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U.S. DEPARTMENT OF AGRICULTURE

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GRAIN INSPECTION ADVISORY COMMITTEE MEETING

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THURSDAY

AUGUST 15, 2019

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The Committee Meeting was convened at 

the AMS National Grain Center, 10383 North 

Ambassador Drive, Kansas City, Missouri, in the 

Main Conference Room at 8:00 a.m., Linsey 

Moffit-Tobin, GIAC Chair, presiding.

PRESENT:

BRUCE SUTHERLAND, Michigan Agriculture and

Commodities

JOHN MORGAN, Supreme Rice

RICK ROBINETTE, Sioux City Inspection

SARAH SEXTON-BOWSER, Kansas Producer

JOHN LINDGREN, Director of United Grain

Corporation

MATTHEW KERRIGAN, Vancouver, Washington ETT

BRENT TURNIPSEED, South Dakota State University

RYAN KUHL, North Plain Inspection

RANDY BURNS, Arkansas Bureau of Standards

CHAD BECNAL, SGS

DAVID AYERS, Champaign Grain Inspection

TOM TUNNELL, Kansas Ag

MARK WANTE, North Dakota Farmers' Union

TODD RUSSOM, Anheuser Busch
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ALSO PRESENT:

BRUCE SUMMERS, AMS Administrator

ARTHUR NEAL, FGIS Deputy Administrator, DFO

KENDRA KLINE, Assistant to the Deputy

Administrator and the Advisory Committee

Specialist
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CONTENTS

Call to Order and Welcome ..................... 4

Greetings .................................... 10

Facility Overview ............................ 18

Agenda Overview and Meeting Goals ............ 19

FGIS Updates

Financial Overview ........................... 28

Resolutions Update ........................... 34

AMS Update on Hemp Rulemaking ................ 36

Boundary Exceptions Discussion ............... 68

Discussion with the National Organic Program

(NOP) -Organic Certification Information on

Official FGIS Certificates .................. 166

Introduction of Draft GIAC Policy and

Procedures Manual ........................... 233

Adjourn ..................................... 237
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P R O C E E D I N G S

(8:00 a.m.)

CHAIR MOFFIT-TOBIN: Can everybody 

hear me? Good. Now, that we have established our 

quorum, the meeting will now come to order. I would 

like to recognize the members of the 2019 Grain 

Inspection Advisory Committee. 

We have Bruce Sutherland with Michigan 

Agriculture and Commodities. John Morgan with 

Supreme Rice. Rick Robinette, Sioux City 

Inspection. Sarah Sexton-Bowser, Kansas 

Producer. John Lindgren, Director, United Grain 

Corporation. 

Matthiew Kerrigan, Vancouver, 

Washington ETT. Brent Turnipseed, South Dakota 

State University. Ryan Kuhl, Northern Plain 

Inspection. Randy Burns, Arkansas Bureau of 

Standards. Chad Becnal, SGS. 

David Ayers, Champaign Grain 

Inspection. Tom Tunnell, Kansas Ag. Mark Wante, 

North Dakota Farmers' Union. And Todd Russom, 
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Anheuser Busch. 

I also want to thank and recognize our 

AMS Administrator, Bruce Summers. We really 

appreciate you being here today. And our FGIS 

Deputy Administrator and for the committee 

purposes, our designated Federal Officer, Arthur 

Neal. The Assistant to the Deputy Administrator 

and the Advisory Committee Specialist, Kendra 

Kline. 

I also want to thank the Secretary for 

this dynamic group he has chosen, and everyone else 

that has taken the time and sees the value of being 

here today. We appreciate everybody coming here. 

I'm going to start today off with a 

question, and don't be shy. So, raise your hand 

if you believe everyone in this room has at least 

one thing in common. Think about it; what is that 

commonality. Don't be shy. I won't call on you; 

probably don't want to hear some answers.

That commonality we all share is the 

commitment to the integrity and progress of this 
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official system. That is why we're all here today. 

Every person at this table was chosen for a reason. 

You were each selected because of your unique 

knowledge, experience and background.

Having a diverse committee, with unique 

viewpoints, ability, experiences, outlooks, 

backgrounds, skills sets is pivotal to the success 

of the official system.

I wanted to tell you just a short story 

about the first time that I learned about the 

importance of diversity. I didn't realize then, 

but I understand it now. I grew up the last of 

four daughters, and my dad always says that he 

wouldn't have it any other way. But there's many 

days where I'm sure he didn't even know he believed 

that. 

But on this day, I was about 12 or 13 

years old, and I was farming with my dad and his 

three farmhands. At one point, we were broken 

down. For some reason, we had no cover to the vent. 

We're picking 18, 19 percent moisture corn, and 
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there's no dryer, no spreader, no serrator and no 

room in any other bin.

So, while they're trying to fix 

electricity, my normal course of action is, 

obviously, to sit back and wander off into the 

abyss, waiting for them to figure out what the 

solution is. Of course, back then we didn't have 

the efficient equipment that we have today, so it 

took us much longer to harvest than it does today 

with the same amount of acreage.

Once they determined that the 

electrician could not until the next morning, and 

after a lot of cussing, kicking, throwing hats, 

they decided that they were going to come to a halt 

that day. And I didn't understand. It was a 

perfectly nice day. You cannot stop farming on 

a really nice day.

So, you had individuals with very 

similar backgrounds who were looking at one 

solution. You know, and it just, it seemed so 

simple to me, and I was afraid to speak up. You 
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know, so that's why today, with your diverse 

backgrounds, don't be afraid to speak up. Don't 

think that you don't have the answer of the 

solution.

So, that's why you were chosen. That's 

why you were picked. That's why we have such a 

unique, awesome group. Brent, you said something 

last night that really hit me, you know, about well, 

I'm just a seed guy. You know, but I have all these 

thoughts; I have all these ideas, you know, for 

the grain inspection, in the good of the official 

system. That's perfect.

That's why we're here. That's why all 

of us are here today. So, in order for any 

organization like the USDA to be truly successful, 

it's vital to have diversity. But diversity is 

not solely based on gender, skin color or ethnicity.

The real key to success is having 

diverse experiences, backgrounds, thoughts and 

views and perspectives in order to best serve our 

customers, producers, handlers, exporters and 
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importers to meet the world's 

dramatically increasing need for food, fuel, 

shelter and infrastructure. 

With diversity, it brings new ideas, 

new solutions, innovations and progress. We might 

not all have the same path to get there, but today 

we will have thoughtful, respectful discussions 

about how to get there. 

So, let's move forward together as one 

cohesive unit with at least that one thing in 

common, the integrity and progress of the official 

system. Thank you. I'm going to turn it over to 

Arthur.

MR. NEAL: Good morning everyone. I'm 

going to take this opportunity to introduce our 

administrator for the Agricultural Marketing 

Service, Mr. Bruce Summers. I'm not sure how many 

of you have met him, but Bruce is a very dynamic 

and powerful leader; a man with great integrity.

That's one of the beautiful things that 

we appreciate about the Agricultural Marketing 
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Service out there, and the Agricultural Marketing 

Service is about 25 years now. 

Bruce is one of the first leaders that 

I met in the organization when I joined back in 

1994. And so he's come from D.C. just to touch 

base and spend some time with us today. So, please 

receive him as he comes to the podium. 

MR. SUMMERS: Well, good morning 

everybody. So, I can only give so many speeches 

a year when Arthur introduces me because it costs 

me $100 every time he says stuff like that, and 

I have to pay him. 

So, can I close this laptop and put my 

notes here? Am I going to mess that screen up? 

All right, cool. The last thing I want to do is 

come here and break the IT stuff at 8:00 o'clock 

in the morning, right?

So, Linsey, great opening remarks. 

Thanks for that. You guys picked a great Chair. 

That was a great introduction, and I don't really 

have anything left to say now. You said it so well. 
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But I'm never at a loss for words, so I'll keep 

going. 

So, you know, after the merger of AMS 

and Federal Grain Inspection Service, one of the 

things that we wanted to do, back then it was Dana 

Cole who was sitting in the chair where Arthur is 

now; we really wanted to get this, this advisory 

committee back up and running.

And looking at the representation 

around the table, and looking at the, I'm energized 

just by looking at this room and how many people 

are here. I will tell you, sometimes you'll go 

to advisory committee meetings and it will be just 

the committee and a few USDA staff and it's quiet. 

I came in this morning; man, there's 

people everywhere. It's loud in the back. I don't 

know who all those people are, but they were loud. 

So, I mean, I kind of, I'm feeling good about the 

fact that it feels robust, it feels good. I hope 

you're as excited as I am. I think this is really 
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good.

You know, I was fortunate enough to be 

here last year, and gave some remarks and encouraged 

you guys to get going. And, my lord, you guys 

walked out of here with 17 recommendations. All 

right, so I'm here this time to say slow down. 

No, I'm not; not at all.

We'll take another 17, or we'll take 

whatever you got. That's why you're here. That's 

what we need from you, and it is really important. 

So, I thank you for the way you've gotten started, 

and we're really looking forward to seeing where 

this meeting goes, and beyond.

I'm not here to give a little speech. 

I don't want to be the guy that gets your agenda 

late, we'll keep you on track. Why I really wanted 

to come today is one, to show support. Two, I 

really want to listen. I want to hear about the 

issues. I want to be able to represent you back 

in Washington.

When issues are coming up, I need to 
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understand the challenges you're facing and 

solutions you're looking at. And that's really 

why I'm here, so I'm going to sit over there and 

I'm going to listen more than anything else. 

I'm happy to answer any questions at 

any point, now, later, lunchtime, or this evening. 

But I'm really just here to really thank you for 

what you're doing. And also, provide you just a 

little bit about, you know, what we're trying to 

do at AMS, and I think it's kind of simple.

Our goal at AMS right now is to make 

sure the Federal Grain Inspection Service is first 

class, best in class, best inspection agency in 

the world. Nothing less than that. That is our 

goal, okay? This committee is vital for us being 

able to reach out and maintain that.

We've got to have your feedback. We've 

got to have the collaboration that comes through 

meetings like this, and all the discussions that 

go on in between. And we need the folks who took 

the time to come and sit in the back in the 
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uncomfortable chairs without a table to lean on. 

We need you, too. 

We need your feedback before the 

meeting about the topics you think we should talk 

about. We want your feedback after the meeting. 

So, you all stakeholders in the audience are really 

important, as well. I'm not going to dismiss your 

importance at all. 

And so, I'm going to go a little off 

script, and I didn't talk to Arthur about this, 

but I want to ask you guys to consider something 

because, as you know, at USDA AMS does all the 

grading now. When FGIS came over to AMS, it kind 

of completed that sweep. 

AMS is now responsible for every 

product that USDA grades, from apples and oranges 

to grain and beef and chicken and eggs and butter; 

you know, on down the line. It's all at AMS. And, 

you know, there are a lot of challenges in running 

grading programs and you know what they are in the 

grain sector.
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But one of the things that I'm talking 

to all of my inspection programs about is how we 

can start to use technology to improve the way we 

provide the services. And so, Arthur, if you stand 

here, might be kicking me, but I would appreciate 

it if you all would give that some thought.

We'd like to hear from you on how you 

think technology could help us with respect to 

efficiency, maybe cost. Maybe it's just about 

accuracy. Maybe it's about consistency. 

Some of you may know about the cotton 

program. We class every bale of cotton that's 

grown in the United States. And the numbers that 

came out this week, they may be talking about 22 

million bales of cotton; in which case, we will 

grade cotton all year long. We won't have a break 

if there's really that much cotton.

But the cotton classing, cotton grading 

program is really gone to almost completely an 

automated process. Someone touches it when they 

pull the samples and someone touches it when they 
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feed the sample into the equipment. And then, from 

there on, it's pretty much automated. 

And it works really well, and very 

inexpensive. And it seems to be extremely timely. 

And so we'd like to start to talk to other grading 

customers about what that would look like for the 

grain industry. And cotton is cotton, right? In 

grain we have corn and soybean and we know that's 

more complicated; when we talk about grain, we're 

not just talking about one commodity. 

But we'd like to hear from you. You 

know, we've started using cameras in the grading 

of beef as an aid to the graders. And I think that 

has helped us a lot with consistency. So, there's 

some other things that we're starting to do on the 

-- side. 

So, I would just give you that charge, 

and I didn't talk to Arthur about this, but I think, 

he's shaking his head yes. So, that's just a charge 

I'd like to put in front of this group. I'm not 

asking that you do anything, other than to consider 
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this concept and begin to delve into it when you 

have some time. 

Because I think, I think our grading 

programs across AMS are ripe for investing in 

technology for a lot of different reasons, and we'd 

like to hear your input on something like that. 

So, I told you I was going to keep on schedule. 

Now, I've got to get back on script so Arthur will 

talk nicely about me the next time I give a speech. 

But really I just want to thank you all, 

especially the committee members, right? You 

know, you're volunteering. We know you have 

businesses you could be at. I know how glamorous 

travel is; it's always a bit of a challenger, right? 

We thank you for your time. We really appreciate 

it. We need you. 

And if there's anything I can do to help 

you all on this committee, anything I can do to 

help you all at your businesses, anything I can 

help you all with in Washington, D.C., please; now 

we know each other, right? Give me a call, send 
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me an e-mail, and I'll help you any way I can. 

So, thank you and I hope we have a great, great 

meeting. Thank you.

MR. NEAL: Thank you, Bruce. I really 

appreciate you coming and spending time with us. 

And also sharing those inspiring words. Because 

when I share you'll see we're kind of on the same 

page. We'd like to now call up Ms. Kendra Kline 

who's going to give us a facility overview. 

MS. KLINE: Okay, just a quick rundown 

of the building. Your bathrooms, restrooms are 

going to be right down this hallway where you came 

in. There's also a drinking fountain. If for some 

reason the fire alarm goes off, we're going to just 

organize out the hallway here, and you're going 

to take a right out into the patio. 

If there is a tornado alarm that goes 

off, going to go down the hallway right out here 

through the closed doors, and we'll escort you down 

the stairs into a waiting area. Also, we ask that 

you abide by any posted signs around the building.
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And we have a court reporter here today. 

So, when you speak, make sure you talk into a 

microphone, and you hold it close and you say your 

name and affiliation. I think that's everything. 

MR. NEAL: Thank you, Kendra. Now, 

we'll have the agenda overview by the Chair.

CHAIR MOFFIT-TOBIN: Thank you. 

Today Arthur's going to give us the updates, the 

FGIS updates. And then, after that, Denise Ruggles 

with FGIS executive program analysis; she's going 

to give us the financial overview. We have a small 

switch. We're going to do the AMS update on hemp 

rule-making at 9:15 this morning. We'll take a 

short break.

Resolutions update is Dr. Tim Norden. 

Boundary exceptions discussions with Karen. We 

had a nice discussion yesterday with Karen, so 

welcome them back. I'm actually surprised that 

you guys came back. 

We will break for lunch, and then the 
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national organic program, Betsy Rakola, will be 

here to discuss certification information on an 

official FGIS certificate. We've been talking 

about the idea about issuing organic grain on 

official certificates. And, under AMS, what we 

can do for collaboration between all of us. So, 

we're really looking forward to listening to her 

to see what that would take for that to happen.

We'll have a resolutions update 

continued with Arthur, break, introduction to our 

draft grain inspection advisory committee policy 

and procedures manual. And that will be, and then 

we'll adjourn for the day. 

As far as our meeting goes, last 

meeting's minutes were already approved by Ms. 

Cooper for our goals. Keep in mind, members must 

maintain the highest levels of integrity, 

responsibility to your duties, ethical standards 

and act impartially for the good of the whole 

system.

Our job is to listen and advise FGIS 
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on the programs, policies and services it delivers 

under the United States Grain Standards Act. Our 

goal is to meet the needs of our shareholders who 

operate in a dynamic, challenging and ever-changing 

marketplace.

We need to identify the needs, 

respectfully discuss, brainstorm, feed off of each 

other, and provide recommendations to submit to 

the Secretary. I want to make sure that we focus 

on the agenda items on hand, and do not waiver. 

We also, as a reminder, two-thirds of our majority 

vote shall be the decisive of any vote.

 Moving on to FGIS updates with Mr. Neal. 

MR. NEAL: Well, good morning again, 

everyone. This is not going to be your typical 

FGIS update this morning. Because we're going to 

have a lot of updates, and we're going to be 

providing a response to the 17 committee 

recommendations we received at the last meeting. 

I see Tony right there. Welcome back, 

Tony. Tony just had a new baby girl. So, he got 
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a waiver to come to this meeting. That's how 

important you all are. But I think it goes that, 

you know, Tony's presence here actually speaks to 

a lot of what we're going to talk about today. 

And from an FGIS update perspective, 

I just kind of want to share with you a little bit 

of the things that's swirling around in my head 

and my heart concerning the organization, the 

people, the people that we serve, the official 

network.

The first thing I want to talk about 

is the transformation part of the process. This 

is my fourth month; I'm concluding my fourth month 

as the deputy administrator for the Federal Grain 

Inspection Service. And since I've been here, 

there's been a lot going on.

I mean, day one, I've just been drinking 

out of a fire hose. It's all been good stuff. 

Every person I've met, every issues that we've been 

learning about and addressing has all been for the 

good of the official system. 
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But I've also noticed that there are 

a lot of things that we needed to begin to transform. 

When FGIS transitioned into the Agricultural 

Marketing Service, Bruce mentioned one of the first 

things that they did was to re-initiate, 

re-activate this committee.

My coming in in April and learning about 

the last committee meeting, seeing all the 

recommendations, I noticed like, wow, that's a lot 

of recommendations, and how did they get to this, 

how did they get to the point of making these 

recommendations? What was the process, and things 

of that nature.

And noticed that there were some things 

that we could probably do to strengthen the position 

of the committee, to provide some additional 

structure, to enhance the thinking of the 

committee; how it views itself, so that we could 

begin to transform the type of recommendations that 

come from the committee that advise FGIS and the 

Secretary on how we can provide better service.
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And so over the, I guess yesterday, and 

even prior to coming to Kansas City for this 

meeting, we spent some time drafting a policies 

and procedures manual for the committee to begin 

that process. And I believe that, through the 

discussion you'll hear today, you will feel that 

these policies and procedures, and the concepts 

that are laid out in the manual, have begun that 

process for us.

It also gives us a way to engage you 

better, more meaningfully. It's not that you will 

just be able to come to a meeting and listen. But 

we want to engage you prior to coming to a meeting, 

so that you could provide us feedback and comments 

on things that will be considered by the committee 

for official vote, for official action.

Your voice matters. And as we go 

throughout today, you will hear about other 

activities going on in FGIS where we're going to 

need more input from you to help us do our job. 

Now, we talk to a lot of you all on an individual 
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basis. Tony talks to you. Karen talks to you. 

Byron talks to you. I talk to some of you; not 

as much as probably the staff does. 

We want to make sure that you understand 

as part of this transformation process that 

collaboration is key. Bruce mentioned it already. 

Collaboration is key for us because in the 

Agricultural Marketing Service, our objective is 

to help facilitate the marketing of agricultural 

products more efficiently.

We can't provide the grading and 

inspection services to the various industries that 

we serve if we don't really know the issues and 

work together to solve the issues. And so, we want 

to make sure that you understand. 

And as FGIS is coming to the 

Agricultural Marketing Service, part of our 

transformation process is to elevate collaboration 

so that you understand that we're in this together. 

 Things that we can do, we will do. Things that 

we cannot do, we'll let you know that we can't do 
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it. But we want to be in communication with you.

The other thing and part of the 

transformation process we discovered is staff. 

It's always good to be able to accomplish work, 

but you can't do it without people. And so one 

of the things I've really prioritized is how do 

we value our people? Not just our employees in 

the organization, but also those that we serve. 

We want you to understand that we value 

you, and we value our people. So, we're going to 

be investing more in them in terms of helping them 

figure out things about their own careers within 

the organization. And, to be honest with you, help 

them to be more than what our organization can 

provide for them if it's in them. 

We want to grow leaders; leaders for 

today and leaders for tomorrow. And, as we do that, 

we want you to be able to see impacts along the 

way. We don't just want to come and update you 

and tell you niceties and this what's going to 
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happen; we want you to see results.

You'll hear some of those results 

through our updates. You will see more results 

throughout the upcoming year. And, as we do that, 

we hope it puts us in a better position to manage 

the official system. 

There are a lot of inspectors and 

graders out there in the field. For our designated 

and delegated officials, their hands are full. 

We've got people all over the place with heavy 

responsibilities. How do we help you do your jobs 

more efficiently, more effectively? 

We don't want to complicate matters for 

you; we want to make things easier to accomplish. 

We want to make sure that they're sensible, that 

they're reasonable, and that the solutions that 

we come up with work for the good of everyone.

And so, this goes back to the 

transformation process, which includes the 

collaboration. We can't do that without 

collaboration, but it's going to take time. And 
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if you look at all of these things, it's going to 

take us a little bit of time to make sure it all 

comes together. 

But I'll guarantee you that it will come 

together through our collaborative work. And so 

this committee is going to play a key role in that, 

and you'll hear more from them and us about how 

we'll be moving forward. So, I want to thank you 

for your time, and I look forward to engaging 

throughout the rest of this meeting. Thank you.

CHAIR MOFFIT-TOBIN: Next we have 

Denise Ruggles, our FGIS Executive Program Analyst. 

MS. RUGGLES: Good morning, everyone. 

So, I'm going to talk about our financial status 

right now. Many of these numbers are still 

estimates because we just finished July, so we have 

two more months to go, and I won't have final numbers 

until November 1st.

I'm going to talk about our user fee, 

revenue and obligations by the accounts, the user 
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fee funding obligations and percentages, the grain 

appropriated account, the FGIS appropriated 

funding user fee obligations and revenue 

percentages, and then the fee reviews. 

So, this is our grain inspection and 

weighing account. You can see that we're 

anticipating we're going to have our operating 

reserves be at $13.9 million. To give you an idea 

what that is, on our operating reserve we have in 

the regulations, in the act that we have a goal 

to keep no less than three months of operating 

reserve, and no more than six months.

However, in the regulations for the 

grain inspection program, there's a 

four-and-a-half month trigger to adjust the fees. 

So, based on $13.8, we are at approximately 4.1 

months, and last year we were at 6.5 months. So, 

4.1 months is what we have, we're anticipating we're 

going to have.

So, this is the grain and supervisory 

official agency account. We anticipating we're 
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going to be at about $3.6 million. That program 

needs to have about $664K for operating reserve, 

to be six months of operating reserve. So, we're 

at about approximately 27.9 months, and last year 

we were at 32.4 months. So, we have come down. 

While the rice isn't USGSA, it is also 

a program that FGIS oversees, so I'm mentioning 

those fees. Because it does cover costs associated 

with FGIS. We are estimating we're going to be 

at $9.6 million. This program needs $2.8 million 

for six months of operating reserves. So, we're 

at approximately 20.4 months. And last year we 

were at 21 months.

The commodity inspection program, 

which is also under AMA, we're anticipating that 

this program, estimating it will be at a half a 

million dollars in the negative, which brings it, 

it needs to have about $2.8, I mean, it needs to 

have $1.4 million of operating reserves, to have 

six months of operating reserves. We are, right 

now, at approximately 2.3 months in the negative. 
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Last year we were almost, we were at zero months 

of operating reserve.

This is the percentages of how our 

funding is, our user fee funding obligations are 

broke up by category. We spend 81 percent in salary 

and benefits of FGIS personnel. We spend another 

three percent in other services, which covers items 

like janitorial agreements, janitorial agreements 

and contracted labor, training and maintenance 

agreements. 

Rent and utilities, we have about two 

percent. Supplies and materials is one percent. 

And then, just because of the numbers, it looks 

like zero for equipment. We do buy equipment. 

We do buy, having printing. We do have 

transportation things, but the other categories 

are so much larger, they bring those down to hardly 

anything.

For the agency departmental overhead, 

you can't see my note at the bottom of the slide, 

the 13 percent, that covers our service agreements, 
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also with AFIS for our HR accounting and accounts 

receivable, as well as the MRP IT service agreements 

and departmental charges for green book, as well 

as our support services for AMS. 

