U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

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

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

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

71–630 PDF 2012

S. HRG. 112–281 

FARM BILL ACCOUNTABILITY: 

THE IMPORTANCE OF MEASURING 

PERFORMANCE, WHILE ELIMINATING 

DUPLICATION AND WASTE 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 23, 2011 

Printed for the use of the 

Committee on Agriculture, Nutrition and Forestry 

( 

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

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

DEBBIE STABENOW, Michigan, Chairwoman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

PAT ROBERTS, Kansas 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

SAXBY CHAMBLISS, Georgia 

MIKE JOHANNS, Nebraska 

JOHN BOOZMAN, Arkansas 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

JOHN HOEVEN, North Dakota 

CHRISTOPHER J. ADAMO, Majority Staff Director 

JONATHAN W. COPPESS, Majority Chief Counsel 

JESSICA L. WILLIAMS, Chief Clerk 

MICHAEL J. SEYFERT, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Farm Bill Accountability: The Importance of Measuring Performance, While 

Eliminating Duplication and Waste ................................................................... 1 

Thursday, June 23, 2011 

STATEMENTS PRESENTED BY SENATORS 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, Chairwoman, Committee on Agriculture, Nutrition and Forestry ............................ 1 

Roberts, Hon. Pat, U.S. Senator from the State of Kansas .................................. 2 

Conrad, Hon. Kent, U.S. Senator from the State of North Dakota ..................... 4 

Grassley, Hon. Charles E., U.S. Senator from the State of Iowa ........................ 3 

Panel I 

Concannon, Hon. Kevin, Under Secretary, Food, Nutrition, and Consumer 

Services, U.S. Department of Agriculture, Washington, DC ............................ 11 

Leonard, Hon. Joe, Jr., Ph.D., Assistant Secretary for Civil Rights, U.S. 

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

Scuse, Hon. Michael, Acting Under Secretary, Farm and Foreign Agricultural 

Services, U.S. Department of Agriculture, Washington, DC ............................ 9 

Sherman, Hon. Harris, Under Secretary, Natural Resources and Environment, U.S. Department of Agriculture, Washington, DC ................................. 10 

Tonsager, Hon. Dallas, Under Secretary, Rural Development, U.S. Department of Agriculture, Washington, DC ................................................................ 8 

Panel II 

Blankenship, Brett, Blankenship Brothers, Washtucna, Washington ................ 32 

Fong, Phyllis, Inspector General, U.S. Department of Agriculture, Washington, DC ............................................................................................................. 30 

Omar, Masouda, Manager of Business Finance Loan Production, Colorado 

Housing and Finance Authority, Denver, CO .................................................... 34 

APPENDIX 

PREPARED STATEMENTS: 

Casey, Hon. Robert, Jr. .................................................................................... 44 

Chambliss, Hon. Saxby .................................................................................... 45 

Thune, Hon. John ............................................................................................. 46 

Blankenship, Brett ........................................................................................... 49 

Fong, Phyllis ..................................................................................................... 57 

Omar, Masouda ................................................................................................ 74 

TESTIMONY WAS SUBMITTED COLLECTIVELY FROM USDA FOR THE FOLLOWING

WITNESSESS: 

Hon. Kevin Concannon, Hon. Joe Leonard, Jr., Hon. Michael Scuse, Hon. 

Harris Sherman, Hon. Dallas Tonsager ............................................................. 79 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

AcMoody Farms, Union City, Michigan,on behalf of the American Fruit and 

Vegetable Processoers and Growers Coalition, prepared statement ................ 102 

U.S. Government Accountability Office (GAO), prepared statement .................. 105 

Page

IV 

Center for Agribusiness Excellence, Tarleton State University, prepared statement ...................................................................................................................... 119 

QUESTION AND ANSWER: 

Stabenow, Hon. Debbie: 

Written questions to Hon. Kevin Concannon ................................................. 133 

Written questions to Phyllis Fong ................................................................... 157 

Written questions to Hon. Joe Leonard .......................................................... 162 

Written questions to Hon. Michael Scuse ....................................................... 243 

Written questions to Hon. Harris Sherman ................................................... 259 

Written questions to Hon. Dallas Tonsager ................................................... 278 

Written questions to U.S. Department of Agriculture .................................. 300 

Baucus, Hon. Max: 

Written questions to Masouda Omar .............................................................. 241 

Written questions to Hon. Dallas Tonsager ................................................... 288 

Brown, Hon. Sherrod: 

Written questions to Brett Blankenship ......................................................... 130 

Written questions to Hon. Kevin Concannon ................................................. 141 

Written questions to Hon. Joe Leonard .......................................................... 163 

Written questions to Hon. Michael Scuse ....................................................... 251 

Written questions to Hon. Dallas Tonsager ................................................... 290 

Casey, Hon. Robert, Jr.: 

Written questions to Hon. Kevin Concannon ................................................. 146 

Chambliss, Hon. Saxby: 

Written questions to Hon. Kevin Concannon ................................................. 153 

Written questions to Phyllis Fong ................................................................... 160 

Written questions to Hon. Harris Sherman ................................................... 271 

Written questions to Hon. Dallas Tonsager ................................................... 294 

Grassley, Hon. Charles: 

Written questions to Hon. Joe Leonard .......................................................... 163 

Written questions to Hon. Michael Scuse ....................................................... 256 

Klobuchar, Hon. Amy: 

Written questions to Hon. Kevin Concannon ................................................. 147 

Lugar, Hon. Richard G.: 

Written questions to Hon. Kevin Concannon ................................................. 150 

Written questions to Hon. Michael Scuse ....................................................... 251 

Nelson, Hon. E. Benjamin: 

Written questions to U.S. Department of Agriculture .................................. 301 

Thune, Hon. John: 

Written questions to Brett Blankenship ......................................................... 132 

Written questions to Hon. Kevin Concannon ................................................. 155 

Written questions to Phyllis Fong ................................................................... 160 

Written questions to Hon. Joe Leonard .......................................................... 163 

Written questions to Masouda Omar .............................................................. 241 

Written questions to Hon. Michael Scuse ....................................................... 257 

Written questions to Hon. Harris Sherman ................................................... 277 

Written questions to Hon. Dallas Tonsager ................................................... 297 

Blankenship, Brett: 

Written response to questions from Hon. Sherrod Brown ............................ 130 

Written response to questions from Hon. John Thune .................................. 132 

Concannon, Hon. Kevin 

Written response to questions from Hon. Debbie Stabenow ......................... 133 

Written response to questions from Hon. Sherrod Brown ............................ 141 

Written response to questions from Hon. Robert Casey, Jr. ......................... 146 

Written response to questions from Hon. Amy Klobuchar ........................... 147 

Written response to questions from Hon. Kirsten Gillibrand ....................... 148 

Written response to questions from Hon. Richard G. Lugar ........................ 150 

Written response to questions from Hon. Saxby Chambliss ......................... 153 

Written response to questions from Hon. John Thune .................................. 155 

Fong, Phyllis: 

Written response to questions from Hon. Debbie Stabenow ......................... 157 

Written response to questions from Hon. Saxby Chambliss ......................... 160 

Written response to questions from Hon. John Thune .................................. 160 

Leonard, Hon. Joe 

Written response to questions from Hon. Debbie Stabenow (with attachments) ............................................................................................................ 162 

Written response to questions from Hon. Sherrod Brown ............................ 163 

Written response to questions from Hon. Charles Grassley ......................... 163 

Page

V 

Leonard, Hon. Joe—Continued 

Written response to questions from Hon. John Thune .................................. 163 

Masouda Omar: 

Written response to questions from Hon. Max Baucus ................................. 241 

Written response to questions from Hon. John Thune .................................. 241 

Scuse, Hon. Michael 

Written response to questions from Hon. Debbie Stabenow (with attachments) ............................................................................................................ 243 

Written response to questions from Hon. Sherrod Brown ............................ 251 

Written response to questions from Hon. Richard G. Lugar ........................ 251 

Written response to questions from Hon. Charles Grassley ......................... 256 

Written response to questions from Hon. John Thune .................................. 257 

Sherman, Hon. Harris 

Written response to questions from Hon. Debbie Stabenow ......................... 259 

Written response to questions from Hon. Saxby Chambliss ......................... 271 

Written response to questions from Hon. John Thune .................................. 277 

Tonsager, Hon. Dallas 

Written response to questions from Hon. Debbie Stabenow ......................... 278 

Written response to questions from Hon. Max Baucus ................................. 288 

Written response to questions from Hon. Sherrod Brown ............................ 290 

Written response to questions from Hon. Saxby Chambliss ......................... 294 

Written response to questions from Hon. John Thune .................................. 297 

U.S. Department of Agriculture: 

Written response to questions from Hon. Debbie Stabenow ......................... 300 

Written response to questions from Hon. E. Benjamin Nelson .................... 301 

(1) 

FARM BILL ACCOUNTABILITY: 

THE IMPORTANCE OF MEASURING 

PERFORMANCE, WHILE ELIMINATING 

DUPLICATION AND WASTE 

Thursday, June 23, 2011 

UNITED STATES SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, 

Washington, DC 

The Committee met, pursuant to notice, at 9:31 a.m., in Room 

G50, Dirksen Senate Office Building, Hon. Debbie Stabenow, 

Chairwoman of the Committee, presiding. 

Present: Senators Stabenow, Conrad, Nelson, Brown, Klobuchar, 

Bennet, Gillibrand, Roberts, Cochran, Chambliss, Grassley, and 

Thune. 

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

FROM THE STATE OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

Chairwoman Stabenow. The meeting will come to order of the 

Senate Agriculture, Nutrition and Forestry Committee and we welcome everyone today. We welcome all of our witnesses. We appreciate your efforts and the time to be here. 

We are focused this morning on accountability, making sure that 

taxpayers are getting their money’s worth and that we are making 

sure that the USDA services are efficient and effective for the 

farmers, the ranchers, the families that they serve. 

In my state of Michigan with the economy as it has been, every 

dollar is hard-earned, and I am sure my colleagues can say the 

same in their states. Taxpayers have every right to expect that 

their money is being used wisely and effectively. We know, because 

of the recession, there are families who have paid taxes all of their 

lives, who never thought in their wildest dreams they would need 

help putting food on the table, who now need food assistance. And 

that is even more of a reason to make sure that we are stopping 

fraud and abuse and managing every dollar as responsibly as possible. 

So as we look at the Farm Bill, I believe we need to ask questions like, Are we getting the right results? Are we being cost-effective? Are we eliminating waste, fraud, and abuse? 

We have two great panels here today. We have the four Under 

Secretaries of the Department of Agriculture as well as the Assistant Secretary for Civil Rights who will make up our first panel. We 

also have USDA’s Inspector General and two individuals who will 

2 

talk about their personal experiences working with the Department. 

I have asked our panels to be thinking about three things today 

as we look at accountability. The first is measuring performance 

and efficiency. How are we measuring whether programs are getting results and being cost- effective? Workers in my state get annual performance reviews and they have a right to apply the same 

standard or expect us to apply the same standard to our Government. 

We also need to be carefully looking at how we stop fraud and 

abuse. Last week we saw great work of the Inspector General 

cracking down on fraud related to the SNAP program in my home 

state of Michigan. 

As I indicated, so many families in Michigan never imagined 

they would be in a situation where they would need food help, and 

we, with dollars tight, cannot afford to have even one dollar go to 

fraud or even one person abusing the system. We put a number of 

requirements into the last Farm Bill and I am eager to see how 

those are working. 

The second issue is eliminating duplication. In Michigan, we 

have a proud history of making wheels, but we do not need to reinvent them. Where do we have programs that are overlapping or 

working at cross-purposes? 

Where do we have people wasting time and money doing work 

that somebody else is already doing? How can we bring that together and do it better? We need to be thinking about ways that 

we can streamline services. We are offering to make them not only 

more effective, but also cost- effective for taxpayers. 

And finally, we need to look at customer service. How well is the 

USDA providing services to our farmers, our ranchers, our foresters? I would like for us today to be thinking about how we can 

cut down on the red tape, the paperwork that our producers need 

to worry about and make USDA services more accessible and userfriendly for all of our constituents. 

We have two great witnesses today who will talk about their personal experiences working with the Department, and I am really 

looking forward to their perspective as well. So again, welcome to 

an important hearing as we begin to discuss and debate as we 

move forward on Farm Bill policy important for our country, important for jobs, and we welcome all of your input today. 

I would now turn to my colleague and friend, Senator Roberts. 

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

STATE OF KANSAS 

Senator ROBERTS. Well, thank you, Madam Chairwoman. First of 

all, I want to thank you for these new digs. This is, of course, appropriate in regards to the mission and the goals and the efforts 

of the always powerful Senate Agriculture Committee and I thank 

you for this. We are going to have to talk to members of the Rules 

Committee, of which I am one, to make this a permanent hearing 

room. 

Madam Chairwoman, Senator Lugar could not be here today due 

to another commitment. He has asked me to submit comments 

from the American Fruit and Vegetable Processors and Growers 

3 

Coalition in his absence, so I ask unanimous consent that these 

comments may be part of the record at this point. 

Chairwoman Stabenow. Without objection, so ordered. 

[The information can be found on page 102 in the appendix.] 

Senator ROBERTS. Madam Chairwoman, I know that Senator 

Grassley has an important committee meeting on the Senate Judiciary Committee. At this time, I am going to suggest that we recognize Senator Grassley and then obviously would move over to Senator Conrad. Welcome back, Senator Conrad. And then you can recognize me for any sterling words of truth that I may have to make. 

Chairwoman Stabenow. We will wait with bated breath for that 

moment. But thank you. And we do want to turn to Senator Grassley, who I know cares about these issues and has to leave. We welcome your opening statement. 

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

FROM THE STATE OF IOWA 

Senator GRASSLEY. I am Ranking Member on the Judiciary Committee and so that is why I will not be able to be with you for the 

whole hearing, and I did ask for special exemption to make a statement because, number one, to thank the Chairwoman because she 

responded to a request that I asked her to include civil rights as 

an issue, along with other things. 

And I also think it is very important that I be here, being a 

farmer and the start of the Farm Bill. So thank you for your consideration. I am going to leave some questions for answer in writing, and I would like to have that be accomplished as well. 

The focus of today’s hearing is timely as we consider what policies to set in the next Farm Bill. We have to make sure Farm Bill 

programs are implemented the way we intended. If they are not 

being properly administered, we need to fix the problems. 

And I want to thank all the Under Secretaries and Assistant Secretaries for being here today. Many farmers are probably eager to 

hear the Department’s comments regarding crop insurance because 

crop insurance is very crucial to the operations of most farms 

today. The crop insurance program has had a reduction in funds, 

so it is more important than ever that we hear what the Department is doing to guarantee the program is effectively accomplishing 

the goals of risk management. 

I am also eager to hear from the Department what they are 

doing to ensure individuals applying for farm program payments 

who are truly, according to the legal language, being actively engaged in farming. 

