Appropriations for FY2000: U.S. Department of Agriculture and Related Agencies
Released: 1999-12-06T00:00:00

Most Recent Developments

On October 22, 1999, the President signed into law the FY2000 appropriationsact for the U.S. Department of Agriculture and related agencies ( P.L. 106-78 , H.R. 1906 ). P.L. 106-78 contains $60.56 billion in regular(non-emergency) appropriations and $8.7 billion in emergency spending for farmincome and disaster assistance.

On November 29, 1999, the President signed into law a consolidated appropriations act for FY2000 ( P.L. 106-113 ) which contains several provisionsaffecting agricultural programs, including: 1) an additional $576 million inemergency farm assistance; 2) a two-year extension of the Northeast dairy compactuntil September 30, 2001 and 3) a requirement that USDA adopt a fluid farm milkpricing option (1A) supported by Eastern and Southern milk producers that is closeto current pricing policy. The measure also includes a 0.38% across-the-board cutin total discretionary budget authority for FY2000. This will require a $49 millioncut within USDA and a $4 million cut in FDA programs funded by P.L. 106-78 , withspecific cuts to be determined by the Administration.

USDA Spending at a Glance

The U.S. Department of Agriculture (USDA) carries out its widely variedresponsibilities through approximately 30 separate internal agencies staffed by some100,000 employees. USDA is responsible for many activities outside of theagriculture budget function. Hence, spending for USDA is not synonymous withspending for farmers, nor with the agriculture appropriations bill, which includesfunds for non-USDA programs, notably the Food and Drug Administration (FDA).

USDA outlays for the most recently completed fiscal year (FY1999) were $63.9 billion. By far the largest outlay within the Department, $32.3 billion, or one-half of total outlays in FY1999, was for its food and nutrition programs, primarily thefood stamp program (the costliest of all USDA programs), various child nutritionprograms, and the Women, Infants and Children (WIC) program. Total FY1999outlays also include $22.2 billion, or just over one-third of total outlays, for farm andforeign agricultural services. Within this mission area of USDA are the programsfunded through the Commodity Credit Corporation (e.g., commodity supportpayments, the conservation reserve program, and certain trade programs), cropinsurance, farm loans, and foreign food aid programs. Another $4.4 billion (7%) wasspent in FY1999 on an array of natural resource and environment programs, nearlythree-fourths of which funded the Forest Service (which is funded through theInterior appropriations bill, not the agriculture appropriations bill), and the balancefor a number of conservation programs for farm producers. USDA programs forresearch and education ($1.89 billion in outlays for FY1999), rural development($527 million), marketing and regulatory activities ($1.645 billion), and meat andpoultry inspection ($604 million) account for most of the balance of USDA spending.

Mandatory vs. Discretionary Spending

Approximately three-fourths of total USDA spending is classified as mandatory, which by definition occurs outside the control of annual appropriations. Eligibilityfor mandatory programs is usually written into authorizing law, and any individualor entity that meets the eligibility requirements is entitled to the benefits authorizedby the law. Currently accounting for the vast majority of USDA mandatory spendingare the food stamp program (which accounts for nearly one-half of total USDAmandatory spending); child nutrition programs; the farm commodity price andincome support programs; the federal crop insurance program; and the conservationreserve program (CRP).

Although they have mandatory status, the food and nutrition programs are funded by an annual appropriation based on projected spending needs. Supplementalappropriations generally are made if and when these estimates fall short of requiredspending. An annual appropriation is also made to reimburse the Commodity CreditCorporation for losses it incurs in financing the commodity support programs and thevarious other programs it finances. Historically, the farm commodity supportprograms were a larger portion of the USDA budget than they are currently. Spending levels among these programs were erratic and unpredictable, making totalUSDA spending highly variable. Some of this unpredictability was lessened by theenactment of the 1996 farm bill, which fixes the level of spending on direct paymentsto program crop producers, and no longer ties these payments to market conditions. However, emergency provisions in both the FY1999 omnibus appropriations act( P.L.105-277 ) and the FY2000 agriculture appropriations act ( P.L. 106-78 ) made available a total of $14.6 billion in additional funding to farmers to help them recover fromlow commodity price and natural disasters.

Table 1. U.S. Department of Agriculture and Related Agencies Appropriations, FY1993 to FY2000 (budgetauthority in billions of dollars)

Note: Includes funding for all of USDA except the Forest Service. Also includes the Food and Drug Administration, and the Commodity Futures Trading Commission.Emergency or supplemental spending is not included.

Source: House Appropriations Committee.

The other 25% of the USDA budget is for discretionary programs, which are determined by funding in annual appropriations acts. Among the major discretionaryprograms within USDA that are funded by the annual agriculture appropriations actare its rural development programs, research and education programs, agriculturalcredit, the supplemental nutrition program for women, infants, and children (WIC),the Public Law (P.L.) 480 international food aid program, meat and poultryinspection, and food marketing and regulatory programs. FY2000 funding levels forall USDA discretionary programs (except for the Forest Service) is provided by theFY2000 appropriations act ( P.L. 106-78 ).

FY2000 Appropriations for USDA and Related Agencies

Chronology of Congressional Action

The President's budget for FY2000 submitted to Congress on February 1, 1999 requested appropriations of $62.5 billion for all programs funded through theFY2000 agriculture and related agencies appropriations bill. The total requestincluded $61.2 billion for all of USDA (excluding the Forest Service), and $1.2billion for the Food and Drug Administration and other agencies. The $62.4 billionrequest was $7.8 billion below the regular FY1999 appropriation, mainly because thereimbursement for the realized losses of the Commodity Credit Corporation issignificantly higher than what was made available in FY1999. (1)

Table 2. Congressional Action on FY2000 Appropriations for the U.S. Department of Agriculture and RelatedAgencies

* The Senate passed S. 1233 , as amended, on 8/4/99. Subsequently, the Senate passed H.R. 1906 (the House version of FY2000 appropriations)after striking all of the House text and inserting the complete text of S. 1233 , as passed..

** Subsequent to enactment of P.L. 106-78 , a consolidated appropriations act for FY2000 ( P.L. 106-113 ) was enacted on November 29, 1999, which provided anadditional $576 million in emergency funding to USDA programs.

The full House approved its version of the FY2000 agriculture appropriations bill ( H.R. 1906 ) on June 8, 1999 by a vote of 246-183. TheHouse-passed measure provided a total of $60.96 billion in budget authority toUSDA and related agencies, which was $1.5 billion below the Administration requestand $6.3 billion above the FY1999 regular (non-emergency) appropriations. Of the$60.96 billion provided in H.R. 1906 , $13.88 billion was fordiscretionary programs, a level that was $637 million below the Administrationrequest, $190 million above the FY1999 annual appropriation, and $106 millionbelow the $13.988 billion allocation given to the House agriculture subcommittee forits FY2000 appropriations bill.

H.R. 1906 was first debated on the House floor on May 25 and 26, 1999. Two amendments were adopted -- a Sanders amendment that increasedfunding for elderly nutrition programs by $10 million, offset by a $13 millionreduction in Agricultural Research Service programs, and a Coburn amendment toreduce funding for USDA's Chief Information Officer by $500,000. More than 100other amendments were offered which would have reduced funding below the levelin H.R. 1906 for numerous programs and agencies within USDA, whichcaused House leadership to suspend further consideration of the measure. Acompromise was reached leading to the approval on June 8 of a floor amendmentsponsored by the chairman of the Appropriations Committee which trimmed $102.5million from discretionary accounts. Of this amount, $70.5 million was taken fromUSDA buildings and facilities accounts and $20 million from FDA salaries andexpenses. A separate Coburn amendment also was agreed to by a 217-214 votewhich prevents FDA from using any FY2000 funds for the approval of RU-486, orany other drug to induce abortion.