The grain appropriated account; over 

the last ten years we were at 20.2 for FY19. This 

the trend line of how our obligations and revenue 

have been going over the last, since 1977 through 

the estimation of 2019. The, but you can't see 

it, the red line is our appropriated funding. The 

blue line is our user fee obligations. And the 

green line is our user fee revenue in millions of 

dollars.

The fee reviews. So, as I explained, 

we have had a drop in the grain program, and we're 

at 6.5 months last year. This year we're 

anticipating to be at 4.1. We did do a five percent 

fee reduction January 1st of this year. 

We'll be re-evaluating those fees again 

in November, and publishing what the fee change 

will be. But I won't be finalizing those until 
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we complete our fiscal year. 

And then, we also published on March 

1st the continuing suspension of the supervision 

and collection fees. As I mentioned, that program 

is at currently 27.9 months. We're suspending 

those through December 31st, 2020. 

And before that time comes up, we will 

be sending out a proposal on how to implement those 

fees again, and what necessary formulas might be 

needed to make the adjustments annually. 

I also wanted to mention, I don't have 

it on the slide, the rice proposal is in clearance 

on that fee reduction. Because, as I mentioned, 

that we were at 20.4 months of operating reserves. 

And we also have put together a proposals for the 

commodity program adjusting those fees. 

But those haven't, there's four 

proposals. We have to meet with industry and 

discuss which ones they'd like to see us put out 

for publication for comments. So, any questions 

for me on the fees? Yes, John.
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MR. MORGAN: Thank you, Denise. This 

is John Morgan. A question on the rice fees, the 

proposal in clearance; could you just explain that? 

What does that mean, in clearance?

MS. RUGGLES: Oh, it's, it's that OMB, 

OMB was clearing it. And that's what the last step 

before it goes to Federal Register for publication. 

MR. MORGAN: Okay, will OMB be reaching 

out to the rice industry with comment, then?

MS. RUGGLES: It will be published in 

the Federal Register for comment for everybody.

MR. MORGAN: Any idea on timeline?

MS. RUGGLES: I hope soon. Oh, it's

days, not weeks. The last update, I think, was 

just the end of last week we had from OMB. So, 

hopefully it'll be published in days. 

MR. NEAL: Yes, so that, that rule 

hopefully we'll be seeing real soon. And it does 

address the reduction in fees for rice.

MS. RUGGLES: And it provides the 

formula for comment, as well. The AMS formula for 
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how we're going to annually adjust those fees for 

that program. Any other comments? 

I do have one more thing. I have heard 

that the website, there was a problem with the link 

on where the financials are. They are published, 

and third quarter for FY19 is posted. It was posted 

yesterday. The website, I don't have it on my 

slides, is 

www.ams.usda.gov/reports/fgis-financial-data.

So, but you can get it when you're on 

AMS's page, you'll look up FGIS and you should find 

out financials. There should be a link available 

for you, too. But we post quarterly the status 

of all the accounts, the four user fee accounts. 

And then we also post, in a separate 

section, the inspection, grain inspection, and 

weighing fees with the tonnage and how the tonnage 

fee is broken down by different categories for each 

field office and also headquarters, as well as the 

direct service, other direct services for appeals 
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and -- and staff program and stuff like that. All 

right.

CHAIR MOFFIT-TOBIN: Does anybody else 

on the committee have any further discussion or 

any questions for Denise? Does anybody in the back 

have any question for Denise? Okay, thank you, 

Denise.

MS. RUGGLES: Thanks.

MR. NEAL: Next we'll have Mr. Charles 

Stephens come to the microphone and, the podium, 

rather. And he's going to give us an update on 

AMS' hemp rule-making activities. We want to thank 

Charles for traveling from D.C. to be with us today.

MR. STEPHENS: Is it okay if I do the 

same thing Mr. Summers did, and shut it?

CHAIR MOFFIT-TOBIN: Yes, shut it.

MR. STEPHENS: I thank you all for 

inviting me here today to update you on kind of 

where AMS is with hemp and with the rule-making 

process. I'm the Associate Deputy Administrator 

with the Specialty Crops Program.
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 And we're actually in the middle of our 

advisory committee this week, as well. So, it's 

quite timely, and my boss gave me a waiver to leave 

and come and talk to you all. So, thank you for 

having me.

Right now the rule-making is going 

through clearance process. So, my presentation 

or my update may, at times, appear a little lacking 

in information. But because of where we are in 

the process, we just can't give a lot of specifics 

on certain items. 

That being said, I do feel like there 

is some information I can provide, and I also wanted 

to just give you an update on kind of the overall 

hemp landscape. As you know, there's a lot of 

interest around the country in hemp. It has really 

taken up the interest of the department, 

government-wide in a lot of areas.

We've been meeting with agencies 

throughout the government, who have taken an 

interest in hemp, from the postal service all the 
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way up to, any other government you can think of 

has an either concern or an excitement or interest 

in where the hemp program is going. 

So, we've been working very quickly. 

And with that in mind, I'd like to give you a 

synopsis of kind of where we are. As many of you 

know, the 2014 Farm Bill allowed states and 

institutions of higher learning to begin the 

process of growing hemp under research purposes. 

Those provisions remain in place for 

12 months. So, until this rule is out and in place, 

the states that were growing hemp under research 

purposes and higher education institutes are still 

doing so on an ongoing basis. 

The 2018 Farm Bill was just published 

in December, and asked the USDA to implement a plan 

and a rule that was going to allow for the full 

production and cultivation of hemp. 

Hemp was also removed and hemp seeds 

were also removed from the controlled substance 

list. It's no longer a controlled substance, and 
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at this time the country is primarily waiting on 

us to complete our regulation so they can begin 

to grow.

USDA is required to issue regulations 

and guidelines to implement a program for 

commercial production. The rule-making will 

outline provisions for the USDA to approve plans 

submitted by states and Native tribes for the 

domestic production of hemp as set forward by the 

Farm Bill.

It also will establish a federal plan 

for producers in states and territories, Native 

tribe territories that do not have their own USDA 

approved land, where hemp is still legal. So, 

basically, our rule is going to cover two areas.

One, any state where hemp is legal can 

submit a plan to us, and all the growers in that 

state will be licensed by the state and grow through 

the state. The state will handle the entire 

program. Then USDA is responsible for approving 

a state plan just to ensure that the details in 
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the plans conform with the Farm Bill.

So, we will review the plans that have 

been submitted by the states and Native tribes and 

then give an approval. And if there are some issues 

with the plans where some of the information in 

there may not meet the criteria of the Farm Bill, 

we will work with the states or the Native tribe 

to get the plan up to speed and to where it needs 

to be so it can be approved.

And then, once that happens, once the 

states have their approved plan, they will license 

their growers. And their growers, at that point 

in time, can begin to produce hemp. 

States that do not have a plan or do 

not want to write their own plan, those growers, 

producers can submit application to USDA, and we 

are developing, in the same regulation, our own 

plan. So, we will then license the growers and 

then help with all the sampling and testing that 

will need to be done, and the compliance piece. 

And we'll get into a little bit more on that in 
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a moment.

The four main areas that all the plans 

have to encompass, whether it be USDA's plan or 

the state's, are information as to how the land 

is being captured. We have to be able to speak 

in real time to law enforcement on natural plots 

or the land where the hemp is being grown.

So, a mechanism to get that information 

from the growers to USDA which would, in turn, go 

to law enforcement is going to be important. 

Testing and sampling of THC levels, and then 

disposing of plants that exceed the allowable 

levels, all the licensing requirements and the 

compliance piece. 

Those are the four main components that 

are going to go into either the state plans or the 

one that we're developing for those growers that 

do not have a state plan. 

In addition to AMS, this is really a 

USDA-wide program, as I mentioned before. We've 

been working very closely with the Farm Service 
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Agency, The National Resource Conversation Service 

and Risk Management Agency because they're impacted 

with this, as well.

Obviously, this is a new commodity 

that's coming off of the controlled substance list. 

Farm Service Agency is very interested in 

implementing farm loan programs and the different 

types of programs that they offer. Risk Management 

Agency, with crop insurance, and NRCS with some 

of the different grants that they offer.

And so we're working with them kind of 

hand-in-hand to make sure that as our regulations 

are rolled out, that they're able to kind of join 

in on those regulations. That our regulations, 

you know, understand what their issues will be, 

and then we can speak collaboratively. 

Over this process; this was new for all 

of us, and so we all had to get up to snuff and 

up to speed on what hemp is and what it isn't. 

And so, we have spent, since December, after the 

government shutdown was over, we literally spent 
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hundreds of hours and went to dozens and dozens 

of meetings to learn about hemp. 

And to both educate ourselves, and as 

we are becoming educated, hopefully, educating 

others. And this was going on across the country. 

We attended state meetings. We attended Native 

tribal meetings. 

We took calls from companies that are 

already producing the cannabis oils and the CBD 

oils that are coming from hemp. We took meetings 

with other groups and just anybody who was pretty 

much interested in this were calling us for

meetings. And we tried to meet with as many people 

as we could.

We also held several listening 

sessions. In March, we held a three-hours 

listening session, which was online, and you can 

still get the audio on our website. And we had 

over 60 speakers call in and were able to provide 

some feedback on their perspective of what the rules 

maybe contain and maybe what they don't, and their 
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experience with hemp so far. It was very 

informative, and we had over 2,000 participants. 

So, this is gotten some serious legs. 

We've also participated in two or three 

tribal listening sessions, as this is going to have 

a major impact on tribal lands. And so, we were 

reaching to them, as well, and have had several 

listening sessions there. 

On April 18th, a Notice of Trade went 

out which provided guidance to producers and hemp 

seed exporters seeking an avenue for hemp seed 

exports to the U.S. So, we've been working with 

Customs and importing the seeds in from Canada and 

other places, and how to kind of free up that avenue. 

And from now, we're going out with an 

interim-final rule, which means once the rule is 

published, it will be, in effect, final and our 

goal is to have it out this fall. And so, it will 

be in time for growers to take advantage of the 

2020 crop year. With an interim-final we will 
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still receive comments just like if it was a 

proposed rule. 

And then, once we get all the comments 

in, we'll analyze all the comments, kind of see 

how the season goes. And then, at some point, come 

out with a final rule and make adjustments, if 

needed, based on that, you know season goes and 

all the comments that we receive. 

We are fully committed to the timeline 

that the Secretary has put out for us, and we've 

been moving as quickly as possible on this rule. 

And again, as I mentioned before, the Farm Service 

Agency will be enacting their rules as soon as ours 

is out to allow for loans.

National Resource Conversation Service 

will be issuing guidance shortly after our rule 

comes out, on their programs, and Risk Management 

Agency on crop disaster and all the different 

coverages that they offer. 

Some of the guidance, at this point, 

out recently, also spoke to Transportation. We've 
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had a lot of concern about transporting hemp and 

hemp seed across state lines. Our OGC has opined 

in on that, and put out some guidance a few months 

ago. 

And, basically, gave the legal opinion 

that no state or tribal land can stop the 

transportation of hemp or prohibit the interstate 

of it. So, that's our position at this time, and 

there will, obviously, be more to come on that.

The other big piece with felony 

convictions. The Farm Bill specifically said 

individuals who have been convicted of a felony 

related to controlled substances will be -- will 

not be able to participate in the program for 10 

years after conviction. 

And our Office of General Counsel has 

stated that anyone who's growing under the 2014 

Farm Bill is exempt from that, as long as the 

conviction took place before the Farm Bill. 

Some of the other issues that we're working 

through, and that we hope will bring some clarity 
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after the rule is in place is banking. Been hearing 

from a lot of banks and a lot of producers that 

they're having trouble accessing loans and capital 

that's needed to start their hemp business.

Because this was a controlled substance 

and is just coming out, off, it is just coming off 

the controlled substance list, a lot of banks and 

financial institutions have been very leery about 

working with the growers.

But they've all stated their waiting 

on our rule to come out. So, I think once our rule 

comes out and they see that, okay, this is legal, 

you can do this, they're going to be much more 

willing, at that point, to open up the capital. 

So, I think that's going to begin to free that up.

Also seeds; USDA Plant Variety 

Protection Program offers intellectual property 

protection to hemp graders. I can't comment right 

now how that's going to affect -- be affected with 

the rule, but there will be some, probably some 

more guidance there, as well. 
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And, on the compliance procedure, the 

Farm Bill required an establishment of compliance. 

Our regulations will address this, and how we're 

going to roll out a compliance program. 

The biggest thing right now we're 

working on, though, is just making sure that we 

have a system where all of the growers' information 

can be transmitted to us and then to law 

enforcement.

So, that way, if a law enforcement 

drives up on a hemp field, and hemp looks just like 

marijuana; you can't really tell the difference 

from the eye, they'll be able to go in their system 

and see that this is a registered hemp field. And 

so that will alleviate any, hopefully any legal 

problems that come up during the time.

And then, also our rule is working on 

sampling and testing protocols, and the different 

techniques that we're going to be using for actually 

pulling the samples and getting it to the labs, 

and the different types of labs that will be willing 
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to be used to test for the THC levels.

So, that's kind of a brief synopsis or 

overview of what we're looking at and what the rule 

will contain. So, at this point in time, does 

anyone have any questions for me, anything I could 

possibly answer or give you a little bit more 

information on it?

MR. WANTE: Mark Wante from North 

Dakota Farmers' Union. You mentioned the 

transportation a little bit. Is that in place now, 

or does that happen once the rule is published, 

as far as crossing state lines?

Mr. STEPHENS: Yeah, that's effective 

now. Our General Counsel opined on that. And 

because it's already being grown under the 2014 

Farm Bill, for research purposes, the 

transportation of that is being taken care of now.

MR. WANTE: Okay, so that would deal 

with if you have a crop that you plant in one state, 

and you want to bring product across from another 

state, that should handle that even if that state 
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has not filed a plan?

MR. STEPHENS: That's correct. 

MR. WANTE: Okay. 

MR. KUHL: Ryan Kuhl, Grain 

Enforcement, has there been any discussion on 

inspection processes?

MR. STEPHENS: Not yet. Our rule does 

not cover inspection. It's the product of hemp. 

So, the inspection will have to follow after the 

fact. And a lot of that would depend on the 

industry; whether they want to have standards. 

And then those would have to be established and 

so on.

MR. TURNIPSEED: Brent Turnipseed, 

South Dakota State University. The question I have 

is what if law enforcement does stop this as it's 

being transported across the state lines, and they 

want to verify the THC level? Who do they send 

it to right now?

MR. STEPHENS: Well, right now it's 

kind of up in the air. There's a lot going on. 
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I think, in general, they've taken our guidance. 

And as long as you have the proper documentation 

that it's been tested and it was below the .3 THC 

level, you should be, you should be fine.

And so, I don't want to speak for law 

enforcement, but that's what we've been hearing. 

And I was just out in Kentucky a couple weeks ago, 

and I met with the state police, and that's what 

they're looking for. 

Right now, they're looking for that 

certificate that it's under the .3. And as long 

as you have that certificate that it is hemp, you 

should be good to go. I mean, there some instances 

where, I don't know that there's been a case, but 

we're still working through that.

As you know, this is a very fluid 

situation. And so, just trying to get all of the 

law enforcement agencies on the same page is, you 

know, is going to take some time. 

MR. TURNIPSEED: The certificate you 

discussed, you mentioned, how does one get that 
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certificate. And for anybody in the room here, 

is there any states that are kind of negative 

against this that possibly you should avoid until 

there are clear rules?

MR. STEPHENS: Well, I, there are a few 

states where it is illegal to grow hemp, and so 

they're not going to be submitting plans. However, 

there are several of those states; I think we're 

only at five now that are remaining.

South Dakota is three -- South Dakota 

is one. There's a couple in the South. But some 

of the ones in the South are in the process right 

now of going through the legislative process to 

get it legalized. It was just illegal because it's 

been illegal for all these years, and they just 

hadn't, their rules have caught up yet. So, 

they're working on that. 

And so, with regards to the 

certificate, those would come from the labs. Once 

it's tested, they'll give a certificate that shows 

that this hemp meets the criteria. 
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MR. TUNNELL: This is Tom Tunnell. I 

was just wondering about the percent of producers 

or states that want to have a program. Is it more, 

I mean, typically is it federal? Are there more 

farmers accredited by the federal government rather 

than the states? I guess I'm not asking that 

question properly. But how amenable are states 

to setting up a program?

MR. STEPHENS: Yeah, I think I 

understand your question. So, at this point we 

don't know because we're still operating under the 

2014 Farm Bill which was just research purposes. 

The federal government did not have a program. 

So, any state that was participating 

in this had to have their own state land. And in 

the states where it was illegal, they just didn't 

participate in the program. To date, we've 

received 17 plans from states and tribal nations. 

However, because we don't have 

regulations out, a lot of states have not submitted 

their plans yet. So, we're not quite sure yet what 
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the landscape is going to be with regards to how 

many states are going to manage their own program 

versus come under ours.

We expect to know pretty quickly after 

the regulation is in place. Because, again, 

there's several states that are just waiting to 

submit their plans, from what we've been told, to 

see what the regulation is so they can ensure that 

their plan is going to meet the needs. So, at this 

point, we're not really sure. We're just of --

we'll have to wait and see. 

CHAIR MOFFIT-TOBIN: Charles, you said 

that so far there was no inspection protocol for 

hemp, correct?

MR. STEPHENS: Yes.

CHAIR MOFFIT-TOBIN: I'm going to put 

you on the spot. Isn't hemp and hemp seeds or oils 

under our list of commodities?

MR. McCLUSKEY: This is Pat McCluskey, 

FGIS. We have a list that goes well back into 

antiquity prior, certainly prior to the recent 
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organization. And hemp seed is on that list of 

commodities that are administratively assigned to 

FGIS. 

Hemp oil and any kind of oil related 

to hemp is not on that list, but hemp seek is on 

that list. So, that was kind of my curiosity; is 

at this point, do you all see a, does AMS see a 

role for FGIS, in any way, shape or form, related 

to hemp seed?

MR. NEAL: I'll let Bruce answer that 

one.

MS. SEXTON-BOWSER: To layer on to that 

question, what are the methods, are there, is there 

any seniorization or methodology to be an official 

tester in the current process? 

MR. SUMMERS: Okay, so first question 

on inspection. So, the thing to remember about 

AMS, right, almost, almost everything, I mean, 99.9 

percent of the grading we do is voluntary. There 

are some instances where grading is mandatory; 

exported grain. There's marking orders in place 
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on the borders where there's import inspection 

required for certain fruits and vegetables. 

But for the most part, our grading is 

voluntary. So, if producers or processors in the 

hemp industry want an inspection program, they 

would need to come to AMS. We work, put a grade 

standard together, and put a program together.

Certainly I think the seed part would 

fit very well at FGIS. I don't know if there are 

quality components, because remember when we're 

talking about grading we're talking about quality 

and not, and I guess quality could become THC 

content. 

It could be insect damage and things 

like that. The leaves, possibly. We'd have to 

work that out. That may fit there under specialty 

crop inspection in FGIS. But that really depends 

on the industry coming and saying hey, here's what 

we need.

Your question was on testing.

MS. SEXTON-BOWSER: So, there's 
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testing a THC today. What's the methodology, and 

can anyone be a provider of tests?

MR. SUMMERS: So, the testing for the 

purposes of this rule, which is the production of 

hemp, right? How can you produce hemp legal in 

the United States? Or states where it's legal is 

a better way to say it.

Right now DEA accredits about 1,500 

labs around the country. And, so he's not here, 

so I think I can say it; I might be going too far. 

But we would expect our rule to probably tie into 

those existing labs that are already accredited 

to do the hemp testing. 

But the thing about hemp is there's no 

field test. You can't, to your point, find a truck 

going down the road, you're in the state police; 

you can do a field test and tell if there's THC 

in the product, but you can't tell how much.

And we need to get to that exact level 

of the THC, which under the statute to be hemp has 

to be .3 or less. In effect, they send it to a 
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lab and have it go through this robust testing to 

get that THC level. You can only tell right now 

that there's THC there; you can't tell how much. 

It takes a sophisticated laboratory.

MS. SEXTON-BOWSER: Are there sampling 

requirements of a respective parcel --

MR. SUMMERS: So, the rule will, we 

will put out sampling and testing protocols as part 

of this process. And to say, Charles said it's 

fluid, man, oh man, I mean, we're trying very, very 

hard to ensure that there's a 2020 crop here because 

there's a ton of interest out in the country. 

It's -- it's definitely touch and go. 

There's a lot of work to do to get this cleared 

through all of these different agencies who have 

some regulatory component to this product.

MR. KUHL: Ryan Kuhl here again. Is 

there a way to confirm the credibility of testing 

the THC level of 0.3?

MR. SUMMERS: So, we're working on that 

right now. What, have you been sitting in our 
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meetings? Yeah, because every test we know there's 

a margin of error, right? And I'll look to the 

scientists in the room, right? And so we're 

looking at that right now and trying to determine 

how to include, allow for that in the regulation. 

But yeah, we're learning as fast as we can because 

that's going to be an important component of how 

we craft this final rule. 

MR. KUHL: So, is that where it would 

possibly fit under the official system?

MR. SUMMERS: Official system?

MR. KUHL: Official grain inspection 

system?

MR. SUMMERS: That would, that could, 

yes. That could, yes.

MR. McCLUSKEY: So, we have had at 

least one agency who has gotten a hold of us because 

they had asked, they had a customer ask about doing 

some level of hemp seed inspection. And based on 

how fluid this all is, my advice to the agency was 

maybe you want to step back from that one. Would 
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you say that's okay advice, or would you say no 

--

MR. SUMMERS: Yeah, that's good advice 

right now. I think, I think we're going to be 

cautious. We don't want to open this up to, testing 

right, because the difference between .3 and .4 

is the destruction of the crop or being able to 

sell it, right? 

So, the accuracy here impacts law 

enforcement decisions. But, you know, in some 

states there's been like a 40 percent failure rate. 

So, you can imagine; you got a 40 percent chance 

that you might grow that crop and because of growing 

conditions or the soil type, or maybe the seed you 

got, you may come in, 40 percent chance you're 

coming in too hot.

 And then it's got to be disposed of. 

And at that point it becomes a Drug Enforcement 

Agency issue, not an USDA issue which that doesn't 

sound like fun to me. So, right now the testing 

that's accredited by DEA is what we're leaning 
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toward. 

There probably would need to be some 

sort of accreditation process if other entities 

want to get into the business of testing hemp, but 

it's probably going to be a rigorous accreditation. 

Just the results here are really, really 

important. 

MR. TURNIPSEED: Brent Turnipseed, 

again. I'm just asking this question because I, 

my lab does testing for crop group associations. 

And they're the ones that are going to be involved 

in the seed production of this.

I know North Dakota's already there, 

and they have a lot of concerns. So, there's going 

to have to further licensing with those labs that 

do that testing. And are you all going to be 

working with the crop group associations to address 

those concerns?

MR. SUMMERS: So, you're talking about 

testing the seeds?

MR. TURNIPSEED: Yes, sir, because 
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somebody's got to provide the seed to plant these 

fields from.

MR. SUMMERS: So, testing from what 

aspect? I'm not quite sure --

MR. TURNIPSEED: Well, they're going 

to have to test for THC levels on the seed. They're 

going to have to test for the purity analysis, the 

germination, the noxious-weed seed content. And, 

of course, if it fails it will probably go into 

the grain market or feed market after it's been 

devitalized. 

MR. SUMMERS: So, all of that, and I 

hate to say it, needs to be determined. 

MR. TURNIPSEED: Okay.

MR. SUMMERS: Once we take care of the 

production practices, the seed is a whole other 

frontier, right? For a lot of reasons, right? 

And from what we understand, you know, the seed 

is obviously one component that's going to impact 

the THC, but there are a lot of uncontrolled or 

variables out there beyond the seed that impact 
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that THC level. So, it's, it will be a ton of risk 

to start to put this, to decide to grow this crop. 

MR. NEAL: This is Arthur Neal. I went 

right to what Bruce has shared. With the hemp 

seed, the hemp seed would fall, based on my reading, 

under the USGSA. It would probably be an AMA, 

Agricultural Marketing Act, type of crop and we 

provide that service. And we don't currently have 

standards for hemp under FGIS.

