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S. HRG. 111–521 

THE ROLE OF AGRICULTURE 

AND FORESTRY IN GLOBAL 

WARMING LEGISLATION 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JULY 22, 2009 

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 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

KIRSTEN GILLIBRAND, New York 

MICHAEL BENNET, Colorado 

SAXBY CHAMBLISS, Georgia 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

MIKE JOHANNS, Nebraska 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

MARK HALVERSON, Majority Staff Director 

JESSICA L. WILLIAMS, Chief Clerk 

MARTHA SCOTT POINDEXTER, Minority Staff Director 

VERNIE HUBERT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

The Role of Agriculture and Forestry in Global Warming Legislation ............... 1 

Wednesday, July 22, 2009 

STATEMENTS PRESENTED BY SENATORS 

Harkin, Hon. Tom, U.S. Senator from the State of Iowa, Chairman, Committee on Agriculture, Nutrition, and Forestry ................................................. 1 

Chambliss, Hon. Saxby, U.S. Senator from the State of Georgia ........................ 3 

Grassley, Hon. Charles E., U.S. Senator from the State of Iowa ........................ 5 

Panel I 

Grumet, Jason, Founder and President, Bipartisan Policy Center ..................... 13 

Johnson, Roger, President, National Farmers Union ........................................... 6 

Pierce, Jo, Family Tree Farmer on behalf of the Forest Climate Working 

Group .................................................................................................................... 11 

Stallman, Bob, President, American Farm Bureau Federation ........................... 8 

Panel II 

Holdren, John P., Ph.D., Director, White House Office of Science and Technology .................................................................................................................... 46 

Jackson, Lisa, Administrator, U.S. Environmental Protection Agency .............. 44 

Vilsack, Hon. Tom, Secretary of Agriculture, U.S. Department of Agriculture . 41 

APPENDIX 

PREPARED STATEMENTS: 

Grumet, Jason .................................................................................................. 74 

Holdren, John P. ............................................................................................... 79 

Jackson, Lisa ..................................................................................................... 88 

Johnson, Roger .................................................................................................. 90 

Pierce, Jo ........................................................................................................... 100 

Stallman, Bob ................................................................................................... 106 

Vilsack, Hon. Tom ............................................................................................ 119 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Vilsack, Hon. Tom: 

‘‘A preliminary Analysis of the Effects of HR 2454 on U.S. Agriculture’’, 

Office of the Chief Economist ....................................................................... 124 

Grumet, Jason: 

‘‘Forging The Climate Consensus—Managing Economic Risk in a Greenhouse Gas Cap-and Trade Program’’, National Commission on Energy 

Policy .............................................................................................................. 137 

CountryMark, prepared statement ................................................................. 148 

E.I. DuPont de Nemours and Company, Inc., prepared statement .............. 154 

International Biochar Initiative, prepared statement ................................... 159 

John Deere, prepared statement ..................................................................... 163 

National Alliance of Forest Owners, prepared statement ............................. 170 

National Cattlemen’s Beef Association, prepared statement ........................ 180 

National Cotton Council, prepared statement ............................................... 184 

Page

IV 

Grumet, Jason—Continued 

National Oilseed Processors Association, prepared statement ..................... 186 

PG&E Corporation, prepared statement ........................................................ 196 

SynGest, prepared statement .......................................................................... 199 

The Dow Chemical Company, prepared statement ....................................... 200 

The Fertilizer Institute, prepared statement ................................................. 206 

The Nature Conservancy, prepared statement .............................................. 211 

Various Organizations, prepared statement .................................................. 215 

QUESTION AND ANSWER: 

Harkin, Hon. Tom: 

Written questions for Hon. Tom Vilsack ........................................................ 218 

Written questions for Joe Pierce ..................................................................... 288 

Written questions for Lisa Jackson ................................................................ 266 

Written questions for John Holdren ............................................................... 260 

Written questions for Jason Grumet .............................................................. 255 

Chambliss, Hon. Saxby: 

Written questions for Hon. Tom Vilsack ........................................................ 221 

Written questions for Lisa Jackson ................................................................ 266 

Brown, Hon. Sherrod: 

Written questions for Hon. Tom Vilsack ........................................................ 230 

Gillibrand, Hon. Kirsten E.: 

Written questions for Hon. Tom Vilsack ........................................................ 249 

Written questions for Lisa Jackson ................................................................ 281 

Grassley, Hon. Charles E.: 

Written questions for Roger Johnson ............................................................. 284 

Written questions for Bob Stallman ............................................................... 294 

Written questions for Hon. Tom Vilsack ........................................................ 243 

Written questions for Lisa Jackson ................................................................ 273 

Written questions for Jason Grumet .............................................................. 259 

Written questions for John Holdren ............................................................... 265 

Johanns, Hon. Mike: 

Written questions for Hon. Tom Vilsack ........................................................ 231 

Written questions for Lisa Jackson ................................................................ 269 

Leahy, Hon. Patrick J.: 

Written questions for Hon. Tom Vilsack ........................................................ 223 

Written questions for John Holdren ............................................................... 262 

Written questions for Lisa Jackson ................................................................ 268 

Lincoln, Hon. Blanche, L.: 

Written questions for Hon. Tom Vilsack ........................................................ 228 

Written questions for Joe Pierce ..................................................................... 290 

Written questions for Jason Grumet .............................................................. 258 

Written questions for Roger Johnson ............................................................. 283 

Roberts, Hon. Pat: 

Written questions for Hon. Tom Vilsack ........................................................ 230 

Written questions for Lisa Jackson ................................................................ 269 

Thune, Hon. John: 

Written questions for Hon. Tom Vilsack ........................................................ 242 

Written questions for Lisa Jackson ................................................................ 278 

Grumet, Jason: 

Written response to questions from Hon. Tom Harkin ................................. 255 

Written response to questions from Hon. Charles E. Grassley .................... 259 

Written response to questions from Hon. Blanche L. Lincoln ...................... 258 

Holdren, John P.: 

Written response to questions from Hon. Tom Harkin ................................. 260 

Written response to questions from Hon. Charles E. Grassley .................... 265 

Written response to questions from Hon. Patrick J. Leahy .......................... 263 

Jackson, Lisa: 

Written response to questions from Hon. Tom Harkin ................................. 266 

Written response to questions from Hon. Saxby Chambliss ......................... 267 

Written response to questions from Hon. Kirsten E. Gillibrand .................. 281 

Written response to questions from Hon. Charles E. Grassley .................... 274 

Written response to questions from Hon. Mike Johanns .............................. 270 

Written response to questions from Hon. Patrick J. Leahy .......................... 268 

Written response to questions from Hon. Pat Roberts .................................. 269 

Written response to questions from Hon. John Thune .................................. 278 

Johnson, Roger: 

Written response to questions from Hon. Charles E. Grassley .................... 284 

Page

V 

Johnson, Roger—Continued 

Written response to questions from Hon. Blanche L. Lincoln ...................... 283 

Pierce, Jo: 

Written response to questions from Hon. Tom Harkin ................................. 288 

Written response to questions from Hon. Blanche L. Lincoln ...................... 290 

Written response to questions from Hon. Charles E. Grassley .................... 291 

Stallman, Bob: 

Written response to questions from Hon. Blanche L. Lincoln ...................... 293 

Written response to questions from Hon. Charles E. Grassley .................... 294 

Vilsack, Hon. Tom: 

Written response to questions from Hon. Tom Harkin ................................. 218 

Written response to questions from Hon. Saxby Chambliss ......................... 221 

Written response to questions from Hon. Sherrod Brown ............................ 230 

Written response to questions from Hon. Kirsten E. Gillibrand .................. 249 

Written response to questions from Hon. Charles E. Grassley .................... 243 

Written response to questions from Hon. Mike Johanns .............................. 232 

Written response to questions from Hon. Patrick J. Leahy .......................... 223 

Written response to questions from Hon. Blanche L. Lincoln ...................... 228 

Written response to questions from Hon. Pat Roberts .................................. 231 

Written response to questions from Hon. John Thune .................................. 242 

(1) 

THE ROLE OF AGRICULTURE 

AND FORESTRY IN GLOBAL 

WARMING LEGISLATION 

Wednesday, July 22, 2009 

U.S. SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, 

Washington, DC 

The Committee met, pursuant to notice, at 10:03 a.m., in room 

325, Russell Senate Office Building, Hon. Tom Harkin, Chairman 

of the Committee, presiding. 

Present: Senators Harkin, Leahy, Lincoln, Stabenow, Nelson, 

Brown, Casey, Klobuchar, Bennet, Chambliss, Lugar, Cochran, 

Roberts, Johanns, Grassley, and Thune. 

STATEMENT OF HON. TOM HARKIN, U.S. SENATOR FROM THE 

STATE OF IOWA, CHAIRMAN, COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

Chairman HARKIN. Good morning. The Senate Committee on Agriculture, Nutrition and Forestry will come to order. 

I welcome this hearing to examine the critical challenges in energy and global warming and the pending proposals for addressing 

them. We have two strong panels of witnesses, and I look forward 

to their testimony. We will have this first panel this morning. 

Then, we have to take a break, and, because of the necessity of us 

being on the Senate floor for a constitutional issue at 2, this Committee will resume its sitting with Secretary Vilsack and Administrator Jackson and others this afternoon at 2:30. 

For decades now, we have known that our American way of buying and consuming energy is not only unsustainable but dangerous 

to our future. Our heavy reliance on fossil fuels, much of it imported, is a threat to our energy, economic and national security. 

In April 1977, when I was a second term member of the House, 

President Carter called for a new course in energy policy because 

he believed our very strength and future as a Nation were in peril. 

He called the task the moral equivalent of war. That speech was 

a grim and sober one, though remarkably prescient. Yet, just a few 

years later, the warning was largely discarded and disregarded. 

Today, our energy situation is even more precarious. We import 

about 70 percent of the oil we use, much of that from nations that 

are unfriendly or politically unstable or both. Repeated oil price 

shocks, topping at over $140 a barrel last summer, are a drumbeat 

driving home our vulnerability. Our extraction and use of coal perVerDate Nov 24 2008 08:03 Sep 21, 2010 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\56563.TXT SAG2 PsN: SAG2
2 

manently alters landscapes and pollutes too many of our lakes and 

streams. 

We now know that our reliance on fossil fuels was in fact more 

damaging than what we had realized. The concentration of carbon 

dioxide and other greenhouse gases in the atmosphere has been rising markedly over the course of the Industrial Age, primarily from 

our use of fossil fuels, to the point that the climate and weather 

upon which human civilization relies are dramatically changing 

and will change far more rapidly if we do not act. 

This chart here clearly shows that something is happening. This 

line here is the amount of atmospheric CO2 concentration globally. 

These bars show the temperatures, the mean temperatures globally. The 10 warmest years on record all occurred in the past 12 

years. 

We see the CO2 concentration going up at a steeper slope all the 

time, up to about 2000, and has gone up even more since 2000. 

So we know that something drastic is happening out there and 

to do nothing and to ignore it is, I do not think, an option. So we 

have to do something. 

I think the challenge ahead of us, if we are to honor our responsibility to future generations, is a challenge that we cannot sidestep. Fortunately, there are good reasons to be hopeful. 

We need to drastically increase the efficiency throughout our energy economy, something that we have not done very well in the 

past because energy was so cheap and plentiful. We need to accelerate the transition from fossil fuels to energy derived from domestic renewable energy resources. 

Now agriculture and forestry can play a central role in this energy transition and can earn economic rewards for doing so. They 

provide feedstocks for renewable, carbon-recycling bioenergy. 

Farms and ranches also provide ideal sites for wind power and 

solar systems. Thus, our agriculture and forestry lands are the resource basis for a new energy economy. 

Farms, ranches and forests can also help curb greenhouse gases 

in the atmosphere. Right now, crops, trees and pastures absorb and 

store about 12 percent of the U.S. annual production of carbon dioxide. According to EPA, that figure could reach 20 percent 

through changing agronomic and forestry practices. Increasing the 

storage of carbon in agriculture and forestry operations can earn 

income for producers while reducing the economic cost of cutting 

greenhouse gas emissions in other industries. 

Now, with good reason, we hear a lot of concern expressed about 

projected costs to consumers, farmers, ranchers and other businesses from proposed energy and global warming legislation. I 

share those concerns, and that is why I believe we must do our 

best to analyze costs and find the most economical, common-sense 

ways to achieve critically important results of energy independence 

and reduction of greenhouse gas emissions. 

I am convinced that this energy transformation holds the key not 

only to economic recovery today but to major job growth and economic development for decades to come. The history of American 

agriculture is a history filled with stories of successfully meeting 

and overcoming one challenge after another. I believe that American agriculture is up to this challenge, that we can meet this, and 

3 

we can overcome it, and we can provide income and make sure that 

agriculture has a seat at the table and is not shunted aside in this 

debate on reducing greenhouse gas emissions. 

Chairman HARKIN. With that, I will yield to Senator Chambliss. 

STATEMENT OF HON. SAXBY CHAMBLISS, U.S. SENATOR FROM 

THE STATE OF GEORGIA 

Senator CHAMBLISS. Mr. Chairman, thank you very much for 

holding this hearing today. Climate change and the energy security 

of our Country are two very important issues facing our Nation, 

and I thank our witnesses for coming forward today and letting us 

have a chance to dialog and presenting their ideas. 

I am very concerned about the effect the House-passed American 

Clean Energy and Security Act and the cap and trade program it 

envisions will have on agriculture producers, forest landowners and 

residents in rural parts of the Country. No matter how you look at 

that bill, it appears to me it imposes costs that will far outweigh 

the near-term and long-term benefits. The balance between the 

near and long-term costs and benefits will be of foremost importance to members of this Committee. Agriculture is an energy-intensive industry and, make no mistake, the chief purpose of the 

Waxman-Markey and the Boxer bills is to raise the price of energy. 

I say that again. The purpose of the House and Senate climate 

change bills is to raise the price of energy, and that is a pretty irrefutable fact. 

I have asked USDA and Texas A&M University to conduct economic analyses of the bill with special attention to the effects that 

at the farm gate level as well as to consumers. What we have seen 

of these preliminary results is that no farm will escape the effect 

of this bill. 

According to Farm Bureau—and President Stallman is here with 

us today, and he can confirm this, I think—that by the time this 

bill is fully implemented, farm income will drop $5 billion compared to the baseline. According to the National Cotton Council, 

cotton producers will see $300 million to $400 million in increased 

production cost. Rice producers will see their costs increase $80 to 

$150 per acre. Again, Farm Bureau estimates corn and soybean 

farmers will see their costs increase over $20 per acre by 2020. 

With respect to cotton, our two primary competitors in the world 

market today are China and India, and all of us are acutely aware 

of the response that China and India have given recently to Secretary Clinton with respect to the proposal of their participation in 

the climate change issue. They basically have said go stuff it, and 

we are going to be putting our cotton farmers in particular at an 

unfair disadvantage in the world market with respect to competing 

with countries like India and China who are going to pay absolutely no attention to the issue. 

Equally concerning is what a climate change bill will do to cropping patterns in the United States. According to the United Nations, the population of the globe will increase from 6.5 billion 

today to 9 billion by 2050. According to the Environmental Protection Agency, the Waxman-Markey bill will take 40 million acres of 

productive farm and pasture land out of production. According to 

USDA, total cropland in the United States totals 405 million acres. 

4 

So I find it puzzling why we want to take 10 percent of our cropland out of production when the statistics indicate that we will 

need every available acre of arable land to feed a hungry world. 

For what? Possibly lowering global average temperatures by 

0.195 degrees Celsius by 2100 if the United States is the only 

Country to act. This is not good policy. There has to be a better 

way. 

Since the cap and trade program will undoubtedly raise production costs for farmers and ranchers, the offset provisions in the 

House bill are a key issue for agriculture and forestry, but there 

are still many questions to be answered. For example, if Congress 

creates an offsets program, there will be some producers who are 

able to benefit from it, but there will also be many who are not 

able to benefit from it. 

If the greatest potential for sequestration is planting trees, how 

much opportunity is there for your average producers for provide 

offsets? 

How much land is likely to be taken out of production to plant 

trees and let land lay fallow? 

What does this mean for livestock production and food security? 

Like most of my Senate colleagues, I want to support a bill that 

provides greater energy security for Americans and addresses climate change, but, unfortunately, the House bill is not it. 

I want to support a bill that creates all kinds of jobs, not just 

green jobs. That bill should also reflect the realities of producing 

food, fiber, feed and fuel in the United States and recognize the 

unique aspects of rural America. I support greater energy conservation and efficiency. I support the development of nuclear energy, 

renewable and alternative energy sources and new drilling. We can 

do all of these things while addressing the environmental aspects 

of energy production and use. 

I am ready to work with all of my colleagues who share similar 

goals. 

Given the importance of this topic, Mr. Chairman, I ask you to 

consider holding more hearings on this issue. This 1,427–page bill 

is far too complex to address with only one hearing. For example, 

I expect we will find out today that we need to delve into the proposed agricultural offsets program. We will need to better understand the effects on agriculture, forestry and rural America. We 

will also need to carefully review the role of the Commodities Futures Trading Commission under a cap and trade program. 

The potential long-lasting effects of this bill on the future of agriculture and rural America eclipses the support that we provided in 

the Farm Bill. We simply must have a thorough understanding before moving forward. 

So, Mr. Chairman, I thank you again for holding this hearing. I 

look forward to hearing from our witnesses and for us to have an 

ongoing dialog within the ag community on this issue. 

Chairman HARKIN. I thank you very much, Senator Chambliss. 

Before we get to our witnesses, Senator Grassley I know wanted 

an opportunity to make a statement. Because he has to be involved 

as a Ranking Member of the Finance Committee on something 

called health care reform, I will just recognize him briefly. 

5 

STATEMENT OF HON. CHARLES E. GRASSLEY, U.S. SENATOR 

FROM THE STATE OF IOWA 

Senator GRASSLEY. Yes, I thank you very much, Mr. Chairman. 

I thought I ought to ask the indulgence of you, Mr. Chairman, 

to make a statement why I do not appear at one of the most important issues that is before the Congress that is affecting agriculture, 

which is this subject of cap and trade, why I cannot be here, and 

it is because I am negotiating on the Health Care Reform Bill with 

Senator Baucus along with a few other members. 

I wanted to express my concern about the impact that this legislation has upon American agriculture, particularly row crop agriculture, and to say that as a Senator from the same State the 

Chairman is from, a leading agricultural State, and as a farmer 

myself, that I am very concerned about it. I am going to be very 

actively engaged in this through the process, and I did not want 

my absence from this hearing today to show maybe a lack of concern. 

I share some of the thoughts that Senator Chambliss just gave, 

but I think on the point of the United States acting alone without 

some international agreement I think Administrator Lisa Jackson 

said it best when she said, ‘‘I believe the central part of the charts 

are that the U.S. action alone will not impact world CO2 levels,’’ 

that this argues for doing this on an international basis and not 

on ourselves doing things that are going to make American agriculture or American manufacturing uncompetitive. 

So I thank you very much for allowing me to speak and the indulgence of the other members as well and the witnesses, and I 

hope to be very involved in this in later hearings. I will submit 

questions for the record. 

Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Grassley. 

Without further ado, we would like to turn to our witnesses. We 

have a great first panel to kick this off today. As I said earlier, at 

2:30, we will reconvene with Secretary Vilsack, Administrator 

Jackson and Dr. John Holdren, Director of the White House Office 

of Science and Technology, but this morning, we have a great 

panel. 

We have: Mr. Roger Johnson, President of the National Farmers 

Union; Mr. Bob Stallman, the President of the American Farm Bureau Federation; Mr. Jo Pierce, a family tree farmer from Maine 

representing the Forest Climate Working Group; and Mr. Jason 

Grumet, Founder and President of the Bipartisan Policy Center in 

Washington, D.C. 

Gentlemen, all your statements will be made a part of the record 

in their entirety. I read them all last evening. 

I have asked our clerk to give you 7 minutes on the clock. If you 

run over a minute or so, that is probably OK, but let’s try to keep 

it to about 7 minutes. 

If you could summarize your statements, I would be appreciative. 

We will just start with, as I read them off, Mr. Johnson, and we 

will work across. 

So, Mr. Johnson, welcome again and please proceed. 

6 

STATEMENT OF ROGER JOHNSON, PRESIDENT, NATIONAL 

FARMERS UNION 

Mr. JOHNSON. Thank you, Chairman Harkin, Ranking Member 

Chambliss and members of the Committee, for holding this hearing 

on this very important issue. 

As the Chairman has indicated, my name is Roger Johnson. I am 

the President of the National Farmers Union representing about a 

quarter million farm and ranch families around the Country. 

The American Clean Energy and Security Act of 2009, as recently passed by the House of Representatives, we believe is a step 

in the right direction. Chairman Peterson deserves a lot of credit 

for adding provisions to that Act that are favorable for agriculture 

and forestry, and I want to take this occasion to thank him publicly. 

In order to address the issues of climate change, our policy for 

National Farmers Union has for some time supported a national 

mandatory carbon emission cap and trade system that does a number of things: grants USDA control and administration over the offsets programs, does not place an artificial cap on domestic offsets, 

is based upon science, recognizes and treats appropriately early actors and allows producers to stack environmental credits. 

Financial implications of this issue, climate change, are significant. The cap and trade allows the market to find and deploy lowcost emission reducers—that is the way we think it ought to be 

structured—while mitigating increased energy costs resulting from 

such a program. A cap and trade system with offsets could provide 

farmers and ranchers the opportunity to be part of the climate 

change solution by utilizing soil carbon sequestration and methane 

capture. 

The cost of no action must become a legitimate part of the ongoing debate. Models of climate change scenarios demonstrate increased frequency of heat stress, of droughts and flooding events 

that will reduce crop yields and livestock productivity. The risk of 

crop failure will increase due to rising temperatures and variable 

rainfall. Earlier springs seasons and warmer winter temperatures 

will increase pathogen and parasite survival rates, leading to disease concerns for crops and livestock. So the costs of doing nothing 

need to be considered in the calculation relative to this bill as well. 

Further, if Congress fails to pass climate change legislation, current law would suggest that EPA needs to move to regulate greenhouse gas emissions. I do not know of anybody who thinks that 

would be a better alternative. A purely regulatory approach to addressing greenhouse gas emissions will bring all of the downsides 

with none of the upsides that carbon offsets would provide for agriculture. 

The agriculture and forestry sectors should not be subject to an 

emissions cap as they are too small and diffuse to be directly regulated. The House bill appropriately does that. 

Agriculture, as you stated, Mr. Chairman, emits approximately 7 

percent of all U.S. greenhouse gas emissions but has the capacity 

to offset as much as 20 percent—some estimate 25 percent—of all 

greenhouse gas emissions from all sectors of the U.S. economy. So 

it is important that we figure out a way to get agriculture included 

in this. 

7 

Cap and trade with offsets provide a larger market, leading to 

lower costs for everyone in our society. In addition, offsets also provide an income opportunity to help offset some of the increased expenses that are certain to result as a result of this legislation. 

On Page 3 of my testimony, I talk a bit about legislation priorities, and the question is most appropriately posed. 

Chairman HARKIN. Mr. Johnson? Mr. Johnson, hold on a second. 

Something has happened. 

Mr. JOHNSON. Are we still on here? I got a button on. 

Chairman HARKIN. We blew a fuse back there. It looks like it is 

back on now. There you go. 

Mr. JOHNSON. OK. Are we back? 