The Senate version was first approved on June 15, 1999, by the Appropriations Committee's Subcommittee on Agriculture, Rural Development, and RelatedAgencies. The full committee then marked up and reported the bill ( S. 1233 ; S.Rept. 106-80 ) on June 17, 1999. The bill contained new budget authority of$61.04 billion. Of this amount, $13.98 billion was for discretionary programs, a levelthat was equal to the allocation given to the subcommittee. This level was about$535 million below the President's request for such programs, but $292 million above the FY1999 level. Floor debate on S. 1233 began during the week ofJune 21, when most of the debate focused on proposed health care amendments thatwere not related to the USDA funding measure. Debate resumed in early August,when the Senate adopted a Republican leadership-sponsored amendment providing$7.4 billion in emergency funding to help farmers recover from low farm commodityprices. The Senate-passed bill also included an amendment that would haveexempted agricultural and medical products from current unilateral sanctions andrequired congressional approval for future sanction on these products. A proposedamendment to require certain changes in federal milk pricing policy supported byEastern and Southern dairy farmers was withdrawn because of a filibuster threat byUpper Midwest senators opposed to the amendment.

After contentious debate over whether to include dairy provisions, an exemption of exports on agricultural products from trade sanctions, and additional emergencyassistance for farmers, a conference agreement to H.R. 1906 wasreported on September 30, 1999. The conference agreement contains $60.559 billion in regular (non-emergency) FY2000 appropriations for USDA and related agenciesand $8.7 billion in emergency spending for economic and disaster assistance forfarmers. It did not contain an exemption of agricultural products from tradesanctions or any mandated changes in dairy pricing policy. The $8.7 billion inemergency funding includes $1.2 billion in disaster payments, which was added byconferees. The House passed the conference report on H.R. 1906 measure by a vote of 240-175 on October 1. The Senate passed the measure by avote of 74-26 on October 13. Senate consideration was delayed by a threatenedfilibuster by Eastern senators who were concerned that the agreement did not includeadequate funding for natural disaster assistance or an extension of authority for theNortheast dairy compact. A motion to invoke cloture was adopted on October 12 bya vote of 79-20. The President signed H.R. 1906 into law on October22, 1999, as P.L. 106-78 .

Subsequent to enactment of P.L. 106-78 , Congressional leaders and the Administration reached agreement on the five FY2000 appropriations bills that werestill pending in November. Within this FY2000 consolidated appropriations act( P.L. 106-113 , H.R. 3194 ) are a number of provisions affectingagricultural programs, including additional emergency USDA funding of $576million, primarily in response to damage caused by Hurricane Floyd in the Southeast,a two-year extension of the Northeast dairy compact until September 30, 2001, anda requirement that USDA adopt a federal milk pricing option (1A) supported byEastern and Southern dairy farmers, but opposed by dairy processors and UpperMidwest dairy farmers. P.L. 106-113 also includes a 0.38% across-the-board cut intotal discretionary budget authority for FY2000, which will require a $49 million cutwithin USDA and a $4 million cut in FDA programs funded through P.L. 106-78 , with specific cuts to be determined by the Administration. H.R. 3194 was approved by the House on November 18, 1999. The Senate approved themeasure on November 19, following a cloture vote that ended a filibuster by UpperMidwest senators who strongly opposed the dairy provisions. The President signedthe measure into law on November 29, 1999.

The following is a review of the major provisions of P.L. 106-78 compared with the House- and Senate- passed versions of H.R. 1906 , theAdministration request, and the FY1999 levels. Also included in the discussion arethe agricultural provisions in the consolidated appropriations act for FY2000 ( P.L.106-113 ).

Emergency Farm Financial Assistance

Much of the debate in the House and Senate appropriations committees focused on whether the FY2000 agriculture appropriations bill adequately responds to thefinancial needs of the farm sector given the current state of the farm economy (lowcommodity prices and farm income for major commodities). P.L. 106-78 contains$8.7 billion in emergency farm spending, compared with $7.65 billion in theSenate-passed bill and no emergency funding in the House-passed bill. The maindifference between the Senate measure and the final conference agreement was theaddition of $1.2 billion in disaster payments. Some members contended that the $1.2billion was not adequate to compensate farmers for 1999 commodity lossesassociated with hurricanes, drought, floods, and other disasters. Consequently, theomnibus budget agreement reached between Congressional leaders and theAdministration on November 17 provides an additional $576 million in USDAemergency assistance to farmers and rural areas.

Emergency Provisions in P.L. 106-78. Included in the emergency provisions of P.L. 106-78 is:$5.544 billion in direct payments to grain and cotton farmers; $1.2 billion in directdisaster payments, $475 million to soybean and other oilseed crop growers; $400million for additional premium subsidies to encourage producers to purchase cropinsurance in 2000; $328 million in direct payments to tobacco growers; $200 millionin livestock assistance, $125 million in dairy income assistance; $201 million inincentive payments for U.S. exporters and processors to purchase domestic cotton;$42 million for peanut growers; and the suspension of a marketing assessment onsugar, which will save the industry $42 million. For more details on the emergencyprovisions in P.L. 106-78 , see CRS Report RS20389, Emergency Farm Assistancein the FY2000 Agriculture Appropriations Act ( P.L. 106-78 ).

Emergency Provisions in the FY2000 Consolidated Appropriations Act (P.L. 106-113). The agreementreached by Congressional leaders and the Administration as part of a comprehensiveFY2000 spending bill contains a total of $576 million in additional USDA disasterassistance. Although this additional emergency assistance is being provided inresponse to agricultural damage caused by Hurricane Floyd in the Southeast, most ofthe assistance is not limited to hurricane victims, but is available to any eligiblefarmer or rural area. Included in the total is $186 million in farm disaster paymentsand $10 million in livestock assistance added to the $1.2 billion in disaster paymentsand $200 million in livestock assistance provided by P.L. 106-78 . It also provides$80 million for the Watershed and Flood Prevention Program and $50 million for theEmergency Conservation Program to help restore flooded farmlands. Also includedare an additional $178.6 million to support an additional $2.5 billion in USDA farmloans; $11.2 million to support $70 million in USDA rural housing loans; and $14.5million in rural housing grants. An additional $20 million is provided to thenoninsured assistance program (NAP), a permanent disaster payment program thatmakes direct disaster payments to farmers who grow a crop not eligible for cropinsurance. The agreement waives the statutory requirement that the area in which thefarmer operates must experience a 35% crop loss before a farmer can becomeeligible for a payment. This waiver applies to any county that has been declared adisaster area by the President or the Secretary of Agriculture.

In FY1999, two emergency spending packages were enacted, including $6 billion provided in October 1998 in the FY1999 omnibus appropriations act ( P.L.105-277 ) and $574 million in a supplemental appropriations act ( P.L. 106-31 in May1999. For more information on these and other past emergency spending bills foragriculture, see CRS Report 98-952(pdf) , Emergency Agricultural Provisions in theFY1999 Omnibus Appropriations Act ( P.L. 105-277 ) ; and CRS Report RS20269, Emergency Funding for Agriculture: A Brief History of Congressional Action,1988-June 1999.

Dairy Policy Issues

Three dairy issues have been addressed in this year's appropriations debate -- federal milk marketing order pricing policy, an extension of authority for theNortheast dairy compact, and reauthorization of the dairy price support program. (2) The FY2000 agriculture appropriations act ( P.L. 106-78 ) extends the authority for thedairy price support program by one year through 2000, and also provides $125million in emergency assistance to dairy farmers, as discussed above. P.L. 106-78 did not include any provisions relating to federal milk marketing orders, nor does itaddress the extension of authority for the Northeast compact, although these topicswere subject to contentious regional debate.

The subsequent consolidated appropriations act for FY2000 ( P.L. 106-113 ) signed into law on November 29, 1999 contains provisions ( H.R. 3428 )that cause changes to both milk marketing orders and the Northeast dairy compact.Among these provisions, supported by Eastern and Southern dairy farm groups andopposed by dairy processors and Upper Midwest dairy farmers, is the extension ofauthority for the Northeast dairy compact for 2 years through September 30, 2001 anda requirement that USDA adopt an alternative milk pricing policy that wouldmaintain minimum fluid farm milk prices close to current levels (option 1A).

The 1996 farm law ( P.L. 104-127 ) required USDA to implement a final decision for milk marketing order reforms on October 1, 1999, and also temporarilyauthorized the operation of the Northeast compact until the final rule is implemented.USDA recently issued a final rule for amending milk marketing order pricing policywhich, if implemented, would reduce minimum farm prices for fluid milk in manyregions of the country, particularly in the East and the South. However, a temporaryrestraining order issued by a judge in Vermont indefinitely postponed implementationof the final rule, and in effect extended the life of the Northeast compact as well.