So, as Bruce was sharing earlier, the 

industry would have to come to us, work with us 

to develop those types of standards. So, there 

are a lot of questions about what all would be 

included in that process. For quality samples and 

things of that nature, I'm not sure. 

You know, if there's someone trying to 

determine whether or not if the hemp seed crosses 

the line of, you know, being too high, that's one 

thing. I think that if someone's looking for an 

analysis of moisture or something like that, that's 
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fair, that's a fair type of service that can be 

provided to a company without necessarily getting 

involved in hemp versus marijuana issue.

But that still would be outside of FGIS 

because we currently have no standards for it. 

And until we do so, we wouldn't be able to really 

get our hands involved in it.

CHAIR MOFFIT-TOBIN: Charles, with all 

of your research and learning about it, and the 

quality factors that Arthur just mentioned, do you 

see anything that we could do, as a committee, or 

FGIS could research or start looking into 

developing standards?

MR. STEPHENS: Yeah, I think 

certainly. I think, especially as we get into the 

first season and we kind of see how all the scenes 

are playing out. There's some states where they've 

been doing this for the 2014 Farm Bill, and they're 

already certifying some seeds. 

So, definitely touching base with those 

states. They provided us with quite a bit of 
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information; they've been good sources. And then 

also, you know, the other thing to remember is the 

seeds for hemp, depending on what type, what you're 

growing it for, requires different seed.

So, it's not just the seed hemp. If 

you're going to do the CBD oil, that's one type 

of seed. If you're growing it for fiber, that's 

another type of seed. So, it's not, it's also not 

going to be a one-size-fits-all. 

So, I think just learning all of those 

components, and then deciding if you want to 

approach USDA to put together some standards and 

a program would be good. 

I mean, long-term, if there are 

standards on the seed and there are some 

certification programs, that gives both the 

growers, as well as the financial institutions that 

may be investing in them, a little more certainty 

or more, you know, clarity, I think. 

You know, and just the ability to maybe 

start to take more risk because, you know, they've 
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got some comfort level there. So, yeah, I think 

those are definitely things that this group would 

be able to work on. 

CHAIR MOFFIT-TOBIN: Does the 

committee have any more questions or discussion 

points? Does anybody in the back have any 

questions for Charles? Go ahead.

MR. KUHL: I do have one more. I know 

that there is a concern because the more acres they 

grow of it, the more that they're going to need 

results of moisture. And they are starting to look 

where can this be done, some of the testing. 

One of the tests that you mentioned, 

Brent, was the germination. Since an agency may 

test germination, what we've been told by 

authorities is are you starting to grow now? And 

so, I think that if there is maybe a process of 

starting the method of inspection sooner, until 

we end up with a bunch of product and no method 

of testing. 

MR. NEAL: I think that's an item that 
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the committee can discuss. So, thank you. We 

didn't mean to have you standing up there sweating 

a little longer. Thank you. We appreciate all 

of the information and the insight that you shared. 

Thank you so much.

So, as we see now, there's a pretty 

robust discussion there. I'm sure there are a lot 

of ideas floating around in people's heads. And 

so, as the day goes on, I think that's something 

that the committee should be thinking about. 

Is there a body of work that can be 

considered a better position the official system 

to provide services in a certain arrangement around 

hemp seed? So, saying that, we are now still ahead 

of schedule. I'll ask the Chair if you'd like to 

take a break or keep moving forward?

CHAIR MOFFIT-TOBIN: Yes, I do think 

we can take a break, discuss amongst each other, 

talk to each other. And then we'll come back here 

in 10 minutes. 

(Off the record.) 
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CHAIR MOFFIT-TOBIN: There was a 

clarification, and to correct the record, hemp seed 

oil and hemp seed are both on the list of 

agricultural and food commodities assigned to FGIS.

Also, I just wanted to take a minute 

and just talk about what we just heard from Charles. 

Charles, again, thank you for that information. 

It was very helpful. I know there's a lot of 

interest in what you're doing.

And something that he just told me that 

I thought was really important was that 90 percent 

of the hemp that is grown is grown for oil. The 

other 10 percent is for fiber. So, I would like 

the committee to start thinking and exploring and 

having conversations about what we can do, or what 

we can recommend as far as hemp standards 

development. 

We can talk about this and maybe we can 

put it on the agenda for the next meeting. But 

we can, you know, start talking about and have 

conversations about maybe a sub-committee and 
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researching potential quality factors or criteria 

that we can test for. 

Just a market that we can provide some 

information for in evaluating and testing for those 

factors. And what types of equipment would be 

needed, along with the help of the TSE, and what 

tests of validation programs will we have.

So, I just wanted to committee to start 

thinking about what we can possibly recommend in 

the hemp and the hemp seed oil. We're going to 

have our recommendations formalized tomorrow, but 

if everybody wants to discuss that with a committee 

member, engage them.

So, all right, we'll move on to Dr. Tim 

Norden. He is the FGIS Chief Scientist with a 

Resolutions Update. Thank you, Tim. 

DR. NORDEN: Thank you. So, I'm going 

to provide some updates from technology and science 

division, and these are all pretty much to address 

the resolutions from the 2018 advisory committee.

I do have a couple of brief ones which 
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I don't have slides for; brief updates that have 

happened just recently. So, I'd like to cover 

those first. So, the first is not really from a 

resolution, but we did give a presentation last 

year to the committee on a rice milling project.

And the objective or goal of that 

project was to evaluate the consistency of FGIS 

lab milling for results and compared it to 

commercial milling quality results. So, like head 

rice yield and total rice yield. 

So, we entered into a contract with 

University of California, Davis to do that work 

for us. And they've been doing that. It's been 

a couple of crop years that they've covered. We 

gave an update last year that didn't give any real 

trends at that point.

And so now that's been completed, and 

we just got the report in July. And we've gone 

back and forth a couple of times with the 

researchers, trying to get clarification in the 

report. So, it's very close to being final, and 
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we expect it probably within, September 1st that 

that report will be finalized. 

And just a couple other quick updates. 

So, we gave the presentation and have this 

resolution from the committee; it's a pretty long 

one here. But it's, it has to do with hardened 

vitreous kernels of amber color in durum wheat. 

And that's been, certainly, a challenge that we've 

had in recent years. 

And we made a presentation on a new 

method that the board of appeals can review or what 

was working on about bleaching the kernels, a 

process to make the kernels much more easy, much 

easier to identify. 

So, we gave that update, and we'll 

continue to work on that, and also on the dark, 

hard and vitreous kernels in hard red spring wheat. 

So, a similar bleaching process, presumably, 

would be applicable there.

But the board has done a few things. 

One is that they have done samples exchange the 
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FGIS quality assurance specialists. And the 

reason for doing the samples exchange is just to 

make sure that the board can achieve alignment with 

the quality assurance specialists. That's really 

the first step. So, they're involved in doing 

that. 

They will also produce a visual 

tutorial for inspectors to use in looking at these 

bleached kernels and assigning them, whether their 

vitreous or they're not vitreous. So, they've also 

done that.

And then, we've also engaged ARS 

scientists in looking at imaging technology that's 

available right now in looking at those bleached 

kernels so that it may be something that the 

inspector wouldn't even have to do. You could put 

it and use an imaging technique and imaging 

technology. 

So, we've engaged the ARS group, and 

I believe we've already had some meetings, and I 

believe they're coming to the board of appeals and 
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review next week to discuss that further with them.

And then, another quick update has to 

do with a part of the sense quality assurance 

resolution. And this was that FGIS would 

participate in the grain analyzer sector of the 

National Conference of Weights and Measures to look 

at this new proposal for narrowed maintenance and 

acceptance tolerances for moisture readers.

So, that meeting was held Tuesday of 

this week, and it's the meeting of the it's the 

grain analyzer sector meeting of the National Type 

Evaluation Technical Committee. So, they meet 

once a year. They met back in 2018, and there was 

a proposal at that time to, based on corn and soybean 

crops from Iowa, that those tolerances could be 

narrowed.

And so that proposal came in 2018 to 

the committee and then, that is the technical 

committee of the grain analyzer sector. And then 

that's gone through the National Conference of 

Weights and Measures specifications and tolerance 
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committee, and they've decided to address that and 

call that a developing proposal. 

So, that means, I guess, is further 

discussion is needed. And that was January of 

2019. And then, this recent meeting this week of 

the grain analyzer sector, discussed the issue and 

the members agreed that additional data is needed 

to address potential issues in other states where 

the new tolerances could have some unintended 

affects that might, perhaps, be too narrow. And 

so there is needed further discussion, further data 

needed.

So, the next step is that NIST plans 

to request additional data from the states with 

a goal of developing a revised proposal to be 

discussed in the August, 2020 meeting of the grain 

analyzer sector technical committee. 

Any questions on those brief updates 

before I go further? Okay, so on to some of the 

bigger issues.

So, I want to provide an update on the 
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LED lighting work that we've done in the technology 

and science division. So, we have a resolution 

to continue doing research on appropriate LED 

lighting solutions that might include overhead or 

task lights.

So, what I'd like to do is just start 

from the beginning and even give you a brief 

results, even, from the two studies that we've done. 

So, now we've done two different LED lighting 

studies. And also, where we think we're going from 

here.

So, just a little bit of history. So, 

we've done the best we can to look into some history 

of lighting standards as applied to grain 

inspection. So, one thing that we know from the 

very beginning, that the light industry has 

recognized that daylight is the best light to 

distinguish colors for the human eye.

So, that's not disputed. Everyone 

agrees. And a lot of industry folks in the northern 

hemisphere decided that north-facing daylight was 
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best for the best daylight. 

Now, what's interesting about that is 

what is daylight? Are we talking morning, noon, 

evening, sunset? I mean, clouds? Blue sky? So, 

early on it was recognized that there really is 

no such thing as daylight and meeting the standard 

for daylight. 

And so a lot of the early research was 

focusing on what should that standard look like? 

And so that was a lot of the research. So, what 

does it look like wavelength by wavelength? And 

I'll talk about that on the next slide.

But in the 30s to the 50s that was the 

kind of that's the kind of research that was being 

done. The Agricultural Research Service, based 

a lot primarily on cotton research, decided that 

one specification that they thought was important 

was something called correlated color temperature 

of 7,500 degrees Kelvin. And I'll define that in 

the next slide; so it's not important here.

But in 1963 it was the first real 
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detailed research that was done in the grain 

industry. And that was done by an AMS scientist 

by the name of John Yateman. And he actually looked 

at wheat and corn. He focused primarily on wheat, 

and it was a very elaborate study, incredibly 

elaborate.

So, he had all these color tiles and 

inspectors had to go in there, in very controlled 

conditions. They had no idea what lighting was 

being used. And they had to put these color tiles 

in all different order. So, and they had to get 

that right. 

And he actually focused, also on this 

correlated color temperature of 7,500, and thought 

that was very, very important for the lighting. 

And he looked at fluorescent lights, he looked at 

incandescent lights, and compared them to daylight.

So, what we believe, where our 

tolerances came from for fluorescent lights is 

probably this John Yateman's work. We don't have 

a specific time that that happened, but we saw some 
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memos going back and forth, even before our agency 

was formed in 1976. 

So, those memos were back with the old 

grain division within the Agricultural Marketing 

Service. So, we believe that around 1968 was 

probably when those initial specifications were 

established.

So, why is this such a difficult 

problem? And I apologize for all these plots, but 

let me just kind of walk you through this. So, 

all this is is looking at the different lights, 

different lighting sources with a spectrometer so 

you're able to kind of say what the intensity of 

the light is based on the wavelength.

So, in the X axis you can't see that 

very good, but that's in nanometers and that's the 

wavelengths of light. And you can see a little 

blue bar, a little green bar and a little red bar 

of arrows on either side. Do you see that there? 

So, that's where the human eye is sensitive to 

those colors.
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And the human eye responds to those 

colors and mixtures of those colors to produce all 

the colors of the rainbow, okay? Take a look at 

that maroon curve that says daylight there. That 

is the daylight standard that was established. 

And notice that it kind of goes up in 

the blue region and then it just, generally, trends 

downward all across the spectrum, the visual 

spectrum. And notice that the approved 

fluorescent lamp, that's that black, I think that's 

black curve there, it's at the very bottom. Notice 

how much different that is from daylight.

I mean, it's got this big spike that 

starts around, someplace around just past 400 

nanometers. It doesn't look anything like 

daylight at all. I mean, there's a huge difference 

in the intensities as you go down through there, 

and then there's three spikes right in the middle.

Now, there's a spike in the green. 

There's one spike there that looks like it might 

be right in the red. So, it's very different from 
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the daylight. Which points to the real issue, the 

crux of the issue. These spectra right here 

completely define what a colored object's going 

to look like based on that, on these plots. 

So, two of the test lights there, those 

are two of the test lights that you're going to 

see in our study. Those are also different; those 

are LED lights. So, they're even different from 

the daylight, too. 

So, this is really the crux of the 

issue; is that these different artificial lights 

do not look like daylight when you plot them like 

this. So, that's why the lighting industry has 

had such a difficult time trying to characterize 

what are lights doing to distinguish color? 

So, I want to talk about some 

definitions now. And so, I think it's important 

to talk about these details because it really gives 

you some insights into how, one thing is about why 

it's so difficult for us to do this. Why isn't 

a light a light? Because we've heard that a lot; 
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like, it's a light. Why can't we just use it?

So, our specifications, in FGIS are 

directly towards fluorescent lights. So, and that 

is the correlated color temperature of 7,500 

degrees Kelvin. And a color rendering index of 

greater than or equal to 92. 

And then the illumination, which is not 

nearly as important because you can adjust the 

height of the light or the intensity of the light 

to get whatever you need, but the illumination is 

specified at 150 to 200 foot candles, anywhere in 

that range at the surface where you're doing the 

grain inspection.

So, what are these terms; correlated 

color temperature? Well, what that really is is 

what does the light source look like, on average. 

So, that's all it is. And if you go into a store, 

you can bulbs that are anywhere from the 2,000 

Kelvin all the way up to, you know, 8,000.

And what that is, 2,000 looks more 

yellow, 8,000 looks more blueish, and somewhere 
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in between is white, okay? Maybe around 5,000, 

maybe 6,000. 7,500 is probably a little bit 

blueish-white. And really, it's just an overall 

average of those plots that you saw.

So, all of these different 

specifications, correlated color temperature and 

color rendering index, come from those spectra that 

I showed on the last slide. Everything comes from 

that. So, the correlated color temperature is the 

appearance of the light source.

The color rendering index, the CRI, is 

about the object itself. And it's how well can 

the eye distinguish colors compared to daylight? 

Now, this color rendering index is an old index 

that's been out for a very long time. And it's 

based on eight what's called Munsell test colors.

And the International Commission on 

Illumination has decided that that index, that old 

index is not very good at characterizing LED lights. 

And they've actually made a statement in 2015; 

you can find it online. It says this doesn't work 
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well for LED lights.

So, in other words, it's so old; it 

hasn't been updated in many, many years. So, a 

newer standard adds another seven colors to that, 

seven Munsell colors, to get 15 different colors, 

and how the human eye would react to all of those 

colors. So, it's much broader. And we did a lot 

of those measurements in the studies that we did. 

So, that's what all these are, the CRI 

is actually a number from zero to 100, 100 being 

the best compared to daylight. For that specific 

color. Now, CRI is an average of those eight 

colors, so it's just an average number. So, that 

92 that you see up there is an average over all 

of those eight different colors.

So, that's just some definition. So, 

you'll see this CIER value later on, and that's 

where we've looked at the values for 15 different 

colors. So, I'm just going to briefly review the 

2017 study. We did present this last year to the 

committee. 
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But the way that we did this study is 

we used these test boxes that are, every year the 

board of appeals and reviews put these together, 

these test boxes. And what they are is an 

arrangement of 20 kernels. They're liners between 

damaged and not damaged; damaged and sound kernels.

And they covered all kinds of grains 

and all kinds of damages. And they're supposed 

to be difficult. They're training boxes. So, we 

selected 30 of those boxes for this initial study, 

and two inspectors were assigned to each light. 

And they look at the 30 test boxes both 

in the approved lighting, down from the board or 

appeals and review, and that would be our approved 

fluorescent light. And then they get test light. 

And these were the test lights that were part of 

that study. 

We had two what we call task lights, 

and one tube light. We tried to find as many tube 

lights as we could. Unfortunately, a lot of the 

LED tube lights have inferior specifications, 
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really low color temperatures and very poor color 

rendering indexes. So, at that time we wanted to 

choose the best we could.

We had another light in this study, and 

it was discontinued; it was a tube light, right 

before we started this study. So, unfortunately, 

we only had one LED tube light which is, of course, 

the most desirable because that's the most common 

light that's used out there in grain inspection.

We also included an office fluorescent 

light as a control that definitely had inferior 

specifications, should fail in the test. And so, 

in the end, you get 600 kernel evaluation for each 

light at 30 spectra. So, that's actually two 

inspectors for each light; that's actually 1,200 

kernels for the final evaluation. 

So, here were the results, and I need 

to explain this a little bit. So, the way that 

we did this is matches and mismatches. So, a match 

would be if a board member, an inspector got the 

same result, whether it's sound or damaged under 
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one light and the other light. That's a match.

It would be a mismatch if they said that 

it was sound under one light and damaged under 

another light or vice versa. So, that would be 

a mismatch. And you can see that the first row 

there is a comparison of the reference bar light 

to what is a consensus value. 

So, the board members vote and they 

decide which it should be. So, if the majority 

of the votes say it's damaged, then it's damaged. 

And so that first bar there is just a baseline 

of this is the best we can do. And that's all done 

in the approved reference lighting.

And you see there's 48 mismatches. So, 

that's kind of a bar. That's the standard. And 

if you look down through there on these different 

test lights, you see light number three is pretty 

close to that. It's only 51. And, statistically, 

it's the same. There's no difference between a 

48 and 51.

But there was a difference between 48 
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and 82 and 123 and 129. Do you see the control 

ended up being the worst, which is what we expected 

to see. So, unfortunately, that light ended up 

being a task light and not a tube light. And so 

not as useful because we, actually, at FGIS doesn't 

even have any procedures in place yet for the use 

of a task light.

So, where do we go from here? Well, 

in 2019 we did another study. We took everything 

that learned from the first study and did our best 

to design a new study that would give us results 

on more tube lighting.

So, what we did is we looked everywhere 

we could to find superior LED tubes that had halfway 

decide correlated color temperatures and color 

rendering indexes so there would be a chance of 

at least one of them passing. 

And these are the ones that we found. 

We found Dazor Lighting Technology light and two 

from a company called Yuji International that had 

superior specifications. And then we had an office 
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light, again, for a control. 

In this case, we ended up having 600 

kernels for each lighting evaluation. And so each 

of five board of appeals members looked at six of 

the test boxes. Overall, that ends up, if you 

multiply six times five board members times 20 

kernels in each box, you ended up with 600 

evaluations.

So, here's the results that we ended 

up seeing. And we did this very differently. We 

tried to factor out all of, you know, concerns and 

learnings from our first study. We did everything 

in one room, a controlled room. It was a small 

room, but it was well controlled. 

So, all the lights were installed. We 

did two reference light evaluations; one at the 

beginning and one at the end. And that's that bar 

there at the top there, and there were 17 

mismatches. And again, that's kind of a standard 

by which to evaluate all the others.

But, unfortunately, when you look at 
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those number of mismatches, there's really no 

statistical difference between any of those. It 

is very concerning because if you look at the 

control light, which know that should fail; we know 

it's an inferior light. It's pink. It's just not 

any good for distinguishing color. Yet, how come 

there's only 23 mismatches? 

So, unfortunately, and very 

disappointing to us, because we put a ton of work 

into this, we basically invalidated that study by 

seeing that the control light was the same as the 

reference light. So, to us, that completely 

invalidates the study. So, whatever we did in the 

study design was an issue. 

So, what are some of the lessons we 

learned? And these first two had to do with this 

most recent study that we did. We believe that 

a memory affect, a subjective memory affect is very 

important in doing these evaluations. 

In the initial evaluation, there were 

months that went by between the initial bar 
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evaluation and then their evaluation of the test 

lights. But in this case, we had them in the same 

timeframe because we were trying to get this study 

done as quickly as we could so we could get approved 

lighting available.

So, we believe that the subject memory 

affect was in play. That is it was too short a

timeframe. They knew what the results were. And 

even though they tried not to, it's implanted in 

their minds. So, we think that's one of the key 

issues as why the second study failed.

Secondly, the surrounding light, the 

surround light, we have since found that that's 

a very important issue in grading and inspection 

rooms; is what the lights surrounding the 

inspection room. 

We had eliminated that completely by 

draping black cloth in there. We had no surround 

light. And a little bit later in the presentation, 

I'll show you why that's important. 

And then, in the first study we did have 
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this consensus, and we think that that may have 

made the first study a little bit too difficult 

in that we didn't have two separate reference lights 

evaluations. 

We had the consensus, the voting that 

was the true value. And then we had each inspector, 

their result compared that consensus. So, that 

was kind of, we feel like that was a weakness in 

the first study. We also decided that in the second 

study we needed to use the same set of samples to 

evaluate all light sources. Not switch those boxes 

like we did in the first study. 

And then, lastly, this is a very 

important one we think. Going forward, it's very 

difficult to link the results from test boxes to 

real samples. So, we really feel like in the future 

the best move for use to utilize real samples; maybe 

the same samples, but real samples, rather than 

the test boxes.

So, where do we go from here? Well, 

we did a lot of measurements of specifications. 
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And this might be an opportunity to go forward using 

these measurements that we made. And so, just to 

sort of tell you what you're looking at here, this 

is all the lights that were in the two studies.

The red, and these are all these R 

values I was talking about. And there's 15 

different colors. It's a more updated measurement 

than the old color rendering of the X measurement. 

And these numbers are from zero to 100. 

So, if at 100 you got this kind of like 

a circle around there. So, you can see that the 

approved light, the red light, is very much like 

a circle. It's, it's got good color rendering, 

so the human eye can distinguish those colors pretty 

well compared to daylight for nearly all of those 

Rs, one through 14.

Notice that in the 2017 study, which 

is the bar on the left, you've got some weaknesses 

in some of the LED bulbs. One of the LED bulbs 

you can see that the R9 value, which is a red color, 

is clear down at 20. So, that light is not too 
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good at distinguishing reds. 

And then, if you look at the R12, that's 

a blue color. Those lights were not quite good 

at the blue. And this is a weakness of all the 

LED lamps. If you go down to Home Depot and buy 

yourself an LED lamp, you're going to see an 

incredible contraction of that circle, especially 

around the R9 and the R12.

And then, now look at the 2019 study. 

This is really interesting because you see one 

bulb does have a little bit of weakness in the R9 

there, but not as much. It's there at, it's about 

60 there, so it's not bad. But notice that two 

of the lights, B and C, are really as good, if not, 

and may be better than the reference light.

So this is very promising in that these 

lights look to be excellent compared to our approved 

lighting. So, what we decided is why can't we 

measure all of our approved lights? And perhaps 

we can set standards to pass an LED light based 

on some of these specifications, like these 15 R 
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values.

So, what we did is we measured, they 

took a lot of measurements in the National Grain 

Center where they actually do inspection. So, we 

had a domestic inspection operations office 

inspection lab. They also had a training room 

that's set up as a grading room. 

And then we had a training room here, 

which is right over there once we turn on all of 

the lights. That's an, actually, officially, it's 

got the reference lights in it. And then we have, 

of course, the bar and the, one of kills and reviews 

inspection lab.

So, we did a lot of measurements from

2017 to 2019. We measured all of these parameters 

according to that color temperature, the old color 

rendering index value and these new R values. So, 

this is just, sort of tells you the measurements 

that we made.

And they cut the old color rendering 

index is the first bar on the left. And then 
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there's all these individual R value measurements. 

They're all color rendering index; how good can 

the eye distinguish color in all these 15 colors?

And if you take a look there, you can 

see that we have the minimum, a maximum and a range 

there of results that we got. And you can see even 

the approved lights have a little bit of lower R9 

values, but still up there at 85. So, it's still 

relatively high. 

