there does not appear to be

adequate administrative or regulatory solutions.’’

Thank you, Mr. Chairman, for the opportunity to comment, and

I will be happy to address any questions you may have for me and

the rest of the panelists, if any.

Senator CONRAD. Thank you for that.

[The prepared statement of Mr. Bushue can be found in the appendix on page 97.]

Senator CONRAD. I would ask those who are in the audience, if

you have pagers or cell phones, that those be disconnected during

the pendency of the hearing. That is a Senate rule and all chairmen are encouraged, indeed, required to enforce that rule.

Mr. Frederickson, welcome.

STATEMENT OF DAVID J. FREDERICKSON, NATIONAL

FARMERS UNION, WASHINGTON, DC

Mr. FREDERICKSON. Thank you, Mr. Chairman. I am Dave

Frederickson, President of the National Farmers Union. However,

for the purposes of you and this committee, I am also an FORJ,

Friend of Roger Johnson.

[Laughter.]

Mr. FREDERICKSON. On behalf of our members, members of the

National Farmers Union, farmers and ranchers across this country,

it is an honor to appear before you today to discuss S. 532, the Pesticide Harmonization bill, and the effect of our current pesticide

regulation that allows differential pricing between the U.S. and Canadian agricultural markets.

Mr. Chairman, before I summarize our written testimony, I

would request that, on behalf of the North Dakota Farmers Union,

that their statement, which I believe you have and a letter addressed to you from North Dakota Farmers Union, signed by their

President, Robert Carlson, be included as part of the hearing

record.

Senator CONRAD. Without objection, that will be the order.

Mr. FREDERICKSON. Thank you.

[The prepared statement of Mr. Carlson can be found in the appendix on page 101.]

25

Mr. FREDERICKSON. Also, Senator Conrad, we commend you for

convening the hearing and for joining with your colleagues, Senators Burns and Baucus, Daschle, Dorgan, and Johnson, in sponsoring S. 532.

The key element that has disadvantaged U.S. producers relative

to our Canadian neighbors is the impact of U.S. regulations that

effectively curtails competition in the retail pesticide markets between the U.S. and Canada. Our trade agreements and domestic

regulations have resulted in a hypocrisy that reduces the competitiveness and potential profitability of U.S. producers. The hypocrisy, Senator, is this. The U.S. allows the importation of food products from other countries that are produced with pesticides that

are not registered in the U.S. at the same time our farmers are

prohibited from purchasing crop protection products in Canada

that are substantially similar or identical to products that are registered for use in this country.

The economic impact of these regulations on American producers

can and is significant. Last year, National Farmers Union developed a comparison of the per acre costs for a variety of registered

pesticides for the wheat and barley crops typically produced in both

the U.S. and Canada. For a typical 1,500-acre wheat farm located

near the border, the price differentials between the U.S. and Canadian pesticide markets resulted in a farm chemical bill that is

about $13,400 per year greater for the U.S. producers than his or

her Canadian counterpart for the same products.

That is substantial and that is significant, particularly in the

down market that we are experiencing. This represents 12 to 15

percent of the typical farm’s total gross crop income, assuming average yields and current market prices, and conveys a significant

competitive advantage to our Canadian competitors in both U.S.

and global markets.

We believe the purpose of FIFRA is to utilize the best available

science in ensuring the safety of consumer food products treated

with pesticides, as well as ensure their safe and effective use by

producers and farm workers. We do not believe it was the intent

of Congress to provide a shield for the manufacturers and marketers of crop protection products to allow and encourage price

gouging of their farmer customers. Unfortunately, that is the experience we confront under current U.S. regulations.

The National Farmers Union is certainly not seeking to reduce

the level of regulation or oversight provided by EPA to ensure the

safety of agricultural pesticides. In fact, we support a more globally

harmonized system of safety regulations based on scientific principles and risk assessment for those products that reflects the U.S.

system. This legislation does not weaken that objective or its enforcement. It simply provides U.S. producers access to a more competitive pricing system through a State registration system of Canadian products that are the same or comparable to those that

have already been approved for use in the U.S.