Wisconsin and Minnesota Senators strongly opposed the dairy provisions in the consolidated budget agreement. A cloture motion to cut off a filibuster by thesemembers was adopted on November 19, 1999, and was followed by Senate approvalof the measure, which the President signed into law on November 29. (For more ondairy issues, see CRS Issue Brief IB97011, Dairy Policy Issues .)

Commodity Credit Corporation

Outlays for the farm commodity programs, farm disaster payments and certain farm export and conservation programs are funded through USDA's CommodityCredit Corporation (CCC). The CCC is a revolving financing mechanism withinUSDA, through which it supports more than a dozen specified commodities,including grains, cotton, milk, sugar, peanuts, and tobacco. The formulas thatdetermine payments under these programs are determined by statutes, with benefits provided to any qualifying producer. (3)

The CCC receives its annual funding from a $30 billion line of credit with the U.S. Treasury. Therefore, the CCC does not require an annual appropriation, per se,to fund its financing activities. However, because CCC outstanding borrowingcannot exceed $30 billion, the annual appropriations bill usually contains funding fora "reimbursement of CCC net realized losses" so that the CCC can repay its debt tothe Treasury and not exhaust its borrowing authority. This reimbursement iscategorized as a mandatory expense and is not included toward the discretionaryspending allocation given to the appropriations subcommittees.

As a general rule, the annual appropriation request for CCC is not a reflection of how much CCC spending will be in the appropriation year, but rather how muchCCC losses were in the most recently completed fiscal year (i.e, the FY2000appropriation would cover FY1998 losses.) However, USDA requested, and P.L.106-78 provides $14.368 billion to the CCC for FY2000, an amount that more thancovers previous losses. Of this amount, USDA estimates that $9.3 billion willreimburse the CCC for its actual FY1998 operating losses, and $5 billion is requiredto partially cover anticipated FY1999 losses, so that the CCC does not deplete its $30billion line of credit with the Treasury. Without an appropriation in FY2000 tocompensate for some of the FY1999 CCC spending, USDA estimates that CCCborrowing authority would be exhausted before the end of FY2000. CCC spendingin FY1999 was $18.4 billion, the highest level in 12 years, mainly because farmcommodity prices have been depressed, which prompted the authorization of nearly$6 billion in CCC-funded emergency income-support and disaster assistancepayments in the FY1999 omnibus appropriations act. (See CRS Report 98-952(pdf) , TheEmergency Agricultural Provisions in the FY1999 Omnibus Appropriations Act formore details.) CCC spending in FY2000 could exceed $22 billion since most of the$8.7 billion in emergency spending for farmers contained in P.L. 106-78 initially willbe funded through the borrowing authority of the CCC.

Crop Insurance

The federal crop insurance program is administered by USDA's Risk Management Agency (RMA). It offers basically free catastrophic insurance toproducers who grow an insurable crop. Producers who opt for this coverage have the opportunity 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.

There are basically four sources of federal expenditures for the crop insurance program -- USDA absorbs a large percentage of the program losses, compensatesthe reinsured companies for a portion of their delivery expenses, subsidizes thepremium paid by participating producers, and pays the salaries and expenses of itsadministering agency within USDA. The program losses, premium subsidy, anddelivery expense reimbursement to the private companies are mandatoryexpenditures funded through USDA's Federal Crop Insurance Fund, which receives"such sums as are necessary" annually to fund the program. The salaries andexpenses of the RMA are a discretionary expense, and are dependent on annualappropriations.

The Administration estimates that the program will cost $1.7 billion in FY2000, compared with an estimated $1.6 billion in FY1999 and actual expenditures of $1.75billion in FY1998. Of the $1.7 billion estimated for FY2000, an appropriation of$997 million is required for the Crop Insurance Fund (which is provided in theFY2000 agriculture appropriations act ( P.L. 106-78 ) within its mandatory accounts);$640 million of the total will be funded through a carryover of unobligated fundsfrom previous years. A separate appropriation of $70.7 million was requested by theAdministration for RMA's salaries and expenses. P.L. 106-78 freezes RMA salariesand expenses at the FY1999 level of $64.0 million. Separate from the regular annualappropriations made to the crop insurance program, the emergency provisions in H.R. 1906 include $400 million for USDA to offer discounts on thepremium paid by farmers in the 2000 crop year, which will be funded through theCommodity Credit Corporation.

Despite major legislative reforms to the program in 1994, farmer dissatisfaction with the program, especially among those who have incurred multiple years ofdisasters, has grown in recent years. The enactment of nearly $6 billion in ad hocemergency disaster and price relief payments in the omnibus FY1999 appropriationsact also spurred the Administration and Congress to seek new ways to enhance thecrop insurance program. Several bills for enhancing the crop insurance program have been introduced. The House passed a comprehensive measure( H.R. 2559 )in late September. Senate action is pending. For more onthe federal crop insurance program, see CRS Issue Brief IB10033, Federal CropInsurance: Reform Issues in the 106th Congress .

Farm Service Agency Farm Loans

Through its Farm Service Agency (FSA), USDA serves as a lender of last resort for family farmers unable to obtain credit from a commercial lender. USDA providesdirect farm loans and also guarantees qualified loans from commercial lenders, whichare used to finance the purchase of farm real estate, help producers meet theiroperating expenses, and financially recover from natural disasters. Some of the loansare made at a subsidized interest rate.

Under budget rules adopted in 1990, federal agencies are required to estimate the cost of making a direct or guaranteed loan and record that cost as a budget outlayfor the loan. The cost of making a loan is directly related to any interest rate subsidyprovided by the government, as well as a projection of anticipated loan losses causedby farmer non-repayment of the loans.

The conference agreement on the FY2000 agriculture appropriations bill ( P.L. 106-78 ) concurs with the Senate-passed bill and provides an appropriation of $82million to support $3.08 billion in direct and guaranteed FSA farm loans for FY2000. Within the FSA farm loan programs, the only difference between the FY2000conference agreement and the Administration's request is that the conferenceagreement provides funding to support $200 million in guaranteed unsubsidized farmoperating loans, compared with a request for $97 million.

For all farm loan programs, P.L. 106-78 provides $800 million in loan authority above what was provided in the FY1999 regular appropriation, but $825 millionbelow the FY1999 level when supplementals are included. A three-partappropriation for farm loans was made for FY1999 loan programs-- a regularappropriation of $89.7 million to support $2.285 billion in direct and guaranteedloans, and emergency supplemental funding of $140.4 million to support anadditional $1.54 billion in loans. The supplementals were provided to remedy thebacklog of applications for loans, which occurred because of a shortage of funds andstrong demand for subsidized credit caused by the weak farm economy. TotalFY1999 appropriations (both regular and supplemental) were $230.1 million tosupport $3.825 billion in FSA farm loans.

Conservation

Conservation programs are administered by USDA's Natural Resources Conservation Service (NRCS) and Farm Service Agency (FSA). A portion of theNRCS funds are provided through annual appropriations. The remaining NRCSprograms and the FSA conservation programs are funded through the borrowingauthority of USDA's Commodity Credit Corporation.

The FY2000 agriculture appropriations act ( P.L. 106-78 ) makes minor changes to the amounts in the House and Senate-passed FY2000 appropriations bills, whichwere similar. P.L. 106-78 provides $813 million for conservation programs, whichis more than either the House or the Senate provided, $800 million and $808 million,respectively. It is also an increase from the $793 million provided in FY1999, butless than the $866.1 million that the Administration had requested for FY2000. TheAct does not provide the $50 million requested by the Administration for theFarmland Protection Program, and generally rejects the Administration proposals for initiatives including the Clean Water Action Plan and the Lands Legacy Initiative.

NRCS. Within NRCS, the primary source of technical assistance to producers and landowners is ConservationOperations (CO). P.L. 106-78 provides $661 million, which is more than the $656million approved by the House or $656 million approved by the Senate. Reportsaccompanying both bills included numerous funding recommendations. Both billsrejected Administration proposals for new or redirected spending, including requeststo support its global climate change activities ($15 million)and its Clean WaterAction Plan ($34 million). These costs would have been partially offset by a savingsof $31 million for combining support services with other USDA agencies at the fieldlevel, which Congress also rejected. P.L. 106-78 does identify a number of earmarks;among the larger ones were $17 million for the grazing lands initiative instead of $15million as approved in both the House and Senate, and $7.9 million for animalfeeding operations, instead of $5 million as approved in the Senate.