And then if you look at the correlated 

color temperature measurements that we made, this 

is the really interesting thing that we, was very 

revealing to us. And that is that the bar, the 

furthest to the left bar, that's the approved light. 

And that's all of the NGC lights.

And you notice that they come, the 

average is 6,500 Kelvin. So, it's not 7,500 

Kelvin; it's 6,500. So, why is that? Well, one 

of the reasons is that the bulbs do come down in 

color temperature as they're being utilized. 

Fluorescent bulbs do that. So, we know that that 
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happens.

Secondly, the surrounding lights have 

an impact on that correlated color temperature, 

also. And the way you know that, if you take a 

look at that study room, that's how we, that's the 

most recent study that we did. 

And the approved lights, and that's the 

second bar from the left, it's labeled study room. 

You can see that it's above 7,500 Kelvin. And 

then if you put the black cloth in there, that's 

the third bar, it's a yellow bar, that's still the 

approved lights. It goes even above 8,000 as 

correlated color temperature. So, you can see the 

affect, in real grading labs, of the surrounding 

lights. There's a real affect there that's going 

on. 

The last three bars are the LED lights 

we had in the most recent study. And so, those 

correlated color temperatures are not as high. 

We do have one of those bulbs, though, that was, 

you know, in the same range as that 6,500. Now, 
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of course, it was in the room, the study room, so 

it could go down some if there's surrounding lights.

So, where do we go from here? And we, 

you know, we really believe that this correlated 

color temperature is less important than these 

color rendering index values. But the lighting 

industry still places some weight on that. 

And one challenge we have is the 

lighting industry has gone from this 7,500, they 

call it D75 standard, down to 6,500 as a standard. 

So, it's very difficult to find a commercial 

manufacturers that even want to manufacture that 

old 7,500 standard, which explained why we had 

difficulty finding those types of LED bulbs.

So, what's our strategy for moving 

forward? So, we're thinking that a good, and we 

believe still a conservative, strategy to go 

forward would be to measure, and we've done that, 

set minimum R survive values for all 15 of those 

R values. Set minimums that are basically derived 

from the measures from our reference lamps.
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So, and then the second thing is that 

we need to adopt the D65 standard. So, that's, 

basically, a correlated color temperature of 6,500. 

And that's the biggest difference that we see. 

Right now we require 7,500, so we'd be switching 

to a 6,500.

So, what we think that we should do at 

this point is take that LED bulb that did pass 

everything, except that it has a little bit lower 

correlated color temperature, install it in one 

of our grading room, and do a real control pilot 

study to look at real samples to see if we see any 

shift in any damage lines or grading lines.

So, that's out plan. And that goal 

would be, really the focus of that is really to 

confirm that that shift from 7,500 Kelvin to 6,500 

Kelvin is something that is okay for us to do for 

grain inspection. 

So, if that were successful, we would 

set those specifications, and we would have at least 

one commercially available LED tube that would be 
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approved. So, that's kind of our strategy going 

forward. We continue doing some of the research 

that we've been doing. 

Even to look at that correlated color 

temperature even more closely. Because most of 

the LED bulbs are even in the 5,000 range. So, 

we would continue to do that work to see if we could 

lower it further. 

So, I'm going to switch gears now, so 

I would like to entertain any questions at this 

point because this is a pretty complicated subject. 

So, if anybody's got any questions, I'd be happy 

to answer them now on the LED lighting.

MR. MORGAN: Thank you, Tim. This is 

John Morgan with Supreme Rice. Impressive. How 

stable is the LED tube industry producing these? 

You said you already one that was going out and 

you had one that you approved.

I'm assuming that over time you would 

look to approve several, or have the 

specifications, as long as they meet the 
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specifications, we can use these tubes in LED. 

But just kind of how stable is it, and what are 

your findings on that?

DR. NORDEN: So, what we have seen is 

that the industry does not seem to want to produce 

the tubes at the 7,500 correlated color 

temperature, that 7,500. That's like a standard 

that appears to be an old standard that's going 

away. 

And manufacturers don't want to spend 

the money to create those tubes because there's 

so few people and industries that want them, that 

want to buy them. We believe that this is a much 

better approach in that the D65 is a current 

standard by the lighting industry and there are 

manufacturers that are willing to do that.

But you're right, it's an niche 

industry. So, these manufacturers, this Yuji 

company, we actually had to scour the web and do 

a lot of market research even to find the bulbs 

we found. So, it was difficult. 
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It's difficult to find those 

manufacturers that are going to manufacture 

something that really focuses on an excellent color 

rendering index type product. But we think that 

the D65, since that is an existing standard, and 

manufacturers still are manufacturing to that, that 

that will be a more viable direction to go.

But I think we need to continue to look 

at even lower correlated color temperatures to see 

if those are okay. Because most of the bulbs you 

find, LED bulbs are really much lower than that, 

even. So, I don't know if I really answered your 

question. I'm not sure we know.

MR. MORGAN: Well, I know it's a 

challenge, and all, a lot of the equipment we use 

and everything, to find because it is a niche; the 

industry testing equipment. To find the right 

manufacture to work with to make sure that we have, 

you know, what's approved can be found. And that's 

kind of the reason we price. Thank you. 

DR. NORDEN: So, if there's no other 
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questions, I'll --

CHAIR MOFFIT-TOBIN: Oh, there is. 

You're not off the hook that easily. 

DR. NORDEN: Okay.

CHAIR MOFFIT-TOBIN: I just want to 

thank you for your recent, I know that the LED has 

been on the agenda for a while, so thank you for 

the progress. When do you believe that the pilot 

program is going to be started?

DR. NORDEN: So, we're trying to start 

that as soon as we possibly can. We were involved 

in trying to order them, you know, recently. I 

don't think the order is quite in place yet, but, 

and we actually haven't set down how long it's going 

to be. We need to get enough samples so that we 

have some confidence that we hope, you know, in 

the coming months, in a matter of a few months, 

that we could have that complete.

CHAIR MOFFIT-TOBIN: Yeah, and we'd be 

really interested in the results of your pilot 

program. Is this a task light, or is it an 
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overhead?

DR. NORDEN: It's the overhead tube 

light.

CHAIR MOFFIT-TOBIN: Okay.

DR. NORDEN: So, it would be like a 

drop-in replacement. I mean, it could, 

potentially, be rewiring. But we'll, what we're 

focused on ordering for the grading rooms is a 

drop-in replacement.

CHAIR MOFFIT-TOBIN: Okay. That's 

good to hear, too, because I know I've talked to

a lot of inspectors, and they'd much rather prefer 

an overhead lighting than a task light.

DR. NORDEN: Okay.

CHAIR MOFFIT-TOBIN: And, in this 

pilot program, and correct me if I'm wrong, or if 

you could clarify, you said the D65, and you said 

that you could down even lower. Would that be part 

of the pilot program, as well?

DR. NORDEN: So, what's part of the 

pilot program is to look at this one LED bulb that's 
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available that does meet the 6,500 standard. 

Because it's really, there's a variation of plus 

or minus 200 in there. So, it's actually measured 

to 6,300, so it would fit.

CHAIR MOFFIT-TOBIN: Yes.

DR. NORDEN: But that's the only one 

we know of at this point in time.

CHAIR MOFFIT-TOBIN: Okay. 

DR. NORDEN: And we would hope that

there would, maybe, be other manufacturers that 

we could find that would manufacture that bulb. 

We know that we've got at least one. 

CHAIR MOFFIT-TOBIN: Does the 

committee have any more questions? Does anybody 

in the back have any questions about LED lighting 

or anything else for Tim? Tom? All right, thank 

you so much. I appreciate it. 

DR. NORDEN: Sure, so I have a couple 

more updates here on resolutions.

CHAIR MOFFIT-TOBIN: Okay, I 

apologize. 
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DR. NORDEN: Not a lot more time. So, 

we did present some changes to the falling 

number program back in September, 2018, to the 

committee, and the committee then had two 

resolutions. 

One was that we should implement a new 

barometric pressure correction and the use of a 

Shakematic, which we had showed removed some biases 

in the system and gives a much better overall 

alignment of our whole official inspection for 

falling number. And we should implement those by 

May 1st.

And then, secondly, to look at, to 

continue identifying ways to reduce test result 

variation. And also, to even add alternative 

technologies for determining the effect of 

alpha-amylase.

So, we have done a lot in this area. 

So, we have accomplished implementing these 

changes; that's the barometric pressure correction 

to sea level, and also the requirement to use a 
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Shakematic. So, we did a lot of hit that May 1st 

deadline. 

We did a lot of outreach to stakeholders 

to notify them of the changes. We updated the FGIS 

falling number instructions, provided training. 

And you'll see on there that we also produced a 

training video. So, that's actually out there on 

our website, and can be used now. And it's a really 

excellent video, and gives you ever step of the 

process.

We also did a full accuracy check of 

all the barometers that are being used out there. 

So, everyone sent theirs here to technology and 

science division to make sure that they were 

accurate, and sent them back out. 

And we did make a couple of other 

changes at the same time. So, one of the things 

that we did was we find that some agencies, maybe 

either buy a new instrument or they've repaired 

their instrument, or perhaps they're doing seasonal 

work, so they put the instrument away, and then 
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they get it back out again.

Well, we decided that that's a real 

weakness in that we don't, we don't know what's 

happened to the instrument. So, we have this new 

validation procedure. We will send out samples, 

and make sure that that instrument's working okay, 

operating correctly. And we have some. 

I think it's a number of runs that they 

have to make. It's not really overbearing, but 

it assures us that the instrument is working 

properly. So, we've also increased our inspection 

monitoring program to give more samples to make 

the monitoring program more statistically 

relevant. 

So, our next steps is that we'd like 

to finish our literature review on alternative 

technologies to see where we're at right now, if 

there are any technologies. So, we plan to finish 

that in the next couple months. 

And secondly, we actually continue to 

look for opportunities to reduce variation. And 
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that's really all about our national falling number 

quality assurance program. So, we're always 

looking at that program, and how instruments are 

doing. 

We're visiting labs that have 

difficulties. And we looked at some, if we see 

some extra variation, we're looking to see what's 

causing that variation. In fact, that's how we 

ended up identifying this barometric pressure 

correction and the Shakematic as key issues for 

us.

So, we're going to continue to do that, 

and continue to look at these issues. So, we're 

looking at, we have worked with ARS on a standard 

reference material that would be very stable that 

we could send out to all companies. So, that's 

something we've looked at. So, we're going to 

continue to look at ways to decrease that variation.

So, another resolution, switch gears 

a little bit and talk about mycotoxins. So, we 

had two resolutions from the committee from last 
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year. First, that we identify causes and variation 

in mycotoxin testing and develop a plan to address 

these causes. 

And then, secondly, to look at the issue 

of certifying and reporting at lower levels than 

are current limits of quantitation and report back. 

So, for the first issue, in terms of reducing 

variation, we've, our group here at the technology 

and science division has looked at this in a very 

detailed way.

And we've identified these five areas 

that we know, we believe are significant causes 

of variation. So, we know that the analyst 

proficiency and performance is critical. We've 

seen issues with that. And so we know that's 

something we have to look at. 

The second one, analytical method 

performance; that's really the performance of the 

test kits themselves. So, we believe that some 

of the test kits could perform better than what 

they are now. So, we believe that we'd like to 
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tighten that up.

And then, thirdly, we're using a lot 

of different test kits out there, okay; across 

official inspection. So, we use a lot of different 

test kits, we're going to get increased 

variability. So, we see this as an opportunity, 

perhaps, to do something different here; maybe we 

limit the number of test kits. 

And then, insufficient, so basically 

quality control a the local level. We're thinking 

about simple things that could be done that would 

be some quality control at the local level that 

would help control results going out better.

And then, finally, we're looking at the 

sample drawing. We believe that if we had a finer 

sample drawing, we'd probably get more consistent 

results. So, what we've done is we've put together 

all these recommended changes into a report that's 

completed.

We're in the process now of sharing that 

report, internally, within FGIS. And so the next 
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step is to hold that GIS meeting to talk about what 

changes do we want to make? Which ones, what can 

we do? What's feasible? What makes sense to do? 

And then we create an implementation plan.

So, lastly, I want to talk about this 

certifying at lower concentrations. So, I just 

want to start out with a couple of definitions. 

So, what is the limit of quantitation? So, in the 

testing industry this is very well understood. 

And that is the lowest level of any method, it 

applies to test kits, where you have acceptable 

accuracy and precision. Acceptable and defined, 

actually, too. And this is part of our test kit 

evaluation program, this limit of quantitation. 

Now, the second right now is limit of 

detection. So, what is that? That is the lowest 

level where we know that that particular mycotoxin 

is present in the sample with high confidence. 

Usually, it's 95 percent, 95 percent confident or 

99 percent confident that we know it's there. But 

usually limit of detection, we know it's there, 
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but we can't assign a quantitative value. We can 

only say it's there. 

So, these are the two terms that are 

really accepted by testing, the testing industry 

all around the world; these two definitions. Now, 

first that limit of quantitation is in our test 

kit evaluation program. 

So, that is the lowest level that we 

included, is something called the limit of 

quantitation. That's the lowest level that we 

established where we force the manufacturers to 

give us the accuracy and precision. Then we bring 

in in-house and we test at that level, and we confirm 

that it can perform at that level.

We have no limit of detection in the 

test kit evaluation program, so we don't even have 

that there. So, the real question becomes how low 

do we need to go? If we need to go lower, you know, 

what might we do? 

It really doesn't make, we know that 

below the limit of quantitation the precision and 
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accuracy is not as good. The variability is going 

to increase. In fact, it's even unknown. So, 

really, there's no basis for even putting a number 

on there because you don't know what that number 

is. You don't have any confidence in it.

So, that's a concern we have. If we 

want, if we do, if the committee believes we need 

to go lower on certain mycotoxins, that could be 

done. But we feel like the right way to do that 

is to change our limit of quantitation in the 

program, set a new criterion, and then test, and 

have the test kit submit data and prove that we 

have a good, good numbers at those lower levels. 

So, if we need to go lower, we can. 

It could turn out that test kits can't perform at 

lower levels. We've seen this in some areas where 

at lower levels we just get erratic results. 

So, it may turn out that if we really 

need to test at extremely low levels, we might have 

to use a reference method similar to what we use 

here at the NGC which would be LC fluorescence or 
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liquid chromatography, tandem mass spectrometry 

which requires expensive equipment and highly 

trained operators.

So, we leave this open for further 

discussion and understanding why the desire to have 

the lower level. That's kind of where we're at 

on this issue. So, at this point, I'll entertain 

any questions about the falling number update, and 

even the mycotoxin resolutions.

MR. WANTE: Mark Wante, North Dakota 

Farmers' Union. I want to apologize if this 

question is out of the scope of your answers you 

can give me. But when we look at the mycotoxins 

and potentially here where like phosphate can be 

tested substantially more, where did those 

standards come from before the EDCS started to take 

place? 

Who calculates them? Is that the 

marketplace or is it just a standard? And the 

rationale of my question is I forever searched from 

many government agencies trying to find the levels 
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of vomitoxin where the EDCS come from. 

And I spent some time at FDA and they 

kind of indicated that while, they test for this 

stuff in food, they're not seeing the levels that 

could cause contamination, so it seems, 

specifically in barley, that it's excessive. The 

low levels are necessary before barley will qualify 

for multiple standards. So, I'm curious on how 

that's developed. 

DR. NORDEN: So, you're, are you 

talking about for insurance purposes or just --

MR. WANTE: No, we sell into the 

marketplace from a farmer perspective. You know, 

and I'll get these numbers wrong, but I think .01 

for a vomitoxin, for example. And as soon as you 

get a certain level over that, I mean, basically, 

the grain becomes non-marketable.

So, where does that level that you're 

testing for to ensure that it meets some market 

condition; where does that level setting start?

DR. NORDEN: So, yeah, let me see if I can 
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take a stab at answering that question. So, we know 

that we have contracts between buyers and sellers. 

And so if there's, a seller is selling into an overseas 

market, there might be a contract that says that well, 

we don't want the vomitoxin to be higher than 2.0 part 

per million.

So, we know that that's a level that's 

important, and different countries have different 

levels. So in that sense, you know, it's a global 

market, and who you're selling to makes a difference. 

So for Japan, it's 1.1, is their level that they're 

concerned about.

So, it's going to be a different level in 

these contracts for --

MR. WANTE: Okay, so that's my question. 

Is there any system that verifies that that number 

is an accurate level of acceptance? I mean, is that 

something that anybody works on? And my rationale to 

that is that if you, if you're deducting the grower 

for not achieving a certain level, it should be factual, 

based on something.
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Again, it may be it's just the marketplace 

determines that is what they want, so that's what it 

is. But it almost seems that, from a farmer 

perspective, that there's times when those levels are 

somewhat un-achievable, and it's in the interest of 

buying at a lower price. 

DR. NORDEN: So, if you're talking about 

the basis for those levels, it's usually health effects 

on animals and humans. So, the FDA sets some of those 

levels, and then they're set worldwide that way. 

Codex Alimentarius is an organization that 

sets global levels for food in mycotoxins and they're 

very active in recent years, extremely active. And 

they've set recent maximum levels for vomitoxin and 

for fumonisins. 

So, then other countries take a look at 

those Codex levels and they are likely to adopt them, 

perhaps. The EU has some very restrictive levels. 

So, those levels are kind of really set on a 

country-by-country basis.

And many of them, for example, aflatoxin 
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has a strong basis in science. That is that if you 

feed cattle at 20 part per billion corn, you're not 

going to see the M1, the mycotoxin in milk higher than 

a specific level. 

So, a lot of these do have a basis in 

science. I know that the Codex Alimentarius has their 

own risk assessment body that gets involved in setting 

these levels. 

MR. WANTE: Okay, I think that's accurate. 

I mean, I'm not disputing that. I was curious, though, 

when I looked at FDA and spent quite a bit of time on 

vomitoxin in barley, because that's one that gets us 

part of our quota substantially, and they basically 

said they don't even test for that.

So, we get deducted out there on the farm, 

and it appears like FDA is not really paying attention 

to that level. So it, again, it's one of these things 

where I think you're accurate; some of these mycotoxins 

are obvious. If something tells you blah, blah, blah, 

and you get it all.

But there's other things that we beg the 
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question is there anybody verifying the rationale 

behind the set number on some of the stuff that we're 

being tested for, and the levels that we have to meet 

to try to get to a standard where we get the full 

payments?

CHAIR MOFFIT-TOBIN: I don't know if this 

will help you at all, Mark, but I know that when we 

did a bunch of research when our customers started 

asking for information on mycotoxins and what levels 

are acceptable or not, and I know if you go to the FDA 

website, they have, you know, for young chickens for 

this or for that. 

You know, and then behind that they have 

tons of research of where they came up with those 

numbers. I'm sure you're probably familiar with that. 

MR. KERRIGAN: So, Matt Kerrigan here. 

So, speaking on behalf of the exporter side, a lot of 

your question, I know part of it is is there testing 

behind it? But I can say that, you know, everything 

that, from the exporter side that is passing through 

from a farmer grower to, you know, some sort of co-op, 
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the exporter to the end user is contractually based.

And that's where a lot of that's being 

passed back through. Especially when it comes from 

a wheat perspective, which you guys see in North Dakota, 

obviously. Every customer in every country has a 

different specification.

 Some of them are rounding differences, 

whether it be, you know, is it to one part per million; 

you know, is that rounded up, rounded down? Is that 

to, you know, 0.15, or is it just to a 0.1? And so 

there's all these little different variations that, 

depending on the contract, that have to be hit.

Some countries, we may have 200 different 

items that are being tested that, obviously, FGIS is 

not able to do on-site, and they're going to independent 

labs to test for afterwards, as well. 

You know, I can also say that, from the 

customer side, there's not a lot of movement from the 

contracting negotiation side of it because that's what 

their government has requested, you know, for that 

country to import. 
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Or, you know, what the customer itself, 

because again, what food product that's going in. How 

they're using it. How they're manufacturing it down. 

You know, versus what the U.S. is able to provide to 

maybe what another country, because of growing 

conditions or things of that nature, what they're able 

to provide on the world scale, as well.

CHAIR MOFFIT-TOBIN: John, I have a 

question for you. I know that you brought this up, 

or you were interested in it. Is that still something 

of interest when it comes to the export markets, a lower 

detection level from, say, 0.0 to 0.5?

MR. LINDGREN: Well, it goes back to just 

what Matt was explaining. It is contractually-driven, 

and a lot of those contracts, I mean, Japan is very, 

0.8 to 1.1 that Tim mentioned. 

Just like last year when we talked about 

it and with speaking with Charm Sciences, to get that 

down would be wonderful. But liquid chromatography, 

because that's what we're looking at and, you know, 

it's not going to be, from a money standpoint, feasible. 
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So, if there's a way, and you know it sounds 

like they're still looking at the options, obviously 

it would be better. Because when you're trying to 

plan, once it's below that 0.5, you don't know if 

there's really any there. There's some, but what 

level? It's hard. It sounds like they're still working 

on it, but if we can get it, great; we'll just see where 

it ends up going with the study.

MR. MORGAN: John Morgan, Supreme Rice. 

We see similar issues in rice with Codex in different 

countries. And sometimes we're concerned it's more 

of a trade barrier than a true health concern. So, 

as a farmer, it can be difficult to understand what's 

going on with these different countries.

EU's particularly difficult, as well as 

some of the Asian countries like Taiwan and Japan and 

Korea can be difficult at times, as well. I mean, 

they're looking for ways to prevent rice from coming 

in under like a TRQ program. 

But in regards to the mycotoxins, we're 
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going to cover this tomorrow with Tony Goodeman, but 

the MOU to FDA and NHIS doesn't even contemplate, what 

I've seen, any mycotoxins other than aflatoxin in it. 

So, it talks about toxic substances in grain, rice 

and pulses and only contemplates aflatoxin. So, I 

don't know if that's something to address or talk about, 

as well.

DR. NORDEN: Yeah, so that's, so all of 

our mycotoxin testing is voluntary, except for 

aflatoxin at export. Everything else is voluntary. 

But, obviously, we do 300,000 lots of grain per year 

within the official system for mycotoxin testing. So, 

obviously, it's, people want the test. I mean, it's 

needed, I guess.

So, I did hear, though, that still for, 

particularly, blending purposes, that it would be a 

desire to see a lower level than .5 part per million. 

And I guess that's what I heard. Because we're not 

working on anything at this point. So, I think it's 

important to hear from the committee what they desire, 

you know, going forward.
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CHAIR MOFFIT-TOBIN: And I think that's 

a very valid discussion point. When we were in D.C. 

last year we had the opportunity to go to Boston and 

visit Charm Sciences, and we talked to, and I see you 

nodding your head back there. If you could stand up. 

I don't remember the two gentlemen that 

were the head scientists, and we talked to them about 

the possibility of having a test that would read from 

0.0 to 0.5, and they said that that was definitely a 

possibility if the market was there.

So, if it's something that this committee 

can recommend that, you know, or can put out that Charm 

or other mycotoxin producers or kit producers could 

possibly take up this research.

MS. MUEHLBACH: Linsey, are you talking 

about vomitoxin tests, specifically?

CHAIR MOFFIT-TOBIN: Yes, specifically, 

yes.

MS. MUEHLBACH: Okay, so we already have 

a limit of detection going down to 0.1 ppm. So, if 

there's anything that needs to go lower, you know, we 
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can always take a look at that with Mark Tess and Kyle 

Putnam. So, those are the two guys who create our test 

kits. 

So, we already have the ability to go lower 

than .5; it's just whether or not FGIS would approve 

that, recommend it. 

DR. NORDEN: So, just to address that 

question, specifically. So, what that means, a limit 

of detection, what that means is that you have a 

confidence at .1, a high level of confidence that if 

you get a reading at .1 or above, that you're confident 

something's there. 

That that, that the DON is there, 

vomitoxin, but it gives you no ability to state any 

number there. Now, I will say this; that some risk 

assessment bodies, including EPA and even the AMS 

pesticide data program, they will sometimes say that 

if they have a limit of quantitation and a limit of 

detection, they will some say, say if there's a number 

in between there, they'll just set it at equal, 

equidistance between the limit of quantitation and 
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limit of detection. 