We support this legislation because it helps achieve fair market

conditions and increased competition between the U.S. and Canada

by reducing the potential for differential pricing by pesticide manufacturers.

26

Mr. Chairman, I appreciate the opportunity to appear before

your subcommittee today and offer the support of the National

Farmers Union for the Pesticide Harmonization legislation you and

many of your colleagues have introduced. We certainly look forward

to working with you to achieve passage of this important bill, and

I particularly appreciate the opportunity to sit shoulder-to-shoulder

with my colleagues from the American Farm Bureau Federation in

support of this issue. Thank you very much.

Senator CONRAD. Thank you. I appreciate that testimony very

much and I appreciate your willingness to participate in the hearing today.

[The prepared statement of Mr. Frederickson can be found in the

appendix on page 102.]

Senator CONRAD. Let me indicate for the record, if I can, the

number of cosponsors now, because it has grown. Senator Dorgan

is, of course, the lead sponsor. The lead cosponsor is Senator Burns

of Montana, joined by Senators Baucus, Cleland, Clinton, Conrad,

Crapo, Daschle, Dayton, Johnson, and Levin. I would say that support for this bill is growing, and I have talked to a number of other

Senators today who have signaled to me an interest in joining in

this legislation as soon as their aides have had a chance to study

it so that they understand its full implications.

Mr. Vroom, welcome. It is good to have you here. Thank you very

much, and please proceed with your testimony.

STATEMENT OF JAY VROOM, PRESIDENT, CROPLIFE

AMERICA, WASHINGTON, DC

Mr. VROOM. Thank you, Mr. Chairman. It is a pleasure to be

here. I also want to thank you for holding this hearing and allowing me to represent my industry as part of this esteemed panel of

witnesses.

I am Jay Vroom, President of CropLife America Association, formerly, the American Crop Protection Association. Our association

represents about 80 companies that are engaged in most of the pesticide manufacturing, formulation, discovery, distribution, as well

as the leading companies in crop biotechnology in the United

States and, around the world. Our business is, a global business

and it is a shrinking business, shrinking in part because of the fact

that our farm markets and the agriculture economies of agriculture

here and around the world have been put on a diet, as we all know.

Just as an aside, I would like to mention that I am an Illinois

farm boy, and I still own my family farm. I inherited that ground

from my parents, who are deceased and my cousin still operates

that farm. My wife grew up on a family farm about 40 miles away

in a different county in Illinois. My brothers-in-law farm that

ground and we own part of that operation. I get to pay for pesticides, fertilizers, other inputs and the Federal Land Bank mortgage note every year. I am personally acquainted with the challenges that are involved with the economies of farming today and

I do not dismiss in any way, either as the executive officially representing my industry association here today or from my personal

experience, any of what these witnesses have said already about

the challenges of the farm economy today.

27

I would also like to observe that the American farmer is the best

customer that my industry has in the world. With all due respect

to some of the comments that were made, perhaps ad lib, earlier

in the hearing by Senator Dorgan and Congressman Pomeroy, I

have been in this job for 14 years. I have been all over the world,

including across the United States and Canada with representatives of my industry and I have never in 14 years witnessed anyone

practicing marketing procedures or regulatory processes that are

intended to gouge the American farmer.

We just finished a meeting of my board of directors and Roger

was kind enough to have breakfast with us this morning and enter

an open dialog with the leaders of my industry about this issue.

There may be a problem with regard to the differentials that do

exist. I would point out that there are a lot of products that are

also cheaper in the United States than they are in Canada or in

other markets.

Because of the visibility that this issue has and the examples

that have been cited, including those that have been studied in

North Dakota and the USDA survey and others, we believe that it

is inevitable that legislation will move and we would like to be a

part of that process. We have some constructive ideas to suggest

which we discussed with Commissioner Johnson this morning at

our meeting. We are prepared to offer some of those ideas to your

staff and with Senator Dorgan’s staff and others and hope to be

part of the process of finding something that we can live with as

we go forward.

It is truly unfair and unfortunate that the American farmer has

this disparity of having Canadian grain, flooding into the United

States when inputs, pesticides in particular, are not regulated,

equally.

