Appropriations for FY2003: U.S. Department of Agriculture and Related Agencies
Released: 2003-03-04T00:00:00

Most Recent Developments

On February 20, 2003, the President signed into law the FY2003 omnibusappropriations act ( P.L. 108-7 , H.J.Res. 2 ), which includes $74.25billion in regular FY2003 funding for USDA and related agencies. Of this amount,$17.545 billion is for discretionary programs. Not included in the total is $3.1 billionin supplemental disaster assistance provided by the measure, primarily for farmersand ranchers affected by a natural disaster in 2001 or 2002.

USDA Spending at a Glance

The U.S. Department of Agriculture (USDA) carries out its widely variedresponsibilities through approximately 30 separate internal agencies and officesstaffed by some 100,000 employees. USDA is responsible for many activitiesoutside of the agriculture budget function. Hence, spending for USDA is notsynonymous with spending for farmers.

USDA gross outlays for FY2002 (the most recently completed fiscal year) were $79.95 billion, including regular spending and supplemental spending forhomeland security following the September 11, 2001 terrorist attacks. The missionarea with the largest gross outlays ($37.5 billion or 50% of spending) was for foodand nutrition programs -- primarily the food stamp program (the costliest of allUSDA programs), various child nutrition programs, and the Women, Infants andChildren (WIC) program. The second largest mission area in terms of total spendingis for farm and foreign agricultural services, which totaled $22.9 billion, or 31% ofall USDA spending. Within this area are the programs funded through theCommodity Credit Corporation (e.g., the farm commodity price and income supportprograms and certain mandatory conservation and trade programs), crop insurance,farm loans, and foreign food aid programs.

Figure 1 U.S. Department of Agriculture Actual Gross Outlays, FY2002

USDA spending in FY2002 also included $7.0 billion (9%) for an array ofnatural resource and environment programs, approximately three-fourths of whichwas for the activities of the Forest Service, and the balance for a number ofdiscretionary conservation programs for farm producers. (USDA's Forest Service isfunded through the Interior appropriations bill, and is the only USDA agency notfunded through the annual agriculture appropriations bill.) USDA programs for ruraldevelopment ($2.72 billion in gross outlays for FY2002); research and education($2.2 billion); marketing and regulatory activities ($1.5 billion); meat and poultryinspection ($717 million); and departmental administrative offices and otheractivities ($454 million) account for the balance of USDA spending.

Mandatory vs. Discretionary Spending

Approximately three-fourths of total spending within the U.S. Department ofAgriculture is classified as mandatory, which by definition occurs outside the controlof annual appropriations. Currently accounting for the vast majority of USDAmandatory spending are: the farm commodity price and income support programs(including ongoing programs authorized by the 2002 farm bill and emergencyprograms authorized by various appropriations acts); the food stamp program andchild nutrition programs; the federal crop insurance program; and various agriculturalconservation and trade programs.

Although these programs have mandatory status, many of these accountsultimately receive funds in the annual agriculture appropriations act. For example,the food stamp and child nutrition programs are funded by an annual appropriationbased on projected spending needs. Supplemental appropriations generally are madeif and when these estimates fall short of required spending. An annual appropriationalso is made to reimburse the Commodity Credit Corporation for losses it incurs infinancing the commodity support programs and the various other programs itfinances.

The other 25% of the USDA budget is for discretionary programs, which aredetermined by funding in annual appropriations acts. Among the major discretionaryprograms within USDA are Forest Service programs; certain conservation programs;most of its rural development programs and research and education programs;agricultural credit programs; the supplemental nutrition program for women, infants,and children (WIC); the Public Law (P.L.) 480 international food aid program; meatand poultry inspection, and food marketing and regulatory programs. Funding for allUSDA discretionary programs (except for the Forest Service) is provided by theannual agriculture appropriations act. Funding for Forest Service programs isincluded in the annual Interior appropriations act.

Table 1. USDA and Related Agencies Appropriations, FY1995 to FY2003

(budget authority in billions of dollars)

Note: Includes regular annual appropriations for all of USDA (except the Forest Service), the Foodand Drug Administration, and the Commodity Futures Trading Commission. Excludes all mandatoryemergency supplemental appropriations.

Source: House Appropriations Committee.

A key distinction between mandatory and discretionary spending involveshow these two categories of spending are treated in the budget process. Congressgenerally controls spending on mandatory programs by setting rules for eligibility,benefit formulas, and other parameters rather than approving specific dollar amountsfor these programs each year. Eligibility for mandatory programs is usually writteninto authorizing law, and any individual or entity that meets the eligibilityrequirements is entitled to the benefits authorized by the law. Spending fordiscretionary programs is controlled by annual appropriations acts. The thirteensubcommittees of the House and Senate Appropriations Committees originate billseach year which decide how much funding to devote to continuing current activitiesas well as any new discretionary programs.

FY2003 Agriculture Appropriations Action

Administration's Request. As the first step in the FY2003 appropriations process, the BushAdministration released its budget request on February 4, 2002. Within the budget,the Administration requested FY2003 budget authority of $74.062 billion for the U.S.Department of Agriculture and related agencies (which includes all of USDA exceptthe Forest Service, and also includes the Food and Drug Administration and theCommodity Futures Trading Commission.) The $74.062 billion requested forFY2003 is $814 million above the FY2002 enacted appropriation of $73.187 billion. (The FY2002 enacted level includes two supplemental appropriations acts ( P.L.107-117 and P.L. 107-206 ), making nearly $500 million in net supplementalappropriations to various USDA programs, and FDA and CFTC ,in response to theSeptember 11, 2001 terrorist attacks.)

The requested $17.421 billion for discretionary accounts was $1.145 billionabove the total FY2002 discretionary appropriation of $16.276 billion. Accountingfor $368 million of the requested increase in discretionary spending for USDA andrelated agencies is the Administration's assumption of a legislative proposal thatwould require all federal agencies to assume the full cost of accruing employeepensions and retiree health benefits beginning in FY2003, which ultimately was notadopted by appropriators. (1)

Table 2. Congressional Action on FY2003 Appropriations for the U.S. Department of Agriculture and Related Agencies

(1) The 107th Congress adjourned without passage of H.R. 5263 or S. 2801 by its respective chambers. The 108th Congress considered the FY2003 appropriations for USDAand related agencies in the context of an omnibus appropriations bill ( H.J.Res. 2 ) whichthe Senate amended and passed on January 23, 2003.

House Action. The agriculture subcommittee of the House Appropriations Committee and the full HouseAppropriations Committee completed their respective markups of the FY2003agriculture bill for USDA and related agencies on June 26 and July 11, 2002,respectively. The bill ( H.R. 5263 ) and report ( H.Rept. 107-623 ) werefiled by the full committee on July 26, 2002. No floor action was held on the bill.

Total appropriations in H.R. 5263 , as reported, were $74.306billion, of which $17.601 billion were for discretionary programs, and $56.705billion for mandatory USDA programs. The $17.601 billion for discretionaryprograms was exactly equal to the 302b allocation given to the subcommittee by thefull committee, and $180 million above the President's request for FY2003. Thediscretionary level in the House bill was $1.325 billion higher than the regularFY2002 appropriations, including supplementals.

When the 108th Congress convened in early January 2003, the full Houseadopted a continuing resolution ( H.J.Res. 2 ), which also was intendedto serve as a vehicle for completing final funding decisions on the 11 remainingregular appropriations bills, including agriculture. Although the House-adoptedversion of H.J.Res. 2 was a temporary resolution extending fundingthrough January 31, 2003, the Senate-amended version was an omnibusappropriations measure that included the full-text of each of the outstanding regularbills, as amended. Until H.J.Res. 2 was enacted, FY2003 spending forUSDA and related agencies was governed temporarily by eight continuingresolutions enacted periodically over the first five months of FY2003,

Senate Action. The SenateAppropriations Committee completed subcommittee and full committee markupduring the week of July 22, 2002, and reported its version of the FY2003 agricultureappropriations bill ( S. 2801 , S.Rept 107-223 ) on July 25. S. 2801 , as reported, provided total funding of $74.66 billion, which was$354 million above the House bill, $598 million above the Administration request,and $1 billion above the FY2002 enacted level including supplementals. Of the totalamount provided in S. 2801 , $17.98 billion was for discretionaryprograms, compared with $17.6 billion in the House bill, $17.4 billion in theAdministration's request and $16.55 billion provided in FY2002.

The 107th Congress adjourned without completing action on S. 2801 or any other FY2003 agriculture spending bill. In early January 2003, Senateappropriators combined the FY2003 agriculture appropriations bill with ten otherunresolved appropriations bills, as amended, into an omnibus package which wasadopted as a substitute amendment ( S.Amdt. 1 ) to H.J.Res. 2 . H.J.Res. 2 was further amended on the Senate floor, and adopted bythe Senate on January 23, 2003. Funding levels for USDA and related agencies in H.J.Res. 2 were relatively close to the funding levels in S. 2801 for ongoing USDA programs. However, separate adopted amendments in H.J.Res. 2 provided $3.1 billion in farm economic and disasterassistance, and $500 million in additional P.L. 480 funds for emergency faminerelief in Africa. The $3.1 billion in farm assistance was offset by an across-the-boardreduction in all discretionary programs in the measure. No offsets were provided forthe supplemental P.L. 480 food aid.

Conference Action. Conferenceaction on the FY2003 omnibus appropriations bill ( H.J.Res. 2 ) wascompleted on February 13, 2003, when the conference report ( H.Rept. 108-10 ) wasadopted by the House by a vote of 338-83, and later the same day by the Senate bya vote of 76-20. The President signed the measure into law ( P.L. 108-7 ) on February20, 2003. The final omnibus law combines the 11 appropriations bills that were notcompleted by the 107th Congress, with various other spending provisions, includinga supplemental $3.1 billion disaster assistance package for farmers and ranchers. Forthe regular annual appropriations for USDA and related agencies, P.L. 108-7 containsbudget authority of $74.25 billion, of which $17.55 billion is for discretionaryprograms and $56.70 billion is for mandatory programs. The discretionaryappropriation in the final measure is $56 million below the House-reported( H.R. 5263 ) level and $805 million below the Senate-passed level( H.J.Res. 2 ), but $124 million above the Administration request and$1.27 billion above the enacted FY2002 level including supplementals. The FY2003totals do not include the $3.1 billion in disaster assistance that was adopted in aseparate title of the bill. Spending for disaster assistance was offset by a comparablereduction in estimated spending for a mandatory conservation program over a 10-yearperiod. The appropriated totals do not reflect the effect of a 0.65% across-the-boardin almost all discretionary programs in the omnibus measure, which if appliedequally to all USDA and related agency programs, would reduce appropriations byapproximately $85 million. (The WIC program is the only USDA discretionaryaccount that is specifically exempted from the rescission.)