I am also particularly pleased that Secretary Leonard is here and 

that the Chairwoman responded to my request to bring up issues 

of civil rights. I made this request back in March and I am very 

thankful that she is holding this hearing, including that issue. I 

will note, I also made the same request to two Chairs of the Agriculture Committee as well in the past, so this has been a very important issue for me. 

I am glad that Mr. Leonard is here today, and I want everybody 

to know that I believe that civil rights and discrimination issues 

facing the Department are a big concern that this Committee needs 

to monitor the issue regularly. I do hope that you will consider conVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
4 

ducting a separate hearing on civil rights and discrimination some 

time. 

As for today’s hearing, Mr. Leonard, I hope that you will shed 

some light on how the Department is handling some of the problems that I think are still plaguing us over the years, and a long 

time before you were involved. Specifically, I would like you to 

speak on what the Department is doing to address complaints 

made by employees. 

I continue to hear from USDA employees that they have to wait 

a long time to have their complaints heard and processed. I have 

also received reports about retaliatory behavior by managers after 

complaints are made. So that is a very important thing, that we 

address that issue. 

I am not passing judgment on the validity of any of the employees’ particular claims. My concern is that their claims be considered in a timely and appropriate manner because that is what they 

deserve. I hope the Department will provide us with some idea on 

how that is turning out. 

I will leave my questions, Madam Chairwoman, and thank you 

for the privilege of addressing the Committee, even as a less senior 

member of the Committee. 

Chairwoman Stabenow. Well, thank you, Senator Grassley. You 

certainly are not a junior member when it comes to knowledge and 

experience on this Committee and we are very glad that you are 

a member of this Committee and will be part of writing the Farm 

Bill, as you have in the past. 

I should mention to my colleagues, we went down a road here of 

Senator Grassley needing to leave early and allowed him to make 

an opening statement. I believe Senator Conrad is in the same position. I am now opening this up, so I would ask the discretion from 

my colleagues. We certainly will not say no if someone wants to 

make a brief opening statement, but we do want to get to the witnesses. But I will turn to Senator Conrad who also is going to have 

to leave and is another senior member we are so lucky to have on 

this Committee. 

STATEMENT OF HON. KENT CONRAD, U.S. SENATOR FROM THE 

STATE OF NORTH DAKOTA 

Senator CONRAD. Thank you, Madam Chairman. Thank you very 

much for holding this hearing. I think it is a critically important 

one in the circumstances we confront. Before I just briefly talk, I 

would like to draw the attention of my colleagues to a disaster that 

is unfolding in my state. In Minot, North Dakota, more than 11,000 

people have been evacuated since yesterday, and we face the worst 

flood in recorded history in my state. 

We are now anticipating a flood that would be eight feet higher 

than the last flood of record in our state, and so, as soon as we are 

done voting here today, I will be going home, along with the rest 

of the delegation, to meet with our Governor and the emergency officials in charge of flood response. 

Senator ROBERTS. Would the Senator yield at this point? 

Senator CONRAD. Yes, I would be happy to yield. 

Senator ROBERTS. I want to thank the Senator for his past efforts 

in behalf of his state. When you incur these— I do not know what 

5 

we have done to Mother Nature, but she sure has not been treating 

us very well. In Kansas, we are burning up in the western part of 

our state, and then we are seeing the first surge that you have already experienced. 

I do not know what it was today or this morning. I did not get 

a chance to check. But it is rolling down Iowa and now into Kansas 

at about 160 cubic feet per second. That is about, as you take a 

snapshot right there in time, that is the same amount of water as 

goes over the Niagra Falls. And you got the brunt of it starting up 

from the mountain snow pack and then the snow pack you have 

and then the incredible rain you had on top of that. 

I have given you a little bit of static in the past about play the 

lakes and other things, but this is a very serious thing. It is the 

worst flood, I think, the Corps has told me, since 1898. And so, I 

wish you well and all of the states that are involved here. At least 

we had a little bit of advanced information, but I do not know what 

you do with a flood that is eight-foot over the last flood. It is going 

to be an incredible situation. 

Madam Chairman, we are going to have to do something on this 

Committee in this regard, and for that matter, the Congress is as 

well. But at any rate, I empathize with the Senator and thank you. 

Senator CONRAD. I thank the Senator very much for his comment. This is unprecedented. On Saturday morning, we were given 

reports that looked as though we had dodged the bullet. Within 48 

hours, they increased the flood forecast in terms of the depth of 

water coming through Minot by 11 feet. And there is simply no way 

to respond. 

And at that point, it was evacuate people, build secondary defenses to try to protect critical infrastructure, and prepare for a 

long, slow slog because this is going to be unlike any flood in history in our state. The water is not going to come and go. The water 

is going to come and stay. 

The chief flood fighter for the Corps of Engineers told me they 

now anticipate that there will be high water in our state through 

the middle of July. So these are homes that are going to be under 

water for an extended period of time. My own cousin has had to 

move all of their furniture to their attic because they are going to 

have seven feet of water on their main floor. And that is a story 

repeated many times throughout this community. 

So I did want to say, Madam Chairman, with respect to this 

hearing, how important I believe it to be, because when we are borrowing as a nation 40 cents of every dollar we spend, no taxpayer 

can be wasted and no program can be abused. And I want to salute 

the Inspector General to have identified $256 million in potential 

savings, going after over-payments, going after recording errors. 

I look at the Food Stamp Program, the lowest error rate now 

ever. That is a significant accomplishment. When I look at what is 

happening in terms of our exports, exports doubling, a dramatic increase there. And I look in program after program. USDA has gotten the message. USDA has gotten the message, reducing travel, 

canceling bad loans, renegotiating the basic agreement on crop insurance. 

I am not going to go further, just to say, Madam Chair, I hope 

that where these negotiations are being conducted on our future 

6 

budget, that people understand, Yes, Agriculture is ready to participate and have more savings, significant savings in the billions 

of dollars. 

But it is also true that there are some who are pushing an agenda that would absolutely cripple production agriculture which is 

one of the true bright spots we have in exports for the United 

States, a $28 billion increase over last year. So let us not kill the 

baby in the crib, and that message needs to go to the people who 

are negotiating with the Vice President. Let us not kill the baby 

in the crib. 

You could cripple production agriculture in this country, which is 

one of the real bright spots. I thank the Chair. 

Chairwoman Stabenow. Well, thank you very much. I could not 

agree more with your comments, Senator Conrad, and our whole 

Committee stands ready to help you and your state, as I know the 

Department does, and I know the Secretary does and we wish you 

well today. 

I am going to turn back to our Ranking Member who deferred 

to Senator Grassley and Senator Conrad because they have to 

leave early. Then after that, unless there is a burning desire to say 

something, we are going to move to the witnesses. And so, we start 

down the road of allowing a couple of members to give opening 

comments, but we do want to get to the witnesses, and I will turn 

this back to our Ranking Member. 

Senator ROBERTS. Thank you, Madam Chairwoman, and I would 

like to associate myself with the remarks by the distinguished Senator who is doing everything he can to be of help to his state during difficult times. That water will come down to the Missouri to 

the Mississippi and it will be clear into the end of August until we 

are able to see all that take place. 

Our Constitution created a unique relationship between Congress 

and the Administration and I want to thank all of our witnesses 

here for taking valuable time out of your schedule to come up and 

testify before us. 

We in Congress identify issues affecting the daily lives of our 

constituents, and when appropriate, we develop programs through 

legislation to address those issues. And in this Committee, much 

of that work is done in the Farm Bill. We grow attached to farm 

bills here. Perhaps it is because we spend so much time working 

together to find the right balance for a bill that is national in 

scope, and yet responsible to taxpayers. 

More especially it is because of the work that we do in this Committee has a direct impact on our constituents’ ability to produce 

the food and the food and fiber necessary to keep our economy running and our people fed, and that also means a troubled and hungry world. 

After the agreements have been made and in the case of the last 

Farm Bill, the vetoes have been overridden, those programs we 

crafted are handed off to the USDA for implementation and these 

are the folks who do it. So today, I look forward to hearing how 

well the Administration is carrying out the laws passed by Congress, not only in the Farm Bill, but also in the Child Nutrition 

Bill. Are they delivering the programs effectively, efficiently, fairly, 

and as intended by this Committee? 

7 

Madam Chairwoman, soon I am going to have to leave in order 

to testify before the Homeland Security and Government Affairs 

Committee. I apologize to you for that, but I have introduced a bill 

that codifies the President’s Executive Order of January 18, and 

they have asked me to walk them through it and I am going to do 

exactly that. 

I would like to tell the Committee and you that the bill follows 

the President’s order to require agencies to review regulations and 

hold them up to a cost benefit yardstick just like these folks do. It 

sounds like a very good idea to me. 

If our businesses, large, medium and small, and our farmers and 

ranchers and growers are required to comply with regulations, our 

Government should at least be required to fully understand the impact of those regulations before imposing them. I am still taking cosponsors if anybody is interested and if anybody would like to raise 

their hand, I would be happy to add them as a co-sponsor. 

I hope to return in time to ask questions, but if not, I will submit 

written questions for the record and I want to thank Secretary— 

well, he could be a Secretary some day, who knows—Senator 

Chambliss for standing in for me while I go to the DHS hearings. 

Thank you very much. 

Chairwoman Stabenow. Thank you very much, Senator Roberts, 

and we will now proceed to the witnesses. Again, I had opened it 

up to a couple of our colleagues, but if there is not a burning comment to be made, we are going to proceed to the witnesses. All 

right. 

Let me first introduce and welcome Under Secretary of Rural Development, Dallas Tonsager. Mr. Tonsager grew up on a dairy farm 

in South Dakota where he eventually served as USDA State Director for Rural Development. Much of his career has been focused on 

economic opportunities for rural communities; worked as the team 

that reinvented the Rural Business Guarantee Loan Program in 

the late ’90s. Prior to rejoining USDA, served on the Board of Directors for the Farm Credit Administration promoting rural investment. Welcome. 

Michael Scuse—I never get your name right, so I want to make 

sure I am doing this right. 

Mr. SCUSE. Michael Scuse. 

Chairwoman Stabenow. Scuse. That is what I thought. I wanted 

to make sure I had this right. It is good to see you again. By the 

way, appreciate your efforts as it relates to the weather disasters 

and what has been happening. So Michael Scuse is the Acting 

Under Secretary of Farm and Foreign Agricultural Services. He 

comes from Delaware where he and his brother have had a successful grain operation for over 35 years. 

Mr. Scuse knows agriculture from both a local and national perspective, having been the Secretary of Agriculture in Delaware 

from 2001 to 2007, and Deputy Under Secretary for FFAS for the 

past two years. 

We also want to welcome Harris Sherman as Under Secretary for 

Natural Resources and Environment, Mission Area, and we welcome you. Overseeing both the Forest Service and the Natural Resources Conservation Service, Mr. Sherman has dedicated his career to protecting our country’s natural resources. 

8 

As a practicing lawyer, he specialized in environmental law, and 

more recently, has served as Executive Director of Colorado’s Department of Natural Resources. 

Under Secretary for Food, Nutrition, and Consumer Services, 

Kevin Concannon, welcome as well. He oversees, among other 

things, the Supplemental Nutrition Assistance Program. Over a 25- 

year career in public service, Mr. Concannon has been the Director 

of State Health and Human Services in Maine, Oregon, and Iowa. 

And last, but certainly not least, we will hear from Dr. Joe Leonard, the Assistant Secretary for Civil Rights at the USDA where 

he oversees USDA’s civil rights programs and ensure that programs are compliant with applicable Federal civil rights laws. Prior 

to joining USDA, he was the Executive Director of the Congressional Black Caucus, and before that, Executive Director of the 

Black Leadership Forum. 

We welcome each of you and we will now turn first to Under Secretary Tonsager for your testimony. Welcome. 

STATEMENT OF HON. DALLAS TONSAGER, UNDER SECRETARY, RURAL DEVELOPMENT, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Mr. TONSAGER. Thank you, Madam Chairman. Please forgive me. 

Thank you, Madam Chairman, and thank you, Ranking Member 

Roberts. Members of the Committee, I am pleased to present you 

Rural Development’s accomplishments and activities to ensure accountability of resources provided through the 2008 Farm Bill. 

As stewards of more than 40 Farm Bill programs, our mission is 

to help rural America grow and thrive as it captures the emerging 

opportunities of the 21st century. From creating jobs to funding facilities and infrastructure, and connecting them all through the deployment of new technology, the 2008 Farm Bill has equipped us 

with remarkable tools and maximizing these resources, Rural Development continues to review and modify goals, objectives, and 

performance measures. 

We pay close attention to outcomes and results that inspire businesses to incubate and grow. Rural Development is also engaged in 

a regulatory review process that is intended to streamline program 

requirements and practices. 

President Obama established a goal to deploy the next generation of high speed broadband services. Nearly seven million rural 

residents, 364,000 businesses and 32,000 anchor institutions will 

gain new or improved access to high speed Internet through 

broadband. 

The 2008 Farm Bill recognized that providing loans in both 

unserved and under-served areas may be necessary to bring 

broadband to the under-served. Because of over- building concerns 

that stem from the 2002 Farm Bill, broadband funding was limited 

to areas with three or few service providers. 

The 2008 Farm Bill also featured several energy programs designed to advance biomass and biofuel production, which holds the 

potential to create and save jobs and reduce the country’s consumption of fossil fuels. Program delivery methods have been streamlined and revised to provide greater consistency to our stakeholders. 

9 

For example, an example of refocusing and realigning and 

streamlining is a Comprehensive Loan Program initiative. CLP is 

an automation enhancement which retires legacy accounting systems and replaces them with updated accounting systems. We also 

are taking actions that will assist communities to invest in local 

and regional priorities. In rural America, communities have realized that working collaboratively creates opportunities and growth. 

Looking ahead, we are committed to working with Congress in 

a continued effort to streamline what is practical and to provide 

our customers easier access to our programs. The 2012 Farm Bill 

will be a great tool to help complement these efforts and we look 

forward to your questions. 

[The prepared statement of the USDA can be found on page 79 

in the appendix.] 

Chairwoman Stabenow. Thank you very much. 

Mr. Scuse, welcome. 

STATEMENT OF HON. MICHAEL SCUSE, ACTING UNDER SECRETARY, FARM AND FOREIGN AGRICULTURAL SERVICES, 

U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Mr. SCUSE. Madam Chairwoman, Ranking Member, members of 

the Committee, I want to thank you for the opportunity to testify 

today. 

At the Farm and Foreign Agricultural Services, we are streamlining our programs, processes, and procedures to make them more 

accountable and more efficient and more effective. The Farm Service Agency continues to move forward with business and technology 

modernization initiatives that provide critical services to our nation’s farmers and ranchers, while at the same time achieving cost 

efficiencies, improving security and accountability, and further reducing unnecessary burdens on our customers. 