They'll assign a value to it. But, 

essentially, when you don't have, when you have 

something that's above the limit of detection, at the 

limit of detection, all you can really say about it 

is we have a high confidence it's there. 

There's no way to put, there's no basis 

to put a number on there. Because we don't know the 

precision and accuracy. In fact, like right now we 

talked about typing up the variation. So, a bigger 

variation we, you know, monitoring program we have found 

is very high. Higher than we want it to be. 

So, this actually will exacerbate that 

issue even further, if we try to go down lower. But, 

so we would be comfortable with saying like, okay, let's 

put it down to .25, but let's make it a limit of 

quantitation. 

Let's force the testing companies to 

demonstrate that you give some defined precision and 

accuracy down there. And then we can certainly make 

that part of our test kit criteria. 
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We could also consider what to do between 

the limited detection and limited quantitation. We 

would actually need to introduce that as part of our 

test kit program, though. We would have to say here's 

how you set the limit of detection. 

And we have to put that in our criteria 

that we want to have a new parameter called limit of 

detection. And there might be some way of setting a 

value in between there. So, that's, you know, maybe 

an option. 

We're not too comfortable with that. I 

don't think our scientists are probably here too 

comfortable with that, but that's a possibility, too.

CHAIR MOFFIT-TOBIN: The variation, 

especially when it comes to vomitoxin and aflatoxin 

when it comes from in the field to you, that's a huge 

concern, when there's too much variation. And I know 

that we talked last year about what are the reasons 

for those variations. 

And some of the concern on the official 

service provider side is that program Notice 275; I 
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don't know exactly what it was called. But it switched 

from cutting a sample down to 500 grams, mixing it 

thoroughly, blending for one minute to, you're going 

to put, grind 10 pounds. 

And, mind you, when you grind 10 pounds, 

you're putting it into a plastic bag now that creates 

heat. Now, you're just dumping it out of a gallon 

plastic bag. So, our concern was you went from 500 

grams to 1,000 grams; you doubled the sample size. 

So, our concern was did that create some 

variation? Was there any testing done to see if there 

was any variation versus 500 grams to 1,000 grams? 

And then, do you realize that when you store that there 

is heat in there? So, that was a concern for us, too. 

So, if they ask for a re-inspection, we go back and 

there might have been some contamination because of 

the heat.

DR. NORDEN: So --

CHAIR MOFFIT-TOBIN: So, I know I just 

threw a lot at you. I apologize. My main question 

being was there any testing when it went from a 500 
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gram pile sample to 1,000 grams; was there any variance 

there?

DR. NORDEN: Are you talking, 

specifically, about DON or vomitoxin?

CHAIR MOFFIT-TOBIN: That was be 

aflatoxin, in particular, because that would be the 

10 pounds that you would have grind, and then it went 

to 1,000 grams in a bag shaken.

DR. NORDEN: Yeah, so that we just believe 

is a sound practice that we use in our own laboratory, 

and is used around the world. So, we, you know, we 

didn't do, are you talking about that it may be 

introduced more variation?

CHAIR MOFFIT-TOBIN: It is a little bit 

different because there is more variation. You know, 

when we talked about before you were getting 250 grams 

or 100 grams sent to you for the program. And we would 

grind 10 pounds, and then cut it down to 1,000 grams, 

and then pour out of that 1,000 grams, pour 50 grams 

onto the scale to test. So, with double the sample 

size, would there be variation when you double the 
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sample size? 

DR. NORDEN: And the sample size, you're 

talking about this 1,000 grams?

CHAIR MOFFIT-TOBIN: Versus 500.

DR. NORDEN: Versus 500. So, no, there 

shouldn't be any issue there. That, I can, I may need 

to go back and get the details because I'm not sure 

I'm familiar with all the details and the changes that 

we made. So, I may want to talk to our folks in the 

lab to understand your question.

CHAIR MOFFIT-TOBIN: Yeah.

DR. NORDEN: And then I could probably give 

a better answer.

CHAIR MOFFIT-TOBIN: No, and that's 

perfectly fine. I just, we want to come up with the 

reasons why there's so much variation, and limit that. 

So, if that was one of them? Or what are the other 

possibilities why is there variation in what's being 

done in the field versus what's being done here. Thank 

you. 

Is there any other questions for Tim? Do 
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you have more updates? 

DR. NORDEN: That's it.

CHAIR MOFFIT-TOBIN: Okay, why don't we 

take a 20-minute break, or 15 minutes. Let's do 15.

(Off the record.) 

CHAIR MOFFIT-TOBIN: Karen, our Director 

for QACD will come and talk to us about the exceptions 

program.

MS. GUAGLIARDO: Good morning. Can you 

hear me now? All right, so before I talk about 

exceptions, I do have one, an update about one of the 

resolutions which is actually half of a resolution. 

Tim talked about the tolerances earlier. There's, 

there's the other part of the tolerances which was 

updating the tolerances for the SIMS, which is the 

Sample Information Monitoring System. And the 

resolution was to continue to review and update the 

SIMS quality assurance tolerances for moisture meters 

and post the results on our website.

So, we have been working on evaluating the 

tolerances, the SIMS tolerances, specifically for 
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moisture. I just want to let you know that the SIMS 

tolerances are tolerances where you're taking the 

original result and then a portion, random selection 

of those original results are submitted in for our SIMS 

monitoring. And those samples that are sent in are 

then the file samples. So, they are not the exact 

samples. So, you have a little bit of variability 

because you have two different portions of your sample.

And we have 90 tolerance tables. There 

are tolerance tables that involve factors and 

commodities. So, depending on what the factor and the 

commodity is depends on which tolerance table you use. 

And for moisture, there are actually eight different 

tolerance tables. So, we are looking at those. We've 

been doing quite a bit of research on the tolerances, 

the history, methodology and the statistical basis 

behind them.

We are looking to apply more statistical, 

sound statistical analysis onto the data, which will 

allow us to strengthen the statistical basis of the 

tolerance tables. We recently have run across in our 
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research some software technology that is allowing us 

to make this, to aid our efforts in making them more 

statistically sound numbers.

But we do need some more data for some of 

the commodities. There are some commodities that we 

don't get a lot of samples for, so it's hard to, you 

know, run your statistical analysis when you don't have 

a lot of samples in your pool. So, we are analyzing, 

testing, and vetting the findings to, to insure the 

revisions are more closely aligned with our official 

system and the capabilities of it. So, and we'll have 

more updates on that in the spring. So, anybody have 

any questions on that before I go on to our favorite 

topic of exceptions?

No? All right, here we go with my page. 

All right, to give you a little bit of history on the 

exceptions. In 1994 we proposed a pilot, proposed 

pilot programs for exceptions. The original proposal 

was five different exceptions. We ended up 

implementing two of them and those were open season 

and timely service. Open season was allowing people 
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that had not received service to request an exception 

and timely service was for those who were not receiving 

timely service and they could go to another agency.

They're, they're original, those were the 

two original ones. A few late, years later, they added 

another exception which was barge probing, which allows 

any official agency to provide barge probing on any 

river so there's not really a boundary for barge 

probing. And then recently, in the farm, let's see, 

in the re-authorization in 2015, they added another 

exception, which is the written agreement where all 

three parties agree to have another agency provide 

service instead of the incumbent.

Some people will hear the terms open season 

and non-use of service. Those are the same thing. 

Originally, it was called open season and then at some 

point, they decided to, to make it a more descriptive 

name and they changed the name to non-use of service. 

And that's the one everybody really wants to talk 

about, so I'll tell you a little bit more about that.

Originally, the regulations stated that 
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not receiving service meant not receiving service in 

180 days. In 1996, we changed that to reduce the time 

to 90 days and we put a provision in for a seasonal 

ice. A facility could ask for an exception and approval 

by FGIS. In the past we had criteria for evaluating 

whether or not we would approve that exception. Moving 

forward, what we want to do is, we're looking for a 

more formal criteria for evaluating those requests for 

exceptions. 

In 2018, the Farm Bill in December, the 

day before we were furloughed for 35 days, the Farm 

Bill passed and made changes to the Grain Standards 

Act. There's two parts, I call it two parts of those 

changes. One part was restoring exceptions that were 

cancelled. There were 45 facilities that had their 

exceptions cancelled from the change to the USGSA in 

2015. The, the companies could request their exception 

to be restored. They had a timeframe. That deadline 

was March 20th.

We received 18 eligible requests for 

restoration. There was one request that had three 
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facilities, so that made 20 facilities and all 20 of 

those were restored. Of the remaining 25 exceptions 

that were cancelled, three of those have been resolved 

by two companies merging or a written agreement that 

was put into place. So, we currently have 48 active 

exceptions under the non-use of service exceptions.

Somebody yesterday asked about what is that 

number normally? So, I went back and looked at the

annual report to Congress. In 1996 was the first year 

that we reported it into the, in the annual report to 

Congress, there were 19 facilities under that 

exception. The highest year was in 2005. We had 107. 

It, and it ranged, it kind of went, it grew from the 

19 in '96 all the way up to 2004 it was 104, and 2005 

it was 107 and then it kind of dwindled from there. 

So, and now we're down to the 48.

So, where do we go now? So, the other part 

of the changes to the Grain Standards Act was to put 

back the language that was taken out in the Grain 

Standards Act, in the re-authorization that changed 

the Grain Standards Act in 2015 when they put that 
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language that was taken out in 2015 and put it back 

into the Grain Standards Act. Along with that, they 

added a few more provisions, one being when a 

designation terminates, the exception would also 

terminate but then the exceptions can be renewed if 

the designation is renewed.

So, so the, that part we have to do 

rule-making for. So, our plan is, we have a work plan 

in to do a advanced notice of proposed rule-making that 

would allow us to get feedback from the, from the public. 

We have to make changes to the regulations before we 

can implement the changes to the Grain Standards Act. 

So, this will allow us to get feedback from the 

customers, from the official agencies, from the 

industry. What are your needs? What are your, what 

are the criteria that we need to implement this, to 

make it more, more formal in our criteria for 

determining those? 

Little bit about how the process works. 

We will publish the advanced notice of proposed 

rule-making. We will get comments and, I think, the, 
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the comment period will be 30, 60, I'm not sure what 

the criteria is, but it will be either 30, 60 days of 

comment period, open comment period. All of those 

comments that are submitted are public comments, but 

we are looking for feedback from everyone.

So, pass the word. We really are looking 

for what should the criteria be for evaluating the 

exceptions, you know, what are the needs of, of the 

industry so that we can make good, sound decisions on 

how we implement the exceptions.

 After we do the advanced notice of proposed 

rule-making, we will take those comments and then we 

will actually propose, we'll do a proposed rule that 

will also go out in the Federal Register, and that, 

that part is, we've taken all of the comments and we, 

we say, okay, this is what people are looking for. 

We propose to do this, to implement it this way.

This is what those regulations would say 

if those were the things that get implemented. This 

is what we propose to do. That will also have a comment 

period and then we will take the feedback from those 
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comments and then we will do the final rule, which will 

then make the changes to the regulations.

And I think that is about it. Any 

questions? I'm sure there are.

MR. NEAL: This is, this is Arthur Neal. 

Just want to add clarity to, since, since coming on 

board, I've heard a lot of questions about exceptions 

and boundaries and things of that nature. So, I want 

to clarify, too, why we're choosing the advanced notice 

of proposed rule-making route. There seems to be a lot 

of questions about terms being used, processes, 

decision making criteria. And if we were to go out 

with a proposed rule based on what FGIS knows it still 

may, we may lose time. 

So, what we want to do is engage you in 

the process of understanding, getting insight on what 

are the key issues you want to have addressed as we 

clarify the exceptions requirements in the regulations; 

how should certain things from your perspective be 

defined so that we can process them as we draft a 

proposed rule. So, we get that input from everybody 
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through the advanced notice of proposed rule-making. 

Then we draft a proposed rule and you will see our 

rationale as to why we chose to develop the regulations, 

the proposed regulations, the way that we did based 

on the comments we received in the advanced notice of 

proposed rule-making.

So, that's why we're going that route, 

because we don't want to assume we know how to address 

this issue because it's been going on for a long time 

and it hasn't been addressed well. So, we want to do 

it right one time. That's our goal.

CHAIR MOFFIT-TOBIN: First, I'd like to 

ask if the committee has any discussion or comments 

or anything that they would like to add. Just so

everybody knows, Karen and Sophie were kind enough to 

come and talk to the committee yesterday to help us 

understand the background, the history, a lot more, 

why is it such a hot issue today. And I want to thank 

you for being transparent.

And I think everybody would appreciate when 

you do put the language into the regulations that that's 
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clear, concise, and it takes out that interpretation 

factor that was there before, that created, that started 

this whole thing. So, if you could take any 

interpretation factors out, I'm sure everybody would 

be happy with that. I think I've heard, what are the 

rules and, I'm going to ask, what are the rules and 

how do we play by them? You know, so that way ---

MS. GUAGLIARDO: Yeah, rules of the game.

CHAIR MOFFIT-TOBIN: Absolutely, so, and 

if you could share one more thing that, for the, for 

everybody to hear. With the 2018 Farm Bill, it states, 

and if you could, I know you have it on your, where 

it says facilities that have not received service can 

choose an agency that they want. And that was big 

concern for a lot of agencies with their livelihood 

and so if you could please read that for everybody?

MS. GUAGLIARDO: Sure, so yeah, if you just 

read that, that part. You have to actually read a 

little bit before that. So, under the Grain Standards 

Act, Section 79, if you go by that way, it's wrongly 

dated -- we will go with that, in 79F2B which says 
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exceptions. It's a little bit, I'll skip a little bit, 

part of it, but it says, if the Secretary determines 

that the presence of more than one designated official 

agency in the same geographic area will not undermine 

the policy stated in Section 74 -- you're going to have 

to read that part too.

The Secretary shall allow a designated 

official agency to cross boundary lines to carry out 

inspections in another geographic area if a person 

requesting inspection services in that geographic area 

has not been receiving official inspection services 

from the current designated official agency for that 

geographic area. And that's all the part says, which 

is the exact same language that was taken out in 2015. 

It's put back in. There are two other provisions. 

I can read those.

One is the termination of the non-use of 

service exceptions. The exception under that 

paragraph I just read, may only be terminated if all 

parties to that exception jointly agree on the 

termination, unless terminated according to Subsection 
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G4(a) which says, the exception under the clauses, that 

I read up above, shall not apply if the designation 

of an official agency is terminated pursuant to 

paragraph one -- that part, if I'm reading the right 

thing, says if the designation of the official agency 

is renewed or restored after being terminated, the 

Secretary may renew or restore the exceptions under 

subsection-- the one I read above.

So, that is, and then they did add the same, 

the same kind of language under the weighing part, under 

the weighing authority. So, it applies not just to 

inspections but to weighing.

MR. KERRIGAN: Arthur ---

CHAIR MOFFIT-TOBIN: So, nope, you go.

MR. KERRIGAN: -- what's your anticipated 

timeline for putting the advanced notice of proposed 

rule-making in process?

MR. NEAL: The process has started and we 

hope to see it out by the end of the year.

MR. KERRIGAN: So, I mean, just for this 

group, and we got a lot of information yesterday, a 
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lot of background information and, you know, I think 

most of us here received a lot of comments leading up 

to it. Some of us are a little bit newer on this. It 

would be my, I guess, suggestion for this group that, 

you know, we work on this offline a little bit. That 

the recommendation, you know, either be submitted 

individually through that process or not until the next 

meeting, until we've had to kind of look through that. 

I don't know that, you know, unless you 

guys want to get into the long discussion of all the 

individual topics and items again, but I think it would 

be good to open it up to, maybe the floor if we saw 

some time to try and gather some more of those comments 

in this process. Because I think it seems like whether 

or not a recommendation comes from this group, really 

the idea here is you getting the feedback that you need 

for what the issues are and then how to move forward 

from that, if I'm not mistaken.

CHAIR MOFFIT-TOBIN: Yeah, and I can't 

agree more and that's one of the reasons that we asked 
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Karen to come and so that everybody in the room hears 

the same information, that there's transparency and 

what are your next steps, you know? Before I heard 

there was, we didn't know, we weren't told this. But 

now everybody is aware. Everybody knows what steps 

need to be taken, the feedback through the process that 

she just described. Does anybody else on that 

committee have anything to say before I pass?

MR. SUTHERLAND: Bruce Sutherland. I 

think that, I can certainly support a review of this 

process. I mean, it's important, though, that moving 

forward, these exceptions, speaking on behalf of 

industry, the exceptions that were granted to these 

companies stay in place. I wouldn't want to see that 

they be cancelled because of some review process in 

the meantime. So, I think, you know, this committee 

last year voted and approved the language as a group, 

that the motion was made and passed and voted by 

majority. I would not want to go backwards.

I think it's, I'm certainly all for 

transparency. I'm certainly all for clarification, 
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but I wouldn't want to see these companies lose their 

exception and then get into a service issue. I think 

it's important. Thank you.

MR. NEAL: And I appreciate your sharing 

that. Just from, from our perspective, working all 

of these things out, because the reality is that, that 

may be different goals from different parts of the 

industry. So, that's why we work all of these things 

out in the public through the Federal Register so we 

can get the input and share our perspective so that 

everybody knows where everybody stands on these issues. 

So, our goal is to make sure that we do 

things as efficiently and effectively for the system 

as possible, for the official system as possible. Our 

intent of a statute at the same time get that input 

from you all as we work collaboratively to try to 

implement these procedures, or these requirements in 

a very smart way to facilitate the work we've got ahead 

of us.

CHAIR MOFFIT-TOBIN: Speaking along those 
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terms and looking at it impartially, I appreciate, you 

know, Bruce and everything that he told us yesterday. 

But it was also, I think it's really important to know 

that, what are the reasons behind wanting to go to 

another agency, you know, is it price? Is it the 

quality of services?

And if it is the quality of services, what 

does, what can we do about that to, to take away that 

gap in the services, in the services that the official 

agencies provide, you know? We're looking at the 

criteria to get a designation and those agencies might 

meet those criteria that were developed how long ago, 

you know, but with innovation and technology, that line 

should always be raising.

 We are a customer service based industry, 

so why do, why do they want to go to another agency, 

you know? Price is one thing, but when you talk about 

the division in the services that are provided because 

the official agencies are supposed to be providing the 

same, right? But we all know that we're not, you know.

So, what can FGIS do to increase, you know, 
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to keep up, because in the private sector, if you don't 

keep up with customer demand, you fail, you know. So, 

it's not right that the, this is probably not the right 

word, but the designation protects the inefficient. 

What can FGIS do to bump that official agency up to 

the services that need to be provided?

MR. NEAL: Use an example, the

certificate.

CHAIR MOFFIT-TOBIN: Okay, so for example, 

there's certain agencies that give a live feed, or give 

customers access to a live feed so their voters can 

make better blending decisions. They see their 

mycotoxin results. They know exactly what to put in 

the next car, you know, and they can be sitting in 

Florida on a beach and watch their trains being loaded. 

The board of directors can watch.

Whatever access levels that that company 

wants, they can see. And it helps the loaders load 

grain so that they don't get hit with all the demurrage 

fees. They don't get a surprise, because the 

regulations say that the official agencies don't have 
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to provide a certificate until the end of the next 

business day. 

Well, that train's already gone. Those 

containers are already gone. And to get something to 

come back is incredibly expensive. But if they have 

that data in front of them, they're more efficient. 

And it's not fair necessarily to the industry that, 

that they're put at an economic disadvantage because 

now they have to call the agency back because now they 

have to off-load cars because they didn't know that 

they didn't meet their contract specs.

So, the difference in what the services 

and the quality of services that the agencies are 

providing, what can FGIS do to help those agencies or 

what can FGIS do to provide those agencies with that 

same information so that industry has that data in front 

of them? Everybody should be, have that set.

MR. NEAL: I wanted you to hear that Bruce 

is still in the room. And as, as AMS definitely deals 

with innovation, this gets back to that comment about 

innovation with 40-plus agencies out there working on 
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behalf of FGIS to provide this service and with 

customers having different needs for timely service. 

Capabilities may vary. And I hear your question about 

what can FGIS do to insure that service levels are at 

par so that someone's not getting, you know, 100 A-plus 

service and someone else is getting 75 percent service. 

Because I think that may also contribute 

to people wanting to request exceptions and go to 

somebody else. Because it is having an economic impact 

if they have to wait for, you know, two days for a 

certificate or a day-and-a-half for a certificate and 

incur demurrage charges. So, that's something we'll 

need to look at and have discussions around as we figure 

out how to best serve an efficient system. So, I 

appreciate you sharing it with us.

MR. SUTHERLAND: You know, Linsey made a 

good point about the delivering quality and measurement 

of quality and reviewing that. And, you know, one thing 

from industry's perspective, we haven't seen, we don't 

know of, at least it wasn't public, a comprehensive 
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review of geographic boundaries of domestic official 

agencies in 43 years. And so, is it time for that to 

transpire, to review the domestic agencies, the 

boundaries, and also those industries within those 

boundaries?

A lot of consolidation has happened in 

industry. A lot of shipper facilities have gotten 

bigger to meet the grain shipping needs. I know our 

company, you know, six facilities out of eight are now 

train loaders and loading up to 100 car trains.

So, the demands on our official inspection 

agencies have probably increased with rapid turnaround. 

Qualitative, we were talking about qualitative testing 

issues and demands on qualitative tests, especially 

for monotoxin, aflatoxin, monocin, those types of 

things. Again, can that official agency deliver those 

things in the timeline we need when we're under the 

gun for demurrage issues on trains or satisfying the 

end user? 

So, comprehensive sounds, you know, 

daunting, and, and perhaps FGIS has information already 
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to share with the public from a metric standpoint, but, 

but that's one of the things we would encourage in this 

process, especially when we talk about delivering 

service and measuring those things.

MR. KERRIGAN: And I would just like to 

piggyback on those comments as well about the quality 

and some of the metrics, you know. One of the 

discussion points yesterday, you know, was what kind 

of feedback does, does FGIS get? You know, should 

quality service for some of those designated agencies, 

you know, if things aren't going well, what are those 

steps that are taken formally, or informally, you know, 

beyond just the exception process. 

Because obviously, you know, for anybody 

if it's a quality of service item, if one entity is 

not getting that, that good quality service then others 

may likely, you know, not be getting that as well. 

And what sort of feedback mechanism is there for 

improvement, you know, either because of the exception 

program or, you know, without needing to go to the 

exception program, as well. It is definitely a key 
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component to that, assuming that the boundary system 

is in place.

MR. NEAL: And I think that's important. 

If there are customer service issues that arise, I'm 

not sure how often you are hearing about them. So, 

that, that is something that we may have to do a better 

job of encouraging, to industry players that if there 

are issues that they're experiencing in the official 

system, that they need to let us know. And how we handle 

that will be very delicately, very confidentially, so 

that we don't disrupt or, you know, create conflicts 

in relationships. But we still want to try to encourage 

better service. So, we'll figure out how to do that 

in a systemic way.

CHAIR MOFFIT-TOBIN: Any more questions, 

discussion from the committee?

MS. GUAGLIARDO: I can say one more 

thing.

CHAIR MOFFIT-TOBIN: Yes, please.

MS. GUAGLIARDO: So, wait, I, I didn't 

talk, I talked about the exceptions and how we did that. 
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But we didn't talk about the designations. So, the 

designation process, I think, I think that you should 

hear that process. Before 2015, the designation term 

was up to three years and the changes in 2015 changed 

that to up to five years. But that process is, the 

designation ends at a particular time and we go out 

with the Federal Register asking for applications and 

any person can apply.

So, every time a designation ends, there's 

the opportunity to anyone, for anyone to apply. We 

also ask for comments on the incumbent agency, the one 

whose designation was, was ending. So, we do look at 

that and the criteria that we have to look at when we 

receive those applications is first that that applicant 

is qualified. And then if you have more than one 

applicant, which one is better able. And we have the 

criteria for that. So, we do have the, I'll 

call it the minimum requirements. We don't have a, 

an additional, you know, we have not increased that 

bar, if you will. There are things that have happened 

within the last 20 years, you know. We didn't have 
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a lot of on-site labs. Now, we have a lot of on-site 

labs.