FY2003 Agriculture Appropriations: Proposed Spending Levels and Current Issues

The following sections compare the enacted conference agreement on theFY2003 omnibus appropriations bill ( P.L. 108-7 ), with the Senate-passed version ofthe bill ( H.J.Res. 2 ), the House-reported agriculture appropriations billin the 107th Congress ( H.R. 5263 ), the Administration's FY2003 request,and the FY2002 enacted level for various mission areas and agencies within USDA,and for the Food and Drug Administration. Also see the table at the end of thereport for a tabular summary of P.L. 108-8 , the House and Senate measures, the FY2003 request, and the FY2002 enacted appropriation levels, includingsupplementals. This report will continue to track congressional action on FY2003agriculture appropriations as the process continues.

Farm Commodity Support

Most spending for USDA's mandatory agriculture and conservation programs, as authorized by the 2002 farm bill ( P.L. 107-171 ), is funded throughUSDA's Commodity Credit Corporation (CCC). The CCC is a wholly ownedGovernment corporation. It has the legal authority to borrow up to $30 billion at anyone time from the U.S. Treasury. These borrowed funds are used to finance thespending of ongoing programs such as farm commodity price and income supportactivities (including annual Direct and Counter-cyclical Payments and Milk IncomeLoss Contract Payments); and various agricultural conservation and trade programs.The CCC has also been the funding source for a large portion of emergencysupplemental spending over the years, particularly for ad-hoc farm disaster payments,and direct market loss payments to growers of various commodities which have beenprovided in response to low farm commodity prices.

The CCC must eventually repay the funds it borrows from the Treasury. But,because the CCC never earns more than it spends, its losses must be replenishedperiodically through a congressional appropriation so that its $30 billion borrowingauthority (debt limit) is not depleted, which would render the corporation unable tofunction. Congress generally provides this infusion through the regular annualUSDA appropriation law. Because of the degree of difficulty in estimating itsfunding needs, which is complicated by crop and weather conditions and otheruncontrollable variables, the CCC in recent years has received a "current indefiniteappropriation," which in effect allows the CCC to receive "such sums as arenecessary" during the fiscal year for previous years' losses and current year's losses. Indefinite appropriations have become more common for the CCC in recent years,particularly in FY2000 when CCC net outlays in that year totaled $32 billion. Without an indefinite appropriation, the CCC would have exhausted its $30 billionborrowing limit.

For FY2003, the Administration requested an indefinite appropriation for theCCC estimated at $16.285 billion, compared with an estimated $20.279 billion forFY2002. The FY2003 omnibus appropriations act ( P.L. 108-7 ) concurs with thisrequest and estimate. Not included in this amount is a separate supplementalappropriation of $3.1 billion in P.L. 108-7 for farm disaster assistance, which is tobe funded through the borrowing authority of the CCC. (See below.)

Farm Disaster Assistance

With a large portion of the nation in extreme and severe drought for the pasttwo years, many farm groups were seeking supplemental federal disaster assistancefor 2001 and 2002 crop and livestock losses. The omnibus appropriations act ( P.L.108-7 ) contains an estimated $3.1 billion in economic and disaster assistance foragricultural producers in a separate title of the act (Division N, Title II). A similaramount was provided in the Senate-passed version of the measure( H.J.Res. 2 ). No comparable provisions were considered in the House.The cost of the package is offset by a spending limitation placed on a farmbill-authorized conservation program, the Conservation Security Program, over thenext 10 years. The Administration did not request any assistance, and insisted duringthe congressional debate that any assistance Congress provided must be offset withcomparable reductions in other farm spending.

The following is a breakdown of the major provisions in the disasterassistance provisions in P.L. 108-7 .

Crop Disaster Assistance. P.L.108-7 contains "such sums as are necessary" from the Commodity Credit Corporationto fully fund a disaster payment formula that is similar to the payment formula lastused for ad-hoc 2000 crop disaster payments. Regardless of whether a farmer is ina declared disaster area, a producer can be eligible for assistance if individual croplosses were in excess of 35% in either 2001 or 2002. For losses in excess of the 35%threshold, an eligible producer can receive a payment equal to 50% of the relevantprice for the commodity. Producers who had the opportunity to insure the crop andwaived insurance for that year will be slightly penalized and receive a payment equalto 45% of the relevant price. All commercially grown crops are eligible for a paymentunder this formula except for sugar and tobacco, which have separate disasterpayment programs in the program. All producers must choose between a 2001payment or a 2002 payment, and may not receive a payment for both years' losses.The act limits the amount of the disaster payment so that the payment, in combinationwith crop insurance payments and the value of the crop that was not lost, cannotexceed 95% of the value of the crop had there been no losses. A participatingproducer also must agree to purchase crop insurance for the next two crop years, or,when insurance is not available, purchase coverage under the noninsured assistanceprogram for two years. Congressional Budget Office cost estimate: $2.115 billion(subject to change, since "such sums as are necessary" are available for thisprovision.)

Livestock Assistance. P.L. 108-7 provides $250 million to compensate for 2001 or 2002 livestock forage or feed lossescaused by a natural disaster. The program will be administered in the same fashionas the ad-hoc 1999 Livestock Assistance Program (LAP). To receive LAP assistance,a producer must be in a disaster-declared county (declared by the President or theSecretary of Agriculture) and must choose between 2001 or 2002 losses. Themeasure also removes date restrictions for eligibility for the Livestock CompensationProgram (LCP), which USDA administratively implemented in 2002. TheCBO-estimated cost of the LCP provision is $100 million . USDA funded the LCPthrough the use of Section 32 funds, which are traditionally used to make surpluscommodity purchases. The omnibus act requires any new spending to come from theCommodity Credit Corporation, instead of Section 32, and reimburses Section 32with $250 million in CCC funds to compensate for a portion of the past payments ofthe program.

Other Assistance. P.L. 108-7 alsoprovides various forms of assistance to certain commodities, including: 1) $60million in disaster payments to sugar beet producers; 2) a CBO-estimated $60million in payments to sugarcane producers and processors for hurricane losses; 3)a CBO-estimated $54 million to compensate tobacco producers for losses associatedwith quota reductions, pests and diseases; and 4) $18.2 million to compensate Floridacitrus growers whose trees were quarantined for citrus canker.

Crop Insurance

The federal crop insurance program is administered by USDA's RiskManagement Agency (RMA). It offers basically free catastrophic insurance toproducers who grow an insurable crop. Producers who opt for this coverage have theopportunity to purchase additional insurance coverage at a subsidized rate. Mostpolicies are sold and completely serviced through approved private insurancecompanies that have their program losses reinsured by USDA. The annualagriculture appropriations bill makes two separate appropriations for the federal cropinsurance program. It provides discretionary funding for the salaries and expensesof the RMA. It also provides "such sums as are necessary" for the Federal CropInsurance Fund, which funds all other expenses of the program, including premiumsubsidies, indemnity payments, and reimbursements to the private insurancecompanies.

The omnibus appropriations act ( P.L. 108-7 ) provides an FY2003appropriation of $70.708 million for RMA salaries and expenses, the onlydiscretionary component of the federal crop insurance program. This appropriationis the same as in the Senate-passed version of the omnibus measure( H.J.Res. 2 ), slightly below the House-reported ( H.R. 5263 )level of $72.771 million. The House and Senate and final levels for FY2003 areslightly below the Administration request only because neither bill concurs with theAdministration request to shift GSA rent expenses from a central account toindividual agency accounts. The Administration request was $4 million below theFY2002 appropriation of $74.75 million. Most of the reduction in the FY2003funding request is attributable to one-time costs in FY2002 for implementing theAgricultural Risk Protection Act ( P.L. 106-224 ), which provided increased subsidiesand made other enhancements to the crop insurance program.

For mandatory expenses of the crop insurance program (premium subsidy,program losses and reimbursements to private insurance companies), theAdministration requests "such sums as are necessary" and estimated an FY2003appropriation of $2.89 billion, which was virtually equal to the FY2002 estimate of$2.90 billion. P.L. 108-7 concurs with the FY2003 request.

Annual spending on the crop insurance program is difficult to predict inadvance and is dependent on weather and crop growing conditions. The cropinsurance program received legislative enhancements in 2000 ( P.L. 106-224 ) whichhave contributed to significantly higher farmer participation in the program. TheAdministration maintains that the increased participation has resulted in windfallprofits for the private insurance companies. Hence, the FY2003 budget requestcontained a legislative proposal to require private insurance companies to absorbmore of the risk of the program by limiting their underwriting gains to 11.5% ofretained premiums. P.L. 108-7 does not address this proposal, and to date, nolegislative action has occurred. Senate report language accompanying S. 2801 directed USDA to follow current procedures in the Standard ReinsuranceAgreement between private companies and USDA before any risk-sharing changesare made.

For more background on crop insurance, see CRS Report RL30739(pdf) , FederalCrop Insurance and the Agriculture Risk Protection Act of 2000 (P.L.106-224) .

Farm Service Agency

While the Commodity Credit Corporation serves as the funding mechanismfor the farm income support and disaster assistance programs, the administration ofthese and other farmer programs is charged to USDA's Farm Service Agency (FSA). In addition to the commodity support programs and most of the emergency assistanceprovided in recent supplemental spending bills, FSA also administers USDA's directand guaranteed farm loan programs, certain conservation programs and domestic andinternational food assistance and international export credit programs.