FSA has implemented new systems to incorporate adjust gross 

income qualifications, program payment limitations, and direct attribution, and has incorporated actively engaged policy into program administration. FSA has launched the Midas Initiative to 

modernize price support, conservation, production assistance, and 

emergency assistance programs. 

Midas will improve the delivery of farm programs to our customers by modernizing information technology systems and business practices. Since its launch, Midas has already improved service delivery and reduced error rates. FSA mission area will further 

reduce burdens on program participants through the consolidation 

of required participant information. 

For an example, a developing pilot program called the Average 

Crop Reporting Streamlining Initiative will allow producers to report common information at their first point of contact with USDA, 

whether it is at the FSA service center or with an improved insurance provider, or even online at home. This effort will allow for 

common data to be reported on time, thereby reducing burdens on 

producers and ensuring data consistency across all of our USDA 

programs. 

USDA Foreign Agricultural Service annually assesses and aligns 

overseas offices to be serve agricultural export interests and minimize cost. FAS’s presence in regions and countries with high operVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
10 

ating costs have been reduced and allocated to countries where 

growing middle classes and trade agreements present the very best 

opportunities. 

Our leaner FAS overseas presence remains as effective as ever, 

contributing to a record level of agricultural exports in the calendar 

year 2010 of $115.8 billion. FAS also improved the performance 

and efficiency of its foreign market development programs by implementing a 21st century Web-based system that simplifies the 

application process, reduces grant award time, and enhances program evaluation. 

Madam Chairwoman, members of the Committee, I look forward 

to answering your questions. Thank you very much. 

Chairman STABENOW. Thank you. 

Mr. Sherman, welcome. 

STATEMENT OF HON. HARRIS SHERMAN, UNDER SECRETARY, 

NATURAL RESOURCES AND ENVIRONMENT, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Mr. SHERMAN. Thank you, Madam Chairwoman, and members of 

the Committee. I am pleased to give you a brief snapshot of a few 

of the recent NRCS and Forest Service efforts to improve program 

effectiveness and to eliminate duplication and waste. Our goal is to 

position both of these agencies as leaders in 21st century conservation and management. 

First, how are we improving delivery of our conservation programs? Our conservation programs cannot work without a strong 

partnership with farmers, ranchers, and private forestry owners, so 

we need to make participation in USDA’s conservation programs 

easier and less complex. 

To that end, NRCS recently initiated a five-year Conservation 

Delivery Streamlining Initiative. We call it CDSI. This initiative 

will integrate our scientific and business tools to significantly reduce the amount of time our technical experts are spending in the 

office, and increase the time that they are spending in the field. 

This will be accomplished by deploying nimble and mobile wireless 

21st century technology to support our work with producers. 

We estimate that full implementation of CDSI will allow our field 

technical staff to spend as much as 75 percent of their time in the 

field working directly with clients, compared to the 20 to 40 percent that is currently taking place. And perhaps most importantly, 

CDSI will revolutionize the way our customers interact with us and 

participate in our programs. 

NRCS and our clients will finalize in the field conservation planning, document the expected environmental benefits, and accelerate payments to the producers, and allow 24/7 access so that customers can check their plans and contracts at their convenience. 

Second, it is important that we measure our performance and we 

improve efficiency. Conservation programs, like all other Federal 

programs, are facing significant budget constraints, so we must 

better focus our conservation investments and clearly demonstrate 

the resulting benefits. 

One of our key tools to accomplish this is the Conservation Effects Assessment Projects, CEAPs, which are designed to estimate 

the effects of conservation practices on the landscape. The CEAP 

11 

crop assessment combines comprehensive surveys and detailed soil 

information with edge of field and in-stream modeling to produce 

scientifically-based estimates of the effects that conservation is 

having on crop land. 

The first two of 14 regional CEAP crop land reports for the 

Upper Mississippi River Basin and the Chesapeake Bay have reported on great progress farmers are making in reducing sediment 

and nutrient losses. While at the same time it has revealed the 

need for a more comprehensive nutrient management program and 

continued targeting of our financial and technical resources. 

The Forest Service is also involved in a variety of ways to 

prioritize resources and work with states and local governments to 

improve the health of our nation’s forests. I would be happy to answer any questions you might have about these and other ongoing 

efforts. Thank you, Madam Chairman. 

Chairwoman Stabenow. Thank you very much. 

Mr. Concannon, we welcome you as well. 

STATEMENT OF HON. KEVIN CONCANNON, UNDER SECRETARY, FOOD, NUTRITION, AND CONSUMER SERVICES, U.S. 

DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Mr. CONCANNON. Thank you very much, Madam Chairwoman 

and Ranking Member, Senator Roberts, and members of the Committee for this opportunity for me to testify before you today. 

May I begin by expressing my appreciation to all of you for the 

bipartisan approach this Committee has taken over the years in 

working with USDA and, specifically, with the Food and Nutrition 

Service to address program integrity. And as members are undoubtedly are aware, we are living through a period of time in this 

country where these nutrition programs have never been as urgently needed as they are today. 

Americans deserve excellence from their Government, and we understand that at USDA, when it comes to accountability. We know 

that the mission of the Nutrition Assistance Programs, which serve 

millions of Americans, is inseparable from the responsible stewardship of Federal funds. Waste and abuse draw away resources from 

the low-income children, individuals and families who need them 

the most. And our ability to continue to serve these families requires public confidence that benefits are used appropriately and 

go only to those who qualify. 

Most notably, last week Secretary Vilsack announced that 

SNAP’s national payment error rate fell to 3.81 percent in the fiscal year 2010. This is the fourth consecutive year of record low 

error rates and the continuation of a decade-long improvement 

trend. And this is a success story for which all of us, Congress, the 

USDA, our state partners which administer SNAP, share both the 

responsibility and the credit. 

But beyond payment accuracy, accountability also entails a commitment to ensure that benefits are used properly. The sale, purchase, or exchange of SNAP benefits for cash, what we refer to as 

trafficking, is illegal and punishable by criminal prosecution. 

Over the last 15 years, FNS has aggressively sought to reduce 

trafficking in SNAP from what extended over a period of years during the era of paper coupons, roughly 4 percent trafficking was typVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
12 

ical during that period of time, to its current level of 1 percent of 

the SNAP Program. 

But we have not rested on the success of this reduction. All available resources, from state of the art data mining technology, to undercover investigations, to criminal prosecutions are used to ensure 

that recipients and retailers alike, who misuse benefits, are held 

accountable. 

In conclusion, we recognize that effective accountability in the 

Nutrition Assistance Programs takes long-term sustained effort 

working closely with our program partners. My team and I are 

seeking every opportunity to build on our success with new strategies to tackle the challenges that remain before us. 

I believe we can improve performance and accountability without 

compromising service to those in need. I look forward to working 

with you in this regard. Thank you again for the opportunity to be 

here today. 

Chairwoman Stabenow. Thank you very much. 

Dr. Leonard, welcome. 

STATEMENT OF HON. JOE LEONARD, ASSISTANT SECRETARY 

FOR CIVIL RIGHTS, U.S. DEPARTMENT OF AGRICULTURE, 

WASHINGTON, DC 

Mr. LEONARD. Thank you, Madam Chair. Chairwoman Stabenow, 

Ranking Member Roberts, and members of the Committee, thank 

you for the opportunity to bring testimony today on the progress 

of civil rights activities at the Department of Agriculture. Let me 

state that since my confirmation in April 2009 as Assistant Secretary for Civil Rights, the Office of the Assistant Secretary for 

Civil Rights has made progress in creating a new era of civil rights 

at USDA. 

I entered the Department on the heels of the 2008 GAO report 

and the 2008 Farm Bill report, and used them both as a blueprint 

on how the office should function in order to succeed. GAO has historically audited the civil rights functions within USDA. In 2010, 

after responding to an informal GAO audit, our office was not listed on the high risk list and our implementation efforts were rated 

as in progress by GAO. 

As you may be aware, the Office of the Assistant Secretary of 

Civil Rights was reorganized in 2009 to streamline its operations 

and to conform to the 2008 Farm Bill. That reorganization allows 

us to focus on our mission, to provide leadership and direction for 

the fair and equitable treatment of all USDA employees and customers while ensuring the delivery of quality programs and enforcement of civil rights laws. 

We have been consistently processing complaints with a focus on 

not letting the statute of limitations expire for program discrimination complaints. 

To address recommendations of the GAO report, we have increased our staffing in the program investigation and adjudication 

to levels not seen in over a decade, and our program investigators 

are now conducting on-site investigations versus the telephonic 

interviews that were standard in the past. 

From 2001 to 2008, there was only one program complaint finding of discrimination issued by the Office of the Assistant Secretary 

13 

of Civil Rights. In 2010, there were three findings, and to date, in 

2011, there are five. Our employment numbers are something the 

Secretary can be proud of. The number of EEO complaints filed by 

USDA employees has dropped significantly since 2007, and the 

number of merit findings of discrimination has increased. 

The efforts of the Office of the Assistant Secretary of Civil Rights 

to ensure USDA employees are aware of their rights is evidenced 

in these numbers. 

In fiscal year 7, there were 562 complaints that were filed and 

there were three findings of discrimination. In fiscal year 0, there 

were 461 complaints that were filed with 22 findings of discrimination. And for fiscal year 1, as of yesterday, there are 343 complaints that have been filed to date and we project there will be between 450 and 475 for the year, and we have 17 findings of discrimination and project there will be between 25 and 30. 

This is a short synopsis regarding the essential functions of the 

Office of the Assistant Secretary of Civil Rights. Thank you for the 

opportunity to come before you and describe how this Administration is addressing USDA civil rights progress and the importance 

of it measuring performance while eliminating duplication and 

waste. 

Chairwoman Stabenow. Thank you very much to each of you. 

Let me start the questioning with Under Secretary Concannon. 

We, again, appreciate your being here, and as was indicated last 

week, the Inspector General’s office announced it had successfully 

pursued 80 convictions in the SNAP fraud cases and returned 

about $8 million of taxpayer money in the last six months. 

Going forward, could you talk about what more we need to do in 

terms of looking at the next Farm Bill and the ratio of dollars we 

have invested in terms of enforcement and money back? And then 

the final thing I would ask is, could you speak about what the Administration is doing to encourage states to be more active in pursuing fraud, especially discussing some of the authorities that the 

states have as well to be able to crack down? 

Mr. CONCANNON. Thank you very much, Madam Chair, for that 

question. First of all, I should thank the Committee for the enhanced authorities that the Agriculture Committee granted 

through the 2008 Farm Bill to the USDA and the Food and Nutrition Service for imposing penalties for traffickers, and we are in 

the midst of internally working on proposals in that very regard. 

I want to mention that as I stated in my opening remarks, we 

are very encouraged by the fact that we now have record low numbers of improper payments. That incorporates either over payment 

or under payments to recipients. But I think the Chairwoman’s 

question focuses more on the issues of trafficking. 

Since we have moved to the electronic benefit cards, or plastic 

cards, happily, I can speak to my state experience in this regard. 

It has had a dramatic effect on reducing trafficking. But nonetheless—and that number now runs about 1 percent, but even that 1 

percent concerns me greatly because it is 1 percent of a larger 

number now. 

The numbers of persons in the United States depending on the 

SNAP program now are in excess of 44.5 million Americans, reflecting largely, by intent, what is going on in the American econVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
14 

omy. So we need to be particularly vigilant on making sure that 

we are doing all we can to both identify trafficking, but also to pursue traffickers. 

When I was in the state of Ohio earlier this week, there was a 

report that appeared in one of the newspapers of again a network 

of traffickers in one area of the state. I should point out that what 

we are doing, in terms of trafficking, is we are particularly deploying not only undercover investigators—last year, the Food and Nutrition Service was involved in 5,000 undercover investigations 

across the country. 

There are now 233,000 licensed vendors in the SNAP program. 

Again, that number has increased tremendously. About 85 percent 

of the benefits go through supermarkets, and about 15 percent of 

the benefits go through smaller stores. And invariably, when trafficking occurs, it is the rarest occurrence that may involve a supermarket. It is much more typically a small store. 

What we are using, both post-2007 GAO report, that directed or 

urged FNS to take more aggressive steps around trafficking, we 

have enhanced our electronic data mining and we now have daily 

streamed information to us. When people process benefits, whether 

it is in Mississippi or in Miami or up in the state of Maine, we 

have electronic monitors that are tracking for trends. We also have 

high at-risk identified areas where there have been historic problems. 

And we are working closely not only with the Office of the Inspector General, but with state law enforcement agencies across 

the country as well as FNS itself. I am very troubled when it occurs because I know it is an improper use of a benefit that has 

been stated earlier by the Chair. Taxpayers have worked hard to 

provide these benefits to us. I believe that represents the greatest 

threat to this program in terms of public confidence when the public experiences or learns of a trafficking issue. 

So we are deploying our resources that way, but also, in response 

to the Chair’s question, just as recently as this week, I sent a letter 

to every state commissioner of health and human services, something I did myself for many years, urging them to pay particular 

attention to this issue of trafficking. 

The Food and Nutrition Service, the Federal Government, we 

particularly track redemptions processed through vendors across 

the country. That is the monitoring side we are responsible for. 

State agencies across the country are more directly responsible for 

the individual consumers in their respective states. And I urged, in 

that letter, based on again these recent stories first out in the state 

of Washington and then more recently in several other locations, 

that states need to redirect their attention to issues of trafficking. 

As I mentioned right at the outset of this response, we are examining the opportunities that the 2008 Farm Bill gave to us as to 

what we can do to strengthen the penalties that are involved for 

vendors, because for trafficking, you cannot do it solely. You have 

got to have somebody conspiring with you. 

Chairwoman Stabenow. And we look forward to working with 

you on that. In the interest of time, I am going to have to move 

to my colleagues, but we are very anxious to follow up with you as 

it relates to the issues around penalties and so on, as well as what 

15 

can we be doing and what you are doing in terms of states’ ability 

to address individuals and so on. 

Mr. CONCANNON. Thank you. 

Chairwoman Stabenow. So we thank you very much. I have a lot 

of other questions, but in the interest of time, I am going to turn 

now to Senator Chambliss. 

Senator CHAMBLISS. Thanks very much, Madam Chair. 

Under Secretary Tonsager, you recently announced that Rural 

Development will use REAP funds to install blender pumps at gas 

stations, and I have got a couple of concerns about the announcement. 

First, as you might recall, this proposal was considered during 

the 2008 Farm Bill process and was rejected during our conference 

with the House. The REAP program was not designed for this purpose and is already over-subscribed. So what we are doing now is 

adding a new competitor to an already over-strapped, over-subscribed program. 

My second concern is that the Department of Energy is already 

using the Clean Cities Program to fund ethanol infrastructure including E85 fueling stations. In fact, the Stimulus Act provided 

several projects to agricultural associations for that very same purpose. 