As an industry, we are regulated in two separate marketplaces

by two sovereign governments and that is an absolute fact. We

agree that there has been substantial progress in the NAFTA harmonization process. Steve Johnson’s testimony from EPA did speak

to the fact that industry and the governments in the United States

and Canada have made significant progress in harmonizing the

testing protocols and some of the other processes.

What has come up short in terms of harmonization is implementing the harmonization process, actually getting simultaneous reviews and mutual acceptance of reviews between the two governments in the United States and Canada. It has not progressed as

quietly as should have. One of the things we would like you to consider and Senator Dorgan to consider would be more hard deadlines and requirements for PMRA and EPA to that industry implement some of these harmonization steps so and the American farmers can enjoy the benefits long-term.

Short-term, you are planning to take some legislative steps to relieve the pricing differential perception that exists, and we believe

that is a reality. Keeping EPA more closely in charge of that shortterm regulatory process than S. 532 would provide is appropriate.

We hope you will consider some suggestions specific to Section 24

of FIFRA, to expand, the special local need supplemental label provisions that are already there, precedent already established. It

would be fairly easy to expand the definition of a special local need

28

to include these trade irritant issues around pesticide pricing

through petitions by State governments to EPA, and to mandate

quick action.

We thank you once again for the opportunity to be here and to

acknowledge that this is a real problem, both in perception and reality. We stand ready to work with you to find a solution that we

can live with as an industry that will continue to provide incentives

for long-term harmonization that we think is so vital. It is a huge

frustration for us right now. Once we get past this issue, hopefully

it will look only like a speed bump. We want to be a part of the

long-term solution and continue to bring new, innovative products

in both pesticides and biotechnology to American farmers to help

keep them the most important producers and viable producers in

the world. Thank you very much.

Senator CONRAD. Thank you, Mr. Vroom. Thank you for your

very constructive testimony. I want to make clear that all of us

view your industry as a responsible industry and one that has

served American farmers well and served really world agriculture

well. We know it is a very difficult time for the industry because

of the economics of agriculture. It is a difficult time because of a

number of these irritants to the relationship between all those who

are players in the market, and we want to acknowledge that. We

look forward very much to working with you to try and resolve

these places where there are differences so that we can have even

broader support for the bill. I thank you for that testimony.

[The prepared statement of Mr. Vroom can be found in the appendix on page 106.]

Senator CONRAD. Let me just go through the witnesses and ask

the question that I have asked the other witnesses, and that is do

you support the enactment of S. 532 as proposed or with amendments, and if amendments are required for your support, what

would those amendments entail? I would start with you, Lieutenant Governor Dalrymple.

Mr. DALRYMPLE. Chairman Conrad, the North Dakota Harmonization Board would support S. 532 exactly as it is. We have reviewed the legislation. We feel that it is sound, it is a result of a

lot of background work that has already been done.

The only thing I would add to that is that we, like everyone at

this table, would like to see a good law that will work well when

implemented. The implementation will be challenging, and any

ideas that come forward that would make the law work better, we

would certainly support.

Senator CONRAD. Can you tell us if the National Governors Association or Lieutenant Governors Association have endorsed this bill

or if there are any plans to get their endorsement?

Mr. DALRYMPLE. Chairman Conrad, there has not been an official

endorsement of it that I know of. As you know, this is sort of a—

it is quite a formal process of submitting the resolution well in advance, building support, and gaining the support and that type of

thing. If that is something that you think would be helpful, we

would be happy to expend more energy and spend time in getting

that done.

Senator CONRAD. I do think it would be useful. I can tell you that

I do not have the concern so much for the committee. I do have a

29

greater concern when we get to the floor. Any additional endorsements that would come from the Governors, Lieutenant Governors,

would be very useful.

Commissioner Johnson, the same question I would pose to you.

Do you support the enactment of S. 532 as proposed or would it require amendments for you to support it, and if so, what would

those amendments be?

Mr. R. JOHNSON. Mr. Chairman, I support it just the way it is.

I agree with what the Lieutenant Governor said. If folks want to

offer amendments, I certainly think we would look at them. There

was a lot of work that went into crafting this language.