All right. How should this be done? USDA has more than 20 

years of targeted climate change research and is probably the premier entity in the world with respect to climate change research 

relative to agriculture. USDA has the institutional resources, the 

administrative structure and established relationships with producers to oversee the offsets program. The 2008 Farm Bill provided 

the Department with the statutory authority necessary to create 

and administer an offsets program. 

A number of agencies at USDA are already working on this issue 

and likely will continue to ramp up their work. NRCS, CSRES, 

FSA, ERS and ARS are all agencies of USDA that are doing climate change work, research or work with producers. 

In addition, USDA has offices located nearby to almost all farmers and ranchers in the Country. 

An important issue for you to consider is to deal with the question of early actors. These are folks who have entered into voluntary legally binding contracts to reduce greenhouse gas emissions. We believe they should be allowed to participate under a 

Federal schedule that is adopted. We need to encourage widespread 

adoption of practices that reduce greenhouse gas emissions or sequester carbon, and getting these early actors appropriately accounted for, without penalizing them or adopting perverse incentives that penalize early actors, should be an important goal of this 

Committee. 

Agriculture and forestry have the ability to provide the easiest, 

the least costly and the most readily available means to reduce 

greenhouse gas emissions on a meaningful scale, and I think all of 

us on this panel would argue that should a bill pass agricultural 

offsets need to be carefully considered by this Committee and made 

an integral part of the cap and trade legislation. 

Allowances: We believe that the majority of the emission allowances under a cap and trade system should be auctioned off with 

the generated revenue used to mitigate costs and to foster the development of renewable low carbon energy sources and technologies. 

Providing a percentage of overall allowances to the agricultural 

sector, as proposed in the earlier Lieberman-Warner climate 

change bill this body considered, would have a number of advantages: 

It would offer flexibility for agriculture producers to implement 

activities that provide greenhouse gas benefits but may not technically fall within the scope of an offsets program. 

8 

It would also be a funding source for research and development 

that would lead to likely new offset protocols that also could be 

adopted and used to reduce our emissions. 

It could be used to help compensate some of those folks in agriculture who are not currently likely to benefit as a result of offsets. 

Specialty crop producers are some that come to mind and also dealing with those pre-2001 actors who are doing the right things environmentally and need to be rewarded. 

National Farmers Union believes that 5 percent of all the allowances should be provided to agriculture as this body has earlier decided should be provided to agriculture. 

Skipping to the bottom of Page 5 of my testimony, dealing with 

renewable energy opportunities, as climate and energy legislation 

moves through the U.S. Senate it is critical that this opportunity 

is used to advance renewable energy opportunities in rural America. There are two items in particular, very briefly. 

EPA should be barred from considering international indirect 

land use changes. This is unsettled science. The House bill did it. 

I would urge the Senate to follow. 

Second, it is critical that legislation include a robust renewable 

energy standard. We have abundant wind, solar and biomass resources. We should use them. 

Finally, near the bottom of Page 6, I would say also that I would 

encourage the Senate to look at locally owned wind projects and to 

provide incentives for them. They generate about 2.6 times more 

jobs and more than 3 times as much rural economic benefit than 

those that have outside ownership. 

Finally, Mr. Chairman, let me say that National Farmers Union 

is the largest aggregator under the current Chicago Climate Exchange Carbon Reduction program. We have worked with about 5 

million acres that are enrolled across more than 30 States, and 

nearly $9.5 million has been earned, almost 4,000 producers that 

are voluntarily participating in this program. We have learned 

some lessons that we think should be used as you design this legislation. 

With that, Mr. Chairman, let me thank you for the opportunity 

to testify and for holding this hearing on this important issue. 

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

90 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Johnson. 

Now we turn to Mr. Stallman, President of the American Farm 

Bureau Federation. Mr. Stallman, welcome and please proceed. 

STATEMENT OF BOB STALLMAN, PRESIDENT, AMERICAN 

FARM BUREAU FEDERATION 

Mr. STALLMAN. Thank you, Mr. Chairman, Ranking Member 

Chambliss, members of the Committee. It is a pleasure to appear 

before you today on behalf of the American Farm Bureau Federation, a membership organization representing six plus million 

member families all across this Country. I am a rice and cattle producer from Texas, and so I am intimately familiar with the hazards 

that we face in the occupation of farming. 

9 

I commend you for convening this hearing today. The issue of climate change legislation is absolutely critical to American agriculture. 

We are heartened by your statements, Chairman Harkin, that 

you want to support and even improve upon the provisions that 

were negotiated by Chairman Peterson and the House of Representatives. We will certainly support you and other members in 

that effort. 

Any cap and trade bill must have the strongest, most effective, 

most comprehensive agricultural provisions possible. I discuss 

those in detail in my written statement and will be pleased to answer any questions with respect to those during the question session. 

But let me stress that it is critically important to give USDA full 

authority over the program, full authority to ensure that conservation tillage and no-till get appropriate credit, that credits are 

stackable, that domestic credits get priority over international offsets, that early actors are appropriately recognized and that nutritional management plans for livestock are encouraged. In short, we 

want to ensure that all efforts producers undertake that mitigate 

greenhouse gas emissions get credit. 

This is important for a simple reason: Even with the best, most 

comprehensive agricultural offsets program, the agricultural sector 

will lose under cap and trade. Under the best estimates we can 

make, the House-passed bill will take $5 billion out of farmers’ 

pockets in the short term. Senator Chambliss referenced that. 

The worst news is that upon full implementation we would expect that number to be $13 billion out of farmers’ pockets, and it 

is likely that he costs could be very much higher. 

In addition, we have the potential for acreage shifts, which we 

experience in agriculture, but the structure of the Waxman-Markey 

bill and the energy expenses would tend to indicate that soybeans 

will have a preference because of less inputs like fertilizer and energy costs. 

We also have the very real risk, if carbon offset prices are high 

enough, of having cropland shifted into forestry. 

One thing that is not often recognized is that landowners are 

often not the farmers. There are many tenant farmers in this 

Country. Most of the acreage in this Country is farmed under 

leases from landowners, and those landowners may have a great 

incentive to put that cropland into forestry at the expense of the 

farmers who are currently farming that ground. 

But, truthfully, any figure I or anyone else gives you is really not 

much more than an educated guess. There are so many unknowns 

and assumptions and estimates that are built into this debate. No 

one can look you in the face and tell you with certainty what is 

going to happen. 

One thing, however, does seems certain. You are not going to 

make a meaningful difference in what the climate will be 40 years 

from now. 

Mr. Chairman, your chart certainly showed the trends in temperature and carbon concentrations, but the reality is under the 

IPCC models the Waxman-Markey legislation will not alter that 

10 

trend. Administrator Jackson of EPA testified to that fact just 2 

weeks ago. Others have said as much. 

Bjorn Lomborg, the Danish environmentalist and author who has 

written a great deal on this topic, said: ‘‘At a cost of hundreds of 

billions of dollars annually, Waxman-Markey will have virtually no 

impact on climate change. If all of the bill’s many provisions were 

entirely fulfilled, economic models show that it would reduce the 

temperature by the end of the century by 0.11 degree centigrade, 

reducing warming by less than 4 percent. 

‘‘Even if every Kyoto-obligated country passed its own duplicate 

Waxman-Markey bills, which is implausible and would incur significantly higher costs, the global reduction would amount to just 

0.22 degree centigrade by the end of the century. 

‘‘The reduction in global temperature would not be measurable in 

100 years, yet the cost would be significant and payable now.’’ 

Mr. Chairman, I hope you and all the members of the Committee 

take those words to heart. 

Today, the United States has more recoverable coal reserves than 

any other country, over 263 billion short tons. Waxman-Markey requires us to ration that resource. 

China has 126 billion short tons in coal reserves. Russia has 173 

billion short tons, and you can add to Russia’s energy resources 60 

billion barrels of oil, 3 times what we have in the United States. 

Waxman-Markey puts no limit at all on how those nations use 

their natural resources. 

Here is the kicker. If you examine this issue from a truly environmental perspective, the United States produces more product 

per ton of emission than those other countries. We are more efficient users of energy. The argument that China and India are 

using, that per capita carbon emissions should be the standard 

with which to negotiate an international agreement, is flawed. I 

would think we would want to have a system that rewarded productivity and energy use. 

Waxman-Markey penalizes the best environmental steward in 

terms of the U.S. and does nothing to tackle the real problem. We 

strongly urge Congress to reject such an approach. 

I hear from farmers all over the Country who are following this 

debate, and they keep asking me: Why are they doing this? Frankly, I do not have an answer. 

As Mr. Lomborg points out, coal-fired power plants being build 

today in India and China have the potential to lift a billion people 

out of poverty. I think we can all agree that is probably a good 

thing. But we do not have to reduce the American standard of living at the same time, and we should not. Make no mistake, Waxman-Markey puts a huge economic burden on American citizens. 

This issue is at a critical juncture. It is imperative that this 

Committee formulate the strongest agricultural offsets program 

possible, but we also strongly urge all members of the Committee 

to work with your colleagues to make the right policy choices. If 

those choices cannot be made, then you should reject the overall 

bill, just as a strong bipartisan group did in the House. 

We hope this Committee will mark up your own provisions to be 

incorporated in any bill and conduct further hearings if you think 

it is advisable. If you take the time to evaluate this issue honestly, 

11 

fairly and objectively, we have no doubt you will craft a much better bill than the one passed by the House of Representatives. 

Never forget a few simple facts: If you want to change the climate in 40 or 100 years, this bill will not do it. If you want the 

U.S. to compete internationally, this is not the answer. If you want 

to make the U.S. energy independent, this is not the solution. 

Thank you again for the invitation to testify, and I look forward 

to answering questions. 

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

106 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Stallman. 

Now we will turn to Mr. Jo Pierce on behalf of the American Forest Foundation. Mr. Pierce. 

STATEMENT OF JO PIERCE, FAMILY TREE FARMER ON 

BEHALF OF THE FOREST CLIMATE WORKING GROUP 

Mr. PIERCE. Thank you, Chairman Harkin, Ranking Member 

Chambliss, Senators, for the opportunity to come talk with you 

today. 

America’s forests have a lot to offer when it comes to addressing 

climate change. Right now, according to the EPA, U.S. forests sequester and store 10 percent of our annual emissions. EPA estimates can double this number, supplying 20 percent of the Nation’s 

climate solution from our forests. 

This is a solution here in our own backyards. All we need to do 

is to encourage sustainable forest management. I want to be clear, 

we are not looking for people to plant trees on farmland. The problem is too many landowners who do not manage their land the way 

my family does, and we have to bring them along to do sustainable 

forestry. 

Forest offsets are a key cost saver in cap and trade. EPA’s analysis of the House bill showed reliance on U.S. forest offsets for over 

80 percent of domestic offsets. With such heavy reliance on forest 

offsets, forests are key to keeping the costs of a cap and trade system low. Including a strong role for forests in a cap and trade system will also provide thousands of new green jobs in rural communities, putting people to work harvesting the carbon in our forests. 

It is not just forest owners like me that agree about the strong 

role of forests in climate solutions. The Forest Climate Working 

Group, a diverse coalition of groups from the Hardwood Federation 

to the National Wildlife Federation, all support a strong role for 

forests in climate legislation. We will submit into the record a letter from this diverse group later in the day. 

To secure this climate benefit, climate legislation must engage 

the broad range of owners of U.S. forests. Most people think U.S. 

forests are owned by the Feds or big industry, but this is far from 

reality. In fact, over 10 million private forest owners in America 

own most of the Nation’s forests. Most of these owners are families 

just like me. I am a sixth generation family forest owner managing 

my land for income, wildlife and other community amenities like 

clean water and recreational opportunities. 

Why not for carbon sequestration too? 

12 

Unfortunately, with declining timber markets and increased development pressures, we are losing forest land. I get four or five 

offers for my land every year. 

Climate legislation can set up new income streams for forest 

owners to help them hang onto their land while providing climate 

benefit. To fully capture the estimated 20 percent of the Nation’s 

climate solution from our own forested backyards and engage the 

10 million owners of U.S. private forests, climate legislation must 

put the right incentives and market structures in place. 

So what are key elements of climate legislation that will engage 

the Nation’s private forest owners in climate mitigation activities? 

First, the legislation should establish environmentally sound offset markets that are flexible enough to engage a broad range of forest owners. Specifically, the legislation must: Specify forest project 

types, allowing offset projects from improvement of forest management activities with appropriate crediting for harvested wood products, not just tree planting. Provide flexible contracting options for 

landowners who may or may not be able to commit to a very longterm contract as required in many other offset markets right now. 

Reward early actors who have already taken steps to combat climate change. Provide a role for the USDA in offset markets. 

The House-passed bill contained improvements on some of these 

issues, but more can be done. 

Second, legislation should provide forest carbon incentives that 

capture climate mitigation benefits from forests that do not fit in 

the carbon offset markets. This is especially important for smaller 

forest owners who are not likely to participate in offset markets because the up- front investment is not likely to be recovered on 

small forest tracts. Interestingly, these smaller owners hold onequarter of the private forest land base. So these types of incentives 

are critical to fully tap the climate mitigation potential from private forests. 

Unfortunately, these incentives were not provided in the Housepassed bill even though an amendment was offered to create them. 

Third, the legislation should provide resources for forest adaptation activities to ensure that the climate mitigation tool we have 

in our forest backyard is not overtaken with impacts from climate 

change like drought, fires, pathogens and pests. 

The House-passed bill is an improvement, but more can be done. 

The bottom line is the U.S. forests have a lot to offer, and we 

should not miss the opportunity to deal with climate change while 

also setting up incentives and markets to keep families like me on 

the land and keeping it forests. 

Chairman HARKIN. Thank you very much, Mr. Pierce. 

Now we will finish our testimonies with Mr. Jason Grumet. Do 

I pronounce it Grumet or Grumette? 

Mr. GRUMET. Senator, shockingly, you did pronounce it correctly. 

It is Grumet. Thank you. 

[The prepared statement of Mr. Pierce can be found on page 100 

in the appendix.] 

Chairman HARKIN. Yes, we have good staff working. All right, 

Mr. Jason Grumet, President of the Bipartisan Policy Center. 

13 

STATEMENT OF JASON GRUMET, FOUNDER AND PRESIDENT, 

BIPARTISAN POLICY CENTER 

Mr. GRUMET. Well, good morning, Chairman Harkin, Ranking 

Member Chambliss and the Committee. 

As you note, I am Jason Grumet. I am the President of the Bipartisan Policy Center. On behalf of our founders, your former colleagues, Tom Daschle, Bob Dole, George Mitchell and Howard 

Baker, it is a pleasure to appear before the Committee today. 

Also I want a special thanks to go to Mr. Chambliss for the high 

protein breakfast snack that we all enjoy. We appreciate that very 

much. 

Mr. Chairman, the Bipartisan Policy Center was created to provide both the motivation and the infrastructure for the kind of 

principled compromise that you all well know is necessary for the 

kind of durable policy change that we need in this Country. Toward 

that end, we have projects underway on health care and national 

security, regulatory reform and transportation policy, but we have 

two projects that bear directly on the inquiry here today. 

The first is a project that was begun in 2001 called the National 

Commission on Energy Policy. This effort has brought together a 

diverse group of energy experts, chaired by former EPA Administrator Bill Reilly, John Rowe, who is the Chairman and CEO of the 

Exelon Corporation, and, until recently, by John Holdren, who you 

will be hearing from later today. 

Consistent with the way that you framed the challenge in your 

opening remarks, we see the goal as trying to figure out how we 

address the challenges of climate change consistent with our 

longer-term national security and economic goals. And, in particular, we focus on mechanisms to address, I think, many of the 

very real concerns that Mr. Stallman has raised: How do you ensure that you can address climate change in a meaningful and sincere way without having excessive volatility in prices or excessive 

impacts on the economy? I will draw from some of our thinking in 

a moment. 

The second project is a project that Senators Daschle and Dole 

have led personally. This is the 21st Century Agriculture Policy 

Project. They have been working together for several years. They 

have produced two reports which have been submitted to the 

record previously, but as we are down to our last 18,000 copies I 

have brought a few more for your enjoyment. These reports really 

focused, first, broadly on the questions of what are new opportunities for agriculture in new competing markets. 

They held a series of hearings around the Country. They conducted and sponsored a series of analysis, some by Dr. McCarl from 

Texas A&M, who I know you are also working with. In the conclusion of Dr. McCarl, the sense was that a well-designed market that 

took advantage of all these opportunities could in fact provide net 

benefits for the agriculture community. 

On the basis of that and their analysis, and I will quote, Senators Daschle and Dole concluded in the first study that ‘‘Federal 

action to establish a mandatory program to limit greenhouse gas 

emissions is sensible and will provide agricultural producers with 

significant new market opportunities.’’ 

14 

They continue that ‘‘The agriculture sector is in a unique position 

to lead and benefit from efforts to address climate change.’’ 

The second study focused on taking that theoretical possibility 

and figuring out how, in practice, to capture the real opportunities 

to provide a new economic impetus for American farming and forestry through carbon sequestration activities. 

I think the prior witnesses have done an excellent job of framing 

the risks and opportunities that we have, and I think the principal 

point I want to share with you is that it is really up to you. You 

can design a carbon mitigation strategy that mitigates the costs 

and takes advantage of those opportunities in a way that is going 

to be very good for American farming and forestry. But it is equally 

true that a poorly designed program that does not address the risks 

of high cost and price volatility and does not capture the very significant opportunities for agriculture will harm the industry. 

I think it is important to move away from this kind of binary culture war of is climate change going to be good or bad for American 

farming. The answer is it depends, and I think we have the opportunities now that I would like to reflect upon to chart that productive course. 

So, first of all, I want to embrace Mr. Stallman’s challenge, that 

we have to think seriously about the potential for price volatility 

and the costs borne by agriculture and all energy-intensive industries. This Committee, like those before, has always faced the challenge of having sensible experts who reach wildly different views 

on the costs of climate change control, and that comes from the fact 

that you can put together a number of reasonable optimistic or reasonable pessimistic assumptions on the progress on technology, on 

future prices for natural gas, on the availability of offsets and 

reach wildly different conclusions. 

This has been going on for quite some time. In the 1990’s, the 

Council of Economic Advisers concluded that we could achieve compliance with Kyoto for between $14 and $23 a ton, but the Department of Energy thought it would be $95 a ton. 

We have the challenge of people coming forward and basically 

having the kind of my modeler is smarter than your modeler fight. 

Ultimately, of course, we do not know. 

It is important, I think, to have mechanisms that do not rely on 

the magic words, ‘‘trust me’’, because there is simply not enough 

trust in this debate, and the stakes are too high to gamble our future on one side or the other being right. 

The good news is those mechanisms exist. Our Energy Commission proposed many years ago the idea of a cost cap in the early 

years of the climate program, called the safety valve, in which the 

government would provide credits at a fixed price to people who 

had a compliance obligations. By setting that fixed price, you could 

provide a meaningful absolute cap on the total cost of the program. 

This idea has matured over the years, and in the Warner-Lieberman legislation and in the recent House bill the idea of a credit reserve, which I am happy to talk about in more detail, is something 

that we have helped develop and support. This would take credits 

from the future and put them in a transparent vat that you could 

go access if in fact it turns out the technology is not proceeding at 

the pace that we hoped. 

15 

Either of these mechanisms provide the opportunity for predictable and transparent cost containment, which we do believe is 

going to be necessary to build a meaningful bipartisan consensus. 

I will note that there are a few other mechanisms that the House 

bill and prior Senate bills have take advantage of. First of all, as 

I think Mr. Chambliss points out, farming is an energy-intensive 

industry. As Senator Stabenow and others have spent a great deal 

of time focusing on how we address the transition for energy-intensive industries, one good opportunity is to provide free permits for 

a period of time so that companies have the resources to invest and 

modernize and become more efficient. I think the House made a 

smart choice in including key aspects of the agriculture sector in 

that energy-intensive category—fertilizer manufacturing, wet milling and others—and we commend you to look at those ideas. 

Then, finally, issues of market design are important, and, Chairman Harkin, I know this is a concern of yours. The words, marketbased program, are not quite the selling point that they used to be 

in proposing new policy ideas since the financial collapse. 

One of the benefits of cost containment, having both a price floor 

and a price ceiling, is that you reduce the market volatility. Consumers do not like volatile prices. One group that does like volatile 

prices is Wall Street. That is where, if there is going to be mischief, 

that mischief can come from—arbitraging the highs and the peaks 

and the valleys and the lows. 

If you have a cost collar, both a cost floor and a cost cap, you 

can dramatically reduce that concern and, importantly, do so without coming up with overly prescriptive regulations that could actually seize the market and stop it from functioning at all. We think 

you do need to be careful not to try to be overly prescriptive in regulating the market. Having a cost cap for the first several years, 

we think, is a good opportunity. 

Let me turn now in the limited time I have left to the good news, 

to the opportunities to capitalize on the significant ability of agriculture and forestry to help solve this problem. 

The House debate focused greatly on which agency should have 

the lead, and we commend and applaud Chairman Peterson’s efforts to demonstrate the important role that the agriculture community and the USDA should play in leading this program. Senators Dole and Daschle focused less on which agency should have 

the lead and more on what is a program design that would encourage the kind of collaboration and discourage the conflict that we 

have seen from time to time between environmental and ag advocates and between USDA and USEPA. 

I want to very much reinforce Mr. Johnson’s suggestion that we 

take a two-track approach. Senators Daschle and Dole believe that 

we should have unlimited access to domestic farm offsets for 

projects that can be demonstrated to meet the rigorous measurement, permanence and additionality requirements, but they also 

recognize that not all programs are going to fit easily into that set 

of ideas, and there is a real concern that the high level of scrutiny 

could slow down the market in a way that we cannot tolerate. 

So they propose, I think similar to Mr. Johnson, that we have a 

second track where we encourage more innovation and more experimentation, and we do so by insuring the program with emisVerDate Nov 24 2008 08:03 Sep 21, 2010 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\56563.TXT SAG2 PsN: SAG2
16 

sion credits. Rather than giving those credits to somebody to emit, 

you hold those credits aside and you use these allowances to essentially provide insurance against more innovative and creative 

projects—projects that are more complicated because there are 

early action issues that create concern over baseline, projects in 

which they are brand new and we need to learn our way through 

that system. 

Just like we provide bonus allowances to encourage carbon sequestration, just like we support the need for loan guarantees for 

nuclear power, we need to have an opportunity to be experimental. 

It is in that spirit that we are confident that the ag and the environmental communities will work well together. 

The offsets program in its most rigorous form is an all or nothing 

proposition. It forces EPA to focus on the 5 percent that is imperfect and not the 95 percent that is perfect. So having this alternative mechanism, we think, will enable much greater collaboration. 

So, in closing, I just want to make two points. First, absent purpose-designed climate legislation, the government will have no 

choice but to use the existing statutes that you have all passed, 

that being the Clean Air Act. As Mr. Johnson points out rightly, 

that obligates EPA to focus on the glass being half empty. It obligates them to focus their considerable regulatory authority in traditional command and control regulation, and they do not have the 

ability to enable the ag and forestry communities to capitalize on 

the significant opportunities through sequestration. 

Finally, this Committee has a proud history of bipartisanship 

and putting the interests of agriculture ahead of party interests. I 

will note that despite the tremendous themes and theories of Purple Nation and bipartisanship in the campaign, when I tell people 

these days that I run something called the Bipartisan Policy Center, they tend to smile and say, good luck with that. 

We need more than good luck. We need real leadership, and this 

is the Committee, I think, that can bring the debate back to focus 

on the real substantive challenges and design a program that is 

truly going to be in the best interest of American agriculture and 

forestry. I look forward to the opportunity to be able to work with 

you in that regard. 

Thank you. 