Did USDA understand that REAP would be duplicative of existing U.S. Government programs for funding ethanol infrastructure 

and if so, why did we proceed with the final rule on REAP knowing 

that other programs are already delivering funds for blended 

pumps, and how will the agency ensure that other important goals 

and purposes of the REAP program are not crowded out by grants 

for blended pumps? 

Mr. TONSAGER. We did closely review to make sure that it was 

an eligible purpose, and we have a clear understanding from our 

general counsel that it is an eligible purpose to be using REAP for 

that purpose. REAP has proven to be extraordinarily of interest to 

people. It has been used for a number of energy-related products 

and has been done so successfully. 

We stepped forward with this because we believe that it is enormously important, as the evolution of the ethanol industry and the 

biofuels industry goes forward, to make sure that there is the opportunity for consumers to use biofuels in as many places as possible. 

So we have reached out not just on biofuels, but also to make 

sure the program is used widely across America. In recent years, 

it has been generally concentrated in the northern plains in the 

Midwest, so we are trying to move the program very broadly. 

We do understand that there was other agencies that have the 

funds that could be used for biofuels projects, but there was only 

recently a clarification by the Department of Energy to the states 

regarding the use of that program. That only occurred a few 

months ago when the opportunity was expressed clearly to the 

state energy offices that they could use the program. And we also 

encouraged the groups that we have worked with to seek out those 

funds as well. 

There has, unfortunately, been a limited number of E85 pumps 

made available across the country. There has been some demVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
16 

onstrations by states. My home state of South Dakota, for example, 

has committed some resources to the use of E85 pumps, and we focused on that a good bit as a model about how we might help expand the availability of those pumps. 

So in short, sir, we believe it is an eligible purpose. We think 

that it is important. We made a decision to go forward with the use 

of the program for that purpose. 

Senator CHAMBLISS. Well, I would simply respond to your answer 

by saying that if there is a market for E85, the private sector ought 

to be where the funding comes from to meet that demand because 

that is where the profits are going to go. And it does concern me 

greatly that we are going to be crowding out some other very 

worthwhile programs in REAP to spend money on something that 

the private sector should take care of. 

Next, Mr. Tonsager again, in 2005, USDA’s Inspector General 

completed its first review of the Broadband Loan program and generally found USDA was awarding grants and loans even though applications were incomplete, applicants had previously defaulted on 

government loans, and that grant funds were being used for inappropriate purposes. 

Specifically, the IG found USDA had not maintained a focus on 

rural communities lacking pre-existing service. For example, IG 

found that out of $485 million in grants and loans, $103 million to 

64 communities near large cities. The IG also found that USDA 

was using a significant portion of the program to support competitive service in areas with pre-existing broadband access, rather 

than expanding service to areas without service. 

The IG also found that 159 of the 240 communities associated 

with the loans already had service. In 2009, IG revisited the 

broadband programs and found that USDA had not taken corrective action on eight of its 14 recommendations. From 2005 to 2009, 

USDA continued to make loans to providers near very large cities 

or in areas with pre-existing service. 

I understand that USDA has recently released an interim final 

rule that will address some of these problems. Why, almost ten 

years after these problems were identified and millions of dollars 

had been spent, in such a reckless manner? If USDA cannot address waste within their own agency, how can the taxpayers have 

faith in President Obama’s newly created Rural Council chaired by 

the Secretary of Agriculture? 

In regards to the President’s Rural Council, how does USDA plan 

to implement, coordinate, and involve stakeholders in the decisionmaking process? So I am very concerned about this and I would appreciate your comments. 

Mr. TONSAGER. We agree there were significant problems with 

this and we have aggressively pursued addressing those problems. 

We believe the new rule will help significantly with that. During 

the period of the Recovery Act when we were implementing the 

broadband process, we used that as an opportunity to learn from 

the shortcomings of the previous program. 

We do believe that the Recovery Act money, while contentious, 

we believe we have made significant progress there and we took 

those lessons to learn them. There will be and are plans for a sigVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
17 

nificant outreach to stakeholders. I believe there is a stakeholders 

meeting scheduled soon to begin that process. 

The Rural Council, which we are extremely excited about, bringing a new focus on rural America and the programs that USDA 

helps provide, particularly the programs that I have the opportunity to oversee. I think there is great opportunity in that. 

We believe we have acted to address most of the issues associated with the standing program and we believe the rule will help 

respond to that. 

Senator CHAMBLISS. Well, this has been a very controversial program, particularly as we went through the last Farm Bill, and I am 

sure, as we come to next year, it is going to continue to be in the 

public eye. And while I look forward to the next IG report, I hope 

that that report comes forward with significant improvements 

being made and the people in rural areas who need broadband, just 

like people in more populated areas, are getting the kind of service 

that the Farm Bill intended for them to get. So we will look forward to that. 

Mr. TONSAGER. Yes, thank you. 

Chairwoman Stabenow. Thank you very much. Senator Brown. 

Senator BROWN. Thank you, Madam Chair. A couple of comments. Secretary Concannon, thank you for your testimony and for 

your recent visit, I think, this week to Columbus and to the MidOhio Food Bank. You pointed out rightly that demands for all 

kinds of food assistance, from food banks to emergency funding for 

food, or SNAP, are unprecedented and the demand has grown. 

You understand, of course, as your testimony and as your visit 

there, the difference between making ends meet and coming up 

short and why the work that all of you do at USDA, but you particularly, why that work matters so much. I want to emphasize 

what you had said about the national error rate reported for SNAP. 

Combining states’ over- payments and under-payments to program 

participants has declined some 56 percent in the last 10 years from 

9-plus to 4-plus percent. 

I also appreciate what you said about trafficking being the biggest threat to this program. You mentioned an article from an Ohio 

newspaper, the Dayton Daily News, pointed out a variety of things 

that are of concern. We also know there are newspapers, as there 

was today, the Wall Street Journal, newspapers have never much 

liked the whole idea of food stamps and helping citizens who have 

less privilege than the people that sit on that editorial board have, 

and may or may not have grown up with, but have now. 

We expect those kind of criticisms, but as you pointed out, trafficking is, in fact, the biggest threat to this program and it is so 

important that you double-down, if you will. 

I want to move on to Mr. Tonsager because I have a couple specific questions for him, but I just would like to outline some questions to you that you could impart, in response to Chairwoman Stabenow, get to us in writing about what you are doing, how the 

USDA is keeping track of how it counts and how it keeps track of 

fraud and abuse, what you are doing to ensure program integrity, 

what can be done to further improve management and administration of these programs, how do these EBT cards work. 

18 

If I have your card, can I use it and what are the penalties if 

I—what are the steps of how that would happen, how often are 

they replaced, do they have to be decertified, do you have tools, do 

you have sufficient tools to track and prosecute fraud? If we are 

going to have the number of inspectors, have a relatively low number of inspectors, as I think the Wall Street Journal editorial today 

pointed out, I believe that is where I read it, is that enough to go 

after the fraud in this program? So I know you understand all that, 

but I would like to see some specific answers. 

Mr. Tonsager, my questions for you, USDA Rural Development 

is so, so important, but I frequently hear two things in criticism. 

In Washington, I hear how USDA rural development programs are 

duplicative or inefficient or not that different from what EDA and 

HUD do. 

In Ohio, I hear that the application process can be so cumbersome that far too many people and too many entities in rural 

Ohio have just given up on using existing loan and grant programs 

under USDA that USDA RD administers. 

So my question, and I am a strong supporter and want to continue to be of these rural development programs, discuss what you 

are doing to reduce that duplication, to answer those questions that 

I hear in this town, and what you are doing to make the system 

more modern, efficient, and accessible for people in Ohio and 

Michigan and Nebraska and Mississippi and Georgia and South 

Dakota when groups or individuals are applying to be part of this. 

Mr. TONSAGER. Sure. Thank you, Senator, and we do appreciate 

your support. I would just like to offer a few general thoughts to 

try and offer our perspective. The USDA Rural Development really 

was created to be a mini version of the entire Federal Government 

in a lot of ways, specifically for rural America. 

We have a very broad tool set, some 40 programs to do that, and 

the reason I think it exists this way is because we have that focus 

on rural. You know, 80 percent of the landmass, of course, United 

States is rural, and it takes, I think, the access for people to get 

to that program by having this special rural emphasis on it. 

We do recognize that many of our programs are very similar to 

other programs throughout the Federal Government, and we try 

very specifically to work with them. We have an agreement with 

SBA, for example. We believe their tool for business lending works 

better than ours, in many cases in rural areas, so we emphasize 

that to people. Quite often, our loan guarantee program works well 

for larger loans, maybe not so much for the smaller kinds of loans. 

But I would also like to say that in an efficiency context, we have 

a $150 billion loan portfolio at this time with less than a 2 percent 

delinquency rate overall on that, and we think that is important. 

Our proposed budget by the Administration was $2.4 billion this 

year. We make that into $36 billion. 

Our largest programs are at zero budget cost. So we have to 

work very hard with people in making sure projects work well. And 

that is a success story for everybody when you do that. It takes a 

lot of work and sometimes it becomes complex, especially on larger 

loan projects. 

So we think that having our rural field structure is important. 

We recognize that there are people that are challenged by our procVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
19 

ess and we have some work to do. We believe our new consolidated 

loan program, over the long term, is going to really make that 

much more efficient because it will make the forms less duplication 

so you do not fill out the same thing three or four times as we go 

forward. 

So I believe we can continue to address some of the challenging 

parts of our process, and we know that those challenges exist. But 

we believe we are efficient and effective because it is a very large 

amount of leveraging we are doing, and we think we have to keep 

the performance of those programs in a very high quality state in 

order to come to you all to ask for the money and the authorities 

to do it. 

But we will continue to look very hard at those processes and we 

do believe we are making some steps to address those. And we take 

it as our goal, when we look at every other Federal program, if we 

cannot do it, we will go after their money to get it into rural areas. 

So we do recognize there is some duplication. We think the field 

structure we have to help get access is important. And we take it 

as our responsibility, if we cannot figure out how to do it, we are 

going to go after somebody else to help try and figure out how to 

do a project. 

Chairwoman Stabenow. Thank you very much. Senator Cochran. 

Senator COCHRAN. Madam Chairman, let me join you and the 

other members of the Committee in welcoming this distinguished 

panel to our Committee. We appreciate the work you do to administer the agriculture programs, not only those designed to help improve conservation programs, to safeguard natural resources, and 

the production of food and fiber in our country. 

My observation is, over the years, that we have made substantial 

progress in a lot of areas that have long been concerns of the general public and taxpayers as well. There have also been a lot of attention focused on integrity of the programs, the honesty and integrity of those who apply for and receive benefits of one kind or another, farm payments, program payments, crop insurance back 

when the Government basically ran the crop insurance, and food 

and nutrition assistance programs. 

I think a lot of progress has been made in all of these areas. I 

was particularly impressed with Mr. Concannon’s comments about 

the challenges that his office has faced and how they are going 

about identifying fraud and abuse and eliminating it. I sensed an 

attitude of ‘‘can-do.’’ It is not something to apologize for, but to do 

something about it. I think that is what I hear from the testimony 

that we have heard this morning, and that is encouraging. 

I do not have any particular specific complaints just to cite in my 

questions of you, but I think the Chairwoman ought to be commended, too, for the oversight of the Department. This hearing is 

a good example of that and I think we can all benefit from it. 

The Food Stamp program has been under a close inspection process for a long time, but some of the other programs in nutrition 

areas I wonder about. I know there are a lot of mistakes made, 

probably some of them innocent mistakes, but there are school 

lunch program activities which have been found to have been abusive and errors made, intentional or not. I do not know. 

20 

But I wonder if there is a program at the Department to ensure 

that payments are going to eligible participants in those programs, 

whether at schools, other organizations that dispense a lot of benefits to program participants. Citing eligibility is one question. 

I know Under Secretary Michael Scuse may be the person to answer that. In your area of responsibility, what programs are there 

underway and what are the steps taken by the leadership at the 

Department to see that they are producing benefits in recapturing 

wrongfully paid or mistaken paid benefits to those who are not entitled to them? 

Mr. SCUSE. Well, thank you, Senator. I appreciate the opportunity to answer that question because as you are well- aware, 

there has been criticism over the years about some of the Farm 

Service Agency and Risk Management Agency programs and payment eligibility. We take it quite seriously at the Farm Service 

Agency and USDA to make sure that program participants that are 

entitled to money actually receive that funding. 

There are several things that we do at the Farm Service Agency. 

All of our producers who are receiving payments must fill out a 

form to give the IRS permission to view their tax returns to make 

sure that they are within the adjusted gross income levels for participation in the Farm Service Agency programs. 

There is another form, CCC Form 902, that our producers also 

have to sign to be active to verify that they are actively engaged 

in agriculture and in production through management, through 

providing land, equipment, capital, and some other areas as well. 

And that form is reviewed by the accounting committee and if 

there are discrepancies, it is elevated to the state and to the Federal level. 

Through the Risk Management Agency, the CIMS project, the 

Comprehensive Information Management System, we have been 

doing data mining to make sure that the program is being run 

properly, that those producers that should be receiving payments, 

crop insurance payments, actually do. 

In the last ten years, Senator, we have been able to have a cost 

avoidance of $840 million. So we have put things into place to 

make sure that there are no improper payments. One improper 

payment is one too many, and we will continue to do the very best 

job that we can to make sure that we take care of any improper 

payments being made. 

Senator COCHRAN. Thank you. I appreciate your response to that 

question. One specific program was brought to my attention in 

farm payment programs. There had been an inordinate number of 

people paid who had died, and there were no records to reflect that 

at the Department of Agriculture. 

The information that I was given said that from 1999 through 

2005, USDA paid $1.1 billion in farm payments in the names of 

172,801 deceased individuals. Of this total, 40 percent went to 

those who had been dead for three or more years; 19 percent to 

those who had been dead for seven or more years. That is kind of 

shocking. 

What is the response that you could make to that to let us know 

what is being done to ensure that we are not making payments to 

deceased individuals? 

21 

Chairwoman Stabenow. And I am going to ask that you do that 

quickly at this point, because we have a time limit. But please answer that important question. 

Mr. SCUSE. Yes, Madam Chair. We have an agreement with the 

Social Security Administration. The Farm Service Agency does 

quarterly re-review those deceased individuals to make sure that 

they are, in fact, entitled to payments. If you sign up and participate in a program and you pass away during the course of that 

year, Senator, you still or your estate is still entitled to that program. But we are looking to make sure that yes, in fact, those people are entitled to that payment. 

Senator COCHRAN. Thank you very much. 

Chairwoman Stabenow. Thank you very much, Senator. Senator 

Bennet was next, but I do not see him here and so we will turn 

to Senator Nelson. 