As recommended by both the House and Senate bills, P.L. 106-78 provides $99 million for Watershed and Flood Prevention Operations, which funds smallwatershed projects. Both bills had rejected the Administration-proposed reductionto $83 million. Conferees concurred with the House and Senate provision to placea limit of $47 million on spending for technical assistance from this account, so thata majority would go to projects. The Senate bill called for a detailed analysis of agingflood control structures, with recommendations for Congress. P.L. 106-78 specifies that $8 million be made available for pilot rehabilitation projects of aging projectsin four specified states, and that no more than $1 million can be spent implementingthe Endangered Species Act. (These provisions do not affect an additional $95million provided in the FY1999 emergency supplemental appropriations act ( P.L.106-31 ) approved in May 1999.)

Regarding several smaller programs, P.L. 106-78 rejects an Administration proposal transferring $50 million from the Land and Water Conservation Fund to theFarmland Protection Program as a part of its Lands Legacy Initiative. The actprovides $6.3 million for the Forestry Incentives Program, although theAdministration had requested no funding for the program.

Five NRCS programs are funded through the CCC, and are not subject to annual appropriations. The Administration requested in FY2000: $300 million for theEnvironmental Quality Incentives Program (EQIP) (+$126 million from FY1999);$209 million for the Wetlands Reserve Program (WRP) (+$77 million); $28 millionfor the Farmland Protection Program (FPP) (up from $0); and $10 million for theWildlife Habitat Incentives Program (WHIP) (-$14 million). P.L. 106-78 rejectedall of the Administration requests for increased funding for mandatory conservationprograms, mainly because authorizing legislation would have been required to effectsuch increases. The Act does limit FY2000 spending on three mandatoryconservation programs to levels below their authorized level-- 1) EQIP is limited to $174 million (-$26 million from the FY2000 authorization); 2) WRP acreage islimited to 150,000 acres (instead of the 200,000 acres estimated by theAdministration, for savings of $49 million; 3) All funding ($35 million) for theConservation Farm Option is prohibited, as requested by the Administration topartially offset requested increases in other mandatory conservation programs .

The Administration budget proposals and related changes in NRCS and FSA conservation programs included an anticipated reduction in NRCS staffing ofapproximately 10%, or an estimated 1,055 positions. In April, NRCS temporarilyhalted technical assistance in support of new enrollments into the CRP, while itreviewed its funding and staffing situation. The emergency supplementalappropriations act for FY1999 ( P.L. 106-31 ) enacted in May included $28 millionfor NRCS in FY1999 and $35 million in FY2000, which will allow it to fully supportCRP enrollment for these two fiscal years without significant reductions in field staff,according to an agency analysis. This topic was not, therefore, addressed in theFY2000 appropriations act.

FSA Conservation Programs. FSA administers the largest conservation program, the Conservation ReserveProgram (CRP). CRP, which is funded through the CCC, offers multi-year rentalagreements to producers who retire highly erodible and other environmentallysensitive lands from production. P.L. 106-78 includes three general provisions onthe CRP which limit funding for certain components. Neither the House nor theSenate commented on the Administration's CRP proposal, but the HouseAppropriations Subcommittee did approve an amendment to extend the deadline forthinning pines planted on CRP lands. The Administration had requested in increaseof $20 million in FY2000, to $1.596 billion, stating that enrolled acreage would growfrom 31.1 million acres in FY1999 to 34.4 million acres in FY2000, and thatenrollment of buffers under a continuous enrollment option would grow from 2.4million acres at the end of FY1999 to 3.5 million acres in FY2000.

Conservation funding could be affected by provisions in the FY2000 Interior Appropriations bill associated with the Administration's Lands Legacy Initiative. Neither the House nor Senate versions of the FY2000 Interior bill provide anyfunding for this initiative. As proposed, it would provide just over $1 billion forresource protection, including $268 million for USDA programs. Agricultureprograms that would receive increased funding include the Forest Legacy Program(to acquire easements on private lands), the Urban and Community Forestry Program(to provides grants to states and localities for urban and community forests andrelated green spaces), a new smart growth partnership loan program (a revolving loanprogram to subsidize land acquisition and management), Forest Service landacquisitions, and a portion of the funding for the FPP, mentioned above. (See CRS Report RL30206 for the latest information on the FY2000 Interior bill.)

Congress also rejected an Administration proposal to provide USDA with an increase of $262 million for USDA programs that would be a part of the CleanWater Action Plan. Of this proposed increase, Forest Service programs wouldreceive $89 million while NRCS would receive $169 million, primarily through theproposed increase of $126 million for the EQIP and $34 million for ConservationOperations described above.

Agricultural Trade and Food Aid

The international activities of USDA include programs that provide foreign food aid, guarantee the commercial financing of U.S. agricultural exports, subsidize U.S.agricultural exports, and support the development of overseas markets for U.S.agricultural products. Direct appropriations are required for some or some portionof these programs, while others are carried out with funds from the CommodityCredit Corporation, appropriations for which are handled separately. (4) The programssubject to annual appropriations include P.L. 480 foreign food aid, salaries andexpenses incurred in administering export credit guarantees, and the salaries andexpenses of USDA's Foreign Agricultural Service, which administers USDA'sinternational activities. Programs funded by the Commodity Credit Corporationinclude separately authorized foreign food aid programs and USDA's export subsidyand market development programs. (5)

Appropriated Programs. For the international programs requiring direct appropriations, the FY2000 agricultureappropriations act ( P.L. 106-78 ) provides an appropriation of $1.063 billion.Although the Act provides the same amount as the the Senate-passed bill, it is notidentical to the Senate bill. P.L. 106-78 increases food aid, but by less than theHouse-passed bill, and reduces funding available to the Foreign Agricultural Service.

The Administration had requested FY2000 budget authority of $1.057 billion which would support a program level of $5.563 billion. Program level exceedsbudget authority because, for federal credit programs, which are a substantialcomponent of USDA's activities, only administrative expenses and loan subsidies,not the value of the loan or guarantee, require an appropriation. The budget authorityrequested for these programs in FY2000 was $139.9 million below FY1999. Thesupported program level would be $1.3 billion less than the estimated program levelfor FY1999 of $6.853 billion. The larger FY1999 program levels derive from theaugmentation of P.L. 480 Title I with borrowing from the CCC to help financeexpanded food aid to Russia, and larger than usual export credit guarantees toeconomically depressed Asian markets.

P.L. 480. The usual source of foreign food aid is P.L. 480 or the Food for Peace Program. Food aid is providedthrough three program authorities. Title I provides for sales of U.S. agriculturalcommodities to developing countries through concessional financing, i.e., long-term, low interest loans. Title II provides for commodity donations for feeding programsor in response to extraordinary relief requirements. Title III provides for bilateralgrants of food aid to be used for development activities in least-developed countries. Title I is administered by USDA, while Titles II and III are administered by the U.S.Agency for International Development.

P.L. 106-78 provides an appropriation of $951 million for P.L. 480 which supports a program level of $976 million. Title I funding is set at $149 million; TitleII donations are funded at $800 million; and no funds are provided for Title III. ThePresident had requested an appropriation of $915 million for P.L. 480 in FY2000,which includes $128 million for Title I, $787 million for Title II, and no funds forTitle III.

As originally passed by the House, H.R. 1906 would have provided an FY2000 appropriation for P.L. 480 of $1.015 billion, $100 million more thanrequested by the President. The bill did not concur with the President's request forTitle II, which would have reduced funding for that program by $100 million inFY2000, but instead kept Title II funding at the FY1999 enacted level of $837million. The House-passed bill did concur with the President's request to eliminatefunding for Title III. The House committee report notes the inclusion in its bill oflanguage that would allow transfers of funds, not to exceed 15% among Titles I, II,and III of P.L. 480. The Senate-passed version provides an appropriation of $922.9million (program level of $946 million) for P.L. 480.

The Senate-passed bill was $8 million above the President's request for Title I funding, and concurred with the President's request to reduce Title II funding by $50million. Despite this cut the Senate Appropriations Committee expects that thebudget authority recommended, together with carryovers, will enable USDA tomaintain P.L. 480 program levels in FY2000 at the FY1999 level. TheSenate-passed bill also eliminates funding for Title III commodity grants.

Not included in FY1999 totals is emergency funding of $149 million for Title II commodity donations provided in supplemental appropriations. These funds aredesignated for humanitarian food relief for Kosovar refugees.