[The prepared statement of Mr. Grumet can be found on page 74 

in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Grumet, and 

thank you all for good testimonies, not only verbally but your written testimonies. 

We will start now rounds of 7–minute questions, and, if we can 

get the clock reset here, I will start. 

First of all, I will start with Mr. Johnson. 

The Farmers Union Carbon Credit Program allows producers to 

earn income by reducing greenhouse gas emissions through no-till, 

anaerobic manure digester systems, tree plantings and other sustainable management techniques. It is my understanding that carbon sequestration methods can be implemented with conventional 

farming techniques so that the agriculture community can provide 

carbon offsets in a cost-effective manner while acquiring new revVerDate Nov 24 2008 08:03 Sep 21, 2010 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\56563.TXT SAG2 PsN: SAG2
17 

enue. So I think it is not a matter of deciding to grow carbon or 

crops. Producers can be growing both crops at once on the same 

land. 

Could you elaborate on the opportunities that a global warming 

bill could bring to farmers? How large was your effort and how 

many farmers have participated? What does the trend look like? 

Are farmers able to adopt these practices? Those are kind of the 

questions I want to get into on your carbon credit program. 

What would happen to your program? How might it accelerate if 

in fact we did in fact have a cap? Right now, there is no cap. I do 

not know how much your farmers are making, but with a cap, obviously, those offsets become more valuable. 

Mr. JOHNSON. Well, thank you, Mr. Chairman. 

On Page 7, near the top of my testimony, I give you some of the 

numbers: about 5 million acres that have been enrolled, 30—I 

think the latest number is closer to 40—States, about $9.5 million, 

about 4,000 producers. 

But the crux of your question really gets to what are the opportunities and is there a difference between the voluntary program that 

we operate now and a mandatory program that would exist under 

a cap? Let me take those in two pieces—first of all, the kinds of 

things that would and should be eligible. 

First of all, we have no-till practices. There are lots of science 

that says you follow no-till practices, especially in certain areas of 

the Country, you clearly sequester carbon and store it underground 

in the root structure at variable rates. And so, under the program, 

there is a larger credit that is given to a farmer in one part of the 

Country versus another part of the Country because the science 

says that that is the way it ought to be. 

Precision farming is one of those that we have not yet had approved through the CCX. This voluntary market has only been 

operational for about 3 years. In 2006 is when we entered it. So 

it has not been around all that long. 

But, under precision farming, one of the very deleterious greenhouse gas emissions that exists is nitrous oxide. It is like 300 times 

more potent than carbon dioxide. So, by certain kinds of fertilizer 

practices that reduce those gaseous emissions of that nitrogen 

going into the air, you can clearly reduce greenhouse gas emissions. 

No we have not advanced the protocols yet to the point where we 

are actually giving folks credit for that, but certainly that is a good 

example of the kinds of R&D that ought to be funded so that we 

in fact could figure out a way to appropriately compensate folks for 

that, if not under offsets then under the allowance pool that we 

have been talking about as well. So there are lots of those kinds 

of examples. 

Now, as to your question about what is the market likely to look 

like in a voluntary versus a mandatory system, I think the average 

price that our folks have received has probably been in that three 

to four, maybe five dollars a ton range. Today, it is well under a 

dollar a ton for two reasons. The economy collapsed, No. 1. No. 2, 

all the uncertainty that is generated by these debates in Congress 

right now lead people to wonder whether what they are signing up 

for today will be eligible under a system going forward, and so that 

has a severe market-depressing impact. 

18 

Pretty clearly, under a mandatory system, that uncertainty 

would go away once you have a bill that is passed and you know 

what the rules. Most models suggest that the value of a ton of carbon would go up significantly under a mandatory system. 

Today, the value is determined mostly out of the graciousness of 

some large companies, both national and international companies 

and that are voluntarily purchasing these carbon reductions in 

order to have a clean, green image to the press or maybe they have 

got some attendant obligations under Kyoto because they are a 

multinational company. Maybe they just want to do kind of the 

right thing environmentally. Maybe it is part of their marketing 

program. But, whatever it is, it is different reasons for different 

companies, and it is voluntary. So, as their income goes down, you 

know the likelihood of them investing in these voluntary things 

goes down with it as well. 

Chairman HARKIN. First of all, I just want to say at the outset 

to everyone here that this whole debate, I guess if you want to call, 

about whether or not early actors as we now call them—I get all 

kinds of new phrases coming down here—will be folded into the 

system. I can assure you they will be. I have spent too many years 

on this Committee and in the House committee watching programs 

come up that require a farmer to tear up conservation practices in 

order to redo them to qualify. 

Mr. JOHNSON. Exactly, exactly. 

Chairman HARKIN. It ain’t going to happen. OK? 

Mr. JOHNSON. Good. 

Chairman HARKIN. There are very few things I can guarantee 

but on that one, we are going to make sure. 

Mr. JOHNSON. All right. 

Chairman HARKIN. We did that in the conservation stewardship 

programs, saying that if you were doing these practices you were 

eligible for it just as much as anyone else. So I want to make that 

very clear, and I think we will find probably a pretty good consensus here on this Committee and in the Senate for that. 

The other thing, does it makes sense right now for your farmers 

to adopt some of these practices, economic sense, Mr. Johnson? You 

are talking about a dollar a ton? 

Mr. JOHNSON. Yes. At that price, certainly, that is not at a high 

enough level to sort of induce people to do something that they otherwise would not do, and that is one of the fundamental precepts 

of an option, by the way, of the various protocols that are involved. 

It is the principle of additionality. You want folks to do something 

that they would not otherwise do in the absence of that offset opportunity. So that is something that we are really struggling with, 

with the market as low as it is right. 

But, over the last weekend, I met with a dairy farmer in southern Virginia who is very seriously looking at putting in a methane 

digester, a fairly sizable dairy producer. Well, it is not economical 

today. I mean you just cannot make it work just on dollars and 

cents. 

He wants to do it for all the right reasons. He likes the environmental impacts. He is in an area where he has got a lot of neighbors. They would appreciate the fact that the odor problem largely 

disappears with methane digesters. If you have a significant value 

19 

that can be attached to the reduction of that methane, the destruction of that methane by burning it, that is probably enough to tip 

a number of folks over into adopting those kinds of practices that 

have a multiplicity of benefits for the environment. 

Chairman HARKIN. Well, thank you. 

I, obviously, have questions for other panelists. I will have to 

wait until my second round. Now I will turn to Senator Chambliss. 

Senator CHAMBLISS. Thank you, Mr. Chairman. 

Mr. STALLMAN AND MR. Johnson, both of you represent large producers from different parts of the Country, but the testimony of the 

two of you differs substantially on the costs, the benefits and the 

other likely impacts of the House bill on production agriculture. I 

would like for both of you to comment on that. 

What is the reason for this difference, Mr. Johnson? 

Mr. JOHNSON. Well, you know I think it is important, Senator 

Chambliss, that maybe we talk about where we agree. You know 

Mr. Stallman can certainly have a chance to respond to this after 

I do, but I think on pretty much all the kinds of things, if you listen closely to my testimony and to his testimony and the testimony 

of the other witnesses, these kinds of things relative to agriculture, 

if they are folded into a bill, these are all things that we agree on. 

Where our fundamental disagreement lies is whether we ought 

to pass a bill like this or not. 

You know I can only speak for myself and for my members. Our 

policies are adopted by all of our members as they come together 

in the national convention, and we have had this policy for a number of years. It has been longstanding policy. 

I would say a couple of things. First of all, we take seriously this 

threat that EPA may at some point, under existing law, go out and 

try to regulate what is going on in agriculture. We do not like that 

idea very much. 

Under the Clean Air Act, you now have a Supreme Court decision that basically compels them to do it. You have an 

endangerment finding that fits into that. You have a regulatory 

threshold under the bills that are being contemplated that is a 

thousand times larger than the regulatory threshold under the 

Clean Air Act. 

That is why farmers, most farmers and ranchers are excluded 

under the cap and trade legislation. They are provided these optional opportunities. Under EPA, that may be that we may be required to do a whole bunch of things. And so, we take that very 

seriously. 

We also think that we believe the science. I mean the science 

seems compelling. It says climate change is happening, mankind is 

having an impact on it, and we need to do something about that. 

Now whether it is all this bill or something else, you know there 

is a lot of room for us to come together on different parts of it. We 

think something needs to be done, and we want to be helpful in 

that debate, and we would be delighted to work with you. 

Chairman HARKIN. OK. Mr. Stallman? 

Mr. STALLMAN. Senator, with respect to our economic analysis, 

we were trying to figure out some common set of numbers or assumptions to use, and so we used the EPA’s analysis of the Waxman-Markey bill which we view as a very rosy scenario in terms 

20 

of impact on energy costs. That is what gave us our $5 billion reduction in net farm income and up to $13 billion reduction in net 

farm income. So our economics team used that as the basis for trying to analyze the impact on agriculture. 

Once again, you can pick other assumptions. You can pick higher 

energy costs, which we feel are more likely than not given the 

EPA’s assumptions about the Waxman-Markey bill and how fast 

things like nuclear and solar and wind-generated electricity will 

come online, and come up with much worse numbers. 

We do disagree with my colleague here relative to a couple of 

issues. One is we are focusing on the Waxman-Markey bill and 

what the impacts of that are going to be. Once again, that bill, 

even by proponents of the global warming crowd, will do little or 

nothing to address this problem. And so, then our question becomes 

why are we burdening the U.S. economy with a bill that admittedly 

will not do anything to address the problem that it is purported to 

address? So that is one area that we disagree with pretty substantially. 

On the EPA regulation issue, currently, under the endangerment 

finding in the Massachusetts case, EPA has the obligation to regulate basically auto emissions. All of the rest of their proposed regulation is very speculative. 

I find it very difficult to believe that this Congress would give 

them the amount of resources necessary to come out on a farm by 

farm basis and regulate agriculture. It may happen. I am not saying it cannot happen, but that would be so burdensome and onerous. I think there would be an outcry that this Congress would address. So I am not as concerned about that as my colleague sitting 

next to me is. 

Those are some of the fundamental differences that we think, but 

it really comes back to looking at the specifics of the Waxman-Markey bill and trying to determine what those impacts will be, not 

only on agriculture but on America in general. 

Senator CHAMBLISS. And, again, I assume this is not Bob 

Stallman’s opinion. It is the opinion of your membership in some 

sort of formalized way. 

Mr. STALLMAN. Well, absolutely, Senator Chambliss. I did not 

talk about our decisionmaking process, but we actually start out at 

the county level with proposals that go up to a State level meeting 

and then ultimately to our national meeting, all decided upon by 

our delegates that are there representing their respective members 

at each level. It is a very democratic, grassroots process, and it allows for a lot of debate. In fact, it allows for about 5 months worth 

of debate every year on these issues, and that is how we derive our 

policy positions. 

Senator CHAMBLISS. Mr. Johnson, I can appreciate the willingness of your members to want to address climate change. However, 

in your testimony, you do not address the cost aspects of the House 

bill and a cap and trade program. Yet, these costs are likely to be 

significant for producers in every rural part of America. 

Has NFU done an analysis of those costs and what do you think 

about the other studies that have been done that are going to 

project these high costs on your membership? 

21 

Mr. JOHNSON. Senator Chambliss, we are concerned about the 

costs. We are convinced that there will be some increased costs to 

producers. Energy costs are going to go up. I do not think there is 

much debate about that. As a result, you are likely to see fertilizer 

prices, particularly nitrogen fertilizer prices, go up. So you are 

going to see costs go up. 

We have not done our own independent studies. Lots of studies 

have been done, as you know. Mr. Stallman talked about their inhouse study. Ohio State just did and released a study. The FAPRI 

released a study. Most of these have been considerably lower than 

what the Farm Bureau study result has been. 

All of these have not included the costs of doing nothing, and 

that is a real challenge that I think all of us have. We do not have 

the resources to do that, but I hope that this Committee will figure 

out, will try to sort out is there a methodology to quantify these 

additional costs to risk management, to insurance companies, to 

disaster payments that Congress is likely to authorize as a result 

of the increased flooding and droughts and fires and pestilence— 

those sorts of things that pretty much the body of scientific evidence suggests is the outcome that we are likely to see more and 

more of in increasing amounts as global change continues to happen. 

Those are difficult things to get your arms around, and so we do 

not have an internal study that we have looked at, but there are 

have been a lot of studies out there. I think the FAPRI study basically said the cost to the average person is like 50 cents or something like that. There was another study that says it is going to 

be less than $5 an acre on average, much higher for some crops, 

lower for others. So they are kind of all over the board. 

Senator CHAMBLISS. Mr. Pierce, quickly, you talked about a small 

forest landowner not really being able to participate in the Housepassed design. What are we talking about with a small forest? Are 

you talking about 50 acres, 100 acres, 200? What range are you 

looking at there? 

Mr. PIERCE. We are talking about 100 acres or less. It just does 

not pay to do all the auditing and the setting up of a carbon sequestration program. 

Senator CHAMBLISS. OK. Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Chambliss. 

I might just add that I just received this morning a preliminary 

analysis of the effects of H.R. 2454 on U.S. agriculture from the Office of the Chief Economist at USDA. It was just delivered this 

morning. I think this would be a good point just to read the executive summary. 

They said that USDA performed a preliminary economic analysis 

of the impact of the House-passed bill. The analysis assumes no 

technological change, no alteration of inputs in agriculture and no 

increase in demand for bioenergy as a result of higher energy 

prices. Therefore, the study overestimates the impact of the climate 

legislation on agricultural costs in the short, 2012–2018, medium, 

2027–2033, and long term, 2042–2048. 

In USDA’s analysis, short-term costs remain low in part because 

of provisions in H.R. 2454 that reduce the impacts of the bill on 

fertilizer costs. In fact, the impact on net farm income is less than 

22 

a 1 percent decrease. In the short run, agriculture offset markets 

may cover these costs. Over the medium term and long term, cost 

to agriculture rise but remain modest, 3.5 percent and 7.2 percent 

decreases in net farm income respectively over the medium and 

long term. 

However, benefits to agriculture from an offsets market rise over 

time and will likely overtake costs in the medium and long term. 

Other studies that account for the impact of higher energy prices 

on input substitution and demand for bioenergy find that H.R. 

2454 leads to higher agricultural incomes even without offsets. 

In summary, USDA’s analysis showed that the agricultural sector will have modest costs in the short term and net benefits, perhaps significant net benefits, over the long term. 

Their table that they had here showed that the effects in the 

short term from 2012 to 2018: Total expenses, 0.7 billion; fertilizer 

and lime, less than 0.1. So the total of fuel, oil and electricity is 

about 0.7. So about seven-tenths of a percent increase in farm expenses from the 2012 to 2018 timeframe. 

So this is USDA’s analysis. I am sure you will be reading about 

it today, but I thought this would be the appropriate place to mention that we just got that to the Committee today. 

Now, in order of arrival, Senator Johanns, Senator Lugar, Senator Stabenow, Senator Roberts, Senator Klobuchar, Senator Lincoln. So I will recognize Senator Johanns. 

Senator JOHANNS. Mr. Chairman, let me start by just expressing 

my appreciation not only to the witnesses but to the Chairman for 

calling this important hearing. I do appreciate it. 

Mr. Johnson, let me start with you. The legislation is so complex 

that I could probably spend 2 hours with each witness, and we do 

not have 2 hours. We have 7 minutes in the first round at least. 

But I was struck by the fact that one of the things you said at 

the start of your testimony was that Waxman-Markey was a step 

in the right direction, and I want to drill down a little bit deeper 

on that. One of the things that I understand about Waxman-Markey is that it does not help out the early good actors. Is that your 

understanding also? 

Mr. JOHNSON. Senator Johanns, I think Waxman-Markey could 

be improved by this Committee significantly on the question of 

early actors, and that is really one of the things. They just did a 

tiny something, like a quarter of a percent of the allowance allocation. That is one of the reasons why we have asked for a 5 percent 

of the allowances to go to USDA to figure out how to appropriately 

deal with early actors. 

The early actor question is a really difficult question because the 

purists—and I do not mean that pejoratively—when dealing with 

offsets, will argue that you should not pay someone for doing something that they would have done anyway. If you do, you are violating this principle of additionality. 

But most of us who live in the real world would say, well, the 

last thing you want to do is to incent someone to plow up no-till 

so you can redo no-till or to take land out of CRP so you can put 

it back into permanent grass. 

To deal with those things, there are a couple of ways you do it. 

You either bend that definition of additionality. What we would 

23 

argue is you use a baseline, and the House did that, of 2001. For 

practices beginning after 2001, going forward, they are eligible. 

That bends that definition a little bit. But, beyond that, you need 

to provide another pool of resources so that you can put policies in 

place that do not provide these sorts of perverse incentives. 

Senator JOHANNS. To date, there is a real deficiency here. It is 

not only in the legislation, but it is also in what USDA is saying. 

USDA, in testimony before EPW, says ‘‘To ensure that carbon offsets result in real atmospheric benefits, carbon offsets must be additional. That is carbon offset credit must not be awarded for actions that have happened in the absence of the offsets policy.’’ 

So, at least to date, this Waxman-Markey bill is a very serious 

problem for agriculture. Would you agree with that? 

Mr. JOHNSON. Well, no, I do not know that I would. 

First of all, what I would agree with is that definition that you 

just read from the Secretary, I think, very accurately summarizes 

the principle of additionality that proponents of offsets insist upon 

being met. 

Senator JOHANNS. That very well summarizes the position of the 

USDA. 

Mr. JOHNSON. Well, you will have to ask the Secretary. I am sure 

you will later today. But I suspect that it does. It is on the record. 

And, it is for that very reason that you need another pool of money 

to deal with these early actors. 

To get to the premise of your question initially, it was about my 

statement that the bill was a step in the right direction. There is 

a lot of things sort of built into that summary statement, if you 

will. 

One of the things that I think and I hope will happen in the Senate is that you will have the benefit of looking at the language well 

in advance of having to make decisions and will have the ability 

to make lots of adjustments that many of us, as we were involved 

in testifying on the House side, we just simply did not have that 

advantage. Language arrived late. It is sort of the nature of the 

process. I understand that. 

But, hopefully, the best news I heard out of this was announcements by your Chairman and other chairmen over here saying that 

they intend to use the language of the House as a starting point. 

I think that is wise because it is complicated language. Undoubtedly, there is lots of room for improvement. 

Senator JOHANNS. What other areas, as you have now had a 

chance to review and analyze the bill, would you say we should reject, pay attention to? What other deficiencies do you see in Waxman-Markey? 

Mr. JOHNSON. If you will look at my testimony beginning on Page 

3 and through Page 5, I summarize, and, again, the focus that we 

have taken here is on the agricultural and forestry offsets. I summarize a number of the principles that we think are very important. 

We think in the case of early actors they did not go far enough. 

We have already talked about that. 

On the question of unlimited domestic offsets, they have a limit 

that is imposed. In fact, this is another area where I think Mr. 

Stallman and I would agree. We think there ought not be a limit 

24 

there, and we think you ought to devise a system that gives preference to domestic as opposed to international offsets. 

We think while there was some language in there trying to deal 

with this, the international trade issue, that is an enormous for us. 

If we go down this path and major emitters like China and India 

do not, then we are at a significant competitive disadvantage. You 

need to have some provision, whether it is through the use of tariffs or something, that will sort of level that playing field, if you 

will. And, it would probably need to be country by country because 

much of the rest of the world were signatories to Kyoto, and so 

they are embarking on something not identical but probably similar to what we are talking about here. 

Senator JOHANNS. Let me stop you there, Mr. Johnson. 

Mr. JOHNSON. OK. 

Senator JOHANNS. What if we do have a tariff system on China? 

China has basically said: We are not going to agree to caps. Take 

a hike. 

So, if we have a tariff system on China’s goods, whatever the 

goods are we want to put a tariff on or some kind of trade barrier 

or whatever, what do we do when China says, we do not want your 

soybeans? 

Mr. JOHNSON. Well, you know you raise a really good point, and 

the point is about the integration of our policies with respect not 

only to this legislation but with respect to our negotiating positions 

at the WTO and those sorts of things as well. You need to. That 

is something that we do not have a lot of expertise in. We just 

think that that is something that you need to deal with. 

My guess is that what China is saying and what India is saying 

is going to be muted and defused as the years go by, in fact, as the 

months go by, leading up to the big conference in Copenhagen in 

December. Some of this is probably positioning. Some of this is 

making sure that different countries have the moral authority to 

stand up and argue one way or another way. 

It would be my hope that what happens, depending upon where 

this legislation is in this Country, that our Administration will go 

to Copenhagen and argue with as much passion as possible that 

the rest of the countries of the world need to be joining in this fight 

because a ton of greenhouse gas emissions, whether it comes from 

the U.S. or China, has the same impact. 

Senator JOHANNS. Let me wrap up because I am out of time, but 

I will say this. With many years of experience in dealing with 

them, they are not positioning. Ask our pork producers. Ask them 

about poultry. They are not positioning. On the last day, China will 

look out for China. 

Chairman HARKIN. Thank you very much, Senator Johanns. 

Senator Lugar. 

Senator LUGAR. Well, thank you, Mr. Chairman. 

Let me just say at the outset that when asked by the press 

whether I would have voted for Waxman-Markey if I had been in 

the House, my answer is no. Now this does not mean that I am 

opposed to our Committee writing a bill, and I look forward to 

working with the Chairman and the distinguished Ranking Member. But we have just touched upon one reason why we really have 

a danger zone, and I understand the problems of dealing with 

25 

China and India and the fact that they are not very cooperative but 

there is already a little bit of a protectionist tendency in our governmental policies perhaps because of the recession, loss of jobs 

and so forth. It is sort of an easy throw to gain support for something that really ought not to be in the trade area. 

In addition, I would hope that even though persons were pleased 

that you could pass any bill on cap and trade or climate change 

and therefore exult really in the legislative success, I am not convinced that the impact upon CO2 or greenhouse gases is very substantial even over the long run of this, in part because so many 

compromises had to be made to draw one person after another 

across the line. So it is there, but maybe we better really try again. 

It is in that spirit that I listen carefully today, and I appreciate 

some thoughts that have arisen from this panel, one of which was 

that ag emits maybe 7 percent of the problem but could contain 25 

percent under certain circumstances . That is truly remarkable. If 

American agriculture alone is able on a net basis to take care of 

18 percent of the problem, that is a good bit more, I think, than 

the whole Waxman-Markey bill will be finally evaluated as. So we 

ought to listen carefully as to how that is going to occur. 

Now one of the ways that it occurs is, for instance, through the 

early actors guarantee that you have talked about, Mr. Johnson, 

and you have talked about, Mr. Pierce. 

Let me just admit that I have been intrigued by this issue for 

a while. As Chairman of the Foreign Relations Committee, we had 

hearings in 2005 and 2006, and you participated in one of those, 

Mr. Grumet. We appreciated that. 

Clear back when I was Chairman of the Agriculture Committee, 

in 2000, we had a hearing on this issue, a long time ago. One of 

the things that came from that was Chicago Climate Exchange testimony, and on one occasion I was asked by Mr. Sandor to become 

a client or a partner or what have you of the Exchange. So people 

came out to my farm and measured trees that had just been planted. 

Now here we have, of course, the problem of the early actor business. We have hundreds of acres of trees that had been planted, 

but they are off the reservation. Nonetheless, they were measured, 

and so I have been an active participant and looking at the web 

site of CCX almost every day. It is only about 55 cents a ton. Now 

I have had some good days. It was $7 a ton back 2 or 3 years ago. 

It even got to four during the last climate change debate with Warner-Lieberman or what have you. 