I do want to make it clear that we worked very closely with EPA

to make sure that they would not be saying, we cannot support this

bill, and that is sort of a litmus test that needs to be met, because

if the administration support drops off or if, in fact, it turns to opposition, it seems to me that would be a real problem. I certainly

support it as it is drafted.

Senator CONRAD. You did make in your testimony, and I want

to acknowledge for the record, a number of recommendations on

technical changes to the bill. We have asked the staff to explore

those proposals—— Mr. R. JOHNSON. Yes.

Senator CONRAD [continuing]. Make a judgment on each of those.

In looking at them, they look to me to be reasonable and common

sense—— Mr. R. JOHNSON. Yes.

Senator CONRAD [continuing]. Implementation issues to make it

a bill that is more easily administered, if you will, and we are taking a close look at those proposals.

Mr. R. JOHNSON. I would call them just technical corrections, just

to clarify intent and so forth.

Senator CONRAD. I appreciate that.

Mr. Bushue, if I can ask you, do you support this bill as proposed

or would it require amendments to garner your support, or are

there amendments that you would urge us to consider?

Mr. BUSHUE. Certainly, American Farm Bureau Federation supports the bill as proposed and we will continue to do so. However,

we would be remiss in at not least looking at an opportunity to look

at other amendments which may make the bill more workable and

perhaps more passable and help our friends in the agricultural

chemical industry. I certainly have to address the fact that they do

have some confidentiality issues and some liability issues that perhaps some of the amendments that Mr. Vroom brought up would

be opportunistic. We like the bill the way it is and we will work

with you however you wish to proceed.

Senator CONRAD. Thank you very much.

Mr. Frederickson, same question, if I can, to you.

Mr. FREDERICKSON. Mr. Chairman, generally speaking, the same

answers. Our organization, the National Farmers Union, together

with many of the border State organizations, North Dakota, Minnesota, Montana, and on across, have time after time, year after

year, submitted resolutions both to the local, the State, and the national organization in support of this effort, and so we have read

and examined the legislation and my compliments, Commissioner,

30

for your hard work. We support the legislation as drafted and certainly reserve the right to have an opinion on various amendments

that may be forthcoming. At this point in time, Mr. Chairman, we

like it the way it is.

Senator CONRAD. All right. Thank you very much.

Mr. Vroom, what would your response be to that set of questions

with respect to support for the bill as proposed or amendments that

you would consider necessary?

Mr. VROOM. Mr. Chairman, we would be willing to consider support for the legislation with amendments in six key areas, some of

which actually collapse together, but if I may just elaborate on

those quickly.

No. 1, to address the protection of business data confidentiality.

No. 2, to provide a liability waiver should import supplemental

label regulations for imported Canadian products be granted over

the objection of the registrant and that registrant could submit to

EPA a rationale for why they believe that the particular label

would create either personal injury or product, crop damage, liability potentials, that there could be some mechanism there for that

process to be allowed for, liability waiver.

We would like to see EPA, instead of on the back end of the process, on the front end of the process the way I had described in my

oral remarks, an amendment perhaps to Section 24 of FIFRA to

enable——

Senator CONRAD. Is this still No. 3?

Mr. VROOM. Yes, that is No. 3.

Senator CONRAD. OK.

Mr. VROOM [continuing]. Border States to petition for special

local needs supplemental labels.

No. 4, we prefer to see this restricted to farmers and their neighbors being able to bring product through Customs for their own use

and not extend it to the commercial trade. I would cite, for example, in the 2002 Farm bill, there are amendments that mandate

that Congress asks that EPA study the impact of electronic commerce on the trade of pesticides within the United States, and that

speaks to the fact that there are already a lot of disruptions going

on within our marketplace and we believe that a farmer-owned use

provision would mirror the type of mechanism that already exists

in Canada coming the other direction, would harmonize that way

and provide a little more stability to our marketplace.

No. 5, we would like to ask you to consider including an amendment that would direct the USDA and Ag and Agri-Food Canada,

their counterpart agency in Canada, to update the study they did

a few years ago on the situation—Under Secretary Hawks referred

to that earlier in his testimony—with particular attention to how,

over a couple of years’ period of time, if such amendments that I

am suggesting were implemented, what impact was being achieved

or not.