Export Credit Guarantees. The two most important export credit guarantee programs, which guarantee payment forcommercial financing of U.S. agricultural exports, are the GSM-102 (short-termguarantees) and GSM-103 (intermediate-term guarantees) programs. TheAdministration had requested a program level of $4.5 billion for the CCC exportcredit programs in FY2000. Although the FY2000 estimate is $200 million below theFY1999 estimate, guarantees to finance exports to financially strapped Asiancountries would remain at a high level in FY2000. Budget authority of $4.085million was requested for salaries and expenses of FAS and the Farm ServiceAgency (FSA), the administering agencies for CCC credit guarantees. P.L. 106-78 concurs with the Senate-passed bill and provides $3.82 million for administrativeexpenses in FY2000, the same as the FY1999 level. The Senate bill had estimatedthat this appropriation, although smaller than the request, would still support therequested program level of $4.5 billion for export credit guarantees.

FAS. USDA's Foreign Agricultural Service (FAS) implements the international programs. P.L. 106-78 reduces FASspending to $109 million in FY2000, which is $27 million below the FY1999 leveland the Senate level, and $28.5 million below the Administration request and theHouse level. The House committee report calls upon FAS to "allocate all resourcesnecessary to advance the interests of American farmers, ranchers and consumers inthe next round of trade negotiations under the framework of the World TradeOrganization negotiations...(including) the reallocation of current spending, ifnecessary."

CCC-Funded Programs. International programs for which separate budget authority is not required inappropriations legislation but which also are administered by FAS include: theseparately authorized Food for Progress Program and Section 416 (of theAgricultural Act of 1949) commodity donations; two direct subsidy programs, theExport Enhancement Program (EEP) and the Dairy Export Incentive Program(DEIP); and the Market Access Program (MAP) which funds overseas developmentof export markets. Funding for these programs is from the CCC. For theseactivities, however, the President's budget includes program level estimates. Theestimated program level for these activities in FY2000 is $777 million which is $776million less than the estimated program level of $1.554 billion for the same set ofactivities in FY1999, (excluding the costs of approximately $695 million of wheatand wheat products purchased by the CCC under its surplus removal authority andmade available for donation under Section 416).

In the past, limits on program levels for CCC-funded programs have been included in general provisions of appropriations legislation. P.L. 106-78 contains norestrictions on CCC-funded international activities. Conferees deleted a Senateprovision that would have prohibited any MAP spending on the export of wine or anyother alcoholic beverages. An amendment to prohibit all funding for MAP wasdefeated on the House floor when H.R. 1906 was first passed.

Section 416. , a prominent component of the President's Food Aid Initiative in FY1999, would fall from $1.47 billion(commodity value plus ocean freight and overseas distribution costs) to $49 millionin FY2000. Food for Progress (FFP), which provides U.S. farm commodities todeveloping countries that promote free enterprise, would spend an estimated $91million for commodities and transportation services in FY2000. FFP was estimatedat $133 million in FY1999.

Export Enhancement Program. The budget proposes limiting EEP to $494 million, $85 million less than authorized inthe FAIR Act. The "savings" would be used to offset increased mandatory spendingfor other, unspecified agricultural programs. Although EEP spending is estimatedat $494 million in FY2000, it is important to note that EEP spending was only $2million in FY1998 and just over $1 million in EEP bonuses were awarded inFY1999. Moreover, USDA has indicated its reluctance to use EEP in the currenteconomic environment for fear that using it might further depress export prices,especially if used for wheat and feed grains. FY2000 DEIP subsidies are estimatedat $99 million, nearly the same level estimated for FY1999.

The Market Access Program. MAP uses CCC funds to help finance overseas marketing activities of various groups,including private companies that qualify as small businesses under the SmallBusiness Act. The budget proposed FY2000 funding at the maximum authorizedlevel, $90 million, the same level as in FY1999. MAP has been a frequent butunsuccessful target of budget cutters in search of funds to offset increased spendingfor other programs. A Chabot amendment that would have prohibited any MAPfunding in FY2000 was defeated on the House floor during debate on the earlierHouse-passed bill by a vote of 72-355. A Thurmond floor amendment to theSenate-passed bill prohibited the use of MAP funds for the exporting of all alcoholicbeverages, including wine, but was deleted by conferees. Approximately $3.6million of the total MAP funding of $90 million in FY1999 was allocated toalcoholic beverages.

A second export market activity, the Foreign Market Development Program (FMDP), or Cooperator Program, has been funded out of direct appropriations forFAS. FMDP supports market development for generic commodities by nonprofitcommodity and agricultural trade associations. The budget proposes a program levelof $27.5 million of CCC funds for FMDP in FY2000. Funding FMDP with CCCfunds would remove the program from the list of those requiring the enactment ofbudget authority. The House Appropriations Committee report, noting USDA'sproposed funding change for FMDP, directed the Department to notify it beforemaking such a change.

Sanctions Reform. P.L. 106-78 does not include a provision that would have exempted agricultural exports fromeconomic sanctions that the United States imposes on certain countries for foreignpolicy reasons. The Senate had included an Ashcroft-sponsored floor amendment inits bill to exempt commercial sales of agricultural and medical products from currentunilateral sanctions, and require congressional approval for future sanctionsannounced by the President on these products. Because this provision effectivelywould have allowed sales to occur to the Cuban government, thus partially breaking the long-standing U.S. trade embargo on that country, strong opposition by someHouse members to this proposed foreign policy change contributed to the stalematethat developed in conference. The Administration also signaled its opposition,arguing that to require the President to secure congressional approval of a futuresanctions' decision which included these products would limit his flexibility to usesanctions as a tool to advance foreign policy and other national security objectives. Both House and Senate leadership agreed to drop the Ashcroft amendment in thefinal conference report. In reaction, a number of Senators expressed their strongdisapproval of the way this issue was finally decided.

Earlier, in House Appropriations Committee markup of the FY2000 agriculture appropriations bill, a Nethercutt amendment was offered to exempt food andmedicine from unilaterally imposed U.S. economic sanctions, or trade embargoes. A DeLay amendment to the amendment, later withdrawn, would have precludedCuba from benefitting from any such exemption. The Nethercutt amendment wasdefeated in committee, reintroduced during House floor debate on H.R. 1906 , but subsequently withdrawn.

For more on this issue, see CRS Report RL30108(pdf) , Economic Sanctions and U.S. Agricultural Exports.

Agricultural Research, Education, and Economics

The FY2000 agriculture appropriations act ( P.L. 106-78 ) includes just over $2 billion for USDA's four research, education, and economics (REE) agencies, whichis approximately $34 million more than the Senate version, $100 million more thanthe House version, $20 million more than the Administration request, and $70million more than FY1999. P.L. 106-78 does not provide funds in FY2000 for theInitiative for Future Agriculture and Food Systems that was authorized in theAgricultural Research, Extension, and Education Reform Act of 1998 ( P.L. 105-185 ),or for the Fund for Rural America. The FY1999 omnibus appropriations act ( P.L.105-277 ) also prohibited expenditures on both the Initiative and the Fund for RuralAmerica.

Four agencies carry out USDA's REE function. The Department's in-house research 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 National Agricultural Library merged with ARS in the 1994 USDAreorganization. The Cooperative State Research, Education, and Extension Service(CSREES) is USDA's liaison with state-level research, education and extensionprograms at the land grant Colleges of Agriculture. The Economic Research Service(ERS) provides economic analysis of agriculture issues using its databases as wellas data collected by the National Agricultural Statistics Service (NASS). ARS,CSREES, ERS, and NASS are under the Undersecretary for Research, Education,and Economics.

Agricultural Research Service (ARS). P.L. 106-78 provides $886.8 million for the AgriculturalResearch Service. Of that amount, $834.3 million would support ARS's researchprograms and $52.5 million would pay for the renovation and construction of ARSbuildings and facilities. The House-passed bill would have provided $823.4 millionfor ARS, all of which would support research (zero funding for facilitiesconstruction). The Senate-passed version would have provided $862.5 million, ofwhich $53 million would be for buildings and facilities.