So I have been appreciative of the National Farmers Union group 

coming for celebrations here, with the tree people and the no-till 

planting people, with the Farmers Union aggregated farmers. 

There are forestry groups now I am pleased to see, and you 

might comment about this, Mr. Pierce, that are prepared to do 

some aggregation of forest owners, the small people, the people 

that might not ever get the measurements or will get into an argument over early actors or all the rest of it. 

In other words, in order for ag to come into play, we really have 

to begin to think through the rules of the game so that people can 

participate. So I am storing tons of carbon in the trees that have 

been planted. I get a reading each year from CCX, and I am much 

26 

interested in this. A lot of farmers in Indiana are too but feel 

cheated of the opportunity really to get in, in this respect. 

Now let me finally mention I think since a third of my farm is 

also in trees, a third in corn, a third in soybeans, I am interested 

in the fertilizer problem. You have touched upon this today, and we 

want to follow that very closely because this is a cost factor obviously for anybody who is in that business. 

But, at the end of the day, this could be a very constructive Committee because we may be able to solve a good part of whatever the 

climate change problem is without arguing the cosmic issues of 

whether there is a big problem, a small problem, one now or here, 

and do constructive things. 

I just want to ask you, Mr. Pierce, for an additional bit of testimony. How would you go about, in the early actor business, of 

using either of our two great farm organizations if they were to aggregate people? And, maybe that is not a good idea, but how do we 

get forest owners, all these hundreds of thousands and what have 

you that you have mentioned into the ball game? 

Mr. PIERCE. Well, the American Forest Foundation has two pilot 

programs right now which are trading carbon credits on the CCX. 

So there is aggregation going on. 

We need to have any program administered and the rules written by the USDA. They are the people we trust. As one-third of 

your farm is in trees, it is more like 95 percent of my farm. But 

I still farm about 35 acres, and I deal with USDA. You know they 

are down the street, so to speak. 

We need flexibility. We need flexibility as to areas of the Country 

being treated differently. There are different practices that would 

sequester carbon in different areas of the Country. 

We need flexibility in length of contract because family forest 

owners want to have a length of contract that is comfortable for 

them. I have heard of very long contracts that would go beyond my 

lifetime. I cannot commit to what my son’s practice will be. 

Yes, we need to reward the early actors. I practice, I think, the 

best forestry that can be practiced in Maine, and I do not think I 

should be left out of the program. 

Senator LUGAR. My time is about concluded, but let me just add 

one sort of editorial comment. A mention has been made because 

frequently it is sort of dragged into this, that, by golly, if we do not 

act, why heaven help us because EPA will come into this and EPA 

with the Supreme Court ruling will take care of this. 

No, I think no one of us—there are 100 Senators—can set the 

law. But I would just say I believe I could get a majority of Senators to repeal whatever is in the EPA act to eliminate EPA out 

of this picture—the audacious idea that somehow or other we have 

to be pressed into this kind of legislation because somebody at EPA 

finds that things are askance. I am outraged by the measurements 

of corn ethanol being done by EPA using extraneous events, and 

the House bill tried to meet that, and I appreciate that fact. But 

it is outrageous. 

So I would just say that we would have another debate in another committee perhaps, dealing with EPA, but we ought to be 

dealing with agriculture in a very straightforward way. 

I thank you, Mr. Chairman, for giving us this opportunity. 

27 

Chairman HARKIN. Well, thank you, Senator Lugar. I remember 

when you started these hearings back when you were Chairman of 

this Committee. So you have always kind of been in the forefront 

of this sort of effort, not only on agriculture but on foreign relations, and I look forward to working with you and tapping into 

your expertise on how we as an agriculture committee move forward on this. 

As you know, I guess we made some kind of a tentative agreement. I do not know if it is tentative or actual, but we made an 

agreement that by September 28th that we would submit to the 

EPW our recommendations. So, hopefully, our staff and your staff 

can work together on this, with other members of the Committee 

of course. 

Now, Senator Stabenow. 

Senator STABENOW. Well, thank you very much, Mr. Chairman, 

for your leadership and welcome to all of the members that have 

joined us from very important perspectives and organizations. 

Let me just start by saying that it has been a pleasure to work 

with the Chairman, your staff and others in the last year since the 

subcommittee that I chair held a hearing on offsets when the previous bill was up before consideration. At that time, I began to 

really focus and understand how important an offsets program is 

and how important it is that agriculture be participating as part 

of the solution and benefit from anything that is done as it relates 

to a new clean energy policy. And so, everyone who has been involved in working with us and all the staff, we very much appreciate that. 

One of the things that struck out to me at the time was, and the 

numbers can vary a little, but EPA has said that 20 percent of the 

greenhouse gas emissions in the U.S. can be sequestered in agriculture and forest lands. And so, whether that is 15, whether that 

is 20, whether that is 25, I think that is very significant and is 

something that certainly I know we as a Committee want to make 

sure happens from a positive standpoint. 

All of us struggle around the cost issues. Whether I am here with 

my agriculture hat or I am in other committees focused on manufacturing, my goal and I know other goals of colleagues is to make 

sure this is a net winner, not a loser, and it has to be in terms of 

the economy moving forward. 

I am struck, though, by a couple of studies, and the Chairman 

just talked about the USDA analysis. But Iowa State, and I would 

like for the record to say I graduated from Michigan State, Mr. 

Chairman, but Iowa State has suggested that the cost of corn will 

increase $4.52 per acre but with offsets the benefits would be $8 

an acre. So that is what we want to have happen. If that in fact 

is accurate, that is the direction we want to go in. 

Also, Texas A&M agriculture researchers said that there could be 

a net profit benefit, a net increase in profits of as much as 24 percent after taking in consideration of additional costs. 

So, Mr. Chairman, I know that our goal is to make sure those 

numbers are the numbers that happen and that we are not in a 

situation where agriculture is hurt by this policy. 

I have a lot of questions, but, Mr. Grumet, let me start with you 

first. I think it is important to ask a question just in general. We 

28 

have heard a lot about the Waxman-Markey legislation and whether or not it will make a difference in climate change. I mean does 

that bill make a difference? Is it worth building on that? 

Mr. GRUMET. Well, Senator Stabenow, I think it is fair to understand that action of the House and action that the Senate could 

take is going to be heroically important to the global process. I 

think Administrator Jackson’s quote has been referred to a few different times, that U.S. action alone is not going to make a significant ecological difference in global temperature, and that is, I 

think, so profoundly obvious it is not clear to me why people think 

it is a gotcha point. 

We live in a global commons, and the question we have to ask 

ourselves is what role do we see the United States playing in that 

arrangement? Unilateral action by the United States will not solve 

terrorism. It will not solve world hunger. It will not prevent nuclear proliferation, and it will not prevent climate change because 

these are collective action problems. 

In 1992, the first President Bush went to the Rio Accords and 

identified, I think, the right answer which is the notion of differentiated commitments, that the U.S. has an obligation and an opportunity to lead but that we should not be chumps. We should not 

take steps three, four and five without recognizing that the rest of 

the world is going to have to come with us. 

So, the challenge for us is to design a program which, as you 

point out, capitalizes on the incredible opportunities for agriculture. The opportunities are in fact bigger than the risks. So, if 

we capture those opportunities, we put together a program which 

is good for U.S. agriculture on its merits, but it brings us back into 

a very different position in the global arrangement. 

Dr. Holdren will be with you later today. He has come back from 

China recently. I would encourage you to ask his ideas about this. 

But, again, the situation is much more complex than I think 

some would like us to believe. I have not heard China say, we do 

not care about climate change and we never plan to be part of that 

solution. 

The Chinese are nothing if not practical. They have four times 

the population that we have on two thirds of the arable land and 

much less ability to manage the hydro flows from the snow melt 

than we do. They recognize that they are in very significant jeopardy from the impacts on climate change. 

They also are terrific in appreciating markets. As their major clients in Europe and the United States, as major consumers like 

Wal-Mart and others start to identify sustainability standards, the 

markets for these products are going to shift, and the Chinese pay 

very close attention to that. 

The Chinese recognize that they are in a more insecure position 

vis-a-vis oil dependence than we are in the United States, and they 

recognize that, just as we do, the vast majority of actions that we 

take to address our greenhouse gas emissions will also diversify 

our energy supply and make us and them more secure. 

They recognize that modernization—the point that Senator 

Johanns and others made earlier, that to have a more efficient 

economy you produce more goods for less carbon—is also consonant 

with their long-term interests. So they have passed vehicle fuel 

29 

economy standards which are more aggressive than we have. They 

have energy efficiency and renewables programs that are more aggressive than we have. 

I do not want to imply that it is going to be easy to convince the 

Chinese to come with us; it is clear that this is a great problem. 

We are a great Nation, and great nations take steps to solve those 

great problems. I believe if we do lead we can count on the Chinese 

to follow. 

Senator STABENOW. Thank you. I want to get in one other quick 

question. I do want to say, though, that enforcing those, it is great 

to have it on paper with China, but we have to make sure that that 

is enforced if it is going to work. 

Regarding early actors and one of the things that we have been 

working on in language is not only an offsets program but what I 

think is really important, which is a USDA incentive and support 

program so that there would be set aside allowances from the cap 

that would relate to USDA activity, to help both fund early actors 

who have built up carbon stockpiles and fund emission reduction 

projects and for those that are looking for new opportunities. 

There are some areas, certainly of agriculture currently now, 

that would net benefit from this. And, how do we make sure that 

we do research and development and have new opportunities that 

maybe are not currently available made available for certain sections of agriculture? 

My question, I guess I would address it to you as I close the first 

round: Does it matter at this point, as it relates to early actors, 

whether we are rewarding them through the offsets program or 

through an allowance set-aside program at this point? 

Mr. GRUMET. Thank you, Senator. 

I think it does matter, and I commend you for your efforts there 

and also will acknowledge that your conclusions are very consistent 

with the conclusions that Senators Dole and Daschle reached on 

our behalf. 

The traditional offsets approach is, by design, a very rigid approach. You are either 100 percent right or you are flawed. On 

issues such as early action and additionality, it draws out these 

kind of philosophical questions about what would have happened 

otherwise, and it does create, as a number of panelists have mentioned, some tricky perverse incentives. 

If you try to, and I will use a technical term, ‘‘jam’’ those ideas 

into a traditional offsets program, you run a real risk of diminishing the credibility and integrity of that program. And so, one of 

the concerns that we have, one of the necessities of having this alternative pathway is not to undermine the public confidence in the 

traditional offsets program because there are a host of activities— 

flaring, capturing and flaring methane and other programs—which 

are easy to discern, to measure, and those can move through the 

system quickly, and they should be unlimited. 

But we do need to have this creative space where we can be a 

little bit more innovative and a little bit more experimental, where 

we can look at the glass being half full more than half empty. Taking credits and having a set-aside program to do that, I think, will 

enable us to have the learning to get the momentum behind this 

program that we need. I think we have a real concern that absent 

30 

that program we will not realize the full potential as quickly as we 

need to. 

The last point I will make is that it is within that program that 

I think there is tremendous opportunity for real collaboration between EPA and USDA. Where we are going to have fights is over 

that last 5 percent, and I think that will really undermine the spirit of this entire enterprise. 

The idea of a kind of a separate but equal offsets program with 

EPA having its own program and USDA having its own program 

is not likely to create the kind of cordial comity and shared interests that we are ultimately going to need. I think that reinforces 

the divisiveness, and I think that would be a problem in the long 

term for the agricultural offsets program. 

Senator STABENOW. Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Stabenow. 

Senator Roberts. 

Senator ROBERTS. Thank you, Mr. Chairman, and I especially 

want to thank you for holding these hearings. I know we are going 

to have a second round. I know we are going to have testimony 

from the Administration, both EPA and the USDA this afternoon, 

and that is a very good thing. 

I would urge you, sir, and I am going to plead with you to have 

more hearings on this bill. I think Senator Lugar made a very good 

point. We can be part of the answer, not part of the challenge, in 

trying to take the best aspects of this bill if that can be done. I 

have some concern about that, but we will have to do it with hearings like this. This is the first hearing, and I certainly commend 

you for it and look forward to the hearings this afternoon. 

I would just like to tell my colleagues and anybody else interested that some years ago, several years after the Senate voted 97 

to nothing against joining the Kyoto agreement mainly because 

other countries were not taking part and we thought it would harm 

the U.S. economy, we went to Antarctica on a CODEL. Senator Stevens led the effort because he had such a strong interest in it. 

During that particular visit, you can actually look at the ice corridors. Some people call them ice holes. But there is 9,000 feet of 

ice there until you hit ground, and you can determine. It is like 

rings in a tree, Mr. Chairman, where you can actually see there 

has been global warming. Now whether it is temporary, whether it 

is an aberration or whatever, that is still to be decided. 

But, basically, the decision was to come back and see if we could 

not be on the positive side of this, more especially in regards to agriculture. I know I met with Secretary Glickman who was a good 

friend from Kansas. We even had a press conference down on the 

Mall where finally I told the Washington Post that carbon in the 

air, bad, carbon in the soil, good, and that is what carbon sequestration meant. 

I know all of you here certainly understand that. So I would hope 

we could have additional hearings. 

Mr. Johnson, I agree with you that the USDA must be very aggressive to take this jurisdiction, to take the lead. I am sure Mr. 

Stallman agrees with that. 

I am not making this up, but we have had reports of the EPA 

and some people in the EPA of resurrecting the old problem of 

31 

rural fugitive dust which came along in the 1970’s. They recommended we have water trucks going out at 10 in the morning 

and 2 in the afternoon to get this dust down. 

I am not making this up. There is even a proposal to study the 

ramification of changing the genes in cattle, so you have cattle half 

size, half-size cattle. So I guess if you head them up and move 

them out, you will have twice as many, but you will still have a 

lot of dust and will still have a lot of problems. 

Now I am being a little sarcastic, but things like that do happen 

with the EPA, and we need to keep it in the USDA’s jurisdiction. 

I would like to associate myself with the remarks of Senator 

Chambliss who I think made a very good point, Senator Grassley 

who talked earlier, certainly the Chairman and certainly Mr. 

Stallman. It is good to see you back in the saddle. We have a tremendous challenge on our hands, and all of our farm organizations 

including the Farmers Union. 

Mr. Chairman, I think the USDA has to have more resources. 

We have people working on the Farm Bill, people working on trying to finalize the software that does not exist for the permanent 

disaster program, and they are working with pencils and, thankfully, they have erasers. 

Here we are now going to come in and need to implement this 

tremendous program and see what cropping practices are viable, 

what cropping practices make sense, what cropping practices are 

eligible, and then the great question of whether we mandate this 

or not. So I really look forward to this, and I think that the Ag 

Committee under your very capable leadership, sir, can play a big 

part. 

Mr. Stallman, in your testimony, you highlight the potential conflicts of the proposed cap and trade scheme and our trade obligations, and we have talked about that. If passed, would the United 

States be more vulnerable to challenges before the WTO? That answer to me is yes. 

If so, is it possible that the very countries that are major contributors of global greenhouse gases would initiate these challenges? 

And, I am talking about China. 

Mr. STALLMAN. We believe they would. In fact, India has already 

said as much. China has already talked about what border tariff 

barriers would mean to them and how they dislike them. We expect 

a full range of challenges of those kind of border measures that are 

included in Waxman-Markey and may be further included here in 

the Senate. 

You know what we have done is have the bill in the form of Waxman-Markey that puts energy costs on this Country and this Country alone. That makes us less competitive. And then, we try to flip 

around and figure out how to protect our industries, the trade in 

the international market. It is like we are trying to do two wrongs 

to make a right, and it is just we do not believe it is going to work. 

Senator ROBERTS. Thank you for that answer. I think it is a very 

common-sense answer and very candid. 

I do not see the value of putting a tariff on any Chinese product. 

My word, former Chairman Greenspan, talked before one of our 

conferences and indicated he thought we were at a tipping point 

with the economy. By that, he meant China would not buy our 

32 

bonds, our paper, and then interest rates would go up to the point 

that it would make it more attractive. 

If you put a tariff on China, Senator Smoot and Senator Hawley 

might vote for it, but I think that is very dangerous. 

Mr. Johnson, your testimony states that carbon credit income potential is significant for your members. 

The effects of this bill worry me that while all producers will 

have to pay more for input costs, not all producers will receive any 

offsetting income since not all producers can go to a no-till operation or plant trees or afford two to three million dollars for a digester. So my question to you is will not this bill create winners 

and losers among your members? That is the thing we have to determine in this Committee. 

What regional or crop-specific analysis has the Farmers Union 

done to determine which producers win and which producers lose? 

Mr. Stallman, you can answer that question too. 

Mr. JOHNSON. Well, Senator Roberts, thanks for the question. 

As I indicated earlier, we have not done a separate analysis. We 

have looked at a lot of the analyses that others have done. 

Clearly, I mean any time you pass legislation, you create winners 

and losers. I do not think there is any other way to look at it. I 

mean there will be some farmers who will be in a very strong position. They will have the opportunity to do lots of offset income, and 

there will be others that will have minimal opportunity, so will face 

increased costs. I really do not think there is much debate about 

that. 

I would suggest that maybe the best way to look at that is to dig 

into the bowels of the economic think tanks, the USDA study that 

apparently was just released and try and figure out who those winners and losers are. That is one of the reasons why we argue that 

you need to set aside a chunk of these allowances so that if you 

need to design a practice to compensate some of the losers you can 

do that with those monies, without making them overburdened. 

Finally, this question about China is a real intriguing question. 

Fundamentally, it is why many of us have argued in the trade 

arena that we need to have environmental standards and labor 

standards and others, those kinds of things negotiated as part of 

the trade agreement. 

I think we would all agree that it is not fair competition to have 

one country producing things and externalizing a lot of the costs 

of production by dumping them on the rest of either their society 

or, in the case of greenhouse gases, the world while other countries 

follow the rules and have higher costs. So that, I mean this is a 

more a trade issue than it is a greenhouse gas issue. 

Senator ROBERTS. Well, pardon the interruption. My time has 

run out. 

Mr. Stallman, do you have any other comment real quickly? 

Mr. STALLMAN. Quickly, on that particularly, in terms of international negotiations including labor and environment, I cannot 

wait until we have the EU standards imposed on us as a Country 

because that is what we are talking about if you are talk about 

international standards. So we would oppose that approach. 

33 

Offsets, the price that farmers get, as that price goes up for those 

offsets, a limited group of farmers, that also means the cost of energy is going up for all farmers. 

Senator ROBERTS. I have never quite understood why we cannot 

settle the labor or try to settle the labor problems that are challenges we have with other countries, more especially China, with 

the International Labor Organization, the ILO, rather than putting 

in some kind of trade agreement. The chances of China accepting 

a trade agreement by us dictating certain standards for their labor 

decisions are slim and none, and slim left town. 

Chairman HARKIN. Thank you very much. Thank you, Senator 

Roberts. 

Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much, Chairman Harkin, 

and thank you to our distinguished witnesses for being here. 

I want to first of all say that I would agree with the Chairman 

that we need to make some additional changes to this bill. 

Agriculture is incredibly important to my State, the fifth in the 

Country. We are the No. 3 hog producer, a major producer of corn 

and soybeans, wheat, sugar beets and, of course, No. 1 in turkeys. 

So a lot of my focus in this area has been jobs in the ag area and 

energy jobs and introducing renewable energy standards that include waste energy and allow our farmers to have a piece of the 

action, and I actually think that has benefited in our State. 

As you know, Mr. Johnson and Mr. Stallman, that we have a 

gross renewable energy standard, but we also have a very aggressive biofuels program. I think part of why some of these energy 

issues have been more bipartisan in our State is that people feel 

that they have a piece of the action, that they are going to profit 

from some of these energy jobs, that it is not just about people on 

Wall Street or somewhere else. So that is why I appreciated all of 

your comments here. 

I first wanted to start with the ethanol blend issue, that this is 

a possibility that we could do this with this bill. I see homegrown 

biofuels as a piece in a lot of the future here. I think that the way 

to do it may be with higher blend amounts to go up to, say, 15 percent, and I do not see why we could not do this as part of this bill. 

I think it has been taking too long at the EPA. I also see our 

growth into cellulosic ethanol is a much bigger way that we can 

produce ethanol. 

But I wondered, Mr. Johnson, Mr. Stallman, if you could comment on that. 

Mr. JOHNSON. We would certainly support that. 

Senator KLOBUCHAR. OK. Mr. Stallman? 

Mr. STALLMAN. As would we. 

Senator KLOBUCHAR. All right, very good. Thank you for going 

on, so I can now go to my next question on that. 

Mr. Johnson, you talked about making the case for allocating 

some of the allowances. What criteria do you suggest using to determine eligibility for those allowances? 

Mr. JOHNSON. Well, that is a really good question, Senator Klobuchar, and I think it is helpful to think of this in the context of 

offsets. OK? 

34 

We heard earlier testimony about the importance of maintaining 

the integrity of offsets. While I agree with that, I would also want 

your Committee to think very closely about how you distribute the 

revenues. OK? 

Our view is that under this bill USDA should be put in charge 

of the offsets program. They should the empanel the scientific experts who establish the protocols. And then, they should have their 

delivery agencies, the ones that are close to the farmers and ranchers, that are out there verifying and monitoring and perhaps auditing to make sure that the rules are being followed. 

But, as far as the distribution of money, they do not need to be 

involved in that with offsets. That can be handled through the marketplace just like the CCX is doing it right now. Aggregators do it, 

I would argue, much, much more efficiently. 

Now that does not sound like it answers your question, but the 

problem is this: When you try to mirror offsets with these allowances and run them through USDA, I think you need to think creatively about whether there is not a methodology that would allow 

you to get those payments that are made through the market system as opposed to having these folks with pencils and erasers having to write out checks now too. 

We are real concerned about adding to the bureaucracy at USDA. 

It is overstretched. It is strained. It is under enormous pressure. 

So we want to minimize that to the degree that we can. 

It is a long way of answering your question, but, fundamentally, 

we want these allowance dollars to be used for a number of things. 

To deal with the early actors, that gets to all the stuff I have said 

about offsets. OK? So, as closely as you can mirror what the offset 

market is, that is what you want to do with the early actors, using 

these allowances dollars for the folks that do not technically qualify 

for an offset. OK? 

We want you to use these dollars for R&D. We think there is tremendous opportunity through new technologies to demonstrate 

that agriculture will significantly reduce the emissions, but we 

need to research and develop it and establish with scientific certainty, to the degree that those two words go together, that in fact 

what we are doing makes sense so that you can roll these new 

things onto the options market and provide new income opportunities as well. So, R&D is really critically important. 

Of course, anything that provides a perverse incentive to do the 

kinds of things that the Chairman has worked for most of his career to avoid, any of those kinds of things that are identified in this 

process, hopefully, you create some sort of a mechanism to eliminate them. 

Senator KLOBUCHAR. OK. I assume by your comments and Mr. 

Stallman as well, just knowing your previous views on this, that, 

paperwork or not, you both would rather have the USDA doing this 

rather than the EPA with the agricultural offsets? 

Mr. STALLMAN. Absolutely, no question, USDA is well positioned 

to handle this. Much better positioned than the EPA, I might add. 

I would associate myself with the remarks my colleague has made 

about what we need to have USDA be able to do to be sure that 

we have an adequate offsets program. 

Senator KLOBUCHAR. OK. Thank you very much. 

35 

Mr. Pierce, part of this new energy potential is biomass from logging. Do you want to comment on that when we look at renewable 

standards and making sure that we include that as a piece of this? 