Then No. 6, a hard deadline on EPA to mandate that they and

PMRA walk this talk in implementation of the harmonization of

the standards.

That may sound like a long list, but we have already drafted

some legislative language amendment ideas along those lines and

31

could be quickly prepared to sit down and work with your staff on

seeing if we could iron those out.

Senator CONRAD. I would ask you if you could work quickly to

submit any language that you have in each of these six areas.

Let me, if I could, turn to Commissioner Johnson. I do not know

what the subject was of your breakfast meeting, whether or not you

have heard these six areas before, whether you have had a chance

to think about them or react to any or all of them, but I would

want to give you that opportunity. Then any other member of the

panel, if you feel there is something you want to comment on, do

not hesitate to just raise your hand and we will call on you. We

do not have to be overly formal here. Commissioner Johnson.

Mr. R. JOHNSON. Thank you, Mr. Chairman. Let me respond to

each of these and preface it by saying, as I told Mr. Vroom and his

board of directors this morning, that all of us in agriculture absolutely depend upon their industry. You acknowledged that, and I

want to second that. If there is a way that we can come to agreement on acceptable amendments, we certainly ought to do it. The

goal is to equalize the price to create a level playing field, and as

long as we can accommodate that, that is what we are after.

First of all, the issue of confidentiality, I certainly think that no

State should be allowed to use this provision unless they can guarantee that confidential information remains confidential. That is a

reasonable request. The bill prescribes some way for that to happen, and if a State cannot meet the prescription that is outlined

in the bill, then, frankly, they should not receive the confidential

business information. If they need to change a law in a State, they

ought to change the law. I mean, that ought to be a condition. I

certainly concur with them on that point.

Senator CONRAD. Let me stop you on that point, if I can, because

I want the record to be complete. Are you familiar with impediments to that position with respect to the States of Washington

and Oregon? Have you heard this before?

Mr. R. JOHNSON. No, I have not. We have looked at it in North

Dakota. It was actually Washington and Vermont, were the States

that were mentioned.

Senator CONRAD. Yes. I want to stand corrected, Washington and

Vermont.

Mr. R. JOHNSON. I am not familiar with those, but I am familiar

with open meetings and open records laws. We have them in North

Dakota, but we also have, and perhaps the Lieutenant Governor

can better address this because he has been in the legislature for

a long, long while, but we have the ability to receive confidential

business information and maintain its confidentiality, and we

would demonstrate that to EPA and the industry’s satisfaction that

that would happen.

With respect to the liability waiver, the way the bill is crafted,

whoever played a role in doing whatever, they would be liable for

the role that they played, and that is sort of a standard practice,

as I understand, that applies across many industries. If there is

specific language, we would certainly be willing to look at it, but

we crafted it with sort of the standard language——

Senator CONRAD. That is correct.

32

Mr. R. JOHNSON.—that is used not just in agriculture, but across

much of the economy.

The third issue, the special local needs registration and using

supplemental labels, in fact, as we crafted the bill, we talked about

creating—a special local need is actually what is referred to in the

trade as a 24(c) registration. That is a State registration instead

of an EPA registration and there are certain requirements that

need to be met and we routinely issue those, as do other States.

We crafted this bill, following that model. In fact, I do not recall

whether the final version had this, but we talked about creating a

new section of the law that would be created 24(d). I mean, it was

intended to follow that sort of procedure.

Senator CONRAD. That is something we should be able to work

out?

Mr. R. JOHNSON. I would certainly think so. It was intended that

way.

Senator CONRAD. Let us go to No. 4.

Mr. R. JOHNSON. No. 4, restricting access to individual farmers,

we spent a lot of time dealing with this issue, and frankly, this

was, I know, one of the questions that Senator Roberts posed. It

would be a mistake to restrict it to individual farmers. I do not

think EPA will support that. There are lots of integrity questions

that arise. There are lots of procedural problems that arise.

Senator CONRAD. Integrity—maybe we could just be specific. Integrity, not with respect to the product.