The Administration had proposed several research projects for termination in order to target a $76 million increase to certain high-priority research areas, including human nutrition, food safety, global climate change, and others. P.L. 106-78 continues the FY1999 level of funding for all research projects targeted fortermination in the President's budget, as did the House-passed measure. TheSenate-passed bill would have redirected $7.3 million from terminated projects to thepriority projects that the Administration requested, and specifically allocated $10million of increased ARS funds to projects in support of the President's Initiative onFood Safety. (Conferees designated $11 million in increased ARS funds to be usedfor the initiative; a total of nearly $52 million in food safety initiative increases areallocated among various USDA agencies plus the Food and Drug Administration.)

Cooperative State Research, Education, and Extension Service (CSREES). P.L. 106-78 provides $950.1 millionfor CSREES. Of the total, $485.6 million would support the agency's research andeducation program in the states, $424.9 million would support the education andoutreach programs of the Cooperative Extension System, and $39.5 million wouldsupport a program of integrated research and extension programs authorized underthe Agricultural Research, Education, and Extension Reform Act of 1998. TheSenate-passed bill would have provided $931.5 million for CSREES, including$473.4 million to support state research and education programs, $422.6 to supportExtension activities, and $35.5 million to support the integrated programs authorizedin 1998. The House bill would have appropriated $906.3 million for CSREES. Ofthat amount, the House measure would have provided $467.3 million for researchand education program in the states and $439 million for Extension programs, withno funds for integrated activities.

Economic Research Service (ERS) and National Agricultural Statistics Service (NASS). P.L. 106-78 provides $65.4million for ERS. This amount is just below the FY1999 appropriation of $65.8million. The Senate-passed bill would have provided $63.4 million in funding forERS for FY2000; the House-passed bill would have provided $70.3 million. Of thetotal provided, the P.L. 106-78 earmarks $12.2 million for studies and evaluationsof the child nutrition, WIC, and food stamp programs. Conferees agreed on $99.4million for NASS, which includes up to $16.5 million for the Census of Agriculture. The House-passed bill contained $100.6 million for NASS, and the Senate bill $99.4million.

Marketing and Regulatory Programs

The mission of USDA's marketing and regulatory programs -- administered by three agencies, the Agricultural Marketing Service (AMS), the Animal and PlantHealth Inspection Service (APHIS), and the Grain Inspection, Packers, andStockyards Administration (GIPSA) -- is to "facilitate the domestic and internationalmarketing of U.S. agricultural products and to ensure the health and care of animalsand plants while improving market competitiveness and the economy for the overallbenefit of both consumers and American agriculture," according to USDA. APHISspending accounts for most of the marketing and regulatory program budget.

Animal and Plant Health Inspection Service. The FY2000 agriculture appropriations act ( P.L. 106-78 ) provides a total of $446.5 million for APHIS, of which $441.3 million would supportthe agency's programs to protect U.S. agriculture from foreign diseases and pests, and$5.2 million would be used to renovate APHIS facilities. User fees would provideanother $87 million for APHIS activities. (The Administration proposal to increasecertain other APHIS user fees was not endorsed.)

The Senate-passed version would have provided a total of $444.6 million for APHIS, including $439.4 million to support the agency's programs, and $5.2 millionfor renovation of APHIS facilities, and would have permitted another $90 million inuser fees. The House bill would have appropriated $444 million for salaries andexpenses, $7.2 million for facilities, and permit an additional $87 million in user feesto support agency activities. APHIS's FY1999 appropriation is $425.8 for programs,$7.7 million for facilities, and provides for the expenditure of $88 million in userfees.

Agricultural Marketing Service. P.L. 106-78 increases AMS's total funding for FY2000 by more than $4 million(compared with FY1999), to $65.3 million. The Senate-passed bill also would haveincreased AMS's total funding by about $4 million, to $64.9 million, while theHouse-passed version called for a $1.8 million increase, to $62.8 million. Of thesetotals, $51.6 million in P.L. 106-78 are annually appropriated funds for AMS'sprograms, while $12.4 million is to be transferred to AMS for strengthening markets,income, and supply (Section 32 funds). P.L. 106-78 earmarks $2.4 million of theAMS appropriation to support the agency's Pesticide Data Program, which samplesfood products for residues at or near the point of purchase, plus $321,000 forenhancing market opportunities for small farmers.

Grain Inspection, Packers, and Stockyards Administration. P.L. 106-78 funds GIPSA programs at theHouse-passed and Administration-requested level of $26.4 million, compared withthe Senate bill level of $26.3 million. FY1999 funding was $26.8 million. GIPSAhas been working to improve monitoring of the livestock markets, whereconcentration over the past several years has raised concerns about decreasingcompetition, inadequate price information, and other market access issues for farmersand ranchers. The final measure assumes that GIPSA will collect $42.6 million inuser fees for its grain weighing and inspection services, resulting in a program levelof approximately $69 million.

Mandatory Reporting of Livestock Prices. P.L. 106-78 includes the price reporting legislation( S. 1672 ; S.Rept. 106-168 ) approved July 29, 1999, by the SenateAgriculture Committee. That measure, effective for 5 years, imposes new dailyreporting requirements on the largest 10% of cattle and hog packing plants(representing 94% of market transactions), subjects those who violate therequirements to civil financial penalties, and requires USDA (either AMS or GIPSA)to collect and publish the data on a frequent basis, among other things. A specificappropriation for the price reporting program is not included in P.L. 106-78 . Somelawmakers are urging the Secretary to fund the program with existing funds. TheSecretary contends that a separate appropriation is required.

Prior to P.L. 106-78 , packers and processors are not required to report the prices they pay for animals, although AMS does collect and report this data under anextensive voluntary system. Some farm organizations have backed proposals formandatory price reporting, arguing that meat industry consolidation, and the lesspublic marketing arrangements that have resulted, make it difficult for producers todetermine a "fair" market price. Opponents argue that such proposals will be costlyfor government and industry, raise privacy concerns, and not cure the low livestockprices that have helped fuel interest in the idea. (For more information, see CRS Report RS20079(pdf) , Livestock Price Reporting Issues .)

Food Safety

Food safety is among the three goals that USDA Secretary Dan Glickman has set forth for the Department under the Government Performance and Results Act. In addition, USDA is a key agency in the President's Food Safety Initiative, whichwas launched in 1997. In order to elevate the Department's role in this mission area,the Administration in 1995 established an Office of the Under Secretary for FoodSafety. The Food Safety and Inspection Service (FSIS) is the only agency in USDA'sfood safety mission area. FSIS is responsible for the mandatory inspection of meat,poultry and processed egg products to ensure their safety, wholesomeness, and properlabeling.

FSIS and the industry are now implementing a comprehensive new system to reduce pathogens in meat and poultry products through a preventive approach knownas hazard analysis critical control point, or HACCP. This system is to supplement,not replace, existing inspection procedures. Some observers are concerned aboutFSIS's ability to properly implement and enforce HACCP, arguing that the agency'sbudget already is under pressure to meet its traditional inspection obligations with theannual appropriation it receives from Congress.

Food Safety and Inspection Service. P.L. 106-78 provides $649.4 million for FSIS in FY2000,an increase over the FY1999 appropriation, which was $617 million. TheSenate-passed bill would have provided $638.4 million for FSIS in FY2000. TheHouse-passed version had concurred with the Administration's request of $653million. P.L. 106-78 reflects the House and Senate assumption that the agency willcollect an estimated $89 million in user fees for overtime and holiday inspectionservices. The conference bill includes the $2.9 million that was in both the Senate-and House-passed bills to support FSIS's activities under the President's Food SafetyInitiative. House report language requests FSIS to deliver a report on the authorityand operations of the agency's meat product recall coordinator by the end of January2000. The conference report asks FSIS to provide the Appropriations Committeeswith an analysis, by February 15, 2000, of agency staffing needs and recruitmentactivities.

Rural Development

USDA makes available rural development assistance to states, local governments, businesses, cooperatives, and individuals through programsadministered by three agencies: Rural Utilities Service (telecommunications, waterquality, electricity, and solid and waste water disposal), Rural Housing Service(housing and community facilities), and the Rural Business-Cooperative Service(rural business loans and grants).