Mr. PIERCE. Well, I certainly hope that. Speaking as a tree farmer, I certainly hope that we do include biomass. It is very important to support the low end of the market in order to have good 

forestry done. 

Senator KLOBUCHAR. OK, very good. Thank you to our panel. I 

really appreciate your answers. 

I am looking forward to working with the Chairman and with my 

good friend, Collin Peterson, who worked hard to make some improvements to this bill. He just left me a message about a totally 

unrelated matter, but I will continue to work with him. 

Thank you. 

Chairman HARKIN. Thank you very much, Senator Klobuchar. 

Senator Lincoln. 

Senator LINCOLN. Thank you, Mr. Chairman, and thanks to you 

and Senator Chambliss for holding the hearing today, getting us 

started on this. 

We all recognize that cap and trade would really touch nearly 

every aspect of our lives, and that is especially true for agriculture. 

We discussed at great length that there is potential for landowners 

to benefit by tapping new revenue streams, through implementing 

practices that reduce greenhouse gas emissions. 

But it is also very, very likely that farmers will face higher costs 

for input like fertilizer and fuel, and it certainly poses a challenge, 

I think, for Arkansas producers that farm capital-intensive crops 

like cotton and rice. Our poultry, livestock and dairy producers 

could also grapple with those increases in energy costs, but they 

too could potentially take advantage of some of these programs we 

are talking about. 

The purpose of these hearings and future hearings, I hope, is 

really to flesh out the costs and the benefits of a cap and trade bill 

for agriculture and explore how the Senate can improve upon what 

the House has done. 

What is so badly needed in this debate is more detailed economic 

analysis on a crop-by-crop, industry-by-industry and regional basis. 

I do understand from the pieces you presented us today, Mr. Chairman, the preliminary analysis that has been provided by USDA 

this morning does provide us some of that analysis. 

But I do believe we need to take a broader look at how it will 

impact obviously our producers but also impact food prices. I hope 

that we will look for all of that information. It is going to require 

delving into how the House bill is going to impact the food processing industry, which includes sectors like poultry, meat, and oil 

seed processing. I just hope, as Senator Roberts mentioned, that 

the Chairman will consider holding more hearings to be able to 

look at that, and we certainly appreciate your leadership and all 

of what you have been doing here. 

Just three quick questions, and I think I will throw them out 

there and let you all answer them as you may. 

We have talked a lot about early action and credits for early action. Some of you all have mentioned flexibility and the need for 

36 

that flexibility. I do not want to assume what you are saying from 

that. I hope it is, but I am not going to assume it. 

We also know that there is flexibility through different types of 

programs that are recognized. 

In the House bill, there is some confusing language about early 

actors and their offsets, whether they will count unless they are 

registered with an exchange that is recognized under State law. As 

I said, I do not want to assume anything, but I hope it is that we 

are looking that, for us, most of our producers and our foresters are 

going to be out of luck under that House bill because the programs 

they use, like Senator Lugar, the CCX, would not qualify. 

I am assuming that we are hoping that when you say flexibility 

you mean that multiple programs will be acceptable as opposed to 

those that are just registered under States. But, again, I do not 

want to assume anything. So I hope that you all will touch on that. 

Mr. Pierce, in terms of the strategy to address climate change 

and how it has been shifting to increasing use of renewable energy. 

Biomass, forest biomass in the production of electricity and fuels is, 

I think, critical. Do you think that the House-passed bill fully captures the potential use of forest biomass from private forests? 

Of course, private and public forests are treated completely or 

pretty differently in the House bill, and I would like you comments 

on that. 

Then last, Mr. Grumet, one of the concerns I am hearing from 

constituents is the fear that a cap and trade scheme would create 

yet another market where there is opportunity for mischief. I am 

hoping that you can elaborate on how the Bipartisan Policy Center 

believes Congress could be most effective in ensuring transparency 

in the cap and trade market. 

I noticed in your testimony that you quoted limiting ‘‘the risk 

that credit-trading will lead to the enrichment of Wall Street at the 

expense of Main Street.’’ We have been there. We have done that. 

We do not want to go there again. 

So I would love your comments on either of those three. 

Mr. JOHNSON. Well, I will start and be very brief because I have 

talked a fair amount. As to the question relative to offsets and 

flexibility, we would certainly agree with the assumption that you 

stated as you asked the question. 

We do not necessarily think that the only early actors that ought 

to be compensated are those that have already enrolled in the CCX 

program. In fact, we would disagree with that. We have argued 

that you ought to use a baseline of 2001. There are lots of reasons 

you can pick that year. It is arbitrary, I understand. Then any 

changes that have happened since then would be presumed to be 

additional. 

Senator LINCOLN. Any changes since 2001? 

Mr. JOHNSON. Yes. That has been the position that many of us 

in a number of different ag groups have sort of settled on that. 

There are reasons for it. I mean that is the Kyoto thing was happening, the Farm Bill. There are lots of things that lined up that 

suggested that that is a date. 

Right after that date, the CCX was formed. It was sort of formed 

in anticipation of a law passing, and so you can say: Well, let’s figure out how to not penalize those guys. Let’s reward them. 

37 

Mr. GRUMET. Senator, I can just pick up on that, unless you 

want to go in order. 

Senator LINCOLN. No. That is fine. 

Mr. GRUMET. The duel track approach, this is really the same 

question that Senator Klobuchar and others were asking, and how 

we bring flexibility into the system. Then, just again, focus on the 

fact that the traditional offset approach is a brittle approach, and 

it needs to be because if there were flaws in the system we would 

be adding more pollution to the atmosphere than we would be reducing. 

The need to have this alternative use of allowances, to provide 

kind of insurance for that, provides a tremendous amount of flexibility across the line here. It allows people to be a little bit more 

innovative, a little bit more creative and a little bit more risk-taking. That is true for early action because you have a ton as an insurance policy against those approaches. It is true for flexibility 

and diversity in program choices. 

What I would hope the USDA would say when they visited the 

Lugar Farm is: Great work on those black chestnuts, Senator. 

Those are measurable, and we have a protocol, and those just go. 

We do not have to touch them. The marketplace is going to decide 

that. 

But you know you are also doing this interesting job, doing some 

no-till farming and some nutrient management, and this is a very 

creative idea. It is a little harder to figure out. You can go two 

ways. You can either hunker down with USDA and spend a bit of 

time and money really sharpening your pencils and trying to prove 

the value of your work or we have this other alternative, a place 

where you can come do more kind of creative programs because essentially there is an insurance policy behind them. 

USDA could essentially provide credits that would otherwise 

turn into emissions elsewhere to Senator Lugar and his family for 

their good work. 

I wonder if you have looked at the price of your credits before 

and after this hearing to see what kind of impact we have had on 

the marketplace today. 

But it does seem to me that that kind of flexibility is significant 

and important to get this program up and running so that we do 

not spend our time biting our nails and gritting our teeth on the 

tiny details. 

While I have the mic, just on this very important and complicated question of market oversight, it is certainly true that coming to visit folks like you and saying: Senator, do I have a deal for 

you? We would like to create a new $200 billion commodity. Not 

to worry, the good people in New York City are going to figure it 

out—is not as popular an opening statement as it might have been 

a couple of years ago. 

At the same time, it is critically important that we have a functioning market, and there are really two options here. The one that 

we believe is the right one is to think about the carbon commodity 

as part of the overall struggle we are now having to bring more 

transparency to derivatives at large. There is really no difference 

ultimately between what we do here with carbon and what we do 

with other financial products. 

38 

Rather than trying to put a little bit of an obstacle in every possible pathway for nefarious action, we think if you have good cost 

containment, if you have a price floor and a price ceiling that limits 

the volatility, it allows you to exhale a little bit. It dramatically reduces the possibility of that enrichment so that we can learn our 

way into this market with low risk. It is essentially a set of training wheels on the program. 

I fear if we go the other direction and try to pin down every possible problem we will stifle the market to such an extent that we 

will not have investment in these clean technologies. 

So I do not think people see cost containment traditionally as a 

benefit to this kind of market oversight, but I think one of the best 

advantages you get is you reduce the volatility which consumers 

hate, elected officials hate and Wall Street sometimes enjoys. 

Senator LINCOLN. You are saying a cap and a floor as opposed 

to just a cap. 

Mr. GRUMET. A cap and a floor, a price collar. 

Senator LINCOLN. Oh, just a floor, OK. 

Mr. STALLMAN. Senator, if I could still have a little additional 

time to respond, we would support maximum flexibility for the 

early actors. 

But let me get down to the point that Mr. Grumet made earlier 

about mitigating the negative impacts about implementation of a 

carbon market. One way to do that which has not been discussed, 

since that carbon market is going to be driven by the cost of energy, is to have an off-ramp in the legislation in case the renewable 

low carbon fuels and generation of electricity through nuclear, solar 

or wind do not come online as quickly as the predictions have indicated, to point out some of the rosy scenarios in terms of the Waxman-Markey bill. 

There should be an off-ramp provision where if those sources do 

not come online as quickly as project, then we should string out or 

mitigate the implementation of the carbon reductions—so, kind of 

have a trigger, if you will, to keep everyone honest in terms of projections about what will ultimately happen under the WaxmanMarkey bill. 

Chairman HARKIN. Thank you. We are in a vote now, and the 

second bells have rung on our vote. 

I think it is clear this has been a good panel. I appreciate all the 

testimony. 

It is clear that we are probably going to have to have some more 

hearings on this. I will begin consulting with other members of the 

Committee on that. 

As I said, this afternoon, we will have the Administration witnesses. 

I thought I just might conclude with what Mr. Grumet said in 

his closing. He said, ‘‘While we can all agree that U.S. action alone 

cannot solve a global problem, it is equally true that we have no 

hope of securing effective and equitable global action absent U.S. 

leadership.’’ I think that really is the key. 

Now we have this meeting in Copenhagen in December. The 

President would like to have us pass some legislation prior to that 

time. I understand on the Senate floor we were asked to give our 

39 

input by September 28th. That is why we will probably have some 

more hearings on this. But we do have to provide that leadership. 

But, taking off on what Mr. Stallman just said, I have often 

thought of an off-ramp, not the off-ramp that you described in 

terms of what happens if we do not get the technologies, but if we 

put in place a good cap and trade system that incorporates agriculture, gives adequate offsets and allowances to agriculture, and 

we go to Copenhagen and we start down this road, if other countries do not join us, if India and China and all these other countries we hear about do not join in on this effort, then we have an 

off-ramp. That is the off-ramp I am thinking of. 

We provide the leadership. We say this is what we are going to 

do. We are going to be very aggressive in this, in the United States. 

We are going to push as hard as we can for clean renewable energy 

resources, but we want other countries to come in. If you do not, 

well, we are off the highway. 

With that, the Committee will stand adjourned. 

Oh, excuse me. I am sorry. 

Senator CHAMBLISS. Let’s leave the record open. I have some 

other questions, and other members may have to. 

Chairman HARKIN. Good suggestion. Oh, thank you. Thank you, 

Senator Chambliss. 

We will leave the record open for other comments and testimony 

or other comments from members of the Committee and also if we 

have some written questions that we would like to maybe submit 

to you. I did not ask all my questions in either. Perhaps, we would 

like to do that. 

We do look forward to your engagement in this process as we 

move ahead over the next couple or 3 months. 

Thank you very much. We will resume our sitting at 2:30 here 

in this room. 

[Whereupon, at 12:11 p.m., the Committee recessed and reconvened at 2:36 p.m.] 

Chairman HARKIN. The Senate Committee on Agriculture, Nutrition and Forestry will resume its sitting from this morning, and we 

had a great discussion this morning. We had a good panel this 

morning and a good discussion, a lot of pertinent questions. 

This afternoon, we are honored to have three distinguished individuals, all of whom I think have a lot of expertise in this area. 

That is the area of agriculture and the environment, climate 

change and how it is going to impact agriculture and the role that 

agriculture can play both in reducing greenhouse gas emissions but 

also the role it can play in offsets, in carbon sequestration. 

So we are continuing our hearing today, and we are honored to 

have the Secretary of Agriculture, Secretary Tom Vilsack, who was 

sworn as the 30th Secretary of the U.S. Department of Agriculture 

this year. Appointed by President Barack Obama, he received 

unanimous support for his confirmation by both this Committee 

and the entire U.S. Senate. 

Secretary Vilsack has served in the public sector at nearly every 

level of government. When I first met him, he was the Mayor of 

Mount Pleasant, Iowa, in 1987 and then as a State Senator in the 

Iowa Senate, and then in 1998 he was the first Democrat elected 

40 

Governor of Iowa in more than 30 years, an office he held for 2 

terms. 

As Secretary of Agriculture, Secretary Vilsack has been candid 

and direct about the challenges and opportunities facing farmers 

and ranchers across America and the importance of fulfilling the 

vast missions as a champion of rural America and as a steward of 

the environment. So we are honored to have him here. 

Also, we have EPA Administrator Lisa Jackson, again nominated 

to lead the Agency by President Obama and confirmed by the Senate in January. Administrator Jackson lists among her priorities: 

reducing greenhouse gas emissions, improving air quality, managing chemical risk and cleaning up hazardous waste sites and protecting America’s water. 

Before becoming EPA’s Administrator, Administrator Jackson 

served as Chief of Staff to New Jersey Governor Jon S. Corzine, a 

former member of the U.S. Senate. Prior to that, she was appointed 

by Governor Corzine to be Commissioner of the State’s Department 

of Environmental Protection in 2006. 

We have Dr. John Holdren, Assistant to the President for Science 

and Technology and Director of the White House Office of Science 

and Technology Policy. Prior to joining the Administration, Dr. 

Holdren was the Teresa and John Heinz Professor of Environmental Policy and Director of the Program on Science, Technology 

and Public Policy at Harvard University’s Kennedy School of Government as well as a professor in Harvard’s Department of Earth 

and Planetary Sciences and Director of the Woods Hole Research 

Center. 

Well, we are honored to have you here. 

This morning, we had a good discussion. I will point out, I will 

just bring up the chart that I started my comments with this morning on, one, we have to do something. 

But this chart basically just shows we have to do something. This 

goes back to 1880, and it shows the global temperatures here and 

what has happened. We know that the 10 warmest years on record 

occurred in the past 12 years. People always say, well, gee, I had 

a cool summer. Well, those little odds and ends happen. The fact 

is no one can deny that the Earth is heating up at a rapid pace. 

Also, the concentration of CO2 corresponds directly with that, 

and it is going up at an ever increasing rate. 

So to do nothing is not an option, and there are some concerns 

about the role of the United States and whether we should do it. 

And. what about other countries? What about China? What about 

India? What about Brazil? What about the European Union? 

We cannot do it all by ourselves. We cannot really bend that 

curve down if only we do it, but other countries have to be involved 

also. And so, that is, I think, one of the challenges facing us. How 

do we provide that leadership but then how do we get other countries onboard also to help us? 

That is sort of the big picture, but the picture we are concerned 

with here is the role of agriculture, our farmers and ranchers in 

this country and how we are going to be involved, how they are 

going to be involved in this process. 

The House has passed its bill. This Committee will be holding 

other hearings on this, and we will be involved with the EnvironVerDate Nov 24 2008 08:03 Sep 21, 2010 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 C:\DOCS\56563.TXT SAG2 PsN: SAG2
41 

ment and Public Works Committee in the Senate beginning at the 

end of September and into October and probably November in fashioning a bill. I know the President wants something out of Congress before the Copenhagen meetings in December, and we will do 

our darnedest to try to meet that deadline, and the goal of the 

President is to get something done. 

But we want to know, what is the role of agriculture? What is 

going to happen to farmers and ranchers? We hear a lot of estimates on cost, how much the costs are going to go up. 

Secretary Vilsack, I know, will talk about this. We just got the 

analysis from your Department this morning that is a little bit different than what we have been hearing out there. 

Then, what role we can play in the environment and with EPA 

in agriculture and how we can work together both to meet the 

goals of decreasing our greenhouse gas emissions but also becoming 

more energy independent in this country—we have those two goals. 

And, what is the role of agriculture? 

With that, I would recognize my good friend and our distinguished Secretary of Agriculture. Thank you again for being here. 

All of your written testimonies will be made a part of the record 

in their entirety. If you could sum it up in seven or eight, 9 minutes, something like that, I would appreciate it. We will start with 

Secretary Vilsack, go to Administrator Jackson and then Dr. 

Holdren. 

Secretary Vilsack. 

STATEMENT OF HON. TOM VILSACK, SECRETARY OF 

AGRICULTURE, U.S. DEPARTMENT OF AGRICULTURE 

Secretary VILSACK. Thank you, Mr. Chairman, and to Senator 

Chambliss and other members of the Committee, thank you for this 

opportunity to discuss with you today the role of agriculture and 

forestry in global warming legislation and climate change legislation. 

Climate change, I believe, is one of the great challenges facing 

the United States and the world. President Obama believes it is 

important that America show international leadership on climate 

change. The Administration looks forward to working with the Senate to craft legislation that creates jobs, reduces our dependence on 

foreign oil, increases national security and reduces the risks associated with climate change. 

Climate change has enormous implications for farmers, ranchers 

and forest landowners. Drought, more intense weather events, forest fires and insect and disease outbreaks are just some of the potential effects of a warming climate that could subject landowners 

and rural communities to enormous potential costs. 

At the same time, farmers, ranchers and forest landowners have 

a very important role to play in addressing global warming. In fact, 

by effectively exploiting opportunities within the agriculture and 

forestry sectors, we can significantly reduce the cost of meeting our 

climate policy goals. 

I also believe that there are significant opportunities for landowners in a cap and trade program that can help revitalize rural 

America. The production of low carbon energy from biomass, anaerobic digesters and wind will provide landowners with new sources 

42 

of revenue that have significant value in a low carbon economy. 

There are also options for landowners to reduce their energy expenditures. USDA is already working with landowners to reduce 

energy costs and to improve profitability. 

A robust carbon offsets market will also provide farmers, ranchers and forest landowners with the potential for new sources of income. Rural communities could in turn benefit from jobs created to 

implement conservation practices and measure and monitor carbon 

offset activities. 

To be effective in addressing climate change, the offsets market 

will need to accomplish two goals. First, the offsets market must 

be large, with thousands of participating landowners. To get to 

scale, the market will require an infrastructure of people and agencies that can encourage landowner participation, provide information to landowners, manage data and resources and maintain 

records and registries. Second, ensuring that agricultural and forest offsets provide real and verifiable greenhouse gas reductions is 

critical not only to addressing climate change but to maintain public confidence in the carbon offsets program as well. 

Implementing an offsets market will require a partnership of 

several Federal agencies including USDA, EPA, the Department of 

Interior and others. USDA has many assets that we can bring to 

bear, including a network of field staff across the country and 

greenhouse gas management experience with croplands, rangelands, forests and landscapes. 

Even with these opportunities, many in the agricultural and forestry community are concerned about the potential costs of climate 

change legislation. At USDA, we hear these concerns loud and 

clear. 

Now there are a variety of specific approaches that one can use 

to achieve clean energy and climate goals. Over the last several 

weeks, USDA has begun in analyzing costs and benefits of the 

House-passed climate legislation for agriculture. Our analysis demonstrates that the economic opportunities for farmers and ranchers 

can outpace, and perhaps significantly outpace the costs. 

An analysis of the implications of climate change legislation, including that of H.R. 2454, should show the farm sector will experience both costs and benefits. Agriculture, after all, is an energy-intensive sector with row crop production particularly affected by energy prices. Increases in fuel prices are expected to rise overall in 

connection with annual farm expenses by over $700 million between 2012 and 2018, or about 0.3 percent. Annual net farm income as a result of those higher energy prices is expected to fall 

by about 1 percent. 

However, these estimates assume that in the short term farmers 

are unable to make changes in the input mix in response to higher 

fuel prices—an unlikely scenario, given past history. So they likely 

overestimate the cost to farmers. We believe fertilizer prices will 

show little effect until 2025 because of H.R. 2454’s provision to help 

energy-intensive, trade-exposed industries mitigate the burden that 

emission caps would impose. 

The agricultural sector will also benefit directly from allowance 

revenues allocated to finance incentives for renewable energy and 

agriculture emission reductions during the first 5 years of H.R. 

43 

2454’s cap and trade program. Funds for agricultural emissions reductions are estimated to range from an additional $75 million to 

$100 million annually from 2012 to 2016. 

The conservative estimated impact of the cap and trade provisions of H.R. 2454 implies a decline of annual net farm income of 

$2.4 billion or roughly 3.5 percent in 2030, $4.9 billion or 7.2 percent in 2048. These estimates are likely an upper bound on the 

costs because they fail to account for the farmers’ ability to innovate in response to changes in the market conditions. This analysis 

is also conservative because it does not account for revenues to 

farmers from biomass production for bioenergy. 

A number of studies have examined the effects of higher energy 

costs with models that allow for the expected changes in production 

management practices and switching to bioenergy crops. Based on 

the analysis of Schneider and McCarl, for example, allowing for 

changes in input mix and revenues from biomass production, but 

without accounting for income from offsets, it is estimated that the 

annual net farm income would increase in 2030 by $600 million. By 

2045, annual net farm income is estimated to increase by more 

than $2 billion or 2.9 percent. 

Now H.R. 2454 also creates an offset market, and we think that 

will also create additional opportunities for the agricultural sector. 

In particular, our analysis indicates that annual net returns to 

farmers range from about $1 billion per year for the time period 

2015 to 2020 to almost $15 billion to $20 billion in 2040 to 2050, 

not accounting for the costs of implementing offset practices. 

EPA has conducted its own analysis of returns from offsets that 

take into account the cost of implementing land management practices. EPA’s analysis projects annual net returns to farmers of 

about $1 billion to $2 billion per year from 2012 to 2018, rising $20 

billion per year in 2050. 

It is important to note that EPA’s analysis includes revenues 

generated from forest management offsets while the USDA estimate does not. 

So let me clear about this analysis and its implications. In the 

short term, the economic benefits to agriculture from cap and trade 

legislation will likely outweigh the costs. In the long term, the economic benefits from offset markets easily trump increased input 

costs. 

An economic analysis such as ours has limitations, but again we 

believe our analysis is conservative. It is quite possible that farmers will actually do even better than we predict as a result of technology changes and enhanced renewable energy markets. 

What does this mean for the individual farmer? A North Plains 

wheat producer, for example, might see an increase of 80 cents per 

acre in costs of production by 2020 due to higher fuel prices. Based 

on a soil carbon sequestration rate of 0.4 tons per acre and a carbon price of $16 per ton, a producer could mitigate those expenses 

by adopting no-till practices and earning $6.40 per acre. So this 

wheat farmer does better under the House-passed climate legislation than without it, and it is quite possible that this wheat farmer 

could do even better if technologies and markets progress in such 

a way that allows for the sale of wheat straw to make cellulosic 

ethanol. 

44 

We recognize that climate legislation will affect different landowners in different ways. This is an important point, and USDA 

can help smooth this transition by using our Farm Bill conservation programs to assist landowners in adopting new technologies 

and stewardship practices. It is worth noting that the House bill 

also includes important provisions providing how to adapt and increase resiliency to climate change impacts, which will be important for our Nation’s farmers, ranchers and forest landowners. 

Ensuring that landowners and communities have the tools and 

the information they need to adapt to climate change is a priority 

for this Administration, and USDA looks forward to working with 

you as we move forward. 

Thank you, Mr. Chairman. 

[The prepared statement of Secretary Vilsack can be found on 

page 119 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Secretary. 

Now we will turn to Administrator Jackson. 

STATEMENT OF LISA JACKSON, ADMINISTRATOR, U.S. 