Sophie and I went, for the last three days 

we've been to five agencies and most every single one 

of them said they're not really doing a lot of work 

in their main lab, because they're all out at on-site 

labs, because the on-site labs have really made a big 

difference. And when the exceptions program started, 

we didn't really have containers and now we have a ton 

of containers. And how are our agencies providing that 

service? But there is a process through the 

designation. 

We actually do look at the official 

agencies every time their designation comes up. We 

actually go out and do a review of those agencies. 

They have additional criteria that we are updating that 

we started 10 years ago, that we are updating now with 

our quality management program. So, they are all 

required to do that. They're required to do internal 

audits every year. So, we are improving the level that 

they have to provide that information and service to 
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us. We also do, I know I talked about the SIMS a few 

minutes ago, and some of the things that Tim talked 

about earlier. 

You know, there's different monitoring 

programs. So, there are ways for us to determine the 

quality of the work that the agencies are doing. But 

if anyone is having a problem with one of the official 

agencies, I need to know. We have a hot line and 

typically people call in. It's a, you know, if there's 

a violation, anybody thinks there's a violation of the 

Act, you can use that same number. You can call 

anonymously and tell us that you're having a problem 

and we'll check it out.

That's all I want to say.

MR. SUTHERLAND: I've got a question. 

Bruce Sutherland. I've got a question of the review 

process. So you mentioned it goes in the Federal 

Register. But if you're not a student or a user of 

the Federal Register, I mean, is it possible that the 

agency is up for re-designation, if that's a fair way 

to call it, that they be required to put out a notice 
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or letter to the customers that, hey, we're up for 

designation.

Or whether that comes from FGIS or the 

agency and say we're up for, you know, re-authorization 

or whatever you want to call it and public comments 

are accepted at this time, you know. It seems like 

this would be a, be a good way to prompt a review or 

at least give customers an opportunity to speak, hey, 

we have issues, or support the renewal or not. Again, 

if you're not always checking the Federal Register like 

some do, I know I don't, you know, a notification might 

be worthwhile. 

MS. GUAGLIARDO: Yeah, some of, some of 

our official agencies do notify all their customers 

and, you know, saying, you know, ours is coming up, 

please, you know, send in comments. We do require them 

any time they want to make a fee change, we make them 

notify their customers that they're, you know, 

proposing a fee change.

So, we could, we could do a notice to trade, 

you know, there are ways that we can, I know the Federal 
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Register is not something that I read every day. Yeah, 

we could, we could work at making sure that everyone 

knows that those are coming up.

CHAIR MOFFIT-TOBIN: And I also think it's 

important to know when it comes to the criteria, whether 

you approve or deny an exception, what that language, 

what you would want that to look like, as well, you 

know, so what was the previous language that you used 

to determine? I know that there was five of them or 

something that you told us yesterday about.

MS. GUAGLIARDO: Yeah, I could print that 

out. Kendra has it, right, Kendra?

Yes, we did have a directive that we 

published in 2010 that had the criteria for the non-use 

of service exceptions and that was updated in 2017 when 

the non-use of service exceptions were no longer in 

the Grain Standards Act.

CHAIR MOFFIT-TOBIN: And I think it's 

important to note with that criteria being so subjective 

and up to who was interpreting that language, you know, 

that we just appreciate the clarity in the regulations 
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versus what comes out in the directive. So, the 

clearer, I just want to note what Arthur said yesterday, 

the clearer they can make it in the regulations, the 

better.

MS. GUAGLIARDO: Right, yes, so some of 

the criteria that we used previously was services 

offered, location of the specified service points, 

potential impact of loss of revenue by the incumbent 

agency, the number of approved exceptions in the 

incumbent's designated area, and the ability for staff 

to staff an on-site lab. 

And these are not necessarily the criteria, 

or the only criteria that we could use when moving 

forward, you know, talking about technology, talking 

about the services, you know, the ability to have an 

on-site lab, some of those other criteria, you know, 

we're looking for feedback on that, on that kind of 

thing. You know, what is it that should be this much 

better, much better, I will say quantitative that we 

can look at would be much more helpful than the 

subjective ones.
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MR. NEAL: Now, as a part of our process 

we can accept input from now directly, because you're 

already thinking about this issue. We don't have to 

wait until we put the advanced notice of proposed 

rule-making out to give us your thoughts on the 

exceptions provisions. We'd like to have that type 

of information as we draft the advanced notice of 

proposed rule-making. We don't have to do it as a 

committee. As Matt said, we can do it as individuals. 

However, when the advanced notice of 

proposed rule-making does come out, it will lay out 

our current thinking on that issue and it will allow 

you an opportunity to give us feedback on our current 

thinking on the issue. So, that's just for your 

understanding of how it will come out in that, in that 

format. It, it may not be the proposed rule for all 

departments, but it would be our current thinking around 

issues that involve the exceptions requirements.

CHAIR MOFFIT-TOBIN: Is there any more 

questions or feedback?

MR. TUNNELL: I just wondered about the 
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three, five year re-designation and what's the criteria 

to go to five years? Is there some agencies just three 

years? Who makes that decision?

MS. GUAGLIARDO: So, the, so the law 

changed. Prior to 2015, the law said that the 

designations could not go beyond the three years. And 

it was changed to up to five years. So, an agency can 

have a designation up to five years. But that doesn't 

mean that they automatically get five years. We do 

look at the quality and some of the things that the 

agencies are doing as to whether or not they should 

get five years. We could do, you know, three years, 

four years, you know, two years, depending on how the 

agency is performing. 

We do have criteria on that and we actually 

do have measurements. And we're updating those 

measurements as we go through our quality management 

program and look at some of the other things. We're 

measuring those things. In the past, we had, you know, 

certain thresholds for certain things, how, you know, 

how well they're performing on their SIMS and their 
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steps and things like that. And they get numbers, they 

get quantitative numbers on their, the reviews that 

we do for them. And depending on what number they come 

up with depends on whether or not they have the full 

term or a shortened term.

Another question?

MR. TUNNELL: Well, just from a user 

perspective, a customer perspective, if you've got an 

agency that's rated every three years, would that make 

you wonder about the quality of the service as opposed 

to five?

MS. GUAGLIARDO: Yes, so they still have 

to be qualified. So, remember the first criteria is 

they have to be qualified. So, they have to meet those 

criteria. And then we have, you know, additional 

measures as to whether or not, how well they're 

performing. So, they have to have that criteria and 

then, you know, like Linsey's saying, you know, there's 

that other additional items that we look at, how well, 

you know, are they participating in all of the programs 

that, you know, some of the programs that TSD does are 
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voluntary programs. Are they participating in them? 

Are they doing all of the things that, most 

of them are supervised by DIOO, some of them aren't, 

but most of them are, you know, are they participating? 

Are they making improvements? If they send out a, 

what do you call those, QARs? You know, are they making 

those improvements? So, how are they providing, making 

that improvement?

MR. NEAL: I think, I think, Karen, what 

Tom is getting at is that there needs to be a process 

or some, some clarified tier about why we made decisions 

on whether or not, if someone's authorized to have five 

years, why did we give them three? Why did we give 

them two? And I know we may have reasons why. It's 

similar to the situation we have with exceptions. 

People want to know why. And so, that's something we 

can definitely talk about and figure out how we do it 

in a way that's consistent.

CHAIR MOFFIT-TOBIN: Any other comments, 

questions from the committee?
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MR. LINDGREN: Karen, do you have a rough 

estimate on how many don't get the full five years?

MS. GUAGLIARDO: Well, I guess it's a, it's 

a revolving thing. So, the designations don't all end 

at the same time. It's a, every, you know, certain 

period. It used to be every quarter that there were 

some agencies that were, their designations were 

ending.

Now, that we have a gap of those two years 

from the three to the five, there are ones, I wouldn't 

know, I wouldn't say it's a large percentage that don't 

make the full designation. Some of them that, you know, 

are meeting the criteria, they are qualified but they 

are not doing as well as we would like them to do, so 

we typically will give them a little bit of time to 

make that improvement. 

I would say the majority of them, when they, 

when they get to that point, they get out of the 

business. You know, we had 90 agencies, we're now to 

42, 43, something like that. You know, they typically 

do it on their own before we get rid of them. So, but 
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I would say it would be a small, it would probably be, 

overall a small, a small portion don't make that full 

designation.

CHAIR MOFFIT-TOBIN: Any other questions 

or concerns from the committee? Okay, I would like 

to open it up to the floor to see if anybody has any 

comments or questions for Karen about -- do you want 

to come up or do you want to use the back?

MS. SEXTON-BOWSER: State your name, 

please.

CHAIR MOFFIT-TOBIN: Yes, if you have 

comments or questions, please state your name and 

affiliation.

MR. McCLUER: Sure, I'm Jess McCluer with 

the National Grain Feed Association. So, I know many 

of you here within the room with the AMS staff and, 

and those within the audience. I know some of the 

advisory committee members. Obviously, this is a very 

important issue, this exceptions issue, for our 

industry or for our members of the National Grain and 

Feed Association. We've been very involved in this 
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since the 2015 U.S. Grain Standards Act 

re-authorization and the 2018 Farm Bill, so really 

appreciate you bringing this issue, putting it on the 

agenda for this meeting. 

I think having this good, open discussion 

about it, I think hearing about the briefing and the 

background, the information provided to the committee 

yesterday was very helpful. And appreciate FGIS coming 

to us and looking for our feedback as far as the advanced 

notice of proposed rule-making. And from the NGFA 

standpoint, we have provided the agency with our 

thoughts on some of the potential language for the 

advanced notice of proposed rule-making. So, we really 

appreciate that. 

My question is, though, is, you know, we've 

had a lot of this discussion about, you know, we've 

gone back to, we've restored these exceptions that were 

revoked, you know. We're moving forward with this 

advanced notice of proposed rule-making. But the main 

question is, what is that, you know, what does that 

mean currently? 
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So, if you have somebody like Bruce, right, 

you have his facility is having a service issue and 

they make a request for a non-use of service exception. 

If we're going through this rule-making process, what 

does that mean for him? What is the process, then, 

if he were to make a request? What's going to happen? 

What's the process that's going to be used? Is it, 

would it be granted?

I mean, I guess that's kind of the whole 

question we're talking about, everything, you know, 

moving forward. But I think as we all know from a 

rule-making process, I mean, an advanced notice and 

then a proposed rule and then a final rule. I mean, 

that could take some time. 

But what does that mean in between if you 

have a facility that's going to be requesting an 

exception, what's going to be the process, then, for 

reviewing it? Is one even going to be potentially 

granted?

MR. NEAL: Good question. The process, 

well, if we did receive a request, it would be assessed, 
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evaluated and decided upon. The criteria, obviously, 

is not established. So, we have to figure out how we 

make a decision on that internally. We share the 

results of it based on what our decision was based on. 

But for right now, we don't have criteria in the 

regulations. We're going to be working on that. If 

we get a request, we're authorized or required to 

respond to the request and we will.

MR. McCLUER: So, what you're saying it's 

a case-by-case basis from now until there's some type 

of --

MR. NEAL: That's kind of what, what it's 

been, a case-by-case basis. So, I don't see a change. 

I mean, we want to, what we're going to try to do is 

insure consistency and fairness in our process. But 

every case has been a case-by-case basis from what I've 

understood.

MR. McCLUER: And that's, I think, some 

of the issues that we've had during that process, being 

a case-by-case basis.

MR. NEAL: Yes, and the only way we can 
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really address that effectively is to do things, put 

everything in the regulations so that we can operate 

in the sunshine as best as we can. I appreciate that. 

MR. McCLUER: Thank you.

CHAIR MOFFIT-TOBIN: Would anybody else 

like to ask any questions? Okay, Karen, do you have 

anything else?

MS. GUAGLIARDO: No.

CHAIR MOFFIT-TOBIN: All right, thank you. 

All right, we are going to break for lunch until 1:00 

p.m., so if everybody could be back here five minutes 

before 1:00 that would be appreciated. Thank you.

(Off the record.)

MR. NEAL: We've got a special guest with 

us again, coming from Washington, D.C., from the 

National Organic Program, Ms. Betsy Rakola and Mr. Matt 

Pavone from the National Organic Program. And they're 

going to talk to us a little bit about organic 

requirements and some of, some of the regulations that 

involve organic certification. We had one question 

that came up from the committee about are their 
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opportunities for AMS and FGIS to allow for organic 

certificate information to be included on official FGIS 

certificates.

And so NOP has agreed to come just to 

educate us about how they do things and whether there 

could potentially be opportunities for further 

exploration. So, without any further ado, I'm going 

to turn it over to Ms. Betsy.

MS. RAKOLA: All right, well, thank you, 

Arthur and Linsey. I want to thank you for inviting 

us here and for having the idea to start the 

conversation. It sounds like there are some really 

exciting ideas on the table, so I'm interested to see 

what we can offer you and how to do it together. Before 

I get started, does anyone know what I need to press 

to get the presentation on?

All right, thank you, Kendra. All right, 

so as I said, my name is Betsy Rakola. I am the director 

of the Compliance and Enforcement Unit for the National 

Organic Program. So, I spend a lot of my time trying 

to root out the problems of people who are not following 
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the rules. So, it's nice being in a room with people 

who are trying to do the right thing. 

It sounds like some of the questions and 

ideas that we might be talking about here today will 

be about how we can reduce the paperwork burden to help 

American agriculture flow better. We are all about 

that. Anything we can do to make the customer 

experience better and provide a better level of customer 

service from the federal side to, to help the marketing 

of those products, is always our goal. So, very 

interested to see what we can all do together.

So, a little bit about what we want to do 

here today. I want to give a big picture overview of 

our rules and regulations without actually citing 

chapter and verse. And I think some of it, it sounds 

like may sound very familiar in terms of process and 

quality management. We are more process oriented and 

less testing oriented. Testing is a portion of what 

we do. So, we'll talk through kind of what that looks 

like. 

We also have some special challenges when 
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it comes to organic verification in grains and 

commodities. So, I want to talk about, just in full 

disclosure, what some of those challenges are so when 

we think about the solutions of us working together, 

we also think about the possible hurdles and the risks 

and make sure that whatever we come up with confronts 

those as best we can.

But we want to start with an overview of 

the market to give you a little bit of idea of where 

that's at, talk about our system, and then go into some 

of the specifics. And then we wanted to wrap up our 

time with you talking about, you know, the future state 

of organic. We have some big changes that came out 

of the 2018 Farm Bill. And the timing is really good. 

We're seeking a lot of input right now, so this is 

a good time for us to start the conversation and make 

sure that you all know ideas that are on our mind so 

that you can tell us what you think, submit your comments 

when we put some rules out, hopefully, later this fall.

So, with that, I'm going to turn it over 

to my colleague, Matt Pavone. Matt is here as part 
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of our rule writing team, so he's going to give you 

the market overview and then he'll take the podium again 

to talk about our strengthening organic enforcement 

rule-making. And so I will had the floor to Matt.

MR. PAVONE: Thank you, Betsy. Just a 

quick background note. My name is Matt Pavone. I work 

in D.C. I work for the Farm Service Agency, which I'm 

sure you all are familiar with. Spent some years as 

a loan officer in New Jersey, so please don't hate me. 

And came to D.C., worked in stakeholder engagement 

and now I've been with AMS for about, about three years, 

going into my, hopefully, fourth year. A large part 

of my work has been over the last several months to 

a year or longer, has been focused on an upcoming rule 

writing, which we're going to get into towards the end 

of the presentation. 

But in terms of the big picture, without 

hitting you with too many Power Point slides, this is, 

this is a really great graphic, because it shows the 

past 10 years in a snapshot. And as you can see, the 

trend is sales have been growing in the U.S. And if 
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you look at NAS data and you look at the number of organic 

farmers, if you look at the acreage of organic farmers 

in the U.S., you'll also see a similar increase over 

time. 

But if you look at import data, you'll also 

see another sloping, a glide path going upward, to show 

that we are importing more, even though we're buying 

more and demanding more. And the trouble is that we 

have very strong demand for organic products at the 

retail level and we have to offset some of that by 

importing organic products. So, this is a quick screen 

shot. If we keep this in mind and then look at, so 

this is a break out of 2018. 

So, the organic market is going to be over 

$50 billion, the highest point it's ever been. And 

this is a rough estimate of where those retail sales 

are. So, you can see fruit and vegetables, they're 

pretty significant of the, of the whole pie. It also, 

you know, this break out also includes beverages, 

snacks, but we have breads and grains, 11 percent, meat 

and poultry, dairy, yes. So, this is just a quick 
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composite picture to give you some sort of context as 

to where the organic sales are actually occurring at 

the supermarket.

Now, we zoom in just a little bit further, 

since this is the Federal Grain Inspection Service, 

let's just get a quick idea based on some data that 

is relatively current of where the spend is, the 

production is, for these different commodities, milk, 

eggs. As you can see, it's sizable. So, you can see 

the dairy up there, eggs, bread, grain, meat. So if 

you look at this now, it might make a little sense. 

The numbers are big. This is from 2015. The 2018 data 

was the other slide, so keep that in mind.

 Now, getting into just the actual 

commodities here of the top sellers of organic, you 

can see corn, hay and wheat are all in excess of $100 

million in terms of sales. So, that's, that's pretty 

sizable and this is 2015. More current data may 

indicate upticks in each of those categories. And this 

is just very macro-level stuff. I don't want to drill 

down in too much detail because A, we just had lunch, 
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and you're probably very tired, and B, we want to keep 

it very user friendly for you.

Would you like to take over? Betsy's back 

on the mic.

MS. SEXTON-BOWSER: I have a very layman's 

question on hay. Is the feeding of organically 

produced feed stocks or forges necessary for the 

labeling of organic milk?

MS. RAKOLA: Yes, absolutely yes. So, you 

know, I think what we really can see in here, and these 

slides, just for clarification, are farm gate sales 

and what our farmers are actually getting versus the 

others that are the retail sales. But you can see that, 

you know, the livestock products are really the ones 

that are driving the farm gate sales.

And then, you know, I think just because 

specialty crops are always, you know, that higher farm 

gate value because they're, they're different. I think 

it kind of understates the importance of those feed 

stuffs. But yes, all organic, certified organic 

livestock have to eat 100 percent certified organic 
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livestock feed and so that is really the driver for 

those markets.

For people in the organic markets say that 

organic milk is the gateway drug to all other organic 

products. Certifying that and then they tend to start 

buying other organic products afterwards.

All right, so that's a little bit of an 

overview of the market. And, you know, as Matt was 

saying that the challenge that we have domestically 

is that American appetites for organic foods are just 

a lot higher than our appetites for growing organic 

foods. So, we're filling the gap with imports, but 

there's a real need for us to see, I think there's a 

lot of interest in the industry, in wholesale, in 

consumers. Everybody wants to buy American organic 

products. They just can't find as many of them as they 

want to. So, it's a real opportunity for the sector, 

for sure.

So, I'm going to talk about what does it 

really mean and what is that process? So, we're 

thinking about how we verify the integrity of that 
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supply chain, how we hand out those certificates. What 

does it look like? So, this is going to be a very quick 

overview. It's a complicated process. So, it will 

be a start of a conversation and we'll look forward 

to any opportunities to continue that conversation 

after today.

So, what does organic really mean? So, 

it means a whole lot of things, but at its base, this 

is right from our regulations. And it's a labeling 

term for food or other agricultural products that are 

produced using cultural, biological and mechanical 

practices that support on-farm resources, ecological 

balance, and conserve bio-diversity. Those are the 

basic ideas that are trying to underscore everything 

else that is organic. And then the one that we always 

focus on is it also means complying with all of the 

USDA organic regulations. 

So, people will sometimes say to me, well, 

it is USDA organic? Or is it certified organic? Or 

is it organic? They're all the same. Anything that 

uses the word organic or any derivative of the word 
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organic has to comply with the rules and the first part 

of the rules is you have to get certified if you want 

to call it organic. So, we do see, particularly I think 

with some smaller growers, a lack of understanding. 

They say, well, I just said that my product is 

organically grown. I didn't say it was organic. Well, 

in the eyes of the law, it's the same thing. 

So, that's a lot, a lot of what we do in 

my division is do some of that compliance education 

with small farmers to let them know what the rules of 

the road are and make sure that if they do want to market 

their product as organic, that they get certified first.

So, a lot of the organic regulations talk 

about what you can't do. There are a fair number of 

limitations on things like synthetic pesticides and 

fertilizers, in terms of livestock prohibitions on the 

use of antibiotics and synthetic growth hormones, and 

prohibitions on the use of sewage, sledge, or 

bio-solids, no irradiation and nothing that is a product 

of genetic engineering. And that all comes down to 

having a good organic plan and a robust record keeping 
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system.

I talked before about wanting to cut down 

the paperwork burden. That's the constant challenge 

for us is how you cut down the paperwork burden and 

still have the traceability and the verification that 

you need. So, we're always trying to, to figure out 

how to, to make those things work.

So, what we are, again, what we're trying 

to do is protect the integrity of that product. If 

the consumer is buying something that's organic, we 

want to make sure that it's delivering on that, that 

promise. So, we're always trying to do that in the 

most efficient and effective way possible. So, our, 

our mission at USDA is to do what you see on the left 

hand side, those four blocks. We set the organic 

standards. We get a lot of input from the public.

We have two federal advisory committee 

meetings every year. Ours are about three days long 

and we usually have a public webinar, a public comment 

webinar beforehand, you know, a lot of input from people 

all around the organic supply chain and the organic 
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community to tell us what they would like to see out 

of the organic regulations. So, it's a very 

participatory process. 

We then accredit third-party organizations 

to do organic certification on our behalf. So, it 

sounds like there's a lot of similarities in the model 

in terms of that public/private partnership. We 

currently have just shy of 80 certifiers that we 

accredit. A little bit more than half of those are 

located here in the U.S. A fairly small number of those 

are state-run governments. Most of them are private, 

either for- profit or not-for-profit and close to half 

of them are headquartered overseas.

So, we do have a lot, because we have a 

need for imports to meet our market demand, we do have 

a lot of organic certification that happens in other 

countries. And so we do send our USDA auditors all 

over the world to make sure that we're verifying those 

processes and that everyone is following the same rules.

And then what comes out of that is that 

we have currently about 43,000 farm branches and food 
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processors that are certified to the USDA organic 

standards. And we also have a small number of 

government-to-government equivalency arrangements. 

So, for instance, the European Union has an arrangement 

with us where if you are E.U. certified organic, you 

can then export to the U.S. market and sell as organic, 

as well. So, the 43,000 number is actually a little 

bit low when you think about the total number of 

producers and handlers who can sell products as organic 

here in the U.S. That's global for USDA certified, 

but not for those that are certified to, to other 

standards.

So, the path to getting certified organic 

is probably what you would expect. That you -- it's 

first, adopt organic practices. You start farming 

organically. That's obviously the first thing you need 

to do. There is a three year transition if you have 

land that has had synthetic fertilizers or pesticides 

applied to it. That practice needs to cease, and then 

three years pass before you can have that first date 

organic certification. There's an application and a, 
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a fee that happens, and then an on-site inspection. 

Every single farm, ranch and food processor 

who is certified organic must be inspected on-site at 

least once every year. You know, any inspection will 

find some questions. So, whatever issues, questions, 

concerns come out of that then get resolved most of 

the time between the applicant and the certifier. And 

then after that, the, the operation gets the USDA 

organic certificate. And the process repeats every 

year.

So, anyone that wants to stay certified 

organic has to report to their certifier and tell them 

any changes that they may have made in that year, 

especially if those changes could affect their 

compliance with the rules. They have to submit those 

annual fees, get another on-site inspection and then 

they get an updated certificate.

One of the challenges, I'll say since you 

all are familiar with the certification rules, our 

certificates don't have an expiration date, so it's 

very important to look at those certificates and make 
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sure that they have been issued in the past 12 months. 

Our regulations say that a certificate remains in 

effect unless or until it is surrendered, suspended, 

or revoked. It leaves a little bit of wiggle room, 

you know, in case the inspector can't get out there 

on time, especially a year like this where you have 

a lot of flooding events. It might be hard to get out 

there within that 12 months.