Mr. R. JOHNSON. With respect to the process. The problem you

have if you have individuals accessing it is who is going to prove

what is where? Who is going to prove that the Canadian product

is identical to the U.S. product? There has to be somebody that can

make that judgment. In fact, judgment is the wrong term, that absolute determination.

Currently, it is EPA. Currently, they have the confidential statement of formula and the bill is designed such that that formula

would remain confidential. If we start opening it up just to individual farmers, you raise lots of questions about how do you prove

that the product is the same as the one we have here? That is the

fundamental issue that we had with Achieve. That is the issue that

presents itself with Liberty. Unless you have the confidential information, you cannot make that proof.

Senator CONRAD. Let me just stop there and say to Mr. Vroom,

I detected that you wanted to say something on that point.

Mr. VROOM. I am not sure we were talking about the same thing.

In the concept that I was trying to describe in terms of farmerowned use, that would be the mechanism by which individuals who

could actually bring, using the supplemental label that EPA would

have already drafted and established for trade irritant designation,

the mechanism is only farmers would be able to cross Customs

using that supplemental label, as opposed to any commercial

enterprise—— Senator CONRAD. Distributors?

Mr. VROOM [continuing]. Distributors, dealers. Again, that is the

mechanism that the Canadian government had put in place some

years ago—— Senator CONRAD. Their own use.

33

Mr. VROOM. There is some industry experience with regard to

that impact in the marketplace on either side of the border for the

Canadian—— Senator CONRAD. This is clearly an area where we have a problem.

Mr. VROOM. Yes.

Mr. R. JOHNSON. Yes.

Senator CONRAD. As I hear it, one through three of what you

raised, Jay, are things we can work out. We have a problem on No.

4.

Mr. R. JOHNSON. If I can add to that, the real problem you would

have here is not just what I have described, but it is what would

be the impact on the dealer network in border States. If individuals

were forced to drive to Canada to buy their pesticides, what would

that do to the local pesticide dealer, to the local co-op, to that whole

regulatory system, the whole farm supply system, I should say,

that we have?

Senator CONRAD. Just the efficiency of it is—— Mr. R. JOHNSON. Absolutely. I mean, why would you want someone from South Dakota to have to drive all the way through North

Dakota to go to Canada to buy a product when if you could make

it accessible through the dealer network, it would be much more

efficient. That——

Senator CONRAD. Let us go to No. 5, if we could.

Mr. R. JOHNSON. As I heard No. 5, it was to direct USDA and

Canada Agri-Food to do another study and to sort of—— Senator CONRAD. Update their study, as I heard.

Mr. R. JOHNSON. I do not have an issue with that. I do not know

that that would need to be in the bill. We could just ask USDA and

Agri-Food Canada to do it and they would probably do it.

Senator CONRAD. We might be able to do report language or

something like that.

Mr. R. JOHNSON. Sure, and your conversation earlier is evidence

of that. I suspect USDA heard what you said.

Senator CONRAD. Let us go to No. 6, if we could, on the hard

deadline on the implementation. This is with respect to EPA’s

deadlines.

Mr. R. JOHNSON. You know, frankly, I agree with the industry

on this issue. I am not just exactly sure how we do it. In my opening remarks, I describe sort of harmonization as being this two-step

thing. It is access to products and it is pricing. This is about access,

and frankly, the bill does not deal with it. If we can figure out a

way to have the bill deal with it, I would certainly be open to that.

Senator CONRAD. Can I just raise this point with respect to No.

6. We have a very hard time making that part of this bill, and I

say that because we get into all kinds of jurisdictional issues as

soon as we cross that line. We are immediately over into Environment and Public Works Committee jurisdiction. I mean, that is the

way they will see it. That creates lots of problems.

I agree with you, Roger. I agree with the industry on this. They

have a very reasonable concern and complaint here and we need

to find a way to address it. I have real reservations about this bill

being the place because I know what it would lead to. We would

immediately be into a referral question with respect to jurisdiction

34

and EPW has, if you go to the backlog of what they are dealing

with in terms of the issues that are before them, including the

whole matter of highway funding this year, a highway bill, and

their four pollutants legislation, and so forth, that is a problem.

The industry has a very legitimate concern here and I am struggling in my own mind at the moment as to how we address it. Jay.