FSA Salaries and Expenses. Thisaccount funds the expenses for program administration and other functions assignedto the FSA. These funds consist of appropriations and transfers from CCC exportcredit guarantees, from P.L. 480 loans, and from the various direct and guaranteedfarm loan programs. All administrative funds used by FSA are consolidated into oneaccount. For FY2003, the FY2003 omnibus appropriations act ( P.L. 108-7 ) providesan annual appropriation of $976.7 million for FSA salaries and expenses. Separatelyin the act, FSA is authorized to tap the Commodity Credit Corporation for up to anadditional $70 million to cover the administrative costs associated with implementingthe $3 billion farm disaster assistance package in the act, as well as the ongoing farmcommodity support programs. The regular appropriation of $976.7 million is equalto the amount provided in the House-reported appropriations bill ( H.R. 5263 ) and $10.2 million below the Senate-passed ( H.J.Res. 2 ) level of$986.9 million. The Senate measure also contained the $70 million supplementalauthority.

The Administration had requested an FY2003 appropriation of $993.6 millionfor FSA salaries and expenses, compared with $939 million appropriated in FY2002. Most of the requested increase was attributable to increased pay costs and a lack ofcarryover funds from FY2002. (FY2002 funding was bolstered by a $29 millioncarryover from FY2001. No carryover was expected into FY2003.) The requestedlevel for FY2003 did not reflect any new activities associated with the recentlyenacted 2002 farm bill ( P.L. 107-171 ). The farm bill provides $50 million in newmandatory no-year funding for FSA salaries and expenses to administer new farm billprograms. Neither P.L. 108-7 nor the House-reported or Senate-passed measure concurs with the President's request to increase the FSA appropriation by $17 millionover FY2002 to cover FSA rental payments to GSA, which are currently paid out ofa central USDA account.

FSA Farm Loan Programs. Through FSA farm loan programs, USDA serves as a lender of last resort for familyfarmers unable to obtain credit from a commercial lender. USDA provides directfarm loans and also guarantees the timely repayment of principal and interest onqualified loans to farmers from commercial lenders. FSA farm loans are used tofinance the purchase of farm real estate, help producers meet their operatingexpenses, and financially recover from natural disasters. Some of the loans are madeat a subsidized interest rate. An appropriation is made to FSA each year to cover thefederal cost of making direct and guaranteed loans, referred to as a loan subsidy. Loan subsidy is directly related to any interest rate subsidy provided by thegovernment, as well as a projection of anticipated loan losses caused by farmernon-repayment of the loans.

The omnibus appropriations act ( P.L. 108-7 ) provides an appropriation of$228.3 million to subsidize the cost of total direct and guaranteed farm loans of$3.937 billion for FY2003. The appropriation is midway between the $212.1 million (supporting $3.8 billion in total loans) in the House-reported bill ( H.R. 5263 ) and the Administration request and the $243 million ($4.01 billion in loans)in the Senate-passed measure ( H.J.Res. 2 ). The enacted FY2003 levelwill allow FSA to make available nearly twice the level of direct operating loans thanin FY2002 ($104.4 million in FY2003 vs. $54.6 million authorized in FY2002.)

FSA farm loan levels have been higher in recent years because an FY2000supplemental act ( P.L. 106-113 ) provided significant emergency funding for various

USDA farm loan programs, from which balances were carried over into subsequentyears. Supplemental funding has been provided in recent years for federal farm loansin response to low farm commodity prices, which have limited the ability of farmersto secure commercial farm loans.

Agricultural Trade and Food Aid

USDA's agricultural trade and food aid activities include some programs thatare funded by appropriations and others that are funded through the borrowingauthority of the CCC. The FY2003 omnibus appropriations act ( P.L. 108-7 ) dealsmainly with programs for which appropriations are required. CCC-funded activitiesare dealt with primarily in budget proposals submitted by the President, althoughgeneral provisions in the annual appropriations act occasionally address fundinglevels and other aspects of the CCC-funded programs.

Adding together appropriations and estimated spending for CCC-fundedactivities (some additional food aid programs, market development, export subsidies,export credit guarantees) results in a program level of about $6.1 billion for allUSDA international activities for FY2003. (2) The program level for USDA's internationalactivities was estimated at about $5.5 billion in FY2002. The program level reflectsnot only increased spending for food aid, but also Congress's rejection in the 2002farm bill of many of the food aid reforms proposed by the Administration in itsFY2003 budget proposals.

FAS Salaries and Expenses. TheForeign Agricultural Service (FAS) administers USDA's international programs (bothappropriated and CCC-funded). The administration of P.L. 480 Food for Peace,however, is shared between USDA and the U.S. Agency for InternationalDevelopment (USAID). USDA is responsible for Title I of P.L. 480, which provideslow-interest, long-term loans to developing countries to finance the purchase of U.S.food products, while USAID is responsible for Title II (commodity donations) andTitle III (a bilateral food grant program). (FAS also administers several food aidprograms financed with CCC-funds) For salaries and expenses of FAS, P.L. 108-7 provides $129.9 million, which is $8.1 million above the FY2002 enacted amountand about $1.5 million less than requested by the President.

Foreign Food Aid: Funding andIssues. P.L. 480 food aid accounts for $1.343 billion (more than90%) out of an appropriation of $1.477 billion for discretionary agricultural tradeprograms. P.L. 108-7 contains an appropriation of $1.477 billion for USDA'sinternational activities that are subject to annual appropriations (P.L. 480 food aid,salaries and expenses of the Foreign Agricultural Service, and administrativeexpenses for managing export credit guarantee programs). Of that amount, $1.2billion is authorized for humanitarian commodity donations under P.L. 480 Title II. In addition, P.L. 108-7 includes a supplemental appropriation of $250 million foremergency relief activities under P.L. 480, which will remain available throughFY2004. Not counting the additional $250 million, the total for appropriatedinternational programs is $344 million greater than enacted for FY2002 with mostof the increase going to humanitarian food donations. Additional spending forhumanitarian relief is a response to the Administration's decision to phase out foodaid based on commodity surpluses and to estimates by U.S. and international food aidagencies of large, urgent food needs in Sub-Saharan Africa, North Korea,Afghanistan and elsewhere. In light of estimated food needs around the world, theissue of food aid spending for emergency relief could be revisited during the 108thCongress.

The increase in food aid appropriations in the FY2003 omnibusappropriations act is in response both to large estimated global food needs and to theAdministration's decision to phase out food aid based on commodity surpluses orCCC funding. Proposed reductions in Section 416(b) (which uses surpluscommodities and CCC funds) are based on the Administration's review of food aidthat also recommended (in the FY2003 budget proposal) that all programs now runthrough private voluntary organizations (PVOs), cooperatives, and the World FoodProgram be placed in USAID, with USDA food aid activities confined togovernment-to-government programs. Consistent with this approach, theAdministration recommended in the FY2003 budget proposal an increase in P.L. 480Title II commodity donations to compensate partially for the phase-out of Section416(b) commodity donations.

Initial Administration budget proposals also excluded any CCC funding inFY2003 for Food for Progress (FFP) which provides U.S. commodities to developingcountries and emerging democracies. CCC funding of this program has averagedaround $100 million annually in recent years. Under the President's proposals, anyFFP activity would have been be limited to government-to-government programsfinanced with money appropriated for P.L. 480 Title I. However, reauthorization ofthe FFP program in the 2002 farm bill ( P.L. 107-171 ), with continued reliance onCCC funding, complicated the efforts of the Administration to phase outCCC-funded food aid programs. P.L. 108-7 goes further and amends the FFP statueby requiring a minimum volume of 400,000 metric tons of commodities (whicheffectively entails CCC funding) and by requiring the President to enter into FFPagreements not only with foreign governments, but also with PVOs, coops, andintergovernmental organizations. Consequently, the President's FY2003 estimatesfor international programs now include $158 million of CCC funding for FFP.

On the international level, the use of commodity surpluses to augment U.S.food aid has been criticized by the European Union, Australia, and other agriculturalexporting countries as an effort by the United State to circumvent U.S. World TradeOrganization (WTO) export subsidy reduction commitments. These trading partnersargue that much of U.S. food aid is being used to manage supplies rather than to meetemergency needs and that large food aid shipments impede sales of agriculturalproducts by and between developing countries. The issue of food aid andinternational agricultural trading rules is being pursued by U.S. trading partners in thenew round of multilateral trade negotiations launched at the end of 2001.

Consistent with its phase-out of Section 416(b), the President's budgetassumes that $118 million will be available for programming under Section 416(b)in FY2003. That would consist almost entirely of surplus nonfat dry milk held inCCC inventories. In contrast, $175 million of commodity assistance andtransport/distribution costs under Section 416(b) were funded in FY2002 and $948million in FY2001.

Mandatory Trade Programs. Inaddition to Section 416(b) and Food for Progress (discussed above), many otherUSDA international programs are funded through CCC borrowing authority. By farthe largest component of program level is accounted for by an estimated $4.225billion of CCC export credit guarantees, which guarantee payment for commercialfinancing of U.S. agricultural exports. The actual export value of credit guaranteesmade available in FY2003 will depend ultimately on market conditions and demandsfor credit. Historically, the value of such guarantees has rarely reached (or exceeded)the levels anticipated in budget requests.

U.S. export credit programs have also been raised as an issue in WTOagricultural trade negotiations. The EU and other trading partners charge that theprogram has a subsidy element (although it is much less than the subsidy representedby the EU's export restitution program) and gives the U.S. an unfair competitiveadvantage in exporting certain agricultural commodities. The United States took part in negotiations on export credit programs in the Organization for EconomicCooperation and Development (OECD), but these negotiations did not succeed and were suspended. Any changes in the U.S. program that might result from tradenegotiations would have to overcome strong congressional support of these programsas they are presently constituted.

Two other CCC-funded programs assist trade organizations in their efforts to develop markets overseas for U.S. agricultural products. For the Market AccessProgram (MAP), the Administration assumes spending of $110 million and for theForeign Market Development (or "Cooperator") Program (FMDP), $34 million.These amounts are authorized in the 2002 farm bill ( P.L. 107-171 ).