So, it kind of allows for some of that fudge 

room you need for the reality of what might be happening 

in the production cycle, but the challenge of that is 

that you, you don't have sort of an automatic expiration 

of that certificate. So, it's good to check the date, 

make sure that it is current.

So, our certifiers are our eyes and ears 

on the ground. They are the, the people in between 

the USDA and the farmer to make sure that the system 

works and verify that those organic practices are being 

followed. So, they're doing paper reviews. They're 

doing those on the ground inspections. Many of them 

are also doing unannounced or surprise inspections. 
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There is residue testing.

We require our certifiers to test at least 

five percent of all of their clients ever year. Those 

tests do focus on crops and they do focus on pesticide 

residues. But having said that, our certifiers have 

the authority to test any, any operation, any product 

that is certified organic. And they can also look at 

testing soil or livestock if they have any concerns 

in those areas.

Complaint investigations happen both by 

our certifiers and by us at the National Organic 

Program. That is the world that I live in is complaint 

investigation. And if we do find that someone who is 

certified is not following the rules, we start with 

a, a non-compliance, a correctable process. We focus 

on the continuous improvement, you know, as long as 

someone has made a mistake that they can fix, we want 

to give them the opportunity to do the right thing.

Now, if you billed something non-organic 

as organic, that's probably not something you can fix, 

so that's where we would take a stronger line and look 
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at something like suspension or revocation of the 

certificate.

Everyone has appeal rights. We all live 

under the same constitution. We all have due process. 

So, we do focus on alternative dispute resolution and 

look at mediation and settlement agreements and we 

encourage our accredited certifiers to do the same 

thing.

Any questions so far from the committee?

So, looking at the, the members here, it 

sounds like a lot of you are in the handling world. 

So, I want to talk about what does that really mean if 

you're not the, the grower, but instead, you're handling 

or processing? So, the, just like anybody else, if you 

wanted to get certified as a USDA organic handler, you 

have to apply to one of our accredited certifiers. And 

a lot of that in that area really does focus on the record 

keeping, making sure that you have traceability and 

anything that comes in as organic, goes out as organic, 

and that you have the records to prove that process.

And a lot of the ways that we verify that 
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is through a math balance exercise. So, did you buy 

enough organic product in to account for what went out 

as organic. Very simple. Well, it sounds simple, 

depending on how complex your business is, obviously, 

it can take some time.

Dedicated organic storage is important, or 

if you don't have dedicated storage, you need to have 

some kind of demonstration of what kind of clean out 

process you have. I'm not going to lie, this is a 

challenge when you've got dry greens, so we'll often 

see is something like a purge between a non-organic and 

an organic run to try to work through any residues that 

might have been there from the conventional product.

And then typically that purge starts with 

an organic product but any result of that purge would 

be sold on the conventional market. So, it's just a, 

a typical process that we see. It's, the regulations 

are very flexible and adaptable so you can figure out 

whatever one makes sense for the process that you're 

looking at.

Labels do need to be approved by an organic 
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certifier. So, I think when we're thinking about 

organic claims on a certificate, you want to think about 

that certifier approval. Generally, you're thinking 

about the retail label here. We don't currently require 

organic certifier approval for bulk containers, but Matt 

will talk about how that may be changing in the near 

future. That's one area we'd love your comments on and 

definitely ask you to start thinking about as we get 

ready to propose some changes to our rules.

And another area that may come up as you're 

thinking about your processing facility is that there 

are some restrictions on sanitizers or cleansers that 

can be used, really just on surfaces that contact the 

organic product. 

Again, a fair amount of questions about 

funding and how the fees work for organic. It is very 

much a public/private partnership, while there are a 

whole host of USDA programs in farm service agency, the 

conservation programs -- are certainly adaptable and,

in some cases, tailored to organic, the certification 

process itself is very much privatized. So, the USDA 
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accredits our certifiers. The certifiers have to pay 

the USDA a fee for that accreditation and then pay our 

auditors to conduct the audits. Farms, ranches and food 

processors then pay the certifier to get their organic 

certificates.

 Inspectors will work for the certifiers. 

They are both full-time and contract employees. We 

have a -- a good mix out there. And so the only funds 

that actually flow from the USDA to that organic 

certification system is through our cost share program. 

And that's limited to 75 percent of the certification 

fees every year, and it's also capped at $750 a year 

for each scope of certification. So, if you've got 

crops and livestock, you could get $750 each. So, it's, 

you know, capped at that level to really benefit the, 

the small operations that need it the most.

So, I talked about our certificates. I 

wanted to show an example of what one looks like. This 

is specifically what we hope the future of organic 

certificates will look like. So, we are piloting what's 

called a -- what we are calling a federated organic 
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certificate. I mentioned we have almost 80 certifiers.

So, that means if you're trying to figure 

out whether you have a legitimate certificate, you'd 

have to know what format all 80 of them used and that 

can be a challenge. And it can be an area where it just 

becomes a little bit too easy to falsify that 

certificate.

So, we have an online data base. This is 

our organic integrity data base where all of our 

certified farm, ranches and food processors have a 

specific record. They all have a specific numeric ID. 

This is the consolidated screen so you can't see all 

of that level of detail, but everyone who has an entry 

in here soon will be able to log in and get a, a real 

time federated certificate. So, you can see that it's 

got a QR code there. 

Our hope is that once we are able to roll 

out this technology, that will give anyone who is trying 

to verify that organic certificate the ability to very 

quickly, you know, use a smart phone or any other 

QR-enabled device, get online to our data base and know 
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for certain that they have an updated, real time 

certificate, not something that has been falsified, not 

something that has been suspended or revoked, and have 

that confidence in the product. So, that's another area 

that is coming soon that we'll be asking for comments 

on. So, if you're a data or software person, we'd love 

to hear from you about this idea.

All right, any questions on any of that 

before I move on to, yes?

MR. WANTE: Excuse me. Mark Wante from the 

Farmers' Union. So, in looking at the imports, you said 

you have countries that have standards that you allow 

them to import and then you have verifiers. But do those 

standards then meet or exceed our current levels?

MS. RAKOLA: Great question. Yeah, so the 

standards for countries that we recognize are generally, 

we call them equivalency arrangements because they're 

not equal, but they are functionally equivalent. If 

there are exceptions that seem really critical, that 

we can't reconcile, we'll carve those out. We just call 

them critical variants. So, one example would be 
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antibiotic use. Some, some of our trading partners will 

allow a 12 month withdrawal of the animal after 

antibiotic use and then allow that animal to come back 

into the organic market. Our regulations don't have 

that exception. So, that would be one of the critical 

variances that we'd carve out. 

So, our current equivalency arrangements 

are limited to Canada, European Union, Japan, Korea, 

and Switzerland. And in the Asian markets, they're also 

limited in scope, so we don't cover all crops. We may 

just cover crops or livestock. Processed products, I 

think, are under negotiation in some of those areas.

MR. WANTE: Yeah, I have a deep concern 

about truth in labeling. It's one of the things that 

we want to, you know, from the farmer perspective, that 

want to get accurate. It appears to me that right now 

if you look at the organic standards are the only ones 

really probably truly achieving near-perfect, you know, 

compliance. A lot of the other claims are a little bit 

messy as far as we can tell. But just to mention to 

you, from a farmer perspective, I'm not sure it's a bad 
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thing that we're short in supply of organics. That 

might not be a bad thing, because that's what keeps that 

premium.

MS. RAKOLA: Yes, that is very, very true. 

I see another hand.

MR. MORGAN: I have a couple questions, but 

the first one -- it's John Morgan with Supreme Rice. 

The first question on the imports, Mark, do you guys, 

you talked about testing, audits, surprise audits, do 

you do any of that on the imports?

MS. RAKOLA: Great question. So, the 

testing on imports, we rely on the FDA system. And so 

when the FDA does their testing on imports, which I think 

is the, the typical control level on imports where it 

generally is about two percent. If they do testing on 

an organic product and they get a positive hit, they 

will send that to us and then we'll investigate to find 

the source of the, of the pesticide.

MR. MORGAN: Thank you. Regarding the --

you said you have 80 organic certifiers. I guess these 

are independents that you guys have approved.
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MS. RAKOLA: Right.

MR. MORGAN: Are they also consultants to 

help a company who wants to go organic or a processor 

from an organic processing facility? Who do we turn 

to, to help us ensure that's a, we can meet the standards?

MS. RAKOLA: Yeah, so our certifiers, some 

of them also have a consulting or a technical assistance 

side of the house. The challenge for them is that they 

also have to have a really good policy to separate 

conflict of interest. So, someone who's inspecting a 

farm can't also be consulting for the farm. That makes 

them wear two hats that are just really difficult to 

balance. So, several of the certifiers do have a 

separate educational or technical assistance arm, so 

if you are looking to get certified, that's a good thing 

to look for in deciding who you're going to work with. 

And there are organic consulting firms. 

I think one of them is actually called the Organic 

Consulting Firm, not an endorsement, just the one that's 

easy to remember. But there are certainly organic 
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consultants out there who can help to set up the system 

and help you figure out what you need to do to get the 

process running.

MR. MORGAN: Do you guys have parameters 

on your website by, say by industry or by product to 

say the way it meets organic?

MS. RAKOLA: We have, we have definitely 

a whole host of fact sheets and other materials there. 

It won't be quite as, you know, we don't have a how 

you set up a plan to become an organic processor, but 

we do have a whole host of training materials that are 

up on our website. We've actually just launched what's 

called our Organic Integrity Learning Center.

So, we have a lot of self-paced training 

modules that will take you through the process of how 

you would get certified, what it means, what, how, how 

to find an organic certifier, all that sort of thing. 

So, we can follow-up and share that information for 

how to get to that Learning Center and that would be 

a great place to start. The Organic Integrity Learning 

Center.
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MR. PAVONE: We're going to be here this 

evening, as well, so if there's additional questions 

we're happy to, in the in-between moments, to, to address 

all the questions that are specific. Very good 

questions.

MS. RAKOLA: So, let me move on to the 

enforcement portion of the program. So, when you think 

about our system or are thinking about organic control 

systems; the certifiers that we have; traceability so 

that that worldwide supply chain, import or domestic, 

has integrity; robust enforcement, so everyone is 

playing by the same rules; and transparency in how we 

are creating our standards.

So, again, my world is in the enforcement 

world. I'm going to talk a little bit about that and 

a little bit about the specific areas that are a, a bit 

concerning in what we're seeing in the great world today. 

So, we do open investigations based on 

complaints that we get. Anyone who suspects that 

someone's breaking the organic rules can send a 
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complaint and we will take a look at it and see if there's 

something that, that we need to take action on. And 

we also do surveillance. So, that more and more, we're 

trying to focus on areas of highest risk.

So, we're directing our resources to the 

places that have a big impact on the markets so that 

the market is fair for all American producers who want 

to participate in it. So, we are doing more and more 

surveillance and choosing the areas that we think need 

some extra attention.

We do coordinate with other federal 

agencies. We have more and more been coordinating with 

the Inspector General and Department of Justice for 

enforcement on a large scale. And biggest areas of 

concern for us right now are import oversight, 

compliance by organic dairies, and unfortunately, grain 

and oil seed. We are thinking about how we can work 

together. This has been a bit of an area of concern 

for us.

So, to just, you know, think about what 

those risks might be and how we could, could overcome 
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them together. In grains it is all about traceability, 

being able to trace that product all the way back to 

a certified farm. Anyone who does make an organic claim 

then would have to be able to prove, if they're asked, 

that their product was actually organic. And we do have 

the ability to levy civil penalties, so a little bit 

of a cautionary note there. We don't want anyone to 

suffer any of this, so we all want to figure out how 

we can bring integrity to, to our various systems.

So, we are in the news a little bit more 

these days than we might like. Full disclosure for 

anyone who reads the Minneapolis Star Tribune, there 

is a story just coming out today about some concerns 

that people have shared about organic grains coming in 

from Argentina. A look at the, the news in the coming 

days, we have had some concerns about domestic farmers 

also committing some fraud in organic commodities and 

are expecting some, some additional news on that 

shortly. 

So, you know, there are just some special 

concerns when it comes to trying to have full farm to 
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traceability in bulk commodities that are traded in, 

in large silos and just have a long shelf life, and you 

know, a little bit of back and forth with the 

caterpillar. It's just a, it's an area that's been 

really, really tough for us. And because there is that 

shortage, there's a big price premium. It's just an 

area where there is that incentive.

So, everything that we are thinking about, 

and perhaps you could help us do better, is how do we 

try to work with the existing system and overlay that, 

that traceability from farm to table? What are the 

controls that we're not putting in place today that maybe 

we could put in place tomorrow to help us all just verify 

that integrity a whole lot better?

So, you know, going back to some of the, 

the rules for, for organic and thinking about, you know, 

what might be that plan if you wanted to get yourself 

certified organic as a processor, you know, it's really 

important to have those dedicated organic, organic 

storage sites, have really good record keeping and 

product tracking systems. And a lot of it comes down 
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to how are you training your employees? Especially some 

of the areas where we've seen things kind of start to, 

to fall apart. You know, growth is wonderful and growth 

can bring its new risks. So, if you have a really well 

functioning system, it grows really quickly. Do those 

controls that you have over the system and your employees 

understanding scale up with that.

Transportation becomes a, a pretty big 

issue, as well. Making sure that you're working with 

transporters that you can trust who are doing proper 

clean outs, dedicating that equipment to the organic 

supplies. And then also, you know, again, just checking 

on that certificate. We do also see people start to 

get comfortable with suppliers.

 Some, you buy from the same person month 

in and month out and then they do something wrong. They 

lose their organic certificate. They could have some 

inventory they're trying to pass off and so, you know, 

they come to you the month after they actually got 

suspended, don't disclose that to you. You know, we've 

seen people get taken advantage of, just, you know, you 
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get comfortable with those relationships. You start 

to, to ease up on the verification. So, just keeping 

all of those controls in place and keeping them really 

consistent is important.

All right, so that's all the bad stuff. 

Let's talk about the good stuff. So, the, I mentioned 

earlier that there are some changes coming down the pike 

in the Farm Bill. We were really pleased that the 

Congress gave us the tools that we need in the 2018 Farm 

Bill to start confronting some of these challenges. 

So, we got more funding to try to have better security 

and more scrutiny of organic imports.

And we also have a requirement to reduce 

what is called our exemption. We have a current rule 

in place that exempts anybody from organic certification 

that doesn't physically touch the product. And that's 

become a challenge for us. And that's an area where 

I think you all might have a unique perspective. 

So, you know, if you think about our law 

was written back in 1990. Our regulation was put in 

place in 2002. The market was really small, okay. You 
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only talked to people who were writing the law and they 

were all, well, they said, you know, we're just trying 

to think about a system to reward people who are doing 

the right thing. Supply chains were really short. You 

know, there was not a whole lot of steps in between that 

farm to market. And today, with $52 billion in retail 

sales, there's a whole lot of hands in between that farm 

to market. 

So, you know, we think the intention in the 

past was, well, if someone's not touching the product, 

you know, they're not changing what happens to the 

product, they don't need to be certified, because it 

doesn't really have that impact. And today when we have 

just a much bigger market with longer supply chains, 

so many more transactions in the middle, it's become 

a real challenge to have that exemption to 

certification. 

And a lot of the people who really can trace 

that integrity of the product through the market tell 

us something like, did it get fumigated when it crossed 

a border? That fumigation would mean it no longer gets 
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to be organic. A lot of those folks actually aren't 

part of the organic certification system. So, Congress 

told us you have to change that. And we think that that 

makes a whole lot of sense. And so that's something 

that we will be proposing to implement through a new 

regulation in the coming months.

So, the two main areas for this are data 

sharing with Customs and Border Protection. This 

really deals with product incoming, import 

certificates, trying to make all of our certificates 

have an electronic component. And integrating with the 

systems that are already in place. So, if any of you 

work within the ACE system, we're adding our organic 

data to that and sometime in the next couple of years 

we'll be mandating that for all imports so that we really 

know what's coming across our borders. 

And the piece we'd like to focus on in our 

conversation with you today is our strengthening organic 

enforcement rule. So, that rule will require an 

electronic import certificate and will also do a lot 

to improve that supply chain traceability, particularly 
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by requiring certification from those brokers and 

traders who right now aren't within that organic 

oversight system.

So, I have mentioned a couple of times 

electronic certificates. We are working towards the 

import certificates in the proposed rule. We did launch 

electronic export certificates earlier this year 

through the ETDE system that AMS has. And through that 

federated certificate, we are also working toward the 

electronic real time version of the regular annual 

organic certificate. 

There was a big focus, even in the 

legislation, on technology. We really think that the 

future of all of this for us is data driven. It is going 

to be software driven. With this many players in the 

market, this many countries participating in the market, 

we really need to have software solutions to give us 

the traceability that we need. We don't exactly know 

what that is going to look like, but there are a lot 

of conversations happening right now around blockchain 

and the applications that that could have for the organic 
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market.

And with that, I'm going to turn it over 

to Matt to talk more in specifics as our subject matter 

expert here about what our strengthening organic 

enforcement rule will propose and the kind of things 

where we would love to hear your comments.

MR. PAVONE: Thank you, Betsy. So, as 

Betsy mentioned, the Farm Bill for 2018 has charged the 

USDA with really improving the oversight of the supply 

chain, of the organic supply chain. So, when you hear 

things like data integration, transparency, it has a, 

it has a statutory source to it. And so we're in the 

process, we've been in the process for over a year now, 

reaching out to stakeholders, talking with them, 

listening, and developing topic areas that we feel are 

important to them and then have the might of the Farm 

Bill. 

And we've developed what is expected to 

publish at some point in the fall of 2019, what is 

technically called the strengthening organic 

enforcement rule. It's a proposed rule, so there's 
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going to be opportunity thereafter, about 60 days to 

submit public comment. We're hoping that you, among 

others, will be interested in reading it, learning about 

it, understanding it, looking at the economic analysis 

and then sending us your comments and suggestions. It 

would be helpful for us, always, as regulators, to be 

better informed. And I think it's a, it's a good process 

to be a part of.

So, we've talked about the demand. We've 

talked about the size of the sales in the U.S. and just 

additional information, globally it's about $100 

billion in sales. Just happens to be about half. So, 

it's really a, this is really a fast growing market. 

The affected businesses, based on the way the proposed 

rule is made, we're going to affect three different types 

of operations. 

First, those who are certified. They're 

pretty aware of this because they're certified 

operations and they subscribe to the Organic Insider. 

Now, this is a free service that we provide, so I would 

encourage each of you, if you're interested in learning 
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more and staying up-to-date, go to the website and put 

your e-mail in for the Organic Insider. It's great 

information. It's fairly routinely released, every 

month or so, and it's a good place to be plugged into. 

Costs nothing and it's high value. So, we have the 

organic producers and handlers and they know about this. 

And the certifying agents, roughly 80 you 

said, right? Just under 80? We also have these 

handlers that are just beyond the current statutory and 

regulatory reach. And this gets into the world of 

brokers and traders, both domestic based, domestic 

focused, domestic sourcing, as well as those who are 

importing from overseas. So, it's a big tent idea. 

And these, these individuals, some of you 

may be in the room, are folks that we want to get into 

the discussion with and hear from. So, these three 

types of businesses are going to be directly affected 

by this proposed rule-making were it to continue 

marching forward in its current state and get published.

So, I mentioned the publication date is 
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anticipated in the fall. We have about 60 days of public 

comment thereafter. And as part of rule-making, we 

receive the comments. We review and assess them. And 

we make decisions based on them. And then we go into 

final rule-making. So, if you think it might affect 

you, please read it. We encourage it. If, if you're 

convinced it's going to affect you, read it. Give us 

your comments. 

The most helpful comments we find, as a 

matter of course, is not to just send in a very basic 

yes or no. Point out what the concern is. Describe 

how it's going to impact your business or even how you 

feel it will impact your industry. Provide a solution. 

If you have data, throw it in. Sometimes the comments 

we get, we, we find ourselves asking a little bit more 

than the comment provided. The most informative 

comments are holistic. So, we strongly encourage that 

from any stakeholder. 

These are going to be submitted, this is 

the normal course of business, through regs.gov. 

They're all publicly available. So, what you submit 
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will be viewable and accessible to anyone who wants to 

go to that website and read the comments. 

So, in terms of, in terms of expectations 

about the actual rule, it's, and I want to leave a few 

minutes for questions, it's going to focus on 

traceability in the supply chain. And one of the most 

important places where we find that we don't have the 

ability and the authority yet to certify and examine 

and prod, is in that market facilitator. So, along the 

supply chain, we can deal with producers quite 

proficiently and we can deal with the retailer quite 

well. It's the in-between that we're trying to get a 

good read on. 

And the strengthening organic enforcement 

proposed rule will posture us to do that so that you 

can be a trusted buyer and a seller, and that's key. 

This is going to help strengthen the supply chain and 

it's going to make the consumer at the very end believe 

in the product even more and really set the standard 

for us, that elevates everything we do. So, it's a, 

it's a really a win-win-win for everyone. I don't want 
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to, we have until 2:00, I believe, right, so please, 

questions or comments? I guess the floor is now open.

MS. RAKOLA: I also just want to add, as 

I mentioned, this is a proposed rule for us to work with 

people we've never worked with before. So, if you read 

through this and say, you know, you guys have kind of 

missed something, we want to hear about it. We don't 

know what we don't know because we're trying to work 

with a, a segment of the supply chain that isn't 

currently a part of our oversight system. So, tell us 

what we need to tweak. Tell us what we need to fix. 

We've even found, as we're talking about 

brokers and traders that people use those words 

differently than we do and so we're trying to figure 

out what it is we need to change. But I want to open 

it up to you all to hear, you know, what interest do 

you have in, in the organic program and how would you 

like to see us working better with, with your industry?

MR. MORGAN: This is John with Supreme 

Rice. You said you work, now working with a segment 
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of the industry you hadn't worked with before. Is that 

the importers, I'm just guessing?

MS. RAKOLA: Yeah, so importers would be 

part of the, I think the most, one of the most concrete 

examples we've heard of are those like customs brokers 

and freight forwarders. So, often the people that are 

getting things like the manifests of an importer are 

not necessarily required to be certified and then that's 

really, really important data to know if, if you have 

that, that traceability of the product. So, so that's 

one example. We also assume that there are people who 

are doing brokering and trading just domestically, that 

it will also be impacted and that would be important 

to be a part of that certification system.

MR. MORGAN: So, if you're a, just a broker, 

you've never touched the grain, you would still be 

required to be certified organic. Is that right?

MS. RAKOLA: If you are brokering, yeah, 

anyone who is brokering, selling, or trading in the 

future will be required to be certified.

MR. MORGAN: What about trucks?
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MS. RAKOLA: So, transportation will have 

its own exceptions. I think it's sort of like we don't 

currently require retail to be certified because it's 

just not feasible in a lot of ways. Transportation will 

still have its own carve outs. The responsibility then 

fall on the person who is receiving to verify that that 

transportation service maintained the integrity of the 

product from the time that it was shipped to the time 

that it was received. And there's things like truck 

clean outs and other things that are generally required 

for that. 

MR. MORGAN: Once it's packaged, is it 

considered final, even if it's being transported? Or 

is it still you have to maintain that from, say, a 

processor to warehouse to a grocery store?

MS. RAKOLA: Yeah, generally until it gets 

to the point of retail, anybody who would be 

participating in that would need to get certified.

MR. PAVONE: To, to add a little more 

texture to that, so currently there are brokers and 

importers that are certified. Remember, we are an 
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opt-in program. So, it's voluntary. And the, if 

you're a farmer who wants to sell organically, you have 

to get certified. If you're on the market and lately 

your product is organic.

But we don't have that same requirement for, 

let's say, the broker. So, some brokers have taken it 

upon themselves to say, I want to be certified organic 

because I want my buyers to know that they can really 

trust that the product that I'm getting, because I'm 

exposing myself voluntarily to audit. So, there is, 

there are importers and brokers that currently do have 

certification, but the proposed rule because of the Farm 

Bill, is getting to that requirement. Now, it's going 

to be a standard.