ENVIRONMENTAL PROTECTION AGENCY 

Ms. JACKSON. Thank you, Mr. Chairman. Thank you to Ranking 

Member Chambliss and members of the Committee for allowing me 

to testify today. It is a pleasure to appear alongside my colleagues, 

Secretary Vilsack and Dr. Holdren. 

As you know, the President has called for legislation to decrease 

our dependence on oil, to create millions of new jobs in clean energy industries and reduce the greenhouse-gas pollution that 

threatens our children and grandchildren. That call to action is as 

much about helping rural America as it is about helping urban 

America. 

For example, the bill the House passed in response to the President’s call includes a program to help American auto makers 

produce vehicles that use less petroleum-based fuel. That program 

goes beyond the cars used in cities and suburbs to include the 

trucks and non-road vehicles used in farm and ranch country. 

The House bill also includes an incentive structure to catapult 

American companies forward in the burgeoning global market for 

clean energy technologies. Those American employers include not 

just the advanced battery manufacturer in Massachusetts and the 

solar panel installation firm in Arizona. They also include the wind 

tower manufacturer in Iowa, the biodiesel processor in Ohio and 

the bio-based insulation producer in Arkansas. 

Finally, I would note the recent report by the U.S. Global change 

Research Program. It projected the impacts that we would see in 

America over the course of this century if we allow global warming 

to continue unchecked. Those impacts would not be limited to the 

urban coast of South Florida and the arid hills of Southern California. The Great Plains would experience more sustained droughts 

and increased infestation of insect pests. The Southeast would experience declines in livestock production due to heat stress and 

more frequent and intense wildfires, and the Midwest would experience reductions in water levels in the Great Lakes, more frequent 

spring flooding and more severe summer drought. 

45 

So, rural America is very much on the President’s mind as he 

urges Congress to send him a bill that gets America running on 

clean energy. Meeting that goal will require each of us to make a 

modest investment. I applaud USDA for its ongoing work to quantify the investment that Americans raising crops and livestocks 

would be called upon to make. For its part, EPA projects that if the 

bill recently passed by the House were enacted, then gasoline and 

diesel prices would be 17 cents per gallon higher in 2020 than 

under business as usual. 

But the House-passed bill includes provisions designed to soften 

many of the cost impacts that worry farmers. For instance, the program would distribute free emission allowances to energy-intensive, nitrogenous fertilizer manufacturers and wet corn millers. It 

also would distribute the value of emissions allowances to propane 

consumers such as the farmers who use it in drying corn. 

Overall, EPA projects that the House-passed bill would entail an 

annual average per household cost of between 22 and 30 cents a 

day over the life of the program. CBO projects 48 cents per day in 

2020. The costs would be higher in States where people regularly 

drive long distances and rely almost exclusively on coal for electricity, but, as CBO has explained, these regional differences likely 

would be small. And, even if the costs borne by the average household in a particular State were double the national average projected by CBO, that would still be less than a dollar a day in 2020. 

Now the modest costs would be exceeded by the direct financial 

benefits that American farmers would receive. Under the Housepassed bill, American farmers, foresters and ranchers would be the 

beneficiaries of a new, voluntary free-enterprise program in which 

they could, if they chose, receive money for offsetting other’s emissions by increasing carbon sequestration on their lands or reducing 

methane emissions from their operations. EPA projects that the offsets generated by American farmers, foresters and ranchers in 

2020 alone would have a market value of nearly $3 billion, and the 

amount would increase very year. 

Fortunately, the U.S. Government is in a good position to establish a robust domestic offsets program. USDA has a network of 

field offices across rural America. Both EPA and USDA have scientific expertise in greenhouse gas management with croplands, 

rangelands, forests and livestocks. 

For instance, since 1993, EPA has run the AgSTAR Program in 

which the Agency’s technical experts work with farmers to find opportunities to capture methane gas and put it to profitable use. 

And, through its Climate Leaders Program, EPA has developed a 

series of offsets methodologies that now have undergone extensive 

review and testing. 

The development of an offsets market will require a full partnership between relevant Federal agencies including USDA, EPA, the 

Department of the Interior and the Department of Energy. EPA 

looks forward to continuing an intensifying that partnership. 

I thank this Committee for its constructive engagement with the 

agricultural community on clean energy and climate stewardship. 

Thank you again for inviting me to be here today, and I look forward to answering your questions. 

46 

[The prepared statement of Ms. Jackson can be found on page 88 

in the appendix.] 

Chairman HARKIN. Thank you very much, Administrator Jackson. 

Now we will turn to Dr. Holdren. 

STATEMENT OF JOHN P. HOLDREN, Ph.D., DIRECTOR, WHITE 

HOUSE OFFICE OF SCIENCE AND TECHNOLOGY 

Mr. HOLDREN. Chairman Harkin and Ranking Member Chambliss and members of the Committee, I certainly very much appreciate the opportunity to testify at this important hearing. 

My mic was off. Did you get that? 

Chairman HARKIN. Try it again. 

Mr. HOLDREN. Chairman Harkin, Ranking Member Chambliss, 

members of the Committee, I do very much appreciate the chance 

to testify today at this important hearing. 

My written statement for the record and my short oral statement 

here are focused on the scientific aspects of the relation between 

global climate change on the one hand and agriculture and forestry 

on the other. That relation is a multifaceted one. Farming and forestry practices are significant sources of the emissions that are 

driving global climate change as well as points of particular vulnerability where climate change imperils human well-being by reducing the productivity of the land. With appropriate management, on 

the other hand, farms and forests can become the locus of increased 

carbon storage that draws down the atmospheric load of carbon dioxide, and they can serve as sources of renewable low carbon 

biofuels. 

Although it is the case today that climate change has benefited 

farms and forests in some places while harming the in others and 

that mixed pattern may persist for some years more, there can be 

little doubt that the larger temperature increases expected by 2030 

and beyond on a business as usual trajectory of climate change are 

going to put substantial stresses on farms and forests in most 

places. 

Those stresses can be alleviated to some extent by adaptation efforts of a variety of kinds, of course, including development of heat, 

drought and pest-resistant crop strains, more efficient water management strategies for agriculture and more. We absolutely need to 

make well-focused and effective investments in these kinds of adaptation measures. 

But adaptation becomes more difficult, more costly and less effective the larger are the changes in climate to which one is trying 

to adapt. The need to restrain climate change to a level with which 

affordable adaptation measures can plausibly cope is what has led 

so many analysts of this problem to conclude that every effort 

should be made to avoid exceeding a global average temperature 

increase of 3.6 degree Fahrenheit, that is 2 degrees Celsius, above 

the pre-industrial level. 

Looking at the numbers on what would be required to achieve 

that goal makes clear that the agriculture and forest sectors simply 

must be part of the program. We will need the reductions in emissions that can be had by reducing tropical deforestation and by 

modifying the agricultural practices that currently account for sigVerDate Nov 24 2008 08:03 Sep 21, 2010 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 C:\DOCS\56563.TXT SAG2 PsN: SAG2
47 

nificant methane and nitrous oxide emissions. We will need the increase in absorption of carbon dioxide that can be had from 

afforestation and reforestation and improved management of agricultural soils. And, we will need the contributions that expansion 

of sustainably produced biofuels can make to reducing our dependence on carbon dioxide-emitting coal, oil and natural gas. 

All of these opportunities are sufficiently well understood scientifically to support implementation of policies and activities to 

help us get from the farm and forest sectors the contributions needed from them if the challenge is to be met. At the same time, continuing to improve our scientific understanding of the relevant 

processes, including our capacity to measure and monitor them 

quantitatively on local to regional scales, will be valuable for increasing confidence that the performance specified in policy and 

international agreements is indeed being achieved, for developing 

improved understanding of some of the currently less well-researched options in the agricultural and forest sectors for both 

mitigation and adaptation and for refining our policies in the decades ahead. 

Achieve the high confidence that decisionmakers and the public 

will want concerning offsets and the reality of emissions reductions 

or uptake increases claimed for other initiatives in the agricultural 

and forest sectors will have to rely in substantial part on existing 

tools such as the EPA’s National Greenhouse Gas Inventory, land 

use data, carbon cycle modeling and the project-based monitoring 

approaches that have been developed by EPA and USDA. 

At the same time, our current observation networks for emissions 

and absorption of carbon dioxide and other heat-trapping gases are 

not adequate for some kinds of the monitoring that would be desirable, and a continuing effort to strengthen the network of groundbased, air-based, ocean-based and space-based measurements of 

those fluxes is warranted. 

The many approaches for deriving clean fuels from plant material differ in their state of technological development, the efficiency 

of energy conversion, their requirements for land and water and 

other inputs such as pesticides and fertilizers, their cost, their net 

benefits in reducing greenhouse gas emissions when all of the inputs, as well as influences on soil and vegetation where the material is grown and elsewhere, are taken into account and other environmental and social impacts, positive as well as negative. 

While much is known about those factors, the technologies are 

evolving and so is our understanding of their full range of characteristics. I believe we know enough to define appropriate metrics to 

help with choosing options and regulation, but we will get better 

at it as our scientific understanding of the details improve. 

Continuing to strengthen the scientific foundation for policies 

and strategies in this domain going forward is going to bring significant rewards in terms of our confidence in the performance of 

the approaches that are put in place, in terms of the ability to improve those approaches over time and the capacity to develop additional options for farm and forest-based climate change mitigation 

and adaptation for the future. 

The White House Office of Science and Technology Policy is energetically engaged, together with the full range of relevant Cabinet 

48 

departments, other Federal agencies and White House offices and 

with our partners in the wider research community and the Congress, in ensuring that this happens. My colleagues in the White 

House and I look forward to working with this Committee and the 

rest of the Congress to that end. 

I thank you for your attention. I will be pleased to try to answer 

any questions you may have. 

[The prepared statement of Mr. Holdren can be found on page 79 

in the appendix.] 

Chairman HARKIN. Thank you very much, Dr. Holdren. 

We will begin a series of 7–minute rounds here, if we get our 

clock going here right. 

Mr. Secretary, first of all, thank you very much for getting the 

analysis to us that you did on this. I would just like to ask again 

and have you expand a little bit on this, that what you are saying 

basically in this analysis is that for the near term—let me look at 

my table again here—for the near term, 2012 to 2018, that the increase in total expenses on agriculture would be $0.7 billion it 

looks like. I think that is right. Is that $0.7 billion per year? 

Secretary VILSACK. Senator, that is correct, but that is not necessarily the net farm income number if that is what you are looking for. 

Chairman HARKIN. So it would be an increase of $700 million per 

year in real dollars on average. 

But then you are saying that on the other side of the equation 

is that the offset markets could cover these costs. Is that right? 

Secretary VILSACK. Senator, that is correct, but if I can just expand on it just a bit. 

It is somewhat difficult to conduct a full and complete analysis 

because there are many, many variables. What we tried to do is to 

come up with a very conservative estimate of the impact, and, by 

conservative, I mean we did not take into consideration in looking 

at the expense side. 

There are basically two components to it. There is the direct and 

indirect energy costs. Direct costs would be fuel for tractors and 

combines. Indirect would be fertilizer. 

We did not ask ourselves or try to include in the evaluation what 

changes would be made if fuel prices were going to go up, so that 

farmers would end up figuring out how to use less. 

Now, since 1970, we have seen a fairly consistent pattern of 

farmers basically figuring out how to do more with less, but we did 

not factor that in nor did we factor in any technology changes that 

could potentially impact fuel usage nor did we figure in the impact 

of increased opportunities on the bioenergy side. So there are 

things that would potentially impact and affect this expense number which have been evaluated in other studies, and other studies 

would obviously see this total expense number lower. 

So, depending upon, what we tried to do is give you a range, and 

the most conservative estimate is you are looking at $700 million 

on the expense side. On the more inclusive evaluation, that number 

is significantly lower. In fact, we think that there is a possibility 

of increase in net farm income in the early years as a result. 

Chairman HARKIN. I take it from your testimony, Mr. Secretary, 

that you actually feel pretty bullish about this, that really there 

49 

are more opportunities out there for farmers and ranchers to actually gain income from a cap and trade as long as there are decent 

offsets and as long as we have some other provisions I assume that 

I have not talked about in there, and that really the farmers, while 

their expenses may go up a little bit, they have more to gain from 

offsets. 

Secretary VILSACK. Senator, I think that is true. 

You know some will suggest that there is a difference between 

a farmer who is raising corn and a farmer who is soybeans and one 

who is raising rice. There are regional differences. There are product commodity differences. 

But, on the whole, farming and agriculture in this Country, I 

think, will benefit. And, I think also the rural communities that 

farmers support and live in will also benefit because we are not 

factoring into any of this the job creation opportunities that are 

presented in rural communities. 

Chairman HARKIN. Ms. Jackson, in the 2007 Energy Bill, we 

committed to a steadily increasing supply and use of biofuels as a 

key element of our national strategy to reduce dependence on petroleum. We need to make sure the marketplace can accommodate 

that increasing supply, and the key issue today—the key issue—is 

what we call the blend wall for ethanol. The amount of ethanol 

being produced soon will exceed the amount that can be used as 

10 percent, E10. 

Your Agency is considering a request to grant a waiver that 

would allow ethanol blends of up to 15 percent to be used in gasoline-fueled vehicles. 

Now, again, the 10 percent, I went back and looked. How did we 

ever get to 10 percent? That was just plucked out of thin air in the 

Clean Air Act, and I remember when that was passed. 

We have had a lot of data, and I have seen a lot of information 

come in that it could be as high as 20–some percent. That would 

have no effect whatsoever on present state internal combustion engines. 

We were talking about just a waiver up to 15 percent which 

would give us half again as much use of the ethanol being produced. When can we expect a ruling on that request and could you 

address yourself to the possibility of increasing the blend wall to 

15 percent? 

Ms. JACKSON. Sure, Mr. Chairman. The public comment period 

on the waiver request to increase the ethanol content of gasoline 

from 10 to 15 percent actually closed just a few days ago on July 

20th. EPA received thousands of comments, and, as we are required to do, we are evaluating those comments as well as data 

from several sets of tests, engine tests that are being performed 

jointly with the Department of Energy and some information that 

we are getting from the Department of Agriculture. The Clean Air 

Act gives the Administrator up to 270 days which would end on December 1st of 2009 to render a decision. 

Chairman HARKIN. Ms. Jackson, you just came onboard EPA, but 

there is a feeling among some of us. I always speak for myself. I 

cannot speak for any other member of this Committee, but I talk 

to a lot of people around in agricultural circles, obviously. I have 

been on this Committee a long time. 

50 

There is a sense. I will be very frank with you. There is a sense 

among a lot of us that there is a built-in bias within EPA against 

biofuels, that there is a bias somehow that an initial mistake was 

made when we first started our biofuels program and that we need 

to put an end to it as soon as possible. 

Now that could be wrong. I am just telling you in all frankness 

there is that sense and that feeling among a lot of us, that there 

is some bias at EPA against biofuels. 

I hope that you will not take that as any kind of a bad remark. 

After all, you just got there. I am not talking about you. I am just 

talking about going back 20 years and some of the battles that we 

have had with EPA going back that time on ethanol. 

So I hope that we can expect this ruling on the request, and, of 

course, we will take a close look at it, very close to make sure that 

it is really scientifically based when it comes. But you think we will 

have that ruling before when? 

Ms. JACKSON. Well, the deadline in the Clean Air Act is up to 

270 days, and there are two crucial pieces of information. The first 

is the public comment period which has just recently closed, and 

the second are the results of the engine tests that will, I think, provide the scientific and factual background that can support a determination of what the impact would be on engines. 

Chairman HARKIN. So, by December? 

Ms. JACKSON. That is what we are looking for. December, yes. 

Chairman HARKIN. It could be before? 

Ms. JACKSON. It could be before, sir. But we did get lots of comments, and we do need the results of the testing from DOE. 

Chairman HARKIN. Thank you very much, Administrator. 

I now turn to Senator Chambliss and then in order of arrival, as 

has always been the procedure in this Committee, Senator Nelson, 

Senator Bennet, Senator Johanns, Senator Stabenow, Senator 

Leahy, Senator Casey and Senator Roberts. 

Senator CHAMBLISS. Thank you, Mr. Chairman. 

Secretary Vilsack, as I understand it, what you do is you model 

these analyses based on history, I assume, of input costs as well 

as revenues that are generated, and that is the way you came up 

with your overall analysis relative to the impact of the Housepassed bill on agriculture. Am I correct in stating that? 

Secretary VILSACK. I think that is correct, Senator. We also, obviously, utilized information from the EPA as well. 

Senator CHAMBLISS. OK. Now Administrator Jackson said that 

she anticipates that by 2020 you are going to have a 17 cents per 

gallon increase in gasoline. Is that the input cost that you used on 

gasoline? 

Secretary VILSACK. We used the EPA numbers relative to fuel, 

and then we utilized them within a simulated model that USDA 

has used for quite some time to factor in other expenses and other 

income opportunities. 

Senator CHAMBLISS. OK. I understand that your analysis only 

models the impact on nine crops, and that does not include a discussion on specialty crops and no mention on the impact on livestock, which are the two sectors that generate the greatest amount 

of farm income annually. Can you explain why those two sectors 

were excluded? 

51 

Secretary VILSACK. Senator, I think that there was a discussion 

and review of crop prices and its impact on livestock. So the evaluation does discuss livestock. 

The issue of specialty crops, we are in the process of obviously 

continuing these evaluations in a continuing analysis. We tried to 

get as best we could information on the crops that were relatively 

easy to calculate. 

Senator CHAMBLISS. The USDA analysis estimates the gross revenues associated with offsets and yet tries to compare those with 

the costs incurred by farmers and ranchers. Could you please explain if the offset income noted in the long-term analysis is for soil 

sequestration by row crop agriculture or, if as EPA does or EPA 

notes, does the majority of the benefit go to afforestation? 

Secretary VILSACK. As you can see—I do not know if you have 

the chart in front of you—on Table 8, the estimated revenues look 

at afforestation and soil carbon long-term methane and nitrous 

oxide reductions. The combination of those two on the long term, 

we are talking about roughly $20 billion, and then forest management is another $8.2 billion. 

Senator CHAMBLISS. I am sorry. Run through that again with 

me, Mr. Secretary. My brain does not operate that quickly here. I 

am looking at Table 8 right now. 

Secretary VILSACK. Well, if you look at Table 8, there are three 

items, two under the Ag Offsets category, if you will, and one under 

Forest Management. The Ag Offset category is afforestation and 

soil carbon and then methane and nitrous oxide reductions. I mean 

there are multiple strategies here for addressing how offsets can be 

calculated. 

We understand and appreciate that EPA was making certain 

projections relative to forests and the amount of tress that would 

be grown. That is part of the equation. It is, by no means, the only 

equation. 

There are a number of farming practices that could be adopted 

that would ultimately qualify for credits as the bill is currently 

drafted. We would anticipate that in partnership the Federal agencies would probably, as we learn more about this, expand the list 

of practices and be more specific about the practices, but based on 

the bill as it exists today this is our estimate. 

Now there are other estimates that show an even better picture 

for agriculture because they take into consideration technology 

changes. They take into consideration bioenergy opportunities. 

They take into consideration strategies that farmers might embrace 

to reduce their input costs which has been historically what farmers have done. 

Senator CHAMBLISS. Given the quick pace of the House’s consideration and passage of the American Clean Energy and Security 

Act, I understand that there was not much time to think through 

the implementation aspect of the agricultural offsets program. 

Now that you have had about a month to think about it, how do 

you envision the Department would operate the offsets program, 

what agency or agencies would administrate the program and how 

would the Department interface with producers who want to participate? 

52 

Secretary VILSACK. Well, Senator, we obviously recognize the role 

that the Senate is going to play in the crafting of this proposal. I 

will say that we are prepared to work in partnership with other 

Federal agencies. Several have been mentioned today. And, I think 

it is going to be appropriate to have that partnership. 

This will be a significant undertaking, and each department has 

individual and unique assets that allow it to have expertise and 

knowledge. In our particular case, we have field staff in every 

county, virtually every county in the Country, which allows us to 

have eyes and ears on the ground for verification purposes. 

Certainly, EPA and USDA have expertise in terms of the calculations and determinations of precisely what is being absorbed and 

what is being sequestered and how agriculture is being impacted 

by all this, and so I would see a partnership between our agencies. 

The Department of Energy will be involved. The Department of Interior will also be involved. So I think it is a partnership that we 

envision, and USDA is prepared to take the roles that are assigned 

to it by policymakers. 

Senator CHAMBLISS. We had a discussion with the panel this 

morning relative to the potential for tariffs to be imposed on those 

countries that do not follow the lead of the United States if some 

sort of cap and trade legislation is enacted. Very clearly, it is going 

to impact our ability to export in the world market, and I am one 

of those who has long advocated the fact that the future of American agriculture and our ability to make a profit depends on our 

ability to export our products. 

China and India, two countries that are probably the biggest 

competitors for our cotton farmers here, have already stated flatly 

that they do not intend to take any action irrespective of what we 

do. 

Mexico is not likely to take much, if any, action. A country like 

Mexico that has a huge export of agricultural products into the 

United States would be one of those countries that was discussed 

this morning that might potentially have tariffs imposed on it. 

What is your thought about other countries we deal with and 

whether or not tariffs ought to be imposed on agricultural of those 

countries that do not participate in some sort of cap and trade program? 

Secretary VILSACK. Senator, I would agree that it is in the longterm best interest of farmers and ranchers in this Country to have 

robust trading opportunities globally. Clearly, agriculture is one of 

the bright spots in terms of trade, and we have a trade surplus of 

roughly $12 billion. Obviously, it will be up to USDA to work with 

our farmers to make sure that that continues. 

I am not sure that I am willing with respect to acknowledge the 

foundation of your question which is that countries internationally 

will not do anything on this area. I think the reality is that many 

countries, as I have traveled extensively last year for the Council 

on Foreign Relations report on the international consequences of 

cap and trade and climate change and in visiting with international leaders, with foreign leaders, with dignitaries on this 

issue, I got the sense that they were waiting for the United States. 

They wanted to see action. They wanted to see leadership from the 

United States. 

53 

My view of this is that the world is waiting for us. When and 

if the United States moves, I think we will create, along with many 

other nations, a significant amount of momentum. 

Will what other countries do be precisely what we agree on or 

precisely in the process, I do not know. But I would be very, very 

doubtful that countries as large as China and India will essentially 

do nothing on this. I really expect them to be participating in some 

form or another. 

Senator CHAMBLISS. Well, obviously, if anything is enacted here, 

I would hope you would be correct in that prediction. But the fact 

is, Mr. Secretary, they, this week, have told Secretary Clinton that 

basically we can do whatever we want to, that they do intend to 

do nothing. 

You know from the standpoint of competing in the global market, 

they are tough competitors and they are direct competitors with 

our farmers. 

I think that question obviously is a difficult question to answer 

except, from the standpoint of tariffs, I just hate to see us get into 

a contest where we are throwing rocks at other countries for their 

failure to take action and knowing that we are going to be put at 

a disadvantage because they are going to retaliate in some sort of 

similar activity. So I hope if as we move down the line, and we will 

have other discussions about this, that we can have some additional conversation about what might happen if that does come 

about. 

Thanks, the Chairman. 

Chairman HARKIN. Thank you, Senator Chambliss. 

Now we will turn to Senator Nelson. 

Senator NELSON. Thank you, Mr. Chairman. 

Thank you for being here, Secretary Vilsack, Administrator Jackson and Dr. Holdren. 