For one CCC-funded direct export subsidy program, the Export EnhancementProgram (EEP), the conference report limits CCC spending to $28 million. For itsreduction from the level authorized in the farm bill ($478 million), P.L. 108-7 scoressavings of $450 million. In the past, the Congressional Budget Office (CBO) hasscored no savings for proposed cuts to EEP funding since actual spending in theprogram has been negligible (e.g., $1 million in FY2001, $0 in FY2002). However,the conference report estimate of savings is based on Office of Management andBudget's (OMB) scoring method (rather than CBO's) which allows dollar-for-dollarsavings for cuts from the authorized EEP level. For the other export subsidyprogram, the Dairy Export Incentive Program (DEIP), the President's budgetanticipates that $57 million would be provided, an estimate that reflects the maximum permitted under international trade agreements.

The 2002 farm bill established a new food aid program, the McGovern-DoleInternational Food for Education and Child Nutrition Program (IFED), and mandatedthat $100 million of CCC-funding be made available for FY2002. In subsequentfiscal years (FY2004-FY2007), "such sums as necessary" would be appropriated. IFED began as a pilot project during the Clinton Administration and was financed by$300 million in CCC-funds and commodities. Consistent with farm billrequirements, the Administration indicates that $100 million of CCC funds would beexpended on IFED in FY2003.

For more information on agricultural trade and food aid, see CRS Issue Brief IB98006, Agricultural Export and Food Aid Programs and CRS Issue Brief IB10077, Agricultural Trade Issues in the 107th Congress.

Natural Resources and Environment

The natural resources and environment mission area within USDA isimplemented through the programs of the Natural Resources Conservation Service(NRCS), the Farm Service Agency (FSA), and the Forest Service. (Funding for theForest Service is provided in the annual Interior appropriations bill, and is discussedin CRS Report RL31306 , Appropriations for FY2003; Interior and RelatedAgencies .) Conservation spending combines discretionary spending, which is justover $1 billion in the FY2003 omnibus appropriations act ( P.L. 108-7 ), andmandatory funding, which is funded through the Commodity Credit Corporation, and is estimated at almost $3.0 billion, according to the January 2003 CongressionalBudget Office (CBO) estimate.

Mandatory conservation spending includes $1 billion in new spendingauthorized by the recently enacted 2002 farm bill ( P.L. 107-171 ). The new farm billprovides legislative authority, including funding levels, for many of the mandatoryconservation programs through FY2007. When Congress was considering this law,the CBO estimated that overall mandatory conservation funding would grow byabout 80%, increasing by a total of $9.2 billion through FY2007 (and $17.1 billionthrough FY2011, assuming an extension of current policies, without modification,through that year.)

Discretionary Programs. TheFY2003 omnibus appropriations act ( P.L. 108-7 ) provides $1.028 billion for alldiscretionary conservation programs within USDA, which is $7 million higher thanthe House committee-reported bill ( H.R. 5263 ), $9 million less than theSenate-passed measure ( H.J.Res. 2 ), and $22 million below theAdministration request of $1.049 billion. Much of the difference between thecongressional levels and the Administration request was a $48.7 million request forthe Emergency Conservation Program (funded under the Farm Service Agency) thatwas not included in P.L. 108-7 or either chamber's measure. The FY2003 enactedlevel is a decrease of $29 million from the FY2002 appropriation of $1.056 billion,which included $94 million of supplemental spending provided for watershed andflood prevention in P.L.107-206 .

The largest discretionary conservation program is Conservation Operations(CO), most of which supports technical assistance. P.L. 108-7 provides $825 millionfor CO in FY2003, which is less than the Administration request of $841 million, buta significant increase from the $779 million provided in the FY2002 appropriation. A large portion of the requested increase, $48 million, would have paid for technicalassistance in helping animal feeding operations comply with clean water regulations. P.L. 108-7 provides less than either the House-reported bill ($844 million) or theSenate-passed measure ($840 million). The conference report accompanying the lawidentifies 114 earmarks for CO with a total cost of more than $110 million. Someof these are new this year, while others had been specified in appropriations bills inprevious years. Reports accompanying bills emerging from both chambers eachidentified numerous earmarks; S. 2801 , for example, includes 83earmarks allocating about $90 million. Some earmarks are for specific projects orsites and others are for activities. The largest earmark in the law, $21.5 million, is forthe grazing lands conservation initiative. The conference report also identifiespartners to be involved in many of these projects and activities. P.L. 108-7 , drawingfrom the House bill, requires NRCS to treat earmarks as additions to each state'sallocation.

For watershed activities, P.L. 108-7 provides $110 million for Watershed andFlood Prevention Operations ($200 million appropriated in FY2002, including a $94million supplemental appropriation provided in P.L. 107-206 ), $11.2 million forWatershed Surveys and Planning ($11 million in FY2002) and $30 million forWatershed Rehabilitation Program ($10 million in FY2002). It identifies severalearmarks in the general provisions and in the conference report. The Administrationrequested no appropriation in FY2003 for these three watershed programs. Instead, it proposed a new approach, requesting $110 million for Emergency WatershedProtection, which is the average of annual spending over the past 10 years, so thatUSDA would have funds on hand to provide immediate assistance after a naturaldisaster. (Currently, emergency programs typically are funded in supplemental actsafter a disaster strikes, so assistance may not be available for several months orlonger after the damage occurs.)

Neither chamber concurred with this Administration request to consolidatethree accounts into the Emergency Watershed Protection account. Instead, the Houserecommended $110 million for Watershed and Flood Prevention Operations (withnumerous earmarks), $11.2 million for Watershed Surveys and Planning, and nofunding for Emergency Watershed Protection or Watershed Rehabilitation, while theSenate recommended $105 million for Watershed and Flood Prevention Operations(with numerous earmarks), $11.0 million for Watershed Surveys and Planning, andno funding for Emergency Watershed Protection, and also $30 million for WatershedRehabilitation. P.L. 108-7 includes provisions from both bills that limit spending fortechnical assistance to $45.5 million of the total for Watershed and Flood PreventionOperations, and limit expenditures related to protecting threatened and endangeredspecies to $1 million.

P.L. 108-7 provides no funds for the Emergency Conservation Program, anFSA-administered program which helps producers repair damaged farmlandfollowing a disaster. Traditionally, this program has been funded throughemergency supplemental appropriations. Congress rejected an Administrationproposal to move to a new funding approach. This proposal assumed that FY2003spending would be the average of the past 10 years, $48.7 million, and requests thislevel of funding in the regular FY2003 appropriations, so that it can more rapidlyrespond to emergencies.

P.L.108-7 provides $51 million for the Resource Conservation andDevelopment (RC&D) Program to support activities in designated RC&D districts. This amount is almost $2 million more than the Administration request of $49.1million and $1 million more than the Senate provided, but $4.1 million less than theHouse-reported level. The act does not provide any funding for the ForestryIncentive Program administered by NRCS, which was eliminated by the 2002 farmbill.

Technical Assistance Funding. In late 2002, the Office of Management and Budget, supported subsequently by theDepartment of Justice, issued an opinion that technical assistance funding formandatory programs remains limited under a cap that has been placed in section 11of the Commodity Credit Corporation charter under prior law. Members had thoughtthat the issue had been resolved through language included in the 2002 farm bill andwere supported in this conclusion by an opinion issued by the General AccountingOffice. The Administration proposed to address this limit in FY2003 through aJanuary 2003 proposal to create a new farm bill technical assistance line item, andto fund it at $333 million in FY2003. It stated that this line item combined with otherfunding would be adequate to fully fund all technical assistance necessary toimplement all mandatory and discretionary conservation programs. Congressstrongly rejected this proposal. Section 213 of the disaster assistance package(Division N, Title II) in P.L. 108-7 amends the farm bill by specifically prohibitingthe use of discretionary funds to implement any mandatory conservation programs.

Mandatory Programs. TheAdministration's FY2003 request was submitted prior to enactment of the 2002 farmbill, which reauthorized and greatly increased funding for many conservationprograms slated to expire at the end of FY2002. Although the Administration hadstated its support for authorizing higher annual mandatory conservation fundinglevels in the 2002 farm bill, its request for FY2003 did not include any of theanticipated reauthorizations or increases, except that it requested then-level fundingat $200 million for the Environmental Quality Incentives Program (EQIP), a costsharing program to pay for installing conservation practices. Most of the othermandatory conservation programs had either reached their authorized ceilings (set indollars or acres), or had been unfunded because of limitations enacted in previousappropriations legislation.

The $3.1 billion in agricultural disaster assistance provided in P.L. 108-7 isoffset by limiting spending on the new Conservation Security Program (CSP). TheCSP has not yet been implemented, but was designed to pay farmers to institute andmaintain conservation practices on land that is producing food and fiber. Thelimitation in P.L. 108-7 prohibits any funding in FY2003 and limits total ten-yearfunding (FY2004-2013) to $3.773 billion, providing an offset of $3.105 billion overthe time period. The farm bill had called for this program to be implemented inFY2003. The House-reported bill would have limited this program to a single state,Iowa, making it a pilot program with savings of $3 million, while the Senate-passedbill would have made it available in all states.

P.L. 108-7 includes three other provisions that either limit or prohibit fundingfor certain mandatory conservation programs. The act: 1) limits FY2003 enrollmentin the Wetlands Reserve Program to 245,833 acres instead of the 250,000 acresauthorized in the farm bill (savings of $5 million); 2) limits FY2003 funds for theEQIP to $695 million instead of the $700 million authorized in the farm bill; and 3)

prohibits the use of any of the $45 million in mandatory funds authorized in FY2003for the Small Watershed Rehabilitation Program. (However, the act does provide$30 million in discretionary funding for the Small Watershed RehabilitationProgram.)