Senator NELSON. Thank you, Madam Chairman, and again, as 

my colleagues have congratulated you, I want to congratulate you 

on setting this hearing on extremely important issues and giving 

us the opportunity to meet with Department officials on accountability on program delivery. We spend an awful lot of time talking 

about what programs we would like to have. Probably not nearly 

enough time on accountability. So this gives us a chance to do that. 

It gives us a chance to focus on performance, management programs, and to get a better sense of how real the impact of improper 

payments, fraud, and abuse of programs can be. 

Certainly everybody agrees that better accountability should be 

sought for in every Government program, and I hope this hearing 

will highlight the positive studies and strides that have been made 

by the departments with the agencies with those reforms put in 

place with the 2008 Farm Bill and highlight areas were additional 

accountability and efficiency can be found to help reduce costs and 

ensure producers can count on an adequate safety net for the current and the future programs. 

I have one question. I know my colleague from North Dakota has 

been in and discussed, to some degree, the flooding in the Midwest, 

and it is with that in mind that I want to ask the panel about the 

coordination between agencies. And among the agencies, with the 

flooding ongoing in Nebraska and all along the Missouri waterway, 

I wanted to focus on the coordination between the various agencies 

providing relief to Nebraska farmers and producers impacted by 

flooding with both the Missouri and the Platte Rivers in Nebraska. 

I have to say I was very pleased with Secretary Vilsack’s visit 

to Nebraska with me a week ago to meet with those that were impacted by the flood firsthand, and assure USDA’s support to those 

impacted by the devastation. I am hopeful that the Under Secretaries could discuss their individual efforts in coordinating their resources between agencies and ensuring that Nebraska farmers and 

those living in rural communities impacted by the floods can count 

on timely and efficient assistance throughout the flooding, and perhaps more importantly, rebuilding their livelihood after the flood 

waters recede. 

We asked the other day Director Fugate, Administrator Fugate 

of FEMA, will the flood be over and will we know when it is over? 

Because we are talking about sustained high water for a long peVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
22 

riod of time. Perhaps we could start with you, Mr. Tonsager, to 

what you are looking to do. Yours is a part of making certain that 

the quality of life issues and structural economic development 

issues are being addressed out there. Maybe we could start with 

you. 

Mr. TONSAGER. Thank you, Senator. Mr. Scuse and I did recently 

make a trip through the flood areas of the South, through Louisiana, Arkansas, Alabama, and Mississippi. To be concise, my 

agency has a clear process to follow up with FEMA. We generally 

do not serve in the lead role, but we want to fill in the gaps behind 

FEMA. And so, we are very studious about following their process 

as they are the lead agency. 

But we do get into financing homes, dealing with water and 

sewer systems that have been inundated and trying to assist those. 

We do work with businesses who have been through the inundation 

to try and help refinance in those cases. So we do have some tool 

sets that help us manage those communities that have been inundated and we try and want to be helpful with them. 

Senator NELSON. Thank you. Yes, and then your colleague there? 

Mr. SCUSE. Thank you, Senator. We have been having meetings 

throughout the Mississippi River area now for several months. The 

Farm Service Agency, the Risk Management Agency has been 

working very closely together to make sure that our producers are 

getting the assistance that they, in fact, need. 

During the course of these meetings, we encourage them to visit 

the Farm Service Agency as quickly as possible to look at the emergency loan program and emergency conservation program. We have 

also been encouraging our producers to visit with their crop insurance agent to make sure that they can start that process as quickly 

as possible. 

We have been touring the areas. Acting Deputy Under Secretary 

Karis Gutter is in Missouri yesterday and today looking at some 

of the flooded areas. We have been providing fact sheets to all of 

our farmers and ranchers to let them know what programs are 

available, and we will be continuing working together with the 

Army Corps of Engineers as well as Under Secretary Honsaker and 

NRCS as well. 

Senator NELSON. Mr. Sherman, and then we can wrap that up. 

Mr. SHERMAN. Yes. Let me just briefly supplement what has 

been said. NRCS has an Emergency Watershed Protection program, so part of what we do is to provide immediate emergency relief, and we have provided, I believe, something like $600,000 to 11 

different states that have been affected by this, and we have additional resources that can be allocated. 

But let me just say that part of our work is to assess flood damage. Part of our work is to remove obstructions to watersheds. Part 

of it is to ensure the stability of certain structures. And we have 

a very active SNOTEL program that monitors the amount of snow 

pack in the mountains which ultimately can get to the Mississippi 

and the Missouri River Basins. 

So all of these programs are important. We work carefully with 

the Corps, with the Bureau of Reclamation, with EPA, and other 

Federal agencies. 

23 

Senator NELSON. We appreciate the fact that you do work together. I was taken by that sitting with Secretary Vilsack who 

made it clear that internally within the agency, a lot of effort was 

being made to coordinate and make certain that there was no underlay or overlap of effort, but that everything was being done that 

could reasonably be done. 

Given the fact that this high waters are going to go on for another six weeks or longer, I hope that fatigue does not set in within 

your agency. Certainly it is being felt by an awful lot of those who 

are directed affected, but I hope you will avoid fatigue within your 

agency. It is not going to be easy. It is not a typical flood. Thank 

you very much. Thank you, Madam Chair. 

Chairwoman Stabenow. Thank you very much. Senator Thune. 

Senator THUNE. Thank you, Madam Chairwoman and Senator 

Roberts. I want to thank you both for holding today’s hearing. I 

think this is an important subject given the current fiscal and 

budget and deficit crisis the nation is facing, and obviously reducing and eliminating waste, fraud, and duplication of services and 

abuse, not only at USDA, but across the entire Federal Government would make a significant dent in reducing Federal spending. 

I want to say, Madam Chairwoman, that as we focus today on 

measuring performance in eliminating duplication and waste, I believe the Federal Government needs to take a close look at our nation’s agricultural producers as examples of efficient, effective, and 

streamlined operations and learn how they conduct their businesses and operations and follow their example. 

When faced with rising operating input costs, farmers began utilizing equipment and modifying their operations to make certain 

seeds are planted at consistent depths and distances to maximize 

their growth potential. Today’s equipment can also place fertilizer, 

chemicals, and other inputs precisely where they need to be without overlap. 

I would just say, Madam Chairwoman, that our farmers have 

learned how to make every seed and every drop of fuel, chemicals, 

fertilizer provide the maximum benefit possible, and that is certainly something that the Federal Government must likewise do, 

and that is increase its efficiencies and cost-effectiveness of its operations as well. So I think our farmers are a great example to us 

about how we need to be going about the process of becoming more 

efficient. 

I have a question for Mr. Tonsager I would like to ask in particular dealing with an issue in my state. And if we have time, a 

couple other questions I would like to ask for the record. But, Mr. 

Tonsager, as you know, there is a project in South Dakota called 

Mni Waste which is a water system that received a nearly $10 million grant and a $3.6 million loan from USDA Rural Development 

to build a new raw water intake line. 

This is the first phase of what would be a three-phase project to 

complete a new water treatment plan and a water line on the 

Cheyenne River Reservation. Despite the dire need for water on 

the Reservation, USDA Rural Development has indicated that only 

small amounts of funding are going to be possible for this project 

going forward. 

24 

Allowing this project to languish not only means increased cost 

for the Federal Government to finance this project as construction 

costs rise and existing parts of the system fall into disrepair before 

they are even put into use, but there also will be increased health 

care costs through the Indian Health Service and there will be increased payouts in unemployment insurance, food stamps, and 

other safety net programs as housing projects, livestock taps, and 

other economic development projects are put on hold. 

Could you just explain how giving these small amounts of funding to this project which helped provide water to the poorest county 

in the nation is, over the long term, a fiscally prudent move? 

Mr. TONSAGER. It, of course, is a challenging area that is faced 

with a desperate problem that has a long history and that we have 

explored carefully. Of course, as you well know, the restraints on 

our resources are a major challenge for us and we face challenges 

like this in several of the high poverty areas across the country, including places like the Navajo Reservation or other reservations 

across the country where you have very widely-dispersed groups of 

people. 

It saddens us that we cannot proceed more quickly with the 

project. I think the near term solutions would be to work with the 

other Federal agencies, and we do get into the discussion about duplications that we have. But we will look closely at the other Federal funding sources and see if we can bring stronger encouragement with them to participate with us in the continued funding of 

this project. And hopefully, we can then possibly make some more 

faster progress with them under those circumstances. 

Senator THUNE. I hope you can do that. As you know, it is an 

area of dire need and the consequences of waiting are going to be, 

as I mentioned, pretty profound for the people on the Reservation. 

Let me just ask you, in terms of the hurdles that you encounter. 

If you look at trying to become more efficient and do away with duplication, what would you say are the biggest hurdles that Rural 

Development has had to overcome in administering, for example, 

the 2008 Farm Bill programs that are assigned to your portfolio at 

Rural Development? 

Mr. TONSAGER. Probably the sheer volume of the number of new 

programs, and we, of course, see those as opportunities, but we 

have an enormous number of regulations to get through. We took 

biofuels, for example, or the associated 9000 Series programs. We 

put out NOFAS immediately with those in order to implement 

them fairly quickly, then tried to learn from that experience. 

So I think the challenges were to follow the appropriate process, 

to get input, so we did want to get them going quickly. We did notices in order to get funds out the door quickly, tried to learn from 

that, and then do the programs. We believe we have pretty much 

fully implemented all of the Farm Bill authorities. Did not go as 

fast as we would like, but boy, there was a lot of ground to cover. 

Senator THUNE. How is NEPA compliance affected RD’s program 

administration delivery? 

Mr. TONSAGER. It has taken work certainly. We, of course, have 

an obligation to not only build and finance, but to try to make sure 

it is a quality of life process. So we have environmental processes 

associated with every one of our programs. Typically NEPA comes 

25 

into place when we come with very large programs that have very 

significant impacts. So it becomes more of a step to make sure that 

the compliance is there, and we accept NEPA and work closely 

with it because we do want to assure that qualitative component. 

Senator THUNE. Thank you. My time is expired. Thanks, Madam 

Chair. 

Chairwoman Stabenow. Thank you very much. Our distinguished 

Ranking Member has returned and I will turn to Senator Roberts. 

Senator ROBERTS. Thank you very much, Madam Chairwoman. 

Mr. Concannon, the SNAP program conducts employment training to help in the job search for SNAP participants who may be out 

of work. The U.S. Department of Labor’s Work Force Investment 

Act programs also provide employment and training to over 1.6 

million participants. Temporary Assistance to Needy Families, 

TANF, program spends $2.4 billion in work activities which include 

education and training. 

GAO recently reported that there are 47—47 Federal employment and training programs at an annual cost of $18 billion. In an 

effort to avoid duplicity in Government programs, can you tell me, 

is there any reason why SNAP should continue to have its own employment and training program? Is there any way you could merge 

some of your efforts in regards to the 47 other programs? 

Mr. CONCANNON. Thank you very much, Senator. Well, if I might 

mention right at the outset, work is a very integral part of the 

SNAP program and has been going back to 1970 or ’71. All 53 

SNAP programs across the country, all the states and the territories, operate employment and training programs. It is part of the 

effort of the program to make people more self-sufficient. 

I can say from my state experience, we work very closely with 

Department of Labor, or one-stop shopping centers, as they are referred to, one-stop centers at the state level. The advantage on the 

employment and training program focus to the SNAP program is 

it is particularly— that person comes through the front door applying for assistance. 

We know that they are in a compromised income situation by virtue of that. So the program is very tailored at that particular population, but we certainly would be happy to work on ways to make 

it even more integrated into the other range of labor programs. 

Senator ROBERTS. Thank you, sir. Mr. Sherman, are we creating 

programs such as CSP that are too complicated for the agency to 

implement? I am concerned about the level of improper payments. 

If producers are providing incorrect information, that is one thing. 

But if agency staff is having difficulty implementing the programs 

we create, is this an accountability problem with the agency or 

complexity in the design of the program? Is this our fault up here? 

What changes have been made in the Conservation Stewardship 

Program from the 2008 Farm Bill? 

Mr. SHERMAN. Thank you for the question, Senator. I think we 

have made some very positive progress concerning the Conservation Stewardship Program. As you know, we did have a variety of 

issues and problems with the Conservation Security Program, and 

I think Congress wisely decided to phase out that program by 2012 

and to bring into focus the Conservation Stewardship Program. 

26 

The Conservation Stewardship Program, I believe, is working 

well. NRCS is actively involved in verifying all aspects of their program, as opposed to a self-verification system that we previously 

had. So the improper payments that occurred under the Conservation Security Program have stopped. 

We are recovering monies that we lost in that program. And I 

think under the Conservation Stewardship Program, it is being 

handled very effectively. 

Senator ROBERTS. Thank you, sir. Mr. Scuse, we have heard a lot 

of frustration from our producers about ACRE and SURE. Specifically we hear complaints that the programs do not allow for the 

timely delivery of assistance, that they use a multitude of data 

points, they are generally confusing for the producer. 

The ACRE payment calculation alone requires a producer to go 

through 23 steps. That is about 22 more than necessary. And the 

testimony that Mr. Blankenship will state, he spends 25 percent of 

his management time trying to work through the requirements for 

these various Government programs. 

So here you have a very successful producer who is going to indicate that one-fourth of his time is simply plowing through all of the 

programs requirements. Have you had similar frustrations in implementing the programs that our farmers have had using them, 

short of just going back to the drawing board, which some of us 

might like to do? Short of that, are there things you think the 

USDA or Congress can do to make these programs more streamlined, efficient, and user-friendly? 

Mr. SCUSE. Thank you, Senator. I think the last Farm Bill took 

a giant step forward in helping our farmers and ranchers across 

the United States with the livestock programs that were put into 

place for losses, and ACRE and SURE are taking another step to 

enhance coverage that they may have on crop insurance and provide that additional protection. 

These three programs, they are complex, there is no doubt about 

it. There have been issues from the agricultural community about 

SURE. SURE pays you that payment one year after the loss. And 

that has been an issue that I have heard as I have traveled around 

the United States. But again, that was a program designed by Congress that we have implemented. 

ACRE is a complex program, no doubt about it. As you are wellaware, technology is an issue for the Farm Service Agency when 

you are dealing with systems that date back to the 1980s. So the 

technology issue has been one that has affected some of the program implementation. Some of these complicated programs, with 

SURE for an example, we have had to do manual calculations because of the lack of technology. 

So if there is one thing that I believe that we need going forward, 

it is to continue down that path to better technology to help our 

office staff. 

Senator ROBERTS. As a follow-up—and my time has expired, 

Madam Chairwoman—but you are basically saying you need better 

technology across the board to keep up with this and that that 

would help a bunch, as opposed to a program that has 23 steps for 

a farmer to comply. If you have any suggestions on how we can 

27 

streamline these programs, change these programs, it would be extremely helpful. 

You just heard the testimony here from a lot of members here 

about the flood, the historic flood we are going through, and the 

SURE program and—I mean, there are times when you have bad 

situations almost every year up in the northern states. And then 

you go to the SURE program and you do not get paid until a year 

later. That really is a problem. 