Mr. VROOM. Mr. Chairman, I do think that there are sections in

FIFRA, and unfortunately, among the things I have here at the

table with me is not my copy of FIFRA, but there are sections that

deal with harmonization and international movement of pesticides.

Certainly, I am not interested in having to go over to that other

committee you mentioned, so—— [Laughter.]

Mr. VROOM. That was not my intent. We can stay——

Senator CONRAD. I did not think it would be.

[Laughter.]

Senator CONRAD. All of us would be much happier if we did not

go through that.

Mr. VROOM. I will retreat from that if that is proven to be the

case, but I actually do think that this amendment that we have in

mind could be clearly deemed to be a FIFRA amendment in the jurisdiction of the Agriculture Committees.

Senator CONRAD. Let me say this to you. We get into a whole series of issues. I did not go down my whole list, but I can tell you,

this gets to be a resource question at EPA in terms of prioritization

of the use of resources. It gets to be an Appropriations Committee

question. I can just tell you, the way this place works, we get

drawn into a swamp of the Appropriation Subcommittee, the EPW

Committee, this committee’s jurisdiction, and a mud wrestling

match with respect to an amendment like this on this particular

bill.

I am not sure, I just raise these red flags for the purpose of being

very direct with everybody on that particular amendment. You

have a very good case. There is no question in my mind. We have

had many meetings in my office—Roger Johnson has been at some

of them—with EPA for years and we go around and around and

around and all these things are going to happen and some of them

do, but a lot of them do not, and these deadlines are set up and

I do not know, their idea of a deadline, some of these people, is a

lot different than my idea of a deadline.

Those of us who were brought up in the Midwest, it really means

something to us. If somebody says, be someplace at 10, our understanding is that you are there at 10. That is not the culture of this

institution, I can tell you that.

[Laughter.]

Senator CONRAD. I am still 20 minutes early for almost every

meeting. You would think I would figure it out by now.

[Laughter.]

Senator CONRAD. You know what I am saying. It applies to these

deadlines. I mean, a lot of them, they just—I do not know, they

think that is advisory or something. It is not compulsory, it is like,

well, if you get it done by then, great, but it does not really matter,

and that is impossible for an industry to function under that kind

of regime.

35

Mr. Vroom.

Mr. VROOM. The resource question is also eminent with regard

to the pesticides program at EPA because we have statutory authorities that expire the end of September and we had, thanks to

Chairman Harkin, a very good comprehensive solution in the Senate version of the Farm bill, which unfortunately got kicked out at

the very end on the weekend before you finished the Farm bill in

conference.

Senator CONRAD. I was there.

Mr. VROOM. It was there, but Senator Harkin’s staff, in fact,

called us again today, so I guess that Senator Mikulski is planning

to mark up VA, HUD, and Independent Agencies next week and

there may be an opportunity to do something there in this broad

context.

To the point of resources to do more of the harmonization implementation or walk, frankly, I believe the case could be made that

it could result in less work for the U.S. regulatory agencies and the

Canadian agencies if they were actually implementing mutual acceptance of reviews because then only one of them would do this

and they would trust the other one to have done the job. It begs

the question.

Senator CONRAD. I will tell you something, sign me up. Sign me

up. This has been a matter of I do not know how many hours of

meetings in a meeting room in my office. I can remember at least

three lengthy, detailed meetings in which we discussed that very

matter. We trust the Canadians to guard our northern border with

fighter aircraft. That is the way it works. The protection of the

northern border of the United States, do you know whose responsibility it is? It is the responsibility of the Canadian Air Force. We

trust them to protect our northern border. We cannot trust them

to evaluate these kinds of applications on a similar basis and workup? Come on, I mean, this is not that tough.

The fact is, much of their procedure and approach is the same

as ours. Somehow, we have a turf battle. Let us just say it the way

it is. It is a turf battle, and that has to get resolved. It is in the

interest of everybody to do it. I hope that message goes back out

of this meeting, that we have had enough meetings. For God’s sake,

let us get the job done.

Mr. Bushue.

Mr. BUSHUE. Chairman Conrad, I would appreciate it if I could

be excused. You mentioned deadlines.