The FY2003 omnibus appropriations act does not comment on the mostcostly mandatory conservation program, the Conservation Reserve Program (CRP). It is administered by FSA and pays farmers to retire from production highly erodibleand environmentally sensitive land. Late last year, USDA reported that there wereabout 35.1 million acres enrolled in the CRP, almost 10% of the country's cropland. It has been approaching its ceiling of 36.4 million acres, which was raised to 39.2million acres by the 2002 farm bill. The budget assumes FY2003 outlays of $1.856billion to fund existing and new contracts. Most other mandatory funding programswill grow rapidly, as they were reauthorized by the 2002 farm bill. Examples includethe Wetlands Reserve Program, which will grow from 1.075 million acres (by250,000 acres per year) to 2.275 million acres and the EQIP, which will grow from$200 million in FY2001 to $1.3 billion in FY2007.

For more information on USDA conservation issues, see CRS Issue Brief IB96030, Soil and Water Conservation Issues , and for more information on the farmbill conservation provisions, see CRS Report RL31486(pdf) , Resource Conservation Titleof the 2002 Farm Bill: A Comparison of New Law with Bills Passed by the Houseand Senate, and Prior Law .

Agricultural Research, Education, and Economics

The FY2003 omnibus appropriations act ( P.L. 108-7 ) provides $2.506 billionfor USDA's four research, education, and economics (REE) agencies in FY2003,compared with $2.517 billion in the Senate-passed bill ( H.J.Res. 2 ) and$2.379 billion in the House-reported bill ( H.R. 5263 ). TheAdministration had requested $2.232 billion. The final law is $61 million above theFY2002 enacted level (including supplementals for counter-terrorism activities).

Four agencies carry out USDA's REE function. The Department's in-houseresearch agency is the Agricultural Research Service (ARS), which providesscientific support to USDA's action and regulatory agencies and conducts long-term,high risk, basic and applied research on subjects of national and regional importance. The Cooperative State Research, Education, and Extension Service (CSREES) is theagency through which USDA sends federal funds to land grant Colleges ofAgriculture for state-level research, education and extension programs. TheEconomic Research Service (ERS) provides economic analysis of agriculture issuesusing its databases as well as data collected by the National Agricultural StatisticsService (NASS).

Agricultural Research Service(ARS). The FY2003 omnibus appropriations actprovides $1.172 billion in total for ARS. Of that amount,$1.053 billion supports ARS's research programs (a $73 million increase from theregular FY2002 appropriation), and $119.5 million supports modernizing andbuilding ARS facilities (a $0.5 million increase from the regular FY2002appropriation). Overall, however, ARS will receive $64 million less in FY2003, ifthe additional $138 million ARS received in supplemental funding is included in theFY2002 agency total. (3) P.L. 108-7 provides virtually level funding with theSenate-passed omnibus measure for ARS research, and an increase over both theSenate-passed and House-reported measures in funds available for facilitiesconstruction ($95 million and $101 million, respectively). The Administration requested $971.4 million for ARS research and $16.6 million for ARS constructionprojects for FY2003.

The conference report contains language calling for the continuation of allARS research projects and locations that the Administration had recommended fortermination or consolidation and closure. Conferees also adopted a provision fromthe House-reported spending bill that blocks the expenditure of any funds to conducta review of the quality and relevance of ARS research. Congress first authorized theUSDA secretary to request the National Academy of Sciences to conduct this reviewin the Agricultural Research, Extension, and Education Reform Act of 1998 ( P.L.105-185 ). However, the NAS study, which was released in December 2002, isinstead a review of the effect of publicly funded research on the structure of U.S.agriculture. The 2002 farm bill ( P.L. 107-171 ) reauthorized the ARS study asoriginally conceived, but the language in the final FY2003 appropriations law statesthat USDA should have time to review the existing NAS study before asking NASto undertake another.

The Public Health Security and Bioterrorism Response Act of 2002 ( P.L.107-188 ) authorized additional appropriations for ARS in FY2003-06 to upgradebioterrorism-related research facilities in Plum Island, NY and Ames, IA. The Actalso authorized $190 million in FY2003 to be shared among ARS, APHIS, the ForestService, and cooperators in the states for research on bioterrorism prevention,preparedness, and response, among other things. The FY2003 omnibusappropriations act does not contain any appropriations under that authority.

Cooperative State Research, Education, andExtension Service (CSREES). P.L. 108-7 provides $1.125 billionfor CSREES support of research and extension programs at the land grant collegesof agriculture. The Senate-passed omnibus measure would have provided $1.156billion, and the House-reported measure would have appropriated $1.07 billion. TheAdministration had requested $1.021 million. The $1.125 billion enacted total is a$97 million increase (almost 10%) over the FY2002 appropriation, most of which isallocated to research and education programs ($79 million) and extension programs($14 million), with a $4 million decrease in funding for integrated research andextension programs.

P.L. 108-7 adopted the Administration's request for: (1) $180.1 million(FY2002 level) in formula funds for core research and extension programs at 1862land grant institutions; and (2) $21.8 million (FY2002 level) in formula funds forforestry research. The final law provided $35.6 million (+$1 million from FY2002)for research at 1890 (historically black) land grant colleges; $32.1 million forextension at 1890 colleges (+$1 million from FY2002), and $453.5 million (higherthan FY2002 and both the House-reported and Senate-passed measures) for extensionat 1862 institutions.

The final FY2003 spending act increases funding for Special Research(earmarked) grants to $112.3 million, an amount higher than both the House-reportedand the Senate-passed measures ($102.8 million and $103.8 million, respectively).The Administration had proposed termination of most Special Research grants, witha funding recommendation of $3.3 million. FY2002 funding was $97 million. P.L.108-7 also provides $30 million for an additional group of earmarked grants underthe "Federal Administration" portion of the CSREES budget, which is more thanincluded in either chamber's initial bill, and more than in FY2002 ($21.7 million). The FY2003 budget request was $9.7 million. Finally, the conferees agreed toprovide $167.1 million for the National Research Initiative Competitive ResearchGrants (NRI) program, compared with $124.3 million in the Senate-passed omnibusmeasure, $130 million in the House-reported bill, and $120 million in FY2002. The Administration had proposed doubling that amount -- to $240 million -- for FY2003.

The conference report retains the earlier concurrence between the House andSenate bills, and with the FY2003 budget request, to block the expenditure of $120million in mandatory funds for the Initiative for Future Agriculture and Food Systemsthat was created in separate legislation in 1998. The 2002 farm bill ( P.L. 107-171 ),reauthorizes the Initiative and gradually increases its authorized funding from $120million to $200 million annually in FY2006-07.

The Public Health Security and Bioterrorism Preparedness and Response Actof 2002 ( P.L. 107-188 ) provides authority for security improvements at land grantcollege facilities and development of on-farm biosecurity education programs. TheFY2003 omnibus appropriations act contains no appropriations under this authority.

Economic Research Service (ERS) and NationalAgricultural Statistics Service (NASS). P.L. 108-7 provides $69.1million for ERS, representing an increase from the Senate-passed measure ($65.1million) and a decrease from the House-reported bill ($73.3 million) and the budgetrequest ($79.2 million). FY2002 ERS funding was $67.2 million. The conferees didnot include the Administration's request (which was included in the House-reportedbill) to transfer funds from a central account to each individual agency to cover rentpaid by each agency to GSA. For NASS, the conference report contains $139.4million, which is only slightly below the Senate-passed measure ($140.9 million), butabove the House-reported level of $137.8 million. The FY2002 appropriationwas$113.8 million, and the budget request was $143.7 million. P.L. 108-7 reflectsearlier House and Senate concurrence on allocating $41.3 million of the NASSappropriation for the agency's work on the 2002 Census of Agriculture, as theAdministration requested.

Food Safety and Inspection

USDA's Food Safety and Inspection Service (FSIS) is responsible for themandatory inspection of meat, poultry, and processed egg products to insure theirsafety, wholesomeness, and proper labeling. The FY2003 omnibus appropriationsact ( P.L. 108-7 ) contains the Senate-proposed $759.8 million for FSIS, which ishigher than the $755.8 million in H.R. 5263 and fully funds thePresident's budget request. The FY2002 funding level (including a $15 millionsupplemental) was $730.6 million. FSIS also will have access in FY2003 to anadditional $101 million in user fee income to support its inspection activities. P.L.108-7 includes $5 million specifically for FSIS to hire at least 50 additionalpersonnel to enforce the Humane Methods of Slaughter Act. A provision in theSenate-passed measure calling for more stringent monitoring of foreignestablishments exporting meat and poultry to the United States, is not included.

Marketing and Regulatory Programs

USDA's marketing and regulatory programs (MRP) are administered by threeagencies: the Agricultural Marketing Service (AMS), the Animal and Plant HealthInspection Service (APHIS), and the Grain Inspection, Packers, and StockyardsAdministration (GIPSA). The stated mission of these programs is to "expanddomestic and international marketing of U.S. agricultural products and to protect thehealth and care of animals and plants, by improving market competitiveness and thefarm economy for the overall benefit of both consumers and American agriculture."The FY2003 omnibus appropriations act ( P.L. 108-7 ) provides $868.1 million forUSDA's three marketing and regulatory agencies, which is about $18 million belowthe amounts contained in the House-reported ( H.R. 5263 ) andSenate-passed measure ( H.J.Res. 2 ). The amount provided in P.L. 108-7 is also $11 million below the Administration request of $879.2 million, but close tothe total FY2002 appropriation of $867.3 million (including FY2002 emergencysupplemental appropriations of $119.1 million, intended to protect the food supplyagainst agricultural terrorist threats).

Animal and Plant Health InspectionService. The largest appropriation for marketing and regulatoryprograms goes to USDA's Animal and Plant Health Inspection Service (APHIS), theagency responsible for protecting U.S. agriculture from foreign pests and diseases. P.L. 108-7 contains $735.5 million for APHIS. This amount is $11.3 million lowerthat the FY2002 total ($746.8 million), which included supplemental appropriationsof $119.1 million under P.L. 107-117 . Disregarding the supplementals, the FY2003appropriation represents a $105 million increase in funds for APHIS salaries andexpenses over FY2002, and a $2.8 million increase for facilities renovation. TheAdministration had requested an FY2003 appropriation of $775.3 million for APHIS(which included a one-time shift of $26.7 million to cover GSA rental costs, whichwas not adopted in the conference report). Both the House-reported appropriationsbill ( H.R. 5263 ) and the Senate-passed omnibus measure would haveprovided $749 million. The conferees did not include a Senate proposal to increaseAPHIS salaries and expenses by $17 million for stepped-up border inspections. Thatappropriation has been used in the past primarily for purchasing new equipment andtraining inspectors (including new additions to the Beagle Brigade), whereas theinspection service itself is paid entirely for by user fees collected from passengers,importers, and shippers at U.S. ports of entry. The inspection function, equipment,Beagle Brigade, and up to 3,200 employees have been transferred to the newDepartment of Homeland Security under P.L. 107-296 . USDA is retaining controlof the user fees collected and is to repay DHS for the costs that the new departmentincurs for providing border inspection services from that account. USDA expects tocollect approximately $275 million in user fees in FY2003. Beginning in FY2004,appropriations for equipment, dogs, and training will be made under the newDepartment's budget authority. (See CRS Report RL31466, Homeland SecurityDepartment: U.S. Department of Agriculture Issues ).