Now, you focused on the technology to help you get through this, 

but is there anything from the ability of us to take a hard look at 

the structure of the program that could better streamline it? 

Mr. SCUSE. Senator—— 

Senator ROBERTS. And if you have those suggestions, you do not 

have to go into them now, but you could certainly submit them for 

the record. 

Mr. SCUSE. Madam Chair? 

Chairwoman Stabenow. If you are brief. Yes, thank you. We definitely want to go into this more extensively with you. 

Mr. SCUSE. Yes, Senator. We here in Washington at USDA, as 

well as all over county offices across the United States, would welcome simplified programs, programs that are easier to understand 

and easier to manage, simpler programs, as well as the technology. 

We would be more than willing to work with you in coming up with 

programs that can be easily managed. We welcome that opportunity, Senator. 

Chairwoman Stabenow. Thank you very much. Senator Klobuchar. 

Senator KLOBUCHAR. Well, thank you very much, Madam Chairman, and thank you for holding this important hearing. As a 

former prosecutor, I saw time and again how good meaning programs can sometimes be abused if the wrong people get a hold of 

money, so I appreciate all the work that you are doing with the 

oversight, as well as the leadership of Secretary Vilsack and all of 

you to work on this accountability issue. 

One of the things that I was most curious about is just what kind 

of programs do you think lend themselves most—I guess I would 

ask this of you, Mr. Scuse. What are the factors that make programs more open to abuse? What additional oversight rules should 

we consider as we look at any programmatic changes to the Farm 

Bill? 

Mr. SCUSE. Well, thank you. The sheer complexity and size of the 

programs. Again, I think it goes back to the previous question. Programs that are easily understood and easily administered are the 

ones that we would have the best ability to do oversight on. 

And again, the technology is a major factor for our offices in the 

field. We need to have the proper tools that will allow us to do reviews at the local level. So I think, Senator, those two things would 

be a big help for us going forward. 

Senator KLOBUCHAR. Well, in speaking of technology, the Farm 

Service Agency and the Risk Management Agency require farmers 

to provide data at different times using different definitions for the 

same land. As you work to harmonize the data requirements from 

these two agencies, how are you ensuring that the newest GPS 

field data can be seamlessly incorporated into this new system? 

28 

Mr. SCUSE. Thank you, Senator. We have started a project just 

ten months ago—it is still in its infancy— that we hope to have a 

pilot project going in 2012, with full implementation in 2013 whereby we are using common information, common data, and common 

terminology, for one of the first times at USDA, between NRCS, 

FSA, RMA, and NAS to make sure that the technology is all compatible, as well as our terminology is compatible. 

We right now are looking at bringing together the dates where 

we do our certification between RMA and the Farm Service Agency, 

to bring those dates as closely possible together, and in some cases, 

make them one and the same to eliminate some of the confusion 

to our producers out there on when they need to certify their crops. 

So we are taking those steps. 

Senator KLOBUCHAR. Thank you. Mr. Sherman, the conservation 

program, the CSP program, has been especially important in my 

state. However, I know, even though we have had great anecdotal 

in our state, it is sometimes hard to accurately estimate the positive impacts of these efforts. How do you know if the significant investments that I believe we should make and are making, how do 

you know that the investments in voluntary conservation are actually working? 

Mr. SHERMAN. I had mentioned in my opening statement the ongoing Conservation Assessment Effects Program that we have, the 

so-called CAEPs, where we are taking a very careful look at the efficacy of these programs. And we are going out into the fields, we 

are doing modeling to see what the benefits are. 

And we are seeing really quite remarkable benefits. For example, 

the no till or reduced till efforts in the Chesapeake and the Upper 

Mississippi, approximately 85 to 90 percent of the crop lands there 

are now engaged in these practices, and we are seeing significant 

reductions in sediment contributions to streams and rivers, reductions in nitrogen, reductions in phosphorous. 

So we are documenting this very carefully, and as we document 

it, we are becoming more skillful in learning how we change practices to focus on this. So, for example, when we target areas where 

the most significant problems are and we come in and we focus on 

those areas, that is where we get the greatest benefits. 

And where we apply a suite of conservation practices, as opposed 

to an individual conservation practice, we get greater and greater 

benefits. So we are constantly evaluating this, amending how we 

apply conservation practices, and I think we are seeing some very 

strong and good results. 

Senator KLOBUCHAR. Very good. My last question. Mr. Sherman, 

you also discussed the efforts within the Forest Service to improve 

the integrity of environmental reviews and reducing the cost of litigation that the Government faces. How do you believe that this initiative will work to help focus resources on conservation goals and 

not courtroom legal battles? 

Mr. SHERMAN. We are very focused with the Forest Service on 

working with our partners in the field, that is with communities, 

with stakeholders, and so forth through collaborative efforts. So 

hopefully, we can arrive at a consensus on what is the best way 

to do restoration. 

29 

We are also very focused on improving the ways in which we conduct our need for reviews. We have projects now with the Council 

on Environmental Quality to explore how could we do more focused 

NEPA work, how can we have shorter environmental assessments, 

how can we take programmatic EISs and apply them in a way that 

we can work efficiently on forest restoration projects? 

All of these things are helpful and our hope is that we can take 

money that we are spending on environmental reviews and on litigation and shift that over to on-the-ground successful work in the 

forests. 

Senator KLOBUCHAR. On the trees and not the legal fees? 

Mr. SHERMAN. Exactly. Well said. 

Senator KLOBUCHAR. A little rhyme for you. I thought you would 

like that. 

Mr. SHERMAN. Thank you. 

Senator KLOBUCHAR. Well, anyway, give my greetings to Secretary Vilsack, tell him we have been working very hard to try to 

work out this biofuels issue. It is incredibly important to the Midwest and also to the deficit reduction, because if we can work it 

out, it could be a win-win to everyone. I am going to tell him you 

guys did not get the memo about seersucker suit days. 

[Laughter.] 

Chairwoman Stabenow. Thank you very much, Senator Klobuchar, and thank you for your leadership, and I share your desire 

to be able to work this out in a way that makes sense for rural 

America and for jobs. 

As we close this panel, there are many more questions that we 

have that we are going to be submitting to each of you, questions 

regarding areas of where we can consolidate programs. We have 

very important programs that meet very important needs for farmers, for communities, for families. 

But, for instance, we have some 20 different conservation programs. Do we need 20? Can we create efficiencies? Can we do 

things better in terms of streamlining? And I know that is something that you are focused on, but we want to know more about 

that. 

Rural development, 40 different programs. Do we need 40? Can 

we bring them together? Can we create more efficiencies? I would 

suggest that we can, and yet meet some things that are incredibly 

important. Every community outside the major cities of Michigan 

is impacted and needs an effective rural development program. 

But we will be following up with you in each of these areas as 

we look at what is being done to combine the acreage reporting and 

data. We know that as you are working on making sure that farmers only have to report once, what else can we do, as you have 

talked about, Mr. Scuse, so that—those are the kinds of things that 

we are going to be deeply involved in with each of you and, of 

course, Mr. Concannon, we will continue to work with you on that, 

and Dr. Leonard as well. 

We have very specific questions that we will be asking you to respond to. In this time of stretching every dollar, being as efficient 

as possible, cutting out the paperwork, making things work, we 

will look forward as we move forward on the Farm Bill and as we 

explore each area, you will be back, of course, with us, which we 

30 

appreciate as we go in- depth into each of the areas you are involved in. 

But this is important work and I want to commend the Department in the areas of improvement we have seen based on your 

work and based on the reforms in the 2008 Farm Bill and the Secretary’s leadership, and we very much appreciate the direction in 

which we are going. 

We think we can do more and we are looking forward to working 

with you as we do, in fact, continue to push ahead on ways that 

we can streamline and create more efficiencies and effectiveness in 

the programs. So thank you very much for being with us. 

We will ask our next panel to come forward. 

Well, good morning and thank you very much for your patience 

and for joining us today. Senator Roberts will be coming back to 

join us, as I believe other colleagues will as well. So let me introduce our three distinguished members of the panel. 

I am pleased to introduce today first Phyllis Fong who is the Inspector General at the U.S. Department of Agriculture where she 

promotes USDA efficiency and effectiveness and tackles waste, 

fraud, and abuse, and we appreciate your leadership in this important area. 

Prior to her post at USDA, she served as Inspector General for 

the U.S. Small Business Administration and was also elected the 

first Chair of the Council of Inspectors General on Integrity and Efficiency. 

Brett Blankenship, welcome. Farms over 10,000 acres of spring 

and winter wheat in Washington. He is the President of the Washington Association of Wheat Growers and was a former President 

of the Washington Grain Alliance. And we are so pleased to have 

you here today. 

And Ms. Masouda—I am going to make sure I am doing this 

right—Masouda—am I correct? Masouda Omar? 

Ms. OMAR. That is correct. 

Chairwoman Stabenow. Okay, thank you. Is the Manager of 

Business Finance Loan Production at the Colorado Housing and Finance Authority in Denver. She works with small businesses on a 

daily basis underwriting loan requests and marketing business finance products to a wide variety of partners statewide, and we 

very much appreciate your expertise and experience in being here 

today with us as well. We will start with Ms. Fong. Welcome. 

STATEMENT OF PHYLLIS FONG, INSPECTOR GENERAL, U.S. 

DEPARTMENT OF AGRICULTURE, WASHINGTON, DC 

Ms. FONG. Thank you, Madam Chairwoman and members of the 

Committee. We appreciate the opportunity to be here today to testify about our oversight work to help the effectiveness and delivery 

of USDA programs. You have my full written statement so I will 

just offer some brief comments on our work as it relates to the subject of the hearing. 

And very briefly, we believe that our audits and investigations 

help USDA, first of all, strengthen communication and coordination 

in its programs; secondly, address improper payments; and third, 

increase program control and integrity. 

31 

As you all know, the IG’s mission is to help USDA deliver its programs as effectively as possible, and the way we do this is by performing audits to determine if a program is functioning as intended, if payments are reaching the right people, and if funds are 

achieving their intended purpose. We also conduct investigations of 

people who may be abusing the programs, and these investigations 

can result in fines, imprisonment, or agency administrative actions. 

So let me spend a moment on communication and coordination 

and the need for stronger coordination between USDA programs. 

Several agencies within the Department provide payments to producers for programs that may have interlocking or complementary 

missions, for example, insurance payments for crop losses and disaster assistance payments as well. 

And we believe in our work that it is critical that RMA, FSA, and 

RCS work together to create a cohesive integrated system of program administration and data. This type of coordination is equally 

important in areas where USDA must work with other Federal, 

state, and local agencies, and with foreign countries, for example, 

in the areas of food safety inspection and global trade export programs. My statement gives examples of this in the areas of suspension and debarment, the Food Emergency Response Network, and 

the Invasive Species Program. 

Turning to the topic of improper payments, our work in this area 

is intended to save taxpayers money by ensuring that programs deliver the correct benefits in the right amounts to the right people. 

We have released a number of reports this past year that talk 

about different aspects of these issues. 

We have looked at FNS’s report on improper payment rates in 

the SNAP program. We have also looked at NRCS’s Conservation 

Security Program and RD’s Single Family Housing Guarantee Program. And in all of those programs, we found that the Department 

had made progress, but could also make further progress. 

And finally, our investigations of fraud in USDA programs had 

identified many instances where individuals improperly received 

payments to which they are not entitled, and my testimony gives 

examples of that in the SNAP, Child and Adult Food Care, and 

WIC programs. 

So finally, let me say a few words about program control and integrity. Our work in this area is designed to help USDA managers 

strengthen program administration. Examples of this kind of work 

include our review of the BCAP program. We did an audit of loan 

collateral in FSA’s Direct Loan Program, and we currently have 

work ongoing in the Civil Rights Program. 

Our investigations in this area can address issues of employee integrity and also cases involving false claims made by those doing 

business with USDA. 

So in conclusion, our office remains committed to helping USDA 

provide and deliver programs as effectively as 

possible. We look forward to working with this Committee on 

areas of mutual interest, particularly as you start to develop a new 

Farm Bill, and we would be very pleased to provide you with any 

assistance that we can based on our audit and investigative work. 

So thank you, and we welcome your questions. 

32 

[The prepared statement of Ms. Fong can be found on page 57 

in the appendix.] 

Chairwoman Stabenow. Thank you very much. Mr. Blankenship, 

welcome again. 

STATEMENT OF BRETT BLANKENSHIP, BLANKENSHIP 

BROTHERS, WASHTUCNA, WASHINGTON 

Mr. BLANKENSHIP. Thank you, Madam Chairwoman. I will also 

honor Ranking Member Roberts who is here in spirit, and members 

of the Committee as well. Thank you. 

As you introduced me, my name is Brett Blankenship. I am a 

farmer from Washtucna, Washington where I produce soft white 

winter wheat and dark northern spring and spring barley in a 

partnership with my brother, our wives, and my sister. 

As a matter of perspective, this places me in the center of the 

winter wheat growing region of the state of Washington, and the 

gateway to the famous Palous Region, which boasts of the highest 

dryland wheat yields in the world. 

As a state, we are averaging roughly six to five bushels per acre 

on approximately 2.3 million acres of wheat, and this places our 

state approximately fourth in wheat production in the United 

States. As we move forward toward serious consideration of the 

next Farm Bill, there are two other major components that are 

often left out of discussions like this. 

Yes, I am an American farmer, and I rely on the safety net aspects of the Farm Bill to produce crops. But I am also an American 

taxpayer and I also shop for groceries just like everyone else. So 

I commend you, Madam Chairwoman, for looking at the top of efficiency, just as we do on our farms. 

I will focus the remaining comments on my interactions with 

USDA, and perhaps offer some ideas that might help improve 

those. As background, my partnership operates in two counties, 

and I seem to be fortunate. We manage our interactions with 

USDA through one field office in the county seat of where I reside, 

and it has always been that way. 

I have had other growers complain that multiple counties offer 

them a lot of difficulty, but on my farm, we have been able to consolidate in one office and it has worked very well for us. I also 

interact with the NRCS office locally and, of course, our crop insurance provider. 

I am a participant in the ACRE program, Conservation Reserve 

Program, Conservation Security Program, and, of course, I carry 

CRC crop insurance. I was also able to participate in the SURE 

Program in 2008 and before—ancient history—participated in the 

DCP program as well. 

As Senator Roberts alluded to, the management time taken to coordinate all this often takes 25 percent of our time—not our time, 

but our management time. And I participate in various government 

and quasi-government programs and it is frustrating to have so 

many rules and procedures to comply with, but to complicate matters further, often these agencies seem to have trouble talking to 

each other or coordinating with each even when they are closer together in some of the buildings, as I am to the panel right now. 