I know the frustration is there of how to improve the environment without adversely impacting the economy and to do so in the 

reality of a world where, as my colleague from Georgia has indicated, some other countries have shown little or no interest in assuming some of the costs in curtailing their emissions. And so, I 

hope that we can pursue the most economically prudent model. The 

question is with a cap and trade, in my opinion, is whether that 

is the model. 

Has either of your agencies or the White House done any kind 

of analysis of just instituting a straight cap on emissions without 

a trading mechanism which I quite honestly feel will create a new 

monetary system, trading in these credits? Do we have any modeling just on a cap without trade? 

Ms. JACKSON. Senator, EPA has not. We know that it would be 

expensive, but we have not done an analysis of that situation. 

Senator NELSON. Well, when you know it would be expensive, 

what does that mean? More or less expensive than cap and trade? 

Ms. JACKSON. Well, since I have no analysis to back up my statement, I do not want to say relatively. But we know that EPA in 

its regulatory roles on other contaminants knows that there is always a cost to regulating a contaminant. 

54 

Cap and trade has proven an opportunity to involve the marketplace in mitigating costs. The offsets program discussed earlier is 

one example of a way to mitigate those costs. 

Senator NELSON. Well, my mail is running about 99 to 1 against 

that. I use the parade analogy as well. That is what are people 

yelling at you when you are walking in a parade? It is no to cap 

and trade. 

So I am concerned that if this is going to be the approach that 

is taken, that it be the most benign method of dealing with the importance of balancing the economy and the environment. It is not 

just about agriculture. It is about individuals who turn on the 

lights at home and business as well. 

Is it possible? It seems to me, and you do not have the data to 

back this up, so maybe I just state this in a positive way as opposed to a question. It seems to me that a cap without the trading 

piece is likely to give us a more levelized increase and less volatile 

rise in energy prices over the volatility that the market is going to 

experience with the allotment of allowance and market of trading 

credits. 

In Nebraska, which is 100 percent public power, unique—no 

other State is 100 percent public power—I am told that the cost of 

the credits will add significantly to the cost of electricity generation 

in the State. It is not just agriculture. It is across the board. So, 

obviously, I am quite concerned that whatever we do, if anything, 

that it be the least invasive in terms of raising the cost of electricity in the State. 

I just think that a more resounding effect would come from a cap 

without trade over a reasonable period of time to transition to the 

kind of technology, and maybe Dr. Holdren is the person to talk 

about the technology, to develop the technology to overcome the 

growing emissions. 

Mr. HOLDREN. Senator, maybe I can just take a very brief crack 

at this. 

The different options for achieving reductions in greenhouse gas 

emissions have certainly been looked at in the White House largely 

on the basis of the existing economic literature, which is very large, 

and what that literature says is that the cost of a straight cap 

without trading will be higher than the cost of achieving the same 

emissions goals with the cap and trade system. The reason is the 

cap and trade system allows people to look for and exploit the lowest cost, most efficient emissions reductions that are available, including reaching into the area of offsets in the agricultural and forest sectors. So the idea really is to find the most economical way 

of achieving the emissions reduction targets that we are interested 

in. 

Senator NELSON. Secretary Vilsack, in doing the modeling at the 

USDA, did you follow the modeling set forth by EPA? I guess perhaps you did as it related to some of the analysis, but was there 

any other modeling done that might provide additional insight as 

to what the impact of this program might be? 

Secretary VILSACK. Senator, what we did is we took information 

from EPA and we utilized a model that we have been using at 

USDA for some time to model impacts and came up with what we 

think is a relatively conservative view about this because we did 

55 

not factor into it, as I said earlier, technology changes, adaptation 

by farmers and ranchers. We did not look at the potential impact 

on bioenergy and the positive aspects of that. We did not look at 

the impact of the renewable energy standard that might create 

more opportunities. None of that was calculated. 

Now there have been other models, Senator, outside of USDA 

that actually attempted to calculate the impact of those changes. 

Obviously, they came up with less expense and more net farm income than our model, and the offsets would be something in addition to that. 

So we are looking initially at the impact directly on farming and 

then income opportunities from the offsets program. Our view is in 

the short term it is a plus for agriculture. In the long term, it is 

a significant plus. 

Other studies have suggested in the short term it is an even bigger plus than we have calculated, and in the long term it is roughly 

equivalent to what we calculated. EPA has done its own analysis, 

and I think we have created what, for you, is a range, is a sense. 

I think what I would like to say is it is my view that, all things 

being considered, what we know today is agriculture and rural 

communities will benefit in the long term from this approach. And, 

I have great confidence in American farmers and ranchers to be innovative and to be adapting and to be embracing technology. That 

has been their history. That is going to continue to be their history. 

Senator NELSON. Thank you. 

Thank you, Mr. Chairman. Thank you all. 

Chairman HARKIN. Thank you very much, Senator. 

Senator Stabenow and then Senator Bennet, Senator Johanns 

and on down the list. 

Senator STABENOW. Well, thank you, Mr. Chairman, and welcome to all of our witnesses today. We appreciate all of your work 

in so many different areas. 

Mr. Chairman, thank you again for this very thoughtful hearing 

today. 

Let me start with Administrator Jackson. I want to talk about 

the role of the USDA and the EPA because it is so important as 

we move forward on what is an essential part of this bill, offset bill, 

and I believe also an incentive program under USDA. But as we 

are working through drafts and looking at language as it relates 

to an offset title, one of the biggest issues really is clarifying the 

roles between the two agencies, the two departments. 

The result has to be the fact that we have assurances that we 

are going to have projects that are backed by scientific integrity, 

no question about that, but we also need to have certainty to the 

regulated community that offsets will in fact be available. 

I understand that the EPA will be one of the agencies that will 

ensure the operability of a cap and regulatory obligations, the 

agency. It is also critical that USDA implement the agriculture and 

forestry offsets program and that in fact it be more than consultation, that in fact it be the agency that is implementing the program. 

So, as we are working out all the details, I wonder if you might 

just speak about the EPA’s history of working with other agencies. 

We have two agencies. There has been concern about the different 

56 

cultures or perspectives of the two agencies. But I wonder if you 

might talk about how you view working together to implement this 

very important section and what has been the agency’s experience 

in joint cooperation with other agencies as well. 

Ms. JACKSON. Thank you, Senator. 

First, I would like to say that if our agencies can work as well 

together as I do with Secretary Vilsack I think we will be in very 

good stead. I have enormous respect not only for his knowledge of 

his industry, of agriculture, but his knowledge on this issue, on the 

environmental aspects and the potential benefits for the environment as a whole as well as what we can do for our agriculture. 

And, I obviously think we both have important roles to play. 

We have history, and it troubles me to know that there is some 

bad history. But there is also some very good history, and I am 

committed to bringing that forward. 

We have worked with USDA Natural Resources Conservation 

Service under the EQIP Program to help growers in California who 

are in severe on-attainment areas for ozone, a big issue because obviously their operations impact ozone levels. What we have done together is work on replacement of older diesel engines that have 

high levels of NOx emissions that are creating ozone problems, and 

we have worked on new certified diesel engines together to address 

that issue. 

We work very well together on the Food Quality Protection Act 

where each of our agencies has co-chaired separate committees that 

consulted extensively during the promulgation of the FDA rules, 

where EPA’s role there is actually written into the statute—very 

effective process. 

We work very well together, I think, on international limits and 

domestic issues related to pesticide residues. That is not to say that 

we do not come at it from different angles, but we find invaluable 

the input from USDA on those programs. 

We work with other agencies as well. We have worked collaboratively on any number of issues with FDA and certainty with the 

Department of Energy. 

Senator STABENOW. Thank you very much. 

Mr. Secretary, to you now, a similar kind of question, but I want 

to speak about the capacity of the USDA to focus on climate change 

and the offsets program. 

I understand that the Global Climate Change Office has been 

studying agriculture’s role for some time and has even been contributing currently to our international efforts. I also know that the 

USDA is developing the Office of Ecosystem Service and Markets 

to look at methodologies and standards for carbon projects such as 

offsets. I joined with Senator Lugar and 10 other Senators in a letter supporting the work of these two offices recently, encouraging 

you to continue to develop both of those. 

But I wonder if you might talk about and assure the Committee 

that the USDA has the history, the capability to implement an offsets program and that it can be done with strong scientific integrity so that we and the private sector will be able to depend on the 

fact that there will be offsets for quality projects. 

Secretary VILSACK. Senator, first of all, let me join with the comments of Administrator Jackson in terms of our personal working 

57 

relationship. It cannot be closer, and it is a very solid relationship. 

The respect that she has for me is certainly equal to the respect 

that I have for her and her background and her knowledge and her 

way of approaching problem-solving, which I think is important for 

agencies to be able to do, to be able to work things through when 

there are difficulties or differences of opinion. So I value that 

friendship and that relationship. 

I would say that I am very proud of the extraordinary outreach 

efforts that we have within USDA. We have a lot of hardworking 

folks working in communities all across this great Country, and 

they are anxious to be part of this process if you, the policymakers, 

make a decision that there is a role for USDA. We are prepared 

to accept that role, but, obviously, that is your decision. 

These are folks who, because of their work in conservation programs, are somewhat familiar with the capacity to verify activities 

that take place. We have been criticized for some of our efforts in 

conservation in terms of some of the work that has been done recently. We are aware of those criticisms, and we are in the process 

of responding to them. So I think we will be an even stronger agency than we have been in the past by virtue of the Inspector General’s report. So we are prepared. 

I would also say that it is important for us to do our work well. 

To Senator Nelson’s comments, part of the capacity of a market to 

work is that people have confidence in the market. In order to have 

confidence in the market, you have to know that when a credit is 

being given and value is being assigned to it and it is for sequestering a certain amount of carbon, that in fact that is occurring. 

I think it is important, relevant, that we understand the significance of our work connected to the significance of the quality of the 

market, the validity and the merit of the market. So we are anxious to be helpful, and we are anxious to work in partnership with 

other Federal agencies if that is the decision you all make. 

Senator STABENOW. Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Stabenow. 

Senator Bennet. 

Senator BENNET. Mr. Chairman, thank you for holding this hearing and thank you all for coming and giving us your testimony. 

This is one of the most complicated issues, I think, that we are 

going to face in the Senate, and I think no one has a monopoly on 

wisdom on these issues. We are going to have to hear from a lot 

of people, a lot of different ideas. 

I, for one, look forward to working with my colleagues here and 

others on what is a tough, tough challenge, but I was reminded 

this week. You know in Colorado water is everything, especially for 

agricultural producers. 

Dr. Holdren, I wanted to ask you because on Monday a new 

study from the University of Colorado at Boulder, one of our Nation’s premier research universities, was published, indicating that 

there is a one in two chance that the water reservoirs of the Colorado River will dry up by 2050. I do not know if I will still be 

around, but my children certainly will, and the Colorado River is 

the lifeblood of communities across Colorado, Arizona, Utah, Nevada. It enables agriculture in California’s Imperial Valley not only 

to exist but to flourish. 

58 

So, Dr. Holdren, in your testimony, you talk about climate 

change shifting weather and water patterns. Is this the kind of 

phenomena that you are talking about and could you elaborate a 

bit? 

Help us better understand why climate change would so dramatically alter water flow. How would changing water patterns affect 

agriculture? How are water, energy and agriculture linked? 

Why and would a climate bill make a difference? 

Mr. HOLDREN. Well, Senator, that is a big question, but I will do 

my best with it. 

As I mentioned in the testimony, there are a number of different 

ways in which the global climate change that is underway influences water availability, including not only surface runoff but soil 

moisture. Part of that is that changes in relative heating of land 

and ocean areas produces changes in circulation patterns which 

changes where the rain falls. As it happens, somewhat perversely, 

the overall pattern is that places that are already tending to be 

semi-arid, water-short, over time are likely for the most part to become even more so because of these changes in circulation patterns 

in the atmosphere. 

That is happening in the United States. It is also happening in 

other parts of the world, for example, China, where changes in the 

monsoon that the Chinese themselves have concluded have been 

driven by global climate change have aggravated flooding in the 

south of China and drought in the north, which is a longstanding 

problem for them. 

A second aspect of this phenomenon is that in a warmer world 

more water evaporates. That sounds good for water because what 

goes up must come down. More evaporation means more rainfall. 

The problem is that with more water in the atmosphere as a result of more evaporation a greater proportion of the rainfall comes 

in deluges, and deluges have the characteristics that a larger proportion of the water runs off quickly in storm runoff and is not captured in soil moisture or n reservoirs and, therefore, is not available. The second aspect of having more of it come down in deluges 

is there is typically a longer interval between those deluges during 

which the higher air temperatures that are coming from the warming phenomenon overall increase the evaporation. 

You have less of the total precipitation available, longer periods 

between precipitation in which the soil moisture is evaporating 

away, and the projections therefore for much of the Western United 

States, and particularly the Southwest but many other parts of the 

world, is a very substantially increased incidence of drought over 

the decades as ahead as climate change increases. Drought, of 

course, is bad for agriculture. 

Senator BENNET. I get the collective action problem that was 

talked about earlier, about do we go first, do we wait for these 

other countries to go first, how does all that work. 

What I can tell you is that in Colorado now we are confronting 

these issues because of the water shortages that we have. From my 

perspective anyway, if we are going to be able to assure that another generation of Coloradans are able to farm or one after that, 

we need some answer to this question on how to reserve our water 

resources. This, I think, is part of it. 

59 

Mr. Secretary, I just wanted to ask you quickly if you could 

speak a little bit more about the potential for farmers in rural communities to sell offsets for practices like improvements in soil management, optimization of crop rotations, improvements in livestock 

management. All seem like potential economic benefits. We have 

not seen them yet, so we are not sure, but they could be hugely 

important to our rural communities. 

I wonder if you could talk a little bit more about the economic 

opportunities that you see here. 

I should say having seen you out in my State, on the question 

of whether USDA is ready for this, if the ability to withstand tough 

questioning is part of that, you certainly meet that test. I appreciate your being out there. 

Secretary VILSACK. Thank you, Senator. 

Farmers and ranchers in this Country, I think, are extraordinary 

innovators. When you take a look at the level of productivity that 

we have seen in American agriculture over the course of the last 

30, 40, 50 years—take whatever timeframe you wish—you are 

going to see an extraordinary amount of productivity, productivity 

that feeds our families and helps to provide food for the entire 

globe. 

One of the reasons they have been successful is that they have 

been adapters. They have been innovators. They have been embracing new technologies. 

We have an annual event in my hometown of Mount Pleasant. 

It is called the Old Threshers Reunion. They bring out the old 

steam-powered threshing machines and the old tractors, and you 

compare those to the tractors and combines and farm machinery 

that are being produced in John Deere plants in my home State in 

Waterloo and Ottumwa and Ankeny. It is absolutely phenomenal. 

So I am convinced that there is going to be significant innovation. 

What we attempted to do in this analysis was to say, look, let’s 

put that innovation for the time being aside and let’s see if we can 

get a handle, a range on how this might impact folks. 

What we concluded was that when you take everything into consideration—the capacity for offsets, the impact on fuel costs, the 

impact on indirect energy costs—the reality is for farm and agriculture generally we are going to see opportunity. 

Now folks will ask me about various types of farming in various 

regions of the Country, and, obviously, there will be differences between what farmers do in Colorado and what farmers do in Iowa. 

But if we cannot participate, if our farmers cannot participate in 

this particular program, then there are a whole host of other programs that we can direct and provide assistance for. So, between 

the farm programs, the conservation programs, this, the energy 

title of the Farm Bill, broadband—this is apart from your question—there is enormous opportunity in rural America. 

In fact, I would argue that what we are seeing is one of the most 

significant, if not the most significant, investment in new opportunities in rural America that we have seen in a long, long time, 

maybe in my lifetime, if we take advantage of it. 

Then, if we do take advantage of it, then we are going to see 

windmill manufacturing facilities in our States. We are going to see 

new bio refineries being located in our States. We are going to see 

60 

companies that can make anhydrous ammonia out of corncobs and 

reduce our reliance on petroleum. And, that is all going to create 

jobs, and many of those jobs are going to be located in rural communities throughout the Country. 

So I think there is an opportunity side here that is often is not 

appreciated. We can argue about the numbers, and we can fiddle 

with the numbers. But I think at the end of the day the innovation 

history of agriculture is one of America’s success stories, and I 

think with this we will see a continuation of that. 

Senator BENNET. Thank you. 

Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Bennet. 

Senator Johanns. 

Senator JOHANNS. Mr. Chairman, thank you. 

I must admit I was listening with some degree of amusement 

when Senator Nelson was talking about our parade experiences. As 

the junior Senator, I follow him in Nebraska parades, and, yes, 

they were yelling at us: Vote no on cap and trade. 

You are at a different point than where most of the American 

people are, and I will just be blunt about that, and let me walk you 

through why. 

Administrator Jackson, recently, you testified, I think it was you, 

and said, after you pass this, you are going to have a very negligible impact—I am probably not using your exact words—on temperature. 

So the chart that the Chairman was using, the other facts that 

have been brought to your attention, what you are saying is if the 

United States passes this bill, we are not going to impact temperature in any significant degree. Is that not correct? 

Ms. JACKSON. Senator, you are referring to a question at a recent 

Senate EPW hearing that asked about whether or not we would 

have an impact—alone, we could have a significant impact on global CO2 concentrations in the atmosphere. We did not actually talk 

about temperature. 

What I said is, alone, I did not think we could get to a significant 

enough level to solve the climate change problem. I also went on 

to state that I recognize that we need others to join. I will tell you 

here, I do not think we have to do it all at the same time. 

Senator JOHANNS. But, you see, here is the problem. Poor Tom 

Vilsack has to go out there with that testimony and try to convince 

farmers on a hope and a prayer that somehow this is going to work 

out. 

I turn to my attention to you, Mr. Secretary. When you talk 

about the offsets, I noticed in both the charts from the EPA and 

the charts from the USDA you have clumped together farmland 

and forests, and they are two vastly different things. Tell me how 

much farmland is going to be taken out of production as a result 

of this climate change effort if it were to become law. 

Secretary VILSACK. Senator, it is funny you should mention that. 

I was speaking to State foresters yesterday, and I asked them to 

define for me a forest. Their view was that what you and I would 

normally think of, like a national forest, was not their view. 

Their view was if you have trees on your farm. If you have, as 

I do on my farm, roughly 90 acres of timber, I have a forest. Now 

61 

I would never have considered that a forest, but those in the business do consider it a forest. So I guess there is a definitional issue 

here. 

You ask the question, how many acres are going to be displaced? 

I do not know that anybody. I mean the EPA estimated a number 

of a million acres of farmland, but my point is this. 

Senator JOHANNS. I know your point. 

Secretary VILSACK. I do not think you do. 

Senator JOHANNS. By number of acres, just the question asked, 

how many acres go out of farm production? 

Secretary VILSACK. Well, the problem with that question is that 

it assumes that there is no increase in productivity in farming because if you increase productivity and you have the opportunity to 

take marginal land and you create offset opportunities from that, 

you have increased the possible income for farmers as we are doing 

with conservation programs. 

Senator JOHANNS. But here is the question. 

Secretary VILSACK. Then the question becomes what about CRP 

in terms of the options that people have? So it is difficult to answer 

your question because I am not willing to concede that there will 

be a lack of productivity and I am not willing to concede that we 

are not going to take land that is in CRP and use it for forests. 

Senator JOHANNS. Mr. Secretary, I am not even asking about 

productivity at this point. 

I am just asking, you or maybe the Administrator can tell me in 

your forecasts how many productive acres of farmland will go out 

of production. We will start there, and then I will ask other questions. 

Secretary VILSACK. Go ahead. You can answer it, and then I will 

be glad to add something. 

Ms. JACKSON. Senator, I do not have a number for you here. I 

have heard numbers that are being attributed to EPA’s modeling 

efforts that are on the order of tens of millions of acres. We are 

looking into that. 

But what EPA’s modeling efforts say, the analysis, the conclusion 

you can draw is that if an offsets program is geared around 

afforestation such that farmers could be paid voluntarily to grow 

trees, there is possibly the idea that many farmers will choose, 

choose voluntarily to do that. But we do not have a firm estimate 

on that number with me. 

Senator JOHANNS. In your charts, the USDA relied upon the EPA 

analysis of June 23rd. In your charts, on Page 33 of that analysis, 

you say this: Because overall land area in crops declines due to 

afforestation, the modeling indicates—so you had to have some 

acres to model it—a net decrease in total agricultural soil carbon 

storage as carbon is transferred from the agricultural soils pool to 

the afforestation pool. 

Now the whole purpose of this hearing is just to be honest with 

people what is going out of production because the important thing 

about that is that affects the pork producer, the cattle guy, and it 

beats living daylights out of them. Why? Because your prices are 

going to go up. 

They are out there saying, look, my input costs are going to go 

up with electricity and natural gas and any fertilizer I have to buy. 

62 

Just tell them how many acres are going out of production. 

Secretary VILSACK. Senator, the problem is that qualifier, how 

many acres are going out of production, because that assumes that 

the forests are going to be planted and the trees are going to be 

planted on land that is currently in production. 

What I was trying to suggest is what you are now providing is 

another option to conservation programs. So it may be that farmers 

choose not to take the acre where they are growing corn out of production. They are going to take the acre that is currently in the 

CRP program or another program. 

Senator JOHANNS. I know what you are saying, Mr. Secretary, 

but I read this language. I did not write this language. I am only 

trying to get to the bottom of it. 

Acres are going to go out of production. You used some number 

in your model. What is that number? 

Secretary VILSACK. Senator, I think what—— 

Senator JOHANNS. That was directed at the Administrator. 

Secretary VILSACK. Oh, I am sorry. 

Ms. JACKSON. Thank you. Senator, I do not have a number of 

acres that go out of production. I did listen carefully to the qualitative language that you read, and the assumption is that an offsets program that includes some incentives for afforestation could 

have the impact of taking some acreage out of production into forest production, but we do not have a number. 

Senator JOHANNS. The offsets there that the Secretary speaks 

about would not go to the row crop person to offset his higher energy costs, his higher fertilizer costs, his higher other costs. It 

would go to the person who is planting the forest land. 

But, again, unless you can quantify this, you cannot sell this 

plan because it becomes the hope and the prayer plan for agriculture, because you cannot tell farmers and ranchers what they 

are going to be exposed to in terms of their input costs, and that 

is a huge issue. And, that is what I am getting to here. 

I said yesterday on the Senate floor it is no consolation to stand 

with one foot in the campfire, one foot in the ice bucket and say, 

on average, I am in good shape. 

It is no consolation to say to farmers and ranchers, you are going 

to be in good shape on average, if you do not know the regional differences, if you do not know the crop differences, if you cannot tell 

them how much land is going to go out of production. 

Yet, we have a House bill that was passed, and I find that shocking. I just find that amazingly shocking that that would have happened without that information being out there. 

Mr. Chairman, thank you. 

Chairman HARKIN. Thank you very much, Senator. 

Now, Senator Roberts. 

Well, I will go to Senator Cochran then if you are not ready. 

Senator ROBERTS. You caught me off guard there, Mr. Chairman. 

Thank you for your agreement that we hold additional hearings. 

Thank you for your agreement that we try to focus on some subjects that all of us will decide on when we have a meeting. I think 

that is real leadership, and I appreciate it Mr. Chairman, thank 

you very much. 

63 

Senators Bennet, Nelson, Thune, the county commissioner, 

mayor and Governor and Secretary and Senator Johanns and Senator Roberts, me, we are all High Plains drifters. We are out there 

on the high plains where it is pretty risky business, and we make 

a great crop 1 year, lose it two and hope for the best. 

You have indicated that, well, if you are from coal country, and 

we are, 73 percent in Kansas. You drive long distances, and we 

sure as heck do that. And if we do not have any trees, last time 

I counted there were six in Dodge City. 