P.L. 108-7 contains a $62.1 million increase for APHIS Animal HealthMonitoring and Surveillance activities ($133.2 million total), in order to increase theagency's surveillance against and readiness for a biological attack against U.S.agriculture. In addition, the report includes a $37.8 million increase for managingemerging plant pests($75.3 million total), an $18.2 million increase for managingJohne's disease ($21 million total), and an $20.2 million increase for WildlifeServices (predator control) programs($69 million total).

P.L. 108-7 also provides $15 million for management of chronic wastingdisease (CWD) in domestic and wild deer and elk in different regions of the UnitedStates, and contains language requiring APHIS to expand laboratory testing capacityfor the disease by establishing protocols with and providing funding for commerciallabs that have rapid testing capabilities. Conferees did not adopt a House-reportedproposal to require USDA and the U.S. Department of Interior (Fish and WildlifeService and Park Service) to submit a detailed joint budget request for an FY2004 CWD program. Likewise, proposals to appropriate additional funds for CWDresearch were not included in the final measure.

Agricultural Marketing Service. AMS is responsible for promoting U.S. agricultural products in domestic andinternational markets, and for facilitating the marketing and distribution ofagricultural products. P.L. 108-7 provides $92.0 million for AMS as proposed bythe House, a level which is just above the $91.7 million proposed by the Senate andrequested by the Administration. The FY2002 level was about $86.8 million. Conference agreement report language calls for $15.8 million to be used for thepesticide data program, of which not less than $1 million is to be added to existingfunds for the drinking water initiative.

AMS is responsible for the so-called Section 32 program, a permanentappropriation (but separate from the annual USDA appropriations bill) that since1935 has earmarked the equivalent of 30% of annual customs receipts to support thefarm sector through a variety of activities. As is customary, most of the money forFY2003 (approximately $4.7 billion of the $5.8 billion total) has been transferredto the Food and Nutrition Service to help pay for child nutrition programs, andanother $75 million was transferred to the Commerce Department to pay for fisheriesactivities. Much the remainder is available to AMS to cover a variety of obligations,including: planned and "emergency" farm commodity purchases, which in turn areused to supplement the resources of domestic feeding programs; AMS administrativeexpenses for marketing order oversight; and other activities.

There was widespread concern that there might not be adequate funds forthese various activities -- particularly the "emergency" commodity purchases thatarise during the course of the fiscal year -- after the Department said in the fall of2002 that it would use Section 32 funds to pay up to $937 million for a speciallivestock disaster assistance program. Department officials subsequently reportedthat they had made a number of adjustments in other USDA spending accounts forFY2003 that, they said, would enable them to cover both the disaster program andthe other, more "traditional" Section 32 activities. Furthermore, a provision (Section204) of the agricultural disaster assistance title (Title II) of the FY2003 omnibusappropriations act requires the Secretary of Agriculture to transfer $250 million fromthe CCC to Section 32 "to carry out emergency surplus removal of agriculturalcommodities." Separately, a general provision (section 720) in the regular agricultureappropriations section of P.L. 108-7 prohibits the "reprogramming" of any fundsprovided in the act from one program to another, unless the House and SenateAppropriations Committees are notified 15 days in advance of such reprogramming. (For more background on Section 32, see CRS Report RS20235, Farm and FoodSupport Under USDA's Section 32 Program .)

Grain Inspection, Packers, and StockyardsAdministration. GIPSA establishes the official U.S. standards,inspection and grading for grain and other commodities, and ensures fair-tradingpractices. GIPSA also has been seeking to improve its understanding and oversightof livestock markets, where increasing concentration and other changes in businessrelationships have raised concerns among some producers about the impacts oncompetition and on the prices they receive. P.L. 108-7 provides $39.95 million forGIPSA in FY2003 instead of $44.7 million as proposed by the House and $44.5million as proposed by the Senate. The Administration had requested $12.2 millionfor GIPSA in FY2003, down $20.9 million from the $33 million provided inFY2002. To cover the shortfall, the Administration had included a proposed increaseof $29 million in new user fees, which if enacted would have been used to fundPackers and Stockyards Act inspections, and grain standard testing activities. P.L.108-7 does not assume adoption of such user fees. The final law does includelanguage, as proposed by the House, directing the Secretary to conduct a 2-year studyon packer ownership of livestock ($4.5 million). For more information, see CRS Issue Brief IB10063, Animal Agriculture Issues in the 107th Congress .

Rural Development

USDA's rural development mission is to enhance rural communities bytargeting financial and technical resources in areas of greatest need. Three agencies,established by the Agricultural Reorganization Act of 1994 ( P.L.103-354 ), areresponsible for this mission area: the Rural Housing Service (RHS), the RuralBusiness-Cooperative Service (RBS), and the Rural Utilities Service (RUS). AnOffice of Community Development provides community development supportthrough Rural Development's field offices. The mission area also administers therural portion of the Empowerment Zones and Enterprise Communities Initiative andthe National Rural Development Partnership.

The FY2003 omnibus appropriations act ( P.L. 108-7 ) provides $2.795 billionin budget authority for rural economic and community development programs, whichis between the $2.739 billion recommended in the Senate-passed measure( H.J.Res. 2 ) and $2.823 billion in the House-reported measure. TheAdministration's budget request was $2.587 billion. The FY2003 enacted level is$225.3 million more than was enacted for FY2002 (including a rescission). Itsupports a loan authorization level of $12 billion in direct and guaranteed ruraldevelopment loans, considerably higher than the budget request of $7.251 billion.Accounting for most of the difference between P.L. 108-7 and the request is theadditional loan authority in P.L. 108-7 for unsubsidized guaranteed housing loans andelectric utility loans. The House proposed a loan authorization level of $9.677 billion,and the Senate proposed a level of $9.857 billion.

Rural Community Advancement Program(RCAP). The RCAP, authorized by the 1996 farm bill( P.L.104-127 ), consists of consolidated funding for 12 rural development loan andgrant programs in three accounts: Community Facilities, Rural Utilities, and Businessand Cooperative Development. RCAP was designed to provide greater flexibility intargeting financial assistance to local needs and permits a portion of the variousaccounts' funds to be shifted from one funding stream to another. P.L. 108-7 provides$907.7 million in budget authority for the three RCAP accounts, $42.6 million lessthan proposed by the House, $40.5 million more than proposed by the Senate, and$116.2 million more than the Administration request.

P.L. 108-7 provides funding of $96.8 million for the Community Facilitiesaccount, over twice the level recommended by the House and just slightly less thanthe amount proposed by the Senate. For the Rural Utilities account, it provides$723.2 million, $40.4 less than the Senate and about $92 million less than the Housemeasure. P.L. 108-7 provides $87.7 million for the Rural Business Developmentaccount, $5.7 million less than the House proposal and approximately $1 million lessthan the Senate measure. The majority of the RCAP authorization supports waterand waste disposal grants in the Rural Utilities account. Within that account, P.L.108-7 also earmarks $18.3 million for technical assistance grants for rural water andwaste systems and adopts House and Senate recommendations for $12.1 million forthe circuit rider program. The House measure contained a provision for $17.5million in technical assistance for water and waste water, but the Senate measure hadno similar provision.

As with both the House-reported bill and Senate-passed measure, P.L. 108-7 also earmarks $30 million of RCAP funding for water and waste disposal programsin Alaskan native villages, $24 million for Federally Recognized Native AmericanTribes, $2 million for the Delta Regional Authority, and $25 million for colonias along the U.S.-Mexican border. Funding for the colonias is $5 million more thanproposed by the Senate and the same as that proposed by the House. P.L. 108-7 alsoincludes Senate language providing $30 million for grants to rural communities withhigh-energy costs and $25 million for facilities in rural communities sufferingextreme unemployment and severe economic depression. The House measure didnot contain these latter two provisions.

P.L. 108-7 also designates $7 million for the Rural Community DevelopmentInitiative, $1 million of which is provided to a demonstration program forReplicating and Creating Rural Cooperative Home Based Health Care. The Houseand Senate measures proposed $6 and $10 million respectively for the Initiative. P.L.108-7 adopts language from the House measure designating $37.6 million for theEmpowerment Zones/Enterprise Communities (EZ/ECs) and areas designated asRural Economic Area Partnerships (REAP) Zones. The Administration's budget didnot request direct EZ/EC funding, and the Senate measure did not designate fundingto the program.

Rural Housing Service. P.L.108-7 provides a total appropriations of $305.5 million for the Rural HousingInsurance Fund Program account instead of $303.6 million proposed by the Houseand $282.5 million proposed by the Senate. The appropriation supports a total ruralhousing loan authorization level of $5.8 billion, which is greater than the $3.9 billionproposed by the Senate and requested by the Administration, and the $4.5 billionproposed by the House. P.L. 108-7 permits $5.5 billion for Section 502 direct andguaranteed loans, $35 million for Section 504 housing repair loans, $5 million forSection 524 site loans, $12 million for credit sales of acquired land, and $5 millionfor Section 523 self-help housing and land development loans. Other than theincrease for Section 502 loan level, P.L.108-7 concurs with the Senate's proposedfunding levels. It also provides $100 million in Section 538 multi-family loanguarantees and $4.5 in loan subsidies, as proposed by the House measure and budgetrequest. The Senate measure did not recommend any loan authority for Section 538multi-family housing guarantees. The budget request for Section 538 housingguarantees was $100 million, approximately the same as the House proposal.