So, we are cognizant of the fact that the 

supply chain is long and complex and, and especially 

when you talk about imports, there's dozens of actors 

along that journey from farm to table, handling it, not 

handling it, paper transactions. It is not our intent 

to hurt an industry. We've actually done a pretty good 

job, I think, if I may say, in trying to mitigate as 
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much of the cost as possible and focus on the actors 

that we think the liability exists in. 

And so transportation is, is a great question. 

We've talked about this for a long time. And it is 

not our intent to require anyone transporting a 

finished, sealed product to be certified because the 

cost would be prohibitive and the oversight would be 

very difficult. So, I don't want to give you any false 

indications. So, if you're in transport, probably not 

going to be in that proposal.

MR. WANTE: Mark Wante, North Dakota 

Farmers Union. So, in the, in the non-GMO world we 

export out to other countries. We typically seal the 

containers. And that's somewhat of a grave concern with 

at the port the seals being opened for testing. Are 

you doing sealed stuff coming in from the imports? Or, 

and then is there, you know, what's the risk of 

contamination if those containers were opened or 

whatever?

MS. RAKOLA: Yes, this is, this is in an 

area where we have specific requirements in the 
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regulations. However, I think sealed is often the best 

practice. One of the challenges that we have had and 

one of the areas where I think Arthur and I have said 

maybe we can all figure out a way to work together better, 

our certifiers are private entities. They can't always 

get to the port. And so they are, even if they wanted 

to, and this is a once a year certification, so it's 

not every time a ship or a truck arrives, right? 

So, even if our certifiers are interested 

in being on-site when a product is unsealed, often 

because they're a private entity, they don't have the 

ability to get onto the grounds of the port and to witness 

that event. So, if there are ways that we can all, you 

know, if there are people who have those eyes and ears 

on the ground and we can figure out a way to build that 

bridge to the organic certification system, I think that 

would be very helpful. And some of our trading partners 

are testing our exports quite frequently and they do 

a lot of work to try to negotiate reasonable residue 

tolerances. More and more success as time goes by, but 

it is an ongoing challenge.
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MR. PAVONE: And as you bring up a really 

great point, actually both of you, there's so many 

different routes through a supply chain. We have the 

intention, not to just drop a rule on the walkway. We're 

going to actually be programming in meetings over the 

duration of this process moving forward. Can't give 

dates, but we intend to provide focused sessions for 

these type of questions to be asked in, because we want 

to give you the certainty that you need to make business 

decisions. And it's going to be a holistic outreach 

campaign. 

So, I encourage you to get on the Organic 

Insider. Stay tuned with what's coming. When the rule 

is published in the Federal Register, go read it. Talk 

to your colleagues. We're going to separately, but 

simultaneously, publish the grain flex analysis, so for 

all of you econ-heads out there, this is going to be 

for you. You can read about how we project costs and 

that will be on our web page. So, you can read that, 

as well as what the rule is going to state and then submit 

your comment and, and we'll, we'll review all of those.
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CHAIR MOFFIT-TOBIN: I have a question. 

As far as, you know, like, the export locations or 

anywhere domestically, do you see it as an additional 

service that FGIS and/or other official agencies could 

do as far as being certifying agents? Would that be 

any kind of a partnership?

MS. RAKOLA: That's a really interesting 

question and something that we should all explore 

further. I think we want to, I'll be honest, I'm, I'm 

a little bit in the dark. I don't think I know enough 

about what you all do to answer that question 

intelligently. But I think, it sounds like from the 

little I understand, that there could be the possibility 

of being a certified agent or a certified operation that 

would allow you to, to do those activities. So, I think 

it's a, it's a great idea and something that we should 

definitely explore further.

CHAIR MOFFIT-TOBIN: You know, as we, all 

of our AMS, we're looking for different collaboration 

ideas, you know, and if it's a new line of business that 

FGIS or official agencies could offer, you know, it's 
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something that we could definitely look into. The 

committee could recommend possibly looking into.

MS. RAKOLA: Absolutely.

CHAIR MOFFIT-TOBIN: Is there any further 

questions or comments from the committee? I do have 

one more statement and I just want to thank you two so 

much for coming here today and explaining what you do. 

And it's so much in line with what we do, you know, 

as far as certification and verification and processes 

in place to insure the integrity is there. So, what 

we initially asked for, you know, was you guys do all 

the work. NOP does all the work to make sure that that 

is certified organic. And so what we were asking was 

if you guys do all the work to insure that it's organic, 

can we adopt that and collect your paperwork or 

documentation and put that on a USDA certificate? 

For example, you know, if we collected all 

the documentation from you, we could actually put U.S. 

number two organic yellow corn. We have a similar 

partnership with APHIS that we do the work on the ground 

to make sure that they can issue that 921. So, we give 
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them all the paperwork and then they issue the 921 for 

the exports. So, we have a similar relationship with 

APHIS.

So, we were wondering, well, could we take 

that, you know, could we take that a step further and 

take all of your documentation because you did all the 

work, and then put that on our certificate. We have 

a, a customer that is certified organic. He's a 

handler. So, he transports a lot of organic grain. 

He's said that that would give him a huge economic 

advantage over some of his competition using FGIS and 

NOP.

MS. RAKOLA: Yeah, absolutely, I think 

that's a really interesting idea that seems like it has 

a lot of promise. And we look forward to exploring it 

more.

CHAIR MOFFIT-TOBIN: Thank you. Is there 

any questions or comments from anybody else? Go ahead. 

Will you get a microphone, and you have to hold it, 

okay.

MR. NEAL: Yeah, for the court reporter. 
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MR. McCLUSKEY: That word organic, that 

word organic may not be able to go on the grade line. 

It may have to go as a certificate remark because it's 

not in the regulations at this point that we would put 

that mark on the grade line itself. So, something to 

think about. How could we move forward. It might be 

as a remark on the certificate.

CHAIR MOFFIT-TOBIN: What would have to 

change to get it on the grade line? I know it can go 

in the remarks section because it's true and it's valid. 

But what would it take to be put onto the grade line?

MR. McCLUSKEY: That would take an 

amendment to some part of the 800 parts of the 

regulation. I'm not sure which particular, which 

particular section that, that's in the CFR right now, 

what, what, how you serve, what a grade looks like. 

And that's not listed in the, the items that can be a, 

can be on the grade line. So, it would take a, it would 

take rule-making.

CHAIR MOFFIT-TOBIN: Thank you, Pat. 

MS. RAKOLA: Thank you all for having us 
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here today. It was a pleasure.

CHAIR MOFFIT-TOBIN: Thank you, too, very 

much.

MR. NEAL: All right, so we're going to wrap 

up the FGIS recommendation updates during this section. 

Dr. Nordlund took, took some of the updates that dealt 

with a lot of the work that the technology and science 

division was engaged in. Karen took some of the updates 

that revolved around the exceptions and the SIMS issues. 

And I'm going to finish this off by providing some 

additional updates. 

One of the recommendations that came forth 

from the committee was that the advisory committee 

appreciates FGIS' recognition of the importance of 

encouraging competition in the official device system. 

The committee urges FGIS to develop a comprehensive 

and pro-active approach to identifying new technology 

priorities that may bring improved test results, greater 

efficiency, and lower costs. The committee recognizes 

that any new devices must add value to the testing system 

in compliance with the current guidelines.
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So, Bruce mentioned this earlier about ways 

for us to identify opportunities to innovate and 

introduce new technology. Coming into FGIS, I've 

learned that we've got a lot of requests from different 

manufacturers to approve various pieces of equipment 

for use in the official system. And it requires a lot 

of work and staff resources to pull that off.

So, we've begun a process to evaluate how 

do we evaluate these requests for new equipment to be 

introduced into the official system in a consistent and 

transparent manner and how do we prioritize those 

requests? How do we get feedback from the industry as 

to whether or not these pieces of equipment are needed, 

and the like?

So, we started that, that process. Staff 

has drafted up some flow charts and some concepts for 

us to consider. By the next meeting, what we'd like 

to do is present to you a way that we want to introduce 

moving forward on evaluating new equipment in FGIS and 

the official system. Part of that could involve the 

committee. Some of it could involve introducing 
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application processes through the Federal Register.

It's just, it's a heavy demand on resources 

to accommodate these requests and we need to have a 

process in place that allows us to manage it in a more 

efficient and transparent manner. So, we're going to 

be looking at that and planning on having an update for 

you, really something to share with you at the next 

committee meeting.

An additional recommendation was that the 

advisory committee recommends FGIS to take steps to 

reconcile and consolidate instructions to insure clear, 

easy to access guidance. This would help the official 

system provide more accurate, consistent and timely 

service. We fully agree. We've initiated a process, 

I like to call it a strike force attempt to prioritize 

a number of handbooks and attempt to consolidate the 

instructions, whether it be program notices, 

directives, instructions, whatever they may be, 

consolidate all of that information into single 

handbooks and also update them at the same time. We've 

got about 17, I think, handbooks. We're going to try 
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to go at seven, take on seven of those to have them 

updated, consolidated by next year. 

So, that's a process that we are pursuing 

right now. As soon as we get it underway, which will 

be well before the next meeting if all things go well, 

we'll have more information to share with you before 

the meeting and during the meeting.

The advisory committee commends the field 

management division in their efforts to modernize 

training for new hire graders at the field level. They 

encourage the continued effort of developing new and 

innovative techniques for training and continued 

education in field level raters working directly with 

end users. Accuracy, efficiency, and consistency is 

of the utmost importance for end users across all 

regions. And we appreciate that, that feedback. 

The field management division has a similar 

task force to standardize more training for those that 

we bring into the system. If I'm not mistaken, real 

soon we'll be rolling that new training module out and 

we'll be improving that over time. So, hopefully, as 
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we're engaging with our end users, there's enhanced or 

improved service that they're seeing as a result of 

interacting with the folks we've got at the field level.

So, we also want to thank NGFA and NAEGA 

for participating in our training of our employees. 

There's some industry perspective sessions that we've 

been hosting. I think the FGIS started those in 2017. 

We had one recently, my first time participating in. 

Bruce also participated in it down in New Orleans. 

It really gave us newcomers into FGIS a great opportunity 

to talk to industry, hear their perspectives. What are 

they experiencing in terms of customer service with 

FGIS? How are they doing that? And how can we put our 

heads together to more quickly address some of the 

situations on the ground, or just at the table?

Also it allowed our employees to understand 

the value of their work to this industry, the 

significance of their work and how important it is to 

U.S. trade and also to the companies that we service. 

So, it's been a great opportunity for sharing of 

information, I think, on both sides because our 
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customers get a chance to meet our employees and we get 

a chance to talk more intimately with our customers. 

So, we're going to continue to improve in that way.

Well, let me, let me go back a little bit 

here. I had talked to Tony about this. He was, he was 

out birthing babies. But, you know, Congress had, I 

didn't talk to Bruce about this, either, but, but 

Congress had a panel about three weeks ago on virtual 

reality and using it in training. So, Lee Capper and 

I, we went up on the hill and we sat on, you know, sat 

in on the panel just to listen and one of the difficulties 

that we all wrestled with is training new employees to 

do this grading and inspection work. Takes a lot of 

time, lot of effort. 

You get these people and they may never have 

been in an environment such as the lab or on a ship or 

walking a barge, anything like that. And some people, 

they want the job, but when they find out what they've 

got to do, then it's, I don't want the job any more. 

And so, what we discovered is that the number of federal 

agencies that have contracted with these technology 
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providers to use virtual reality to train employees. 

So, the Air Force is one. And what they've 

done, the Air Force has, I guess it's standard, about 

a 14 month period to train pilots. With the 

introduction of virtual technology, virtual reality 

technology, they've reduced that 14 months to seven 

months. And so we had one of the providers come to the 

office and just give us a demonstration because they've 

also used it with social services to train new social, 

what do you call them, social workers, where the social 

worker, you know, put this headset on my head and the 

Dolby surround sound.

And you're in this home. And there's a lot 

of noise going on, children crying. And you can just 

turn your whole body around and you can see the entire 

house. It lets you sit down and you begin to have a 

conversation with the parent to ask them what's going 

on in their home and the person responds based on 

questions that you've asked them.

 So, we began thinking, this may be one way 
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of us to exploring more technology for our training to 

prepare new hires for the environments they're going 

to have work in, whether it's a barge, whether it's a 

ship, whether it's, you know, walking, using technology 

now for trains and kind of stowage exams. But 

different, different reasons and ways that we can look 

at this virtual reality technology to potentially help 

us in our training. We've not committed to doing 

anything, but we are going to explore and we're going 

to engage the rest of the agency just to see whether 

or not it can help them, too. So, that's just another 

idea about new hire training and continuing education.

Cost of ARTI services relative to selling 

price. The advisory committee appreciates how the 

merger of FGIS and AMS has brought a renewed focus on 

customer service for the end user. The committee would 

like for FGIS to review its procedures and overall costs 

of the service to the end user in areas where those costs 

may affect the overall market, competitiveness of the 

commodity being sold. So, we really don't have a great 

deal to share here, other than the fact that we're making 
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revisions to how we review our fees, our service fees 

are, are set to, to recover the cost of program service. 

But we're going to be implementing an annual 

review process for all of our user fee activities to 

make sure that the fees that we charge are appropriate, 

we're not charging too much. And we can adjust them 

accordingly as we're doing now for rice and others to 

insure that we're not taking more in than what we need 

to be in operation.

Around fee tables, the advisory committee 

supports the FGIS proposal to remove the schedule A fee 

tables from the Code of Federal Regulations. This 

change will expedite the release of adjusted fee 

information to interested stakeholders. And we did 

remove those fee tables from the Code of Federal 

Regulations.

Another resolution around the budget. The 

advisory committee recommends that the Office of 

Management and Budget eliminate the limitation on 

inspection and weighing service, service expenses. If 
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this is not possible, the committee recommends that the 

$55 million limitation only apply to grain export 

activities under the provision of the United States 

Grain Standards Act.

We appreciate the recommendation. We are 

still working internally to address that $55 million 

cap issue. We've had some conversations with industry. 

We've also had some conversations with the Hill. But 

we think the best method for us to approach this cap 

issue is to work internally with our budget folks and 

with our attorneys to see if we can get some things 

addressed. Hopefully, we'll be able to give you a more 

in-depth and positive update on this at the next meeting. 

We've be meeting with Bruce on this. We'll have to 

sit down and have some additional conversations.

Regarding FGIS online, the advisory 

committee commends FGIS for its work and progress on 

FGIS online and encourages the agency to continue to 

upgrade and enhance the system to meet the needs of all 

interested parties. The committee recommends FGIS 

investigate and report on a back-up system to the FGIS 
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official service provider licensee. 

So, regarding FGIS online, we have just 

recently launched in a pilot or test mode, an online 

application process where our clients, our customers 

will be able to request work orders through an online 

application. I think DIOO, you all are participating 

in that? No? Well, I think we've got a couple of field 

offices participating in that process with Lee. We are 

going to roll things out slowly. I think one of the 

things in the past that we've experienced with FGIS 

online, we may have tried to do too much at the same 

time. 

What we're trying to do now is slow it down, 

parse it all out phase by phase, so that when we 

implement, I said, when we implement this online 

application process, we're going to review that process. 

Make sure we've got all the kinks worked out of it. 

If any codes need to be adjusted, if any improvements 

need to be made, we'll knock that out first before we 

introduce a new component to FGIS online.

We want to make sure that when we're rolling 
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things out into the field, that they're done in such 

a way that they're manageable, that they're feasible, 

and that they don't disrupt people's business processes 

to the place where we create more confusion than we do 

alleviate concerns.

And with respect to the back-up system, 

there's a lot more investigation we've got to do there 

to make sure we do, we, we take things into consideration 

in a very careful and considerate manner and that we've 

got the resources to actually pursue them without 

putting additional burden on, on fees. Any questions?

Regarding the systems approach, FGIS 

execution support to the USDA soybean systems approach 

should not compel a change in U.S. grading standards, 

nor require FGIS financial resources. We agree. Just 

a quick update. AFIS collected 3,874 samples from 14 

states during the 2018 Farmgate study. FGIS, we 

calculated foreign matter on those samples. Samples 

were sent to AMS C-labs to determine species, count and 

weight of the weed seeds. 

With respect to how we move forward, we 
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still continue to collect composite samples for YSB 

ships loaded for China and determining foreign material, 

and foreign matter, and weed seeds to help track the 

efforts of the systems approach. And AFIS is planning 

to continue this systems approach Farmgate study into 

2020. We do not use FGIS funding for this project. 

AFIS provides the funding for us to conduct the work 

and they do that through a reimbursable agreement.

For international grading report, the 

advisory committee urges caution in acceptance and 

execution of new inspection approaches that 

disadvantage the U.S. grain industry relative to 

international trade practices. The committee requests 

USDA to report on international grading practices to 

entail comparison of result based, of results based on 

origin and destination sampling and grading protocols. 

On this particular recommendation, our international, 

our international IAD, I'm forgetting the name, they 

work to compile a list of all of, as many foreign country 

grading and inspection standards as possible. 

And what we're going to be doing is 
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reviewing what they compile. We'll make it available 

to you all online through our website, regarding an 

analysis of each one. That's an extremely burdensome 

process. So, we'll have to figure out, you know, if 

we take that on, how do we take that on, but our first 

mode of action is to make available to you all of the 

standards that we've compiled, so that they're available 

to you for review.

For vessel stowage exams, the advisory 

committee commends FGIS on its efforts to incorporate 

innovative technology by delivering services to its 

shareholders, while protecting the safety of personnel. 

The committee strongly encourages the approval and 

implementation of the pilot program for barge stowage 

examinations via camera system. The committee also 

recommends FGIS continue studying its technological, 

innovative programs for cost savings, efficiency and 

operational safety concerns as it relates to the vessels 

stowage examinations.

So, what we have going on here, after a lot 

of work and effort put in by Eastern Iowa in partnership 
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with our team kind of looking at results, we recently 

published a program notice that authorizes the 

examination of river barges using approved video systems 

and establishes minimum specifications and guidelines 

for their usage. And so this is available online on 

our website, as we try to continue to provide service 

in a more efficient, effective, and safe way for our 

employees and for our official agencies. 

We are continuing to look at this. I know 

the next one is on deck is for ship holds and I think 

that one may be a little bit more complex because of 

different requirements and regulations. But we're 

still going to explore to see what's possible.

CHAIR MOFFIT-TOBIN: I just want to take 

a second and thank Tony, FMD and its team, Ron, Charlie, 

Josh, Pat who did a lot of work, a lot of blood, sweat 

and tears, maybe not tears, but, I just wanted to say 

thank you. You guys sped the process along. You guys 

worked really well with us and no doubt does this program 

notice -- it's going to save lives. So, I just want 

everybody to give them a round of applause because this 
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is fantastic, for not only the industry and operational 

efficiencies, but the service providers as well and 

their safety. So, thank you, guys, very much.

MR. NEAL: So, they're not done yet. So, 

I think this may be the last one. For committee 

chairperson selection, the advisory committee would 

like to formalize the Chair selection process. The 

committee members, in a public forum, could nominate 

either the committee members or themselves and give the 

nominated an opportunity to speak for five minutes to

present their qualifications in being Chair. The 

position of Vice Chair should be done in the same 

process.

One of the reasons why we're here during 

this meeting is to discuss the Policies and Procedures 

Manual. We've taken this recommendation seriously, as 

all others. We've tried to incorporate a nomination 

and election process in this Policies and Procedures 

Manual that you all will discuss during your time 

together.

And that concludes the remaining items from 
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the committee. I think we've addressed them all. If 

there are any questions, concerns, the floor is open 

for those now.

Yes, sir, Matthew?

MR. KERRIGAN: Yeah, just one question on 

the barge cameras. Is that obviously in Iowa you're 

working for empty barges that are to be loaded. You 

talked about vessel holds to be loaded as a potential 

next. What about unloading? Is that going to be part 

of the process, such as barges that are unloaded and 

certifying empty and things of that nature? Are those 

included in that, that program?

MR. GOODEMAN: We talked about unloaded at 

---

MR. NEAL: Come on up.

MR. GOODEMAN: Can you hear me okay? Tony 

Goodeman with the FGIS. So, the program notes just came 

out, the policy that, that Eastern Iowa helped develop 

with the official agencies in GFA is only about empty 

river barges prior to loading. I think we do use some 

video technology already to verify empty. That's 
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basically verifying that the weight that came out of 

a barge. 

We used to send a person out to, to go look 

at an empty barge to make sure all the grain is out of 

it. So, it's, it's a little bit kind of a different 

exam. We want to make sure all the weight is out versus 

the prior to loading exam is to make sure it's cleaned. 

So, I just want to make sure, it's not, it's just a 

little bit different standard. So, we do use that now, 

to an extent. It's in more export locations, but the 

policy that came out was about empty river barges.

MR. NEAL: Thanks, Tony. If there are no 

other questions, we'll move on to the next agenda item. 

Thank you, all.

CHAIR MOFFIT-TOBIN: The next agenda item 

is a break that we have scheduled. So, if we could come 

back here in 15 minutes, we'll do that.

(Off the record.)

CHAIR MOFFIT-TOBIN: Introduction of Draft 

GIAC Policy and Procedures Manual. Yesterday we had 

time for the committee to discuss the Policies and 
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Procedures Manual. This is something new that Arthur 

and his team brought to the committee. And basically, 

it establishes our rules, our parameters.

It lays the foundation for current and 

future grain inspection advisory committee's roles, 

responsibilities, and duties. It explains our purpose, 

our intent, which is to provide advice to the Secretary 

with respect to the implementation of the United States 

Grain Standards Act. 

This Policies and Procedures Manual states 

purpose, goals and intents of the committee. In order 

to be successful in your role as a member on the 

committee, you need to know what is expected of you. 

I said this yesterday, you know, for many of us, when 

it comes to training, it's like giving your sampler, 

telling your sampler to go out into the field and you 

have to go sample that grain but I'm not going to tell 

you how to do it. I'm not going to give you any resources 

to do it, but you need to do it right. So, this is the 

instructions that we need. 

We're all policy people, so we always know 
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what rules do we need to follow where we cross over. 

So, a lot of us have mindsets like that. So, this is 

something that was, in my mind, definitely needed and 

very much appreciated. Some of the other things that 

is covers is the nomination and appointment process, 

standards of conduct, collaboration with FGIS and just 

a mutual respect between each other. It gives a new 

mindset towards the future of how this body should try 

to run. 

As we stated earlier, we're not always going 

to agree on everything. That's why the voting process 

is there. But in general, we try to speak as one voice 

and that team reflection needs to be there.

I was telling Arthur the other day, I played 

softball for many years. And when I started at a, when 

I played for a junior college, we didn't have all the 

talent in the world. We had decent talent, but we had 

a great leader. And that mindset was that you guys are 

a team. You support each other. You support the person 

next to you. You support the person to the right of 

you, above you, below you. You're a team. You wanted 
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them to succeed. And, and we did very well. You took 

something that was mediocre and we went far beyond what 

we were intended to do because of that mindset.

 And then when I played, I went to a Division 

I school where it had much more talent, but that 

leadership and that mindset wasn't there to collaborate 

and to work as one cohesive unit. It was cut the person 

next to you, you know, so you get that position, you 

know, and you had all the talent. Just like we have 

all the expertise, but if we move together as one, we're 

much stronger, a much more dominant powerhouse that can 

get stuff done. We've talked about the purpose in that 

we want to be an impact. So, that's what this helps 

us, the Policies and Procedures Manual, accomplish.

We are going to, does anybody want to add 

anything else about the Policies and Procedures Manual? 

Good? Okay. So, we are going to go through in 

wordsmith and add any changes or anything that you feel 

that you want to talk about, term limits are all put 

in here. So, if there's stuff that you want to discuss, 

we're going to discuss it now. But I am going to end 
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the meeting, so not everybody has to verbally be a part 

of that. I should have said that out loud.

So, with that in mind, this meeting is 

adjourned. You're more than welcome to stay, if you

want to go through this with us, but you don't have to. 

So, the meeting is adjourned. Thank you, everybody, 

for coming today. 

(Whereupon, the above-entitled matter went 

off the record at 3:13 p.m.)
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