[Laughter.] 

Senator ROBERTS. I am making that up. We do have trees. 

That somehow we are going to go to nuclear from coal. We have 

not built a nuclear plant in 30 years. 

I think we are going to natural gas, which means higher fertilizer prices, and so that endangers the wheat, the corn, the sorghum and the soybean and even the cotton crops that we have and 

then puts a real dilemma in regards to the livestock producer and 

our rural communities. So that is just for starters in regards to the 

indexes that you have indicated. 

Secretary Vilsack, it has been over 1 year since the Congress 

passed the Farm Bill. I know you are working hard on the implementation. I know our producers are anxious for the final rules and 

the decision to be made. 

This bill gives you 1 year to establish the offsets allowances programs. I just think that is going to be a pretty heavy burden for 

you, if not an unrealistic task. 

We know you do not have all the necessary resources for the 

SURE disaster program. I understand that has been done by pencil 

and paper and, hopefully, an eraser. If you do not have the software to implement this program, which we have a good idea of how 

it works, how are you going to implement this new carbon program 

that demands time and understanding? 

Do you have the necessary resources to do this? Are you going 

to have to pull away from the Farm Bill and the disaster program 

to explain the warming cap and trade program? 

Secretary VILSACK. Senator, I am confident that we will be able 

to get the work done. 

You have alluded to the fact that we have an outdated, antiquated computer system, and we have requested resources to begin 

the process of modernizing that system. Our hope and prayer is 

that we can justify to you, the policymakers and the appropriators. 

Senator ROBERTS. I will be very warm to that, and I appreciate 

the answer. 

Administrator Jackson, EPA’s cost analysis has taken a good 

deal of concern here. The EPA assumes 150 percent increase by 

2015 in nuclear electricity production. I just mentioned that. I 

think this underestimates the amount of fuel switching by utilities, 

to move coal-based generation to natural gas. Obviously, as I have 

stated, in the High Plains, why, we are heavily dependent upon 

coal for our electricity, meaning our farmers are heavily dependent 

upon coal. 

Now, since we have not had a new nuclear plant in 30 years, is 

it not more likely that many utilities will simply switch from coal 

to natural gas as opposed to building new nuclear plants and then 

64 

how is that going to affect farmers who need fertilizer to grow the 

crops that feed a troubled and hungry world? And, it is a whole 

bunch of crops. 

Where is my chart or is this the one with the chart? 

Ms. JACKSON. No, that is the other one. 

Senator ROBERTS. Oh, there is the chart. This is a Kent Conrad 

special. 

That is the nuclear production that you indicate is going to rise 

there. Stick your finger out there, right there. 

I just do not think that is going to happen. I do not think it is 

going to happen. I wish it would, and I hope it would. 

Any answer? 

Ms. JACKSON. Yes, Senator. Thank you. 

EPA did not assume nuclear power assumption. Rather, we projected that nuclear power would expand because of a rise in the 

carbon price. We constrained the ability of nuclear power production to grow any faster than the Energy Information Administration, which I see is also listed on your chart, has in its reference 

case. So we tried to adhere to what the Energy Information Administration says is likely to happen. So we did not look come up with 

that. 

Senator ROBERTS. I understand that. 

I am not going to ask the question by Saxby Chambliss that referred to India when he said no, and that per capita they release 

less CO2 than anybody else. 

But I would sure be careful about any tariff punishment, more 

especially on China. We just heard from the former Fed Chairman, 

Mr. Greenspan, saying we might be at a tipping point with our 

economy, where he indicated that China might even buy our paper 

or our bonds—if that happens, higher interest rates. 

I would be a little careful. As I said before, maybe Senator Smoot 

and Senator Hawley are for it, but I am not. 

Finally, Administrator Jackson, I want you to come with me to 

a little town in Kansas called Treece. It is down there in the southeastern part. We can make a short walk across the street from 

Treece, a town in need of a buyout, into some place called Picher, 

Oklahoma, a town that received a buyout. 

So, whenever your schedule allows you, we will show you a good 

time down there. We will get away from that toxic waste site. 

There is a lot of restaurants there, and you can take your pick, and 

we will have a good time. 

If not, then at least the Region 7 Administrator who tends to be 

not less than cooperative but just a little stubborn or something. 

I am not quite sure what the problem is down there. 

Secretary Vilsack, your testimony leaves out the impact of removing an estimated 40 million acres. That is the answer I think 

or that is the answer I have, Senator Johanns, and that is on the 

Farm Bureau estimate. I do not know if anybody is going to buy 

that. I am sure the Farm Bureau does—of pasture land to plant 

trees on the livestock industry. 

Basically, I do not understand when you say there will be no impact of these decisions on livestock producers, and I think we have 

to have that answer, more especially in the High Plains. 

65 

You do not have to answer that. I think I am over time by 26 

seconds, and that is pretty good. 

No, I still have time left. Go ahead. You have 14 seconds. 

Secretary VILSACK. Senator, I guess I approach this from a 

slightly different viewpoint about the capacity of American agriculture to innovate, and I appreciate that you may have some skepticism about that. But, based on history, what we have seen is the 

capacity of farmers and ranchers to adapt and to embrace technology and to be extraordinarily productive. 

So, if one is suggesting that by virtue of taking pasture land out 

of production, that somehow that is going to substantially increase 

feed costs, that is an argument you can make. But I think you have 

to take into consideration: How will we adapt to that? What will 

we do in terms of feed technology? What will we do in terms of seed 

technology that might reduce inputs, that might increase productivity, that might allow us to produce exactly what we are producing today or more on less land? 

Because the reality is that is in fact what has happened. We 

have produced more. We have significantly increased productivity 

in this Country. 

Senator ROBERTS. Well, I think we have a pretty good record on 

that. I mean after several Farm Bills that many of us have worked 

on the productivity of the American farmer is incredible, and precision agriculture has been incredible. Matter of fact, we have been 

so incredible that production agriculture is sort of a forgotten miracle. 

But 40 million acres out of production is significant. Do you 

agree with that number or not? 

Secretary VILSACK. It may very well be the number that is in the 

estimate, but what I do not agree, and I do not want to belabor the 

point that I had with Senator Johanns. 

The question is what land are we taking out of production? Are 

we taking land that currently is being used to produce crops or currently being used for grazing or are we taking out land that is significantly marginal and is not currently being used or is in conservation programs? That is the question. 

I think what we are creating here are options. What we need in 

rural America in my view is as many income options as possible 

so that farmers have a chance of success and particularly those 

mid-sized farmers. You know if you look at the ag census what you 

are going to see is an increase in production agriculture, units of 

$500,000 in sales, 41,000 more units of farms in the last 5 years, 

108,000 more farms in the smaller category of less than $10,000 in 

sales. Where we need options are those folks in the middle, and I 

think what this presents is the possibility of another income option. 

Chairman HARKIN. Senator Roberts? 

Senator ROBERTS. Yes, I know my time is up, and I thank you, 

Mr. Chairman. Just could I ask Administrator Jackson if she could 

just please come to Treece with me? It would just be—— 

Ms. JACKSON. I am happy to, Senator. 

Senator ROBERTS. You will make every effort to come? 

Ms. JACKSON. I will make every effort to come. 

Senator ROBERTS. Yes, ma’am. Thank you so much. 

Ms. JACKSON. Thank you. 

66 

Chairman HARKIN. Senator Cochran. 

Senator COCHRAN. Mr. Chairman, thank you. 

I have been sitting here for quite a while, so I have had an opportunity to read some of the statements which I found interesting. 

I want to congratulate you, Mr. Chairman, for convening the 

hearing and getting our Committee to focus on the challenges, not 

only the traditional ones that we talk about, using agricultural 

products for energy production and some of the other alternatives 

that discussions like this always drive to consider. 

I wanted to bring to the attention of the distinguished Assistant 

to the President for Science and Technology, John Holdren, that in 

our State of Mississippi, in Vicksburg, Mississippi, a few years ago, 

an entrepreneur family who had been in the oil and gas production 

business and in the distribution of product, transporting product in 

the traditional fossil fuel industries has now branched out and become active in the production of fuels from bioengineering experiences and trying to find new ways of creating usable energy products and delivering them at competitive prices. 

I was fascinated by the success that this one company has had. 

I happen to be at the groundbreaking in Vicksburg several years 

ago and really had not thought much about that business until I 

got their annual report, and they are beginning to make money. 

But more than that, they have invented and are creating new ways 

of producing and distributing energy in our State and throughout 

the Southeastern Region. 

This is the old Lampton-Love Company. Two families joined together to start the business. But they now have a high-tech name, 

and I cannot remember it. It is an acronym, two or three letters 

together, Inc. 

But I am going to send you a copy of the annual report just to 

encourage you that leadership in the innovative approaches to dealing with older problems is being experience around our Country, I 

think. I think this is an indication of a new industry that gives us 

all hope for the future, that it is not all doom and gloom. 

We do have challenges in the agricultural area, and I know you 

are interested in that too, but I think you might be interested in 

this. 

But I want to thank the panel too for being here and helping us 

explore other issues that we need to be familiar with, so we can 

work in a cooperative way. This is not a partisan deal. We are all 

in this together. So we want to make sure that we have programs, 

government policies that encourage the successful operations of not 

only farms and agribusinesses but other energy companies as well, 

similar to the one I just mentioned. 

Thanks for conducting the hearing, Mr. Chairman. 

Chairman HARKIN. Thank you, Senator Cochran. I do not know 

if there are any responses from the panel to that or not. 

We are expecting two stacked votes. If we can hurry, we will not 

have to come back then. So next would be Senator Thune. 

Senator THUNE. Thank you, Mr. Chairman, and I want to thank 

you for holding today’s hearing. I hope it is the first of many hearings that the Agriculture Committee conducts on climate change. 

If that kind of a law is enacted, a cap and trade program would 

67 

have sweeping implications for agriculture and for the entire economy. 

I would say that in past years, when I have traveled across 

South Dakota, what I traditionally hear from agriculture producers 

has to deal with market and weather conditions. It has to do with 

USDA, price support, conservation programs, export opportunities, 

those sorts of things, the traditional topics of conversation that reflect the challenges of making a living in agriculture. 

But today, it seems to me at least the attitude among farmers 

and ranchers has shifted dramatically, and it seems like the issues 

that they are bringing up have more to do with things that the government is doing that they think is making agriculture production 

more costly, less productive, less competitive. And, they are concerned about the cap and trade system proposal that they view 

would increase already high input costs for fertilizer and diesel fuel 

and electricity. 

They are concerned about food safety laws that invite FDA inspectors onto their farms and ranchers. 

They are worried about EPA studies that make ethanol look like 

a worse polluter than gasoline. They are worried about efforts to 

dramatically expand the Clean Water Act or regulate every ditch 

and puddle and stock dam and creek bed and stream on their land. 

And, they are worried about the EPA regulating greenhouse gases 

under the Clean Air Act and what that would mean for the future 

of production agriculture. 

So, in a few short months, it seems to me at least that the government is being viewed more and more to folks in production agriculture as almost an adversary as opposed to an ally. 

My view is that Congress and the Administration should be helping farmers and ranchers compete in a global marketplace and not 

hamstringing their everyday production decisions, and I hope as 

the Ag Committee moves forward with these issues that we will 

keep that very simple principle in mind. 

Administrator Jackson, do you believe that increased renewable 

fuel production is better for our economy and our environment than 

relying on traditional gasoline made from imported oil? 

Ms. JACKSON. Senator, I believe that renewable fuels by law, and 

that is what I am bound to implement. The Energy Independence 

and Security Act says that we should be moving toward renewable 

fuels and requires EPA to do certain rulemakings around that. 

Senator THUNE. Will the EPA in its RFS2, final RFS2, limit that 

regulation to just domestic indirect land use changes when associated with renewable fuel production as opposed to international 

land use changes? 

Ms. JACKSON. Senator, that regulation was out in draft. The public comment period has closed, and we are now in the middle of a 

peer review that is being conducted over the summer. We are waiting for the results of that peer review, and that will certainly also 

inform our decision—specifically the peer review, specifically on the 

issue you raise which is the international indirect land use implications of certain biofuels. 

Senator THUNE. The other issue, and I guess I would ask this, 

and I do not know if this is contemplated in your rulemaking, but 

68 

will the EPA include in its RFS2 rule the indirect land use changes 

that are associated with increased oil production? 

Ms. JACKSON. Yes, because they were already considered in the 

draft rulemaking. So, in looking at petroleum fuel, there was a look 

at indirect land use production with respect to international impacts there as well, Senator. 

Senator THUNE. For petroleum? 

Ms. JACKSON. Right. We applied the same kind of modeling to 

petroleum fuels that we did for renewable fuels. 

Senator THUNE. OK. Well, I guess I would hope that, if in fact 

when the final ruling comes out. But if it does contemplate using 

international land use changes, Mr. Chairman, I would hope that 

this Committee would work toward making a change because that, 

to me, is not something that ought to be a part of any equation or 

calculation of the carbon footprint of renewable energy. 

Secretary Vilsack, I am interested in the role that Federal forests 

can play in a safe and reliable source of renewable electricity and 

biofuel, and I am interested in your thoughts about what role Federal forests can play in the climate change policy and biofuels in 

terms of renewable energy production and energy security. 

My question, I guess specifically, is do you believe that the Farm 

Bill definition of renewable biomass or the current RFS2 version of 

biomass is a better way to promote renewable energy? 

Secretary VILSACK. Senator, we have obviously been supportive 

of the definition of biomass that the Senate and the House worked 

extensively on during the course of the Farm Bill discussions. 

We know that on public lands the current House bill will allow 

for removal of trees and other materials except from national 

parks, but we also are working within the Recovery and Reinvestment Act to utilize opportunities in our forests for woody biomass 

demonstration projects to show the feasibility and opportunities. So 

a combination of those two programs, I think, will allow us to fully 

utilize our forests. 

I would also say that we are looking at a strategic view relative 

to our forests that focuses on a comment that Senator Bennet made 

earlier, and that is maintaining them so that we make maximum 

use of their capacity to retain water and to improve the quality of 

water. So that requires us to look at maintenance a little bit differently, and that creates, I think, additional opportunities for supplying biofuel production from woody biomass and energy production from woody biomass. 

Senator THUNE. There is a different definition in the Farm Bill, 

however, than exists in the Energy Bill which many of us have 

tried to rectify. The current definition in the Energy Bill and the 

RFS2 would preclude some of the areas of the Country that might 

participate in renewable fuel production, and the Black Hills of 

South Dakota comes to mind. 

Now people in that area of the State are very much supportive 

of taking some of these forest residues and waste materials that 

generally contribute to fuel loads for fires in those forests and 

using them for a beneficial use which would be production of renewable energy. 

So I guess what I would suggest, and I hope that before this 

process is completed that we will be able to get a biomass definiVerDate Nov 24 2008 08:03 Sep 21, 2010 Jkt 000000 PO 00000 Frm 00074 Fmt 6633 Sfmt 6633 C:\DOCS\56563.TXT SAG2 PsN: SAG2
69 

tion that is consistent with the one that we passed in the Farm Bill 

because I think that is the correct one. It makes it possible for 

many of these areas of the Country to participate in renewable fuel 

production. I guess I make that as an observation. 

I mean your answer to me sounds like you are sort of more along 

the lines of the RFS2 and the Energy Bill definition. I know there 

have been various permutations of that as the process has moved 

forward, but right now all those definitions, with the exception of 

the one in the Farm Bill, preclude areas like the Black Hills of 

South Dakota from participating. 

Secretary VILSACK. Senator, I guess if I might just suggest to you 

or indicate to you my thought about this, and I think we have been 

fairly consistent publicly about this. We think the Farm Bill definition of biomass is a good one. 

Having said that depending upon what the policymakers decide, 

if you decide collectively to make a different decision on this as it 

relates to the Climate Change Bill, I still think that there are opportunities for the utilization of the woody biomass that can be created in the forests that you referred to. I think there are still opportunities within the energy title of the Farm Bill, within some 

of the recovery and reinvestment projects that are also being funded. 

So I think there are still opportunities, and I think it will be part 

of how we maintain our forests properly in order to preserve water. 

Chairman HARKIN. Thank you very much, Senator. 

There are two votes now. The first vote was called at 4:14. I assume the first vote will be 15 minutes and the second vote, 10 minutes. They are back-to-back votes. 

Senator LINCOLN IS NEXT. I am going to leave and go vote, but 

you are probably going to have to leave pretty soon too. Do you 

want to go vote and come back? 

I am trying to figure out what to do here as we have two votes. 

If it was one vote, it would be easy. 

Senator BROWN. I cannot come back. 

Chairman HARKIN. Pardon? 

Senator BROWN. I cannot come back. I have meetings about half 

an hour, 15 minutes from now. So, Senator Lincoln, it is her turn. 

So she can go. 

Chairman HARKIN. Well, but she can—— 

Senator LINCOLN. I will be brief. 

Chairman HARKIN. All right. Why do we not go ahead and you 

proceed? 

Senator BROWN. I have just one. 

Chairman HARKIN. Go ahead. 

Senator LINCOLN. Yes, I will just throw mine out there. 

Thank you, Mr. Chairman. We appreciate you and Senator 

Chambliss for bringing us here, and we do hope there will be more 

of those hearings. 

We want to thank the panel. We are grateful to you for being 

here today, but we just need you to know we have to have you 

through this whole process in terms of coming through and really 

doing something that is meaningful but also something that is respectful of the economic conditions we are in right now and certainly from the different, diverse areas that we come from in this 

70 

Country. So we appreciate your all being here, and we look forward 

to working with you. 

Just three questions basically: Secretary Vilsack, you have discussed that an agricultural offsets program will provide new revenue sources for agricultural producers across America. I guess my 

question, though, is do you believe that that will be the case for 

all agriculture producers? 

As you well know, my State is a State that produces a tremendous amount of rice. They do it efficiently and effectively, and they 

feed the world. But many rice producers will see their input costs 

increase with no opportunity for mitigation on those costs. We 

would certainly rather have a rice field than a parking lot. 

If you have any recommendations for mitigating cost increases 

for those producers that are ineligible for the ag offsets programs, 

I hope that you will express those to us either here today or in 

writing. 

The other question I would have for you would be the USDA’s 

analysis, which we got this morning. I have not had the opportunity to go through it thoroughly. But are there estimations of 

how many acres of cropland are going to be converted to forestry 

over the life of this bill and what are the impacts of those acreage 

shifts to the cost of grain and crops and particularly food prices? 

That question has another second part to it which is we hear 

these questions over this debate and concerns about potential increases in the cost of fuel and the cost of electricity. We do not hear 

much about the potential increases in the cost of food and feed that 

may be indirectly impacted. I am certainly interested in the potential impact of climate legislation on food processing, the food processing industry which includes sectors that are important to us in 

Arkansas, whether it is poultry, meat, oil seed processing and others and would certainly like to have your comments on that and 

wondering if we would provide. 

I mean there is going to be little assistance in the form of free 

mission allowances in the initial years of some of these programs. 

So I just worry if you have taken the kind of look at USDA at the 

potential impact of the House legislation on the food processing industry and the disproportionate cost on that industry that could 

really high, higher food prices in these difficult economic times. 

Secretary VILSACK. Senator, let me see if I can quickly respond 

in light of the schedule here. 

As far as rice is concerned, I think there are steps that rice producers can take to potentially qualify for offsets. Obviously, there 

are differences in terms of crops. Some people have more opportunities. Some people have less. Those who have less or those who 

have no opportunities, the bill that is currently before you does provide for additional allowances for those who cannot take advantage, 

to help them transition. So there is potentially some additional income source and opportunity from allowances for those who cannot 

participate. 

That presupposes that innovation, presupposes that our knowledge stays static. That will not stay static. We will continue to innovate, and I think we will find a multitude of ways that we do 

not know of today to take full advantage of this. 

71 

As it relates to crops and trees, I think Senator Roberts said 40 

million. I am not willing to concede that that necessarily will take 

cropland and will necessarily result in acre for acre reduction of 

feed and therefore increase costs for livestock producers. 

The reason I am not willing to concede that is because this gives 

farmers a choice. They may decide to take unproductive land. They 

may decide to take land that is currently in conservation programs 

and utilize the offset opportunities that forestry may present. So I 

think there are options here. 

As it relates to food processing, I do not know that we have done 

an evaluation of this, but I do know that the bill was designed and 

created in a way to try to provide for opportunities for energy-intensive industries to receive some sort of assistance and some sort 

of opportunity to transition to more efficiency and greater efficiency, which hopefully over time will lead to less input costs and 

hopefully be able to stabilize what we currently enjoy in this Country, which is relatively inexpensive food relative to other countries. 

Senator LINCOLN. I would just say that these are problems that 

I think we have not fully addressed, and I hope that you will work 

with us to address these. They come as a big complication for our 

State and our population, also working with the Hunger Caucus 

here in the Senate, understanding difficult times, and the availability of food at reasonable prices is a critical issue. 

Just to put on all of your minds, I hope, we have talked about 

early actors and the importance of what early actors have done. I 

hope that we will in some way adequately ensure that there is not 

an incentive for those owners to stop doing the good things that 

they have done. 

I know my dad. I come from a rice farmer and a seventh-generation Arkansas rice farm family. I have never known a better conservationist than my dad, and I look around our State, and I see 

what farmers are doing, using the existing programs and others to 

really do the best job they can, whether it is clean water or whether it is conservation, planting trees and a whole host of other 

things. 

So I hope we will disincentivize the good things that are happening, and I hope that all of you all will look at whenever we do 

push on these things sometimes we get unintended consequences. 

So I look forward to working with you. 

Thank you, Mr. Chairman. 

Chairman HARKIN. Thank you very much, Senator Lincoln. 

Senator BROWN. Can I have 30 seconds? 

Chairman HARKIN. We have about 4 minutes left. 

Senator BROWN. Oh, do we have it? OK. Thank you, Mr. Chairman. 

We have how long left? 

Chairman HARKIN. We have about 4 minutes. 

Senator BROWN. I wanted to ask a question, and I will just submit it in writing to Secretary Vilsack. 

First, welcome all three of you. 

Chairman HARKIN. I will leave the record open for questions to 

be submitted in writing. 

Senator BROWN. OK. I appreciate that. 

72 

I wanted to ask about the two major industries in my State are 

manufacturing and agriculture, and there are six major energy-intensive manufacturing nationally. All of them are in Ohio, and one 

of them is chemicals. I wanted to and I will put a question in writing about nitrogen fertilizer and the analysis that you are doing 

and its impact on climate change and on the legislation. So I will 

put that in writing and get it to, and I appreciate your thoughts 

on it. 

Thanks. 

Chairman HARKIN. I am sorry, Senator. I think by the time we 

go and come back, we have these two votes, and it is not fair to 

keep these people here for that. I apologize. 

But we will submit these in writing. I would ask you to please 

respond as rapidly as possible. I will leave the record open for Senators who were not here, and, Senator Chambliss, I think, has 

some follow-up questions that he wanted to submit in writing in 

also. 

Ms. JACKSON. Mr. Chairman, can I just correct the record? I gave 

an inaccuracy. The public comment on the renewable fuels rule has 

not closed. That is important to many of your constituencies. We 

extended it recently, so I just wanted to make sure I corrected the 

record on that. 

Chairman HARKIN. I appreciate that very much. 

I thank you all very much. It was a good exchange. 

The Committee will stand adjourned. 

[Whereupon, at 4:29 p.m., the Committee was adjourned.] 

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(217) 

QUESTIONS AND ANSWERS 

JULY 22, 2009 

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