P.L.108-7 provides $202 million in direct loan subsidies for Section 502single family housing, about $17 more than the budget request and $8 million morethan the Senate measure proposed. The House measure proposed $210 million forSection 502 loans. P.L. 108-7 provides $115 million in loan authorization forSection 515 housing, nearly double the budget request and $4.2 million less than theHouse proposal. The Senate proposed $120 million for Section 515 rental housing. P.L.108-7 further provides $54 million in direct loan subsidies for Section 515 rentalhousing, the same as proposed by the House, but nearly double the budget request.

P.L. 108-7 also adopted Senate language that permits loans for newconstruction of Section 515 housing. The Administration had requested that therebe no new construction of Section 515 rental housing. P.L. 108-7 also adopts Senatelanguage stating that a priority should be placed on long-term rehabilitation needs inthe multi-family housing portfolio and encourages the Department to study Section515 costs in comparison to other federal programs serving the same eligible ruralpopulation. For Section 504 housing repairs, P.L. 108-7 provides $10.8 million, thesame as the House and Senate measures and the budget request.

For Section 521 rental assistance, P.L. 108-7 provides $726 million, $4million more than the House bill and $4 million less than proposed by the Senatemeasure. P.L. 108-7 provides $36.3 million for the Farm Labor Program grants anddirect loans, instead of $38 million proposed by the House and $34.6 millionprovided by the Senate measure and requested by the Administration. For ruralhousing assistance grants, the Conference Agreement concurs with the House bill andthe Administration request by providing $42.5 million. P.L. 108-7 adopts the Houseand Senate proposals for $35 million for the mutual and self-help housing grants, $1million more than requested. It also earmarks $11.6 million in rural housing loansuntil June 2003 for empowerment zones, enterprise communities, and REAP Zones.

Rural Utilities Service. P.L.108-7 provides a total subsidy of $12.5 million for programs under the RuralElectrification and Telecommunications Loan Program, the same as proposed inHouse and Senate measures and the budget request. The Agreement provides for anestimated loan authorization level of $5.6 billion as proposed by the Senate insteadof $4.5 billion proposed by the House. The loan authorization is nearly $2.4 billionmore than requested. Part of the loan authorization also includes $1 billion forguaranteed underwriting of credit payments under Section 313A of the RuralElectrification Act of 1936. ( 7 U.S.C. 940(c )), as proposed by the Senate measure.

For the Rural Telephone Bank (RTB), P.L. 108-7 adopts the Senate measure'sproposed loan level of $174.6 million, $23 million less than the House proposal. There was no Administration request.

In other RUS programs, P.L. 108-7 provides loan subsidies and grants of$56.9 million for the Distance Learning and Telemedicine program, instead of $44.1million as proposed by the House and $51.9 as proposed by the Senate. P.L. 108-7 adopts the House proposed loan authorization level of $380 million. The Senateproposal was for $129.5 million and the budget request was for $156.5 million. Asproposed by both House and Senate measures, P.L. 108-7 provides no funding for theLocal Television Loan Guarantee program. Direct authorization of $80 million forlocal television broadcast loan guarantees is included in the 2002 farm bill( P.L.107-171 ).

Rural Business-CooperativeService. P.L. 108-7 provides $19.3 million in loan subsidies tosupport $40 million in loan authorization for the Rural Development Loan Fund. These amounts are the same as the House and Senate measure and the same asrequested. Earmarks make portions of this account available to Federally RecognizedNative American Tribes, EZ/ECs, and Mississippi Delta counties. Rural CooperativeDevelopment Grants are funded at $9 million, the same as proposed by House andSenate measures and as requested by the Administration. P.L. 108-7 also adopts bothHouse and Senate proposals for $15 million to EZ/EC areas. The Administrationrequested no direct funding for the EZ/EC program.

Other Spending Provisions. Asin both the House and Senate measures, P.L. 108-7 provides no funding for theNational Rural Development Partnership, which was authorized in the 2002 farm bill. It also concurs with the Senate -passed measure in prohibiting the expenditure offunds to carry out the following two mandatory programs authorized by the 2002farm bill ( P.L.107-171 ): (1) the Rural Strategic Investment Program (authorized at$100 million), and (2) the Rural Firefighters and Emergency Personnel TrainingProgram (authorized at $10 million). The House-reported bill did not contain anyprovisions to limit or prohibit funding for any mandatory rural development program.

Food and Nutrition

The FY2003 omnibus appropriations act ( P.L. 108-7 ) provides a totalappropriation of $41.89 billion for all USDA food and nutrition programs. These programs provide federal funding and commodities to states for food assistance tochildren in schools and other children's facilities, and for low-income individuals andfamilies. The FY2003 appropriation is $21 million above the original Administrationrequest, but $79 million below the House-reported level in H.R. 5263 ,and $34 million below the Senate-passed level in H.J.Res. 2 .

Food Stamps. P.L. 108-7 provides $26.313 billion for food stamps and related programs. This includes foodstamp program expenses, a reserve fund, nutrition assistance for Puerto Rico andSamoa and funding to buy commodities for the emergency food assistance program(TEFAP). The enacted FY2003 level is the same as the House-reported level, andis $24 million more than the Senate-passed level, $64 million more than theAdministration request, and $3.25 billion more than FY2002. The House and Senatemeasures and the Administration request were in agreement on the amounts for foodstamp expenses and the food distribution program on Indian Reservations (FDPIR)($22.773 billion) and the food stamp reserve ($2.0 billion). For other relatedprograms, P.L. 108-7 provides $1.401 billion for Puerto Rico and American Samoaas proposed by the House, instead of $1.377 billion as requested by theAdministration and proposed by the Senate. According to the House committeereport, this is because of additional mandatory spending required for these programsunder the 2002 farm bill ( P.L. 107-171 ). P.L. 108-7 also provides $140 million forthe emergency food assistance program, as proposed by both the House and Senate,rather than the FY2003 request and FY2002 enacted level of $100 million.

The Administration budget anticipated food stamp participation growth ofabout 800,000 in FY2003, or about 4% above FY2002 for a total of 20.6 millionpersons in FY2003. Conference report language allows up to $10 million of theTEFAP funds to be used for administrative costs.

Child Nutrition. For all childnutrition programs, P.L. 108-7 provides $10.580 billion, the same as theSenate-passed level and $4 million above the House-reported level and theAdministration request. The difference is an additional $4 million in discretionaryspending for -- school breakfast program start-up grants ($3 million), the FoodWorks of Vermont Common Roots program ($200,000), and an archive resourcecenter at the National Food Service Management Institute ($500,000). The fundinglevels projected by the Administration for meal service programs are expected tomaintain full program participation. Independent verification of school food serviceclaims, proposed by both the House and Senate measures, is funded in the finallyenacted measure at $5.08 million.

WIC. P.L. 108-7 provides for atotal FY2003 appropriation of $4.696 billion for the special nutrition program forwomen, infants and children (WIC), which is $289 million more than the FY2002level of $4.462 billion (including supplementals), $55 million less than was recommended by the Senate bill, and $180 million less than recommended by theHouse bill. The final amount includes a reserve fund of $125 million, asrecommended by the Administration. (WIC is the only discretionary account that isexempted from the provision in P.L. 108-7 that requires a .65% across-the-board-cut in other discretionary program spending to keep the omnibus measure within budgettargets.) The Administration request was projected to be able to serve a monthlyaverage of 7.8 million low-income pregnant and postpartum mothers and youngchildren. The Administration revised its original WIC proposal, recommending that$25 million be taken its previous proposed $150 million reserve fund in order to helpoffset proposed increases in spending for conservation technical assistance andEEOC salaries and expenses. Administration officials report that this reserve will notbe needed and therefore no loss occurs to the program for this change. WIC reservefunds are provided in case costs to maintain caseload are higher than projected.

Commodity Assistance Program. P.L. 108-7 provides FY2003 funding of $164.5 million for the CommodityAssistance Program (the term used by appropriators to refer to the CommoditySupplemental Food Program (CSFP) and for administrative funds for the TEFAP). This appropriation is $19.5 million more than requested and $15 million aboveFY2002, but $5.5 million less than the House bill and $2.5 below the Senatemeasure. The House Appropriations Committee recommended that all of its proposedincrease go for the CSFP; EFAP administrative costs would have remained at theFY2002 level of $50 million. The Senate measure proposed $167 million, less thanthe House level, and required that $5 million of the amount provided be used forsenior farmers' market activities.

Food Donation Programs. NoFY2003 funding is provided in USDA appropriations for the elderly nutritionprogram (or nutrition services incentive program), a food donation program thatprovides mostly cash-in-lieu of commodities to support meal programs for seniorcitizens. P.L. 108-7 concurs with an Administration proposal to merge this programwith the larger meal programs operated for senior citizens under the Older AmericansAct by the Department of Health and Human Services. FY2002 funding for theelderly nutrition program was $149.7 million. Pacific Island and Disaster Assistance(the Needy Family Program) will continue to be funded at $1.081 million under P.L.108-7 , in concurrence with the Administration request and both the House and Senateproposals.

Other Provisions. P.L. 108-7 adopted a House provision that prohibits the use of any child nutrition, WIC, or foodstamp funds from being used by the Food and Nutrition Service (FNS) to conductstudies or evaluations, with some exceptions. In its general provisions, P.L. 108-7 funds the Bill Emerson and Mickey Leland Hunger Fellowships at $3 million,compared with $4 million in the House bill and $2.5 million in the Senate measure. Senate provisions earmarking $1 million of the $3.3 million school breakfast start-upgrant program for Wisconsin and setting aside $200,000 for a Common Rootsprogram also were adopted in the final measure.