33 

My most common interaction is with FSA, and it is the easiest 

office to deal with and the personnel seems to be incredibly welltrained and familiar with the actual impact of changes to program 

eligibility, payment limit compliance, and they have been very 

helpful. They seem to have a culture of Congress has appropriated 

these programs, authorized these programs. It is our job to provide 

the service to deliver them to you in the best efficient manner possible. 

We also work with NRCS where staff seems to have a different 

culture or not as well trained on payment questions or eligibility 

requirements, and certainly not familiar with FSA programs. 

NRCS has had a different focus in the past delivering conservation 

on the ground. FSA has had their focus on administration of the 

programs. But with different program work and different time 

frames, this has the tendency to create some problems. 

I do not have much direct interaction with RMA, but our agents 

do and they often seem confused with changes in insurance programs. There also seems to be confusion in the proper way to report acreage and yields in a format that transfers easily to SURE 

eligibility. 

We also, of course, work with bankers who largely do not have 

a good understanding of farm programs, other than the knowledge 

that those programs cover their risks as they loan us operating 

money. And to me, that is an important point in the Farm Bill debate, is the safety net programs help us secure operating capital to 

minimize our risks. 

All in all, I would say we make ten separate trips of several 

hours each to our FSA office for sign-ups, certification of acreage, 

CRP status checks, SURE eligibility questions, and returning paperwork once it is properly collected. As an aside, I will also add 

that that does not count if I am called in for an audit, as Ms. Fong 

alluded to. 

We often have so-called random audits, and unfortunately, I 

seem to get in a random audit almost every year. I do not know 

how it can be random if my name comes up. But that has been one 

of my frustrations. Even the county executive will say, Were you 

not just in here? So it has been an unusual situation. 

So it is no surprise in a rapidly changing agricultural economy 

that we adopt the new technology out in the field quite readily. We 

have adopted computers, data sheets, and readily adhere to GPS 

systems to increase our accuracy, and field mapping. 

And it would be wonderful to be able to coordinate that better 

with the agencies that we interact with, rather than adding things 

manually. But my FSA office has eliminated a large amount of 

frustration, declaring planted acreage and compliance issues because of the GPS maps that they have implemented in Washington, 

and that has increased our accuracy and we are able to use that 

with ACRE, CRP, CSPN crop insurance. However, it took several 

seasons to work out some of the kinks. 

One of the frustrations that can often be traced to the SURE program, but it is very difficult to explain why those numbers do not 

seem to line up and why they cannot be corrected, because if someone somewhere along the way does not fill a form out properly, it 

throws a wrench into the machinery. 

34 

The two major conservation programs which we participate in 

are the Conservation Reserve and the CSP handled by the different 

USDA agencies with dramatically different administration experience. Personally, I appreciate the way CRP is administered because 

the agency with the strength in administration, Farm Service 

Agency, relies on the agency with their expertise in conservation, 

NRCS for technical advice and compliance, but it is administered 

with FSA. That has worked very well for us. 

Since the implementation of ACRE and SURE, there have been 

several comments about overlap or duplication. I have not found 

that to be the case, not on our farm, because we depend on the 

three different facets of the farm safety net for different areas of 

risk. But often, the interactions and paperwork can create the frustration. 

But finally, I would like to just say generally, it would be my personal opinion that rules for all Federal programs in this nature 

ought to be the same, and if the program is there to support my 

business’s activity, then no matter what agency is administering it, 

the rules ought to apply the same. 

So you can see that the business of being in agriculture anymore 

is not just about cultivating or tending or harvesting a crop. It is 

also protecting the enormous risk and we depend on the programs 

you help us implement to do that. So thank you for the opportunity 

to address you. 

[The prepared statement of Mr. Blankenship can be found on 

page 49 in the appendix.] 

Chairwoman Stabenow. Thank you very much. We appreciate it. 

Ms. Omar, welcome. 

STATEMENT OF MASOUDA OMAR, MANAGER OF BUSINESS FINANCE LOAN PRODUCTION, COLORADO HOUSING AND FINANCE AUTHORITY, DENVER, COLORADO 

Ms. OMAR. Thank you, Chairwoman Stabenow and members of 

the Committee, thank you for the opportunity to speak with you 

today. It is a privilege to come before you to discuss several of rural 

development programs authorized in the Farm Bill, and how Colorado Housing and Finance Authority has utilized these programs 

to support economic development in our state. 

Colorado Housing and Finance Authority, also known as CHFA, 

is a quasi-governmental entity created by the Colorado General Assembly in 1973 to increase the availability of affordable housing in 

the state. 

In 1982, the Colorado General Assembly expanded CHFA’s mission to include business finance for the purpose of providing access 

to capital for economic development across Colorado. So it is 

CHFA’s economic development mission that I will direct my comments to today. 

CHFA works in partnership with local and regional economic development agencies as well as large and small lenders in the state 

to finance business activities. We primarily support real estate and 

equipment purchases for existing businesses to expand or improve 

their operations, and we do this by offering fully-amortized, fixedrate mortgages with lower down payments requirements to allow 

that business to preserve cash and grow their operations. 

35 

Since 1982, CHFA’s business finance efforts have provided nearly $900 million in capital to over 2,200 businesses supporting over 

37,000 jobs. Historically, over 50 percent of our small business loan 

production has occurred in rural areas of Colorado. 

So among CHFA’s partners is the USDA Office of Rural Development. CHFA has utilized Rural Development programs to support 

our work in Colorado’s non-metro areas. During this time, we have 

financed a number of small businesses and non-profit organizations 

using Rural Development’s Business and Industry Loan Guarantee, 

and the Community Facilities Loan Guarantee, and the Intermediary Re-Lending Program. 

As part of CHFA’s partnership with Rural Development, we rely 

heavily on the expertise of their regional offices. There are seven 

regional offices in Colorado, six of which are located in rural communities. These offices provide an essential service by acting as an 

intermediary between CHFA and the local businesses. 

They are also instrumental in ensuring smooth delivery of RD’s 

programs statewide. Our work with the regional office really starts 

from the initial stages of structuring that financing, and even after 

that loan has closed, to help maintain a strong relationship with 

the borrower as we service these loans. 

In CHFA’s experience, we have found that establishing trust 

with the rural customers is critical to ensuring a successful outcome. Rural communities take pride in conducting business with 

someone from the area who is known and reliable, and even though 

CHFA is a local entity with offices in Denver and Grand Junction, 

the day-to-day relationship that Rural Development regional offices 

provide is invaluable to us. 

Rural Development local offices serve as a one-stop shop that 

connect rural communities with resources that generate economic 

opportunities. They take on the responsibility of being familiar 

with other resources, ensuring that they serve as a conduit for the 

business to access help, even if it means going outside of RD’s programs. 

CHFA’s first experience in using Rural Development programs 

was through the Business and Industry Guaranteed Loan. The 

Business and Industry Guaranteed Loan allows CHFA to directly 

originate loans for small businesses. Similar to the SBA program, 

the Business and Industry is a loan guarantee. 

However, it is distinct from SBA in that it allows non- traditional 

lenders such as CHFA to participate. It is also a larger loan size 

than SBA’s programs. An example of how CHFA was able to use 

this unique feature of the Business and Industry program, is the 

Durango and Silverton narrow gauge railroad. 

Using the Business and Industry program, CHFA was able to 

provide the railroad with a $16.5 million loan and long- term financing to replace short-term variable rate debt that was coming 

due. The $16.5 million loan would have exceeded SBA’s maximum 

loan size. However, CHFA’s ability to assist the railroad was an 

important economic development opportunity for our state. 

The railroad is a popular tourist attraction in southwest Colorado, attracting over 200,000 visitors to the Four Corners area. It 

provides jobs to over 200 people and is responsible for nearly $100 

million in economic impact to the area. Small businesses such as 

36 

the Durango and Silverton are the backbone of Colorado’s economy. 

Tourism accounts for 25 percent of the economy in the Four Corners area, and the railroad is estimated to impact 16 percent of the 

total employment in those two communities. 

Another program that I will briefly mention is the Community 

Facilities Guarantee which, as you are aware, is similar to the 

Business and Industry Guarantee program, but it is used to finance non-profit organizations. To our knowledge, USDA is the 

only agency that guarantees loans to non-profits, which is critical 

to ensuring that these organizations have access to capital. 

Oftentimes, non-profits, due to a higher risk profile, have difficulties getting financing through traditional outlets, which is why the 

support through the Communities Facilities Program offers solutions to help lenders extend credit. 

Young Tracks Preschool and Child Care Center is an example of 

a project that CHFA financed using the Community Facility guarantee. This non-profit is located in Steamboat Springs, Colorado, a 

community of less than 10,000 people whose primary industry is 

tourism. 

Young Tracks was referred to CHFA by a local bank who was unable to provide the financing, so CHFA partnered with USDA who 

not only provided a community facility’s loan guarantee, but also 

funded a direct loan together which provided the necessary dollars 

to build this new facility. 

Once the permanent financing was arranged, the local bank was 

also able to come in and reach a greater level of comfort and provided the borrower with an interim loan to fund the construction 

costs. And this facility has greatly enhanced Young Tracks’ ability 

to serve the community. It has allowed them to add a new infant 

care program that was previously not available, as well as expanded classroom capacity for their programs. 

And still today, they are the only infant/toddler care program 

open to the public for a 27-mile radius. There are nearly 100 children enrolled there in their services and their clients are primarily 

low and moderate income households. 

In the interest of time, I am not going to go into some of the 

other remarks. You do have a written copy of my testimony, but 

the other program that I will briefly mention is the Intermediary 

Re-Lending Program, or the IRP program, that also benefits rural 

communities where lenders such as CHFA can borrow funds from 

USDA at a low interest rate and turn around and re-lend it to very 

remote areas of Colorado. 

And we have used these funds to provide low-interest rate loans 

to communities with greatest need based on their level of out migration, unemployment, and poverty rates. 

So as you can see, Rural Development programs are valuable to 

Colorado; as such, ensuring their ongoing and efficient delivery is 

critical. 

So thank you again, Chairwoman Stabenow and members of the 

Committee for allowing me to speak with you today. I applaud your 

leadership as you continue your work to support our nation’s rural 

communities, and I look forward to answering any questions. 

[The prepared statement of Ms. Omar can be found on page 74 

in the appendix.] 

37 

Chairwoman Stabenow. Thank you very much, and thank you to 

all of you. 

Mr. Blankenship, let me ask first, again talking about paperwork, I think paperwork is always a very significant frustration for 

farmers who have a lot of work to do and do not need to be spending all their time, as you talked about, filling out a lot of forms. 

So when you look at the greatest need for streamlining and really cleaning up the bureaucracy and the red tape and dealing with 

USDA agencies, you spoke about a number of things, but what do 

you think is the most important area for us to focus on from your 

perspective? 

Mr. BLANKENSHIP. I would like to see some kind of standardization of the information that is needed that could be used in the various different portals among the agencies. It is the duplication, and, 

unfortunately, the culture we have created in enforcement or trying 

to make sure that the right folks are getting the right payments, 

rather than delivering the service. 

Sometimes employees have viewed themselves as the great defenders of the Federal treasury, and somehow we need to find that 

sweet spot of delivering the service and being responsible and accountable as well. 

Chairwoman Stabenow. What is your experience in dealing with 

the technological capabilities of the Department? We have heard a 

lot today on our first panel about improvements in a number of 

areas because of technology. Do you see that, in your end? What 

is the interaction in terms of the use of technology, or what could 

be done better as including technology? 

Mr. BLANKENSHIP. My experience is things have gotten a lot better. I remember going through programs sign-up before, as a much 

younger person, and we would have to haul out all the maps and 

count all the acres of the fields and measure them manually. And 

it literally took all day. 

And we have recently added the GPS maps at the local office, 

and now that that is reasonably standardized, we know how many 

acres are out there now, as long as no changes have happened. It 

would be nicer to be able to submit a lot of that electronically. That 

would be, of course, the next step. Without going into greater detail, that would be a good start, standardization. 

Chairwoman Stabenow. Great. Thank you very much. This is an 

area of great interest, I think, to us. 

Ms. Fong, last week your office issued a report detailing its fraud 

prevention efforts in programs under your jurisdiction, including 

the food assistance programs, and there were some impressive 

numbers in terms of what has happened in the last six months. 

We have heard 516 arrests for $47.8 million given back to taxpayers. And, in fact, in Michigan, I want to congratulate you, the 

OIG, working with the Lansing Police Department, just identified 

a major fraud case at a storefront, J&K General Store, and thanks 

to the record- keeping technology and the data analysis, you were 

able to work in a way to recover half a million dollars. 

And so, we appreciate that. I have now seen that up close, what 

you are doing, and how effective it is. But I am wondering, as we 

look at what was given to you in the 2008 Farm Bill in terms of 

new authorities and investments and so on, if you could talk a litVerDate Nov 24 2008 01:34 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 C:\DOCS\71630.TXT MICHA
38 

tle bit more about what has happened in terms of improving efforts 

to combat fraud and abuse, and what we can continue to do to keep 

a good record going. 

Ms. FONG. Well, thank you, Madam Chairwoman, for your comments and we appreciate your support on all of the work that we 

are doing across the board, especially in the SNAP program. And 

as you pointed out, we work very closely with FNS and with the 

state and local jurisdictions to find instances where there are problems and to go after them. 

We believe that that relationship is so essential, to have very 

close working relationships with the Department of Justice, state 

and local enforcement, and FNS as well, because we all approach 

these issues from our own perspectives, and they tend to reinforce 

each other. 

And to address your question about the Farm Bill of ’08, we have 

been working with FNS. There are a number of provisions in there 

to strengthen the SNAP program. We realize that they have just 

issued a proposed rulemaking that will change some of the definitions of trafficking and will give us the ability to really pursue 

some of the instances that involve retailers as well as individual 

recipients. So we think those provisions are very helpful. 

Chairwoman Stabenow. And just as a quick follow-up and a clarification and a comment in your testimony. If an individual is 

caught trafficking SNAP benefits, what happens to their ability to 

get future benefits from any Federal Government program? 

Ms. FONG. Well, that is a very good question. Generally, when 

an individual is found to have improperly trafficked or improperly 

used their benefits, they would be subject to prosecution by state 

and local authorities, and if they are convicted, then their eligibility, I think, would be very much impaired, shall we say. 

Chairwoman Stabenow. True, in my experience, at least in situations we have been involved with, they would just be eliminated 

from eligibility. Is that your understanding? 

Ms. FONG. That is my understanding, that a conviction of criminal conduct would make them ineligible. 

Chairwoman Stabenow. Okay. I would certainly hope so. 

Ms. FONG. Yes, exactly. 

Chairwoman Stabenow. If there is a concern there, please let us 

know. But that is my understanding. Please follow up and make 

sure, because that is my understanding, and I am assuming unless 

otherwise if that is the case, if you could let us know. 

I would like to turn now to our Ranking Member, Senator Roberts. 

Senator ROBERTS. Thank you, Madam Chairwoman. Mr. 