For all rural development programs, the FY2000 agriculture appropriations act ( P.L. 106-78 ) provides a total appropriation of $2.213 billion, a 1.7% increase abovethe FY1999 appropriation of $2.175 billion. P.L. 106-78 provides slightly higherfunding than proposed by the Administration ($2.194 billion), or what was providedinitially in the Senate-passed ($2.184 billion) or the House-passed ($2.134 billion)bills. The agreement provides approximately $217 million in subsidies to supportestimated direct and guaranteed loan amounts of $7.629 billion. TheAdministration's budget request included $215 million in subsidies in support of$6.087 billion in direct and guaranteed loans.

For FY2000, P.L. 106-78 provides $1.332 billion for activities administered by the Rural Housing Service. This, in part, would support RHS loan authority of $4.589billion. The Administration's proposal included $1.146 billion in funds for RHSactivities and expenses in support of $4.575 billion in loan authority.

P.L. 106-78 provides $107.3 million in Rural Utilities Service assistance, which includes $19.1 million in loan subsidies in support of $2.896 billion in loan authority. The FY2000 loan subsidy level of $19.1 million is substantially below the $47.6million subsidy level provided in FY1999. P.L. 106-78 provides no funding forFY2000 for the Alternative Agriculture Research and CommercializationCorporation (AARCC) revolving fund. An earlier version of the bill passed by theHouse recommended transferring AARCC from the Rural Business-CooperativeService to RUS, but would provide no new funding for FY2000. The Senate billwould have provided the Corporation with $3.5 million for FY2000 activities, thesame amount as FY1999, but below the Administration request of $10 million. P.L.106-78 also prohibits the expenditure of $60 million in mandatory funding for theFund for Rural America.

P.L. 106-78 provides $54 million in budget authority for the Rural Business-Cooperative Service. This is a marginal increase above the amountappropriated in FY1999 ($52.6 million). In addition, conferees provided $53 million in loan authority in support of business and job creation and retention efforts in ruralAmerica. P.L. 106-78 also appropriates $20 million in loan subsidy to supportbusinesses in rural areas.

A portion of the funds allocated to the three rural development agencies are made available under USDA's Rural Community Advancement Program (RCAP).This program gives USDA the flexibility of reallocating up to 25% of each state'srural development funding among certain RCAP-linked programs. P.L. 106-78 provides $718 million for RCAP, which is the same amount recommended by theSenate. The House bill recommended $669.1 million for RCAP activities. RCAP'sFY1999 allocation totaled $722.7 million. RCAP includes water and waste disposalloans, loan guarantees, and grants; solid waste management grants; communityfacilities grants, direct loans, and loan guarantees; business and industry loans andloan guarantees; rural business opportunity grants; and rural business enterprisegrants.

Food and Nutrition Service

The President's budget for FY2000 requested budget authority of $41.382 billion for USDA domestic food assistance programs, an increase of $6.6. billionover the FY1999 amount. This included funding for the food stamp program, thelargest of all food assistance programs, for meal programs in schools and child caringfacilities (e.g. school lunch and breakfast, child care food and summer food, andspecial milk programs), and for supplemental feeding programs for low-incomewomen, infants, and children (WIC). It also covered spending for commodityassistance programs serving the elderly, needy, and homeless, and the costs of federalsalaries and expenses and program administration. The FY2000 agricultureappropriations act ( P.L. 106-78 ) provides $35.04 billion for food and nutritionprograms, or $6.3 billion less than the Administration request. This is $227 millionmore than the $34.8 appropriated for these programs for FY1999. The amount in P.L.106-78 is lower than both the House and Senate level primarily because of a"downward re-estimate" of required funding for the food stamp program.

Most of the $6.3 billion differences between the Administration request andwhat is provided in P.L. 106-78 is related to the congressional rejection of the $4.8billion in advance funds requested by the Administration for the food stamp programfor FY2001 (in case appropriations are not enacted prior to the beginning of thatyear), and a $100 million contingency reserve fund for food stamps in P.L. 106-78 , instead of the $1 billion reserve fund requested by the Administration.

For the food stamp and related programs , the Administration budget proposed $27.3 billion; the House- and Senate-passed bills recommended $21.6 billion. P.L.106-78 provides: (1) $19.6 billion for food stamp expenses, which is $500 millionbelow the original request, and reflects a re-estimate of the needs of the program; (2)$100 million for the food stamp contingency reserve, instead of the $1 billionproposed by the Administration; (3) no advance funding for FY2001 (compared with$4.8 billion proposed by the Administration); and (4) $1.27 billion, the same as theAdministration and the House and Senate bills for Nutrition Assistance for PuertoRico. P.L. 106-78 allows $98 million to be spent on Emergency Food AssistanceProgram mandatory commodities, splitting the difference between the $97 millionin the House bill and $99 million in the Senate bill. Conferees deleted Senatelanguage that would have required the Economic Research Service to conduct a studywithin 6 months of enactment on the reasons for the decline in food stampparticipation, and to identify any obstacles that households with eligible children have experienced in obtaining food stamps.

No major policy changes were proposed by the Administration for child nutrition programs (including the school lunch, breakfast, child and adult care,summer and special milk programs). P.L. 106-78 provides $9.554 billion for theseprograms, close to the Administration request for $9.565 billion. Over 90% of theappropriated funds are expected to be used to fund the school lunch program ($5.48billion), the school breakfast program ($1.42 billion) and the child and adult carefood program ($1.76 billion). The level in P.L. 106-78 for child nutrition programs($9.56 billion) is about $377 million more than projected FY1999 spending for theseprograms, and is $6 million less than was recommended by the Senate appropriationsbill and $7 million more than the House appropriation measure. The difference is theresult of the decision to provide $7 million for the school breakfast pilot project,instead of nothing proposed by the House, and $13 million proposed by the Senate.

P.L. 106-78 also continues language (originally added in FY1999 appropriations) requiring the USDA to use so-called "bonus commodities" (6) to helpmake up the difference between the per meal commodity assistance rate mandatedfor school lunches, and the requirement that not less than 12% of federal schoollunch assistance be in the form of commodities. For several years, the per lunchcommodity reimbursement did not total to an amount equal to 12% of federal schoollunch aid, and the USDA had to use child nutrition funds to buy commodities tomake up the difference. Last year, the Congress added a provision to FY1999agriculture appropriations law requiring the Secretary to use "bonus commodities"when necessary to meet the 12% requirement. This resulted in savings for the USDA(projected at $40 million) because they could use commodities already acquired forfarm support or surplus removal reasons to meet this obligation. (7) House and Senatenegotiators trying to forge an acceptable budget package that merges the severalremaining FY2000 appropriations bills reportedly have agreed to make permanentthe "12% solution" so they can use the $55 million in savings to offset some of thenew spending in the consolidated budget package.

The Administration proposed $4.105 billion for the special supplemental nutrition program for women, infants and children (WIC) in FY2000. P.L. 106-78 funds WIC at $ 4.032 billion, which is $108 million more than the amount providedin FY1999, and $73.5 million less than the Administration request. TheSenate-passed bill would have funded WIC at $4.038 billion, or about $33 millionmore than the House bill. Responding to renewed pressure to permit natural sugarcontained in fruits to be exempted from the sugar limits established for cerealsapproved for WIC program use, the conference report to P.L. 106-78 containslanguage directing that USDA make no exception to the current sugar limit. Neitherthe House nor Senate bills approved the Administration request to fund the Farmers'Market Nutrition Program (FMNP) from Commodity Assistance Program (CAP)funds instead of WIC funds, and continue to require that $10 million of WIC fundingbe used within 45 days of enactment for the FMNP. The FMNP provides WICparticipants in some areas with vouchers to buy fresh foods at farmers markets. TheHouse and Senate bills assumed that there will be $125 million in unexpended, orcarryover funds from FY1999 available for the program in FY2000, and that this,together with the appropriated funds will be sufficient to maintain a monthly averageWIC caseload of 7.4 million participants.

The Administration proposed to fund Commodity Assistance Programs (CAPs) at a total of $155.2 million for FY2000, $20 million of which was to go for theFMNP (described above). The remainder would have provided $90.2 million for thecommodity supplemental food program (CSFP), $4.2 million more than the FY1999appropriation, and $45 million for state administrative grants for the emergency foodassistance program (EFAP), the same amount as in FY1999. P.L. 106-78 adopted$133.3 million in spending for CAPs for FY2000, $2.3 million more than FY1999funding, and $2 million less than that requested for these programs by theAdministration. The House originally approved version of the bill included a totalof $151 million for CAPs, $20 million more than FY1999 spending; theSenate-passed bill provided $131 million for CAPs, $20 million less than the House.As mentioned above, neither chamber approved funding WIC farmers marketcoupons under this budget category.