Food and Drug Administration

The Food and Drug Administration (FDA), an agency in the Department ofHealth and Human Services (DHHS), is responsible for the regulation and safety offoods, drugs, biologics (mainly vaccines), and medical devices. The agency isfunded by a combination of congressional appropriations and user fee revenues,assessed primarily for the pre-market review of pharmaceuticals and medical deviceproducts. The amount of drug user fees to be collected each year is set in FDA'sannual appropriations act. The FY2003 omnibus appropriations act ( P.L. 108-7 ) provides $1.661 billion to fund FDA for FY2003. This amount includes a totalappropriation of $1.391 billion (including $1.383 billion for salaries and expensesand $8 million for the maintenance of buildings and facilities. The balance of $270.5million is for various user fee collections. By comparison, the House-reported bill( H.R. 5263 ), including salaries and expenses, drug user fees, andfacilities came to $1.608 billion. The Senate omnibus measure ( H.J.Res. 2 ) , which also added revenues from a new medical device user fees, provided$1.665 billion.

The Prescription Drug User Fee Act (PDUFA), reauthorized in 2002 as partof the Public Health Security and Bioterrorism Preparedness and Response Act of2002 ( P.L. 107-188 ), allows FDA to collect user fees for the review of drug andbiologic applications. P.L. 108-7 set these fees at $222.9 million for FY2003. Also,the new Medical Device User Fee and Modernization Act (MDUFA) of 2002 ( P.L.107-250 ), signed by the President in October 2002, authorized FDA to charge userfees for medical device applications as well. P.L. 108-7 set the FY2003 user feeassessments for medical devices at $25.1 million. The agency also collects user feesfrom mammography clinics and export certificates, and P.L. 108-7 set their FY2003total at $22.5 million.

For FDA counter-terrorism activities, the conference report mirrors thePresident's FY2003 budget request, and provides $159 million to continue activitiesinitiated by the agency during the previous year relating to the safety of food,pharmaceutical products, and physical security.

Conferees also provided FY2003 funding for a number of specific budgetcategories. For instance, conferees provided $3 million to continue support for theOffice of Women's Health and directed the agency to provide concise information towomen and health professionals about hormone replacement therapy. Moreover, theconferees urged the FDA to work with physicians, women's health groups, andfederal agencies to conduct a public awareness campaign about the use of hormonetherapy, including the treatment of menopausal symptoms. The conferenceagreement provided $5 million to support the agency's adverse event monitoringsystem (AERS), along with $8.3 million to upgrade its financial management system. Also, the conferees prohibited FDA from relocating its Offices of Public Affairs andLegislative Affairs to the Department of Health and Human Services.

Food Issues

P.L. 108-7 funded a number of initiatives related to food safety. It provideda $1 million increase for the FDA's Center for Food Safety & Applied Nutrition'sAdverse Event Reporting System (CAERS), to ensure prompt identification of andresponse to adverse health events related to foods, including dietary supplements. It also provided $250,000 for the development of advanced testing methods for foodsat New Mexico State University. Acknowledging FDA's role in international tradeissues, the conferees stipulated that the agency spend at least $2.1 million ofappropriated funds to support activities of the Codex Alimentarious Commission, theinternational food standard setting organization.

Drug Issues

The House and Senate have, for years, recognized that the timely approval ofgeneric drugs is an important factor in addressing the rising cost of prescriptiondrugs. To this end, the adopted conference agreement provided $44.5 million, anincrease of $5.3 million over the FY2002 baseline level of $39.2 million, and$750,000 more than the Administration's budget request. Further, the conferees recommended that FDA spend no less than $400,000 to continue its generic drugeducation activities, particularly for increased consumer education. Conferees alsoprovided $5 million for the agency's Office of Drug Safety to continuepost-marketing surveillance for pharmaceuticals. Moreover, the conferees said thatprint advertisements for pharmaceuticals should provide information relating to theside effects, contraindications, and effectiveness in a format that is useful toconsumers consistent with existing law, and encouraged the agency to work withconsumers and industry as it moves towards finalizing its April 2001 draft guidanceon print advertising for pharmaceuticals. Additionally, the conference agreementstipulated that FDA is to spend no less than $13.4 million for grants and contractsunder the Orphan Drug Act.

Medical Device Issues

The conferees were concerned about delays in review of new medical devicesand the impact this was having on the health of Americans. Last year, in the FY2002appropriations conference report, Congress directed FDA to upgrade its medicaldevice review performance, compared to the 180-day statutory requirements forapplication decisions. Today, applications for medical devices are often forcombination products that involve consultation with FDA's Center for BiologicsEvaluation and Research (CBER). The conference agreement makes $25.1 millionin new medical device user fees available for the agency, as proposed by the Senate. This provision was not in the House bill, since it preceded passage of the authorizinglegislation. As such, the device program including user fees is $208.7 million, a$29.2 million increase over the FY2002 regular appropriations. The confereesexpected that this investment will significantly reduce review times for medicaldevices.

The conferees noted that DHHS is currently working to ensure that healthcare providers and first responders are vaccinated in the event of a public healthemergency. Recognizing that a small percentage of health care workers are allergicto natural rubber, the conferees urged the Secretary to ensure that alternatives arereadily accessible to individuals who are allergic to the gloves normally provided. Also, the conferees urged the FDA to finalize its 1999 proposed regulations toclassify all surgeons' and patient examining gloves as Class II medical devices.

Biologics Issues

The conference report noted that FDA had not finalized its proposed rule torequire manufacturer tracking of blood-derived products and prompt patientnotification of adverse events. As such, they directed the FDA to submit a report onthe status of the rule by March 1, 2003.

Table 3. USDA and Related AgenciesAppropriations for FY2003

(Budget Authority, in Millions of $)

Source: Based on spreadsheets provided by the House Appropriations Committee

An item with a single asterisk (*) represents the total amount of direct and guaranteed loans that canbe made given the requested or appropriated loan subsidy level. Only the subsidy level is includedin the totals.

*** = Action Pending

(1) FY2002 enacted levels include amounts appropriated in the regular FY2002 agricultureappropriations act for USDA and related agencies ( P.L. 107-76 ), the $535 million in emergencysupplemental funding in P.L. 107-117 , and the $158 million in net non-contingent appropriations(after $44 million in rescissions) made in P.L. 107-206 .

(2) Agency totals do not include the cost of the Administration's legislative proposal to require allfederal agencies to pay the full share of accruing employee pensions and annuitant health benefitsbeginning in FY2003. However, the CBO-estimated cost of this proposal ($368 million in FY2003for USDA, FDA, and CFTC) is included at the end of the table in the scorekeeping adjustments ofthe FY2003 request.

(3) H.J.Res. 2 , as passed by the Senate, includes an estimated across-the-board 2.9%rescission in all discretionary accounts in the resolution. To date, it is not certain how the rescissionwould affect individual accounts. Therefore, this table does not reflect the rescission on USDA andrelated agency programs and accounts. Recorded in this column are the two adopted flooramendments that affect USDA spending : $3.1billion in disaster assistance and $500 million in P.L.480 international food aid.

(4) P.L. 108-7 includes a 0.65% across-the-board cut of all discretionary accounts funded by theomnibus FY2003 appropriations act, with the exception of the WIC program, which is specificallyexempted. This table does not reflect the effect of the 0.65% rescission on individual accounts, nordoes the total reflect the rescission. If the rescission were applied equally to all accounts, totalreductions in spending to USDA and related agencies would be approximately $85 million.

(4) The Administration's request assumes enactment of new inspection and licensing user feestotaling

$29 million.

(5) Under current law, the Commodity Credit Corporation and the Federal Crop Insurance Fund each receive annually an indefinite appropriation ("such sums, as may be necessary"). The amountsshown for both FY2002 and FY2003 are USDA estimates of the necessary appropriations.

(6)The Administration request does not include a January 2003 budget amendment to reduce theWIC reserve request by $25 million in FY2003, from the original requested amount.

(7) Includes an adopted $3.3 million rescission in the FY2002 enacted level.

(8) Among the enacted FY2002 "general provisions" are $75 million in apple market loss assistance,and an extension of the authority for the dairy price support program for 5 months (scored by CBOat $15 million). The enacted other provisions for FY2003 include $250 million in emergency foreignfood assistance through P.L. 480 Title II (compared with $500 million in the Senate-passed version.)

(9) Scorekeeping adjustments reflect the savings or cost of provisions that affect mandatoryprograms, plus the permanent annual appropriation made to USDA's Section 32 program. The costof the Administration proposal to require all federal agencies to pay the full share of currentemployee pensions and annuitant health costs is also included in the scorekeeping adjustments ofthe FY2003 Administration request. Appropriators included in FY2003 House and enactedscorekeeping adjustments the savings attributed to limiting expenditures on the Export EnhancementProgram. Similar savings in FY2002 were included in "general provisions" by appropriators.

(10) P.L. 108-7 includes $3.1 billion in farm disaster assistance for 2000 and 2001 crop livestocklosses. The cost of this assistance in the final law was offset by a limitation placed on mandatoryspending for the Conservation Security Program over a ten-year period (FY2004-2013). Thissupplemental spending does not appear in the grand total listed above.

For Additional Reading

CRS Issue Brief IB98006. Agricultural Export and Food Aid Programs .

CRS Report 98-325 . Agricultural Research, Education, Extension and EconomicsPrograms: A Primer .

CRS Issue Brief IB10077. Agricultural Trade Issues in the 107th Congress .

CRS Issue Brief IB10063, Animal Agriculture Issues in the 107th Congress

CRS Report 98-25. Child Nutrition Programs: Background and Funding .

CRS Report RL31095 . Emergency Spending for Agriculture: A Brief History ofCongressional Action, FY1989-2001 .

CRS Report RS20235, Farm and Food Support Under USDA's Section 32 Program

CRS Report RS21212 . Farm Disaster Assistance.

CRS Report RL30739(pdf) . Federal Crop Insurance and the Agriculture Risk ProtectionAct of 2000 (P.L. 106-224) .

CRS Report 98-59(pdf) . Food Stamps: Background and Funding .

CRS Report RL31466, Homeland Security Department: U.S. Department ofAgriculture Issues.

CRS Report RL31486(pdf) , Resource Conservation Title of the 2002 Farm Bill: AComparison of New Law with Bills Passed by the House and Senate, andPrior Law

CRS Issue Brief IB96030. Soil and Water Conservation Issues .