Blankenship, there is an awful lot of information out there on the 

Web. My staff is in a continual re-education effort to try to get me 

up to speed. I know it is out there. I just cannot find it. 

Are you able to find a lot of the forms, the information that you 

need online? It may be online, but are you able to get in a situation 

where you think you can rapidly find these things? Are you simply 

utilizing the online forms and resources that people talk about that 

are available. Are they available? 

Mr. BLANKENSHIP. They may be available, Senator, if you can 

wade through the pages to get to them. But we have found it just 

39 

as easy, since my business partner lives not too far from the service 

agency office, we have just found it easier just to go in and then 

you have the same one there looking for—— 

Senator ROBERTS. So basically you ask Mabel, Will you help me? 

Mr. BLANKENSHIP. That seems to work the best for us. 

Senator ROBERTS. I see. I wish you could do it online, but I 

empathize with your situation. I just have another question here. 

You note in your testimony that Farm Bill programs help producers obtain their operating capital from the banking community. 

That is an obvious statement. 

Are there specific programs that are more important to banks 

than other programs, in your view? Do banks ask you what level 

of crop insurance you purchase or how much you will receive in direct payments. Something that has been discussed a lot around 

here. Do they ask you if you have signed up for ACRE? What do 

they ask you? 

Mr. BLANKENSHIP. When I submit my financing budget and my 

plan for the year, they know what line to look for, for either the 

direct payment or the ACRE payment, as the case may be. I am 

in ACRE, so they are looking for that line, and it is very important 

to them. 

The next question is, since they know I am a policy guy, they ask 

me, Where do you think the next Farm Bill is going? And then the 

third question is, Do you have CRC? 

Senator ROBERTS. I think you are right. The next Farm Bill is 

going. That was very clever of you to turn that right back on us, 

and I wish we knew. Both the Chairwoman and I, we have no 

other higher priority than to try to do the best we can to preserve 

that safety net that that bank asks you. Otherwise, you are not 

going to get your loan that you depend on. What about crop insurance? You did not mention that one. 

Mr. BLANKENSHIP. I am a participant in CRC. They certainly 

want me to participate in that, to preserve their exposure, and my 

assumptions in financial receipts, CRC does help me cover that 

risk. 

Senator ROBERTS. So you have got some crop insurance and direct payments and ACRE? 

Mr. BLANKENSHIP. Yes. 

Senator ROBERTS. Those are the big three? 

Mr. BLANKENSHIP. Yes. 

Senator ROBERTS. I appreciate that. Thank you. 

Chairwoman Stabenow. Thank you very much. Senator Bennet. 

Senator BENNET. Madam Chair, thank you for holding this important hearing, and also thank you for having two Coloradans testify and three Coloradans visit. Harris Sherman, who testified on 

the first panel, who used to be our Director of Natural Resources 

in Colorado and has been dedicated to our natural resources in particular, fighting the Bark Beetle infestation that we have had. It 

has been very, very important to the state. 

And Masouda Omar and Steve Johnson, who are here, the Colorado Housing and Finance Authority who have done such great 

work at the local level, and I appreciate your recognition of the 

quality of folks in Colorado by having everybody here. 

40 

Ms. Omar, not the purpose of this testimony, but you mentioned 

the Durango-Silverton Railroad, and I drive by that regularly. And 

I often think, Madam Chair, about the people that built that railroad and the people that built the road next to that railroad. I blew 

two tires out on the minivan the last time I was on it because of 

a rock slide. Still very treacherous. 

But the cooperation between the private sector and the Federal 

Government that made those things possible, that allowed one generation to build something that even now is making a huge economic contribution to our state, I think their memory is something 

that we would do well to think about as we have the debates that 

we are having here and trying to drive this country forward and 

build for the next generation. 

But to come to the purpose of today’s hearing, I wanted to ask 

Ms. Omar a couple of questions. Thanks for coming all the way out 

here. There was discussion earlier today in reference to a GAO 

study that identified significant duplications in Federal economic 

development programs. I wondered whether, from your vantage 

point, you see duplication? And also, if you could talk a little bit 

more about your interactions with the SBA versus USDA and how 

we should think about that? 

Ms. OMAR. Thank you, Senator Bennet. Yes, my experiences with 

USDA is primarily with the Community Facilities, the Business 

and Industry, and then the IRP program. And I can tell you that 

those programs are very distinct and serve very different purposes 

than the SBA program. 

The Community Facility program is the only—to my knowledge, 

it is the only loan guarantee for non-profits, and when you have a 

local non-profit in a rural community, access to capital is very difficult. And so these programs serve a very important purpose. 

If anything, in terms of improvements to programs, we would 

like to be able to see Federal programs working together, greater 

collaboration, and one program that I will briefly mention is the 

New Markets Tax Credit Program, which is a tax credit program 

that was designed back in 2000. 

And we have some tax credits available in rural areas, and it 

would be nice to be able to combine a USDA guarantee or a loan 

through the New Market Tax Credit structure to be able to finance 

projects in rural communities and very high distressed communities within rural areas of our state. 

Senator BENNET. Thank you. I also wanted to follow up on the 

Ranking Member’s questions about paperwork with you. You have 

been working for years with Rural Development programs, and I 

know you are familiar with the paperwork. I have heard from Coloradans, more than I could possibly represent well today, who are 

so frustrated with the paperwork process for everything, from 

water to business programs. 

I wanted to ask you, if you were going through the USDA RD 

avocation process for the first time, would it be self- explanatory 

to you, do you think? 

Ms. OMAR. You know, that is a great question. Yes. We have 

worked with—we have done a number of transactions with, as you 

know, with USDA, and obviously the first time, when you are 

working on a new program or working trying to put together a 

41 

guarantee program, we do look to work closely with the local office 

and help guide us through the process, and they have been very 

helpful. 

The programs or the projects that we have financed, they tend 

to be larger transactions that do require additional due diligence. 

So the way I communicate those expectations to my borrowers is 

that oftentimes, when you are buying that piece of real estate, it 

is the largest investment that company is making in their business. 

And so, we do want to do a little bit of additional due diligence, 

make sure that that asset is a quality asset that is being put on 

their balance sheet. 

But again, in our experience, the USDA staff has been available 

to walk us through the process, answer any questions that we 

might have. Like I said, this is typical with other programs that 

we work with. There is just a little bit more due diligence involved. 

Senator BENNET. I would like to see how we might be able to 

streamline some of that because there is a recurrent theme that we 

hear. But I will be after you for your ideas about that. Thank you. 

Thank you, Madam Chair. 

Chairwoman Stabenow. Thank you very much, Senator Bennet. 

This is exactly why we wanted to hold the hearing today, is to be 

able to begin to have that discussion about how we can streamline 

and consolidate and do effectively what needs to be done, and there 

are very important things done through the Department of Agriculture for communities, for farmers, for families, for ranchers, foresters. 

But there are a lot of ways in which we can streamline and do 

a better job. So that is the reason for the hearing and we very 

much appreciate it. As we come to the close, let me just indicate 

again that we have held the hearing today to make sure that there 

is accountability in the administration of Farm Bill programs. 

We need to be confident that we are sound stewards of limited 

taxpayer dollars and that we are cracking down on any fraud and 

abuse that is in these important programs. So we are going to be 

asking a lot of questions as we go forward, and to each of our witnesses today, we are going to be asking you to continue to be involved with us as we focus on all of these areas. 

Have we provided the right tools and invested in an effort to 

catch those who would abuse the systems and, in fact, are we 

catching them? How can we continue to do that? Are we cutting 

down on inefficiencies and waste that lead to mistakes or cause 

frustration by those who use the programs? What can we do to consolidate? What can we do to be more effective and efficient? 

I think today it is important to note that the hearing has demonstrated that fraud and abuse are not rampant or out of control, 

but we also know that we need to stay focused and that we need 

to look for continual improvement, and that is really the job of this 

Committee. 

We have provided the tools to catch those who would commit 

fraud, and small investments appear to be having major benefits 

as we look to address those issues, all of which are saving taxpayer 

dollars. 

I think it would also serve as an important reminder to those 

who are focused on cutting budgets and spending, that misguided 

42 

cuts can lead to more waste, fraud, and abuse and damage the 

agencies’ ability to crackdown on those who abuse the programs, 

and bring them to justice. 

In other words, unwise cuts can lead to more wasteful spending. 

And so, I think we need to be very smart about how we are doing 

things going forward, and that is something we take very seriously. 

And finally, I think we have areas where we clearly can work to 

cut down on duplication and unnecessary complexity in a whole 

range of areas so that programs are easier to understand, administer, and use, while also improving our ability to ensure better accountability. I think it would be our Ranking Member’s and mine 

goal, some day to see one form. Our farmers would have to fill out 

one form to be able to know what they qualify for and what their 

options are and so on. We will work towards that goal, certainly. 

So we look forward to working with the Department and with all 

of our colleagues, with all of you. We appreciate, Ms. Fong, your 

efforts, and I continue to applaud and encourage you in your very 

important efforts. 

Mr. Blankenship, we hope that we are going to be able to address 

some of those issues that you have raised that are frustration to 

you as you work to be successful for your family on your family 

farm, and we congratulate you for being here. 

Ms. Omar, the same for you. What is done with Rural Development programs is incredibly important and we want to see what 

we can do to more effectively give you the tools, or at least streamline the process for you to be able to meet the needs of communities, both in Colorado, but all over the country. 

So thank you very much to everyone. The meeting is adjourned. 

[Whereupon, at 11:55 a.m., the hearing was adjourned.] 

(43) 

A P P E N D I X 

JUNE 23, 2011 

44 


71630.001
45 


71630.002
46 


71630.003
47 


71630.004
48 


71630.005
49 


71630.006
50 


71630.007
51 


71630.008
52 


71630.009
53 


71630.010
54 


71630.011
55 


71630.012
56 


71630.013
57 


71630.014
58 


71630.015
59 


71630.016
60 


71630.017
61 


71630.018
62 


71630.019
63 


71630.020
64 


71630.021
65 


71630.022
66 


71630.023
67 


71630.024
68 


71630.025
69 


71630.026
70 


71630.027
71 


71630.028
72 


71630.029
73 


71630.030
74 


71630.031
75 


71630.032
76 


71630.033
77 


71630.034
78 


71630.035
79 


71630.036
80 


71630.037
81 


71630.038
82 


71630.039
83 


71630.040
84 


71630.041
85 


71630.042
86 


71630.043
87 


71630.044
88 


71630.045
89 


71630.046
90 


71630.047
91 


71630.048
92 


71630.049
93 


71630.050
94 


71630.051
95 


71630.052
96 


71630.053
97 


71630.054
98 


71630.055
99 


71630.056
100 


71630.057
(101) 

DOCUMENTS SUBMITTED FOR THE RECORD 

JUNE 23, 2011 

102 


71630.058
103 


71630.059
104 


71630.060
105 


71630.061
106 


71630.062
107 


71630.063
108 


71630.064
109 


71630.065
110 


71630.066
111 


71630.067
112 


71630.068
113 


71630.069
114 


71630.070
115 


71630.071
116 


71630.072
117 


71630.073
118 


71630.074
119 


71630.075
120 


71630.076
121 


71630.077
122 


71630.078
123 


71630.079
124 


71630.080
125 


71630.081
126 


71630.082
127 


71630.083
(129) 

QUESTIONS AND ANSWERS 

JUNE 23, 2011 

130 


71630.084
131 


71630.085
132 


71630.086
133 


71630.094
134 


71630.095
135 


71630.096
136 


71630.097
137 


71630.098
138 


71630.099
139 


71630.100
140 


71630.101
141 


71630.102
142 


71630.103
143 


71630.104
144 


71630.105
145 


71630.106
146 


71630.107
147 


71630.108
148 


71630.109
149 


71630.110
150 


71630.111
151 


71630.112
152 


71630.113
153 


71630.114
154 


71630.115
155 


71630.116
156 


71630.117
157 


71630.087
158 


71630.088
159 


71630.089
160 


71630.090
161 


71630.091
162 


71630.118
163 


71630.119
164 


71630.120
165 


71630.121
166 


71630.122
167 


71630.123
168 


71630.124
169 


71630.125
170 


71630.126
171 


71630.127
172 


71630.128
173 


71630.129
174 


71630.130
175 


71630.131
176 


71630.132
177 


71630.133
178 


71630.134
179 


71630.135
180 


71630.136
181 


71630.137
182 


71630.138
183 


71630.139
184 


71630.140
185 


71630.141
186 


71630.142
187 


71630.143
188 


71630.144
189 


71630.145
190 


71630.146
191 


71630.147
192 


71630.148
193 


71630.149
194 


71630.150
195 


71630.151
196 


71630.152
197 


71630.153
198 


71630.154
199 


71630.155
200 


71630.156
201 


71630.157
202 


71630.158
203 


71630.159
204 


71630.160
205 


71630.161
206 


71630.162
207 


71630.163
208 


71630.164
209 


71630.165
210 


71630.166
211 


71630.167
212 


71630.168
213 


71630.169
214 


71630.170
215 


71630.171
216 


71630.172
217 


71630.173
218 


71630.174
219 


71630.175
220 


71630.176
221 


71630.177
222 


71630.178
223 


71630.179
224 


71630.180
225 


71630.181
226 


71630.182
227 


71630.183
228 


71630.184
229 


71630.185
230 


71630.186
231 


71630.187
232 


71630.188
233 


71630.189
234 


71630.190
235 


71630.191
236 


71630.192
237 


71630.193
238 


71630.194
239 


71630.195
240 


71630.196
241 


71630.262
242 


71630.263
243 


71630.197
244 


71630.198
245 


71630.199
246 


71630.200
247 


71630.201
248 


71630.202
249 


71630.203
250 


71630.204
251 


71630.205
252 


71630.206
253 


71630.207
254 


71630.208
255 


71630.209
256 


71630.210
257 


71630.211
258 


71630.212
259 


71630.213
260 


71630.214
261 


71630.215
262 


71630.216
263 


71630.217
264 


71630.218
265 


71630.219
266 


71630.220
267 


71630.221
268 


71630.222
269 


71630.223
270 


71630.224
271 


71630.225
272 


71630.226
273 


71630.227
274 


71630.228
275 


71630.229
276 


71630.230
277 


71630.231
278 


71630.232
279 


71630.233
280 


71630.234
281 


71630.235
282 


71630.236
283 


71630.237
284 


71630.238
285 


71630.239
286 


71630.240
287 


71630.241
288 


71630.242
289 


71630.243
290 


71630.244
291 


71630.245
292 


71630.246
293 


71630.247
294 


71630.248
295 


71630.249
296 


71630.250
297 


71630.251
298 


71630.252
299 


71630.253
300 


71630.254
301 


71630.255
302 


71630.256
303 


71630.257
304 


71630.258
305 


71630.259
306 


71630.260
307 


71630.261