Food donations programs for selected groups (the elderly and needy families) would receive $151.1 million in FY2000 under the Administration proposal, $10million more than was provided in FY1999. P.L. 106-78 provides the same amountas that recommended by both the House- and Senate-passed measures - $141.1,which is the same amount as in FY1999.

Food and Drug Administration

The Food and Drug Administration (FDA) is funded through both congressionalappropriations and user fees whose total level of collections is set each year by theUSDA and related agencies appropriations act. For FY2000, the FY2000 agricultureappropriations act ( P.L. 106-78 ) provides an appropriation of $1.052 billion for FDA,which is $90 million below the Administration request, $33 million below theHouse-passed level, $8 million above the Senate-passed level, and nearly $70 millionabove the FY1999 appropriated level. Included in P.L. 106-78 is $1.04 billion forFDA salaries and expenses for activities such as pre-market approval of drugs anddevices, collecting reports of injury from products under FDA regulatory jurisdiction,and carrying out food safety efforts. The balance of the FDA appropriation is $11.35million for FDA's buildings and facilities. The buildings and facilities funding is $20million below the Administration request and the House-passed level, and $3 millionabove the Senate level.

Conferees deleted a provision in the House-passed bill that would have prohibited FDA from using any of its FY2000 funds for "testing, development, orapproval of any drug for the chemical inducement of abortion." In September 1996,FDA had issued a "conditional approval" to the Population Council for the drugmifepristone, or RU-486, to be used for the termination of early pregnancy. In doingthis, FDA concluded that mifepristone is safe and effective, but additionalinformation on issues such as manufacturing and labeling must be submitted andevaluated before the agency determines whether or not the drug can be marketed inthe United States. FDA has yet to make its determination.

P.L. 106-78 approved the requested $3 million to be used towards completion of the final phase of the renovations at the National Center for ToxicologicalResearch in Jefferson, Arkansas. The conferees prohibited any closing, relocations,or changes to occur in the St. Louis, Missouri FDA Division of Drug Analysis, theMichigan District Office Laboratory, or in the FDA Detroit, Michigan District Office.The conferees specified that for FY2000, FDA may not reduce funding and staffingfor the Detroit Office below the level found in the Office as of July 31, 1999.

P.L. 106-78 provides FDA with $188 million or $30 million in additional funds over FY1999 levels for the President's food safety initiative. With this additionalfunding, the Act requires that $3 million go to the National Center for Food Safetyand Technology, and the accompanying committee report directs FDA to report, byMarch 1, 2000, on the activities the agency has taken to improve the coordination andcooperation with the U.S. Customs Service over imported foods. With this increase,the conferees want FDA to use $250,000 to continue support for cooperative researchon molluscan shellfish safety, and for FDA's education program to decreaseconsumption of raw shellfish. The conferees also directed USDA and FDA todevelop by December 1, 1999, a plan of action to achieve the goal of reassuring thepublic on the safety of the U.S. food supply, to educate Americans on foodproduction, and to identify ongoing or proposed activities to achieve this goal.

P.L. 106-78 also gives FDA $100,000 to fund a design contest to find solutions to microbial contamination of ground water use and treatment by theWaste-Management Education and Research Consortium (WERC). Also, theconference report requires FDA to publish, by March 2000, a feasibility study onappropriate methods of informing consumers of bottled water contents.

The conference agreement also mentions the development of resistance in food borne and other bacteria to antibiotics used to treat humans and used for livestockproduction. The agreement requires FDA to report, by January 2000, on the status ofFDA's development of regulations on electronic data submission requirements on theuse of growth promoting antibiotics in animals that may compromise humantherapies and on alternatives to this practice. The agreement report directs FDA andUSDA to develop a joint strategy for addressing resistance and to report to thecommittee by January 2000 on that strategy. The strategy is to include a time frameand cost of a risk assessment that would compare the level of risk posed by other usesto the level of risk posed by using antibiotics on the farm.

The conferees increased funding by $11.4 million for the food additive petition review program of which $5.4 million is for food additive petition review, and $6million to implement the food contact substances program as authorized in currentlaw. Report language requests FDA to negotiate with the industry to proposelegislation to authorize user fees to fund this food contact substance notificationprogram and to submit a proposal to the House Commerce Committee, so that theprogram can be implemented in FY2000.

After FDA receives a food additive petition requesting the use of irradiation on ready-to-eat meats and poultry, and fruits and vegetables, P.L. 106-78 requires FDAto propose a rule within six months and to issue a final rule within twelve months ofreceipt of the petition.

The conferees believed that agencies with jurisdiction over meat, poultry and food products should have consistent recall protocols. By January 30, 2000, the conferees expect FDA's recall coordinator to report to Congress on its authorities,operating procedures, budget, and a description of actions taken during recent recalls.

The conference report questioned whether the agency had used "sound science" in a proposed 1997 rule on the use of ephedrine alkaloids (naturally occurringchemical stimulants) in dietary supplements. Report language asks FDA to postponefinalizing the proposed rule until the agency provides more scientific evidence toensure strict compliance with the Dietary Supplement Health and Education Act. Italso directed the agency to report back within six months on the methodology theagency would use to enforce this proposed rule.

Within the next 5 years, the Office of Generic Drugs expects a heavier work load when about $22 billion of brand name drugs come off patent and are likely tobecome generic drugs. P.L. 106-78 provides $1.9 million so the office can hire atleast 11 more reviewers to process these applications. The conferees also agreed thatFDA use $200,000 of the $1.6 million appropriations increase to hire two newfull-time employees in the Center of Veterinary Medicine to review aquaculture drugapplications.

In August 1992, Congress authorized an FDA-administered program for training in clinical pharmacology at medical schools without such a program. The conferenceagreement provides FDA with $500,000, about $200,000 below the FY1999 level offunding, for clinical pharmacology grants awarded on a competitive basis.

P.L. 106-78 prohibits FDA from developing, establishing, or operating any "general user fee" program. The report language explains that the Administrationshould submit legislative proposals to the appropriate authorizing committees.

The conferees agreed that of the $154 million FY2000 appropriation for the Center for Devices and Radiological Health, $1 million is to be used in oversightactivities regarding reprocessed medical devices, and $55.5 million and 522 full-timeemployees are to be used for pre-market application review activities to meetstatutorily-set review deadlines.

Report language notes that FDA failed to meet the June 1, 1999, deadline for publication of a rule concerning the use of foreign marketing data in review of newsunscreen active ingredients in the sunscreen over-the-counter drug monograph. Theconferees direct the FDA to propose a rule, not later than sixty days after enactmentof this Act, and finalize such a rule twelve months after enactment.

P.L. 106-78 maintains for FY2000 a funding level of $34 million for the President's youth tobacco prevention activities. In addition, the conferees directedFDA to submit a report, within 180 days of the date of enactment of the Act, on theeffects of reducing illegal tobacco sales to minors and the effect on compliance of theuse of automated identification systems.

The conference report also encourages FDA to enforce good manufacturing practices and work with interested people, including the Centers for Disease Controland Prevention (CDC) and the National Hemophilia Foundation, to investigatepossible contamination of blood and blood products. FDA is expected to report toCongress, by March 1, 2000, on actions it has taken to respond to this public healthconcern.

Table 3. U.S. Department of Agriculture and Related Agencies Appropriations, FY1999 vs. FY2000 ($ inmillions)

Note: An item with an asterisk (*) represents the total amount of direct and guaranteed loans that can be made given the requested or appropriated loan subsidylevel. Only the subsidy level is included in the totals. NA = Not yet available.

(1) The Administration total does not include an advance appropriation request of $4.8 billion for the food stamp program for FY2001, or a $200 million request forrural housing programs.

(2) Scorekeeping adjustments reflect the savings or costs of provisions that affectmandatory programs, plus the permanent annual appropriation made to USDA'sSection 32 program.

(3) FY2000 enacted levels do not reflect a 0.38% rescission required by P.L. 106-113 on total discretionary spending for FY2000. This will require total spending cuts ofapproximately $49 million from USDA , $4 million from FDA , and $240,000 fromCFTC, for programs funded by P.L. 106-78 , with specific cuts to be determined bythe Administration.

Source: House Appropriations Committee