Senator CONRAD. Yes, sir.

Mr. BUSHUE. I have a flight to catch.

[Laughter.]

Senator CONRAD. I would say to Mr. Bushue and other members

of the panel, we indicated that we would finish by 4 and that is

our intention. We understand you need to leave for a plane. You

are excused, and I would say to the other members, we have about

completed. Certainly, you take your leave so that you do not miss

your flight.

Mr. BUSHUE. Thank you, Mr. Chairman.

Senator CONRAD. We appreciate very much your appreciation

here today.

36

If there are any last thoughts or observations, we would entertain those at this time. Lieutenant Governor Dalrymple.

Mr. DALRYMPLE. Mr. Chairman, I also have a flight, but I also

have one last comment. Thank you.

I just wanted to point out that I did meet about a year ago now

this summer with some of the leaders, also, of the Crop Protection

Product Association and some of these ideas or concerns, I guess

you could say they had, were mentioned then, protection of business data, liability waiver, farmer own-use importation, and I

asked them at that time if they would produce for me some suggested language or a suggested amendment to cover some of these

issues.

I guess what I am reporting to you is that a year later, I am still

waiting for that to come to me, and now that we have had a hearing, I hope that we can ask the association to show us in detail

what it is that they would like to see and that we would not simply

wait for that.

Senator CONRAD. No, waiting is over. We are done. This is it.

The train is moving. You get on board or you are going to get left

behind. That is the message out of here.

Let me just say, on the question of confidentiality, on page 13 of

the bill, under No. 4, if the State certifies to the Administrator that

the State can and will maintain the confidentiality of any trade secrets and commercial or financial information provided by the Administrator to the State under this subsection to the same extent

as is required under Section 10—this is preceded by this paragraph.

The EPA Administrator may disclose to a State that is seeking

to register a Canadian pesticide in the State information that is

necessary for the State to make the determinations required by

paragraph four if the State certifies to the Administrator that the

State can and will maintain the confidentiality of any trade secrets

and commercial or financial information provided by the Administrator to the State under this subsection.

That is designed to get at this question. If it does not accomplish

it, then we need to address it. There is a good faith desire to do

precisely that.

Are there any other final comments?

Mr. VROOM. Mr. Chairman, one thing I did want to mention earlier, and that is that we worked with all the other organizations

and witnesses here on a range of issues and have enjoyed their

support on things like the Food Quality Protection Act and TMDL,

water quality regulations, tough scientific and emotional issues and

we appreciate the partnerships that we have had, as well as with

the Senate Agriculture Committee’s support on those kinds of

issues. I just want to thank those that have been so supportive of

us. NASDA and Commissioner Johnson have been involved in so

many of those kinds of issues. We want to put this contentious

issue behind us.

The Lieutenant Governor is absolutely correct. He did ask for

that and we have been struggling to try to get our membership together to address this issue in a consensus way. It has not been

easy. Part of the reason, as I mentioned at our breakfast meeting

this morning with the Commissioner, is that we are constrained by

37

antitrust regulations also before us that makes it very difficult for

price-related issues to be discussed in an association context. As we

try to gather our own price information data, it has to all come

through legal counsel and be carefully vetted. It has just been a

very difficult issue, not necessarily any more difficult than any of

the others I just mentioned, but different in nature. I apologize for

appearing to have been dragging our feet, and in fact, we probably

have at times. Some of it has just been the nature of this issue.

I appreciate the chance, again, to be here. We want to be at the

table and we want to be on the train. Thank you.

Senator CONRAD. I appreciate that, and I just will send a very

clear, distinct message here. We are going to move to completion

and we are going to do it quickly, but we are going to do it with

reaching out to everybody. We are going to listen respectfully. We

are going to reach conclusion. We have just got to do that.

I want to again thank all the witnesses for what has been a very

constructive and productive hearing, and I thank you.

With that, the committee will be adjourned.

[Whereupon, at 4:02 p.m., the subcommittee was adjourned.]

(39)

A P P E N D I X

JULY 18, 2002

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

101

102

103

104

105

106

107

108

109

110

111

112

Æ